EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TLMD STATION GROUP, INC.
TLMD ACQUISITION CO.
AND
TELEMUNDO GROUP, INC.
DATED AS OF NOVEMBER 24, 1997
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS..................................................... 4
Section 1.1. Definitions................................................ 4
ARTICLE II. THE MERGER..................................................... 8
Section 2.1. The Merger................................................. 8
Section 2.2. Effective Time............................................. 8
Section 2.3. Effects of the Merger...................................... 8
Section 2.4. Certificate of Incorporation and By-Laws................... 8
Section 2.5. Directors.................................................. 8
Section 2.6. Officers................................................... 8
Section 2.7. Conversion of Shares....................................... 8
Section 2.8. Conversion of Sub Common Stock............................. 9
Section 2.9. Dissenting Shares.......................................... 9
Section 2.10. Payment for Shares......................................... 10
Section 2.11. No Further Rights or Transfers............................. 11
Section 2.12. Stock Options.............................................. 11
Section 2.13. Warrants................................................... 11
Section 2.14. Adjustments................................................ 11
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................. 12
Section 3.1. Organization............................................... 12
Section 3.2. Capitalization............................................. 12
Section 3.3. Authority Relative to This Agreement....................... 13
Section 3.4. No Violation............................................... 13
Section 3.5. SEC Reports; No Undisclosed Liabilities.................... 14
Section 3.6. Proxy Statement; Other Information......................... 14
Section 3.7. Compliance................................................. 15
Section 3.8. Absence of Certain Changes................................. 15
Section 3.9. Certain Fees............................................... 16
Section 3.10. FCC Qualifications......................................... 16
Section 3.11. Section 203................................................ 16
Section 3.12. Litigation................................................. 16
Section 3.13. Intellectual Property...................................... 16
Section 3.14. Labor Matters.............................................. 17
Section 3.15. Employee Benefit Plans: ERISA.............................. 17
Section 3.16. Taxes...................................................... 18
Section 3.17. Affiliation Agreements..................................... 18
Section 3.18. Environmental Matters...................................... 18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB............... 19
Section 4.1. Organization............................................... 19
Section 4.2. Authority Relative to This Agreement....................... 19
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Section 4.3. No Violation............................................... 19
Section 4.4. Proxy Statement............................................ 20
Section 4.5. Financing.................................................. 20
Section 4.6. No Prior Activities........................................ 21
Section 4.7. Surviving Corporation after the Merger..................... 21
Section 4.8. Certain Fees............................................... 21
Section 4.9. FCC Qualifications......................................... 21
ARTICLE V. COVENANTS....................................................... 21
Section 5.1. Conduct of Business of the Company......................... 21
Section 5.2. Access to Information...................................... 23
Section 5.3. No Solicitation............................................ 24
Section 5.4. Stockholders' Meeting...................................... 25
Section 5.5. Cooperation................................................ 26
Section 5.6. Public Announcements....................................... 26
Section 5.7. Indemnification and Insurance.............................. 26
Section 5.8. FCC Covenants.............................................. 28
Section 5.9. Notification of Certain Matters............................ 28
Section 5.10. Employee Benefits.......................................... 28
Section 5.11. Acknowledgment of Parent and Sub........................... 29
Section 5.12. Renewal.................................................... 29
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER....................... 29
Section 6.1. Conditions to Each Party's Obligation To Effect the Merger. 29
Section 6.2. Conditions to the Obligation of Parent and Sub to Effect
the Merger............................................................... 30
Section 6.3. Conditions to the Obligation of the Company to Effect the
Merger................................................................... 31
ARTICLE VII. TERMINATION; AMENDMENT; WAIVER................................ 31
Section 7.1. Termination................................................ 31
Section 7.2. Certain Actions Prior to Termination....................... 32
Section 7.3. Effect of Termination...................................... 32
Section 7.4. Termination Fees........................................... 32
Section 7.5. Amendment.................................................. 33
Section 7.6. Extension; Waiver.......................................... 33
ARTICLE VIII. MISCELLANEOUS................................................ 33
Section 8.1. Non-Survival of Representations, Warranties and Agreements. 33
Section 8.2. Entire Agreement; Assignment............................... 34
Section 8.3. Validity................................................... 34
Section 8.4. Notices.................................................... 34
Section 8.5. Governing Law.............................................. 36
Section 8.6. Interpretation............................................. 36
Section 8.7. Parties in Interest........................................ 36
Section 8.8. Counterparts............................................... 36
Section 8.9. Expenses................................................... 36
Section 8.10. Obligation of Parent....................................... 36
Section 8.11. Sale of the Company........................................ 37
Section 8.12. Actions by the Company..................................... 37
SIGNATURES................................................................. S-1
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), is dated as of November
24, 1997, by and among TLMD Station Group, Inc., a Delaware corporation
("Parent"), TLMD Acquisition Co., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and Telemundo Group, Inc., a Delaware
corporation (the "Company").
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending on the reference.
"Acceptable FCC Order" shall have the meaning set forth in Section 6.1.
"Additional Amount" shall have the meaning set forth in Section 2.7.
"Affiliation Agreements" shall have the meaning set forth in Section 3.17.
"Affirmed Condition" shall have the meaning set forth in Section 6.2(a).
"Agreement" shall have the meaning set forth in the Preamble.
"Alternative Proposal" shall have the meaning set forth in Section 5.3(a).
"Benefit Plan" shall have the meaning set forth in Section 3.15(a).
"By-Laws" shall mean the Amended and Restated By-Laws of the Company in
effect as of the date hereof.
"Certificate of Incorporation" shall mean the Restated Certificate of
Incorporation of the Company in effect as of the date hereof.
"Certificate of Merger" shall have the meaning set forth in Section 2.2.
"Certificates" shall have the meaning set forth in Section 2.10(b).
"Claim" shall have the meaning set forth in Section 5.7(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications Act" shall mean the Communications Act of 1934, as amended,
and the rules, regulations and policies of the FCC thereunder.
"Company" shall have the meaning set forth in the Preamble.
"Company Complying Certificate" shall have the meaning set forth in Section
6.2(a).
"Company Disclosure Schedule" shall mean the schedule prepared and delivered
by the Company to and for Parent and Sub and dated as of the date hereof,
which sets forth the exceptions to the representations and warranties of the
Company contained herein and certain other information called for by this
Agreement.
"Company Material Adverse Effect" shall mean a material adverse effect on
the financial condition, results of operations or business of the Company and
its Subsidiaries, taken as a whole.
"Confidentiality Agreement" shall mean, collectively, the confidentiality
agreements between the Financial Advisor, acting on behalf of the Company, and
Liberty Media Corporation, dated as of July 23, 1997, between the Financial
Advisor, acting on behalf of the Company, and Sony Pictures Entertainment
Inc., dated as of April 30, 1997 and as amended as of July 25, 1997, and
between the Financial Advisor, acting on behalf of the Company, and Apollo
Management, L.P., dated as of November 12, 1997.
"Debt Commitment Letters" shall have the meaning set forth in Section 4.5.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning set forth in Section 2.9(a).
"Effective Time" shall have the meaning set forth in Section 2.2.
"Environmental Laws" shall have the meaning set forth in Section 3.18.
"Equity Commitments" shall have the meaning set forth in Section 4.5.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning set forth in Section 3.15(a).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall have the meaning set forth in Section 2.10(a).
"FCC" shall mean the Federal Communications Commission or any successor
agency thereto.
"FCC Order" shall mean an order or decision of the FCC which grants all
consents or approvals required under the Communications Act for the transfer
of control of all FCC licenses held by the Company to Parent and/or Sub and
the consummation of the Merger and the other Transactions, whether or not any
appeal or request for reconsideration or review of such order is pending, or
whether the time for filing any such appeal or request for reconsideration or
review, or for any sua sponte action by the FCC with similar effect, has
expired. For purposes of this definition, the "FCC" shall mean the FCC or its
staff.
"FCC Permits" shall have the meaning set forth in Section 3.7(a).
"Filed SEC Reports" shall have the meaning set forth in Section 3.7(a).
"Financial Advisor" shall mean Lazard Freres & Co. LLC.
"Fund" shall have the meaning set forth in Section 2.10(a).
"Governmental Entity" shall mean any federal, state or local government or
regulatory agency, authority, commission or instrumentality.
"Hazardous Substance" shall have the meaning set forth in Section 3.18.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 5.7(c).
"Intellectual Property" shall mean: (i) registered and unregistered
trademarks, service marks, slogans, trade names, domain names, logos and trade
dress; (ii) registered and unregistered copyrights, including, but not limited
to, copyrights in software programs, databases, and the content contained on
any Internet site(s); (iii)
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software programs and databases; (iv) rights in names, likenesses, images and
other attributes of individuals; and (v) agreements pursuant to which the
Company has obtained the right to use any of the foregoing (together with
other agreements to which the Company or any Subsidiary is a party relating to
the development, acquisition or use of Intellectual Property, "License
Agreements").
"knowledge" shall mean the knowledge, after reasonable inquiry, of the
officers of the Company, Parent or Sub, as applicable, with the title of Vice
President or higher and, with respect to the Company, the general managers of
each of the Stations.
"Letter of Transmittal" shall have the meaning set forth in Section 2.10(b).
"Merger" shall have the meaning set forth in Section 2.1.
"Merger Consideration" shall have the meaning set forth in Section 2.7.
"NMS" shall mean the Nasdaq National Market.
"Non-Affirmed Condition" shall have the meaning set forth in Section 6.2(a).
"Non-Complying Certificate" shall have the meaning set forth in Section
6.2(a).
"Option" shall have the meaning set forth in Section 2.12.
"Parent" shall have the meaning set forth in the Preamble.
"Parent Disclosure Documents" shall have the meaning set forth in Section
5.4(b).
"Parent Response" shall have the meaning set forth in Section 6.2(a).
"Parent Stockholder" shall mean each of the persons who, at the date hereof,
are, and as of the Effective Time will be, stockholders of Parent.
"Pending Proposal" shall have the meaning set forth in Section 7.4.
"Preferred Stock" shall have the meaning set forth in Section 3.2(a).
"Proxy Statement" shall have the meaning set forth in Section 3.6.
"Representatives" shall have the meaning set forth in Section 5.3(a).
"SBI" shall mean Salomon Brothers Inc.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"SEC Reports" shall have the meaning set forth in Section 3.5.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series A Common Stock" shall mean the Series A common stock, $.01 par
value, of the Company.
"Series B Common Stock" shall mean the Series B common stock, $.01 par
value, of the Company.
"Share" shall mean a share of Stock.
"Significant Subsidiaries" shall mean any Subsidiary which (i) is a
"significant subsidiary," as defined in Rule 1-02 of Regulation S-X under the
Exchange Act; (ii) holds any FCC Permits; (iii) owns, directly or indirectly,
any interest in any Subsidiary included in clause (i) or (ii); or (iv) is
otherwise material to the Company and its Subsidiaries, taken as a whole.
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"Special Meeting" shall have the meaning set forth in Section 5.4(a)(i).
"Stations" shall mean the full-power and low-power television stations owned
and operated by the Company.
"Stock" shall mean, collectively, the Series A Common Stock, par value $.01,
of the Company together with the Series B Common Stock, par value $.01, of the
Company.
"Stock Option Plans" shall have the meaning set forth in Section 2.12.
"Sub" shall have the meaning set forth in the Preamble.
"Subsidiary" shall mean, with respect to any person, (A) (i) a corporation
in which such person, a subsidiary of such person, or such person and one or
more subsidiaries of such person, directly or indirectly, at the date of
determination, has either (a) a 50% or greater ownership interest or (b) the
power, under ordinary circumstances, to elect or to direct the election of 50%
or more of the board of directors of such corporation, (ii) a partnership in
which such person, a subsidiary of such person or such person and one or more
subsidiaries of such person (a) is, at the date of determination, general
partner or (b) has a 50% or greater ownership interest in such partnership or
the right to elect, or direct the election of, 50% or more of the governing
body of such partnership and (iii) any other person (other than corporation or
a partnership) in which such person, directly or indirectly, at the date of
determination, has either (a) a 50% or greater ownership interest or (b) the
power to elect, or direct the election of 50% or more of the directors or
other governing body of such other person and (B) any other person which is
consolidated with such person in accordance with generally accepted accounting
principles. For purposes of this Agreement, the term "parent," when not
capitalized, means, with respect to any person, any other person of which such
person is, directly or indirectly, a Subsidiary.
"Superior Offer" shall have the meaning set forth in Section 7.1(e).
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
"Third Parties" shall have the meaning set forth in Section 5.3(a).
"Transactions" shall have the meaning set forth in Section 5.3(a).
"Trigger Date" shall mean the date which is seven months after the date on
which Parent and Sub shall have initially filed with the FCC the FCC Form 315
for approval of the changes of control of the FCC Permits; provided, however,
that if it has not earlier occurred, such date shall be deemed to be August 1,
1998.
"Warrants" shall mean, collectively, (i) those certain warrants dated
December 30, 1994 issued to the Company's bondholders and general unsecured
creditors as of such date entitling the holder of each such warrant to
purchase one share of Series A Common Stock at a price equal to $7.00 per
share (of which 624,094 of such warrants were outstanding as of November 12,
1997 (ii) that certain warrant dated as of December 30, 1994 issued to
Reliance Insurance Company and its subsidiaries entitling the holder of each
such warrant to purchase one share of Series A Common Stock at a price equal
to $7.19 per share (of which 416,667 of such warrants were outstanding as of
November 12, 1997).
"1994 Plan" shall have the meaning set forth in Section 2.12.
"1996 Plan" shall have the meaning set forth in Section 2.12.
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ARTICLE II.
THE MERGER
Section 2.1. The Merger. At the Effective Time (as hereinafter defined),
upon the terms and subject to the conditions hereof, and in accordance with
the DGCL, Sub shall be merged with and into the Company (the "Merger") as soon
as practicable following the satisfaction of the conditions set forth in
Article VI hereof. Following the Merger, the Company shall continue as the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of Sub shall cease.
Section 2.2. Effective Time. The Merger shall be consummated by and shall be
effective at the time of acceptance for filing by the Delaware Secretary of
State of a certificate of merger (the "Certificate of Merger") in such form as
is required by, and executed in accordance with, the relevant provisions of
the DGCL, and such other documents as shall be required by the provisions of
the DGCL (the time of such filing being the "Effective Time").
Section 2.3. Effects of the Merger. The Merger shall have the effects set
forth in the DGCL. As of the Effective Time, the Company shall be a wholly-
owned subsidiary of Parent.
Section 2.4. Certificate of Incorporation and By-Laws. Subject to Section
5.7 hereof, the Certificate of Incorporation and By-Laws of the Company as in
effect at the Effective Time shall be the Certificate of Incorporation and By-
Laws of the Surviving Corporation and thereafter may be amended in accordance
with their respective terms, the DGCL and Section 5.7 hereof.
Section 2.5. Directors. The directors of Sub at the Effective Time shall be
the directors of the Surviving Corporation and will hold office from the
Effective Time until the next annual stockholders' meeting of the Surviving
Corporation and until their successors shall be elected or appointed and shall
be duly qualified.
Section 2.6. Officers. The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the certificate
of incorporation and by-laws of the Surviving Corporation, or as otherwise
provided by law.
Section 2.7. Conversion of Shares. Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held by Parent, Sub
or any other wholly-owned subsidiary of Parent, or in the treasury of the
Company or by any wholly-owned subsidiary of the Company, all of which shall
be canceled and no payment will be made with respect thereto, and Dissenting
Shares, as hereinafter defined) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive from Parent the Merger Consideration (as defined below), subject to
applicable withholding or back-up withholding taxes, if any, payable by the
holder thereof, without interest thereon, upon surrender of the certificate
formerly representing such Share. As used in this Agreement, the term "Merger
Consideration" shall mean the sum, in cash, of $44.00 plus the Additional
Amount (as defined below). As used in this Agreement, the term "Additional
Amount" shall mean, subject to Section 6.1(a), an amount equal to the product
of: (a) $44.00; multiplied by (b) 8%, multiplied by (c) a fraction, the
numerator of which shall be the number of days in the period from and
including the Trigger Date to but excluding the date on which the Effective
Time of the Merger occurs, and the denominator of which shall be 365.
Section 2.8. Conversion of Sub Common Stock. Each share of common stock, par
value $.01 per share, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and represent the right to
receive one share of common stock of the Surviving Corporation, which
thereafter will constitute all of the issued and outstanding common stock of
the Surviving Corporation.
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Section 2.9. Dissenting Shares.
(a) General. Notwithstanding anything in this Agreement to the contrary,
Shares which are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who have not voted such Shares in
favor of the Merger, who shall have delivered a written demand for appraisal
of such Shares in the manner provided in the DGCL and who, as of the Effective
Time, shall not have effectively withdrawn or lost such right to appraisal
("Dissenting Shares") shall not be converted into or represent a right to
receive the Merger Consideration pursuant to Section 2.7 hereof, but the
holders thereof shall be entitled only to such rights as are granted by
Section 262 of the DGCL. Each holder of Dissenting Shares who becomes entitled
to payment for such Shares pursuant to Section 262 of the DGCL shall receive
payment therefor from the Surviving Corporation in accordance with the DGCL;
provided, however, that (i) if any such holder of Dissenting Shares shall have
failed to establish his entitlement to appraisal rights as provided in Section
262 of the DGCL, (ii) if any such holder of Dissenting Shares shall have
effectively withdrawn his demand for appraisal of such Shares or lost his
right to appraisal and payment for his Shares under Section 262 of the DGCL or
(iii) if neither any holder of Dissenting Shares nor the Surviving Corporation
shall have filed a petition demanding a determination of the value of all
Dissenting Shares within the time provided in Section 262 of the DGCL, such
holder or holders (as the case may be) shall forfeit the right to appraisal of
such Shares and each such Share shall thereupon be deemed to have been
converted, as of the Effective Time, into and represent the right to receive
payment from the Surviving Corporation of the Merger Consideration, without
interest thereon, as provided in Section 2.7 hereof.
(b) Notice of Appraisal Demands. The Company shall give Parent and Sub (i)
prompt notice of any written demands for appraisal, withdrawals of demands for
appraisal and any other instruments served pursuant to Section 262 of the DGCL
received by the Company and (ii) the opportunity to direct all negotiations
and proceedings with respect to demands for appraisal under Section 262 of the
DGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisal or
offer to settle or settle any such demands.
Section 2.10. Payment for Shares.
(a) Exchange Mechanics. Prior to the Effective Time, Parent shall designate
a bank or trust company reasonably satisfactory to the Company to act as
Exchange Agent in the Merger (the "Exchange Agent"). At or prior to the
Effective Time, Parent will, or will take all steps necessary to enable and
cause the Surviving Corporation to, provide the Exchange Agent funds (the
"Fund") necessary to make the payments contemplated by Section 2.7. Out of the
Fund, the Exchange Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 2.7. The Fund shall not be used for any other
purpose. The Exchange Agent may invest portions of the Fund, as directed by
Parent (so long as such directions do not impair the Exchange Agent's ability
to make the payments referred to in Section 2.7 hereof or otherwise impair the
rights of holders of Shares), provided that no such investments may be made
other than in direct obligations of the United States of America, obligations
for which the full faith and credit of the United States of America is pledged
to provide for the payment of principal and interest, commercial paper rated
of the highest quality by ▇▇▇▇▇'▇ Investors Services, Inc. or Standard &
Poor's Corporation, or certificates of deposit issued by a commercial bank
having capital exceeding $500,000,000. Any net earnings resulting from, or
interest or income produced by, such investments shall be paid to the
Surviving Corporation as and when requested by Parent. The Surviving
Corporation shall replace any monies lost through any investment made pursuant
to this Section 2.10. Deposit of funds pursuant hereto shall not relieve
Parent or the Surviving Corporation of their obligations to make payments in
respect of Shares and Parent hereby guarantees the Surviving Corporation's
obligations in respect thereof.
(b) Letter of Transmittal. Promptly after the Effective Time, the Surviving
Corporation shall cause the Exchange Agent to mail to each record holder, as
of the Effective Time, of an outstanding certificate or certificates which
immediately prior to the Effective Time represented Shares (the
"Certificates") a form letter of transmittal (the "Letter of Transmittal") for
return to the Exchange Agent (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the
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Certificates to the Exchange Agent) and instructions for use in effecting the
surrender of the Certificates, for payment therefor. Upon surrender to the
Exchange Agent of a Certificate, together with the Letter of Transmittal duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor cash in an amount equal to the product of the number of
Shares represented by such Certificate multiplied by the Merger Consideration
subject to any required withholding taxes, and such Certificate shall
forthwith be canceled. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment is to be made to a person
other than the person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered shall
be properly endorsed or otherwise in proper form for transfer and that the
person requesting such payment shall pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.10, each
Certificate (other than Certificates representing Shares held by Parent, Sub
or any other wholly-owned subsidiary of Parent, the Company or any wholly-
owned subsidiary of the Company which shall have been canceled, or Dissenting
Shares) shall represent for all purposes the right to receive the Merger
Consideration in cash multiplied by the number of Shares evidenced by such
Certificate, without any interest thereon.
(c) Return of Unclaimed Funds. Any cash provided to the Exchange Agent
pursuant to this Section 2.10 and not exchanged for Certificates within six
months after the Effective Time will be returned by the Exchange Agent to the
Surviving Corporation, which thereafter will act as Exchange Agent.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered
to a public official pursuant to applicable abandoned property, escheat and
similar laws.
Section 2.11. No Further Rights or Transfers. At and after the Effective
Time, each holder of a Certificate that represented issued and outstanding
Shares immediately prior to the Effective Time shall cease to have any rights
as a stockholder of the Company, except for the right to surrender his or her
Certificate or Certificates in exchange for the payment provided pursuant to
Sections 2.7 and 2.10 hereof or to perfect his or her right to receive payment
for his or her Shares pursuant to Section 262 of the DGCL and Section 2.9
hereof if such holder has validly exercised and perfected and not withdrawn
his or her right to receive payment for his or her Shares, and there shall be
no transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates formerly representing Shares are
presented to the Surviving Corporation, they shall be canceled and exchanged
for cash as provided in this Article II, subject to applicable law in the case
of Dissenting Shares.
Section 2.12. Stock Options. Immediately prior to the Effective Time, each
holder of a then-outstanding Company stock option issued pursuant to either
(a) the Company's 1994 Stock Plan, as amended (the "1994 Plan"), or (b) the
Company's 1996 Non-Employee Director Stock Option Plan (the "1996 Plan" and,
collectively, with the 1994 Plan, the "Stock Option Plans"), whether or not
then presently exercisable, to purchase Shares (an "Option") will be entitled
to receive, and shall receive, in settlement of such Option a cash payment
from the Company equal to the product of (i) the total number of Shares then
subject to each such Option with an exercise price per Share less than the
Merger Consideration multiplied by (ii) the excess of the Merger Consideration
over the exercise price per Share subject to such Option, subject to any
required withholding of taxes. If necessary or appropriate under the Stock
Option Plans, the Company will, upon the request of Parent, use its reasonable
best efforts to obtain the written acknowledgment of each person holding an
Option that the payment of the amount of cash referred to above will satisfy
in full the Company's obligation to such person pursuant to such Option. By
virtue of the foregoing treatment of the Options, at the Effective Time all
Options shall be canceled and shall cease to exist. Prior to the Effective
Time, the Company shall make any amendments to the terms of the Stock Option
Plans that are necessary to give effect to the transactions contemplated by
this Section 2.12.
Section 2.13. Warrants. Immediately prior to the Effective Time, each holder
of a then-outstanding Warrant will be entitled to receive, and shall receive,
in settlement of such Warrant a cash payment from the Company equal to the
product of (i) the total number of Shares then subject to each such Warrant
with an
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exercise price per Share less than the Merger Consideration multiplied by (ii)
the excess of the Merger Consideration over the exercise price per Share
subject to such Warrant, subject to any required withholding of taxes. If
necessary or appropriate under the terms of such Warrant, the Company will,
upon the request of Parent, use its reasonable best efforts to obtain the
written acknowledgment of each person holding a Warrant that the payment of
the amount of cash referred to above will satisfy in full the Company's
obligation to such person pursuant to such Warrant. By virtue of the foregoing
treatment of the Warrants, at the Effective Time all Warrants shall be
canceled and shall cease to exist. Prior to the Effective Time, the Company
shall make any amendments to the terms of the Warrants that are necessary and
give effect to the transactions contemplated by this Section 2.13.
Section 2.14. Adjustments. If, between the date of this Agreement and the
Effective Time, the outstanding Shares shall be changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment,
or a stock dividend thereon shall be declared with a record date prior to the
Effective Time, the amount of consideration to be received pursuant to this
Article II in exchange for each outstanding Share, Option, or Warrant shall be
correspondingly adjusted.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and, with respect to the covenants
contained in Section 3.6 only, covenants to Parent and Sub as follows:
Section 3.1. Organization. Except as set forth in Section 3.1 of the Company
Disclosure Schedule, the Company and each of its Significant Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its state or jurisdiction of incorporation and is in good standing as
a foreign corporation in each jurisdiction where the properties owned, leased
or operated, or the business conducted, by it require such qualification and
where failure to be in good standing or to so qualify would, individually or
in the aggregate, have a Company Material Adverse Effect. The Company has made
available to Parent true and correct copies of the certificate of
incorporation and By-Laws or equivalent organizational documents, each as
amended to the date hereof, of the Company and each Significant Subsidiary.
Such certificates of incorporation, by-laws and equivalent organizational
documents are in full force and effect. The Company is not in violation of its
Certificate of Incorporation or By-Laws. No Significant Subsidiary is in
violation of its certificate of incorporation, by-laws or equivalent
organizational documents, except for violations that would not, individually
or in the aggregate, have a Company Material Adverse Effect.
Section 3.2. Capitalization.
(a) Company Capitalization. The authorized capital stock of the Company
consists of 14,388,394 shares of Series A Common Stock, 5,611,606 shares of
Series B Common Stock and 1,000,000 shares of preferred stock ("Preferred
Stock"). As of September 30, 1997, there were (i) 6,966,895 shares of Series A
Common Stock issued and outstanding and (ii) 3,198,761 shares of Series B
Common Stock issued and outstanding and (iii) no shares of Preferred Stock
issued and outstanding. Since September 30, 1997, no Shares have been issued
(except for (x) the issuance of Shares pursuant to the exercise of Options
outstanding under the Stock Option Plans at such date, the issuance of Shares
pursuant to the exercise of the Warrants outstanding on such date, and (y) the
issuance pursuant to the terms of the Certificate of Incorporation of Shares
of Series A Common Stock upon the sale of Shares of Series B Common Stock
issued and outstanding on such date), and no shares of Preferred Stock have
been issued. Except as set forth in Section 3.2(a) of the Company Disclosure
Schedule and except for 2,080,761 shares of Series A Common Stock issuable (i)
upon exercise of Options outstanding as of September 30, 1997 or issued in
compliance with Section 5.1 issued pursuant to the Stock Option Plans and (ii)
upon exercise of the Warrants, there are not now, and at the Effective Time
there will not be, any existing options, warrants, calls, subscriptions,
convertible or exchangeable securities, or other rights, or other agreements
or
8
commitments, obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock of the Company or any of its Subsidiaries. All issued and
outstanding Shares are validly issued, fully paid, nonassessable and free of
preemptive rights. None of the outstanding shares of capital stock of the
Company is held by the Company or any of its Subsidiaries.
(b) Subsidiary Capitalization. Except as set forth in Section 3.2(b) of the
Company Disclosure Schedule, all of the outstanding shares of capital stock of
each of the Significant Subsidiaries have been validly issued and are fully
paid and non-assessable and are owned directly or indirectly by the Company
free and clear of all liens, charges, claims or encumbrances or as imposed by
applicable securities laws. Except as set forth in Section 3.2(b) of the
Company Disclosure Schedule, there are no outstanding options, warrants,
calls, subscriptions, or other rights, or other agreements or commitments,
obligating any Significant Subsidiary of the Company to issue, transfer or
sell any shares of its capital stock. There are no proxies outstanding with
respect to any shares of capital stock of the Company's Subsidiaries.
(c) Except as set forth in Section 3.2(c) of the Company Disclosure Schedule
and interests in the Subsidiaries, neither the Company nor any Significant
Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, business,
trust or entity (other than non-controlling investments in the ordinary course
of business and corporate partnering, development, cooperative marketing and
similar undertakings and arrangements entered into in the ordinary course of
business).
Section 3.3. Authority Relative to This Agreement.
(a) Company Approvals. The Company has full corporate power and authority to
execute and deliver this Agreement and, subject to obtaining the necessary
approval of this Agreement by the affirmative vote of a majority of the
outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as a single class (the "Stockholder Approval"), to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation of the Transactions have been duly authorized by the Board of
Directors of the Company, and no other corporate proceedings on the part of
the Company are necessary for the execution and delivery of this Agreement by
the Company and, subject to the filing of the Certificate of Merger pursuant
to Section 2.2 and obtaining the Stockholder Approval, the performance by the
Company of its obligations hereunder and the consummation by the Company of
the Transactions. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes a valid and binding
obligation of each of Parent and Sub, this Agreement constitutes a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that its enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors rights generally or by general
equitable principles.
(b) Other Authorizations. Except as set forth in Section 3.3(b) of the
Company Disclosure Schedule, other than in connection with, or in compliance
with, applicable requirements of (i) the DGCL with respect to the filing of
the Certificate of Merger, (ii) the Exchange Act (including, without
limitation, the filing of the Proxy Statement), (iii) the requirements of the
NMS, (iv) the HSR Act and (v) the Communications Act (including, without
limitation, requirements related to the transfer of control licenses in
connection with the operation of the Stations), no authorization, consent or
approval of, or filing with, any court or any public body or authority is
necessary for the execution and delivery of this Agreement and the
consummation by the Company of the Transactions other than authorizations,
consents and approvals the failure to obtain, or filings the failure to make,
which would not, in the aggregate, have a Company Material Adverse Effect.
Section 3.4. No Violation. None of the execution or delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder or the consummation by the Company of the Transactions will (a)
subject to obtaining the Stockholder Approval, constitute a breach or
violation of any provision of the Certificate of Incorporation or By-Laws of
the Company, (b) except as set forth in Section 3.4 of the Company Disclosure
Schedule, constitute a breach, violation or default (or any event which, with
notice
9
or lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the payment or performance required by, or
result in the creation of any lien or encumbrance upon any of the properties
or assets of the Company or any of its Subsidiaries or permit any person to
require the Company or any Subsidiary to repurchase or repay any obligation
under, any note, bond, mortgage, indenture, deed of trust, license, agreement
or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which they or any of their respective properties
or assets are bound, (c) constitute a violation of any order, writ,
injunction, decree, statute, rule or regulation of any court or governmental
authority applicable to the Company, any of its Subsidiaries or any of their
properties or assets, or (d) except as set forth in Section 3.4 of the Company
Disclosure Schedule, give any person the right to require the Company or any
Subsidiary to purchase any assets from, or sell any assets to, such person or
trigger any "change of control" provisions in any agreement to which the
Company or any of its Subsidiaries is a party, other than, in the case of
clauses (b), (c) and (d) above, such breaches, violations, defaults,
terminations, accelerations or creation of liens and encumbrances or rights to
require the Company or any Subsidiary to purchase or sell any assets or
trigger any "change of control" provisions which, in the aggregate, would not
have a Company Material Adverse Effect or as set forth in Section 3.4 of the
Company Disclosure Schedule.
Section 3.5. SEC Reports; No Undisclosed Liabilities. Since September 30,
1995, the Company has filed all forms, reports and documents ("SEC Reports")
with the SEC required to be filed by it pursuant to the Securities Act, and
the Exchange Act and the SEC rules and regulations promulgated thereunder.
True and correct copies of all such SEC Reports have been made available to
Parent by the Company. All of the SEC Reports complied (as of their respective
filing dates) in all material respects with the applicable requirements of the
Securities Act, the Exchange Act and the SEC rules and regulations promulgated
thereunder. None of such SEC Reports (as of their respective filing dates)
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. The audited and unaudited consolidated financial statements of
the Company included in the SEC Reports have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as otherwise stated in such financial statements included in the Filed SEC
Reports, including the related notes, and except that the interim financial
statements do not contain all of the footnote disclosures required by
generally accepted accounting principles) and fairly present in all material
respects the financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of their operations and
their cash flows for the periods then ended, subject, in the case of the
interim unaudited financial statements, to normal year-end audit adjustments,
which, except as disclosed in the Filed SEC Reports, would not be material in
amount or effect. Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or
reserved against in, the consolidated financial statements of the Company or
in the notes thereto, prepared in accordance with generally accepted
accounting principles consistently applied, except for (i) liabilities or
obligations that were so reserved on, or reflected in (including the notes
to), the consolidated balance sheet of the Company as of December 31, 1996 or
September 30, 1997; (ii) liabilities or obligations arising in the ordinary
course of business consistent with past practice since September 30, 1997;
(iii) liabilities or obligations which would not, individually or in the
aggregate, have a Company Material Adverse Effect; (iv) liabilities or
obligations related to this Agreement or the Transactions; and (v) payments
required as a result of the consummation of the Merger under the acceleration
provisions of the terms existing on the date hereof of the Company's
employment agreements, severance agreements or Benefit Plans which would not,
individually or in the aggregate, have a Company Material Adverse Effect. No
Subsidiary of the Company is required to file any report or form with the SEC.
Section 3.6. Proxy Statement; Other Information. None of the information
included or incorporated by reference in the letter to stockholders, notice of
meeting, proxy statement and form of proxy, or the information statement
(including, without limitation, the proxy or information statement containing
information required by Regulation 14A under the Exchange Act, and, if
applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act), as the case
may be, to be distributed to stockholders of the Company in connection with
the Merger, or any schedules required to be filed with the SEC in connection
therewith (collectively referred to herein as the
10
"Proxy Statement"), if required, except information supplied by Parent or Sub
in writing for inclusion in the Proxy Statement or in such schedules (as to
which the Company makes no representation), will, as of the date the Proxy
Statement is first mailed to such stockholders, and on the date of the Special
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No representation is made by the Company with respect to any
forward-looking information which may have been supplied by the Company
whether or not included in the Proxy Statement. The Proxy Statement will
comply (at the time of its mailing) as to form in all material respects with
the Exchange Act and the rules and regulations thereunder. The Company will
promptly correct any statements in the Proxy Statement that to its knowledge
have become false or misleading and take all steps necessary to cause such
Proxy Statement as so corrected to be filed with the SEC and disseminated to
the stockholders of the Company in accordance with applicable law.
Section 3.7. Compliance.
(a) Except as disclosed by the Company in the SEC Reports filed with the SEC
prior to the date hereof (the "Filed SEC Reports") or as set forth in Section
3.7(a) of the Company Disclosure Schedule, the Company and its Subsidiaries
hold all permits, licenses, waivers, exemptions, orders, franchises and
approvals necessary for the lawful conduct of their respective businesses in
the manner in which they are currently being conducted (including, but not
limited to, those required under the Communications Act or the rules and
regulations of the FCC (the "FCC Permits")), except where the failure to
possess the same would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company and its Subsidiaries are in compliance
with the terms of all FCC Permits, except where the failure to so comply would
not have a Company Material Adverse Effect.
(b) The FCC Permits are in full force and effect unimpaired by any condition
that could have a material adverse effect on the financial condition, results
of operations, or business of the Stations. Except as set forth in the Filed
SEC Reports or identified in Section 3.7(b) of the Company Disclosure
Schedule, no application, action or proceeding is pending for the renewal or
modification of any of the FCC Permits and, except for actions or proceedings
affecting television broadcast stations generally, no application, complaint,
action or proceeding is pending or, to the Company's knowledge, threatened
that is reasonably likely to result in (i) the denial of an application for
renewal, (ii) the revocation, modification, non-renewal or suspension of any
of the Station licenses and other material FCC Permits, (iii) the issuance of
a cease-and-desist order, or (iv) the imposition of any administrative or
judicial sanction with respect to any of the Stations, individually or in the
aggregate, with respect to this clause (iv) that would have a Company Material
Adverse Effect.
(c) The Stations, their respective physical facilities, electrical and
mechanical systems and transmitting and studio equipment (i) are being
operated in all material respects in compliance with the specification of the
applicable Station licenses and other material FCC Permits, and (ii) are being
operated in all material respects in compliance with all material requirements
of the Communications Act. The Company and the Stations have complied in all
material respects with all requirements of the FCC and the Federal Aviation
Administration with respect to the construction and/or alteration of the
Company's antenna structures and "no hazard" determinations for each antenna
structure owned by the Stations have been obtained.
Section 3.8. Absence of Certain Changes. Except as set forth in the Filed
SEC Reports or identified in Section 3.8 of the Company Disclosure Schedule,
since September 30, 1997 there has not been any material adverse change in the
financial condition, results of operations or business of the Company and its
Subsidiaries, taken as a whole.
Section 3.9. Certain Fees. With the exception of the fees payable to the
Financial Advisor and SBI pursuant to the respective engagement letters dated
July 17, 1997 and November 20, 1997 which have been delivered to Parent,
neither the Company, any of its Subsidiaries nor any of their officers,
directors or employees has employed any broker or finder or incurred any
liability for any financial advisory, brokerage or finder's fees or
commissions to any brokers or finders in connection with the Transactions.
11
Section 3.10. FCC Qualifications. After due investigation, except for
matters described in Section 3.10 of the Company Disclosure Schedule, the
Company is not aware of any facts or circumstances related to the Company that
are likely to prevent or delay prompt consent to the transfer of control
applications (as described in Section 5.8(b)) to a qualified purchaser and the
issuance of the FCC Order.
Section 3.11. Section 203. The Board of Directors of the Company has
approved this Agreement and the Merger. Section 203 of the DGCL has been
rendered inapplicable to the consummation of the Merger and the other
Transactions.
Section 3.12. Litigation. Except as disclosed in the Filed SEC Reports or
identified in Section 3.12 of the Company Disclosure Schedule, there are no
civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries at law or in equity,
or before or by any federal or state commission, board, bureau, agency or
instrumentality, that could reasonably be expected, individually or together
with any other action, suit, claim, hearing, investigation or proceeding
arising out of or based upon the same or substantially the same facts or
circumstances, to have a Company Material Adverse Effect.
Section 3.13. Intellectual Property. Except as disclosed in the Filed SEC
Reports or identified in Section 3.13 of the Company Disclosure Schedules and
except to the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect:
(a) The Company or its Subsidiaries own or have the valid right to use
all Intellectual Property used in or necessary for the conduct of their
businesses as currently conducted or proposed by the Company to be
conducted, free and clear of all liens, charges, claims or encumbrances and
the Company has not granted to any third party a license to use the
trademark "Telemundo" or any related logo, except as displayed or embedded
as part of video programming licensed for exhibition to third parties or
pursuant to the Affiliation Agreements or for customary cross-promotional
or advertising purposes.
(b) To the knowledge of the Company, (i) neither the Company's nor any
Subsidiary's use of any Intellectual Property nor the conduct of the
Company's nor any Subsidiary's business infringes any Intellectual Property
rights of any third party, and no such claims have been asserted against
the Company or any Subsidiary which have not been resolved, and (ii) no
third party is materially infringing any of the Company's or any
Subsidiary's Intellectual Property rights, and no such claims are pending
or threatened by the Company or any Subsidiary against any third party.
Section 3.14. Labor Matters. Except as set forth in the Filed SEC Reports or
identified in Section 3.14 of the Company Disclosure Schedules, there is no
labor strike, dispute, slowdown, work stoppage or lockout actually pending or,
to the knowledge of the Company, threatened against or affecting the Company
or any Subsidiary and, since January 1, 1995, there has not been any such
action. Except as set forth in the Filed SEC Reports or identified in Section
3.14 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary is a party to or bound by any collective bargaining, guild or
similar agreement with any labor organization, or work rules or practices
agreed to with any labor organization or employee association applicable to
employees of the Company or any Subsidiary. The Company and its Subsidiaries
have at all times been in compliance with all applicable laws respecting
employment and employment practices, terms and conditions of employment,
wages, hours of work, and occupational safety and health, except where any
failure to be in compliance could not reasonably be expected to have a Company
Material Adverse Effect, and are not engaged in any unfair labor practices as
defined in the National Labor Relations Act or other applicable law, ordinance
or regulation which could reasonably be expected to have a Company Material
Adverse Effect. There is no grievance or arbitration proceeding arising out of
any collective bargaining or guild agreement or other grievance procedure
relating to the Company or its Subsidiaries which could reasonably be expected
to have a Company Material Adverse Effect.
12
Section 3.15. Employee Benefit Plans: ERISA
(a) Section 3.15(a) of the Company Disclosure Schedule sets forth a true and
complete list of each material compensation plan and each other material
"employee benefit plan" (within the meaning of Section 3(2) of ERISA) that is
maintained or contributed to, or was maintained or contributed to, at any time
since January 1, 1995, by the Company, any Subsidiary or by any trade or
business, whether or nor incorporated, which together with the Company would
be deemed a "single employer" within the meaning of Section 4001(b) of ERlSA
(an "ERISA Affiliate") for the benefit of any employee, former employee,
consultant, officer, or director of the Company or any Subsidiary (a "Benefit
Plan").
(b) Except as set forth in the Filed SEC Reports or identified in Section
3.15(b) of the Company's Disclosure Schedule: (i) no Benefit Plan is a
"multiemployer plan," as such term is defined in Section (3)(37) of ERISA, or
a "multiple employer plan" within the meaning of Section 413(c) of the Code;
(ii) each of the Benefit Plans is, and has always been, operated in all
respects in accordance with the requirements of all applicable law; (iii) each
of the Benefit Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service to that effect; (iv) no Benefit Plan has an
accumulated or waived funding deficiency within the meaning of Section 412 of
the Code; (v) neither the Company nor any ERISA Affiliate has incurred,
directly or indirectly, any liability (including any material contingent
liability) to or on account of a Benefit Plan pursuant to Title IV of ERISA;
(vi) no proceedings have been instituted to terminate any Benefit Plan that is
subject to Title IV of ERISA; (vii) no "reportable event," as such term is
defined in Section 4043(b) of ERISA, has occurred with respect to any Benefit
Plan that is not reflected on an applicable annual report filed on behalf of
such plan; and (viii) no condition exists that presents a risk to the Company
or any ERISA Affiliate of incurring a liability to or on account of a Benefit
Plan pursuant to Title IV of ERISA; provided, however, that the
representations made in the foregoing clauses (ii) through (viii) of this
Section 3.15(b) shall be deemed to be true and correct except to the extent
that their untruth would, individually or in the aggregate, have a Company
Material Adverse Effect.
(c) Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect, (i) there are no pending, or to the knowledge of the
Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Benefit Plans, or any trusts
related thereto or any trustee or administrator thereof, and (ii) no
litigation or administrative or other proceeding (including, without
limitation, any litigation or proceeding under Title IV of ERlSA) has occurred
or, to the knowledge of the Company, is threatened involving any Benefit Plan
or any trusts related thereto or any trustee or administrator thereof.
Section 3.16. Taxes Except as set forth in Section 3.16 of the Company
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has filed all material tax
returns and reports required to be filed by it, or requests for extensions to
file such returns or reports have been timely filed and granted and have not
expired, and all tax returns and reports are complete and accurate in all
respects, except to the extent that such failures to file, have extensions
granted that remain in effect or be complete and accurate in all respects, as
applicable, would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company and each of its Subsidiaries has paid (or
the Company has paid on its behalf) all taxes shown as currently due on such
tax returns and reports. The most recent financial statements contained in the
SEC Reports reflect an adequate reserve for all taxes payable by the Company
and its Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements in accordance with generally
accepted accounting principles, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any Subsidiary that are
not adequately reserved for, except for inadequately reserved taxes and
inadequately reserved deficiencies that would not, individually or in the
aggregate, have a Company Material Adverse Effect. No requests for waivers of
the time to assess any taxes against the Company or any Subsidiary have been
granted and are pending, except for requests with respect to such taxes that
have been adequately reserved for in the most recent financial statements
contained in the SEC Reports, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
13
(b) As used in this Section 3.16 and in Section 5.1, "taxes" shall include
all Federal, state, local and foreign income, franchise, property, sales, use,
excise and other taxes, including obligations for withholding taxes from
payments due or made to any other person and any interest, penalties or
additions to tax.
Section 3.17. Affiliation Agreements. The Company has provided Parent with
access to true and correct copies of all affiliation agreements between the
Company or any of its Subsidiaries and a television broadcast station pursuant
to which such station has agreed to broadcast the network programming of the
Company (the "Affiliation Agreements"). Each of the Affiliation Agreements is
in full force and effect, is the valid and binding obligation of the parties
thereto and is enforceable in accordance with its terms. The Company is not
and, to the knowledge of the Company, no other party to any Affiliation
Agreement is in material breach or default with respect to its obligations
thereunder, or has given notice of, or, to the Company's knowledge, has any
basis for, any action to terminate, cancel, rescind or procure a judicial
reformation thereof.
Section 3.18. Environmental Matters. The Company and its Subsidiaries are in
material compliance with all federal, state, and local laws governing
pollution or the protection of human health or the environment ("Environmental
Laws"), except in each case where noncompliance with Environmental Laws would
not reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received any written notice with
respect to the business of, or any property owned or leased by, the Company or
any of its Subsidiaries from any Governmental Entity or third party alleging
that the Company or any of its Subsidiaries is not in material compliance with
any Environmental Law. To the knowledge of the Company, there has been no
release of a "Hazardous Substance," as that term is defined in the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. (S) 9601 et seq., in excess of a reportable quantity on any real
property owned or leased by the Company or any of its Subsidiaries.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and Sub represent and warrant and, with respect to the covenants
contained in Section 4.4 only, covenant to the Company as follows:
Section 4.1. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of its state
or jurisdiction of incorporation and is in good standing as a foreign
corporation in each other jurisdiction where the properties owned, leased or
operated, or the business conducted, by it require such qualification and
where failure to be in good standing or so to qualify would, individually or
in the aggregate, have a material adverse effect on the financial condition,
results of operations or businesses of Parent and Sub, taken as a whole.
Section 4.2. Authority Relative to This Agreement.
(a) Parent and Sub Approvals. Each of Parent and Sub has full corporate
power and authority to execute and deliver this Agreement and to consummate
the Transactions. The execution and delivery of this Agreement by Parent and
Sub and the consummation of the Transactions have been duly authorized by the
respective Boards of Directors of Parent and Sub, and by Parent as the sole
stockholder of Sub, and no other corporate proceedings on the part of Parent
or Sub are necessary for the execution and delivery of this Agreement by each
of Parent and Sub, the performance by each of Parent and Sub of their
respective obligations hereunder and the consummation by each of Parent and
Sub of the transactions so contemplated. This Agreement has been duly executed
and delivered by each of Parent and Sub and, assuming this Agreement
constitutes a valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and Sub,
enforceable against each of Parent and Sub in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors rights generally or by general equitable principles.
14
(b) Other Authorizations. Other than in connection with, or in compliance
with, applicable requirements of (i) the DGCL with respect to the
Transactions, (ii) the Exchange Act (including, without limitation, the filing
of the Proxy Statement), (iii) the HSR Act and (iv) the Communications Act
(including, without limitation, requirements related to the transfer of
licenses in connection with the operation of the television stations owned and
operated by the Company), no authorization, consent or approval of, or filing
with, any court or any public body or authority is necessary for the
consummation by Parent and Sub of the Transactions other than authorizations,
consents and approvals the failure to obtain, or filings the failure to make,
would not, in the aggregate, have a material adverse effect on the financial
condition, results of operations or business of Parent and its Subsidiaries,
taken as a whole, or on the ability of Parent and Sub to consummate the
Transactions.
Section 4.3. No Violation. Neither the execution or delivery of this
Agreement by Parent and Sub, the performance by Parent and Sub of their
respective obligations hereunder nor the consummation by them of the
Transactions will (a) constitute a breach or violation under the certificate
of incorporation or by-laws of Parent or Sub or (b) constitute a breach,
violation or default (or any event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in the creation of any lien
or encumbrance upon any of the properties or assets of Parent or any of its
Subsidiaries under, any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument to which Parent or any of its
Subsidiaries is a party or by which they or any of their respective properties
or assets are bound or (c) constitute a violation of any order, writ,
injunction, decree, statute, rule or regulation of any court or governmental
authority applicable to Parent or Sub or any of their respective properties or
assets, give any person the right to require Parent or Sub to purchase any
assets from, or sell any assets to, such person or trigger any "change of
control" provisions in any material agreement to which Parent or Sub is a
party other than, in the case of clauses (b), (c) and (d) above, such
breaches, violations, defaults, terminations, accelerations or creation of
liens and encumbrances which, in the aggregate, would not, individually or in
the aggregate, have a material adverse effect on the financial condition,
results of operations or business of Parent and Sub, taken as a whole, or on
the ability of Parent and Sub to consummate the Transactions.
Section 4.4. Proxy Statement.
(a) None of the information supplied in writing by Parent, Sub or their
respective affiliates specifically for inclusion in the Proxy Statement will,
at the time the Proxy Statement is mailed or at the time of the Special
Meeting (as defined in Section 5.4) or at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If at any time prior to the Special Meeting any event with respect
to Parent or Sub, or with respect to information supplied by Parent or Sub for
inclusion in the Proxy Statement, shall occur which is required to be
described in an amendment of, or a supplement to, such documents, such event
shall be so described to the Company in a timely manner.
(b) Parent Disclosure. The Parent Disclosure Documents, will (as of their
respective filing dates) comply in as to form in all material respects with
the applicable requirements of the Securities Act and the Exchange Act and the
SEC rules and regulations promulgated thereunder. None of Parent Disclosure
Documents will, at the time they are filed, at the time of any distribution
thereof or at the time of the Special Meeting, contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
will not apply to statements or omissions in the Parent Disclosure Documents
based solely upon information furnished to Parent in writing by the Company
specifically for use therein.
Section 4.5. Financing. Parent has received binding written commitments (the
"Equity Commitments") from its stockholders to contribute equity capital to
the Parent in the aggregate amount of $273,200,000 plus additional amounts
necessary to fund the Additional Amount (if any) hereunder and Sub has
received from Parent a binding written commitment from Parent that Parent will
immediately thereafter contribute the Equity Commitments to Sub. The Equity
Commitments include an unconditional commitment from each of the Parent
Stockholders that an aggregate of $100,000,000 will be contributed to Parent,
whether or not the Merger is
15
consummated, to satisfy the obligations of Parent and Sub hereunder, including
without limitation, claims made as a result of any breaches by Parent or Sub
of the terms of this Agreement. Parent and Sub have or have access to the
funds, or have, at the date hereof, binding written commitments from
responsible financial institutions to provide Parent or Sub with the funds
(the "Debt Commitment Letters") necessary, together with the Equity
Commitments, to consummate the Merger and the other Transactions and to
provide working capital for the business of the Company, and to consummate the
Transactions, including the payment of related fees and expenses. True and
correct copies of all such financing commitments have previously been
furnished to the Company along with letters from each of Parent Stockholders
stating that the Company may rely on the Equity Commitments as if they were
addressed to the Company. As of the date hereof, none of the Equity
Commitments or commitments represented by the Debt Commitment Letters has been
withdrawn and Parent and Sub do not know of any facts or circumstances
existing at the date hereof that would result in any of the conditions
contained in the Debt Commitment Letters not being satisfied.
Section 4.6. No Prior Activities. Sub has not incurred, directly or
indirectly, any material liabilities or obligations, except those incurred in
connection with its organization or with the negotiation of this Agreement and
the Transactions. Sub has not engaged, directly or indirectly, in any business
or activity of any type or kind, or entered into any agreement or arrangement
with any person or entity, and is not subject to or bound by any material
obligation or undertaking, that is not contemplated by or in connection with
this Agreement and the Transactions.
Section 4.7. Surviving Corporation after the Merger. At the Effective Time
and after giving effect to any changes in the Surviving Corporation's assets
and liabilities as a result of the Merger and after giving effect to the
financing for the Merger and the use of proceeds therefrom, the Surviving
Corporation will not (a) be insolvent (either because its financial condition
is such that the sum of its debts is greater than the fair market value of its
assets or because the present fair saleable value of its assets will be less
than the amount required to pay its debts as they become due), (b) have
unreasonably small capital with which to engage in its business or (c) have
incurred or plan to incur debts beyond its ability to pay as they become
absolute and matured.
Section 4.8. Certain Fees. Neither the Parent or Sub nor any affiliates
thereof nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability required to be paid by
the Company prior to the Closing for any financial advisory, brokerage or
finder's fees or commissions to any brokers or finders in connection with the
Transactions.
Section 4.9. FCC Qualifications. Parent and Sub, to their knowledge after
consulting with regulatory counsel and based on the FCC's current practice and
precedent, are, for purposes of obtaining the FCC Order, legally, technically,
financially and otherwise qualified to acquire control of the Company, and
Parent and Sub are not aware of any facts or circumstances related to Parent
or Sub that are likely to prevent consent to the transfer of control
applications (as described in Section 5.8(b)) and issuance of the FCC Order.
Parent's equity ownership is structured as described in the bid letter dated
November 17, 1997 and delivered by Parent and Sub to the Financial Advisor on
behalf of the Company. Parent and Sub, to their knowledge after consulting
with regulatory counsel, are not aware, except for the continuation of
existing waivers, that any waiver of any FCC rule or policy is necessary to be
obtained for the grant of the applications for transfer of control of the
Company to Parent and Sub, nor will processing pursuant to any exception to
any rule of general applicability be requested or required in connection with
the consummation of the Transactions.
ARTICLE V.
COVENANTS
Section 5.1. Conduct of Business of the Company. Except as expressly
contemplated by this Agreement or as set forth in Section 5.1 of the Company
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its respective operations according to its ordinary and usual course
of business and consistent with past practice and
16
use reasonable efforts to (i) preserve intact its business organizations'
goodwill, (ii) keep available the services of its present officers and key
employees, and (iii) preserve the goodwill and business relationships with
suppliers, distributors and others having business relationships with it.
Without limiting the generality of the foregoing, and except as expressly
contemplated by this Agreement or as set forth in Section 5.1 of the Company
Disclosure Schedule, prior to the Effective Time, the Company will not, and
the Company will cause its Subsidiaries not to, without the prior written
consent of Parent (such consent, except in the cases of clauses (a), (h) and
(i) below, not to be unreasonably withheld):
(a) issue, sell, pledge or otherwise dispose of, grant or otherwise
create any additional shares of, or authorize or propose the issuance,
sale, pledge, disposal, grant or creation of any shares of capital stock of
the Company and its Subsidiaries, or securities convertible into or
exchangeable for such shares, or any rights, warrants or options to acquire
such shares or other convertible or exchangeable securities, other than the
issuance of Shares pursuant to the exercise of Options or Warrants as
outstanding on the date hereof or otherwise issuable pursuant to the
automatic grant provisions of the 1996 Plan as in effect on the date
hereof, relating to director options;
(b) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital
stock, other than in transactions between the Company and its wholly-owned
subsidiaries and any required repurchases of options or stock upon
termination of employment to the extent required by agreements in effect on
the date hereof;
(c) declare, set aside, make or pay any dividend or distribution, payable
in cash, stock, property or otherwise, on any shares of its capital stock
(other than dividends paid by wholly-owned Subsidiaries of the Company to
the Company);
(d) other than with respect to intercompany payables and receivables and
intercompany debt, incur or become contingently liable with respect to any
indebtedness or guarantee of any indebtedness or issue any debt securities
other than indebtedness incurred to finance working capital requirements in
the ordinary course of business consistent with past practice;
(e) merge, consolidate with or consummate any other business combination
with any person or acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business entity;
(f) sell, lease, license (other than exhibition licenses entered into in
the ordinary course of business consistent with past practice), mortgage,
transfer or otherwise dispose of any properties or assets which are
material to the Company and its Subsidiaries, taken as a whole;
(g) except as disclosed in Section 5.1 of the Company Disclosure Schedule
or as may be required by applicable law or by contracts existing as of the
date hereof, (i) increase the compensation payable or to become payable to
its officers or employees, except for non-officer employees and production
and talent personnel, increases in the ordinary course of business
consistent with past practice; (ii) enter into any written employment
agreement with any employee, except in the ordinary course of business
which, in any event, shall be terminable, without penalty, on not more than
six months notice; (iii) grant any severance or termination pay to any
director, officer or employee inconsistent with Company policy; or (iv)
establish, adopt, enter into, terminate, withdraw from or amend in any
material respect or take any action to accelerate any rights or benefits
under any collective bargaining agreement, any stock option plan, or any
material Benefit Plan;
(h) enter into any programming commitment other than in the ordinary
course of business consistent with past practice;
(i) enter into any local marketing, joint marketing or similar
agreements, modify or amend any such existing agreements on terms less
favorable to the Company than such existing agreements, if such terms
would, individually or in the aggregate, have a Company Material Adverse
Effect;
(j) incur any commitments for capital expenditures (as such term is used
in accordance with generally accepted accounting principles) in excess of
$10,000,000 in any twelve month period.
17
(k) incur any obligations to make any payment of, or in respect of, any
tax, except in the ordinary course of business consistent with past
practice, settle any material tax audit, make or change any tax election or
file any amended tax returns; in each case other than (i) in connection
with the current audit of the Company's federal income tax returns for the
years ended December 31, 1994 and December 31, 1995, details of which have
previously been provided to representatives of Parent or Sub and (ii)
obligations and actions which action would not result in a Company Material
Adverse Effect;
(l) cancel or waive any claim or right of substantial value or settle any
material pending litigation;
(m) enter into any paid programming or infomercial agreement or any
agreement granting any person the right to program any block of network or
local time, in each case which is not terminable at the Company's
discretion upon not more than 30 days notice or which does not extend
beyond June 30, 1998;
(n) except as set forth in Section 5.1 of the Company Disclosure Schedule
or in the ordinary course of business consistent with past practice, pay,
discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) before they are due or fail to
pay accounts payable in accordance with their terms;
(o) propose or adopt any amendments to its certificate of incorporation
or by-laws;
(p) agree, in writing or otherwise, to take any of the foregoing actions;
or
(q) take, or agree or commit to take, any action that would make any
representation or warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time or result in any
of the conditions to the Merger set forth in this Agreement not being
satisfied.
Section 5.2. Access to Information.
(a) General. So long as this Agreement has not been terminated, between the
date of this Agreement and the Effective Time, the Company will give Parent
and its authorized representatives reasonable access during normal business
hours to all offices, stations, studios, production facilities and other
facilities and to all books and records of it and its Subsidiaries, will
permit Parent to make such inspections as it may reasonably require and will
cause its officers and those of its Subsidiaries to furnish Parent (at such
time as it would otherwise become available in the ordinary and usual course
of business and consistent with past practice) with such financial and
operating data and other information (consistent with that which is currently
being prepared by the Company) with respect to the business and properties of
the Company and its Subsidiaries as Parent may from time to time reasonably
request.
(b) Confidentiality. Subject to any additional requirements of law
(including, without limitation, FCC regulations) and the terms of the
Confidentiality Agreement, Parent and Sub (i) will hold and will cause their
respective representatives, advisors and financing sources to hold in strict
confidence, unless compelled to disclose by judicial or administrative
process, or, in the written opinion of its counsel with a copy sent to the
Company, by other requirements of law, all documents and information
concerning the Company and its Subsidiaries furnished to Parent, Sub or any of
their respective representatives, advisors and financing sources in connection
with the Transactions, provided, however, that, prior to any disclosure
pursuant to the foregoing, Parent shall notify the Company and afford the
Company an opportunity to obtain a protective order against such disclosure
(except to the extent that such information can be shown to have been (x)
previously known by Parent, (y) in the public domain through no fault of
Parent, its representatives or advisors or (z) later lawfully acquired by
Parent from other sources, unless Parent knows that such other sources are not
entitled to disclose such information) and (ii) will not release or disclose
such information to any other person, except in connection with this Agreement
to (1) its auditors, attorneys, financial advisors and other representatives
and advisors with a need to know such information and (2) responsible
financial institutions in connection with obtaining the financing contemplated
by Section 4.5 hereof, provided that such person shall have first been advised
of the confidentiality provisions of this Section 5.2 and the Confidentiality
Agreement and agreed to be bound thereby. If the Transactions are not
consummated, such confidence shall be maintained except to the extent such
information can be shown to have been (i) previously known by Parent, (ii) in
the public domain through no
18
fault of Parent, its representatives or advisors or (iii) later lawfully
acquired by Parent from other sources, unless Parent knows that such other
sources are not entitled to disclose such information and, if requested by the
Company, Parent will return to the Company all copies of information furnished
by the Company to Parent or its agents, representatives, advisors or financing
sources, or derived therefrom, or shall in writing confirm the destruction of
such information.
Section 5.3. No Solicitation.
(a) The Company shall not, nor shall it permit any of its Subsidiaries, or
any officer, director, employee, agent or representative of the Company or any
of its Subsidiaries (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries)
(collectively, "Representatives"), directly or indirectly, to (i) initiate,
solicit or encourage any inquiries or proposals that constitute, or could
reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of assets representing a substantial
portion of the assets of the Company and its Subsidiaries, taken as a whole,
or a sale of shares representing 20% or more of the capital stock of the
Company, including, without limitation, by way of a tender offer or exchange
offer by any person for 20% or more of the shares of capital stock of the
Company, other than the Merger and the other transactions contemplated by this
Agreement (the "Transactions") (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "Alternative Proposal"), (ii) engage
in negotiations or discussions concerning, or provide to any person or entity
any non-public information or data relating to the Company or any of its
Subsidiaries for the purposes of, or otherwise cooperate with or assist or
participate in, facilitate or encourage, any inquiries relating to or the
making of any Alternative Proposal, (iii) agree to, approve or recommend any
Alternative Proposal or (iv) take any other action inconsistent with the
obligations and commitments of the Company pursuant to this Section 5.3;
provided, however, that nothing contained in this Agreement shall prevent the
Company or its Board of Directors from (A) furnishing non-public information
to, or entering into discussions or negotiations with, any person or entity in
connection with an unsolicited bona fide written Alternative Proposal (for
which financing, to the extent required, is then committed or which, in the
good faith judgment of the Company's board of directors after consultation
with the Company's financial advisor, is reasonably capable of being obtained)
to the Company or its stockholders from persons other than Parent and its
affiliates (a "Third Party"), if and only to the extent that (1) the Board of
Directors of the Company, by action of a majority of the members of the Board
of Directors who are not affiliated with either the Parent or the person
making such Alternative Proposal or their respective affiliates, determines in
good faith, after consultation with the Company's outside counsel and its
financial advisors, that (x) such Alternative Proposal is more favorable from
a financial point of view to the Company's stockholders than the Merger and
the other Transactions and (y) failure by the Board of Directors to furnish
such information to or enter into discussions or negotiations with such Third
Party could reasonably be expected to result in a breach of its fiduciary
duties to the Company's stockholders under applicable law, and (2) prior to
furnishing such non-public information to, or entering into discussions or
negotiations with, such Third Party, the Board of Directors of the Company
receives from such person or entity an executed confidentiality agreement with
terms no less favorable to such party than those contained in the
Confidentiality Agreement; or (B) complying with Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act with regard to an Alternative Proposal or
making any other public disclosure that, based upon advice of the Company's
outside counsel, the Board of Directors determines in its good faith judgment
is required by applicable law, rule or regulation; provided, that prior to
making any such other public disclosure the Company shall to the extent
reasonably practicable inform the Parent that it intends to make such
disclosure. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations by the Company or its
Representatives with any parties conducted heretofore with respect to any of
the foregoing.
(b) The Company shall (i) promptly notify the Parent in writing after
receipt by the Company or its Representatives of any Alternative Proposal or
any inquiries indicating that any person is considering making or wishes to
make an Alternative Proposal, (ii) promptly notify the Parent in writing after
receipt of any request for non-public information relating to the Company or
any of its Subsidiaries or for access to the Company's or any of its
Subsidiaries' properties, books or records by any person that, to the
Company's knowledge, may be considering making, or has made, an Alternative
Proposal and (iii) keep the Parent advised of the status and principal terms
of any such Alternative Proposal, indication or request.
19
Section 5.4. Stockholders' Meeting.
(a) General. The Company shall, in accordance with its charter documents:
(i) duly call, give notice of, convene and hold an annual or special
meeting (the "Special Meeting") of its stockholders as soon as practicable
for the purpose of considering and taking action upon this Agreement;
(ii) subject to its fiduciary duties under applicable law as advised in
writing by counsel, include in the Proxy Statement the recommendation of
its Board of Directors that stockholders of the Company vote in favor of
the approval and adoption of this Agreement and the Transactions
contemplated hereby; and
(iii) use its reasonable best efforts (x) (1) to obtain and furnish the
information required to be included by it in the Proxy Statement, (2) to
file the Proxy Statement with the SEC, (3) to respond promptly to any
comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof and (4) to cause the Proxy Statement to be
mailed to its stockholders at the earliest practicable time and (y) subject
to its fiduciary duties under applicable law as advised in writing by
counsel, to obtain the Stockholder Approval.
(b) Parent Disclosure Documents. As soon as practicable after the date of
this Agreement, Parent and/or Sub shall file (separately, or as part of the
Proxy Statement) with the SEC, if required, a Rule 13E-3 Transaction Statement
with respect to the Merger (together with any supplements or amendments
thereto, the "Parent Disclosure Documents"). Each of Sub and Parent agrees to
correct any information provided by it for use in the Sub Disclosure Documents
if and to the extent that it shall have become false or misleading in any
material respect. Sub agrees to take all steps necessary to cause the Sub
Disclosure Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. The Company and its counsel shall be
given reasonable opportunity to review and comment on each Sub Disclosure
Document prior to its being filed with the SEC.
(c) Voting of Shares by Parent and Sub. Parent agrees that, at the Special
Meeting, all Shares owned by Parent, Sub or any other affiliate of Parent will
be voted in favor of the Merger.
Section 5.5 Cooperation. Subject to the terms and conditions herein provided
(including, without limitation, Section 5.8), each of the parties hereto
agrees to use its reasonable best efforts (a) to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the Transactions including, without limitation, (i) promptly making
their respective filings, and thereafter using their reasonable best efforts
promptly to make any required submissions, under the HSR Act and (ii) promptly
making any filings that are required to be made or seeking any consents,
approvals, permits or authorizations that are required to be obtained under
any other federal, state or foreign law or regulation (including those
required under the Communications Act and by the FCC as are more fully
described in Section 5.8 of this Agreement) and (b) to refrain from taking,
directly or indirectly, any action that would result in a breach of this
Agreement. Parent shall notify the Company and keep it reasonably apprised of
developments relating to its ability to satisfy the conditions set forth in
Sections 6.1(d), 6.2(d) and 6.2(e). In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party to this
Agreement shall use their respective reasonable best efforts to take all such
necessary action.
Section 5.6 Public Announcements. Parent, Sub and the Company will consult
with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by law or any securities exchange or similar
authority (in which case prior notice of at least 24 hours by the Company to
Parent or by Parent or Sub to the Company, as applicable, of such issuance of
a press release or making of a public statement shall be required).
Section 5.7 Indemnification and Insurance.
(a) Continuation of Charter Obligations. The Company shall and from and
after the Effective Time, Parent and the Surviving Corporation shall, maintain
the right to indemnification and exculpation of officers and
20
directors provided for in the Certificate of Incorporation and By-Laws of the
Company as in effect on the date hereof, with respect to indemnification and
exculpation for acts and omissions occurring prior to the Effective Time,
including, without limitation, the Transactions.
(b) Continuation of D&O Insurance. For six years after the Effective Time,
Parent or the Surviving Corporation shall maintain officers' and directors'
liability insurance covering the persons who are presently covered by the
Company's officers' and directors' liability insurance policies (copies of
which have heretofore been delivered to Parent) with respect to actions and
omissions occurring prior to the Effective Time, on terms which are not
materially less favorable, in the aggregate, than the terms of such current
insurance in effect for the Company on the date hereof.
(c) Indemnification. The Company shall and from and after the Effective
Time, the Surviving Corporation shall, (i) to the fullest extent permitted
under applicable law, indemnify and hold harmless, each present and former
director and officer of the Company (collectively, the "Indemnified Parties")
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts paid in settlement in
connection with any pending, threatened or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission
occurring prior to the Effective Time (including, without limitation, any
claim, action, suit, proceeding or investigation arising out of or pertaining
to the Transactions (a "Claim")) and (ii) in the event of any such Claim
(whether arising before or after the Effective Time), upon receipt from the
Indemnified Party to whom expenses are advanced of an undertaking to repay
such advances required under the DGCL, advance expenses to each such
Indemnified Party, including the payment of the fees and expenses of counsel
selected by such Indemnified Party, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, as the case may be,
promptly after statements therefor are received, provided, that the Company
shall not, in connection with any one Claim or separate but substantially
similar or related Claims, be liable for the fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for all such Indemnified Parties, and provided, further, that the Company
shall be entitled to participate in the defense thereof, and (iii) cooperate
fully in the defense of any such matter. Promptly after receipt by an
Indemnified Party of notice of any Claim as to which such persons intends to
seek indemnification hereunder, such person shall give notice thereof to the
Company; except that the failure to promptly give notice of any such Claim to
the Company shall not affect such persons right to indemnification, unless the
Company's ability to defend the Claim is materially impaired as a result.
Neither the Company nor the Surviving Corporation shall be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld).
(d) Eligibility for Indemnification. Notwithstanding any provision to the
contrary contained in the Certificate of Incorporation or By-Laws of the
Company as in effect on the date hereof, any determination required to be made
with respect to whether an Indemnified Party's conduct complies with the
standards set forth under the DGCL, under such charter provisions shall be
made by independent counsel selected by the Indemnified Party and reasonably
acceptable to the Company, Parent, Sub or the Surviving Corporation, which
shall pay such counsel's fees and expenses (it being agreed that neither the
Company, Parent, Sub nor the Surviving Corporation shall challenge any such
determination by such independent counsel which is favorable to an Indemnified
Party).
(e) Survival. This Section 5.7 shall survive the Closing, is intended to
benefit the Company, Parent, Sub or the Surviving Corporation and each of the
Indemnified Parties (each of whom shall be entitled to enforce this Section
5.7 against the Company, Parent or the Surviving Corporation, as the case may
be) and shall be binding on all successors and assigns of Parent and the
Surviving Corporation.
(f) Merger, Assignment, etc. In the event Parent, the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then, and in
each such case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation assume the obligations set
forth in this Section 5.7.
21
Section 5.8. FCC Covenants.
(a) Each of Parent and Sub shall use its reasonable best efforts to take, or
cause to be taken, all action and to do or satisfy, or cause to be done or
satisfied, all things and conditions necessary, proper or advisable to obtain
the FCC Order and to satisfy all conditions and take all actions required
thereby, in each case so as to come into compliance with FCC requirements and
to consummate the Merger as promptly as practicable; provided, however, this
Section 5.8 shall not be interpreted as obligating Parent, Sub, any Parent
Stockholder or any affiliates thereof, to consent to the imposition of any
condition or restriction set forth in Section 6.1(d) hereof; provided,
further, that Parent and Sub shall make all reasonable modifications and
adjustments to their respective relationships and arrangements among the
Parent Stockholders (including the grant of proxies to other Parent
Stockholders with respect to general voting rights) with respect to Parent
that are required in order to obtain an Acceptable FCC Order, so long as such
modifications and adjustments do not modify in any material respect the
contemplated minority stockholder protective provisions or modify in any
material respect the economic arrangement among and between the Parent
Stockholders. The Company shall also use such efforts, but shall not be
required to take any action that would be effective prior to the Effective
Time.
(b) As promptly as practicable, following the date of this Agreement (but in
no event later than January 1, 1998), the Company and Parent and Sub shall
prepare and file with the FCC all necessary applications for approval of the
Merger and the other Transactions. Without limiting the foregoing, the
Company, Parent and Sub shall submit to the FCC an application to be filed on
FCC Form 315 pursuant to the Communications Act.
Section 5.9. Notification of Certain Matters. Between the date of this
Agreement and the consummation of the Merger, the Company will promptly notify
Parent and Sub in writing if it becomes aware of any fact or condition that
causes or constitutes a breach of its representations and warranties as of the
date of this Agreement, or if it becomes aware of the occurrence after the
date of this Agreement of any fact or condition which would (except as
expressly contemplated by this Agreement) cause or constitute a breach of any
such representation or warranty had such representation or warranty been made
as of the time of occurrence or discovery of such fact or condition.
Notwithstanding the foregoing provisions of this Section 5.9, no party shall
be required to give notice with respect to events that are reported in the
financial or general interest newspapers that do not specifically relate to
such party or the Transactions.
Section 5.10. Employee Benefits. Parent agrees to honor, and from and after
the Effective Time shall cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof, the
employment, severance, bonus, and commission agreements and similar
arrangements to which the Company is a party which are set forth in Section
5.10 of the Company Disclosure Schedule.
Section 5.11. Acknowledgment of Parent and Sub. Parent and Sub acknowledge
that any projections prepared by the Company and provided to Parent and/or Sub
as part of the due diligence process were and are merely estimates made by the
Company as of the time they were provided and Parent and Sub have in no way
relied on any such projections. Parent and Sub agree and acknowledge that
neither the Company nor any of its affiliates has made or is making any
representation or warranty as to the accuracy or completeness of the
Confidential Information Memorandum furnished by the Financial Advisor on
behalf of the Company or any supplement thereto provided by such person.
Without limiting the foregoing, Parent and Sub agree and acknowledge that the
only representations and warranties made by the Company with respect to the
Transactions are those representations and warranties contained in this
Agreement (together with the exceptions to such representations and warranties
set forth in the Company Disclosure Schedule) and only those representations
and warranties have and will have any legal effect following the date hereof
which effect will continue solely to the extent specifically set forth herein.
Section 5.12. Renewal. To the extent permitted by FCC regulations, with
respect to each Affiliation Agreement which requires that a notice be given,
or other action be taken, prior to the Effective Time in order to exercise the
Company's option to extend the scheduled expiration date of, or otherwise
renew, such Affiliation Agreement, the Company shall consult with Parent with
respect thereto and shall give such notice and shall take such other action
unless, after such consultation, Parent shall otherwise agree in writing.
22
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where legally permissible, prior to the Effective Time
of the following conditions:
(a) Stockholder Approval of this Agreement shall have been obtained;
(b) No statute, rule, regulation, order, decree or injunction shall have
been enacted, entered, promulgated or enforced by any court or governmental
authority of competent jurisdiction which restrains, enjoins or otherwise
prohibits the consummation of the Merger; provided, however, that the
Company, Parent and Sub shall use their reasonable best efforts to have any
such order, decree or injunction vacated;
(c) The applicable waiting period under the HSR Act shall have expired or
been terminated; and
(d) The FCC Order shall have been obtained without the imposition of any
conditions or restrictions that (i) seek to prohibit or limit the ownership
or operation by any of the Parent Stockholders or the Surviving Corporation
or any portion of its or their respective businesses or assets, or to
compel any Parent Stockholder or the Surviving Corporation to dispose of or
hold separate any portion of their business or assets, (ii) seek to impose
material limitations on the ability of any Parent Stockholder to acquire or
hold equity interests of the Parent, exercise the minority protective
provisions contemplated by the Parent or modify in any material respect the
economic arrangement among and between the Parent Stockholders, (iii) seek
to prohibit any Parent Stockholder from effectively controlling in any
respect any of the business or operations of such Parent Stockholder, or
(iv) which otherwise is reasonably likely to adversely effect the financial
condition, results of operations or business of any Parent Stockholder, the
Parent or the Surviving Corporation, that, in the case of conditions or
restrictions of the type referred to in clauses (i), (ii) or (iii), are not
acceptable to Parent in its sole discretion ("Acceptable FCC Order").
Section 6.2. Conditions to the Obligation of Parent and Sub to Effect the
Merger. The obligation of Parent and Sub to effect the Merger are subject to
the satisfaction or waiver, where legally permissible, prior to the Effective
Time of the following conditions:
(a) The representations and warranties of the Company set forth in this
Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date or as specifically set forth below) as of immediately before
the Effective Time, except as otherwise contemplated by this Agreement, and
the Company shall have performed all obligations required to be performed
by it at or prior to the Effective Time, except to the extent the failure
of such representations and warranties to be true and correct as of
immediately before the Effective Time or the failure to perform obligations
hereunder would not, individually or in the aggregate, have a Company
Material Adverse Effect. Notwithstanding the foregoing, on June 30, 1998,
the Company shall deliver a certificate signed on behalf of the Company by
the chief financial officer of the Company certifying that, in the good
faith judgment of such officer upon inquiry of the other officers of the
Company (Vice President level and above), on such date such officer
believes that the representation and warranty of the Company contained in
Section 3.8 hereof is true and correct, as if made at that date (a "Company
Complying Certificate") or, if such representation and warranty is not true
and correct, then stating with specificity in what respect such
representation is not true and correct (a "Non-Complying Certificate"). If
on June 30, 1998, the Company shall have delivered a Complying Certificate,
then, from and after June 30, 1998, the representation in Section 3.8 shall
be deemed to be true and correct, except as may be specifically set forth
below. If the Company shall have delivered a Non-Complying Certificate then
the representation and warranty contained in Section 3.8 shall, to the
extent of the matters so noticed, be deemed not to be satisfied unless such
matters shall have been cured. Notwithstanding the foregoing, if (i) within
15 days of the delivery of a Company Complying Certificate or a Company
Non-Complying Certificate, as applicable, the chief financial officer of
Parent delivers a certificate to the Company certifying that in the good
faith judgment of such officer upon reasonable inquiry, such officer
believes, as of June 30, 1998, that the
23
representation and warranty of the Company set forth in Section 3.8 is not
true and correct, stating with specificity in what respect such
representation is not true and correct (the "Parent Response") and (ii) the
Company shall confirm in writing that such matter renders such
representation not true and correct (an "Affirmed Condition"), then the
representation and warranty of the Company contained in Section 3.8 shall
be deemed not to be satisfied, to the extent of the Affirmed Condition,
unless the Affirmed Condition shall be cured. If the Company does not
confirm in writing that any matter contained in the Parent Response renders
the representation and warranty made in Section 3.8 not true and correct (a
"Non-Affirmed Condition"), each of the parties hereby reaffirms that it
shall retain its right to exercise any and all remedies and/or defenses
available to it with respect to such Non-Affirmed Condition. If cured prior
to December 31, 1998, no matter set forth in a Company Non-Complying
Certificate or a Parent Response shall thereafter render the representation
and warranty of the Company set forth in Section 3.8 to be not true and
correct, and upon cure, each such matter shall be deemed waived. In no
event shall any matter arising after June 30, 1998 or not set forth in a
Company Non-Complying Certificate or Parent Response be deemed to render
the representation and warranty of the Company set forth in Section 3.8 not
true and correct. No Additional Amount shall accrue or be payable with
respect to any period beginning on the date on which all of the conditions
set forth in Section 6.1 and 6.2 hereof have been finally satisfied and
ending on the date on which all matters that are specified in any Non-
Complying Certificate or are Affirmed Conditions are cured.
(b) Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial officer of
the Company to the effect of clause (a) above;
(c) Subject to the provisions of Section 5.12 of this Agreement, the
Company shall have exercised its option to extend any Affiliation Agreement
which the Company or any Subsidiary has the option to extend and which
expires (or which requires notice to be given or other action to be taken
in order to so extend such Affiliation Agreement) prior to the Effective
Time, or, after consulting with Parent, shall have executed an Affiliation
Agreement in such market with a comparable affiliate;
(d) The FCC Order shall not have been reversed, stayed, enjoined,
annulled or suspended; or
(e) The Parent shall have obtained funds pursuant to the Debt Commitment
Letters (or such alternative financing as is reasonably acceptable to the
Parent) sufficient, together with the Equity Commitments (the provision of
which is not a condition to the respective obligations of Parent and Sub to
effect the Merger), to perform its obligations under this Agreement, to
provide working capital for the business of the Company, and to consummate
the Transactions, including the payment of related fees and expenses.
Section 6.3. Conditions to the Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger are subject to the
satisfaction or waiver, where legally permissible, prior to the Effective Time
of the following conditions:
(a) The representations and warranties of Parent and Sub set forth in
this Agreement shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of immediately before the Effective Time, except as
otherwise contemplated by this Agreement, and Parent and Sub shall have
performed all obligations required to be performed by them at or prior to
the Effective Time, except to the extent the failure of such
representations and warranties to be true and correct as of immediately
before the Effective Time or the failure to perform obligations hereunder
would not, individually or in the aggregate, have a Company Material
Adverse Effect;
(b) The Company shall have received a certificate signed on behalf of
Parent and Sub by their respective chief executive officers and the chief
financial officers to the effect of clause (a) above.
ARTICLE VII.
TERMINATION; AMENDMENT; WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
24
(a) by mutual written consent duly authorized by the boards of directors
of Parent and the Company;
(b) subject to Section 7.4(b), by the Company or the Parent if the
Effective Time shall not have occurred on or before December 31, 1998;
provided, however, that the right of the Company or the Parent to terminate
this Agreement pursuant to this Section 7.1(b) shall not be available in
the event that the Company's or the Parent's, as the case may be, failure
to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date;
(c) by Parent or the Company if any court of competent jurisdiction in
the United States or other United States governmental body shall have
issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) by the Company or the Parent, if, at the Special Meeting (including
any adjournment or postponement thereof) called pursuant to Section 5.4
hereof, the Stockholder Approval shall not have been obtained; or
(e) by the Company, subject to Section 7.2, if the Board of Directors of
the Company shall concurrently approve, and the Company shall concurrently
enter into, a definitive agreement providing for the implementation of a
Superior Offer, provided, however, that (i) the Company is not then in
breach of Section 5.3, (ii) the Board of Directors of the Company shall
have complied with Section 7.2 in connection with such Superior Offer, and
(iii) the Company shall simultaneously make the payments required by
Section 7.4(a). For purposes of this Agreement, "Superior Offer" means an
Alternative Proposal which is superior from a financial point of view to
the Company's stockholders (other than any stockholders affiliated with the
Parent) to the Merger and the other Transactions contemplated hereby and
for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Company's board of directors after
consultation with the Company's financial advisors is reasonably capable of
being obtained.
Section 7.2. Certain Actions Prior to Termination. The Company shall provide
to the Parent written notice of its intention to terminate this Agreement
pursuant to Section 7.1(e) advising the Parent (a) that the Board of Directors
of the Company has determined, by action of a majority of the members of the
Board of Directors of the Company who are not affiliated with either the
Parent or the person making such Alternative Proposal or their respective
affiliates, that such Alternative Proposal is a Superior Offer and that, in
the exercise of its good faith judgment as to fiduciary duties to stockholders
under applicable law, after consultation with the Company's outside legal
counsel, failure by the Board of Directors to terminate this Agreement could
reasonably be expected to result in a breach of such duties and (b) as to the
material terms of any such Alternative Proposal. At any time after the fifth
business day following receipt of such notice, the Company may terminate this
Agreement as provided in Section 7.1(e) only if the Board of Directors of the
Company determines, by action of a majority of the members of the Board of
Directors of the Company who are not affiliated with either the Parent or the
person making such Alternative Proposal or their respective affiliates, that
failure by the Board of Directors to terminate this Agreement continues to be
reasonably expected to result in a breach of its fiduciary duties to
stockholders under applicable law (which determination shall be made in light
of any revised proposal made by the Parent prior to the expiration of such
five business day period) and concurrently enters into a definitive agreement
providing for the implementation of such Alternative Proposal.
Section 7.3. Effect of Termination. In the event of termination of this
Agreement by the Company or the Parent as provided in Section 7.1 hereof, this
Agreement shall forthwith become void (except as set forth (i) in the last
sentence of Section 5.2(b), (ii) in Sections 7.4, 8.2, 8.3, 8.4 and 8.9 and
(iii) in this Section 7.3); provided that no party hereto shall be relieved
from liability for any breach of this Agreement.
Section 7.4. Termination Fees.
(a) If this Agreement is terminated pursuant to (a) Section 7.1(d) or (b)
Section 7.1(e), and if the Company is not at that time entitled to terminate
this Agreement by reason of Section 7.1(b) or 7.1(c), then the Company shall
promptly (and in any event within two days of receipt by the Company of
written notice from the Parent)
25
pay to the Parent (by wire transfer of immediately available funds to an
account designated by the Parent) concurrently with the execution of a
definitive agreement with respect to any Alternative Proposal, a termination
fee of $15,000,000 plus an amount equal to documented fees and expenses
incurred by or on behalf of the Parent and its affiliates and investors in
connection with this Agreement and the Transactions up to an aggregate maximum
amount of $2,500,000; provided, however, that the Company shall not be
obligated to pay such fee to the Parent if this Agreement is terminated
pursuant to Section 7.1(d) unless (a)(i) at the time of the Company Meeting,
the Company has received an Alternative Proposal (a "Pending Proposal") or
(ii) prior to the termination of this Agreement the Board of Directors of the
Company shall have withdrawn, or modified in a manner adverse to the Parent,
its approval or recommendation of the Merger and the other Transactions, and
(b) within one year after the termination of this Agreement, the Company
enters into a definitive agreement or otherwise consummates with any person
such or any other Alternative Proposal, and, provided, further, that if such
termination fee becomes payable as a result of a termination pursuant to
Section 7.1(d), then such termination fee shall be paid promptly following the
earlier of the execution of such definitive agreement providing for an
Alternative Proposal and the consummation of an Alternative Proposal, as the
case may be.
(b) If (i) this Agreement is terminated pursuant to (i) Section 7.1(b) and
(ii) Parent is not at that time entitled to terminate this Agreement by reason
of Section 7.1(c) or 7.1(d), and (iii) Parent has not received an Acceptable
FCC Order, and (iv) the conditions set forth in Sections 6.1(c) and 6.2(a),
(b), (c) and (e) have been, or if the FCC Order had been obtained, would have
been, otherwise satisfied, then Parent shall promptly (and in any event within
two days of receipt by Parent of written notice from the Company) pay to the
Company (by wire transfer of immediately available funds to an account
designated by the Company) a termination fee of $17,500,000; provided,
however, that Parent shall not be obligated to pay such fee to the Company if
the sole reason that Parent and Sub have failed to obtain the Acceptable FCC
Order is due to changes, after the date hereof, in the Communications Act or
the rules and regulations of the FCC, in effect as of the date hereof (except
those which have been proposed in formal rulemaking proceedings and have been
subject to public comment prior to the date hereof).
Section 7.5. Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by the Company, Parent and Sub (and
the stockholders of the Company, if required by applicable law) at any time
before or after adoption of this Agreement by the Company's stockholders;
provided, however, that after the adoption of this Agreement by the Company's
stockholders, no amendment shall be made which decreases the price per Share,
changes the form of consideration to be received by the holders of Shares in
the Merger or which adversely affects the rights of stockholders of the
Company hereunder without the approval of such stockholders. This Agreement
may not be amended except by an instrument in writing signed on behalf of all
the parties.
Section 7.6. Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document,
certificate or writing delivered pursuant hereto or (c) waive compliance with
any of the agreements or conditions contained herein unless waiver is unlawful
or specifically prohibited. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VIII.
MISCELLANEOUS
Section 8.1. Non-Survival of Representations, Warranties and Agreements. The
representations and warranties made herein shall terminate at the Effective
Time or the earlier termination of this Agreement pursuant to Section 7.1 as
the case may be; provided, however, that if the Merger is consummated,
Sections 2.10, 2.11, 5.5 (with respect to the last sentence thereof), 5.7 and
5.10 will survive the Effective Time to the extent contemplated by such
sections, and provided further that the last sentence of Section 5.2(b) and
Sections 7.3, 7.4 and 8.9 will in all events survive the termination of this
Agreement.
26
Section 8.2. Entire Agreement; Assignment. This Agreement, the Annexes and
Schedules referred to herein, the letter(s) contemplated by Section 4.5 hereof
and the Confidentiality Agreement (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all other
prior agreements and understandings, both written and oral, among the parties
or any of them with respect to the subject matter hereof and (b) shall not be
assigned by operation of law or otherwise, provided that Parent may assign its
rights and obligations or those of Sub to any wholly-owned, direct or
indirect, Subsidiary of Parent, but no such assignment shall relieve Parent of
its obligations hereunder if such assignee does not perform such obligations.
Section 8.3. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
Section 8.4. Notices. All notices and other communications among the parties
shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) one business day after delivery to a reputable
overnight courier service (i.e., Federal Express), postage pre-paid, or (iii)
delivered by telecopy and promptly confirmed by telephone and by delivery of a
copy in person or overnight as aforesaid, in each case with postage prepaid,
addressed as follows:
If to Parent or Sub:
TLMD Station Co.
c/o Apollo Management, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
Sony Pictures Entertainment, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Apollo Management, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Bastion Capital Corporation
1999 Avenue of the Stars, Ste. 2960
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
27
With a courtesy copy to (which shall not constitute notice):
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Troop ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C.N. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ III
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Irell & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If to the Company:
Telemundo Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 310/306-7313
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, General Counsel
with a courtesy copy to (which shall not constitute notice):
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: 213/891-8763
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 8.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS
OF LAWS THEREOF.
Section 8.6. Interpretation. For purposes of this Agreement neither the
Company nor any Subsidiary of the Company shall be deemed to be an affiliate
or Subsidiary of Sub or Parent. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Inclusion of information in the Company
Disclosure Schedule, does not constitute an admission or acknowledgment of the
materiality of such information. If an ambiguity or question of intent or
interpretation arises, then this Agreement will be construed as if drafted
jointly by the parties to this Agreement, and no presumption or burden of
proof will arise favoring or disfavoring any party to this Agreement by virtue
of the authorship of any of the provisions of this Agreement.
28
Section 8.7. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and except for the
provisions of Sections 2.7, 2.12, 2.13, 5.7 and 5.10 (which are intended to be
for the benefit of the persons referred to therein and their beneficiaries,
and may be enforced by such persons as intended third-party beneficiaries),
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 8.8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 8.9. Expenses. All costs and expenses incurred in connection with
the Transactions shall be paid by the party incurring such expenses.
Section 8.10. Obligation of Parent. Whenever this Agreement requires Sub to
take any action, such requirement will be deemed to include an undertaking on
the part of Parent to cause Sub to take such action.
Section 8.11. Sale of the Company. The parties hereto agree and acknowledge
that for the purposes of this Agreement no "sale" of the Company shall be
deemed to have occurred until the consummation of the Merger at the Effective
Time.
Section 8.12. Actions by the Company. Any action or decision requiring the
approval of the Board of Directors of the Company which is to be taken or
which is made or required to be taken or made by or for the benefit of the
Company pursuant to, in connection with or in furtherance of this Agreement
(including, without limitation, with respect to Sections 7.5 and 7.6 hereof)
shall be made or taken, as applicable, at the discretion and with the approval
of the members of the Board of Directors of the Company who are not affiliated
with Parent or Sub or their respective affiliates or stockholders.
In Witness Whereof, each of the parties has caused this Agreement and Plan
of Merger to be executed on its behalf by its officers thereunto duly
authorized, all as of the day and year first above written.
TLMD Station Group, Inc.
("Parent")
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
TLMD Acquisition Co.
("Sub")
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
Telemundo Group, Inc.
("Company")
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President and Chief
Executive Officer
29