EXHIBIT 7(c)
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of October 25, 1999, by and between
LIBERTY MEDIA CORPORATION, a Delaware corporation ("Liberty") and EMMIS
COMMUNICATIONS CORPORATION, an Indiana corporation ("Emmis").
RECITALS
WHEREAS, Liberty desires to acquire, and Emmis desires to issue and sell to
Liberty, 2,700,000 shares (the "Purchased Shares") of Emmis' Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), for the consideration
and upon the terms and conditions set forth in this Agreement;
WHEREAS, the parties hereto desire to enter into the other agreements and
arrangements described herein.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.01 Purchase and Sale. On the terms and subject to the
-----------------
conditions set forth in this Agreement, on the Closing Date (as defined in
Section 1.03) Emmis shall sell, issue and deliver to Liberty two million seven
hundred thousand (2,700,000) shares of Class A Common Stock for a total purchase
price of $148,500,000 (the "Purchase Price").
SECTION 1.02 Payment of Purchase Price. On the terms and subject to the
-------------------------
conditions set forth in this Agreement, on the Closing Date, in consideration
for the sale, issuance and delivery of the Purchased Shares, Liberty shall pay
the Purchase Price to Emmis by wire transfer of immediately available funds to
an account designated by Emmis in writing to Liberty at least two days prior to
the Closing Date.
SECTION 1.03 Closing. Subject to the provisions of Articles V and VI,
-------
the closing (the "Closing") of the transactions contemplated by this Agreement
shall take place (i) at the offices of Xxxxx & Xxxxx, L.L.P., 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, XX 00000, as promptly as practicable following the date the
last of the conditions set forth in Article V is satisfied or, if permissible,
waived, or (ii) at such time, or at such other place or time as Liberty and
Emmis may mutually agree (the date and time of the Closing being herein referred
to as the "Closing Date").
SECTION 1.04 Deliveries by Emmis. At the Closing, Emmis will deliver or
-------------------
cause to be delivered to Liberty the following:
(a) The opinions, certificates and other documents contemplated by
Section 5.02;
(b) A stock certificate representing the Purchased Shares, with all
necessary stock issuance or transfer stamps affixed thereto, duly completed
and registered in the name of Liberty, or its permitted assignee under
Section 9.05, on the stock transfer books of Emmis; and
(c) A duly executed registration rights agreement of Emmis, in
substantially the form set forth as Exhibit A hereto (the "Registration
Rights Agreement").
SECTION 1.05 Deliveries by Liberty. At the Closing, Liberty will deliver
---------------------
or cause to be delivered to Emmis the following:
(a) The Purchase Price, in accordance with Section 1.02; and
(b) A duly executed Registration Rights Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF EMMIS
Emmis hereby represents and warrants to Liberty as follows:
SECTION 2.01 Except for Xxxxxxxxx, Lufkin & Xxxxxxxx whose fees shall
be paid entirely by Emmis, no agent, broker, investment banker, financial
advisor or other person or entity is or will be entitled, by reason of any
agreement, act or statement by Emmis or any of its Subsidiaries, directors,
officers, employees or affiliates, to any financial advisory, broker's, finder's
or similar fee or commission, to reimbursement of expenses or to indemnification
or contribution in connection with any of the transactions contemplated by this
Agreement, and Emmis agrees to indemnify and hold Liberty and each of its
Subsidiaries and affiliates harmless from and against any and all claims,
liabilities or obligations with respect to any such fees, commissions, expenses
or claims for indemnification or contribution asserted by any person on the
basis of any act or statement made by Emmis or any of its Subsidiaries,
directors, officers, employees or affiliates.
SECTION 2.02 All facts relating to the assets, business, operations,
financial condition and prospects (as such prospects relate to Emmis and its
Subsidiaries, not to business conditions in the radio or television broadcast
industries generally) of Emmis and its Subsidiaries necessary for a reasonably
prudent investor to make an investment decision with respect to the acquisition
of the Purchased Shares contemplated hereby have been disclosed to Liberty.
Neither this Agreement, nor
2
any other agreement, document, certificate or other written instrument delivered
pursuant hereto, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements herein and therein, when taken together, not misleading.
SECTION 2.03 Each of Emmis and its Subsidiaries (as defined in Section
8.11) has been duly incorporated or organized, is validly existing as a
corporation, partnership or limited liability company in good standing under the
laws of its jurisdiction of incorporation or organization and has the corporate,
partnership or limited liability company power and authority to carry on its
business as described in the prospectus (the "Prospectus") contained in the
registration statement on Form S-3 (file no. 333-88219) filed by Emmis (the
"Registration Statement") and to own, lease and operate its properties, and each
is duly qualified and is in good standing as a foreign corporation, partnership
or limited liability company authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified would
not have a material adverse effect on the business, prospects, financial
condition or results of operations of Emmis and its Subsidiaries, taken as a
whole (a "Material Adverse Effect").
SECTION 2.04 The entities listed on Schedule I are the only Subsidiaries,
direct or indirect, of Emmis. All of the outstanding equity interests of each
of Emmis' Subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable and, except as set forth on Schedule I hereto, are
owned by Emmis, directly or indirectly through one or more Subsidiaries, free
and clear of any security interest, claim, lien, encumbrance, or adverse
interest of any nature (each, a "Lien").
SECTION 2.05 There are no outstanding subscriptions, rights, warrants,
options, calls, convertible securities, commitments of sale or liens granted or
issued by Emmis or any of its Subsidiaries relating to or entitling any person
to purchase or otherwise to acquire any shares of the capital stock of Emmis or
any of its Subsidiaries, except as otherwise disclosed in the Registration
Statement or pursuant to Emmis' employee benefit plans.
SECTION 2.06 All the outstanding shares of capital stock of Emmis have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights.
SECTION 2.07 All of the outstanding shares of capital stock or other
equity interests of each of Emmis' Subsidiaries have been duly authorized and
validly issued and are fully paid and non-assessable, and, except as set forth
on Schedule I hereto, are owned by Emmis, directly or indirectly through one or
more Subsidiaries, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
3
SECTION 2.08 The authorized and outstanding capital stock of Emmis
conforms to the first paragraph under the caption "Description of Capital Stock"
in the Prospectus and as to legal matters to the description thereof contained
in the Prospectus.
SECTION 2.09 Neither Emmis nor any of its Subsidiaries is in violation of
its respective charter, by-laws or equivalent organizational document or in
default in the performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or other agreement
or instrument to which Emmis or any of its Subsidiaries is a party or by which
Emmis or any of its Subsidiaries or their respective property is bound, except
for defaults that are not material to Emmis and its Subsidiaries, taken as a
whole.
SECTION 2.10 The execution, delivery and performance of this Agreement by
Emmis, the compliance by Emmis with all the provisions hereof and the
consummation of the transactions contemplated hereby will not (i) require any
consent, approval, authorization or other order (a "Governmental Consent") of,
or qualification, registration or filing (a "Governmental Filing") with, any
court or governmental body or agency (except such as may be required under the
securities or Blue Sky laws of the various states), (ii) conflict with or
constitute a breach of any of the terms or provisions of, or a default under,
the charter or by-laws of Emmis or any of its Subsidiaries or any indenture,
loan agreement, mortgage, lease or other agreement or instrument that is
material to Emmis and its Subsidiaries, taken as a whole, to which Emmis or any
of its Subsidiaries is a party or by which Emmis or any of its Subsidiaries or
their respective property is bound, (iii) violate or conflict with any
applicable law or any rule, regulation, judgment, order or decree of any court
or any governmental body or agency having jurisdiction over Emmis, any of its
Subsidiaries or their respective property, (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under, any agreement
or instrument to which Emmis or any of its Subsidiaries is a party or by which
Emmis or any of its Subsidiaries or their respective property is bound or (v)
result in the suspension, termination or revocation of any Authorization (as
defined below) of Emmis or any of its Subsidiaries or any other impairment of
the rights of the holder of any such Authorization.
SECTION 2.11 There are no legal or governmental proceedings pending or
threatened to which Emmis or any of its Subsidiaries is or could be a party or
to which any of their respective property is or could be subject that are
required to be described in the Registration Statement or the Prospectus and are
not so described; nor are there any statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are not
so described or filed as required.
SECTION 2.12 Neither Emmis nor any of its Subsidiaries has violated any
foreign, federal, state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), any provisions of the
Employee Retirement Income Security Act of 1974, as amended, or any provisions
of the Foreign Corrupt Practices Act or the rules and regulations promulgated
thereunder, except for such violations which, singly or in the aggregate, would
not have a Material Adverse Effect.
4
SECTION 2.13 There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
SECTION 2.14 Each of Emmis and its Subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals (each, a "Governmental Entity"), including, without
limitation, under any applicable Environmental Laws, as are necessary to own,
lease, license and operate its respective properties and to conduct its
business, except where the failure to have any such Authorization or to make any
such filing or notice would not, singly or in the aggregate, have a Material
Adverse Effect. Each such Authorization is valid and in full force and effect
and each of Emmis and its Subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain no restrictions that are burdensome to Emmis or
any of its Subsidiaries; except where such failure to be valid and in full force
and effect or to be in compliance, the occurrence of any such event or the
presence of any such restriction would not, singly or in the aggregate, have a
Material Adverse Effect.
SECTION 2.15 This Agreement has been duly authorized, executed and
delivered by Emmis.
SECTION 2.16 Xxxxxx Xxxxxxxx LLP are independent public accountants with
respect to Emmis and its Subsidiaries as required by the Securities Act of 1933,
as amended (the "Act").
SECTION 2.17 The consolidated financial statements included or
incorporated by reference in the Registration Statement and the Prospectus (and
any amendment or supplement thereto), together with related schedules and notes,
present fairly in all material respects the consolidated financial position,
results of operations and changes in financial position of Emmis and its
Subsidiaries on the basis stated therein at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; the supporting schedules, if any, included in the
Registration Statement present fairly in all material respects in accordance
with generally accepted accounting principles the information required to be
stated therein; and the other financial and statistical information and data set
forth in the Registration Statement and the Prospectus (and any amendment or
supplement
5
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of
Emmis.
SECTION 2.18 Emmis is not and, after giving effect to the sale of the
Purchased Shares, will not be, an "investment company" as such term is defined
in the Investment Company Act of 1940, as amended.
SECTION 2.19 There are no contracts, agreements or understandings between
Emmis and any person granting such person the right to require Emmis to file a
registration statement under the Act with respect to any securities of Emmis.
SECTION 2.20 Since the respective dates as of which information is given
in the Prospectus other than as set forth in the Prospectus (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement), (i)
there has not occurred any material adverse change or any development involving
a prospective material adverse change in the condition, financial or otherwise,
or the earnings, business, management or operations of Emmis and its
Subsidiaries, taken as a whole, (ii) there has not been any material adverse
change or any development involving a prospective material adverse change in the
capital stock or in the long-term debt of Emmis or any of its Subsidiaries and
(iii) neither Emmis nor any of its Subsidiaries has incurred any material
liability or obligation, direct or contingent.
SECTION 2.21 No consent or approval of the Federal Communications
Commission (the "FCC") is required under the Communications Act of 1934, as
amended, and the regulations promulgated thereunder (the "Communications Laws")
for the issuance and sale of the Purchased Shares. The execution, delivery and
performance of this Agreement in accordance with the terms hereof does not
violate the Communications Laws.
SECTION 2.22 The Subsidiaries of Emmis identified on Schedule II hereto
(the "License Subsidiaries") hold all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits issued by the FCC to own
and operate each of the respective radio or television broadcast stations (the
"Stations") as identified on Schedule II hereto (all such FCC authorizations,
approvals, consents, order, licenses, certificates and permits of the License
Subsidiaries collectively the "FCC Licenses").
SECTION 2.23 Emmis and its Subsidiaries have good and marketable title in
fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of Emmis and its
Subsidiaries, taken as a whole, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property by Emmis and its Subsidiaries; and any real property and buildings
held under lease by Emmis and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by Emmis and its Subsidiaries.
6
SECTION 2.24 Emmis and its Subsidiaries own or possess, or can acquire on
reasonable terms, all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names ("intellectual property") currently employed by
them in connection with the businesses now operated by them except where the
failure to own or possess or otherwise acquire such intellectual property would
not, singly or in the aggregate, have a Material Adverse Effect; and neither
Emmis nor any of its Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of such intellectual
property which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
SECTION 2.25 Emmis and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither Emmis nor any of its Subsidiaries (i) has received notice
from any insurer or agent of such insurer that substantial capital improvements
or other material expenditures will have to be made in order to continue such
insurance or (ii) has any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers at a cost that would not have a Material
Adverse Effect.
SECTION 2.26 Except as disclosed or incorporated by reference in the
Prospectus, no relationship, direct or indirect, exists between or among Emmis
or any of its Subsidiaries on the one hand, and the directors, officers,
shareholders, customers or suppliers of Emmis or any of its Subsidiaries on the
other hand, which is required by the Act to be described in the Registration
Statement or the Prospectus which is not so described.
SECTION 2.27 There is no (i) significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against Emmis or any
of its Subsidiaries before the National Labor Relations Board or any state or
local labor relations board, (ii) strike, labor dispute, slowdown or stoppage
pending or threatened against Emmis or any of its Subsidiaries or (iii) union
representation question existing with respect to the employees of Emmis and its
Subsidiaries, except for such actions specified in clause (i), (ii) or (iii)
above, which, singly or in the aggregate, would not have a Material Adverse
Effect. To the best of Emmis' knowledge, no collective bargaining organizing
activities are taking place with respect to Emmis or any of its Subsidiaries.
SECTION 2.28 Emmis and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
7
SECTION 2.29 All material tax returns required to be filed by Emmis and
each of its Subsidiaries in any jurisdiction have been filed, other than those
filings being contested in good faith, and all material taxes, including
withholding taxes, penalties and interest, assessments, fees and other charges
due pursuant to such returns or pursuant to any assessment received by Emmis or
any of its Subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
SECTION 2.30 Emmis has reviewed its operations and the operations of its
Subsidiaries and any third parties with which Emmis or any of its Subsidiaries
has a material relationship to evaluate the extent to which the business or
operations of Emmis or any of its Subsidiaries will be affected by the Year 2000
Problem (as defined below). As a result of such review, Emmis has no reason to
believe, and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any risk that the
computer hardware or software used in the receipt, transmission, storage,
retrieval, retransmission or other utilization of data or in the operation of
mechanical or electrical systems of any kind will not, in the case of dates or
time periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000.
SECTION 2.31 No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act has indicated
to Emmis that it is considering (i) the downgrading, suspension or withdrawal
of, or any review for a possible change that does not indicate the direction of
the possible change in, any rating assigned to Emmis or any securities of Emmis
or (ii) any change in the outlook for any rating of Emmis or any securities of
Emmis.
SECTION 2.32 Any documents which at the date hereof are incorporated by
reference in the Registration Statement, the Prospectus or any amendment or
supplement thereto, or any preliminary prospectus (the "Incorporated Documents")
were filed in a timely manner and, when they were filed (or, if any amendment
with respect to any such document was filed, when such amendment was filed),
conformed with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
SECTION 2.33 The Class A Common Stock is registered pursuant to Section
12(g) of the Exchange Act and is listed on The Nasdaq National Market, and Emmis
has taken no action designed to, or likely to have the effect of, terminating
the registration of the Class A Common Stock under the Exchange Act or delisting
the Class A Common Stock from The Nasdaq National Market, nor has Emmis received
any notification that the Securities and Exchange Commission (the "Commission")
or the National Association of Securities Dealers, Inc. ("NASD") is
contemplating terminating such registration or listing. Upon issuance to
Liberty or its permitted assignee under Section 9.05, the Purchased Shares shall
be approved for listing on The Nasdaq National Market.
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LIBERTY
Liberty hereby represents and warrants to Emmis as follows:
SECTION 3.01 Authorization and Validity of Agreement. Liberty has all
----------------------------------------
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder and consummate the transactions contemplated
hereby. The execution, delivery and performance by Liberty of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Liberty. This
Agreement has been duly executed and delivered by Liberty and is a valid and
binding obligation of Liberty, enforceable in accordance with its terms (except
insofar as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies).
SECTION 3.02 No Conflict with Instruments. Neither the execution or
-----------------------------
delivery of this Agreement by Liberty, nor the purchase by Liberty of the
Purchased Shares pursuant hereto, (i) violates, conflicts in any material
respect with, or results in a material breach of any provision of, or
constitutes a material default (or an event which, with notice or lapse of time
or both, would constitute a material default) under, any of the terms,
conditions or provisions of (x) its Certificate of Incorporation or By-Laws, or
(y) any material note, bond, mortgage, indenture, lease, agreement or other
instrument or obligation to which Liberty is a party or to which it or any of
its properties or assets may be subject, (ii) results in a material violation of
any material law applicable to Liberty or (iii) violates any material judgment
applicable to any of its properties or assets, except, in the case of each of
the clauses (i), (ii) and (iii) above, for such violations, conflicts, breaches
or defaults, which, individually or in the aggregate, would not have any
material adverse effect on the ability of Liberty to perform its obligations
hereunder.
SECTION 3.03 Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other person or entity is or will be entitled, by reason of
any agreement, act or statement by Liberty or any of its directors, officers or
employees, to any financial advisory, broker's, finder's or similar fee or
commission, to reimbursement of expenses or to indemnification or contribution
in connection with any of the transactions contemplated by this Agreement, and
Liberty agrees to indemnify and hold Emmis harmless from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions,
expenses or claims for indemnification or contribution asserted by any person on
the basis of any act or statement made by Liberty or any of its directors,
officers or employees.
SECTION 3.04 Investment Purpose. Liberty is acquiring the Purchased
------------------
Shares solely for the purpose of investment and, except as provided in the
Registration Rights Agreement, not with a view to, or for offer or sale in
connection with, any distribution thereof in any transaction which would be in
violation of the securities laws of the United States of America or any state
thereof.
9
Liberty understands that the certificate representing the Purchased Shares will
contain a legend stating in substance:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and such shares may not be sold or
transferred unless such sale or transfer will be effected in
accordance with the registration requirements of the Securities Act of
1933, as at that time amended, or in accordance with any exemption
from the registration requirements of such Act, which may then be
available thereto."
RESTRICTIONS ON TRANSFER AND VOTING: The Amended and Restated
Articles of Incorporation of the Corporation provide that (i) the
Corporation shall not issue to or for the account of an Alien any
share of capital stock of the Corporation if such issuance would cause
the total capital stock of the Corporation held by or voted by Aliens
to exceed, in violation of the Communications Act of 1934, as amended
(the "Communications Act"), 25% of (A) the total capital stock of the
Corporation outstanding at any time or (B) the total voting power of
all shares of such capital stock outstanding and entitled to vote at
any time; and (ii) the Corporation shall not permit the transfer on
its books of any capital stock to any Alien that would result in the
total capital stock of the Corporation held or voted by Aliens to
exceed such 25% limits in violation of the Communications Act; and
(iii) no Alien or Aliens, individually or collectively, shall be
entitled to vote or direct or control the vote of more than 25% of (A)
the total capital stock of the Corporation outstanding at any time, or
(B) the total voting power of all shares of capital stock of the
Corporation outstanding and entitled to vote at any time, if to do so
would violate the Communications Act. The term "Alien" means (i) a
person who is a citizen of a country other than the United States;
(ii) an entity organized under the laws of a government other than the
government of the United States or any state, territory, or possession
of the United States; (iii) a government other than the government of
the United States or any state, territory, or possession of the United
States; or (iv) a representative of, or an individual or entity
controlled by, any of the foregoing. The Amended and Restated
Articles of Incorporation also provide that the Board of Directors of
the Corporation shall have all powers necessary to implement the
provisions of the Amended and Restated Articles of Incorporation
regarding Alien ownership and to insure compliance with the Alien
ownership restrictions of the Communications Act including, without
limitation, the power to prohibit the transfer of any shares of
capital stock of the Corporation to any Alien, the power to redeem
shares of capital stock of the Corporation determined by the Board of
Directors to be owned
10
beneficially by an Alien or Aliens and the power to take or cause to
be taken such other action as it deems appropriate to implement such
restrictions.
ARTICLE IV
TRANSACTIONS PRIOR TO CLOSING
SECTION 4.01 Interim Conduct of Business. During the period commencing
---------------------------
on the date of this Agreement and ending on the Closing Date, except as
expressly contemplated by this Agreement or any Exhibit hereto or consented to
in writing by Liberty (which consent shall not be unreasonably withheld), Emmis
shall not (i) make any change in or amendments to its Certificate of
Incorporation (except the amendment to create the Series A Cumulative
Convertible Preferred Stock) or Bylaws, (ii) reclassify the outstanding shares
of its capital stock or make any other changes in its capital structure or (iii)
declare, set aside, pay or make any dividend or other distribution or payment
(whether in cash, property or securities) with respect to its capital stock or
other securities (other than a dividend or distribution consisting solely of
Class A Common Stock).
SECTION 4.02 Access to Information Concerning Properties and Records.
-------------------------------------------------------
From the date hereof until the Closing and subject to contractual and legal
restrictions applicable to Emmis (or its Subsidiaries), upon reasonable notice,
Emmis shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, counsel, accountants and other authorized representatives
of Liberty access during normal business hours to all its properties, personnel,
books and records and furnish promptly to such persons such information
concerning its business, properties, personnel and affairs as such persons shall
from time to time reasonably request in connection with or to facilitate the
consummation of the transactions contemplated hereby.
SECTION 4.03 Public Announcements. Neither Liberty nor Emmis shall, nor
--------------------
shall either Liberty or Emmis permit any of its Subsidiaries to (and each such
party shall use its reasonable efforts to cause its directors, officers,
employees and authorized representatives not to), issue any press release, make
any public announcement or furnish any written statement to its employees or
stockholders generally concerning the transactions contemplated by this
Agreement without the consent of the other party (which consent shall not be
unreasonably withheld), except to the extent required by applicable law or the
applicable requirements of the New York Stock Exchange or the National
Association of Securities Dealers, Inc. with respect to issuers whose securities
are quoted on the Nasdaq Stock Market (and in either such case such party shall,
to the extent consistent with timely compliance with such requirement, consult
with the other party prior to making the required release, announcement or
statement).
SECTION 4.04 Reasonable Efforts. Subject to the terms and conditions of
------------------
this Agreement and applicable law, each of the parties shall use its reasonable
efforts to take, or cause to be taken, all actions, and do, or cause to be done,
all things reasonably necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as soon as
11
reasonably practicable, including such actions or things as either party hereto
may reasonably request in order to cause any of the conditions to such other
party's obligation to consummate such transactions specified in Article V to be
fully satisfied. Without limiting the generality of the foregoing, the parties
shall (and shall cause their respective Subsidiaries, and use their reasonable
efforts to cause their respective directors, officers, employees, agents,
attorneys, accountants and representatives, to) consult and fully cooperate with
and provide reasonable assistance to each other in (i) obtaining all necessary
consents, approvals, waivers, licenses, permits, authorizations, registrations,
qualifications or other permission or action by, and giving all necessary
notices to and making all necessary filings with and applications and
submissions to, any Governmental Entity or other person or entity; (ii filing
all applicable Notification and Report Forms required under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act") as a
result of the transactions contemplated by this Agreement and promptly complying
with any requests for additional information and documentary material that may
be requested pursuant to the HSR Act; (ii using commercially reasonable efforts
(which does not require the commencement of litigation) to lift any permanent or
preliminary injunction or restraining order or other similar order issued or
entered by any court or governmental entity (an "Injunction") of any type
referred to in Section 5.01(b); (iv providing all such information about such
party, its Subsidiaries and its officers, directors, partners and affiliates and
making all applications and filings as may be necessary or reasonably requested
in connection with any of the foregoing; and (v) in general, consummating and
making effective the transactions contemplated hereby; provided, however, that
-------- -------
in order to obtain any consent, approval, waiver, license, permit,
authorization, registration, qualification or other permission or action or the
lifting of any injunction referred to in clause (i) or (iii) of this sentence,
no party nor any of their respective stockholders (including, in the case of
Liberty, AT&T Corp.), Subsidiaries or affiliates shall be required to (x) pay
any consideration, to divest itself of any of, or otherwise rearrange the
composition of, its assets or to agree to any conditions or requirements which
are materially adverse or burdensome(or, in the case of AT&T Corp., adverse or
burdensome in any respect) or (y) amend, or agree to amend, in any material
respect any contract. Prior to making any application to or filing with any
Governmental Entity or other person or entity in connection with this Agreement,
each of Liberty and Emmis shall provide the other party with drafts thereof and
afford the other party a reasonable opportunity to comment on such drafts.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01 Conditions Precedent to the Obligations of Liberty and
------------------------------------------------------
Emmis. The obligations of each of Liberty and Emmis to consummate the
-----
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing Date of each of the following conditions:
(a) HSR Act. All applicable waiting periods under the HSR Act shall have
-------
expired or been terminated without receipt of any objections or commencement of
litigation or threat thereof
12
by the appropriate governmental enforcement agency to restrain the transactions
contemplated hereby.
(b) Absence of Injunctions. No permanent or preliminary injunction or
----------------------
restraining order or other order by any court or other Governmental Entity of
competent jurisdiction or other legal restraint or prohibition preventing
consummation of the transactions contemplated hereby as provided herein shall be
in effect.
(c) No Proceedings or Adverse Enactments. There shall not have been any
------------------------------------
action taken, or any statute, rule, regulation, order, judgment or decree
enacted, promulgated, entered, issued or enforced by any foreign or United
States federal, state or local Governmental Entity, and there shall be no
action, suit or proceeding pending which makes the transactions contemplated by
this Agreement illegal or imposes, or is reasonably likely to result in the
imposition of, material damages or penalties in connection therewith.
(d) Receipt of Governmental Approvals and Consents. All Government
----------------------------------------------
Consents as are required in connection with the consummation of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect, all Governmental Filings as are required in connection with the
consummation of such transactions shall have been made, and all waiting periods,
if any, applicable to the consummation of such transactions imposed by any
Governmental Entity shall have expired, other than those which, if not obtained,
in force or effect, made or expired (as the case may be) would not, either
individually or in the aggregate, have any adverse effect on AT&T Corp. or a
material adverse effect on (i) the transactions contemplated hereby or (ii) the
business, assets, results of operations, financial condition or prospects of
Liberty and its Subsidiaries, taken as a whole, or Emmis and its Subsidiaries,
taken as a whole.
SECTION 5.02 Conditions Precedent to the Obligations of Liberty . The
---------------------------------------------------
obligation of Liberty to consummate the transactions contemplated by this
Agreement are also subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, unless waived by Liberty:
(a) Accuracy of Representations and Warranties. All representations and
------------------------------------------
warranties of Emmis contained in this Agreement shall, if specifically qualified
by materiality, be true and correct and, if not so qualified, be true and
correct in all material respects in each case as of the date of this Agreement
and (except to the extent such representations and warranties speak as of a
specified earlier date) on and as of the Closing Date, with the same force and
effect as though made on and as of the Closing Date, except for changes
permitted or contemplated by this Agreement.
(b) Performance of Agreements. Emmis shall have performed in all material
-------------------------
respects all obligations and agreements, and complied in all material respects
with all covenants and conditions, contained in this Agreement to be performed
or complied with by it prior to or on the Closing Date.
13
(c) No Proceedings or Adverse Enactments. There shall not have been any
------------------------------------
action taken, or any statute, rule, regulation, order, judgment or decree
enacted, promulgated, entered, issued or enforced by any foreign or United
States federal, state or local Governmental Entity, and there shall be no
action, suit or proceeding pending which would, as of or after the Closing,
impose material limitations on the ability of Liberty effectively to exercise
full rights of ownership of the Purchased Shares (including the right to vote
such shares on all matters properly presented to the stockholders of Emmis).
(d) Officer's Certificates. Liberty shall have received certificates of
----------------------
Emmis, dated the Closing Date, signed by executive officers of Emmis to evidence
satisfaction of the conditions set forth in Sections 5.02 (a) and (b), which
certificates shall be given by such officers after due inquiry.
(e) Opinion of Counsel. Liberty shall have received the favorable opinion
------------------
from Emmis' counsel, Bose, XxXxxxxx & Xxxxx, LLP, dated the Closing Date, in
form customary for transactions of the type contemplated by this Agreement.
(f) Other Deliveries. All other documents and instruments required under
-----------------
this Agreement to have been delivered by Emmis to Liberty at or prior to the
Closing (including those specified in Section 1.04) shall have been delivered.
SECTION 5.03 Conditions Precedent to the Obligations of Emmis. The
------------------------------------------------
obligation of Emmis to consummate the transactions contemplated by this
Agreement is also subject to the satisfaction at or prior to the Closing Date of
each of the following conditions, unless waived by Emmis:
(a) Accuracy of Representations and Warranties. All representations and
------------------------------------------
warranties of Liberty contained in this Agreement shall, if specifically
qualified by materiality, be true and correct and, if not so qualified, be true
and correct in all material respects in each case as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of a specified earlier date) on and as of the Closing Date, with the same force
and effect as though made on and as of the Closing Date, except for changes
permitted or contemplated by this Agreement.
(b) Performance of Agreements. Liberty shall have performed in all
-------------------------
material respects all obligations and agreements, and complied in all material
respects with all covenants and conditions, contained in this Agreement to be
performed or complied with by them prior to or on the Closing Date.
(c) Officer's Certificates. Emmis shall have received a certificate of
----------------------
Liberty, dated the Closing Date, signed by executive officers of Liberty to
evidence satisfaction of the conditions set forth in Sections 5.03 (a) and (b),
which certificates shall be given by such officers after due inquiry.
14
(d) Other Deliveries. All other documents and instruments required under
-----------------
this Agreement to have been delivered by Liberty to Emmis at or prior to the
Closing (including those specified in Section 1.05) shall have been delivered.
ARTICLE VI
TERMINATION
SECTION 6.01 Termination and Abandonment. This Agreement may be
---------------------------
terminated and the transactions contemplated hereby may be abandoned at any time
prior to the Closing: (i) by mutual written consent of Liberty and Emmis; or
(ii) by either Liberty or Emmis: (A) if the Closing shall not have occurred
before February 29, 2000, provided that the right to terminate this Agreement
pursuant to this clause (ii)(A) shall not be available to any party whose
failure to perform any of its obligations under this Agreement required to be
performed by it at or prior to the Closing has resulted in the failure of the
Closing to occur before such date, (B) if there has been a material breach by
the other party of any of its representations, warranties, covenants or
agreements contained in this Agreement and such breach shall not have been cured
within five business days after written notice thereof shall have been received
by the party alleged to be in breach, or (C) if any court of competent
jurisdiction or other competent Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting any of the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable.
SECTION 6.02 Effect of Termination. In the event of any termination of
---------------------
this Agreement by Liberty or Emmis pursuant to Section 6.01, this Agreement
forthwith shall become void, and there shall be no liability or obligation on
the part of any party hereto or any of their respective officers and directors,
except that (i) Section 9.02 and Article VII shall survive the termination of
this Agreement, (ii) nothing herein will relieve any party from liability for
any breach of any of its representatives, warranties, covenants or agreements
set forth in this Agreement occurring prior to such termination, and (iii)
nothing herein shall relieve any party from liability for the willful breach of
any of its representations, warranties, covenants or agreements set forth in
this Agreement.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01 Survival. The representations and warranties of the parties
--------
contained in this Agreement shall survive the Closing for a period of two years.
The covenants and agreements of the parties contained in this Agreement that
contemplate actions to be taken (a) prior to the Closing shall not survive the
Closing and (b) after the Closing shall survive until such actions shall have
been taken or performed in accordance with the terms of the applicable covenant
or agreement.
15
SECTION 7.02 Indemnification Relating to the Agreement. (a) Emmis shall
-----------------------------------------
indemnify Liberty and each director, officer, employee, agent, successor and
permitted assign of Liberty, from and against any and all losses, liabilities,
claims, damages, obligations, liens, assessments, judgments, awards, fines,
interest, penalties, costs and expenses (including reasonable attorneys' fees
and expenses) ("Losses") resulting or arising from:
(i) any breach by Emmis of any representation or warranty of Emmis
set forth in this Agreement or in any agreement, certificate or other
document executed by Emmis and delivered to Liberty pursuant to the
provisions of this Agreement; and
(ii) any failure of Emmis to comply with or non-fulfillment of any
covenant or agreement of Emmis set forth in this Agreement.
(b) Liberty shall indemnify Emmis, and each director, employee, agent,
officer, employee, agent, successor and assign of Emmis, from and against all
Losses resulting or arising from:
(i) any breach by Liberty of any representation or warranty of
Liberty set forth in this Agreement or in any agreement, certificate or
other document executed by Liberty and delivered to Emmis pursuant to the
provisions of this Agreement; and
(ii) any failure of Liberty to comply with or non-fulfillment of any
covenant or agreement of Liberty set forth in this Agreement.
SECTION 7.03 Indemnification Procedures.
--------------------------
(a) Procedures for Indemnification of Third Party Claims.
----------------------------------------------------
(i) If a party entitled to indemnification under Section 7.02 (an
"Indemnitee") shall receive notice or otherwise learn of the assertion by a
person, company or other entity (including, without limitation, any
Governmental Entity) (a "Person") who is not a party to this Agreement, of
any claim or of the commencement or threat by any such Person of any
action, suit, arbitration, inquiry, proceeding or investigation by or
before any court or other Governmental Agency (a "Third Party Claim") with
respect to which the other party may be obligated to provide
indemnification pursuant to Section 7.02 (an "Indemnifying Party"), such
Indemnitee shall give such Indemnifying Party written notice thereof
promptly after becoming aware of such Third Party Claim and in no event
later than the second anniversary of the Closing Date; provided that the
--------
failure of any Indemnitee to give notice or any delay in giving notice as
provided in this Section 7.03(a) shall not relieve the related Indemnifying
Party of its obligations under this Article VII, except to the extent that
such Indemnifying Party is prejudiced by such failure to give or delay in
giving notice. Such notice shall describe the Third Party Claim in
reasonable detail and, if ascertainable, shall indicate the
16
amount (estimated if necessary) of the Loss that has been or may be
sustained by such Indemnitee.
(ii) An Indemnifying Party may elect to defend or to seek to settle
or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days of
the receipt of notice from an Indemnitee in accordance with Section
7.03(a)(i) (or sooner, if the nature of such Third Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee of its
election whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any
reservations or exceptions. If the Indemnifying Party assumes the defense
of a Third Party Claim, the Indemnitee shall be kept reasonably informed
with respect to, and shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement
thereof, but the fees and expenses of such separate counsel shall be the
expense of such Indemnitee unless (x) the Indemnifying Party agrees in
advance to pay such fees and expenses or (y) the Indemnitee shall have been
advised by its counsel that there may be one or more legal defenses
available to it which are different from or additional to those available
to the Indemnifying Party, in which case the fees and expenses of such
separate counsel shall be borne by the Indemnifying Party. If an
Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as
provided in this Section 7.03(a)(ii), such Indemnitee may defend or seek to
compromise or settle such Third Party Claim at the expense of the
Indemnifying Party. Neither an Indemnifying Party nor an Indemnitee shall
consent to entry of any judgment or enter into any settlement of any Third
Party Claim which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnitee, in the case of a
consent or settlement by an Indemnifying Party, or the Indemnifying Party,
in the case of a consent or settlement by the Indemnitee, of a written
release from all liability in respect of such Third Party Claim.
(iii) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the related Indemnitee shall
make available to such Indemnifying Party (in a manner that will not
unreasonably interfere with the conduct of the Indemnitee's business) any
personnel or any books, records or other documents within its control or
which it otherwise has the ability to make available that are necessary or
appropriate for such defense, settlement or compromise, and shall otherwise
cooperate (in a manner that will not unreasonably interfere with the
conduct of the Indemnitee's business) in the defense, settlement or
compromise of such Third Party Claim.
(iv) Notwithstanding anything in this Section 7.03(a) to the
contrary, (A) neither an Indemnifying Party nor an Indemnitee shall,
without the written consent of the other party, settle or compromise or
consent to the entry of any judgment with respect to any Action or Third
Party Claim if the effect thereof is to admit any criminal liability by, or
to permit any injunctive relief or other order providing non-monetary
relief to be entered against, the other party and (B) neither an
Indemnifying Party nor an Indemnitee may settle
17
or compromise any claim without the consent of the other (which consent
shall not be unreasonably withheld). Subject to clause (A) of this
paragraph (iv), if an Indemnifying Party notifies the related Indemnitee in
writing of such Indemnifying Party's desire to settle or compromise a Third
Party Claim on the basis set forth in such notice (provided that such
settlement or compromise includes as an unconditional term thereof the
giving by the claimant or plaintiff of a written release of the Indemnitee
from all liability in respect thereof) and the Indemnitee shall notify the
Indemnifying Party in writing that such Indemnitee declines to accept any
such settlement or compromise, such Indemnitee may continue to contest such
Third Party Claim, free of any participation by such Indemnifying Party, at
such Indemnitee's sole expense. In such event, the obligation of such
Indemnifying Party to such Indemnitee with respect to such Third Party
Claim shall be equal to (1) the costs and expenses of such Indemnitee prior
to the date such Indemnifying Party notifies such Indemnitee of the offer
to settle or compromise (to the extent such costs and expenses are
otherwise indemnifiable hereunder) plus (2) the lesser of (x) the amount of
any offer of settlement or compromise which such Indemnitee declined to
accept and (y) the actual out-of-pocket amount such Indemnitee is obligated
to pay subsequent to such date as a result of such Indemnitee's continuing
to contest such Third Party Claim.
(v) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any
right or claim relating to such Third Party Claim against any claimant or
plaintiff asserting such Third Party Claim or against any other Person.
Such Indemnitee shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such Indemnifying Party,
in prosecuting any subrogated right or claim.
(b) Other Procedures for Indemnification.
------------------------------------
(i) Any claim on account of a Loss which does not result from a
Third Party Claim shall be asserted by written notice given by the
Indemnitee to the related Indemnifying Party, in no event later than the
second anniversary of the Closing Date. Such Indemnifying Party shall have
a period of 30 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such 30
day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 30 day period or rejects such claim in whole or in
part, such Indemnitee shall be free to pursue such remedies as may be
available to such party under applicable law.
(ii) If the amount of any Liability shall, at any time subsequent to
the payment required by this Agreement, be reduced by recovery, settlement
or otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
18
SECTION 7.04 Remedies Cumulative. Subject to the limitations set forth
-------------------
in Section 7.04 hereof, the remedies provided in this Article VII shall be
cumulative, and the remedies provided in this Article VII shall not preclude
assertion by an Indemnitee of any other rights or the seeking of any and all
other remedies against any Indemnifying Party.
ARTICLE VIII
POST-CLOSING COVENANTS
SECTION 8.01 Ownership Attribution. Emmis and Liberty intend that the
---------------------
ownership of the Purchased Shares by Liberty or any FCC Affiliate (as defined
below) shall not cause (i) the direct or indirect ownership, now or in the
future, by Liberty or an FCC Affiliate of any broadcast station, newspaper,
cable television system or multipoint distribution system (each, a "Media
Property") to be attributed to Emmis under applicable rules (the "FCC
Attribution Rules") of the Federal Communications Commission (the "FCC"); or
(ii) the direct or indirect ownership, now or in the future, by Emmis or an FCC
Affiliate of any Media Property to be attributed to Liberty under the FCC
Attribution Rules, if in either case such attribution of ownership would result
in the violation of any applicable multiple ownership or cross-ownership rules
of the FCC (the "FCC Ownership Rules"). If at any time the ownership by Liberty
or an FCC Affiliate of Purchased Shares causes attribution to Emmis or to
Liberty as set forth in (i) or (ii), respectively ("Ownership Attribution"),
that would result in a violation of any applicable FCC Ownership Rule, then:
(a) Liberty shall, and shall cause each FCC Affiliate to, promptly execute
and deliver a proxy to a designee selected by Liberty entitling such designee to
exercise the voting power of the Purchased Shares for the election of directors
of Emmis. Each proxy shall pertain to such percentage of the Purchased Shares
and otherwise be in form and substance sufficient to eliminate such Ownership
Attribution to the extent a proxy is then acceptable to the FCC for such
purpose. Each such proxy granted by Liberty or an FCC Affiliate shall remain in
effect until (i) ownership of the Purchased Shares subject to the proxy is
transferred to a person or entity other than Liberty or an FCC Affiliate; or
(ii) such time as the grantor of the proxy may vote its Purchased Shares without
resulting in the violation of any FCC Ownership Rule.
(b) If the granting of a proxy as contemplated by foregoing Subsection (a)
is not then acceptable to the FCC as a means to eliminate such Ownership
Attribution, Liberty agrees, and shall cause each FCC Affiliate that holds any
Purchased Shares to agree, to exchange all or such portion of the Purchased
Shares as required by the FCC to eliminate such Ownership Attribution for an
equal number of duly authorized, validly issued, fully paid and non-assessable
shares of non-voting common stock of Emmis having the same rights and privileges
as the Purchased Shares other than the right to vote except as required by
applicable law. Liberty, at its option, may elect for any reason to exchange
all or any portion of the Purchased Shares for an equal number of duly
authorized, validly issued, fully paid and non-assessable shares of such non-
19
voting common stock of Emmis at any time after Emmis' Articles of Incorporation
have been amended to create such non-voting common stock, which amendment Emmis
shall use its reasonable efforts to effect as soon as practicable. Each such
share of non-voting common stock shall be exchangeable into one share of Class A
Common Stock (i) upon the transfer of such share of non-voting common stock to a
person or entity other than Liberty or an FCC Affiliate; or (ii) at such time as
the holder of such share could vote its Purchased Shares without resulting in
the violation of any FCC Ownership Rule.
(c) In the event that the actions contemplated by foregoing Subsections (a)
and (b) are not acceptable to the FCC as a means to eliminate such Ownership
Attribution, Emmis and Liberty agree, and Liberty shall cause each of its FCC
Affiliates that own any of the Purchased Shares to agree, to promptly take such
other action as reasonably necessary and appropriate to eliminate such Ownership
Attribution in a manner acceptable to the FCC.
The term "FCC Affiliate" shall mean, when used with respect to Liberty or
Emmis, respectively, any person or entity whose ownership of any Media Property
would be attributable to Liberty or Emmis, respectively, under the FCC
Attribution Rules, or any person or entity that is an affiliate of Liberty or
Emmis, respectively.
Emmis and Liberty intend that, as between themselves, neither Emmis,
Liberty nor any of their respective FCC Affiliates shall be restricted or
prohibited from acquiring, owning or operating any Media Property in any market.
Emmis and Liberty, however, recognize that ownership by Emmis, Liberty or their
respective FCC Affiliates of Media Properties in the same market could result in
the violation of the FCC Ownership Rules by reason of Ownership Attribution.
Emmis and Liberty agree, as between themselves and on behalf of their respective
FCC Affiliates, that the sole action that any of them will be required to take
to avoid such a violation shall be compliance by Liberty and its FCC Affiliates
with the terms of this Section 8.01. Without limiting the generality of the
foregoing, in the event that Emmis in good faith gives written notice to Liberty
that Emmis intends to acquire a Media Property in a market which, by reason of
Ownership Attribution, would result in the violation of any FCC Ownership Rule,
Liberty shall, and shall cause each FCC Affiliate to, promptly take such action
as provided in foregoing subsections (a), (b) or (c) to prospectively prevent
such violation by eliminating such Ownership Attribution as soon as practicable
to permit Emmis to consummate the intended acquisition without unreasonable
delay by reason of such prospective violation.
SECTION 8.02 Lockup. Liberty covenants and agrees that Liberty shall not,
------
and shall cause each of its affiliates (including, but not limited to,
controlled Subsidiaries) not to, sell or otherwise transfer any of the Purchased
Shares for a period of twelve (12) months commencing on the Closing Date;
provided that (i) Liberty may transfer all or any portion of the Purchased
Shares to one or more controlled Subsidiaries of Liberty, (ii) Liberty may
transfer up to one-third of the Purchased Shares to one or more affiliates of
Liberty that are not controlled Subsidiaries, and (iii) Liberty, any controlled
Subsidiary and any affiliate of Liberty holding Purchased Shares may pledge any
Purchased Shares to secure bona fide indebtedness owed to an unrelated party or
20
in support of hedging transactions, puts, calls, exchangeable securities,
collars and derivative transactions.
SECTION 8.03 Preemptive Rights. (a) If at any time that Liberty and its
-----------------
Affiliates own at least One Million Four Hundred Thousand (1,400,000) of the
Purchased Shares (as adjusted from time to time to account for any stock
dividend, stock split or reverse stock split) Emmis issues any New Securities
except as provided in Subsection (c) below, Liberty and any Permitted Assignee
shall each have the right, but not the obligation, to purchase such New
Securities up to an amount sufficient to permit it to maintain its percentage
common equity interest in Emmis (based on the Number of Common Shares
Outstanding existing immediately prior to the issuance of the New Securities).
The "Number of Common Shares Outstanding" as of any time means the sum of (i)
the number of shares of Emmis common stock which then are actually issued and
outstanding, plus (ii) the total number of additional shares of common stock
which would then be issued and outstanding if it were assumed that all
outstanding Qualifying Rights, if any, were then duly exercised in full (whether
or not then exercisable). If Emmis desires to issue New Securities, it will
first give written notice (an "Issuance Notice") thereof to Liberty and each
Permitted Assignee stating the number of New Securities proposed to be issued,
the total consideration to be received by Emmis upon sale of the New Securities
and any other material terms of the transaction. Within three (3) days after the
receipt of such notice, Liberty and each Permitted Assignee may exercise its
rights under this Section 8.03 by giving written notice to that effect to Emmis.
Failure to give such notice within that three (3) days period will constitute a
waiver of the rights granted by this Section 8.03 as to the particular issuance
of New Securities specified in the Issuance Notice.
(b) The per share purchase price to be paid upon exercise of the rights
granted under this Section 8.03 will be equal to the lowest per share
consideration at which the New Securities are offered or proposed to be offered
by Emmis to any purchasers of New Securities before any underwriter's discount.
The consideration for which New Securities are offered or proposed to be offered
will be determined as follows: (i) in case of the proposed issuance of New
Securities for cash, the consideration to be received by Emmis will be the
amount of cash for which the New Securities are proposed to be issued and (ii)
in case of the proposed issuance of New Securities in whole or in part for
consideration other than cash, the value of the consideration to be received by
Emmis other than cash will be the Fair Market Value of that consideration.
(c) The provisions of this Section 8.01 will not apply to shares of common
stock of Emmis, or rights to purchase shares of common stock of Emmis, issued
pursuant to any employee stock option, equity incentive, profit-sharing or other
employee benefit plan approved by the Board of Directors of Emmis.
(d) As used in this Section 8.03, the term
21
(i) "New Securities" means any shares of common stock of Emmis or
any rights to subscribe for, purchase or otherwise acquire any share or shares
of common stock of Emmis;
(ii) "Qualifying Rights" means, as of any time, all outstanding
rights to subscribe for, purchase or otherwise acquire any share or shares of
common stock of Emmis which, by their terms, are exercisable for shares of
common stock of Emmis only upon payment, conversion, surrender, exchange or
delivery by the holder of additional consideration in cash or property in an
amount or having a Fair Market Value per share of common stock of Emmis which,
as of such time, is equal to or less than the Fair Market Value per share of the
common stock of Emmis as of such time;
(iii) "Fair Market Value" means, as to any securities or other assets
or property, the price at which a willing seller would sell and a willing buyer
would buy such securities, assets or property having full knowledge of the
facts, in an arm's-length transaction without time constraints, and without
being under any compulsion to buy or sell.
(iv) "Permitted Assignee" means (A) any controlled Subsidiary of
Liberty to which Liberty transfers Purchased Shares and (B) any affiliate of
Liberty to which Liberty transfers Purchased Shares except that in the case of
clause (B), the rights granted under this Section 8.01 shall not apply in
respect of any Purchased Shares held by any such affiliate which are in excess
of one-third of the total number of Purchased Shares issued under this Agreement
(as adjusted to take into account stock splits, stock dividends,
reclassifications and similar transactions).
SECTION 8.04 Urban Stations. So long as Liberty and its affiliates retain
--------------
in the aggregate ownership of at least One Million Four Hundred Thousand
(1,400,000) of the Purchased Shares (as adjusted from time to time to account
for any stock dividend, stock split or reverse stock split), Emmis shall not,
without Liberty's prior written consent, directly or indirectly acquire an
interest or invest in any joint venture, or form any joint venture, with any
radio broadcast company that derives more than seventy percent (70%) of its
broadcast cash flow or fifty percent (50%) of its revenues from urban format
radio stations. Emmis, however, shall in no manner be restricted from acquiring
any urban format radio station or from converting any radio station owned by
Emmis to an urban format.
SECTION 8.05 Strategic Alliance. Emmis and Liberty and will work together
------------------
in good faith to explore opportunities for a strategic alliance which would
benefit both Emmis or its Affiliates and Liberty or its Affiliates.
SECTION 8.06 Potential Future Venture.
------------------------
(a) In the event Liberty or any of its Affiliates determines to engage in
the radio broadcast business, Liberty or its affiliate may, but shall not be
obligated to, form a new entity
22
("Radio Entity") for the purpose of acquiring radio broadcast properties with
urban formats in major United States markets. If requested by Liberty, Emmis
agrees to make equity ownership investments in the Radio Entity, provided that
(i) the Radio Entity shall not own or acquire any radio station in Los Angeles,
(ii) Emmis' aggregate investment in Radio Entity shall at no time exceed ten
percent (10%) of the total cash capital contributions by all owners of the Radio
Entity, (iii) the aggregate amount of all such investments by Emmis shall not
exceed Fifty Million Dollars ($50,000,000), (iv) the business of the Radio
Entity shall be limited to the acquisition, ownership and operation of radio
stations with urban formats in major United States markets, and Emmis shall not
be obligated to make a particular equity investment in the Radio Entity unless
such investment is solely used to fund, contemporaneously with such investment,
ten percent (10%) of the purchase price of one or more such radio stations
specified by Liberty in its investment request, and (v) Emmis shall not be
required to make any investment in the Radio Entity if the investment would
result in Emmis having an attributable ownership interest, within the meaning of
the FCC Attribution Rules, in any broadcast license held by the Radio Entity.
(b) No owner of an interest in Radio Entity shall receive any ownership
interest in Radio Entity in exchange for any services provided or to be provided
as a promoter or otherwise, and the economic rights and benefits of Emmis'
investment in Radio Entity shall be in proportion to the total cash investment
made by Emmis in Radio Entity compared to the total cash investments made by all
owners in Radio Entity. All transactions between Radio Entity, on the one hand,
and any of its owners or their respective Affiliates, on the other hand, shall
be on an arms-length basis, and Radio Entity shall be structured in a manner
that will provide each owner with reasonable liquidity opportunities. If Emmis
is an investor in the Radio Entity at the time that Radio Entity acquires any
radio station in the New York or Chicago market, Liberty shall request that
Emmis invest, and Emmis shall be entitled to invest, in Radio Entity in
connection with such acquisition in accordance with clauses (ii) through (v) of
foregoing Subsection (a).
(c) Except as contemplated by this Section, Emmis shall not be entitled
to participate or otherwise acquire any interest in Radio Entity. Regardless of
whether Emmis invests in Radio Entity, Emmis shall in no event be restricted in
any manner from owning, operating or acquiring any type of radio station in any
market, including, but not limited to, a radio station that competes with Radio
Entity in any market.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Further Assurances. From and after the Closing Date, each of
------------------
Liberty and Emmis shall, at any time and from time to time, make, execute and
deliver, or causes to be made, executed and delivered, such instruments,
agreements, consents and assurances and take or cause to be taken all such
actions as may reasonably be requested by the other party hereto for the
effectual consummation, confirmation and particularization of this Agreement and
the transactions contemplated hereby.
23
SECTION 9.02 Expenses. Except as otherwise provided herein, all costs
--------
and expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses, whether or not the Closing shall occur.
SECTION 9.03 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given on (i) the day on which
delivered personally or by telecopy (with prompt confirmation by mail) during a
business day to the appropriate location listed as the address below, (ii) three
business days after the posting thereof by United States registered or certified
first class mail, return receipt requested, with postage and fees prepaid or
(iii) one business day after deposit thereof for overnight delivery. Such
notices, requests, demands, waivers or other communications shall be addressed
as follows:
(a) if to Liberty, to:
Liberty Media Corporation
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxx X. Xxxxxxx, Esq.
Xxxxx & Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
24
(a) if to Emmis, to:
Emmis Communications Corporation
One Emmis Plaza
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: J. Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Bose XxXxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing to the other party. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of delivery or
on the third business day after the mailing thereof, except that any notice of a
change of address shall be effective only upon actual receipt thereof.
SECTION 9.04 Entire Agreement. This Agreement (including the Exhibits
----------------
and other documents referred to herein) constitutes the entire agreement between
the parties and, except as expressly provided herein, supersedes all prior
agreements and understandings, oral and written, between the parties with
respect to the subject matter hereof.
SECTION 9.05 Assignment; Binding Effect; Benefit. Neither this
-----------------------------------
Agreement nor any of the rights, benefits or obligations hereunder may be
assigned by any party or Subsidiary or affiliate of any party without the prior
written consent of the other party; provided, however, that Liberty may, without
-------- -------
such consent, assign its rights under this Agreement to any controlled
Subsidiary or affiliate of Liberty in respect of any Purchased Shares that
Liberty is permitted under any other section of this Agreement to transfer to
such entity. Such assignment shall not relieve Liberty of its obligations
hereunder in the event such assignee fails to perform such obligations. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties or their respective successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement, other than rights conferred upon Indemnified Parties under Article
VII.
25
SECTION 9.06 Amendment. This Agreement may not be amended except by an
---------
instrument in writing signed on behalf of each of the parties.
SECTION 9.07 Extension; Waiver. Liberty or Emmis may, to the extent
-----------------
legally allowed, (i) extend the time specified herein for the performance of any
of the obligations of the other party, (ii) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, (iii) waive compliance by the other party
with any of the agreements or covenants of such other party contained herein or
(iv) waive any condition to such waiving party's obligation to consummate the
transactions contemplated hereby or to any of such waiving party's other
obligations hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. Any such extension or waiver by any party shall
be binding on such party but not on the other party entitled to the benefits of
the provision of this Agreement affected unless such other party also has agreed
to such extension or waiver. No such waiver shall constitute a waiver of, or
estoppel with respect to, any subsequent or other breach or failure to comply
strictly with the provisions of this Agreement. The failure of any party to
insist on strict compliance with this Agreement or to assert any of its rights
or remedies hereunder or with respect hereto shall not constitute a waiver of
such rights or remedies. Whenever this Agreement requires or permits consent or
approval by any party, such consent or approval shall be effective if given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 8.07.
SECTION 9.08 Interpretation. When a reference is made in this Agreement
--------------
to Sections, Articles or Exhibits, such reference shall be to a Section, Article
or Exhibit (as the case may be) of this Agreement unless otherwise indicated.
When a reference is made in this Agreement to a "party" or "parties", such
reference shall be to a party or parties to this Agreement unless otherwise
indicated. The table of contents and 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 any gender herein shall be deemed to
be or include the other genders and the use of the singular herein shall be
deemed to be or include the plural (and vice versa), wherever appropriate. The
use of the words "hereof", "herein", "hereunder" and words of similar import
shall refer to this entire Agreement, and not to any particular article,
section, subsection, clause, paragraph or other subdivision of this Agreement,
unless the context clearly indicates otherwise.
SECTION 9.09 Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
SECTION 9.10 Applicable Law. This Agreement and the legal relations
--------------
between the parties shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws rules
thereof.
26
SECTION 9.11 Definition of "Subsidiary". As used in this Agreement, a
--------------------------
"Subsidiary" of any party means any corporation or other organization, whether
incorporated or unincorporated, of which (a), in the case of a corporation,
securities or other interests having by their terms ordinary voting power to
elect at least one-half of the board of directors or others performing similar
functions with respect to such corporation are directly or indirectly owned or
controlled by such party, by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries or (b) in the case of any organization
or entity other than a corporation, such party, one or more of its Subsidiaries,
or such party and one or more of its Subsidiaries (x) owns at least one-half of
the equity interests thereof or (y) has the power to elect or direct the
election of at least one-half of the members of the governing body thereof or
otherwise has "control" (within the meaning of Rule 12b-2 under the Securities
Exchange Act of 1934) over such organization or entity.
27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
EMMIS COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman, President and
Chief Executive Officer
28
