AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXXXXXX ENTERTAINMENT COMPANY,
XXXXXXX TELEVISION COMPANY,
XXXXXXX COMMUNICATIONS, INC.,
CBS CORPORATION,
CBS DALLAS VENTURES, INC.
AND
CBS DALLAS MEDIA, INC.
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TABLE OF CONTENTS
SECTION 1. BASIC PROVISIONS............................................2
SECTION 1.1. MERGERS................................................2
SECTION 1.2. CLOSING................................................2
SECTION 1.3. EFFECTIVE TIME.........................................2
SECTION 1.4. EFFECTS OF THE MERGERS.................................3
SECTION 1.5. ARTICLES AND CERTIFICATE OF INCORPORATION..............3
SECTION 1.6. BYLAWS.................................................3
SECTION 1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATIONS.......3
SECTION 1.8. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES.......4
SECTION 1.9. ISSUANCE OF CBS COMMON STOCK...........................4
SECTION 1.10. COMMERCIAL SPOTS......................................4
SECTION 1.11. TAX MATTERS AGREEMENT.................................5
SECTION 1.12. PRORATION OF CAPITAL EXPENDITURES.....................5
SECTION 1.13. PRORATION OF CURRENT ASSETS AND LIABILITIES...........6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF XXXXXXX...................9
SECTION 2.1. ORGANIZATION; QUALIFICATION; POWER.....................9
SECTION 2.2. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS...........9
SECTION 2.3. CAPITALIZATION; OWNERSHIP.............................11
SECTION 2.4. FINANCIAL STATEMENTS..................................11
SECTION 2.5. ABSENCE OF MATERIAL ADVERSE EFFECT....................12
SECTION 2.6. TAXES.................................................12
SECTION 2.7. PERMITS...............................................13
SECTION 2.8. REAL PROPERTY.........................................14
SECTION 2.9. ASSETS OTHER THAN REAL PROPERTY.......................15
SECTION 2.10. ASSETS AND LIABILITIES OF THE LIMITED PARTNERSHIP....16
SECTION 2.11. EMPLOYEES............................................16
SECTION 2.12. EMPLOYMENT AND SIMILAR AGREEMENTS....................16
SECTION 2.13. ERISA................................................16
SECTION 2.14. LABOR MATTERS........................................17
SECTION 2.15. INTELLECTUAL PROPERTY................................17
SECTION 2.16. CONTRACTS............................................18
SECTION 2.17. STATUS OF CONTRACTS..................................21
SECTION 2.18. LITIGATION...........................................21
SECTION 2.19. COMPLIANCE WITH APPLICABLE LAWS......................21
SECTION 2.20. ENVIRONMENTAL MATTERS................................21
SECTION 2.21. FCC MATTERS..........................................22
SECTION 2.22. NO FINDER............................................23
SECTION 2.23. INSURANCE............................................23
SECTION 2.24. YEAR 2000............................................23
SECTION 2.25. TRANSACTIONS WITH AFFILIATES.........................23
SECTION 2.26. CABLE MATTERS........................................23
SECTION 2.27. DIGITAL TELEVISION...................................24
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CBS......................24
SECTION 3.1. ORGANIZATION; QUALIFICATION; POWER....................25
SECTION 3.2. CBS COMMON STOCK TO BE ISSUED IN THIS TRANSACTION.....25
SECTION 3.3. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS..........25
SECTION 3.4. SEC DOCUMENTS; UNDISCLOSED LIABILITIES................27
SECTION 3.5. NO FINDER.............................................27
SECTION 3.6. STATUS OF CBS AND THE CBS SUBSIDIARIES................27
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS..................28
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SECTION 3.8. LITIGATION............................................28
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAWS.......................28
SECTION 3.10. INTERIM OPERATIONS OF THE CBS SUBSIDIARIES...........28
SECTION 3.11. TAXES................................................29
SECTION 4. ACTIONS PRIOR TO THE CLOSING DATE..........................29
SECTION 4.1. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES...29
SECTION 4.2. FCC CONSENT; IMPROVEMENTS ACT APPROVAL................29
SECTION 4.3. OPERATIONS PRIOR TO THE CLOSING DATE..................30
SECTION 4.4. COLLECTION OF ACCOUNTS RECEIVABLE.....................34
SECTION 4.5. PUBLIC ANNOUNCEMENT...................................35
SECTION 4.6. COMPLIANCE WITH LAWS..................................35
SECTION 4.7. ADVICE OF CHANGES.....................................35
SECTION 4.8. NO SOLICITATION.......................................36
SECTION 4.9. OTHER CONSENTS........................................36
SECTION 4.10. NOTICE OF PROCEEDINGS................................36
SECTION 4.11. TRADE AGREEMENTS.....................................36
SECTION 4.12. CONFIDENTIALITY AGREEMENTS...........................37
SECTION 5. ADDITIONAL AGREEMENTS......................................37
SECTION 5.1. SALES, USE AND TRANSFER TAXES, TITLE INSURANCE........37
SECTION 5.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS.....................37
SECTION 5.3. XXXXXXX SUBSIDIARIES AND THE LIMITED PARTNERSHIP
TO CONTROL OPERATIONS PRIOR TO CLOSING DATE...39
SECTION 5.4. COPYRIGHT ROYALTY TRIBUNAL PAYMENTS...................39
SECTION 5.5. ACCESS TO INFORMATION.................................39
SECTION 5.6. REASONABLE BEST EFFORTS...............................40
SECTION 5.7. USE OF XXXXXXX NAME...................................40
SECTION 5.8. ENVIRONMENTAL STUDY...................................41
SECTION 5.9. AGREEMENT NOT TO COMPETE..............................41
SECTION 5.10. WAIVER OF CERTAIN CLAIMS.............................42
SECTION 5.11. RECORDS..............................................42
SECTION 5.12. POST CLOSING MATTERS.................................42
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CBS.................43
SECTION 6.1. CORPORATE ACTION......................................43
SECTION 6.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION...........43
SECTION 6.3. FCC CONSENT...........................................44
SECTION 6.4. REPRESENTATIONS AND WARRANTIES........................44
SECTION 6.5. NYSE LISTING..........................................44
SECTION 6.6. BREACH OF COVENANT BY XXXXXXX.........................44
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX.............44
SECTION 7.1. CORPORATE ACTION......................................44
SECTION 7.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION...........45
SECTION 7.3. FCC CONSENT...........................................45
SECTION 7.4. REGISTRATION OF SHARES................................45
SECTION 7.5. NYSE LISTING..........................................45
SECTION 7.6. TAX MATTERS AGREEMENT BRING DOWN CERTIFICATE..........45
SECTION 7.7. NO MATERIAL ADVERSE CHANGE............................45
SECTION 7.8. TAX OPINION...........................................45
SECTION 7.9. BREACH OF COVENANT BY CBS.............................46
SECTION 8. INDEMNIFICATION............................................46
SECTION 8.1. INDEMNIFICATION BY XXXXXXX............................46
SECTION 8.2. INDEMNIFICATION BY CBS................................47
SECTION 8.3. TERMINATION OF INDEMNIFICATION........................48
SECTION 8.4. PROCEDURES............................................48
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SECTION 8.5. CERTAIN LIMITATIONS...................................50
SECTION 9. TERMINATION................................................50
SECTION 9.1. TERMINATION...........................................50
SECTION 9.2. SPECIFIC PERFORMANCE..................................51
SECTION 9.3. EFFECT OF TERMINATION.................................51
SECTION 10. GENERAL PROVISIONS........................................51
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS..........................................51
SECTION 10.2. CONFIDENTIAL NATURE OF INFORMATION...................51
SECTION 10.3. GOVERNING LAW........................................52
SECTION 10.4. NOTICES..............................................52
SECTION 10.5. SUCCESSOR AND ASSIGNS................................53
SECTION 10.6. ACCESS TO RECORDS AFTER CLOSING......................54
SECTION 10.7. ENTIRE AGREEMENT; AMENDMENTS.........................54
SECTION 10.8. INTERPRETATION.......................................54
SECTION 10.9. WAIVERS..............................................54
SECTION 10.10. EXPENSES............................................55
SECTION 10.11. PARTIAL INVALIDITY..................................55
SECTION 10.12. EXECUTION IN COUNTERPARTS...........................55
SECTION 10.13. DEFINITIONS.........................................55
SECTION 10.14. CONTROLLING PROVISIONS..............................61
SECTION 10.15. RISK OF LOSS........................................61
SECTION 10.16. RESOLUTION OF DISPUTES OVER SATISFACTION OF
CONDITIONS..........................................63
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 9, 1999 (the
"Agreement"), is made by and among XXXXXXX ENTERTAINMENT COMPANY, a Delaware
corporation ("Xxxxxxx"), XXXXXXX TELEVISION COMPANY, a Delaware corporation
and a direct wholly owned subsidiary of Xxxxxxx ("GTC"), XXXXXXX
COMMUNICATIONS, INC., a Texas corporation and a direct wholly owned subsidiary
of Xxxxxxx ("GCI") (GTC and GCI being sometimes referred to herein as the
"Xxxxxxx Subsidiaries"), CBS CORPORATION, a Pennsylvania corporation ("CBS"),
CBS DALLAS VENTURES, INC., a Delaware corporation and a direct wholly owned
subsidiary of CBS ("CBS Dallas Ventures"), and CBS DALLAS MEDIA, INC., a
Delaware corporation and a direct wholly owned subsidiary of CBS ("CBS Dallas
Media") (CBS Dallas Ventures and CBS Dallas Media being sometimes referred to
herein as the "CBS Subsidiaries") (GTC, GCI, CBS Dallas Ventures and CBS
Dallas Media being sometimes referred to herein as the "Constituent
Corporations").
WITNESSETH:
WHEREAS, XXXXXXX BROADCASTING COMPANY, L.P., a Texas limited partnership
formerly named New Xxxxxxx Broadcasting, L.P. (the "Limited Partnership"), is
solely engaged in the business of owning and operating television broadcast
station KTVT-TV, Fort Worth/Dallas, Texas (the "Station");
WHEREAS, GCI is the sole general partner of the Limited Partnership, and
GTC is the sole limited partner of the Limited Partnership;
WHEREAS, the respective Boards of Directors of GCI and CBS Dallas
Ventures, and Xxxxxxx and CBS as the respective sole stockholders of GCI and
CBS Dallas Ventures, have approved the merger (the "GCI Merger") of CBS Dallas
Ventures with and into GCI upon the terms and subject to the conditions set
forth in this Agreement, and such Boards of Directors have determined that the
GCI Merger is advisable and in the best interests of the respective
stockholders of GCI and CBS Dallas Ventures;
WHEREAS, the respective Boards of Directors of GTC and CBS Dallas Media,
and Xxxxxxx and CBS as the respective sole stockholders of GTC and CBS Dallas
Media, have approved the merger (the "GTC Merger" and, together with the GCI
Merger, the "Mergers") of CBS Dallas Media with and into GTC upon the terms
and subject to the conditions set forth in this Agreement, and such Boards of
Directors have determined that the GTC Merger is advisable and in the best
interests of the respective stockholders of GTC and CBS Dallas Media;
WHEREAS, under the terms of this Agreement, each outstanding share of
common stock, no par value, of GCI (the "GCI Stock") issued and outstanding
immediately prior to the Effective Time, and each outstanding share of common
stock, par value $.001 per share, of GTC (the "GTC Stock") issued and
outstanding immediately prior to the Effective Time, shall be converted into
the right to receive common stock, par value $1.00 per share, of CBS (the "CBS
Common Stock"); and
WHEREAS, the parties intend that for federal income tax purposes each of
the Mergers qualifies as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code");
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NOW, THEREFORE, in consideration of the representations, warranties,
covenants, conditions and agreements hereinafter set forth, it is hereby
agreed among the parties as follows:
SECTION 1. BASIC PROVISIONS
SECTION 1.1. MERGERS
Upon the terms and subject to the conditions of this Agreement, and in
accordance with the Texas Business Corporation Act (the "TBCA") and the
Delaware General Corporation Law (the "DGCL"), at the Effective Time, CBS
Dallas Ventures shall be merged with and into GCI and the separate corporate
existence of CBS Dallas Ventures shall cease and GCI shall continue as the
"surviving corporation". Upon the terms and subject to the conditions of this
Agreement, and in accordance with the DGCL, at the Effective Time, CBS Dallas
Media shall be merged with and into GTC and the separate corporate existence
of CBS Dallas Media shall cease and GTC shall continue as the "surviving
corporation".
SECTION 1.2. CLOSING
Unless this Agreement shall have been terminated and the transactions
herein contemplated shall have been abandoned pursuant to Section 9, and
subject to any extension permitted by Section 10.15 or 10.16, the consummation
of the Mergers will take place on the third business day after the
satisfaction or (subject to applicable law) waiver of the conditions set forth
in Sections 6 and 7 (excluding conditions that, by their terms, cannot be
satisfied until the Closing Date (as defined below)). The Closing shall be at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, New York, New York
(the "Closing"), unless another date, time or place is agreed to in writing by
Xxxxxxx and CBS. The date on which the Closing occurs shall be the "Closing
Date".
SECTION 1.3. EFFECTIVE TIME
As soon as practicable following the Closing, the parties shall (i) file
articles of merger (the "GCI Articles of Merger") with respect to the GCI
Merger in such form as is required by, and executed and verified in accordance
with, the relevant provisions of the TBCA to effectuate the GCI Merger, (ii)
obtain a certificate of merger from the Secretary of State of the State of
Texas to effectuate the GCI Merger, (iii) file a certificate of merger (the
"GCI Certificate of Merger") with respect to the GCI Merger in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL to effectuate the GCI Merger, (iv) file a certificate of merger (the "GTC
Certificate of Merger") with respect to the GTC Merger in such form as is
required by, and executed in accordance with, the relevant provisions of the
DGCL to effectuate the GTC Merger and (v) make all other filings or recordings
required under the laws of Delaware and Texas to effectuate the Mergers. The
GCI Articles of Merger, the GCI Certificate of Merger and the GTC Certificate
of Merger shall specify that the GCI Merger or the GTC Merger, as applicable,
shall become effective at 11:59 p.m. on the Closing Date, or at such
subsequent time as Xxxxxxx and CBS shall agree and as shall be specified in
the GCI Articles of Merger, the GCI Certificate of Merger and the GTC
Certificate of Merger (the date and time the respective Mergers become
effective being the "Effective Time").
SECTION 1.4. EFFECTS OF THE MERGERS
At and after the Effective Time, the Mergers will have the effects set
forth, in the case of the GCI Merger, in Article 5.06 of the TBCA and in
Section 259 of the DGCL, and in the case of the GTC Merger, in Section 259 of
the DGCL.
SECTION 1.5. ARTICLES AND CERTIFICATE OF INCORPORATION
In the case of the GCI Merger, the articles of incorporation of GCI, as
in effect immediately prior to the Effective Time, shall be amended at the
Effective time so that Article 1 of such articles of incorporation reads in
its entirety as follows: "The name of this Corporation is 'CBS Dallas
Ventures, Inc.'", and, as so amended, such articles of incorporation shall be
the articles of incorporation of the surviving corporation of the GCI Merger
until thereafter changed or amended as provided therein or by applicable law.
In the case of the GTC Merger, the certificate of incorporation of GTC,
as in effect immediately prior to the Effective Time, shall be amended at the
Effective Time so that Article First of such certificate of incorporation
reads in its entirety as follows: "The name of this Corporation is 'CBS Dallas
Media, Inc.'", and, as so amended, such certificate of incorporation shall be
the certificate of incorporation of the surviving corporation of the GTC
Merger until thereafter changed or amended as provided therein or by
applicable law.
SECTION 1.6. BYLAWS
The bylaws of GCI, as in effect immediately prior to the Effective Time,
shall be the bylaws of the surviving corporation of the GCI Merger at the
Effective Time, and the bylaws of GTC, as in effect immediately prior to the
Effective Time, shall be the bylaws of the surviving corporation of the GTC
Merger at the Effective Time, in each case until thereafter changed or amended
as provided therein or by applicable law.
SECTION 1.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATIONS
At the Effective Time, the officers and directors of CBS Dallas Ventures
shall become the officers and directors of the surviving corporation of the
GCI Merger, and the officers and directors of CBS Dallas Media shall become
the officers and directors of the surviving corporation of the GTC Merger,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified. Immediately prior to the Effective
Time, Xxxxxxx shall cause the then current officers and directors of GCI and
GTC to resign.
SECTION 1.8. EFFECT ON CAPITAL STOCK OF THE MERGING COMPANIES
As of the Effective Time, by virtue of the respective Mergers and without
any action on the part of any holder thereof: (i) each issued and outstanding
share of common stock, par value $1.00 per share, of CBS Dallas Ventures shall
be converted into and become one fully paid and nonassessable share of GCI
Stock; (ii) each issued and outstanding share of common stock, par value $1.00
per share, of CBS Dallas Media shall be converted into and become one fully
paid and nonassessable share of GTC Stock; and (iii) the aggregate of the
shares of GCI Stock and GTC Stock issued and outstanding immediately prior to
the Effective Time shall be converted into the right to receive the number of
duly authorized, validly issued, fully paid and non-assessable shares of CBS
Common Stock determined under Section 1.9 of this Agreement.
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SECTION 1.9. ISSUANCE OF CBS COMMON STOCK
As of the Effective Time, CBS shall issue and deliver to Xxxxxxx one or
more certificates registered in the name of Xxxxxxx evidencing in the
aggregate the number of shares (rounded to the nearest whole number) of CBS
Common Stock equal to the quotient of Four Hundred Eighty-five Million Dollars
($485,000,000) divided by the "Market Price". The "Market Price" means the
average of the daily closing prices per share of CBS Common Stock as reported
on the NYSE Composite Transactions Tape (as reported by the Wall Street
Journal or, if not reported thereby, by another authoritative source mutually
selected by Xxxxxxx and CBS) for the fifteen (15) consecutive full NYSE
trading days immediately preceding the third full NYSE trading day prior to
the date on which the Closing Date shall occur. Xxxxxxx and CBS agree to
allocate one percent (1%) and ninety-nine percent (99%) of the CBS Common
Stock received by Gaylord hereunder to the GCI Stock and the GTC Stock,
respectively.
SECTION 1.10. COMMERCIAL SPOTS
For a period of ten years following the Closing Date, CBS shall cause the
Station to provide commercial advertising spots (the "Spots") to Xxxxxxx, its
subsidiaries, and its Affiliates listed on Schedule 1.10 (to the extent such
parties remain Xxxxxxx Affiliates at the applicable time) for goods or
services of the type offered as of the date hereof (i) by Xxxxxxx and its
subsidiaries, and (ii) by Gaylord's Affiliates listed on Schedule 1.10 and as
set forth on Schedule 1.10. During the ten-year period, subject to CBS's
consent, such consent not to be unreasonably withheld, CBS shall also permit
the Spots to be used for future subsidiaries or Affiliates of Xxxxxxx and for
additional goods or services of Xxxxxxx or its current or future subsidiaries
or Affiliates. The Spots will be provided to Xxxxxxx on the following terms
and conditions:
(a) During the ten-year period, CBS shall cause the Station to grant
to Xxxxxxx an annual credit in a gross amount of $1 million, solely to be
applied toward the cost of the Spots.
(b) The cost for the Spots will be based upon schedules, which
schedules will include rates by program and by day-part no less favorable
than the average rates by program and by day- part negotiated by all
similarly significant cash-paying customers. It is the intention of the
parties that the Spots be placed on a substantially even basis throughout
the year, and that Xxxxxxx will request the placement of Spots
accordingly, and that CBS shall use all reasonable efforts to accommodate
such Xxxxxxx requests. The airing of the Spots will be subject to the
Station's normal sales practices including rates, prompt make-goods of
like value, and the normal level of preemptability for all similarly
significant cash-paying customers. Consistent with Station billing
practices, and in no event more than fifteen (15) days after the end of
the month in which any Spots air, CBS will cause the Station to provide
to Xxxxxxx (i) an invoice which will detail the Spots which aired during
the previous month, including the date, time and value assigned to each
Spot, and (ii) written confirmation of its compliance with this Agreement
on a monthly basis consistent with its standard reporting policies for
other commercial advertisers on the Station, which written confirmation
shall include actual exhibition time and rate charged.
(c) Notwithstanding any of the foregoing, CBS may take such action
with respect to the Spots as necessary to comply with the reasonable
access by federal candidates and equal time for all candidates provisions
of the Communications Act relating to political broadcasting as well as
the FCC's rules and policies, applicable laws and CBS's standards and
practices.
(d) Any unused portion of each annual credit shall expire at the end
of the relevant year and shall not be carried forward to any subsequent
year, unless such credit is not used due to (i) the preemption or
rejection of Spots contemplated by this Section 1.10 or (ii) any other
reason which is outside the control of Xxxxxxx. To the extent that any
credit exists after the end
5
of any annual period for the reasons set forth in clause (i) or (ii),
such credit shall be carried forward to the immediately succeeding annual
period; to the extent any such credits are not fully used at the end of
the ten (10) year period, Xxxxxxx shall be entitled to an additional
eighteen (18) month period during which it may use any such unused
credits, at the end of which any remaining credits will expire.
CBS and Xxxxxxx agree that the fair market value of the annual credits
provided in this Section 1.10 is six million dollars ($6,000,000), it being
understood that the determination of the fair market value as provided herein
shall not alter the obligation of CBS to provide an annual credit of one
million dollars ($1,000,000) for a period of ten (10) years.
SECTION 1.11. TAX MATTERS AGREEMENT
The parties hereto shall, simultaneously with the execution of this
Agreement, enter into that certain Tax Matters Agreement attached hereto as
Exhibit A.
SECTION 1.12. PRORATION OF CAPITAL EXPENDITURES
Xxxxxxx intends to make capital expenditures with respect to the Station,
in the ordinary course of business, on an as-needed basis in an amount not to
exceed $7,100,000 during the calendar year 1999. Xxxxxxx shall be responsible
for 1/365th of this amount per day from January 1, 1999 until the Closing. At
the Closing, to the extent Xxxxxxx has spent less than such pro rata amount,
Xxxxxxx shall deliver the difference in cash to CBS, and, to the extent
Xxxxxxx has spent more than such pro rata amount, CBS shall deliver the
difference in cash to Xxxxxxx; provided, however, that (i) during the period
prior to the Closing, Xxxxxxx agrees to consult with CBS and shall not make
any capital expenditures not otherwise necessary to the operation of the
Station in the ordinary course of business, (ii) to the extent Xxxxxxx and CBS
agree to a revised amount of capital expenditures for calendar year 1999, the
proration referred to herein shall be applied to such revised amount, and
(iii) in no event shall CBS be obligated to pay to Xxxxxxx more than $500,000
under the terms of this Section 1.12. If the Closing takes place after
December 31, 1999, an arrangement similar to that provided for in this Section
1.12 shall be agreed upon by the parties with respect to capital expenditures
in 2000.
SECTION 1.13. PRORATION OF CURRENT ASSETS AND LIABILITIES
(a) All current assets (excluding any assets to be transferred to
Xxxxxxx or any of its Affiliates pursuant to Section 4.3(b)) and all
current liabilities (including accounts payable, bonus or other incentive
payments payable, other payables, accrued liabilities for talent, accrued
salaries and wages, accrued employee benefits, accrued expenses and
accrued deferred income or compensation, but excluding any liabilities or
expenses relating to Taxes, which are governed by the Tax Matters
Agreement, and any liabilities assumed by Xxxxxxx pursuant to Section
4.3(b)) arising from the conduct of the business and operations of the
Station shall be prorated between Xxxxxxx and CBS as of the Effective
Time, taking into account the elapsed time or consumption of an asset
during the month in which the Closing occurs. Such current assets and
current liabilities relating to the period prior to such date shall be
for the account of Xxxxxxx and those relating to the period thereafter
shall be for the account of CBS, and shall be prorated accordingly.
(b) There shall be no proration of the payments due under the film
or programming license agreements other than for the calendar month in
which the Effective Time occurs, and
6
except that Xxxxxxx shall be responsible for any overdue amount under
such film or programming license agreements. Any such prorations shall be
based upon the due date for payments pursuant to the film and program
license agreements. For the purpose of determining the due date for
payments due under film or programming license agreements which are
silent as to the day of the month on which payment is due, such
agreements shall be deemed to provide that the payment is due on the date
payment is actually made during the month of Closing.
(c) The items included in the current assets and current liabilities
referred to above shall be the same items included in the line items
"Current assets" and "Current liabilities" on the balance sheet as of
February 28, 1999 included in the Financial Statements and such items
shall be calculated in accordance with GAAP except that accruals for
taxes and, subject to subparagraph (b) above, all film and programming
license agreements shall be excluded.
(d) At least five days prior to the Closing Date, Xxxxxxx shall
provide CBS with an estimated balance sheet as of the Effective Time
setting forth a good faith estimate of the pro rata adjustments of
current assets and current liabilities contemplated by Section 1.13(a)
(and all information reasonably necessary to determine the accuracy of
such estimate) on the basis of the then most recently available month-end
financial statements of the Station. Any payment required to be made by
either party pursuant to such preliminary estimate shall be made by the
appropriate party at the Closing in accordance therewith, absent manifest
error. CBS shall be required to pay the amount of any current assets
prorated to Xxxxxxx for which CBS will receive a corresponding benefit
after the Effective Time and which do not relate to the period prior to
the Effective Time. Xxxxxxx shall be required to pay the amount of any
current liabilities prorated to CBS for which Xxxxxxx received a
corresponding benefit prior to the Effective Time and which do not relate
to the period after the Effective Time.
(e) After the Effective Time, the Station shall continue with its
rights and obligations (including barter obligations) pursuant to the
License Agreement between the Station and Columbia Tristar Television
Division for Xxxxxx and Xxxxx dated July 2, 1998 and the License
Agreements with Paramount Pictures for Real TV for the 1998-1999 season
dated June 2, 1997 and for the 1999-2000 season dated June 29, 1998 (the
"Identified Agreements"); provided, however, that Xxxxxxx shall be
responsible solely for any cash payments due under the provisions of the
Identified Agreements as in effect at the Effective Time; provided,
further, that upon the expiration of each of the Identified Agreements,
CBS shall promptly account for and pay to Xxxxxxx one-half of gross
revenues net of agency commissions received by CBS with respect to each
Identified Agreement, it being understood that as part of the aforesaid
accounting, CBS shall promptly deliver written documentation confirming
the amount of gross revenues net of agency commissions received with
respect to each of the Identified Agreements. Under no circumstances will
the Station be required to exhibit the programs represented by the
Identified Agreements.
Within 60 days after the Closing Date, CBS shall prepare and deliver to
Xxxxxxx the definitive final balance sheet setting forth final allocations and
related purchase price adjustments for the Station (the "Settlement
Statement") as of the Effective Time. During the 30-day period following
Gaylord's receipt of the Settlement Statement, Xxxxxxx and its independent
auditors shall be permitted to review and make copies reasonably required of
(i) the working papers of CBS relating to the Settlement Statement and (ii)
any supporting schedules, analyses and other documentation relating to the
Settlement Statement. The Settlement Statement shall become final and binding
upon the parties on the thirtieth (30th) day following delivery thereof,
unless Xxxxxxx gives written notice of its disagreement with the Settlement
Statement ("Notice of Disagreement") to CBS prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature
7
of any disagreement so asserted. If a Notice of Disagreement is given to CBS
in the period specified, then the Settlement Statement (as revised in
accordance with clause (I) or (II) below) shall become final and binding upon
the parties on the earlier of (I) the date CBS and Xxxxxxx resolve in writing
any differences they have with respect to the matters specified in the Notice
of Disagreement or (II) the date any disputed matters are finally resolved in
writing by the Accounting Firm (as defined below). Within 10 business days
after the Settlement Statement becomes final and binding upon the parties,
payment of the difference must be made via wire transfer in immediately
available funds, together with interest thereon at the prime rate (as reported
by the Wall Street Journal or, if not reported thereby, by another
authoritative source) in effect as of the Effective Time, calculated on the
basis of the actual number of days elapsed over 365, from the Effective Time
to the date of actual payment, compounded annually.
During the 30-day period following the delivery of a Notice of
Disagreement that complies with the preceding paragraph, CBS and Xxxxxxx shall
seek in good faith to resolve in writing any differences that they may have
with respect to the matters specified in the Notice of Disagreement. During
such period, CBS and its independent auditors shall be permitted to review and
make copies reasonably required of (i) the working papers of Xxxxxxx relating
to the Notice of Disagreement and (ii) any supporting schedules, analyses and
documentation relating to the Notice of Disagreement. If, at the end of such
30-day period, CBS and Xxxxxxx have not so resolved such differences, CBS and
Xxxxxxx shall submit to an independent accounting firm (the "Accounting Firm")
for review and resolution any and all matters which remain in dispute and
which were properly included in the Notice of Disagreement. The Accounting
Firm shall be a mutually acceptable internationally recognized independent
public accounting firm agreed upon by Xxxxxxx and CBS in writing, which
Accounting Firm shall not have been the auditing firm representing CBS or
Xxxxxxx during the last two years. If Xxxxxxx and CBS do not agree on the
selection of an Accounting Firm within sixty (60) days of the Notice of
Disagreement, then the Washington, D.C. office of Ernst & Young shall be the
Accounting Firm. Within sixty (60) days after selection of the Accounting
Firm, Xxxxxxx and CBS shall submit their respective positions to the
Accounting Firm, in writing, together with any other materials relied upon in
support of their respective positions. CBS and Xxxxxxx shall use reasonable
efforts to cause the Accounting Firm to render a decision resolving the
matters in dispute within 30 days following the submission of such materials
to the Accounting Firm. CBS and Xxxxxxx agree that judgment may be entered
upon the determination of the Accounting Firm in any court having jurisdiction
over the party against which such determination is to be enforced. Except as
specified in the following sentence, the cost of any arbitration (including
the fees and expenses of the Accounting Firm) pursuant to this Section 1.13
shall be borne by CBS and Xxxxxxx in inverse proportion as they may prevail on
each matter resolved by the Accounting Firm, which proportionate allocations
shall also be determined by the Accounting Firm at the time the determination
of the Accounting Firm is rendered on the merits of the matters submitted. The
fees and expenses (if any) of CBS's independent auditors and attorneys
incurred in connection with the review of any Notice of Disagreement shall be
borne by CBS, and the fees and expenses (if any) of Gaylord's independent
auditors and attorneys incurred in connection with their review of the
Settlement Statement shall be borne by Xxxxxxx.
Any payments made pursuant to this Section 1.13 shall (i) in the case of
a payment to be made to Xxxxxxx, be treated as being made immediately before
the Effective Time by the Limited Partnership to GCI or GTC, as the case may
be, and then to Xxxxxxx, and (ii) in the case of a payment to be made by
Xxxxxxx, be treated as being made immediately before the Effective Time as a
capital contribution by Xxxxxxx to GCI or GTC, as the case may be, and then by
such entity to the Limited Partnership. None of Xxxxxxx or any of its
subsidiaries, or CBS or any of its subsidiaries, shall take any position
inconsistent with the treatment described in the immediately
8
preceding sentence before any Tax Authority except to the extent that a Final
Determination causes any such payment not to be so treated.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx makes the following representations and warranties to CBS as of
the date hereof and, subject to the following sentence, as of the Closing
Date. The representations and warranties of Xxxxxxx in this Agreement that are
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date).
SECTION 2.1. ORGANIZATION; QUALIFICATION; POWER
The Limited Partnership is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of Texas. The
Limited Partnership has full power and authority to own or lease and to
operate the Station and its assets and to carry on its business as now
conducted. GCI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas. Xxxxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware. GTC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of GCI and GTC has full
power and authority to own its respective partnership interest in the Limited
Partnership. Each of the Limited Partnership, GTC, Xxxxxxx and GCI is duly
qualified to do business as a foreign entity and in good standing under the
laws of each state or other jurisdiction in which either the ownership or use
of the properties owned or used by it, or the nature of the activities
conducted by it, requires such qualification, except where the failure to be
so qualified would not reasonably be expected to have a Material Adverse
Effect on GTC, GCI and the Limited Partnership, taken as a whole, or impair
the ability of Xxxxxxx, the Xxxxxxx Subsidiaries or the Limited Partnership to
consummate the transactions contemplated by, or to satisfy their obligations
under, the Transaction Agreements, or delay in any material respect or prevent
the consummation of any of the transactions contemplated by the Transaction
Agreements (a "Xxxxxxx Material Adverse Effect"). Xxxxxxx has delivered to CBS
true and complete copies of (i) the charter document and by-laws of each of
GTC and GCI and (ii) the Certificate of Limited Partnership and Limited
Partnership Agreement of the Limited Partnership (collectively, the
"Organizational Documents"), in each case as amended through the date of this
Agreement.
SECTION 2.2. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS
(a) Each of Xxxxxxx, GCI, GTC and the Limited Partnership has the
power and authority to execute, deliver and perform this Agreement and
all of the other agreements and instruments to which it is, or is
specified to be, a party and which are to be executed and delivered
pursuant hereto (collectively, together with this Agreement, the
"Transaction Agreements"), to consummate the transactions contemplated
thereby and to comply with the terms, conditions and provisions thereof.
(b) The execution, delivery and performance of the Transaction
Agreements and the consummation of the transactions contemplated thereby
have been duly authorized and approved by all necessary corporate and
partnership action on the part of Xxxxxxx, GCI, GTC and the Limited
Partnership. Each of Xxxxxxx, GTC, GCI and the Limited Partnership has
duly executed
9
and delivered this Agreement and, prior to the Closing, will have duly
executed and delivered the other Transaction Agreements to which it is,
or is specified to be, a party, and this Agreement constitutes, and each
of the other Transaction Agreements to which it is, or is specified to
be, a party will upon execution and delivery thereof constitute, its
legal, valid and binding agreement enforceable against it in accordance
with its respective terms, except in each case as such enforceability may
be limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Except as set forth in Schedule 2.2, neither the execution and
delivery by Xxxxxxx, GTC, GCI or the Limited Partnership of any of the
Transaction Agreements, the consummation of any of the transactions
contemplated thereby nor compliance by Xxxxxxx, GTC, GCI and the Limited
Partnership with or fulfillment by any of them of the terms, conditions
and provisions thereof will conflict with, or result in a violation or
breach of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, amendment, cancellation or
acceleration of any obligation or loss of a material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlement of
any person under, or result in the creation of any Encumbrance upon any
of the properties or assets of the Xxxxxxx Subsidiaries or the Limited
Partnership under, (i) any of the Organizational Documents or the charter
or by-laws of Xxxxxxx, (ii) any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract, agreement,
obligation, understanding, commitment or other legally binding
arrangement or of any license, franchise, permit, concession, certificate
of authority, order, approval, application or registration from, of or
with a Governmental Entity (as defined below) (a "Permit") to which
Xxxxxxx or any of its subsidiaries, including GTC and GCI, or the Limited
Partnership, is a party or by which any of their respective properties or
assets is or may be bound or (iii) subject to the governmental filings
and other matters referred to in Section 2.2(d), any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Xxxxxxx
or any of its subsidiaries, including GTC and GCI, or the Limited
Partnership or their respective properties or assets, other than, in the
case of clause (ii) or (iii), any such items that individually or in the
aggregate have not had and would not have a Xxxxxxx Material Adverse
Effect.
(d) Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as
may be required under, and other applicable requirements of, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Securities Act of 1933 (the "Securities Act"), the Improvements Act and
any foreign competition laws, (ii) filings under state securities or
"blue sky" laws, (iii) filings with the NYSE, (iv) approvals of and
filings with the Federal Communications Commission or any successor
entity (the "FCC") under the Communications Act, (v) the filing of the
GCI Articles of Merger with the Secretary of State of the State of Texas,
the filing of the GCI Certificate of Merger and the GTC Certificate of
Merger with the Secretary of State of the State of Delaware and the
filing of appropriate documents with the relevant authorities of other
jurisdictions in which GCI, GTC or the Limited Partnership are qualified
to do business and (vi) other consents, approvals, orders,
authorizations, registrations, declarations, filings and applications
expressly provided for in the Transaction Agreements, no consent,
approval, license, permit, order or authorization of, or registration,
declaration, filing or application with, any federal, state, local or
foreign government, or any court, administrative or regulatory agency or
commission or other governmental authority or agency, domestic or foreign
(a "Governmental Entity"), is required to be obtained or made by or with
respect to Xxxxxxx or any of its subsidiaries, including GCI and GTC, or
the Limited Partnership, in connection with the execution, delivery or
performance by Xxxxxxx, GCI, GTC and the Limited Partnership of each
Transaction Agreement to which any of them is, or is specified to be, a
party or the consummation by Xxxxxxx, GCI, GTC and the Limited
Partnership of the transactions contemplated thereby (except where the
failure to obtain such consents,
10
approvals, licenses, permits, orders or authorizations, or to make such
registrations, declarations, filings or applications, would not,
individually or in the aggregate, have a Xxxxxxx Material Adverse
Effect).
SECTION 2.3. CAPITALIZATION; OWNERSHIP
The authorized capital stock of GCI consists of 1,000 shares of GCI
Stock, all of which shares are issued and outstanding, and the authorized
capital stock of GTC consists of 100,000 shares of GTC Stock, of which 100
shares are issued and outstanding. All of the Xxxxxxx Subsidiary Stock is
owned beneficially and of record by Xxxxxxx, free and clear of all
Encumbrances, and the Xxxxxxx Subsidiary Stock has been duly authorized and
validly issued and is fully paid and nonassessable and not subject to
preemptive rights. GCI owns the entire general partnership interest in the
Limited Partnership, free and clear of all Encumbrances, and such interest is
its sole asset. GTC owns the entire limited partnership interest in the
Limited Partnership, free and clear of all Encumbrances, and such interest is
its sole asset. There are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Xxxxxxx, GTC, GCI or the Limited Partnership is a party or by which any
of them is bound obligating Xxxxxxx, GCI, GTC or the Limited Partnership to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of GTC or GCI or additional
limited or general partnership interests in the Limited Partnership or
obligating Xxxxxxx, GTC, GCI or the Limited Partnership to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no outstanding
contractual obligations of GTC, GCI or the Limited Partnership to repurchase,
redeem or otherwise acquire any interest in GTC, GCI or the Limited
Partnership. There are no outstanding contractual obligations of Xxxxxxx, GTC
or GCI to vote or to dispose of any of their respective interests in GTC, GCI
or the Limited Partnership.
SECTION 2.4. FINANCIAL STATEMENTS
Schedule 2.4 contains (a) the unaudited balance sheet (the "Balance
Sheet") of GTC, GCI and the Limited Partnership as of February 28, 1999 (the
"Financial Statement Date"), (b) the related unaudited statements of income
for the two months then ended, and (c) the unaudited balance sheets and
related unaudited statements of income as of and for the years ended December
31, 1996, 1997 and 1998 (collectively, the "Financial Statements"). Except as
set forth in Schedule 2.4, the Financial Statements have been prepared in
accordance with GAAP consistently applied, are complete and correct in all
material respects, accurately reflect the books, records and accounts of GTC,
GCI and the Limited Partnership (which books and records are accurate and
complete in all material respects), and fairly present in all material
respects the financial position of GTC, GCI and the Limited Partnership as of
their respective dates and the results of their operations for the periods
then ended, subject to the absence of footnotes. None of GTC, GCI or the
Limited Partnership has any material liabilities or obligations of any nature
(whether absolute, accrued, contingent, unasserted or otherwise) except
liabilities or obligations (a) which are accrued or reserved against in the
Balance Sheet, (b) for Taxes with respect to current operations, or (c) which
were incurred after the Financial Statement Date in the ordinary course of
business and not in violation of this Agreement.
SECTION 2.5. ABSENCE OF MATERIAL ADVERSE EFFECT
Except as disclosed in Schedule 2.5, since February 28, 1999, each of
GTC, GCI and the Limited Partnership has conducted its business only in the
ordinary course consistent with past
11
practice, and there has not been any change, effect, event or occurrence that,
individually or in the aggregate, has had or would reasonably be expected to
have a Xxxxxxx Material Adverse Effect.
SECTION 2.6. TAXES
Except as set forth in Schedule 2.6:
(a) As used in this Agreement, (i) "Taxes" shall include all
federal, state, local or foreign income, property, sales, excise and
other taxes or similar governmental charges, including any interest,
penalties, or additions with respect thereto; (ii) "Tax Returns" shall
mean all returns, reports, declarations, information, estimates,
schedules, filings or documents (including any related or supporting
information) filed or required by any tax authority to be filed with
respect to taxes, including, without limitation, all information returns,
claims for refund, amended returns, declarations of estimated tax, and
requests for extensions of time to file any item described in this
paragraph; and (iii) "Treasury Regulations" refer to the Treasury
Department regulations promulgated under the Code;
(b) No Encumbrances for Taxes exist with respect to any of the
assets or properties of any of GTC, GCI or the Limited Partnership,
except for statutory Encumbrances for Taxes not yet due or payable;
(c) All federal income Tax Returns and all other material federal,
state and local, domestic and foreign Tax Returns required to be filed by
or on behalf of any of GTC, GCI or the Limited Partnership, or any
consolidated, combined, affiliated or unitary group of which any of GTC,
GCI or the Limited Partnership is or has ever been a member, have been
timely filed or requests for extensions have been timely filed and any
such extensions have been granted and have not expired;
(d) Each such Tax Return was complete and correct in all material
respects;
(e) All material Taxes with respect to taxable periods covered by
such Tax Returns and all other material Taxes for which any of GTC, GCI
or the Limited Partnership is liable (together, the "Relevant Taxes")
have been paid in full, or reserves therefor have been established in
accordance with GAAP on the Balance Sheet;
(f) All U.S. federal income Tax Returns filed by or on behalf of
each of GTC, GCI or the Limited Partnership have been examined by and
settled with the Internal Revenue Service, or the statute of limitations
with respect to the relevant tax liability has expired, for all taxable
periods through and including 1995;
(g) All relevant Taxes due with respect to any completed and settled
audit, examination or deficiency litigation with any tax authority have
been paid in full;
(h) There is no audit, examination, deficiency, or refund litigation
pending with respect to any relevant Taxes and no requests pending for
waivers of the time to assess any relevant Taxes and no tax authority has
given written notice of the commencement of any audit, examination or
deficiency litigation, with respect to any relevant Taxes; and
(i) None of GTC, GCI or the Limited Partnership is bound by any
written agreement or arrangement with respect to Taxes.
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SECTION 2.7. PERMITS
Except as set forth in Schedule 2.7, each of GTC, GCI and the Limited
Partnership legally owns, holds or possesses all FCC Authorizations and all
other material Permits which are reasonably necessary to entitle it to own or
lease, operate and use the Station and its assets and to carry on and conduct
the Station's business as currently conducted. Schedule 2.7 sets forth a list
and brief description of each such FCC Authorization and other material Permit
held by each of GTC, GCI and the Limited Partnership. Each of GTC, GCI and the
Limited Partnership has fulfilled and performed in all material respects its
obligations under each such FCC Authorization and other material Permit, and
no event has occurred or condition or state of facts exists which constitutes
or, after notice or lapse of time or both, would constitute grounds for
revocation or termination of any such FCC Authorization or other material
Permit, or the imposition of any materially adverse restriction or limitation
on the operation of the Station. Except as set forth on Schedule 2.7, no
application, action or proceeding is pending for the renewal or modification
of any of such FCC Authorizations or other material Permits, and no notice of
cancellation, of default or of any dispute concerning any such FCC
Authorization or other material Permit, or of any event, condition or state of
facts described in the preceding sentence, has been received by any of
Xxxxxxx, GTC, GCI or the Limited Partnership. Except as set forth on Schedule
2.7, each of such FCC Authorizations and other material Permits is valid,
subsisting and in full force and effect. The Station's operations are limited
only by the conditions and restrictions specified in the FCC Authorizations or
other material Permits and by the FCC's and the FAA's rules and policies and
by the Communications Act, and, except for matters affecting the television
broadcasting industry generally, are not subject to any condition or
restriction which would limit in any material respect the operation of the
Station as currently conducted. Subject to the receipt of the FCC Consent and
any other governmental consents expressly required by the Transaction
Agreements, to the best knowledge of Xxxxxxx, GTC, GCI and the Limited
Partnership, upon consummation of the Mergers, such FCC Authorizations and
other material Permits will remain vested in the Limited Partnership
immediately after the Effective Time and, at such time, will be in full force
and effect, in each case without (a) the occurrence of any material breach,
default or forfeiture of rights thereunder or (b) the consent, approval, or
act of, or the making of any filing with, any other Governmental Entity or
other party. Except as set forth on Schedule 2.7, the Limited Partnership has
operated the Station in all material respects in accordance with such FCC
Authorizations and other material Permits and in compliance in all material
respects with the Communications Act and all other laws and regulations,
federal, state, local and foreign, applicable to the Station. Except as set
forth on Schedule 2.7, none of the Limited Partnership, Xxxxxxx, GCI nor GTC
has received any notice of any violations of such FCC Authorizations, the
Communications Act or any other applicable laws and regulations. Except as set
forth on Schedule 2.7, there is no action by or before the FCC currently
pending or, to the best knowledge of Xxxxxxx, GTC, GCI and the Limited
Partnership, threatened to revoke, cancel, rescind, suspend, modify or refuse
to renew in the ordinary course any of the FCC Authorizations. Except as set
forth on Schedule 2.7, to the best knowledge of Xxxxxxx, GTC, GCI and the
Limited Partnership, there is no reasonable basis for the initiation or
issuance by the FCC of any investigation, proceeding or notice of material
violation with respect to the Station.
SECTION 2.8. REAL PROPERTY
Schedule 2.8 contains (i) a brief description of all real property and
interests in real property owned (the "Owned Property") by the Limited
Partnership (showing the record title holder, legal description, location,
improvements and any indebtedness secured by a mortgage or other Encumbrance
thereon) and (ii) with respect to real property or interests in real property
leased (the "Leased Property") by the Limited Partnership, a list and brief
description of each lease (a "Lease") or similar agreement (showing the
rental, expiration date, renewal, the uses being made thereof and
13
the location of the real property covered by such lease or other agreement).
The Limited Partnership has good and sufficient, valid and marketable title to
the Owned Property and good and valid leasehold title to the Leased Property,
in each case free and clear of all Encumbrances, except (A) such Encumbrances
as are set forth in Schedule 2.8, (B) Encumbrances described in clauses (3),
(4) and (5) of Section 2.9(c), (C) leases, subleases and similar agreements
set forth in Schedule 2.16, (D) easements, covenants, rights-of-way and other
similar restrictions of record and (E) (i) zoning, building and other similar
restrictions, (ii) Encumbrances that have been placed by any developer,
landlord or other third party on property over which the Limited Partnership
has easement rights or on any Leased Property and subordination or similar
agreements relating thereto and (iii) unrecorded easements, covenants,
rights-of-way and other similar restrictions. None of the items set forth in
clauses (D) and (E) above, individually or in the aggregate, materially
impairs or could reasonably be expected materially to impair, the continued
use and operation of the real property to which they relate in the business of
the Station as presently conducted. There are (A) no outstanding contracts for
any improvements to the Owned Property which have not been fully paid, (B) no
expenses of any kind (including brokerage and leasing commissions) pertaining
to the Owned Property which have not been fully paid and (C) no outstanding
contracts for the sale of any of the Owned Property. All Leases are in full
force and effect and grant in all respects the leasehold estates or rights of
occupancy or use they purport to grant. Except as provided in Schedule 2.8,
the Limited Partnership has not (A) assigned or otherwise transferred any
Lease or (B) sublet all or any portion of any Leased Property. There are no
existing defaults on the part of the Limited Partnership or, to the best of
Gaylord's knowledge, on the part of any other party thereto, in any material
respect under any Lease and no event has occurred that, with notice or the
lapse of time, or both, would constitute a default on the part of the Limited
Partnership or, to the best of Gaylord's knowledge, on the part of any other
party thereto, in any material respect under any of the Leases. The
consummation of the Mergers and the transactions contemplated hereby will not
result in the occurrence of a default under any of the Leases subject to the
receipt of any necessary consents (whether pursuant to a "change in control"
or assignment provision in the Leases or otherwise). The Parkerville Park
Lease Agreement set forth on Schedule 2.16 with respect to a portion of the
Owned Property does not materially interfere with the business and operations
of the Station as currently conducted.
SECTION 2.9. ASSETS OTHER THAN REAL PROPERTY
(a) The Limited Partnership has good and valid title to all assets
reflected on the Balance Sheets or thereafter acquired, except for those
sold or otherwise disposed of for fair value since the Financial
Statement Date in the ordinary course of business consistent with past
practice and not in violation of this Agreement, in each case free and
clear of all Encumbrances except Permitted Encumbrances (as defined
below). Schedule 2.9(a) sets forth a true and complete list of all assets
properly categorized as plant, property and equipment reflected on the
Balance Sheet and acquired after December 31, 1993, and a summary of
assets acquired prior to that date by general category. All the material
tangible personal property owned by the Limited Partnership is and has
been maintained in all material respects in accordance with the past
practice of the Limited Partnership and generally accepted industry
practice, is in good working order (normal wear and tear excepted) and is
suitable in all material respects for the purposes of its intended use.
(b) All personal property leased by the Limited Partnership is in
all material respects in the condition required of such property by the
terms of the lease applicable thereto during the term of the lease and
upon the expiration thereof.
(c) "Permitted Encumbrances" shall mean those Encumbrances (1)
referred to in Schedule 2.9(c), (2) for Taxes not yet due or payable or
being contested in good faith, (3) that
14
constitute easements, covenants, rights-of-way and other similar matters
of record, (4) that constitute mechanics', carriers', workers'
compensation or like liens incurred in the ordinary course of business
consistent with past practice, (5) that constitute other imperfections of
title or encumbrances that, individually or in the aggregate, do not
materially impair, and could not reasonably be expected materially to
impair, the continued use and operation of the assets to which they
relate in the business of the Station as presently conducted or (6)
incurred, or deposits made, in the ordinary course of business consistent
with past practice in connection with workers' compensation, unemployment
insurance and social security, retirement and other similar legislation
relating to amounts not yet due or payable.
(d) This Section 2.9 does not relate to the Owned Property or the
Leased Property, such items being the subject of Section 2.8, or to
Intellectual Property, such items being the subject of Section 2.15.
SECTION 2.10. ASSETS AND LIABILITIES OF THE LIMITED PARTNERSHIP
The assets and liabilities of the Limited Partnership, GTC and GCI,
including those set forth on the Balance Sheet, consist only of assets and
liabilities solely related to the Station and its business as currently
conducted. Except as set forth on Schedule 2.10, and except for the transfers
contemplated by Section 4.3(b), the assets to be held by the Limited
Partnership, GCI and GTC as of the Effective Time will constitute the assets
necessary to operate the Station and its business as currently conducted.
SECTION 2.11. EMPLOYEES
None of GTC, GCI or the Limited Partnership has any employees other than
the employees listed on Schedule 2.11. Schedule 2.11 contains, as of February
28, 1999: (i) a list of all Station Employees as defined below, and (ii) the
rate of compensation of such Station Employees excluding commissions. Except
as described in Schedule 2.16, the Limited Partnership has no written
contracts of employment with any Station Employee. Except as set forth in
Schedule 2.11, no Station Employee (i) shall be entitled to receive any
termination, severance or deferred compensation payment or benefits as a
result of the transactions contemplated by this Agreement, (ii) has any
entitlement on or following the Effective Time under any individual agreement,
or under any plan, program, policy or other arrangement, to (x) severance pay
or benefits, or (y) bonus or incentive pay other than commission-based
incentive pay, or (iii) is entitled to any such payment in the event any such
Station Employee ceases to be employed at the Station after the Closing Date
other than as a result of actual termination of such employment by the
Station. "Station Employees" shall mean all individuals employed by GTC, GCI,
the Limited Partnership or the Station.
SECTION 2.12. EMPLOYMENT AND SIMILAR AGREEMENTS
Except as disclosed in Schedule 2.16, there exist no consulting,
employment, severance or termination agreements currently in effect between
the Limited Partnership, GTC or GCI, and any current Station Employee or
former employee, officer or director of the Limited Partnership, GTC or GCI.
SECTION 2.13. ERISA
(a) Each "employee welfare benefit plan" and "pension benefit plan"
as defined in Section 3 of the Employment Retirement and Income Security
Act of 1974, as amended, currently available to Station Employees is
listed on Schedule 2.13, and, except as set forth on Schedule
15
2.13, copies of summary plan descriptions for each plan listed on
Schedule 2.13 have been furnished to CBS. Such summary plan descriptions
are accurate in all material respects. Each benefit plan currently
available to Station Employees, including those listed on Schedule 2.13,
is herein referred to as a "Benefit Plan".
(b) There are no material undisclosed liabilities in respect of the
Benefit Plans with respect to which GTC, GCI or the Limited Partnership
could be liable.
SECTION 2.14. LABOR MATTERS
Except as disclosed on Schedule 2.14, as of the date hereof, none of the
Limited Partnership, GCI or GTC is the subject of any suit, action or
proceeding which is pending or, to the best of Gaylord's knowledge,
threatened, asserting that GCI, GTC or the Limited Partnership has committed
an unfair labor practice (within the meaning of the National Labor Relations
Act or applicable state statutes) or seeking to compel GCI, GTC or the Limited
Partnership to bargain with any labor organization as to wages and conditions
of employment. No strike or other labor dispute involving GCI, GTC or the
Limited Partnership is pending or, to the knowledge of Xxxxxxx, GCI, GTC or
the Limited Partnership, threatened, and, to the best of Gaylord's knowledge,
there is no activity involving any employees of the Limited Partnership
seeking to certify a collective bargaining unit or engaging in any other
organizational activity. None of GCI, GTC or the Limited Partnership is a
party to, or bound by, any collective bargaining agreement or other Contract
with a labor union or labor organization. GTC, GCI and the Limited Partnership
have complied in all material respects with all laws relating to wages, hours,
collective bargaining and the payment of social security and similar Taxes,
and no person has, to the best of Gaylord's knowledge, asserted that GCI, GTC
or the Limited Partnership is liable in any material amount for any arrears of
wages or any Taxes or penalties for failure to comply with any of the
foregoing.
SECTION 2.15. INTELLECTUAL PROPERTY
As used herein, "Intellectual Property" means domestic and foreign
patents, patent applications, trademark and service xxxx applications,
registered trademarks, registered service marks, registered copyrights, and
unregistered material trademarks, service marks and trade names. Schedule 2.15
sets forth a list of all Intellectual Property which GTC, GCI or the Limited
Partnership owns, licenses or otherwise uses as of the date hereof.
(a) Except as set forth in Schedule 2.15, (i) all Intellectual
Property owned by the Limited Partnership has been duly registered in,
filed in or issued by the appropriate Governmental Entity where such
registration, filing or issuance is in the reasonable business judgment
of the Limited Partnership necessary for the business of the Station as
currently conducted or (ii) the Limited Partnership owns, licenses or
otherwise has the right to use all Intellectual Property and material
trade secrets, inventions, know-how, formulae, processes, procedures and
computer software ("Technology") used in connection with the Station as
its business is currently conducted. To the best of Gaylord's knowledge,
no Technology currently used in connection with the Station has been
used, divulged or appropriated for the benefit of any person other than
the Limited Partnership.
(b) To the best of Gaylord's knowledge no other person has violated,
infringed upon, misused, misappropriated any Intellectual Property or
Technology of the Limited Partnership. Except as set forth in Schedule
2.15, none of GTC, GCI or the Limited Partnership has made any pending
claim in writing of a violation, infringement, misuse or misappropriation
by others of rights of GTC, GCI or the Limited Partnership to or in
connection with any Intellectual Property
16
or Technology currently used in connection with the Station and its
business as currently conducted. To the best of Gaylord's knowledge,
there are no interferences or other contested inter partes proceedings,
either pending or threatened, in any copyright office or patent and
trademark office or by any other Governmental Entity relating to any
pending application for any Intellectual Property currently used in
connection with the Station as its business is currently conducted.
(c) To the best of Gaylord's knowledge, the Limited Partnership has
not violated, infringed upon, misused, misappropriated or otherwise come
into conflict with any Intellectual Property of any other person. The
Limited Partnership has not received any written charge, complaint,
claim, demand or notice alleging any violation, infringement, misuse,
misappropriation or other conflict of the type listed in the prior
sentence (including any written claim that the Limited Partnership must
license or refrain from using any Intellectual Property or other
proprietary information of any other person) which has not been settled
or otherwise fully resolved, nor is there any action, pending or, to the
best of Gaylord's knowledge, threatened against the Limited Partnership
claiming that the Limited Partnership has, whether directly,
contributorily or by inducement, interfered with, infringed, or
misappropriated or come into conflict with any other Intellectual
Property.
SECTION 2.16. CONTRACTS
(a) Schedule 2.16 provides a true and complete listing of all
contracts as of the date hereof to which GCI, GTC or the Limited
Partnership is a party or by which GCI, GTC or the Limited Partnership is
bound, or with respect to the Station, GCI, GTC or the Limited
Partnership to which Xxxxxxx or any of its subsidiaries (other than GCI
or GTC) is a party, involving:
(i) the purchase, sale or lease of real property;
(ii) the purchase, rental or use of any films, recordings,
television programming or programming services which is not
terminable by the Limited Partnership without penalty on thirty (30)
days' notice or less or which provides for performance over a period
of more than ninety (90) days or which involves the payment after
the date hereof of more than $25,000;
(iii) the purchase of merchandise, supplies or other tangible
personal property or the receipt of services which is not terminable
by the Limited Partnership without penalty on thirty (30) days'
notice or less or which provides for performance over a period of
more than ninety (90) days or which involves the payment after the
date hereof of more than $25,000;
(iv) the lease, sublease or similar agreement with any person
under which any of GCI, GTC or the Limited Partnership is a lessor
or sublessor of, or makes available for use to any person, (A) any
real property of the Limited Partnership or (B) any portion of the
premises otherwise occupied by the Limited Partnership;
(v) the lease, sublease or similar agreement with any person
under which (A) the Limited Partnership is a lessee of, or holds or
uses, any machinery, equipment, vehicle or other tangible personal
property owned by any person or (B) the Limited Partnership is a
lessor or sublessor of, or makes available for use by any person,
any tangible personal property owned or leased by the Limited
Partnership, in any such case which provide for performance over a
period of more than ninety (90) days, which involve the payment or
receipt after the date hereof of more than $25,000 or which require
the payment of any penalties upon assignment or termination.
17
(vi) any contract under which GTC, GCI or the Limited
Partnership has borrowed any money from, or issued any note, bond,
debenture or other evidence of indebtedness to, any person (other
than the Limited Partnership) or any other note, bond, debenture or
other evidence of indebtedness issued to any person;
(vii) any contract under which GTC, GCI or the Limited
Partnership has, directly or indirectly, made any loan, advance,
extension of credit or capital contribution to, or investment in,
any person (other than among one another and other than to officers
and employees of the Limited Partnership for travel, business or
relocation expenses in the ordinary course of business);
(viii) any mortgage, pledge, security agreement, deed of trust
or other instrument granting an Encumbrance upon any property of
GTC, GCI or the Limited Partnership;
(ix) any contract under which GTC, GCI or the Limited
Partnership is or may become obligated to indemnify (except where
such obligation to indemnify is incidental to the purpose and the
other provisions of such contract) any other person or otherwise to
assume any material liability with respect to liabilities relating
to any current or former business of the Limited Partnership or any
predecessor person;
(x) the sale of broadcast time for advertising or other
purposes for cash which was not made in the ordinary course of
business consistent with past practice;
(xi) any guarantee of the obligations of any person by GTC, GCI
or the Limited Partnership;
(xii) any transaction other than in the ordinary course of
business which is not terminable by the Limited Partnership without
penalty on thirty (30) days' notice or less or which provides for
payments over a period of more than ninety (90) days or which
involves, together with any other such transactions, the payment
after the date hereof of more than $25,000;
(xiii) any agreement relating to a joint venture or similar
arrangement with another person or entity with respect to all or any
part of the operations of the Station or any of its assets;
(xiv) any sales agency, advertising representative or
advertising or public relations contract which is not terminable by
the Limited Partnership without penalty on thirty (30) days' notice
or less or which provides for payments over a period of more than
ninety (90) days or which involves the payment after the date hereof
of more than $25,000;
(xv) any barter agreement or other agreement with advertisers
for broadcasting or commercial time on the Station in exchange for
goods or services;
(xvi) any employee collective bargaining agreement, employment
agreement (other than employment agreements terminable by the
Limited Partnership without penalty on notice of thirty (30) days or
less under which the only obligation of the Limited Partnership is
to make current wage or salary payments and provide current fringe
benefits), consulting advisory or service agreement, deferred
compensation agreement or covenant not to compete;
18
(xvii) any agreement with employees (other than employment
agreements disclosed in response to clause (xvi) above or excluded
therefrom), agents or attorneys-in-fact of the Limited Partnership;
(xviii) any contract (other than this Agreement) with (A)
Xxxxxxx or any of its Affiliates or (B) any officer, director or
employee of Xxxxxxx, GCI, GTC, the Limited Partnership or any other
Affiliate of Xxxxxxx (other than employment agreements covered by
clause (xvi) above); or
(xix) any other agreement, commitment, understanding or
instrument which Xxxxxxx, GCI, GTC or the Limited Partnership
reasonably believes is material to the Station.
(b) Schedule 2.16 also contains a copy of the Station's syndicated
program and feature film "Inventory Report" as of February 28, 1999. Such
report has been prepared in the normal course of the Station's business
in a manner consistent with prior reports, but it has not been audited by
or on behalf of the Limited Partnership. The information contained in
such report is, to the best of Gaylord's knowledge, accurate in all
material respects.
19
SECTION 2.17. STATUS OF CONTRACTS
Xxxxxxx has delivered to CBS true, complete and current copies of all
contracts listed on Schedule 2.16. To the best of Gaylord's knowledge, all of
the contracts listed on Schedule 2.16 are in full force and effect, and are
valid, binding and enforceable in accordance with their terms (subject in each
case to bankruptcy, insolvency, reorganization or similar laws relating to or
affecting the enforcement of creditors' rights generally). To the best of
Gaylord's knowledge, there is not under any such contract any default by any
party thereto or any event that, after notice or lapse of time, or both, could
constitute a default. None of Xxxxxxx, GCI, GTC or the Limited Partnership has
received notice or been otherwise advised of the intention of any party to
terminate any of the contracts listed on Schedule 2.16. To the extent GCI, GTC
or the Limited Partnership leases space on any of its transmission towers
pursuant to a contract listed on Schedule 2.16, such leases, individually or
in the aggregate, do not and would not reasonably be expected materially to
impair the continued use and operation by the Station of any such towers in
the business of the Station as presently conducted.
SECTION 2.18. LITIGATION
Except as disclosed in Schedule 2.18, as of the date hereof, there is no
suit, action, proceeding or investigation pending or, to the best of Gaylord's
knowledge, threatened against Xxxxxxx or any of its subsidiaries, including
GTC and GCI, or the Limited Partnership that, individually or in the
aggregate, would reasonably be expected to have a Xxxxxxx Material Adverse
Effect, nor is there any judgment, order, decree, statute, law, ordinance,
rule or regulation of any Governmental Entity or arbitrator outstanding
against Xxxxxxx, the Limited Partnership, GTC or GCI having, or which would
reasonably be expected to have, a Xxxxxxx Material Adverse Effect.
SECTION 2.19. COMPLIANCE WITH APPLICABLE LAWS
Except as disclosed in Schedule 2.19, there has occurred no default under
any FCC Authorization or other material Permit possessed by GCI, GTC or the
Limited Partnership, except for defaults that, individually or in the
aggregate, would not reasonably be expected to have a Xxxxxxx Material Adverse
Effect. Except as disclosed in Schedule 2.19, GTC, GCI and the Limited
Partnership are in compliance with all judgments, orders, decrees, statutes,
laws, ordinances, rules and regulations of any Governmental Entity applicable
to them, except for possible noncompliance which individually or in the
aggregate would not reasonably be expected to have a Xxxxxxx Material Adverse
Effect. Nothing in this Section 2.19 shall relate to compliance with or
Permits under environmental, health and safety laws which is the subject of
Section 2.20.
SECTION 2.20. ENVIRONMENTAL MATTERS
Except as set forth in Schedule 2.20, to the best of Gaylord's knowledge:
(a) GTC, GCI and the Limited Partnership are in compliance with all
environmental, health and safety Requirements of Law applicable to them;
(b) neither the Limited Partnership nor any of its current or former
properties, assets or operation, is subject to any order from or
agreement with any Governmental Entity or private party respecting (i)
any environmental, health or safety Requirements of Law, (ii) any
Remedial Action or (iii) any Liabilities and Costs arising from the
Release or threatened Release of a Contaminant into the environment;
20
(c) there is not now, nor has there ever been:
(i) any Release of any Contaminant on, in, under or from any
assets or properties currently or formerly owned, leased or operated
by GTC, GCI or the Limited Partnership;
(ii) any underground storage tanks, aboveground storage tanks
or surface impoundments on or under any properties owned or operated
by GTC, GCI or the Limited Partnership;
(iii) any asbestos containing material in any assets currently
owned, leased or operated by GTC, GCI or the Limited Partnership; or
(iv) any polychlorinated biphenyls (PCBs) in any assets owned
or operated by GTC, GCI or the Limited Partnership;
(d) none of Xxxxxxx, GTC, GCI nor the Limited Partnership has
received any notice or claim to the effect that it is or may be liable to
any Governmental Entity or person as a result of the Release or
threatened Release of a Contaminant into the environment;
(e) none of GTC, GCI nor the Limited Partnership is the subject of
any investigation by any Governmental Entity evaluating whether any
Remedial Action is needed to respond to a Release or threatened Release
of a Contaminant into the environment nor, is any such investigation
threatened; and
(f) no facility to which any Contaminant arising from any of the
current or former properties, assets or operations of GTC, GCI or the
Limited Partnership has been taken for disposal is currently subject to
Remedial Action under any environmental, health or safety Requirement of
Law.
SECTION 2.21. FCC MATTERS
Except as set forth on Schedule 2.21, all material notices, reports,
forms, applications and other statements or disclosures required to be filed
with the FCC with respect to the Station have been filed and complied with in
all material respects and are complete, correct and current in all material
respects. The Limited Partnership has timely paid, or caused to be paid, to
the FCC all annual regulatory fees payable with respect to the FCC
Authorizations.
SECTION 2.22. NO FINDER
None of Xxxxxxx, GTC, GCI or the Limited Partnership, nor any party
acting on behalf of any of them has paid or become obligated to pay any fee or
commission to any broker, finder or intermediary for or on account of the
transactions contemplated by any of the Transaction Agreements.
SECTION 2.23. INSURANCE
A copy of the Xxxxxxx insurance manual has been made available to CBS, it
being understood that CBS shall be solely responsible for arranging insurance
coverage with respect to GTC, GCI and the Limited Partnership from and after
the Closing.
21
SECTION 2.24. YEAR 2000
Xxxxxxx believes that it is using all reasonable efforts to assure that
all computer software used by the Station in its business as currently
conducted and other applicable technology used by the Station in its business
as currently conducted will be able to operate consistently after December 31,
1999 to accurately process, provide and receive date data (including
calculating, comparing and sequencing) from, into and between the Twentieth
and Twenty-first centuries, including the years 1999 and 2000, and make
leap-year calculations. Xxxxxxx, GTC, GCI and the Limited Partnership believe
that they are using all reasonable efforts to assure that the Year 2000 date
change will not adversely affect the systems and facilities that support the
operation of the Station and its business as currently conducted, except as
could not reasonably be expected to have a Material Adverse Effect on the
Limited Partnership or the Station and its business as currently conducted.
SECTION 2.25. TRANSACTIONS WITH AFFILIATES
None of the contracts set forth in Schedule 2.16 between Xxxxxxx or any
of its Affiliates (excluding GTC and GCI), on the one hand, and GTC, GCI, the
Limited Partnership or any of their respective Affiliates, on the other hand,
will continue in effect subsequent to the Closing.
SECTION 2.26. CABLE MATTERS
(a) To the best of Gaylord's knowledge, Schedule 2.26 sets forth as
of the date hereof a list of all Market Cable Systems which carry the
Station's signal and/or to which the Station has provided a must-carry
notice or retransmission consent notice in accordance with the provisions
of the Cable Television Consumer Protection and Competition Act of 1992,
as amended, and the FCC Regulations (collectively, the "Cable Act
Requirements"), other than those which have fewer than 2,000 subscribers.
(b) Except as set forth on Schedule 2.26, there are no:
(i) written must-carry or retransmission consent notices
referred to in clause (a) above which were not delivered to the
Market Cable System in question on or before the date required under
the Cable Act Requirements for such notices to be effective for the
three-year period ending in 1999;
(ii) Market Cable Systems which are carrying the Station's
signal and which have given written notice of such Market Cable
System's intention to delete the Station from carriage or to change
the Station's channel position on such cable system, other than
pursuant to any agreement described in clause (c) above;
(iii) written notices received by Gaylord from any Market Cable
System alleging that the Station does not deliver an adequate signal
level, as defined in 47 C.F.R. ss.76.55(c)(3), to such Market Cable
System's principal headend (other than any such notice as to which
such failure has been remedied or been determined not to exist);
(iv) pending petitions filed by Gaylord for special relief to
include any additional community or area as part of the Station's
television market, as defined in 47 C.F.R. ss. 76.55(e); and
22
(v) pending petitions served on Xxxxxxx for special relief
requesting the deletion of any community or area from the Station's
television market.
SECTION 2.27. DIGITAL TELEVISION
The Station has been assigned a channel (Channel 19) by the FCC for the
provision of digital television ("DTV") service. The FCC Authorizations listed
in Schedule 2.7 include a construction permit and all other authorizations
necessary to permit the construction of a DTV station on such channel (the
"DTV Facility"). Construction of the DTV Facility will be completed, and
operation of the DTV Facility commenced, on or before May 1, 1999, the
deadline set forth in 47 C.F.R. ss.73.624(d). To the best of Gaylord's
knowledge, there is no fact or circumstance that will delay the conversion of
the Station to DTV operation in accordance with the May 1, 1999 deadline and
the FCC's overall prescribed timetable for such conversion, or that may cause
the conversion of the Station to DTV operation to have a Xxxxxxx Material
Adverse Effect.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF CBS
CBS makes the following representations and warranties to Xxxxxxx as of
the date hereof and, subject to the following sentence, as of the Closing
Date. The representations and warranties of CBS in this Agreement that are
qualified as to materiality shall be true and correct, and those not so
qualified shall be true and correct in all material respects, as of the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties qualified as to materiality shall be
true and correct, and those not so qualified shall be true and correct in all
material respects, on and as of such earlier date).
SECTION 3.1. ORGANIZATION; QUALIFICATION; POWER
Each of CBS and the CBS Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of CBS and the CBS Subsidiaries is duly qualified to do business as a
foreign entity and in good standing under the laws of each state or other
jurisdiction in which either the ownership or use of the properties owned or
used by it, or the nature of the activities conducted by it, requires such
qualification, except where the failure to be so qualified could not
reasonably be expected to have a Material Adverse Effect on CBS and its
subsidiaries, taken as a whole, or impair the ability of CBS and the CBS
Subsidiaries to consummate the transactions contemplated by, or to satisfy
their obligations under, the Transaction Agreements, or delay in any material
respect or prevent the consummation of any of the transactions contemplated by
the Transaction Agreements. Each of CBS and the CBS Subsidiaries has the
requisite corporate power and authority to carry on its business as now
conducted. CBS has delivered to Xxxxxxx true and complete copies of the
certificates of incorporation and by-laws of CBS and the CBS Subsidiaries, in
each case as amended through the date of this Agreement.
SECTION 3.2. CBS COMMON STOCK TO BE ISSUED IN THIS TRANSACTION
The issuance of the CBS Common Stock to Xxxxxxx pursuant to this
Agreement has been duly authorized by all necessary corporate action on the
part of CBS. When issued and delivered to Xxxxxxx pursuant to this Agreement,
the CBS Common Stock issued pursuant to this Agreement shall be duly
authorized, validly issued, fully paid, non-assessable and not subject to
preemptive rights.
23
SECTION 3.3. AUTHORITY; ABSENCE OF CONFLICTING AGREEMENTS
(a) Each of CBS and the CBS Subsidiaries has the requisite corporate
power and authority to execute, deliver and perform each Transaction
Agreement to which it is, or is specified to be, a party and to
consummate the transactions contemplated thereby and to comply with the
terms, conditions and provisions thereof.
(b) The execution, delivery and performance by CBS and the CBS
Subsidiaries of each Transaction Agreement to which it is or will be a
party and the consummation by CBS and the CBS Subsidiaries of the
transactions contemplated thereby have been duly authorized and approved
by all necessary corporate action on the part of CBS and the CBS
Subsidiaries. Each of CBS and the CBS Subsidiaries has duly executed and
delivered this Agreement and, prior to the Closing, will have duly
executed and delivered the other Transaction Agreements to which it is,
or is specified to be, a party, and this Agreement constitutes, and each
of the Transaction Agreements to which it is, or is specified to be, a
party will upon execution and delivery thereof constitute, its legal,
valid and binding obligation, enforceable against it in accordance with
its respective terms, except in each case as such enforceability may be
limited by bankruptcy, moratorium, insolvency, reorganization or other
similar laws affecting or limiting the enforcement of creditors' rights
generally and except as such enforceability is subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) Neither the execution and delivery by CBS and the CBS
Subsidiaries of any of the Transaction Agreements to which any of them
is, or is specified to be, a party, the consummation by CBS and the CBS
Subsidiaries of the transactions contemplated thereby nor compliance by
CBS and the CBS Subsidiaries with or fulfillment by any of them of the
terms, conditions and provisions thereof will conflict with, or result in
a violation or breach of, or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any obligation or loss of a material
benefit under, or to increased, additional, accelerated or guaranteed
rights or entitlements of any person under, or result in the creation of
any Encumbrance upon any of the properties or assets of CBS or the CBS
Subsidiaries under, (i) the certificates of incorporation or by-laws of
CBS or the CBS Subsidiaries, (ii) subject to the governmental filings and
other matters referred to in Section 3.3(d), any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, contract,
agreement, obligation, understanding, commitment or other legally binding
arrangement or of any Permit applicable to CBS or any subsidiary of CBS
or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in Section 3.3(d), any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to CBS or any subsidiary of CBS or their respective properties
or assets, other than, in the case of clause (ii) or (iii), any such
items that, individually or in the aggregate, would not have a Material
Adverse Effect on CBS and its subsidiaries taken as a whole, or impair
the ability of CBS and the CBS Subsidiaries to consummate the
transactions contemplated by, or to satisfy their obligations under, the
Transaction Agreements, or delay in any material respect or prevent the
consummation of any of the transactions contemplated by the Transaction
Agreements (a "CBS Material Adverse Effect").
Except for (i) consents, approvals, licenses, permits, orders,
authorizations, registrations, declarations, filings or applications as may be
required under, and other applicable requirements of, the Exchange Act, the
Securities Act, the Improvements Act and any foreign competition laws, (ii)
filings under state securities or "blue sky" laws, (iii) filings with the
NYSE, (iv) approvals of and filings with the FCC under the Communications Act,
(v) the filing of the GCI Articles of Merger with the Secretary of State of
the State of Texas, the filing of the GCI Certificate of Merger
24
and the GTC Certificate of Merger with the Secretary of State of the State of
Delaware and the filing of appropriate documents with the relevant authorities
of other jurisdictions in which the CBS Subsidiaries are qualified to do
business and (vi) other consents, approvals, orders, authorizations,
registrations, declarations, filings and applications expressly provided for
in the Transaction Agreements, no consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to CBS or any subsidiary of
CBS in connection with the execution, delivery or performance by CBS and the
CBS Subsidiaries of each Transaction Agreement to which any of them is, or is
specified to be, a party or the consummation by CBS and the CBS Subsidiaries
of the transactions contemplated thereby (except where the failure to obtain
such consents, approvals, licenses, permits, orders or authorizations, or to
make such registrations, declarations or filings, would not, individually or
in the aggregate, have a CBS Material Adverse Effect).
SECTION 3.4. SEC DOCUMENTS; UNDISCLOSED LIABILITIES
CBS has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC since January 1, 1998 (the
"CBS SEC Documents"). As of their respective dates, the CBS SEC Documents
complied in all material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC promulgated thereunder applicable to such CBS SEC Documents, and none of
the CBS SEC Documents when filed contained any untrue statement of a material
fact or omitted 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. Except to the extent
that information contained in any CBS SEC Document has been revised or
superseded by a later filed CBS SEC Document, none of the CBS SEC Documents
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of CBS included in the CBS SEC
Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with GAAP (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects
the consolidated financial position of CBS and its consolidated subsidiaries
as of the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments). Except as set forth in the
Filed CBS SEC Documents, and except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since the
date of the most recent consolidated balance sheet included in the Filed CBS
SEC Documents, neither CBS nor any of its subsidiaries has or will have any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be recognized or disclosed on a
consolidated balance sheet of CBS and its consolidated subsidiaries or in the
notes thereto.
SECTION 3.5. NO FINDER
Neither CBS, the CBS Subsidiaries nor any party acting on its or their
behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by any of the Transaction Agreements.
25
SECTION 3.6. STATUS OF CBS AND THE CBS SUBSIDIARIES
Subject to the grant of the Waiver, CBS and the CBS Subsidiaries are
legally and financially qualified under existing law, including the
Communications Act, to (i) purchase, own, operate and control the Station and
(ii) own, by means of acquisition of the GTC Stock and the GCI Stock, the
general and limited partnership interests of the Limited Partnership. Neither
CBS nor any of the CBS Subsidiaries has knowingly taken any action which would
reasonably be expected to cause the FCC or any other Governmental Entity to
institute proceedings against CBS or any of the CBS Subsidiaries with respect
to their respective legal qualifications to acquire the GTC Stock and the GCI
Stock or knowingly taken any other action which would reasonably be expected
to result in CBS or the CBS Subsidiaries being in noncompliance in any
material respect with the ownership requirements of the Communications Act (or
of any other Governmental Entity having jurisdiction) which would impair CBS's
or the CBS Subsidiaries' qualification to be the transferee of the FCC
Authorizations.
SECTION 3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS
Except as set forth in Schedule 3.7 or as disclosed in the CBS SEC
Documents filed and publicly available prior to the date of this Agreement (as
amended to the date of this Agreement, the "Filed CBS SEC Documents") or as
otherwise expressly contemplated by the Transaction Agreements, since the date
of the most recent audited financial statements included in the Filed CBS SEC
Documents, there has not been any event, change or development which
individually or in the aggregate has had or would reasonably be expected to
have a Material Adverse Effect on CBS and its subsidiaries taken as a whole or
the ability of CBS and the CBS Subsidiaries to consummate the transactions
contemplated by, or to satisfy their obligations under, the Transaction
Agreements.
SECTION 3.8. LITIGATION
Except as disclosed in the Filed CBS SEC Documents, as of the date
hereof, there is no suit, action, proceeding or investigation pending or, to
the best knowledge of CBS, threatened against CBS or any of its subsidiaries
that, individually or in the aggregate, would reasonably be expected to have a
CBS Material Adverse Effect, nor is there, subject to the grant of the Waiver,
any judgment, order, decree, statute, law, ordinance, rule or regulation of
any Governmental Entity or arbitrator outstanding against CBS or any of its
subsidiaries having, or which would reasonably be expected to have, a CBS
Material Adverse Effect.
SECTION 3.9. COMPLIANCE WITH APPLICABLE LAWS
CBS and its subsidiaries have in effect all material Permits reasonably
necessary for them to own, lease or operate their properties and assets and to
carry on their businesses as now conducted, and there has occurred no default
under any such material Permit, except for the lack of permits and defaults
that, individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect on CBS and its subsidiaries taken as a whole.
Except as disclosed in the Filed CBS SEC Documents, CBS and its subsidiaries
are in compliance with all judgments, orders, decrees, statutes, laws,
ordinances, rules and regulations of any Governmental Entity applicable to
them, except for possible noncompliance which individually or in the aggregate
would not reasonably be expected to have a CBS Material Adverse Effect.
SECTION 3.10. INTERIM OPERATIONS OF THE CBS SUBSIDIARIES
The CBS Subsidiaries are and will be at the Effective Time, wholly owned
subsidiaries of CBS. The CBS Subsidiaries were formed solely for the purpose
of engaging in the transactions
26
contemplated hereby and have and will at the Effective Time have engaged in no
other business other than incident to their respective creation and this
Agreement and the transactions contemplated hereby.
SECTION 3.11. TAXES
(a) All federal, state and local, domestic and foreign, material Tax
Returns required to be filed by or on behalf of any of CBS or any of its
subsidiaries, or any consolidated, combined, affiliated or unitary group
of which any of CBS or any of its subsidiaries is or has ever been a
member, have been timely filed or requests for extensions have been
timely filed and any such extensions have been granted and have not
expired;
(b) each such Tax Return was complete and correct in all material
respects; and
(c) all material Taxes with respect to taxable periods covered by
such Tax Returns and all other material Taxes for which any of CBS or any
of its subsidiaries are liable have been paid in full, or reserves
therefor have been established in accordance with GAAP on the balance
sheet contained in the Filed CBS SEC Documents.
SECTION 4. ACTIONS PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
SECTION 4.1. PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES
Each of the parties hereto shall refrain from taking any action which
would render any representation or warranty in this Agreement that is
qualified as to materiality inaccurate as of, and as if made on, the Closing
Date, or which would render any representation or warranty that is not so
qualified inaccurate in any material respect as of, and as if made on, the
Closing Date. Each party shall promptly notify the other of any action, suit
or proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. Xxxxxxx, GCI and GTC shall promptly notify CBS
of any lawsuit, claim, proceeding or investigation that is threatened,
brought, asserted or commenced against Xxxxxxx, GCI, GTC or the Limited
Partnership which would have been required to be listed in Schedule 2.18 if
such lawsuit, claim, proceeding or investigation had arisen prior to the date
hereof.
SECTION 4.2. FCC CONSENT; IMPROVEMENTS ACT APPROVAL
(a) As promptly as practicable after the date hereof but in any
event no later than twenty (20) days hereafter, the parties hereto shall
file with the FCC applications requesting its consent to the transfer of
control of the Station pursuant to the Mergers. Simultaneously with the
filing of the applications, CBS will file with the FCC a request for the
Waiver. The parties hereto will cooperate in the preparation of such
applications and the request for the Waiver (including the furnishing to
each other of copies of such applications and request prior to filing)
and will diligently take, or cooperate in the taking of, all necessary,
desirable and proper steps, provide any additional information reasonably
required and otherwise use their reasonable efforts to prosecute the
applications and the request for the Waiver and to obtain promptly the
requested consent and approval of the FCC to the transfer of control of
the Station and the Waiver. Any fees assessed by the FCC incident to the
filing or grant of such applications shall be borne by
27
CBS. The parties hereto shall make available to one another, promptly
after the filing thereof, copies of all reports filed on or prior to the
Closing Date with the FCC by any of the parties hereto, as the case may
be, in respect of the Station. Neither CBS nor the CBS Subsidiaries will
act or fail to act in such a way as would adversely affect their legal
qualifications to consummate the Mergers and the other transactions
contemplated hereby pursuant to the Communications Act.
(b) As promptly as practicable after the date hereof but in any
event no later than twenty (20) days hereafter, the parties hereto shall
file with the Federal Trade Commission (the "FTC") and the Antitrust
Division of the Department of Justice ("DOJ") the notifications and other
information required to be filed by such commission or department under
the Improvements Act, or any rules and regulations promulgated
thereunder, with respect to the transactions contemplated hereby. Each of
the parties hereto covenants to file as promptly as practicable such
additional information as may be requested to be filed by such commission
or department. Each of the parties hereto warrants that all such filings
by it will be, as of the date filed, true and accurate in all material
respects and in accordance with the requirements of the Improvements Act
and any such rules and regulations. Xxxxxxx and CBS shall each pay
one-half of the filing fees payable under the Improvements Act in
connection with the notifications and information described in this
Section 4.2(b).
(c) Notwithstanding any other provision of this Agreement, in the
event the approval of the FCC under Section 4.2(a) is conditioned upon
(i) the outcome of the FCC's pending rule-making proceeding with respect
to the FCC's television ownership rules (MM Docket Nos. 91- 221 and 87-8)
or (ii) the divestiture by CBS of any (A) broadcast stations in the
Dallas/Forth Worth area or (B) television stations necessary in order to
comply with the FCC's national multiple ownership rule, 47 CFR Section
73.3555(e), CBS agrees promptly and at its sole expense to take any and
all actions necessary to accept and to comply with such conditions in
order to consummate the Mergers in accordance with this Agreement without
undue delay or prejudice to Xxxxxxx.
SECTION 4.3. OPERATIONS PRIOR TO THE CLOSING DATE
(a) Except as permitted by this Agreement, including the provisions
of Section 4.3(b), or as approved by CBS as provided below, the Limited
Partnership shall operate and carry on the business of the Station, and
the business of GTC, GCI and the Limited Partnership shall be operated
and carried on, only in the ordinary course consistent with past practice
and in compliance in all material respects with all applicable laws,
rules and regulations. Consistent with the foregoing and subject to
Section 4.3(b), the Limited Partnership shall: (i) retain ownership of
and maintain its assets in good operating condition and repair consistent
with past practices and the intended use of such assets (wear and tear in
ordinary usage excepted), (ii) use its reasonable efforts to retain the
Station's libraries of films and other programming, to maintain the
business organization of the Station intact, to keep available the
services of the current officers and other key employees and to preserve
the goodwill of the suppliers, contractors, licensors, employees,
customers, distributors and others having business relations with the
Station, (iii) maintain the budgeted level of expenditures for marketing
and promotions, and (iv) continue any remediation efforts relating to
compliance with Year 2000 issues as described in Section 2.24. The
Limited Partnership shall complete construction and commence operation of
the DTV Facility on or before May 1, 1999, and shall take all other
steps, including the timely submission of all required notices, reports,
forms, applications and other statements or disclosures, that are
necessary to satisfy the FCC's requirements with respect to the
implementation of DTV service. Without limiting the foregoing, and except
as permitted by this Agreement, including the provisions of Section
4.3(b), or except with the express prior written approval of CBS, none of
Xxxxxxx and its subsidiaries, including GTC and GCI, and the Limited
Partnership shall:
28
(i) amend any of the Organizational Documents;
(ii) make any material change in the operations of the Station;
(iii) sell, lease, transfer or otherwise dispose of any of the
assets of GCI, GTC or the Limited Partnership, other than (A)
tangible personal property having a value, in the aggregate, of less
than $50,000 sold or otherwise disposed of in the ordinary course of
business consistent with past practice and (B) tangible personal
property replaced in the ordinary course of business consistent with
past practice with items of substantially the same nature and of
equal or greater quality;
(iv) enter into any lease of real property with respect to the
Station, except any renewals of existing leases in the ordinary
course of business consistent with past practice and as to which CBS
shall be permitted to participate in the negotiation of the terms;
(v) permit any of the assets of GTC, GCI or the Limited
Partnership to become subject to any Encumbrance, other than
Permitted Encumbrances;
(vi) create, incur, guarantee or assume any indebtedness for
borrowed money or enter into any capitalized leases, but, with
respect to Xxxxxxx, only to the extent any such indebtedness or
lease relates to GTC, GCI, the Limited Partnership or the Station;
(vii) make any change in the compensation of the employees of
the Station, other than changes required to be made in accordance
with existing agreements, the renewal of employment agreements in
the ordinary course of business, and normal compensation practices,
in each case consistent with past practice;
(viii) make any change in the accounting policies applied in
the preparation of the Financial Statements contained in Schedule
2.4;
(ix) cancel any material indebtedness (other than Accounts
Receivable) owed to, or waive any material claims held by, GCI, GTC
or the Limited Partnership;
(x) delay payment of any account payable or other liability of
GCI, GTC or the Limited Partnership beyond its due date or the date
when such liability would have been paid in the ordinary course of
business consistent with past practice;
(xi) institute any increase in any profit sharing, bonus,
incentive, deferred compensation, insurance, pension, retirement,
medical (except for a contemplated contract with a preferred
provider organization), hospital, disability, welfare or other
employee benefit plan with respect to employees of the Station other
than (A) as required by law, (B) changes made in accordance with
normal practices consistent with past practice that are not, in the
aggregate, material in amount or effect, or changes which affect
Gaylord's employees on a company-wide basis or (C) stay-on or reward
bonuses or similar incentives paid by Xxxxxxx in its discretion;
(xii) cause or permit, by any act or failure to act, any of the
FCC Authorizations or other material Permits of GCI, GTC or the
Limited Partnership to expire, to be modified in any materially
adverse respect, to be revoked, or to be suspended; or take, or fail
to take, any action that would be reasonably likely to cause the FCC
or any other Governmental Entity to institute proceedings for the
suspension, revocation or materially adverse modification of any of
the FCC Authorizations or other material Permits of GCI, GTC or the
Limited Partnership;
29
(xiii) pay, loan or advance any amount to, or sell, transfer or
lease any of the assets of GCI, GTC or the Limited Partnership to,
or enter into any agreement or arrangement with, Xxxxxxx, GCI, GTC,
the Limited Partnership or any of their Affiliates other than
intercompany transactions in the ordinary course of business
consistent with past practice, none of which shall survive the
Effective Time;
(xiv) permit GCI, GTC or the Limited Partnership to acquire, in
any manner, any business or any corporation, partnership,
association or other business organization or division thereof or
otherwise acquire any assets that are material;
(xv) with respect to GCI, GTC and the Limited Partnership, make
any material Tax election or settle or compromise any material Tax
liability or refund;
(xvi) with respect to the Station, waive any material right
under the Cable Act Requirements, fail to timely provide to any
Market Cable System a must-carry notice or retransmission consent
notice in accordance with the Cable Act Requirements (including any
such notice necessary for such notice to be effective for the
three-year period beginning in 1999 and ending in 2002), or reach
any agreement or understanding with any Market Cable System on the
subject of retransmission consent or must-carry under the Cable Act
Requirements without prior consultation with CBS;
(xvii) take any action which would materially adversely affect
CBS's ability to deliver the certificate contemplated by Section
7.6; or
(xviii) authorize, or commit or agree to take, whether in
writing or otherwise, any of the foregoing actions.
Xxxxxxx agrees that CBS shall have the right to approve any contract or
other agreement to be entered into by GCI, GTC or the Limited Partnership
involving payments of more than $500,000 during its term or in connection
with its termination, or having a duration of more than one (1) year;
provided, however, that such approval shall not be unreasonably withheld
by CBS; and provided further that the Limited Partnership shall be
permitted to enter into a contract substantially on the terms as set
forth on Schedule 4.3(a) without the approval of CBS.
(b) Notwithstanding anything to the contrary in this Agreement or
any of the other Transaction Agreements, between the date hereof and the
Effective Time, GTC, GCI and the Limited Partnership shall transfer to
Xxxxxxx or any Affiliate of Xxxxxxx (other than GTC, GCI or the Limited
Partnership), any of the following assets, for any consideration (so long
as such consideration does not involve the assumption by GTC, GCI or the
Limited Partnership of attendant liabilities), or for no consideration,
but at the expense of Xxxxxxx:
(i) all of GTC's, GCI's and the Limited Partnership's cash and
cash equiva xxxxx (including any marketable securities or
certificates of deposit), and all intercompany receivables and
payables as of the Effective Time;
(ii) all rights to refunds for prepaid expenses including
prepayment for bonds, contracts or policies of insurance and prepaid
insurance with respect to such contracts or policies as of the
Effective Time;
30
(iii) all records prepared in connection with the sale of the
Station (other than records prepared for CBS or its Affiliates in
connection with this Agreement), including bids received from others
and analyses relating to the Station and the Station's assets;
(iv) except to the extent the parties shall otherwise
specifically agree in writing, all rights, obligations and assets
under the Benefit Plans;
(v) all of the Limited Partnership's Accounts Receivable,
including rights and claims to payments made by the Copyright
Royalty Tribunal and related to the operations of the Station
arising out of transactions occurring prior to the Closing Date;
(vi) all of the Limited Partnership's, GTC's and GCI's right,
title and interest in and to that certain unused parcel of real
estate, and the abandoned structure thereon, in Fort Worth, Texas,
which real estate and structure are not involved in the current
operations of the Station and are more particularly described on
Schedule 2.8, and all of the Limited Partnership's interest in any
Affiliate (that owns no assets related to the Station) to whom it
may transfer such parcel;
(vii) all of Gaylord's and its Affiliates' Intellectual
Property and Technology not used primarily in connection with the
Station, including all computer software programs (whether or not
used primarily in connection with the Station, and whether or not
owned by Xxxxxxx or its Affiliates) relating to the general ledger,
accounts payable, payroll, and human resources of the Station;
(viii) the programming contracts set forth on Schedule 4.3(b);
and
(ix) all of the Limited Partnership's, GTC's and GCI's rights
and obligations under that certain Advertising Agreement dated as of
December 4, 1998, by and among Marcus Cable Operating Company, LLC,
Charter Communications, Inc., and the Limited Partnership.
Xxxxxxx hereby assumes all liabilities and obligations of any nature
(whether accrued, absolute, unasserted, contingent or otherwise)
relating to any of the foregoing.
(c) Xxxxxxx shall, within fifteen (15) days after the end of each
month, provide CBS with copies of (i) the unaudited income statement of
the Limited Partnership for such month and (ii) the unaudited balance
sheet of the Limited Partnership as of the end of such month.
SECTION 4.4. COLLECTION OF ACCOUNTS RECEIVABLE
(a) At the Closing, Xxxxxxx shall designate CBS, by means of a
mutually acceptable agency agreement, as its agent solely for purposes of
collecting on behalf of Xxxxxxx the Accounts Receivable. Xxxxxxx shall
deliver to CBS, on or immediately after the Closing Date, a complete and
detailed statement of the Accounts Receivable. CBS shall make reasonable
efforts to collect the Accounts Receivable during the period (the
"Collection Period") beginning at the Effective Time and ending on the
last day of the fifth full calendar month following the Closing Date. Any
payment received by CBS (i) at any time following the Effective Time,
(ii) from a customer of the Station after the Effective Time who was also
a customer of the Station prior to the Effective Time and (iii) which is
not designated as a payment of a particular invoice or invoices or as a
security deposit or other prepayment, shall be presumptively applied to
the accounts receivable for such customer outstanding for the longest
amount of time and, if such
31
accounts receivable shall be an Accounts Receivable, remitted to Xxxxxxx
in accordance with Section 4.4(b); provided, however, that if, prior to
the Effective Time, the Limited Partnership or, after the Effective Time,
the Limited Partnership or CBS received or receives a written notice of
dispute from a customer with respect to an Accounts Receivable that has
not been resolved, then CBS shall apply any payments from such customer
to such customer's oldest, non-disputed accounts receivable. CBS shall
not be obligated to refer any of the Accounts Receivable to a collection
agency or to an attorney for collection. CBS shall incur no liability to
Xxxxxxx for any collected or uncollected Accounts Receivable. During the
Collection Period, neither Xxxxxxx nor its agents, without the consent of
CBS, shall make any direct solicitation of any customers owing the
Accounts Receivable for collection purposes.
(b) On or before the fifth day following the end of each calendar
month in the Collection Period, CBS shall deposit into an account
identified by Xxxxxxx at the time of Closing the amounts collected during
the preceding month of the Collection Period with respect to the Accounts
Receivable. CBS shall xxxxxxx Xxxxxxx with a list of the amounts
collected during such calendar month with respect to the Accounts
Receivable and a schedule of the amount remaining outstanding under each
particular account. Xxxxxxx shall be entitled to inspect and/or audit the
records maintained by CBS pursuant to this Section 4.4 from time to time,
upon reasonable advance notice.
(c) Following the expiration of the Collection Period, CBS shall
have no further obligations under this Section 4.4, except that CBS shall
immediately pay over to Xxxxxxx any amounts subsequently paid to it with
respect to any Accounts Receivable. Following the Collection Period,
after consultation with CBS, Xxxxxxx may pursue collections of all
Accounts Receivable, and CBS shall deliver to Xxxxxxx all files, records,
notes and any other materials relating to the Accounts Receivable.
SECTION 4.5. PUBLIC ANNOUNCEMENT
None of the parties hereto shall, without the approval of the other, make
any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that any such
party shall be so obligated by law or by the rules, regulations or policies of
any national securities exchange or association or Governmental Entity, in
which case the other parties shall be advised and the parties shall use their
best efforts to cause a mutually agreeable release or announcement to be
issued; provided, however, that the parties hereby acknowledge and agree that
communications among employees of the parties hereto and their attorneys,
representatives and agents necessary to consummate the transactions
contemplated hereby shall not be deemed a public announcement for purposes of
this Section 4.5. Upon the execution and delivery of this Agreement, the
parties hereto will cooperate in respect of the immediate issuance of a
mutually acceptable press release relating to the transactions contemplated by
this Agreement.
SECTION 4.6. COMPLIANCE WITH LAWS
From the date hereof until the Effective Time, none of the parties hereto
shall take any action in respect of the operations, employees or business of
the Station which violates, in any material respect, any law, regulation,
rule, writ, injunction, ordinance, franchise, decree or order of any court or
of any foreign, federal, state, municipal or other Governmental Entity
applicable to the Station or the operations, assets, employees or business of
the Station.
32
SECTION 4.7. ADVICE OF CHANGES
From the date hereof until the Effective Time, CBS and Xxxxxxx shall
promptly advise the other party orally and in writing of (i) any
representation or warranty made by it contained in this Agreement that is
qualified as to materiality becoming untrue or inaccurate in any respect or
any such representation or warranty that is not so qualified becoming untrue
or inaccurate in any material respect, (ii) the failure by any party or one of
its Affiliates to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (iii) any change or event (x) having, or which can reasonably be
expected to have, in the case of CBS, a Material Adverse Effect on CBS and its
subsidiaries taken as a whole and, in the case of Xxxxxxx, a Xxxxxxx Material
Adverse Effect, (y) having, or which can reasonably be expected to have, the
effect set forth in clause (i) above, or (z) which has resulted, or which can
reasonably be expected to result, in any of the conditions set forth in
Sections 6 or 7 not being satisfied; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
SECTION 4.8. NO SOLICITATION
Xxxxxxx shall not, nor shall Xxxxxxx permit any Affiliate or any officer,
director or employee of Xxxxxxx or any Affiliate to (i) solicit, initiate or
encourage any "other bid", (ii) enter into any agreement with respect to any
other bid or (iii) participate in any negotiations regarding any other bid. As
used in this Section 4.9, "other bid" shall mean any proposal for a merger,
sale of securities, sale of substantial assets or similar transaction
involving GCI, GTC or the Limited Partnership, other than the transactions
contemplated by this Agreement.
SECTION 4.9. OTHER CONSENTS
Without limiting the provisions of Section 4.2, Xxxxxxx, GTC, GCI, the
Limited Partnership and CBS shall use all reasonable efforts to obtain or
cause to be obtained prior to the Closing Date any necessary consents from any
person (other than the FCC, DOJ or the FTC, which are covered in Section 4.2)
to the assignment to CBS of any contract, license or other instrument and
right of Xxxxxxx, GTC, GCI and the Limited Partnership that requires the
consent of any third party by reason of the transactions provided for in this
Agreement, and CBS will reasonably cooperate with Xxxxxxx, GTC, GCI and the
Limited Partnership in this regard, but neither Xxxxxxx, GTC, GCI, the Limited
Partnership nor CBS will be obligated to make any special payment or grant any
special concession to any party. For such purpose but without limitation,
Xxxxxxx, GTC, GCI and the Limited Partnership promptly will at and after the
Closing execute and deliver to CBS such assignments, deeds, bills of sale,
consents and other instruments as CBS or its counsel may reasonably request as
necessary or desirable for such purpose.
SECTION 4.10. NOTICE OF PROCEEDINGS
The parties shall notify each other orally and in writing upon (i)
becoming aware of any order or decree or any complaint praying for an order or
decree restraining or enjoining the consummation of this Agreement or the
transactions contemplated hereunder or (ii) receiving any notice from any
Governmental Entity of its intention (x) to institute an investigation into,
or institute a suit or proceeding to restrain or enjoin, the consummation of
this Agreement or the transactions contemplated hereunder or (y) to nullify or
render ineffective this Agreement or the transactions contemplated hereunder
if consummated.
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SECTION 4.11. TRADE AGREEMENTS
There shall be no proration of current assets and liabilities with
respect to trade and/or barter agreements under Section 1.13 or otherwise.
Xxxxxxx shall use its reasonable efforts to air the advertising contemplated
under any trade and/or barter agreements to the fullest extent practicable
prior to Closing. Xxxxxxx shall not enter into any new trade and/or barter
agreements prior to Closing without the consent of CBS, other than renewals of
existing trade and/or barter agreements in the ordinary course of business.
SECTION 4.12. CONFIDENTIALITY AGREEMENTS
Xxxxxxx hereby assigns, effective at the Closing, to CBS its rights under
all confidentiality agreements entered into by Xxxxxxx or any of its
subsidiaries with any person in connection with the proposed sale of the
Station to the extent such rights relate to GTC, GCI, the Limited Partnership
or the Station. Copies of such agreements shall be provided to CBS on the
Closing Date.
SECTION 5. ADDITIONAL AGREEMENTS
SECTION 5.1. SALES, USE AND TRANSFER TAXES, TITLE INSURANCE
Any sales, use, documentary, stamp or other transfer Taxes payable by
reason of the transactions contemplated by this Agreement shall be paid
exclusively by CBS, except that all of the foregoing relating to the transfers
referred to in Section 4.3(b) shall be paid by Xxxxxxx. CBS and Xxxxxxx shall
cooperate in timely preparing and filing all Tax Returns with respect to such
Taxes as may be required to comply with applicable laws. The costs of any
commitments for title insurance and/or surveys obtained by CBS in connection
with this transaction shall be paid solely by CBS.
SECTION 5.2. EMPLOYEES; EMPLOYEE BENEFIT PLANS
CBS, GTC and GCI agree to the following matters with regard to employees
of GTC, GCI, the Limited Partnership, or the Station after the Effective Time:
(a) CBS, GTC and GCI will continue the employment of all actively
employed (including employees on short term disability leave of absence)
Station Employees as of the Effective Time. Following the Effective Time,
CBS shall maintain, or shall cause the Limited Partnership to maintain,
on behalf of the Station Employees base compensation at the same level as
in effect immediately prior to the Effective Time and employee benefit
plans and arrangements that are, in the aggregate, comparable to the
employee benefit plans and arrangements in effect from time to time after
the Effective Time for similarly situated employees of CBS in its
broadcasting businesses; provided, however, that no Station Employee
shall be entitled to participate in CBS's and its Affiliates'
tax-qualified or non-qualified defined benefit pension or excess plans,
including any cash balance component thereof. Notwithstanding the
foregoing, for not less than six months following the Effective Time, CBS
shall provide, or cause the Limited Partnership to provide, severance pay
and severance benefits to each Station Employee that are no less
favorable than under the Benefit Plans or Gaylord's existing employment
policies (except where otherwise provided in existing employment or
personal services agreements). Notwithstanding the foregoing, except
where existing employment or personal services agreements provide
otherwise, CBS shall have the right to make changes or cause changes to
be made in compensation, benefits and other terms of employment and to
terminate the employment of any employee as CBS determines in its sole
discretion. Nothing in this Agreement shall be construed as granting to
any employee any rights of continuing employment.
34
(b) For purposes of providing health insurance coverage to Station
Employees, CBS shall waive (or obtain a waiver of) all preexisting
condition limitations for all such employees who are covered by the
Station's existing health care plan as of the Effective Time (other than
known preexisting conditions that were excluded by the Station's health
care plan) and shall provide such health care coverage effective as of
the Effective Time without the application of any eligibility period for
coverage (unless a waiting period applied under the Station's plan). In
addition, CBS shall credit all payments made by such employees and their
dependents (pursuant to the Station's existing health care plan as of the
Effective Time) toward deductible, co-payment, out-of-pocket and lifetime
limits under CBS's health care and dental care plans for the plan year
that includes the Effective Time.
(c) As of the Effective Time, CBS, GTC and GCI will provide all
Station Employees with credit for years of service at the Station or
Xxxxxxx or its Affiliates for eligibility and vesting purposes (but not
for benefit accrual purposes or where it would result in a duplication of
benefits) under CBS' applicable benefit plans, including severance
arrangements (excluding, for this purpose, any Station Employee who is a
key employee listed in Schedule 5.2(e) and any other Station Employee
with an employment or personal services agreement which would provide
otherwise in respect of severance payable thereunder), but only to the
extent credited under the applicable Benefit Plan or other applicable
Xxxxxxx plan. Without limiting the foregoing, all Station Employees shall
be entitled to full credit for years of service with respect to their
right (if any) to receive stock options under CBS's Fund the Future
Program.
(d) CBS shall indemnify and hold harmless Xxxxxxx and its Affiliates
from and against any liabilities or obligations in connection with the
Workers Adjustment and Retraining Notification Act (or any similar state
or local law) in connection with this transaction, other than any
liabilities or obligations relating to a violation by Xxxxxxx of such act
(or such similar state or local law) prior to the Effective Time.
(e) The parties agree to those provisions set forth in Schedule
5.2(e).
(f) Except as specifically provided in this Section 5.2, Xxxxxxx
shall retain responsibility for (i) sponsorship of all of the Benefit
Plans, all other applicable Xxxxxxx benefit and compensation plans, and
any other benefit or compensation plans formerly made available to
employees, and (ii) all liabilities and obligations for employee benefits
(including Xxxxxxx employee stock options) and for claims relating to
employment (or termination of employment) which are in respect of (y)
retirees and other former employees of GTC, GCI, the Limited Partnership
and the Station (regardless of whether such liabilities accrued before,
on or following the Closing) and (z) Station Employees to the extent the
event or events giving rise to the liability or obligation occurred
predominantly on or prior to the Closing.
(g) Effective as of the Effective Time, each Station Employee
participating in the Xxxxxxx Pension Plan as of the Effective Time shall
become fully vested in his or her accrued benefit under the Xxxxxxx
Pension Plan.
(h) Effective as of the Effective Time, CBS shall have in effect a
profit-sharing plan that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code (the "CBS
401(k) Plan") that will provide benefits to Station Employees as of the
Effective Time. Each Station Employee participating in the Xxxxxxx 401(k)
Plan as of the Effective Time shall become a participant in CBS' 401(k)
Plan as of the Effective Time. Effective as of the Effective Time, each
Station Employee participating in the Xxxxxxx 401(k) Plan as of the
Effective Time shall become fully vested in his or her account balance
under the Xxxxxxx 401(k) Plan.
35
SECTION 5.3. XXXXXXX SUBSIDIARIES AND THE LIMITED PARTNERSHIP TO
CONTROL OPERATIONS PRIOR TO CLOSING DATE
At all times commencing on the date hereof and ending on the Closing
Date, the operation, management, control and supervision of all programs,
equipment, operations and other activities of the Station shall be the sole
responsibility and shall remain within the complete control and discretion of
the Xxxxxxx Subsidiaries and the Limited Partnership. Neither CBS, the CBS
Subsidiaries nor any of their respective 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 any
of the management or operations of the Station.
SECTION 5.4. COPYRIGHT ROYALTY TRIBUNAL PAYMENTS
To the extent not included in the prorations under Section 1.13, CBS
agrees promptly upon receipt to remit to Xxxxxxx any payments received by CBS
as a Copyright Royalty Tribunal Payment attributable to the Limited
Partnership's ownership and operation of the Station prior to the Closing
Date.
SECTION 5.5. ACCESS TO INFORMATION
Subject to the provisions of Section 10.2, and upon reasonable notice,
Xxxxxxx shall, and shall cause each of its subsidiaries to, afford to CBS, its
subsidiaries and their employees, officers, accountants, counsel, financial
advisors and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time to all of its properties,
books, contracts, management personnel and records relating to GTC, GCI, the
Limited Partnership and the Station; provided, however, that, to the extent
reasonably possible, such access shall be at Gaylord's offices in Nashville,
Tennessee, and shall not unreasonably interfere with the normal operations of
the Station. During such period, CBS shall, and shall cause each of its
subsidiaries to, furnish promptly to Xxxxxxx upon request a copy of each
report, schedule, registration statement and other document required to be
filed by it during such period pursuant to the requirements of Section 13(a)
of the Exchange Act.
SECTION 5.6. REASONABLE BEST EFFORTS
Upon the terms and subject to the conditions set forth in this Agreement,
CBS and Xxxxxxx each agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things reasonably
necessary, proper or advisable to consummate and make effective, in a timely
manner, the Mergers and the other transactions contemplated by the Transaction
Agreements, including (i) the obtaining of all necessary actions or
non-actions, waivers (including the Waiver), consents, approvals, orders and
authorizations from Governmental Entities and the making of all necessary
registrations, declarations and filings and the taking of all steps as may be
reasonably necessary to obtain an approval, waiver (including the Waiver),
order or authorization from, or to avoid an action or proceeding by, any
Governmental Entity, including the actions or divestitures by CBS or its
Affiliates contemplated by Section 4.2(c), if required as a condition to the
approval of the FCC or the satisfactory conclusion of DOJ and/or FTC review
under the Improvements Act, (ii) the obtaining of all necessary waivers,
consents, approvals, orders or authorizations from third parties, (iii) the
defending of any suit, action or proceeding, whether judicial or
administrative, challenging any Transaction Agreement or the consummation of
any of the transactions contemplated by any
36
Transaction Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity vacated or
reversed and (iv) the execution and delivery of any additional instruments
necessary to consummate the transactions contemplated by, and to fully carry
out the purposes of, the Transaction Agreements. Xxxxxxx shall obtain the
consent to assignment of the microwave lease between the Limited Partnership
and Dallas Main Center Limited Partnership and the lease with Crescent Real
Estate, each as listed in Schedule 2.8 or, if such consents cannot be
obtained, enter into replacement leases on terms not materially more
disadvantageous to CBS, GTC, GCI and the Limited Partnership than those
contained in the current microwave lease and Crescent Real Estate lease. CBS
shall use its reasonable best efforts to cause the shares of CBS Common Stock
issued and delivered to Xxxxxxx hereunder to be registered pursuant to an
effective registration statement under Section 5 of the Securities Act to be
registered or otherwise duly qualified under all appropriate state securities
or "blue sky" laws or regulations, and to be approved for listing on the NYSE.
SECTION 5.7. USE OF XXXXXXX NAME
Immediately following the Effective Time, CBS shall cause the surviving
corporations of the Mergers to: (i) cease and desist from all further use of
the name "Xxxxxxx", or any trade names, trademarks, identifying logos or
service marks related thereto (including "Xxxxxxx Broadcasting" and "GBC"), or
any part or variation of any of the foregoing or any confusingly similar trade
names, trademarks or logos (collectively, "Gaylord's Trademarks and Logos");
and (ii) to adopt new trade names, trademarks, identifying logos and service
marks related thereto which are not confusingly similar to Gaylord's
Trademarks and Logos. Nothing in this Section 5.7 shall prohibit CBS and the
surviving corporations of the Mergers from using Gaylord's Trademarks and
Logos to the extent reasonably necessary to fulfill their obligations under
the Transaction Agreements; and provided further, that CBS and its
subsidiaries, including the Limited Partnership, shall be permitted a
reasonable time to transition signage, stationery, business cards, and the
like, it being understood that CBS will use all reasonable efforts to expedite
such transition.
SECTION 5.8. ENVIRONMENTAL STUDY
Within forty-five (45) days after the execution of this Agreement, CBS
shall obtain, at its expense, and present to Xxxxxxx, a Phase I environmental
report (the "Phase I Report") from a licensed environmental engineer or firm
(which shall be reasonably acceptable to Xxxxxxx) with respect to the
Station's real property. If the Phase I Report discloses conditions which
require, in the opinion of the environmental engineer or firm performing the
assessment, further sampling or investigation, Xxxxxxx and the Limited
Partnership shall grant CBS and its agents reasonable access to the Station's
real property, and CBS shall cause such sampling or investigation to be
performed at its expense and shall present the results and recommendations of
the engineer or firm to Xxxxxxx (the "Phase II Report"). Xxxxxxx shall be
responsible for the prompt correction or remediation of any environmental,
health or safety violations or conditions disclosed in the Phase I Report or
the Phase II Report, to the extent required by applicable law or any relevant
Governmental Entity, it being understood that the remediation may continue
following the Closing. The studies contemplated by this Section 5.8 and the
remediation efforts in response thereto shall not hinder or delay the Closing
of the transactions contemplated by this Agreement.
SECTION 5.9. AGREEMENT NOT TO COMPETE
(a) Xxxxxxx and its subsidiaries shall not, and shall cause each of
their Affiliates not to, directly or indirectly: (i) for a period of
eighteen (18) months from the Effective Time own,
37
manage, operate, join, control or participate in the ownership,
management, operation or control of, or permit the use of the Xxxxxxx
name by, or be connected in any manner with, any television broadcast
station within a 75 mile radius from the Station's main transmitter site;
(ii) for a period of twenty-four (24) months from the Effective Time
induce or attempt to induce any Station Employee to leave the employ of
the Station; (iii) knowingly hire for work in the Dallas/Fort Worth area
any voluntarily terminating Station Employee for a period of six (6)
months following such Station Employee's termination; (iv) knowingly hire
for work outside the Dallas/Fort Worth area any voluntarily terminating
Station Employee for a period of three (3) months following such Station
Employee's termination; or (v) for a period of twenty-four (24) months
from the Effective Time induce or attempt to induce any person, business
or entity which is an advertiser with or supplier of the Station, or
which otherwise is a contracting party with the Station, as of the
Effective Time or at any time during the twenty-four (24) month period,
to terminate any written or oral agreement or understanding with the
Station. Nothing contained herein shall prevent Xxxxxxx or its Affiliates
from hiring any Station Employee involuntarily terminated by the Station.
(b) Notwithstanding the provisions of Section 5.9(a), Xxxxxxx or its
Affiliates shall be entitled to invest in or otherwise affiliate with one
or more entities that operate one or more television broadcast stations
within a 75 mile radius from the Station's main transmitter site, so long
as, during the eighteen (18) month period, Xxxxxxx does not participate,
directly or indirectly, in the operation of such television broadcast
station.
(c) Notwithstanding any other provision of this Agreement, it is
understood and agreed that the remedy of indemnity payments pursuant to
Section 8 and other remedies at law would be inadequate in the case of
any breach of the covenants contained in Section 5.9(a). CBS and its
subsidiaries shall be entitled to equitable relief, including the remedy
of specific per formance, with respect to any breach or attempted breach
of such covenants.
SECTION 5.10. WAIVER OF CERTAIN CLAIMS
Neither CBS nor its Affiliates shall be entitled to xxx or otherwise
prosecute a claim or cause of action for breach of fiduciary duty on behalf of
the Limited Partnership, GTC or GCI (or their successors in interest) against
any of their officers or directors with respect to any act or omission
occurring prior to the Closing Date.
SECTION 5.11. RECORDS
As soon as practicable following the Closing Date, Xxxxxxx shall deliver
or cause to be delivered to CBS all agreements, documents, books, records and
files, including records and files stored on computer disks or tapes or any
other storage medium (collectively, "Records"), if any, in the possession of
Xxxxxxx or any of its subsidiaries (except GCI and GTC) relating to the
business and operations of GCI, GTC, the Limited Partnership and the Station
to the extent not then in the possession of GCI, GTC and the Limited
Partnership, subject to the following exceptions:
(a) CBS recognizes that certain Records may contain incidental
information relating to GCI, GTC, the Limited Partnership or the Station
or may relate primarily to subsidiaries, divisions or businesses of
Xxxxxxx other than GCI, GTC, the Limited Partnership and the Station, and
that Xxxxxxx may retain such Records and shall provide copies of the
relevant portions thereof to CBS;
38
(b) Xxxxxxx may retain all Records prepared in connection with the
sale of the Station, including bids received from other parties and
analyses relating to the Limited Partnership and the Station; and
(c) Xxxxxxx may retain any Tax Returns, and CBS shall be provided
with copies of such Tax Returns if they relate to GCI's, GTC's or the
Limited Partnership's separate Tax Returns or separate Tax liability.
SECTION 5.12. POST CLOSING MATTERS
The parties agree to the following, from and after the Effective Time:
(a) In the event that prior to the Effective Time any asset of the
Station suffers any damage, destruction or other casualty loss, Xxxxxxx
shall surrender to CBS after the Effective Time (i) all insurance
proceeds received with respect to such damage, destruction or loss, less
any proceeds applied to the physical restoration of such asset, and (ii)
all rights of Gaylord with respect to any causes of action, whether or
not litigation has commenced as of the Effective Time, in connection with
such damage, destruction or loss. Xxxxxxx shall make available to CBS the
benefit of any workers' compensation, general liability, product
liability, automobile liability, umbrella (excess) liability or crime or
other insurance policy covering GTC, GCI, the Limited Partnership or the
Station with respect to insured events or occurrences prior to the
Effective Time (whether or not claims relating to such events or
occurrences are made prior to or after the Effective Time); provided,
however, that (i) all of Gaylord's costs and expenses incurred in
connection with the foregoing shall promptly be paid by CBS, and (ii) the
benefits of such insurance shall be subject to (and recovery thereon
shall be reduced by the amount of) any applicable deductibles and
co-payment provisions or any payment or reimbursement obligations of
Xxxxxxx in respect thereof. Xxxxxxx shall promptly pay to CBS all
insurance proceeds relating to the business of the Station received by
Xxxxxxx or its subsidiaries under any insurance policy.
(b) Subject to the provisions of Section 5.7, and to the extent
permitted by any third party licensor, CBS shall have a limited license
to use the Intellectual Property and Technology transferred pursuant to
Section 4.3(b) or that is not owned by GCI, GTC or the Limited
Partnership but is used in the operation of the business of the Station
for a period of ninety (90) days following the Effective Time; provided,
however, that CBS shall use all reasonable efforts to make the transition
to its own computer programs and systems and to terminate its reliance on
the Intellectual Property and Technology as quickly as possible. To the
extent that CBS reasonably requires a license beyond the first ninety
(90) day period, CBS shall make a request to that effect to Xxxxxxx, or
to any applicable third party licensor, specifying the reasons for such
need, and Xxxxxxx shall not unreasonably withhold its consent to an
extension of the limited license for up to an additional ninety (90)
days.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF CBS
The obligations of CBS under this Agreement shall be subject to the
satisfaction (or waiver by CBS), on or prior to the Closing Date, of the
following conditions. CBS shall not be entitled to assert the failure of any
condition set forth herein if such failure is caused, in whole or in material
part, by CBS' breach of any covenant or agreement hereunder.
SECTION 6.1. CORPORATE ACTION
Xxxxxxx and the Xxxxxxx Subsidiaries shall have taken all action
necessary to approve the transactions contemplated by this Agreement, and
shall have delivered certified copies of the
39
resolutions of the boards of directors of Xxxxxxx and the Xxxxxxx
Subsidiaries, and unanimous resolutions of the shareholders of the Xxxxxxx
Subsidiaries, approving the transactions contemplated by this Agreement.
SECTION 6.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION
Any applicable waiting period under the Improvements Act shall have
expired or have been terminated and there shall not be in effect any
preliminary or permanent injunction or other order, decree or ruling by a
court of competent jurisdiction, and there shall not be in effect any
temporary restraining order of a court of competent jurisdiction, which, in
either case, restrains or prohibits the transactions contemplated hereby.
SECTION 6.3. FCC CONSENT
The FCC Consent shall have been issued, without any condition or
qualification that is materially adverse to CBS or its subsidiaries or the
Station, and shall have become a Final Order; provided, however, that a
condition contemplated by Section 4.2(c) shall not constitute such a material
adverse condition or qualification.
SECTION 6.4. REPRESENTATIONS AND WARRANTIES
Subject to Section 10.16, the representations and warranties of Xxxxxxx
in this Agreement and the Tax Matters Agreement shall be true and correct as
of the date hereof and as of the Closing Date as though made on the Closing
Date, except to the extent that such representations and warranties expressly
relate to an earlier date (in which case such representations and warranties
shall be true and correct on and as of such earlier date), in each case except
for breaches as to matters that, individually or in the aggregate, would not
reasonably be expected to have a Xxxxxxx Material Adverse Effect the
consequences of which substantially impair the physical assets or economic
value or prospects of the Station taken as a whole.
SECTION 6.5. NYSE LISTING
The shares of CBS Common Stock to be issued and delivered to Xxxxxxx
pursuant to the Mergers shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 6.6. BREACH OF COVENANT BY XXXXXXX
Subject to Section 10.16, Xxxxxxx shall not have materially breached its
obligations in any covenant or agreement hereunder.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX
The obligations of Xxxxxxx under this Agreement shall be subject to the
satisfaction (or waiver by Xxxxxxx), on or prior to the Closing Date, of the
following conditions. Xxxxxxx shall not be entitled to assert the failure of
any condition set forth herein if such failure is caused, in whole or in
material part, by Gaylord's breach of any covenant or agreement hereunder.
40
SECTION 7.1. CORPORATE ACTION
CBS and the CBS Subsidiaries shall have taken all corporate action
necessary to approve the transactions contemplated by this Agreement, and
shall have delivered certified copies of the resolutions of the boards of
directors of CBS and the CBS Subsidiaries, and unanimous resolutions of the
shareholders of the CBS Subsidiaries, approving the transactions contemplated
by this Agreement.
SECTION 7.2. WAITING PERIOD; NO RESTRAINT OR INJUNCTION
Any applicable waiting period under the Improvements Act shall have
expired or been terminated and there shall not be in effect any preliminary or
permanent injunction or other order, decree or ruling by a court of competent
jurisdiction, and there shall not be in effect any temporary restraining order
of a court of competent jurisdiction, which, in either case, restrains or
prohibits the transactions contemplated hereby.
SECTION 7.3. FCC CONSENT
The FCC Consent shall have been issued and become effective, without any
condition or qualification which is materially adverse to Xxxxxxx.
SECTION 7.4. REGISTRATION OF SHARES
The registration statement to be filed with respect to the shares of CBS
Common Stock to be issued and delivered to Xxxxxxx pursuant to the Mergers
shall have become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order, and CBS shall
have received all state securities or "blue sky" authorizations necessary to
issue the CBS Common Stock pursuant to the Mergers.
SECTION 7.5. NYSE LISTING
The shares of CBS Common Stock to be issued and delivered to Xxxxxxx
pursuant to the Mergers shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 7.6. TAX MATTERS AGREEMENT BRING DOWN CERTIFICATE
The Executive Vice President and Chief Financial Officer or the Executive
Vice President and General Counsel of CBS shall have delivered a duly executed
certificate reaffirming the accuracy of the matters described in Sections 4.1
and 4.2 of the Tax Matters Agreement as of the Closing Date.
SECTION 7.7. NO MATERIAL ADVERSE CHANGE
Except as disclosed in the Filed CBS SEC Documents or as otherwise
expressly contemplated by the Transaction Agreements, since the date of the
most recent financial statements included in the Filed CBS SEC Documents,
there shall not have been any event, change or development which individually
or in the aggregate has had or would reasonably be expected to have a Material
Adverse Effect on CBS and its subsidiaries taken as a whole.
41
SECTION 7.8. TAX OPINION
There shall have been, after the date hereof, no changes in law
(including the Code, the Treasury Regulations, revenue rulings or other
official written administrative interpretations, or judicial interpretations)
that would prevent Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP, special tax
counsel to Xxxxxxx, from rendering an opinion substantially to the effect that
each of the Mergers should constitute a "reorganization" within the meaning of
Section 368(a) of the Code. In rendering such opinion, such counsel may rely
upon the representations, covenants and warranties of the parties hereto,
reasonably satisfactory to such counsel, contained in the Tax Matters
Agreement.
SECTION 7.9. BREACH OF COVENANT BY CBS
Subject to Section 10.16. CBS shall not have materially breached its
obligations in any covenant or agreement hereunder.
SECTION 8. INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY XXXXXXX
(a) Subject to Section 8.1(b), Xxxxxxx shall indemnify, defend and
hold harmless CBS, its Affiliates (including, after the Effective Time,
GTC, GCI and the Limited Partnership) and each of their respective
officers, directors, employees, stockholders, agents and representatives
and each of the heirs, executors, successors and assigns of any of the
foregoing (the "CBS Indemnitees") from and against, and pay or reimburse
the CBS Indemnitees for, all losses, liabilities, damages, deficiencies,
obligations, fines, expenses, claims, demands, actions, suits,
proceedings, judgments or settlements, whether or not resulting from
Third Party Claims, including interest and penalties recovered by a third
party with respect thereto and out-of-pocket expenses and reasonable
attorneys' and accountants' fees and expenses incurred in the
investigation or defense of any of the same or in asserting, preserving
or enforcing any rights hereunder (collectively, "Losses"), suffered or
incurred by the CBS Indemnitees (other than any Losses relating to Taxes,
for which indemnification provisions are set forth in the Tax Matters
Agreement), relating to or arising from:
(i) the breach by Xxxxxxx of any agreement or covenant
contained in this Agreement;
(ii) any breach or inaccuracy of any representation or warranty
of Xxxxxxx contained in this Agreement; or
(iii) the ownership of GCI, GTC or the Limited Partnership or
the operation of the Station prior to the Effective Time or the
liabilities and obligations assumed by Xxxxxxx pursuant to Section
4.3(b); or
(iv) any business or activity of GCI, GTC or the Limited
Partnership other than the ownership by GCI or GTC of its
partnership interest in the Limited Partnership or the ownership or
operation by the Limited Partnership of the Station and the assets
relating thereto.
(b) Xxxxxxx shall not have any liability under Section 8.1(a)(ii)
unless the aggregate of all Losses for which Xxxxxxx would, but for this
Section 8.1(b), be liable under Section 8.1(a)(ii) exceed on a cumulative
pre-tax basis an amount equal to $1,000,000, and then only to the extent
of any such excess; provided further, that Xxxxxxx shall not have any
liability under Section 8.1(a) for any amount in excess of $485,000,000
in the aggregate; provided, however,
42
that the foregoing threshold shall not apply to any such Losses relating
to or arising from any breach or inaccuracy of the representations and
warranties contained in Section 2.1, 2.2(a), 2.2(b), and 2.3; and
provided further that neither the foregoing threshold nor the foregoing
cap shall apply to any such Losses to the extent relating to or arising
from the liabilities and obligations assumed by Xxxxxxx pursuant to
Section 4.3(b) or any business or activity of GCI, GTC or the Limited
Partnership other than the ownership by GCI or GTC of its partnership
interest in the Limited Partnership or the ownership or operation by the
Limited Partnership of the Station and the assets relating thereto.
(c) The parties hereto agree that the mere failure to list on a
Schedule a contract required to be listed on the Schedules attached
hereto shall not in and of itself constitute a Loss. The parties hereto
further agree that the foregoing shall in no way limit or impair any
right of any CBS Indemnitee to indemnification under Section 8.1(a) or to
recover any Losses arising out of or otherwise related to any such
contract or the terms thereof, when considered individually or together
with the terms of any other contract, including with respect to any
revenues that may be lower than otherwise reasonably anticipated by CBS,
any expenses that may be higher than otherwise reasonably anticipated by
CBS or any other Losses whatsoever resulting from such contract or its
terms. The parties hereto further agree that this paragraph is not in any
way intended to impose any different or more stringent burden of proof on
any CBS Indemnitee in asserting or enforcing any right than that which
may have existed in the absence of the foregoing.
SECTION 8.2. INDEMNIFICATION BY CBS
CBS shall indemnify, defend and hold harmless Xxxxxxx, its Affiliates
(excluding, after the Effective Time, GCI, GTC and the Limited Partnership)
and each of their respective officers, directors, employees, stockholders,
agents and representatives and each of the heirs, executors, successors and
assigns of any of the foregoing (the "Xxxxxxx Indemnitees" and, together with
the CBS Indemnitees, the "Indemnitees") from and against, and pay or reimburse
the Xxxxxxx Indemnitees for, all Losses (other than any Losses relating to
Taxes, for which indemnification provisions are set forth in the Tax Matters
Agreement), suffered or incurred by the Xxxxxxx Indemnitees, relating to or
arising from :
(i) the breach by CBS, CBS Dallas Ventures or CBS Dallas Media
of any agreement or covenant contained in this Agreement;
(ii) any breach or inaccuracy of any representation or warranty
of CBS contained in this Agreement; or
(iii) except to the extent of Gaylord's indemnification
obligation under Section 8.1, the ownership of GCI, GTC or the
Limited Partnership or the operation of the Station from and after
the Effective Time.
SECTION 8.3. TERMINATION OF INDEMNIFICATION
The obligations to indemnify and hold harmless any party (i) pursuant to
Section 8.1(a)(ii) and 8.2(ii) shall terminate when the applicable
representation or warranty terminates pursuant to Section 10.1 and (ii)
pursuant to Section 8.1(a)(i) and (iii) and Section 8.2(i) and (iii) shall not
terminate; provided, however, that such obligations to indemnify and hold
harmless shall not terminate with respect to any item as to which an
Indemnitee shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice of such claim pursuant to
Section 8.4 to the indemnifying party.
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SECTION 8.4. PROCEDURES
(a) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or
involving a claim made by any person who is not an Indemnitee against the
Indemnitee (a "Third Party Claim"), such Indemnitee must notify the party
who may become obligated to provide indemnification hereunder (the
"indemnifying party") in writing, and in reasonable detail, of the Third
Party Claim reasonably promptly, and in any event within 20 business days
after receipt by such Indemnitee of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except to the extent
the indemnifying party shall have been actually prejudiced as a result of
such failure. After any required notification, the Indemnitee shall
deliver to the indemnifying party, promptly after the Indemnitee's
receipt thereof, copies of all notices and documents (including court
papers) received by the Indemnitee relating to the Third Party Claim.
(b) If a Third Party Claim is made against an Indemnitee, the
indemnifying party will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof (at the expense of
the indemnifying party) with counsel selected by the indemnifying party
and reasonably satisfactory to the Indemnitee. Should the indemnifying
party so elect to assume the defense of a Third Party Claim, the
indemnifying party will not be liable to the Indemnitee for any legal
expenses subsequently incurred by the Indemnitee in connection with the
defense thereof. If the indemnifying party assumes such defense, the
Indemnitee shall have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying
party shall control such defense. The indemnifying party shall be liable
for the fees and expenses of counsel employed by the Indemnitee for any
period during which the indemnifying party has not assumed the defense
thereof (other than during any period in which the Indemnitee shall have
failed to give notice of the Third Party Claim as provided above).
Notwithstanding the foregoing, the indemnifying party shall not be
entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an
order, injunction or other equitable relief or relief for other than
money damages against the Indemnitee which the Indemnitee reasonably
determines, after conferring with its outside counsel, cannot be
separated from any related claim for money damages. If such equitable
relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the indemnifying party shall be
entitled to assume the defense of the portion relating to money damages.
The indemnification required by Section 8.1 or 8.2, as the case may be,
shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
the Losses are incurred. If the indemnifying party chooses to defend or
prosecute a Third Party Claim, all the parties hereto shall cooperate in
the defense or prosecution thereof, which cooperation shall include the
retention and (upon the indemnifying party's request) the provision to
the indemnifying party of records and information which are reasonably
relevant to such Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the indemnifying party
chooses to defend or prosecute any Third Party Claim, the Indemnitee will
agree to any settlement, compromise or discharge of such Third Party
Claim which the indemnifying party may recommend and which by its terms
obligates the indemnifying party to pay the full amount of liability in
connection with such Third Party Claim; provided, however, that, without
the Indemnitee's consent, the indemnifying party shall not consent to
entry of any judgment or enter into any settlement (x) that provides for
injunctive or other nonmonetary relief affecting the Indemnitee or (y)
that does not include as an unconditional term thereof the giving by each
claimant or plaintiff to such Indemnitee of a release from all liability
with respect to such claim. If the indemnifying party shall have assumed
the defense of a Third Party Claim, the Indemnitee
44
shall not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the indemnifying party's prior
written consent (which consent shall not be unreasonably withheld).
(c) In order for an Indemnitee to be entitled to any indemnification
provided for under this Agreement in respect of a claim that does not
involve a Third Party Claim, the Indemnitee shall deliver notice of such
claim (in reasonably sufficient detail to enable the indemnifying party
to evaluate such claim) with reasonable promptness to the indemnifying
party. The failure by any Indemnitee so to notify the indemnifying party
shall not relieve the indemnifying party from any liability which it may
have to such Indemnitee under this Agreement, except to the extent that
the indemnifying party shall have been actually prejudiced by such
failure. If the indemnifying party does not notify the Indemnitee within
20 calendar days following its receipt of such notice that the
indemnifying party disputes its liability with respect to such claim
under Section 8.1 or 8.2, as the case may be, the claim shall be
conclusively deemed a liability of the indemnifying party under Section
8.1 or 8.2, as the case may be, and the indemnifying party shall pay the
amount of such liability to the Indemnitee on demand or, in the case of
any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such
portion thereof) becomes finally determined. If the indemnifying party
has timely disputed its liability with respect to such claim, as provided
above, the indemnifying party and the Indemnitee shall proceed in good
faith to negotiate a resolution of such dispute and, if not resolved
through negotiations, such dispute shall be resolved by litigation in an
appropriate court of competent jurisdiction.
(d) Notwithstanding any of the foregoing, Xxxxxxx shall be
responsible for defending any Third Party Claim pending at the Effective
Time.
Section 8.5. CERTAIN LIMITATIONS
(a) The amount of any Losses for which indemnification is provided
under this Agreement shall be net of any amounts actually recovered by
the Indemnitee from third parties (including, without limitation, amounts
actually recovered under insurance policies) with respect to such Losses.
(b) All indemnification payments under this Agreement shall be
determined on a pre-tax basis, i.e., without regard to the tax
consequences to the Indemnitee of making a payment that is indemnified by
another party under this Agreement or of receiving a payment under this
Agreement as indemnification therefor.
SECTION 9. TERMINATION
SECTION 9.1. TERMINATION
Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated at any time prior to the Closing:
(a) by the mutual consent of Xxxxxxx and CBS;
(b) by Gaylord at any time, if the Closing has not occurred on or
before the first anniversary of the execution of this Agreement;
(c) by CBS at any time, if the Closing has not occurred on or before
the date one (1) year and two (2) months following the execution of this
Agreement; provided, however, that if
45
the granting of the FCC Consent is materially delayed because of any act
or omission on the part of CBS, this time shall be extended by an
additional ten (10) months;
(d) by Xxxxxxx or CBS if the FCC designates the FCC transfer
applications for an evidentiary hearing;
(e) by Xxxxxxx if the condition set forth in Section 7.8 cannot be
satisfied; or
(f) as provided in Section 10.15.
SECTION 9.2. SPECIFIC PERFORMANCE
The parties recognize that if any party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
would not be adequate to compensate the other party for its injury. Each of
CBS and Xxxxxxx shall therefore be entitled, in addition to any other legal
and equitable remedies that may be available, including money damages, to
obtain specific performance of the terms of this Agreement. If any action is
brought by either CBS or Xxxxxxx to enforce this Agreement, the other parties
shall waive the defense that there is an adequate remedy at law.
SECTION 9.3. EFFECT OF TERMINATION
The termination of this Agreement shall not affect the following sections
of this Agreement, which shall remain in full force and effect following any
termination: Sections 9.3, 10.2 and 10.10. In the event of any termination of
this Agreement, and (subject to Section 10.16) Xxxxxxx is not in material
breach of its obligations under any covenant or agreement hereunder, CBS
agrees that, at the option of Xxxxxxx, it shall extend the Station's status as
a CBS affiliate for a term of one (1) additional year past its then current
expiration date, on the same terms and conditions then in effect (other than
changes applicable to all affiliates generally and to the extent such changes
would be binding on the Station under its current affiliate agreement), and
CBS shall not unreasonably withhold its consent to any assignment of the
Station to a transferee or assignee approved by the FCC. Any termination of
this Agreement shall not relieve or release a party from responsibility
hereunder for any breaches of or defaults under this Agreement nor shall it
impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement.
SECTION 10. GENERAL PROVISIONS
SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
OBLIGATIONS
All representations, warranties, covenants and obligations contained in
this Agreement shall survive the Effective Time; provided, however, that the
representations and warranties contained in Sections 2 and 3 of this Agreement
shall terminate eighteen (18) months after the Closing Date, except that (i)
the representations and warranties in Section 2.20 shall terminate as of the
second anniversary of the Closing Date and (ii) the representations and
warranties relating to Taxes shall terminate at the time the applicable
statute of limitations with respect to the Taxes in question expire (giving
effect to any extension thereof). This Section 10.1 shall not limit any
covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
46
SECTION 10.2. CONFIDENTIAL NATURE OF INFORMATION
The Confidentiality Agreement between Xxxxxxx and CBS dated as of January
21, 1999, shall remain in full force and effect to the extent not superseded
by this Agreement; provided, however, that if the Closing takes place, the
Confidentiality Agreement shall no longer apply to the extent it requires CBS
or any of its Affiliates to treat in confidence any documents, materials or
other information relating to GCI, GTC, the Limited Partnership or the
Station. Each party further hereby agrees that it will treat in confidence all
documents, materials and other information which it shall have obtained
regarding the other party during the course of the negotiations leading to the
consummation of the transactions contemplated hereby (whether obtained before
or after the date of this Agreement), the investigation provided for herein
and the preparation of this Agreement and other related documents, and, in the
event the transactions contemplated hereby shall not be consummated, each
party will return to the other party all copies of nonpublic documents and
materials which have been furnished in connection therewith. Xxxxxxx further
agrees that, after the Closing Date, it will treat in confidence all
documents, materials and other information relating to the business, assets,
liabilities and operations of the Station which were confidential prior to the
Closing. The obligation of each party to treat such documents, materials and
other information in confidence shall not apply to any information which (a)
such party can demonstrate was already lawfully in its possession prior to the
disclosure thereof by the other party, (b) is known to the public and did not
become so known through any violation of a legal obligation, (c) became known
to the public through no fault of such party, (d) is later lawfully acquired
by such party from other sources, (e) such party is permitted to disclose
under this Agreement or (f) such party is required to disclose, pursuant to
judicial order or, in the opinion of counsel, pursuant to applicable law.
Without limiting the right of any party to pursue all other legal and
equitable rights available to it for violation of this Section 10.2 by any
other party, it is agreed that other remedies cannot fully compensate the
aggrieved party for such a violation of this Section 10.2 and that the
aggrieved party shall be entitled to injunctive relief to prevent a violation
or continuing violation thereof.
SECTION 10.3. GOVERNING LAW
This Agreement and the transactions contemplated hereby shall be governed
by and construed in accordance with the laws of the State of Delaware without
reference to its choice of law rules.
SECTION 10.4. NOTICES
All notices or other communications required or permitted hereunder shall
be in writing and shall be deemed given or delivered when delivered personally
or by messenger or seventy-two (72) hours after having been sent by registered
or certified mail or when delivered by private courier addressed as follows:
If to CBS, to:
CBS Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
with a copy to:
47
Cravath, Swaine & Xxxxx
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Gaylord, to:
Xxxxxxx Entertainment Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
with a copy to:
Xxxxxxxx & Xxx, PLC
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Xxxx Xxxxx Xxxx & XxXxxx
1301 K Street, X.X.
Xxxx Xxxxx - Xxxxx X 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
or to such other address as such party may indicate by a notice delivered to
the other parties hereto.
SECTION 10.5. SUCCESSOR AND ASSIGNS
(a) The rights of a party under this Agreement shall not be
assignable by such party without the prior written consent of CBS and
Xxxxxxx, except that upon written notice to the other party all or any
portion of the rights of CBS or Xxxxxxx hereunder (but not its
obligations) may be assigned, without the consent of the other party,
only to a direct wholly owned corporate subsidiary of CBS or Xxxxxxx.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. The
successors and permitted assigns hereunder shall include, without
limitation, any permitted assignee as well as the successors in interest
to such permitted assignee (whether by merger, liquidation (including
successive mergers or liquidations) or otherwise). Except as expressly
provided in Article 8, nothing in this Agreement, expressed or implied,
is intended or shall be construed to confer upon any person other than
the parties and successors and assigns permitted by this Section 10.5 any
right, remedy or claim under or by reason of this Agreement.
SECTION 10.6. ACCESS TO RECORDS AFTER CLOSING
For a period of six (6) years after the Closing Date, Xxxxxxx and its
representatives shall have reasonable access to all of the books and records
of the Station transferred to CBS and the CBS Subsidiaries hereunder to the
extent that such access may reasonably be required by Xxxxxxx in
48
connection with matters relating to or affected by the operations of the
Station prior to the Closing Date. Such access shall be afforded by CBS upon
receipt of reasonable advance notice and during normal business hours. Xxxxxxx
shall be solely responsible for any costs or expenses incurred by it pursuant
to this Section 10.6. If CBS shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, CBS shall, prior to
such disposition, give Xxxxxxx a reasonable opportunity, at Gaylord's expense,
to segregate and remove such books and records as Xxxxxxx may select.
For a period of six (6) years after the Closing Date, CBS and its
representatives shall have reasonable access to all of the books and records
relating to the Station which Xxxxxxx or any of its Affiliates may retain
after the Closing Date. Such access shall be afforded by Xxxxxxx and its
Affiliates upon receipt of reasonable advance notice and during normal
business hours. CBS shall be solely responsible for any costs and expenses
incurred by it pursuant to this Section 10.6. If Xxxxxxx or any of its
Affiliates shall desire to dispose of any of such books and records prior to
the expiration of such six-year period, Xxxxxxx shall, prior to such
disposition, give CBS a reasonable opportunity, at CBS's expense, to segregate
and remove such books and records as CBS may select.
SECTION 10.7. ENTIRE AGREEMENT; AMENDMENTS
This Agreement and the Exhibits and Schedules referred to herein, the
other Transaction Agreements and the documents delivered pursuant hereto and
thereto contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all prior
agreements, understandings or intents between or among any of the parties
hereto and related thereto (provided that nothing in this Agreement shall be
deemed to supersede the provisions of the Merger Agreement dated as of
February 9, 1997 among Westinghouse Electric Corporation, G Acquisition Corp.
and Xxxxxxx Entertainment Company and all other agreements related thereto,
including the Post-Closing Covenants Agreement dated as of September 30, 1997,
among Xxxxxxx Entertainment Company, New Xxxxxxx Entertainment Company and the
subsidiaries of New Xxxxxxx Entertainment Company party thereto from time to
time). The parties hereto, by mutual agreement in writing, may amend, modify
or supplement this Agreement.
SECTION 10.8. INTERPRETATION
Article titles and headings to sections herein are inserted for
convenience of reference only and are not intended to be a part of or to
effect the meaning or interpretation of this Agreement. The Schedules referred
to herein shall be construed with and as an integral part of this Agreement to
the same extent as if they were set forth verbatim herein, and disclosure of
any information on any Schedule shall be deemed disclosure on all Schedules
where such information is manifestly applicable excluding Schedule 2.5.
SECTION 10.9. WAIVERS
Any term or provision of this Agreement may be waived, or the time for
its performance may be extended, in a writing signed by the party or parties
entitled to the benefit thereof. The failure of any party hereto to enforce at
any time any provision of this Agreement shall not be construed to be a waiver
of such provision, nor in any way to affect the validity of this Agreement or
any part hereof or the right of any party thereafter to enforce each and every
such provision. No waiver of any breach of this Agreement shall be held to
constitute a waiver of any other or subsequent breach.
49
SECTION 10.10. EXPENSES
Whether or not the Closing takes place, and except as otherwise provided
herein and subject to the following sentence, each party hereto will pay all
of its own costs and expenses incident to its negotiation and preparation of
this Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and accountants.
Xxxxxxx will pay all such costs and expenses on behalf of GTC, GCI and the
Limited Partnership.
SECTION 10.11. PARTIAL INVALIDITY
Wherever possible, each provision hereof shall be interpreted in such
manner as to be effective and valid under applicable law, but in case any one
or more of the provisions contained herein shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal
or unenforceable provision or provisions had never been contained herein
unless the deletion of such provision or provisions would result in such a
material change as to cause completion of the transactions contemplated hereby
to be unreasonable.
SECTION 10.12. EXECUTION IN COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be considered an original instrument, but all of which shall be
considered one and the same agreement, and shall become binding when one or
more counterparts have been signed by each of the parties and delivered to
each of the parties.
SECTION 10.13. DEFINITIONS
As used in this Agreement, the following terms have the meanings
specified or referred to in this Section 10.13:
"Accounting Firm" has the meaning specified in Section 1.13 of this
Agreement.
"Accounts Receivable" means the accounts held by the Limited Partnership
and to which Xxxxxxx is entitled as of the Effective Time for advertising and
programming aired on the Station and for production and other services
provided by the Limited Partnership prior to the Effective Time , including
rights and claims to payments made by the Copyright Royalty Tribunal.
"Affiliate" means, with respect to any person, any other person which
directly or indirectly controls, is controlled by or is under common control
with such person[, excluding, with respect to Xxxxxxx, The Oklahoma Publishing
Company].
"Balance Sheets" has the meaning specified in Section 2.4 of this
Agreement.
"Benefit Plans" has the meaning specified in Section 2.13 of this
Agreement.
"Cable Act Requirements" has the meaning specified in Section 2.26 of
this Agreement.
"CBS" has the meaning specified in the first paragraph of this Agreement.
50
"CBS Common Stock" has the meaning specified in the Recitals to this
Agreement.
"CBS Dallas Media" has the meaning specified in the first paragraph of
this Agreement.
"CBS Dallas Ventures" has the meaning specified in the first paragraph of
this Agreement.
"CBS Indemnitees" has the meaning specified in Section 8.1 of this
Agreement.
"CBS Material Adverse Effect" has the meaning specified in Section 3.3 of
this Agreement.
"CBS SEC Documents" has the meaning specified in Section 3.4 of this
Agreement.
"CBS Subsidiaries" has the meaning specified in the first paragraph of
this Agreement.
"Certificate of Limited Partnership" means the Certificate of Limited
Partnership of New Xxxxxxx Broadcasting Company, L.P., filed in the office of
the Secretary of State of Texas on September 1, 1995, as amended on November
28, 1995 and December 4, 1995 to change its name to Xxxxxxx Broadcasting
Company, L.P.
"Closing" has the meaning specified in Section 1.2 of this Agreement.
"Closing Date" has the meaning specified in Section 1.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Period" has the meaning specified in Section 4.4 of this
Agreement.
"Communications Act" means the Communications Act of 1934, as amended,
and the rules and regulations and written policies and procedures promulgated
thereunder.
"Constituent Corporations" has the meaning specified in the first
paragraph of this Agreement.
"Contaminant" means any waste, pollutant, hazardous substance, toxic or
radioactive substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, or any constituent of any such substance
or waste.
"DTV" has the meaning specified in Section 2.27 of this Agreement.
"DTV Facility" has the meaning specified in Section 2.27 of this
Agreement.
"DOJ" has the meaning specified in Section 4.2 of this Agreement.
"Effective Time" has the meaning specified in Section 1.3 of this
Agreement.
"Encumbrance" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect
in title, covenant or other restrictions of any kind.
"Event of Loss" has the meaning specified in Section 10.15 of this
Agreement.
51
"Exchange Act" has the meaning specified in Section 2.2 of this
Agreement.
"FAA" means the Federal Aviation Administration.
"FCC" has the meaning specified in Section 2.2 of this Agreement.
"FCC Authorizations" means those Permits issued by the FCC for the
operation of the Station.
"FCC Consent" means action by the FCC granting its consent to the
transfer of control to CBS (or an Affiliate of CBS) of the FCC Authorizations
as contemplated by this Agreement pursuant to appropriate applications filed
by the parties with the FCC.
"Filed CBS SEC Documents" has the meaning specified in Section 3.7 of
this Agreement.
"Final Determination" has the meaning specified in Section 1.4 of the Tax
Matters Agreement.
"Final Order" means a written action or order issued by the FCC, setting
forth the FCC Consent, (a) which has not been reversed, stayed, enjoined, set
aside, annulled or suspended, and (b) with respect to which (i) no requests
have been filed for administrative or judicial review, reconsideration, appeal
or stay and the time for filing any such requests for administrative or
judicial review, reconsideration or appeal, and the time for the FCC to set
aside the action on its own motion, have expired, or (ii) in the event of
review, reconsideration or appeal, the FCC's order has been affirmed and
become final by expiration of the time for further review, reconsideration or
appeal.
"Financial Statements" has the meaning specified in Section 2.4 of this
Agreement.
"Financial Statement Date" has the meaning specified in Section 2.4 of
this Agreement.
"FTC" has the meaning specified in Section 4.2 of this Agreement.
"GAAP" means generally accepted accounting principles.
"Xxxxxxx" has the meaning specified in the first paragraph of this
Agreement.
"Gaylord's 401(k) Plan" has the meaning specified in Section 5.2 of this
Agreement.
"Xxxxxxx Indemnitees" has the meaning specified in Section 8.2 of this
Agreement.
"Xxxxxxx Material Adverse Effect" has the meaning specified in Section
2.1 of this Agreement.
"Gaylord's Pension Plan" has the meaning specified in Section 5.2 of this
Agreement.
"Xxxxxxx Subsidiaries" has the meaning specified in the first paragraph
of this Agreement.
"Xxxxxxx Subsidiary Stock" has the meaning specified in the Recitals to
this Agreement.
52
"Gaylord's Trademarks and Logos" has the meaning specified in Section 5.7
of this Agreement.
"GCI" has the meaning specified in the first paragraph of this Agreement.
"GCI Articles of Merger" has the meaning specified in Section 1.3 of this
Agreement.
"GCI Certificate of Merger" has the meaning specified in Section 1.3 of
this Agreement.
"GCI Merger" has the meaning specified in the Recitals to this Agreement.
"GCI Stock" has the meaning specified in the Recitals to this Agreement.
"Governmental Entity" has the meaning specified in Section 2.2 of this
Agreement.
"GTC" has the meaning specified in the first paragraph of this Agreement.
"GTC Certificate of Merger" has the meaning specified in Section 1.3 of
this Agreement.
"GTC Merger" has the meaning specified in the Recitals to this Agreement.
"GTC Stock" has the meaning specified in the Recitals to this Agreement.
"Identified Agreements" has the meaning specified in Section 1.13(e) of
this Agreement.
"Improvements Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
"Including" means including, without limitation.
"Indemnitees" has the meaning specified in Section 8.2 of this Agreement.
"Lease" has the meaning specified in Section 2.8 of this Agreement.
"Leased Property" has the meaning specified in Section 2.8 of this
Agreement.
"Liabilities and Costs" means all liabilities, investigations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, costs and expenses (including, without limitation, attorney,
expert and consulting fees and expenses, costs of investigation and
feasibility studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or contingent, past, present or
future.
"Limited Partnership" has the meaning specified in the Recitals to this
Agreement.
"Limited Partnership Agreement" means the Agreement of Limited
Partnership of New Xxxxxxx Broadcasting Company, L. P. dated as of September
1, 1995, as amended on February 1, 1999 to change its name to Xxxxxxx
Broadcasting Company, L.P.
"Losses" has the meaning specified in Section 8.1 of this Agreement.
53
"Market Cable System" means any U.S. cable television system within the
Station's market, as defined in 47 C.F.R. ' 76.55(c) with two thousand (2000)
or more subscribers.
"Material Adverse Effect" means, when used in connection with an entity
or group of entities, any change, effect, event or occurrence that is
materially adverse to the business, properties, assets, financial condition,
results of operations or prospects of such entity or group, taken as a whole,
other than any change, effect, event or occurrence relating to the United
States or the Dallas/Fort Worth economies in general, to United States stock
market conditions in general, or to the entity's or group's industry or
industries in general and not to the entity or group specifically.
"Mergers" has the meaning specified in the Recitals to this Agreement.
"Notice of Disagreement" has the meaning specified in Section 1.13 of
this Agreement.
"NYSE" means The New York Stock Exchange.
"Organizational Documents" has the meaning specified in Section 2.1 of
this Agreement.
"Owned Property" has the meaning specified in Section 2.8 of this
Agreement.
"Permits" has the meaning specified in Section 2.2 of this Agreement.
"Permitted Encumbrances" has the meaning specified in Section 2.9 of this
Agreement.
"Phase I Report" has the meaning specified in Section 5.8 of this
Agreement.
"Phase II Report" has the meaning specified in Section 5.8 of this
Agreement.
"Records" has the meaning specified in Section 5.11 of this Agreement.
"Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any structure, including
the movement of Contaminants through or in the air, soil, surface water,
groundwater or structure.
"Relevant Taxes" has the meaning ascribed in Section 2.6 of this
Agreement.
"Remedial Action" means actions required to (a) clean up, remove, treat
or in any other way address Contaminants in the indoor or outdoor environment;
(b) prevent the Release or threat of Release or minimize the further Release
of Contaminants so they do not migrate or endanger or threaten to endanger
public health or welfare or the indoor or outdoor environment; or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.
"Requirements of Law" means any foreign, federal, state or local law,
rule or regulation, common law, order, consent, agreement, judgment, decree,
governmental Permit or other binding determination of any Governmental Entity.
"Securities Act" has the meaning specified in Section 2.2 of this
Agreement.
"Settlement Statement" has the meaning specified in Section 1.13 of this
Agreement.
54
"Spots" has the meaning specified in Section 1.10 of this Agreement.
"Station" has the meaning specified in the Recitals to this Agreement.
"Station Employees" has the meaning specified in Section 2.11 of this
Agreement.
"Tax Authority" has the meaning specified in Section 1.17 of the Tax
Matters Agreement.
"Taxes" has the meaning specified in Section 2.6 of this Agreement.
"Tax Matters Agreement" means the Tax Matters Agreement dated the date
hereof by and between Xxxxxxx, GTC, GCI and CBS, a copy of which is attached
hereto as Exhibit A.
"Tax Returns" has the meaning specified in Section 2.6 of this Agreement.
"Third Party Claim" has the meaning specified in Section 8.4 of this
Agreement.
"To the best of CBS's knowledge" or any similar formulation means to the
actual knowledge, after due inquiry into the areas of their respective
responsibility, including without limitation review of their internal files
and records, of Xxx Xxxxxxxx, Xxxxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx (it
being understood that no attorney-client privilege or work product privilege
shall be waived or compromised by this provision).
"To the best of Gaylord's knowledge" or any similar formulation means to
the actual knowledge, after due inquiry into the areas of their respective
responsibility, including review of their internal files and records, of
Xxxxxx X. Xxxxx, Xxxx Xxxxxxxxx, Xxxx Xxxxx, and Xxxxx Xxxxx.
"Transaction Agreements" has the meaning specified in Section 2.2 of this
Agreement.
"Treasury Regulations" has the meaning specified in Section 2.6 of this
Agreement.
"Waiver" means a permanent waiver or a temporary waiver of at least six
(6) months' duration, including a temporary waiver conditioned on the outcome
of the FCC's pending rule-making proceeding with respect to its television
ownership rules (MM Docket Nos. 91-221 and 87- 8), of the "one-to-a-market
rule," 47 C.F.R. ss.73 3555(c), to permit the common ownership and control by
CBS of the Station and the radio stations in the Dallas/Fort Worth area
currently under CBS's ownership and control.
SECTION 10.14. CONTROLLING PROVISIONS
Notwithstanding anything herein to the contrary, nothing in this
Agreement shall be construed as limiting the provisions contained in the Tax
Matters Agreement, and in the case of doubt or conflict, the terms of the Tax
Matters Agreement shall control.
SECTION 10.15. RISK OF LOSS
The risk of loss, damage or destruction to any of the assets of the
Limited Partnership to be transferred to CBS pursuant to this Agreement shall
remain with Xxxxxxx until the Closing. If any of the assets material to the
operation of the Station is lost, damaged or destroyed prior to the Closing
Date (an "Event of Loss"), Xxxxxxx shall promptly notify CBS of all
particulars thereof,
55
including the cause (if known) and the extent to which the cost of
restoration, replacement and/or repair of the lost, damaged or destroyed
assets will be reimbursed under any insurance policy. Xxxxxxx, at its expense,
shall use its reasonable best efforts to restore, repair or replace the assets
with comparable property of like value or quality as soon as practicable after
the Event of Loss and, if applicable, to restore all transmissions that were
interrupted due to the Event of Loss.
If an Event of Loss results in failure to satisfy the condition to CBS'
obligations to close under Section 6.4, then CBS may, at its option:
(a) terminate this Agreement; or
(b) postpone the Closing Date until such time as the assets have
been restored, repaired or replaced in a manner and to an extent
reasonably satisfactory to CBS, unless the same cannot be reasonably
effected within one hundred twenty (120) days of the date CBS received
notice from Xxxxxxx of the Event of Loss, in which case either Xxxxxxx or
CBS may terminate this Agreement; or
(c) choose to accept the assets "as is", in which event Xxxxxxx
shall assign or cause to be assigned to CBS all rights under any
insurance claims covering the loss, damage or destruction of the assets
and pay over or cause to be paid over to CBS any proceeds under any such
insurance policies received by Gaylord or any of its subsidiaries prior
to or after the Closing Date with respect thereto.
In the event the Closing Date is postponed pursuant to this Section
10.15, CBS and Xxxxxxx will cooperate to extend the time during which this
Agreement must be closed as specified in the consent of the FCC.
SECTION 10.16. RESOLUTION OF DISPUTES OVER SATISFACTION OF
CONDITIONS
In the event (a) CBS or Xxxxxxx, as applicable, determines that the
condition set forth in Section 6.4, 6.6 or 7.9 has not been satisfied at the
Closing Date (and CBS or Xxxxxxx, as applicable, is not prepared to waive such
condition), or (b) CBS shall determine pursuant to Section 9.3 that Xxxxxxx is
in material breach of its obligations and is unwilling to extend the Station's
status as an affiliate for an additional one year term, then the party making
such determination shall deliver to the other party a notice setting forth in
reasonable detail the facts and circumstances upon which the determination was
made. In the event the other party does not agree with such determination, the
Closing shall be delayed or final determination of non-renewal of affiliate
status shall be delayed, as the case may be, and such party shall be entitled
to a ten (10) day period from receipt of the notice within which to cause the
condition to be satisfied or the breach to be cured. If the dispute is not
resolved within the ten (10) day period, CBS and Xxxxxxx shall submit the
dispute to a mutually agreed-upon law professor with at least ten (10) years'
experience in the law of corporate transactions and television broadcasting;
provided, that if the parties cannot agree upon a law professor, the party
making the determination of non-satisfaction of a condition or of material
breach, as applicable, shall select either Jams/Endisputes or CPR Institute
for Dispute Resolution, and the other party may accept the selection or elect
the other entity and the choice of that party shall be binding. The choice of
person or entity to resolve the dispute shall be made within five (5) working
days after the expiration of the ten (10) day grace period, and such person or
entity shall be referred to as the "Arbitrator." Within five (5) days of the
selection of the Arbitrator, CBS and Xxxxxxx shall submit their respective
positions to the Arbitrator, in writing, together with any other material
relied upon in support of their respective positions. The party claiming that
a condition has not been satisfied or alleging a material breach shall have
the burden of persuasion. CBS and
56
Xxxxxxx shall use their reasonable efforts to cause the Arbitrator to render a
decision within ten (10) days following the submission of such materials to
the Arbitrator and in no event later than forty-five (45) days from the date
on which the determination was made by a party that a condition had not been
satisfied or that a material breach had occurred, as applicable. The
Arbitrator's decision shall be final and binding upon the parties. The cost of
any arbitration pursuant to this Section 10.16 shall be borne one-half by CBS
and one-half by Xxxxxxx; provided that CBS and Xxxxxxx shall each pay the fees
and expenses of their respective attorneys.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
XXXXXXX ENTERTAINMENT COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Its: _______________________
XXXXXXX TELEVISION COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Its: _______________________
XXXXXXX COMMUNICATIONS, INC
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Its: _______________________
CBS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Its: _______________________
CBS DALLAS VENTURES, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------
Its: _______________________
57
CBS DALLAS MEDIA, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------
Its: _______________________
The Limited Partnership joins in the execution of this Agreement and agrees to
be bound hereby.
XXXXXXX BROADCASTING COMPANY, L.P.
By: Xxxxxxx Television Company, its general partner
By: /s/ Xxxxxx X. Xxxxx
------------------------
Its: _______________________
