EXHIBIT (C)(2)
AGREEMENT
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AGREEMENT, dated as of November 17, 1997 (the "Agreement"), by and
among Apollo Investment Fund III, L.P. ("Apollo Fund"), Bastion Capital Fund,
L.P. ("Bastion Capital"), Liberty Media Corporation, a Delaware corporation
("Liberty"), and Sony Pictures Entertainment Inc., a Delaware corporation
("SPE").
WHEREAS, the parties have determined that it is in their respective
best interests to submit a proposal (the "Bid") for the acquisition (the
"Acquisition") of all of the outstanding shares of capital stock of Telemundo
Group, Inc., a Delaware corporation (the "Company"), by a Delaware corporation
("Station Co."), to be formed by (i) Apollo Fund, and/or one or more other
Apollo Entities (as defined below) (collectively, "Apollo"), (ii) Bastion
Capital and/or one or more of its affiliates (as defined in Rule 405 ("Rule
405") under the Securities Act of 1933, as amended (the "Securities Act")) or
related persons (including for this purpose, investment funds advised by Bastion
Capital and its affiliates) (collectively "Bastion"), (iii) a subsidiary of
Liberty, and (iv) a subsidiary of SPE. For purposes of this Agreement, "Apollo
Entities" means, collectively, Apollo Advisors, L.P., Apollo Management, L.P.,
or any investment fund or investment account over which Apollo Advisors, L.P.,
Apollo Management, L.P., or any of their respective affiliates or principals
(directly or through an investment management or investment advisory
arrangement) have the power to direct the investment decisions;
WHEREAS, Liberty and SPE wish to ensure the continued participation of
Apollo and Bastion in the Company; and
WHEREAS, Apollo Fund and Bastion Capital recognize the unique benefits
of a strategic alliance with Liberty and SPE and wish to secure the
participation of Liberty and SPE in the Company and to have Liberty and SPE or
an entity to be formed by Liberty and SPE for the purpose of acquiring and
operating the network programming and affiliate operations of the Company
("Network Co.") enter into certain arrangements with the Company.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Commitments.
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(a) Apollo and Bastion shall form an entity ("Station Holdings") in
which Apollo shall have an economic and voting interest of not less than 66.67%
and Bastion shall have the remaining economic and voting interest. Apollo and
Bastion hereby agree that they shall cause Station Holdings to purchase prior to
the consummation of the Acquisition (the "Closing") for an amount in cash
determined pursuant to Section 2 (the "Equity Purchase Price") not to exceed
$125 million such number of shares of Common Stock, par value $.01 per share
(the "Common Stock"), of Station Co. that represents at the Closing a 50.1%
interest in Station Co. In addition, Station Holdings shall receive at the
Closing, for no additional consideration, rights (the "Rights") with respect to
membership or partnership interests in Network Co. (the "Network Interest") that
represent 10% of the Network Interests outstanding at the Closing at an
aggregate strike price equal to 10% of the aggregate Network Interest Prices
paid by Liberty and SPE pursuant to Section 1(d), in each case after giving
effect to the issuance of the Rights as if the Network Interests represented
thereby had been issued for an amount equal to the strike price. The strike
price shall be proportionately adjusted for (i) any equity investments made by
Liberty or SPE in Network Co. (with non-cash investments valued at the fair
market value thereof) subsequent to the Closing and (ii) distributions made to
Liberty or SPE, other than (x) distributions made pursuant to the constituent
documents of Network Co. (which documents will contain terms consistent with the
terms of the Network Agreement, dated as of November 10, 1997, between Liberty
and SPE) in respect of taxes payable on the income of Network Co. and (y)
distributions in which all holders of interests in Network Co., including
holders of the Rights, participate on a pro rata basis (as adjusted, the "Strike
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Price"). Any loans to Network Co. by Liberty or SPE or their respective
affiliates shall bear interest not in excess of 10% per annum and shall have
other terms customary for such loans.
(b) Liberty hereby agrees that it will purchase prior to the Closing
for an amount in cash determined pursuant to Section 2 (the "Liberty Equity
Purchase Price") not to exceed $62.2505 million such number of shares of Common
Stock representing a 24.95% economic and voting interest in Station Co. In
addition, Liberty shall, at the Closing, grant to Station Holdings a proxy to
vote shares of its Common Stock representing, at any time, the number of shares
of Common Stock in excess of 4.99% of the outstanding Common Stock, or such
fewer number of shares as is consistent with the requirements of the
Communications Act of 1984, as amended (the "Communications Act") and the rules
and regulations of the Federal Communications Commission (the "FCC") thereunder;
provided, that, if at any time Liberty may vote any percentage of Common Stock
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in excess of or less than 4.99% consistent with the requirements of the
Communications Act and the rules and regulations of the FCC, such
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proxy shall be limited to the number of shares representing the difference
between the number of shares of Common Stock owned by Liberty and the number of
shares of Common Stock representing the percentage which Liberty is permitted to
vote.
(c) SPE hereby agrees that it will purchase prior to the Closing for
an amount in cash determined pursuant to Section 2 (the "SPE Equity Purchase
Price") not to exceed $62.2505 million such number of shares of Common Stock
representing a 24.95% economic and voting interest in Station Co.
(d) Liberty and SPE each hereby agree to purchase for $25 million in
cash (or such greater amount as is required pursuant to Section 2) the Network
Interest that represents at Closing 50% of the equity interests outstanding in
Network Co. (such price hereinafter referred to as the "Network Interest
Price"), provided, however, that the calculation of such percentage shall not
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take into account the Rights. Network Co. shall purchase from the Company and
its subsidiaries the Network Assets (as defined below) for a purchase price of
$50 million (or such greater amount as described in Section 2). To the extent
that any cash taxes are payable as a result of such transfer, the parties agree
to work together to minimize the impact. For purposes of this Agreement,
"Network Assets" means the capital stock of Telemundo Network, Inc. (or, at the
election of Network Co., the assets of Telemundo Network, Inc. and its
subsidiaries) and the other assets of the Company and its subsidiaries (in each
case excluding cash and accounts receivable) used in the network programming,
affiliation, network advertising sales and network marketing operations of the
Company and its subsidiaries, including, but not limited to all rights to names,
logos, trademarks and other intellectual property utilized by the Company in
connection with the Telemundo Network and all station affiliation agreements.
The Network Assets shall not include any assets necessary to conduct the
business of Station Co. as contemplated to be conducted after the Closing and,
to the extent that any assets are shared between Station Co. and Network Co.,
the parties agree to work together to appropriately allocate such assets between
them.
2. Submission of Bid.
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As promptly as practicable following the date hereof, the parties
hereto shall submit the Bid to the Company and Lazard Freres & Co. Inc.,
financial advisor to the Company. Liberty, SPE and Apollo (on behalf of Station
Holdings) agree that the initial Bid shall be $39 per share of common stock of
the Company, which Bid will be financed as set forth in Exhibit A. The
aggregate equity commitment of the parties to Station Co. in connection with the
initial Bid shall be $250 million (the "Total Equity").
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Liberty, SPE and Station Holdings (or if not formed at the time of such
determination, Apollo) shall jointly determine the amount and terms of any
subsequent Bid (including whether any such Bid is made and whether any
conditions specified in any previous Bid will be waived or amended). Each party
agrees that it will act in good faith to arrive at agreement and not
unreasonably object to such terms if the resulting capitalization of Station Co.
is consistent with that described herein. The Equity Purchase Price, the Liberty
Equity Purchase Price and the SPE Equity Purchase Price in connection with the
Bid or any subsequent Bid shall be determined by multiplying the Total Equity
with respect to any Bid by 0.5010, 0.2495 and 0.2495, respectively, subject to
the maximum amounts specified in Section 1. In the event that any subsequent Bid
would require total funding in excess of the amounts set forth in Exhibit A,
then (i) the first $14.8 million of any such additional funding shall be
provided, (x) to the extent possible, by third party debt financing on terms and
conditions reasonably satisfactory to Liberty, SPE and Station Holdings, and (y)
to the extent such debt financing is not available, by contributions to Station
Co. by the parties in the respective proportions set forth in the immediately
preceding sentence, and (ii) the balance of any such excess shall be funded (x)
50% by an increase in the purchase price for the Network Assets (which shall be
funded by an increase in the Network Interest Price paid to Network Co.) and (y)
50% by additional equity contributions to Station Co. by the parties in the
respective proportions set forth in the immediately preceding sentence. In no
event shall the total funding requirements exceed $750 million.
3. Restrictions on Transfers by Station Holdings. Station Holdings
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shall not sell, assign, convey, transfer, pledge, subject to lien or otherwise
dispose or encumber, whether directly or indirectly (including, without
limitation, by way of any transfer of an interest in Station Holdings)
("Transfer"), its Common Stock or the Rights, except as expressly set forth in
this Section 3.
(a) After the fifth anniversary of the Closing, Station Holdings shall
have the right, exercisable at any time as set forth herein, to sell to Liberty
and SPE, and, if Station Holdings elects to exercise such right pursuant to this
Section 3(a), Liberty and SPE shall each have the several obligation to
purchase, for cash or Marketable Securities (as defined below) or a combination
thereof, at the option of Liberty or SPE, respectively, from Station Holdings,
all of the Common Stock owned by Station Holdings. Each of Liberty and SPE
shall be obligated to purchase 50% of such Common Stock, which obligations shall
be several and not joint. The aggregate purchase price for the shares of Common
Stock owned by Station Holdings shall equal the Appraisal Price (as defined
herein) multiplied by a fraction, the numerator of which is the number of shares
of Common Stock owned by Station Holdings (on a fully diluted basis) and the
denominator of which is the total number of shares of Common Stock of
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Station Co. outstanding, on a fully diluted basis (the "Station Co. Purchase
Price") or, if applicable, the Minimum Value or the Maximum Value determined
pursuant to Section 3(d) below. To exercise its rights under this Section 3(a),
Station Holdings shall deliver to Liberty and SPE at the addresses set forth in
Section 15 hereof an irrevocable notice of its election to exercise such right
(the "Put Notice"). If any Put Notice is given pursuant to this Section 3(a),
Liberty and SPE shall also purchase the Rights at an amount equal to the
difference (which shall not be less than zero) between (x) the Network Appraisal
Price multiplied by a fraction, the numerator of which is the number of Network
Interests represented by the Rights and the denominator of which is the total
number of all then outstanding Network Interests (computed on a fully diluted
basis and assuming issuance of the Network Interests represented by the Rights)
and (y) the aggregate Strike Price of the Rights (the "Network Co. Purchase
Price").
(b) After the fifth anniversary of the Closing, Liberty and SPE shall
jointly have the right, exercisable at any time as set forth herein, to
purchase, with cash or Marketable Securities or a combination thereof, at the
option of Liberty or SPE, respectively, all (but not less than all) of the
Common Stock owned by Station Holdings, and, if Liberty and SPE elect to
exercise such right pursuant to this Section 3(b), Station Holdings shall have
the obligation to sell to Liberty and SPE all (but not less than all) of the
Common Stock owned by it, at the Station Co. Purchase Price or, if applicable,
the Minimum Value or the Maximum Value determined pursuant to Section 3(d)
below. In connection with any such purchase Liberty and SPE shall each be
severally obligated to purchase 50% of the Common Stock owned by Station
Holdings. To exercise its rights under this Section 3(b), Liberty and SPE shall
jointly deliver to Station Holdings at the address set forth in Section 15 an
irrevocable notice of its election to exercise such right hereof (the "Call
Notice"). Neither Liberty nor SPE may deliver a Call Notice without the consent
of the other. If a Call Notice is given pursuant to this Section 3(b), Liberty
and SPE shall also purchase the Rights at an amount equal to the Network Co.
Purchase Price.
(c) The consummation of the sale of the shares of Common Stock and
the Rights, as contemplated by Section 3(a) and 3(b) above, as applicable, shall
take place as promptly as practicable following the date of determination of the
Appraisal Price; provided, however, that in the event regulatory approvals are
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necessary for such sale of the shares of Common Stock to be consummated, Liberty
and SPE shall purchase the Rights on or before the 90/th/ day following the date
of determination of the Appraisal Price and the date for the closing of the
purchase of the shares of Common Stock (the "Holdings Closing") shall be
extended to a date 15 days after receipt of all such regulatory approvals, but
in any event no later than 12 months from the date the Put Notice or the Call
Notice, as the case may be, is given (the "Notice Date"). SPE and
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Liberty agree that the nature of any FCC approval (including any waivers) to be
sought in connection with any such sale shall be consistent with then existing
FCC law, regulation and practice and will be consistent with and supported by
relevant precedent. If requested by Station Holdings, SPE and Liberty will
provide written confirmations to Station Holdings from an attorney experienced
in FCC matters as to the matters set forth in the preceding sentence and that
any of the waivers referred to in the preceding sentence are likely to be
obtained. The parties shall use commercially reasonable efforts to consummate
such Holdings Closing. If the Station Co. Purchase Price is not paid by the date
which is six months from the Notice Date, the Station Co. Purchase Price shall
accrue interest from such six month anniversary at a rate equal to 10% per
annum, computed on a daily basis, which rate shall increase to 15% per annum for
the period following the date which is nine months from the Notice Date. Such
interest shall accrue from the dates referred to in the preceding sentence
through the date immediately prior to the Holdings Closing or the consummation
of the sale pursuant to Section 3(e), as applicable. Accrued interest shall be
paid only at the time of the Holdings Closing or as provided for in Section
3(e), as the case may be.
(d) Payment for the shares of Common Stock and the Rights shall be
either (i) by wire transfer of immediately available funds to an account in the
United States designated no later than two business days prior to the Holdings
Closing by Station Holdings or (ii) if Liberty or SPE elect to deliver
Marketable Securities, by delivery of certificates of Marketable Securities
registered in such names and denomina tions as specified no later than two
business days prior to the Holdings Closing by Station Holdings. The amount to
be paid for the shares of Common Stock shall be the Station Co. Purchase Price
(plus accrued interest (if any) under Section 3(c)); provided, however, if the
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Station Co. Purchase Price, plus any interest accrued pursuant to Section 3(c),
is lower than the Minimum Value, then the amount to be paid for the Shares of
Common Stock shall be the Minimum Value, and if the Station Co. Purchase Price,
taking into account any interest accrued pursuant to Section 3(c), is higher
than the Maximum Value, the amount to be paid for the Shares of Common Stock
shall be the Maximum Value. The amount to be paid for the Rights shall be the
Network Purchase Price. The amount to be paid for the Shares of Common Stock is
herein referred to as the "Common Stock Closing Payment". In the event that
Liberty and/or SPE makes payment for the shares of Common Stock or the Rights in
Marketable Securities, Liberty or SPE, as the case may be, shall arrange for the
sale of the Marketable Securities as soon as reasonably practicable to or
through an Investment Banking Firm selected by them and will pay to Station
Holdings out of the proceeds of such sale, the amount of the Common Stock
Closing Payment and/or the Network Purchase Price payable by it and not
previously paid in cash (the "Unpaid Amount"). If the proceeds for such sale
are
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less than the Unpaid Amount, then Liberty or SPE, as the case may be, shall
pay to Station Holdings an amount equal to the Unpaid Amount.
(e) (i) Without limiting the other rights of Station Holdings, in the
event that Liberty and/or SPE fails to purchase (the "Defaulting Party") the
shares of Common Stock held by Station Holdings pursuant to the provisions of
this Section 3, (a) as between Liberty and SPE, the non-defaulting party, if any
(the "Non-Defaulting Party") shall have the right to purchase, for cash or
Marketable Securities, or a combination thereof, at the option of the Non-
Defaulting Party given within 15 days of the default in question, from Station
Holdings, the remainder of the shares of Common Stock held by Station Holdings
at the Station Co. Purchase Price for such shares of Common Stock or (b) if the
Non-Defaulting Party does not so elect to purchase the shares to be purchased by
the Defaulting Party, Station Holding may sell all, but not less than all, of
the Common Stock owned by it to a non-affiliated third party and the purchaser
of such shares shall have the right to purchase the shares of Common Stock held
by the Defaulting Party and the Non-Defaulting Party, at price per share equal
to the price per share received by Station Holdings from such non-affiliated
third party. Notwithstanding anything to the contrary in this Section 3, the
right to cause the sale of the shares of Common Stock of the Defaulting Party
shall not be the exclusive remedy of Station Holdings or the Non-Defaulting
Party against the Defaulting Party. Any such sale of Common Stock shall be made
as promptly as reasonably practicable.
(ii) In the event a Put Notice or a Call Notice has been delivered
and the Holdings Closing does not occur prior to 12 months from the Notice Date,
Station Holdings shall have the right to demand that Station Co. be sold and
Liberty and SPE shall jointly designate an Investment Banking Firm (as defined
herein) to conduct an auction process (the "Auction") reasonably designed to
solicit bids from all interested parties and otherwise seeking to maximize the
sale price of Station Co. In the event Liberty and SPE do not designate such
Investment Banking Firm within 13 months of the Notice Date, then Station
Holdings may designate such Investment Banking Firm. Any such sale of Common
Stock shall be made as promptly as reasonably practicable.
(iii) In the event (a) the amount of consideration received by
Station Holdings in a sale pursuant to Section 3(e)(i) or 3(e)(ii) (the "Auction
Consideration") is less than the Pay Out Amount, Liberty and SPE shall each
promptly pay to Station Holdings an amount equal to one half of the difference
between (x) the Pay Out Amount and (y) the Auction Consideration and (b) the
Auction Consideration is more than the Pay Out Amount, Station Holdings shall
pay to each of Liberty and SPE an amount equal to 25% of the difference between
(x) the Auction Consideration and (y) the Pay Out Amount. The "Pay Out Amount"
shall mean an amount equal to the Station Co.
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Purchase Price plus interest accrued and unpaid pursuant to Section 3(c), or the
Minimum Value if such amount is less than the Minimum Value or the Maximum
Value, if such amount is greater than the Maximum Value.
(f) Notwithstanding the provisions of Sections 3(a), 3(b) and 3(e),
Liberty or SPE may assign its rights or obligations under Sections 3(a), 3(b)
and 3(e) to one or more third parties, subject to any agreements between Liberty
and SPE; provided, that Liberty and SPE shall not be released from their
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respective purchase or other obligations hereunder.
(g) Notwithstanding the provisions of Section 3(a), Station Holdings
shall have the immediate right to give a Put Notice and to sell its Common Stock
and Rights pursuant to the procedures described in Section 3(a) in the event
that none of Liberty, SPE or any entity to which Common Stock is transferred
pursuant to Section 4(b) or 4(c) (i) holds Network Interests representing at
least 25% of all of the outstanding Network Interests and (ii) in the case of
SPE, is a managing member or managing partner of Network Co.; provided, that for
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purposes of this clause (ii), if Liberty or its transferees hold Network
Interests representing at least 25% of all outstanding Network Interests, none
of SPE, Liberty or their transferees shall be required to be a managing member
or managing partner of Network Co.
(h) The obligations of each of Station Holdings, SPE, Liberty and any
assignee of SPE or Liberty under this Section 3 shall not be subject to any
setoff or offset of whatsoever nature. Each of SPE, Liberty, Station Holdings,
Apollo, Bastion and any permitted assignee thereof shall perform their
respective obligations under Sections 3(a)-(e) hereof regardless of any breach,
or claim of breach, of any provision of this Agreement (other than the
obligation to purchase and pay for, or sell and deliver, as the case may be, the
Rights and/or shares of Common Stock pursuant to the Put/Call provisions of this
Section 3) or any other agreement among or between any of them, unless
explicitly specified in definitive documentation implementing sections 3(a)-(e).
(i) Station Holdings may at any time Transfer all of its Common Stock
and Rights to an Apollo Entity, provided (i) such Transfer does not require any
filing of a change of control or license transfer application under the
Communications Act and (ii) such Transfer does not, directly or indirectly,
result in any requirement that any party be required to modify any internal
relationship or relationship with affiliates, divest or limit its rights with
respect to any assets, agree to any restriction of its activities or modify any
transaction with other affiliates in order to continue to hold and vote its
interest in Station Co.
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(j) Station Holdings may pledge shares of Common Stock (and Apollo
Fund and Bastion Capital may pledge their indirect interests in shares of Common
Stock) and in connection therewith assign or transfer the associated put rights
to a financial institution in a bona fide transaction, provided, that (i) no
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pledgee shall be permitted to foreclose on such pledge or to exercise such put
before the fifth anniversary of the Closing or to exercise any voting rights
with respect to such Common Stock, and (ii) any pledgee shall agree to provide
10 days notice of its intent to foreclose on the Common Stock and any such
foreclosure shall be subject to the rights of Liberty and SPE to give a Call
Notice and purchase such Common Stock pursuant to this Section 3.
(k) For purposes of this Section 3:
"Annual Return" shall mean an internal rate of return, taking into
account all payments, investments and distributions with respect to Station Co.,
from the Closing to the date of receipt of payment pursuant to this Section 3.
"Appraisal Price" shall mean the price that an unrelated third party
would pay to acquire all of the shares of Common Stock, in an arm's-length
transaction, assuming that the Company was being sold in a manner reasonably
designed to solicit all possible participants and permit all interested parties
an opportunity to participate and to achieve the best value reasonably available
to the Company's stockholders at that time, taking into account all existing
circumstances, including, without limitation, the terms and conditions of all
affiliation and programming contracts to which the Company is then a party, as
determined in accordance with the provisions of this paragraph. Within 10 days
after the Notice Date, Station Holdings shall designate an Investment Banking
Firm (the "Holdings Appraiser") and Liberty and SPE shall jointly designate an
Investment Banking Firm to determine the Appraisal Price (the "Liberty/SPE Ap-
praiser"). The parties recognize that EBITDA is only one of the factors that is
relevant in determining the Appraisal Price; however, to the extent that the
appraisers utilize EBITDA in their valuation analysis, the parties agree that
they will instruct the appraisers to take into account, and to make appropriate
adjustments to EBITDA for, increases in programming and marketing expenditures
during the twelve month period ending immediately prior to the Notice Date (the
"LTM Period"), compared to the level of such programming and marketing
expenditures during the twelve month period ending immediately prior to the LTM
Period which increased programming and marketing expenditures are reasonably
expected to disproportionately benefit periods subsequent to the Notice Date.
Within 30 days after the Notice Date, the Holdings Appraiser and the Liberty/SPE
Appraiser shall each determine its initial view as to the Appraisal Price and
consult with one another with respect thereto. Within 45 days after the Notice
Date,
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the Holdings Appraiser and the Liberty/SPE Appraiser shall each have
determined its final view as to the Appraisal Price. If the difference between
the Higher Appraisal Price and the Lower Appraisal Price (each as defined below)
is less than 10% of the Higher Appraisal Price, the Appraisal Price shall be the
average of those two views. Otherwise, the Holdings Appraiser and the
Liberty/SPE Appraiser promptly shall jointly designate a third Investment
Banking Firm (the "Mutually Designated Appraiser") to determine the Appraisal
Price. Within 15 days of such designation, the Mutually Designated Appraiser
shall determine the Mutual Appraisal Price (as defined below), and the Appraisal
Price shall be the average of (i) the Mutual Appraisal Price and (ii) the Higher
Appraisal Price or Lower Appraisal Price, whichever is closer to the Mutual
Appraisal Price. Notwithstanding the foregoing, in the event such sale is made
after delivery of the Call Notice provided for in Section 3(b), the Appraisal
Price shall not be lower than an amount determined by multiplying Station Co.'s
EBITDA (taking into account and with appropriate adjustments for the increased
programming and marketing expenditures reasonably expected to disproportionately
benefit future periods described above) for the twelve months ending on the last
day of the month immediately preceding the Notice Date by 10 and subtracting the
indebtedness for borrowed money and capital leases of Station Co. and adding the
cash and cash equivalents of Station Co. (determined in accordance with
generally accepted accounting principles). Station Co. shall provide reasonable
access to each of the Holdings Appraiser, the Liberty/SPE Appraiser and the
Mutually Designated Appraiser to members of management of Station Co. and to the
books and records of Station Co. so as to allow such appraisers to conduct due
diligence examinations in scope and duration as are customary in valuations of
this kind. Each of the parties (and any assignee) agrees to cooperate with each
of the appraisers and to provide such information as may reasonably be
requested.
"Higher Appraisal Price" shall mean the higher of the respective final
views of the Holdings Appraiser and the Liberty/SPE Appraiser as to the
Appraisal Price.
"Higher Network Appraisal Price" shall mean the higher of the
respective final views of the Holdings Appraiser and the Liberty/SPE Appraiser
as to the Network Appraisal Price.
"Investment Banking Firm" shall mean an investment banking firm of
recognized national standing.
"Lower Appraisal Price" shall mean the lower of the respective final
views of the Holdings Appraiser and the Liberty/SPE Appraiser as to the
Appraisal Price.
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"Lower Network Appraisal Price" shall mean the lower of the respective
final views of the Holdings Appraiser and the Liberty/SPE Appraiser as to the
Network Appraisal Price.
"Marketable Securities" shall mean marketable securities (i) issued by
an issuer with a public float equal or greater to $2 billion; (ii) that are of a
class of securities listed on a major national or international stock exchange;
(iii) that constitute, in the aggregate, not more than 5% of the outstanding
securities of such class, and (iv) that have been registered under the
Securities Act or are otherwise freely tradeable under the Securities Act and
applicable "blue sky" or state securities laws.
"Maximum Return" shall mean an amount that equals an Annual Return
equal to 40%.
"Maximum Value" shall mean the amount required to be paid at the date
of receipt of payment pursuant to this Section 3 such that Station Holdings'
internal rate of return with respect to such payment equals the Maximum Return
(taking into account all payments, investments and distributions with respect to
Station Co. from the Closing to the date of receipt of payment pursuant to this
Section 3).
"Minimum Return" shall mean an amount that equals an Annual Return
equal to 10%.
"Minimum Value" shall mean the amount required to be paid at the date
of receipt of payment pursuant to this Section 3 such that Station Holdings'
internal rate of return with respect to such payment, equals the Minimum Return
(taking into account all payments, investments and distributions with respect to
Station Co. from the Closing to the date of receipt of payment pursuant to this
Section 3.)
"Mutual Appraisal Price" shall mean the final view of the Mutually
Determined Appraiser as to the Appraisal Price.
"Mutual Network Appraisal Price" shall mean the final view of the
Mutually Determined Appraiser as to the Network Appraisal Price.
"Network Appraisal Price" shall mean the price that an unrelated third
party would pay to acquire all of the equity interests (including the Rights) of
Network Co., in an arm's-length transaction, assuming that Network Co. was being
sold in a manner reasonably designed to solicit all possible participants and
permit all interested parties an opportunity to participate and to achieve the
best value reasonably available
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to Network Co.'s equityholders at that time, taking into account all existing
circum stances, including, without limitation, the terms and conditions of all
affiliation, carriage and programming contracts to which Network Co. is then a
party, as determined in accordance with the provisions of this paragraph. Within
30 days after the Notice Date, the Holdings Appraiser and the Liberty/SPE
Appraiser shall each determine its initial view as to the Network Appraisal
Price and consult with one another with respect thereto. Within 45 days after
the Notice Date, the Holdings Appraiser and the Liberty/SPE Appraiser shall each
have determined its final view as to the Network Appraisal Price. If the
difference between the Higher Network Appraisal Price and the Lower Network
Appraisal Price is less than 20% of the Higher Network Appraisal Price, the
Network Appraisal Price shall be the average of those two views. Otherwise, the
Mutually Designated Appraiser will be designated to determine the Network
Appraisal Price. Within 15 days of such designation, the Mutually Designated
Appraiser shall determine the Mutual Network Appraisal Price, and the Network
Appraisal Price shall be the average of (i) the Mutual Network Appraisal Price
and (ii) the Higher Network Appraisal Price or Lower Network Appraisal Price,
whichever is closer to the Mutual Network Appraisal Price. Network Co. shall
provide reasonable access to each of the Holdings Appraiser, the Liberty
Appraiser, the SPE Appraiser and the Mutually Designated Appraiser to members of
management of Network Co. and to the books and records of Network Co. so as to
allow such advisors to conduct due diligence examinations in scope and duration
as are customary in valuations of this kind. Each of the parties (and any
assignee) agrees to cooperate with each of the appraisers and to provide such
information as may reasonably be requested.
(l) Liberty and SPE shall pay the costs and expenses incurred in
connection with the Liberty/SPE Appraiser and Station Holdings shall pay the
costs and expenses incurred in connection with the Holdings Appraiser. The
costs and expenses incurred in connection with the Mutually Designated Appraiser
shall be paid by the party whose appraiser submitted the appraisal price
farthest away from the Mutual Network Appraisal Price.
4. Restrictions on Transfers by SPE and Liberty.
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(a) Prior to the fifth anniversary of the Closing, SPE and Liberty
shall not sell, assign, convey, transfer, pledge, subject to lien or otherwise
dispose of or encumber, whether directly or indirectly (including, without
limitation, by way of a transfer of an interest in any entity which owns the
Common Stock beneficially owned by SPE or Liberty) its Common Stock; provided,
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however, either of Liberty and SPE may at any time Transfer its Common Stock in
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order to comply with restrictions imposed upon Liberty or SPE's ownership, as
the case may be, of the Common Stock by any
12
federal or state law, rule or regulation or any final judicial decree or order
issued by any federal or state court of competent jurisdiction if (i) such
compliance cannot be achieved by a restructuring of such party's interest and
(ii) prior to any such Transfer of its Common Stock such party has first offered
to the other parties the opportunity to purchase such Common Stock on a pro rata
--- ----
basis and such other parties shall not have agreed to purchase such Common
Stock. Any third party who purchases such party's Common Stock pursuant to a
Transfer made pursuant to the proviso in this Section 4(a) shall not be entitled
to exercise the right to consent to the matters set forth in Section 6(a)(iv),
(v) or (vi) or to any of the Major Decisions provided for in Section 6(a) of
this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Section 4, each of Liberty and SPE may at any time Transfer all of its Common
Stock, directly or indirectly through a Transfer of equity ownership interests
in Liberty or SPE, as the case may be, to a Controlled Affiliate, provided there
is no Change in Control resulting therefrom.
(c) Notwithstanding anything to the contrary contained in this
Section 4, each of Liberty and SPE may at any time Transfer all of its Common
Stock, as part of a Transfer of a larger group of assets (the "Transferred
Assets"), which Transfer may be effected through a corporate reorganization, a
sale of assets, distribution of equity interests or otherwise, (a) if the
Transferred Assets constitute a business which is engaged principally in the
media, entertainment, cable or tele-communications business, and (b) the value
of the Transferred Assets (other than the Common Stock) at the time of Transfer
comprise at least 85% of the value of the Transferred Assets (including the
Common Stock).
(d) Notwithstanding anything to the contrary contained in this
Section 4, no Transfer of shares of Common Stock by Liberty or SPE shall release
Liberty or SPE, as the case may be, from its obligations under Section 3 of this
Agreement unless expressly released from such obligations by Station Holdings
and the entity to which the Common Stock is Transferred pursuant to this Section
4 shall expressly assume the obligations, and shall be entitled to exercise all
of the rights (except as otherwise specifically limited hereby), of Liberty or
SPE, as the case may be, under this Agreement.
(e) Liberty and SPE may pledge shares of Common Stock and in
connection therewith assign or transfer the associated call rights to a
financial institution in a bona fide transaction, provided, that (i) no pledgee
---- ---- --------
shall be permitted to foreclose on such pledge or to exercise such call before
the fifth anniversary of the Closing or to
13
exercise any voting rights with respect to such Common Stock and (ii) any
pledgee shall agree to provide 10 days notice of its intent to foreclose on the
Common Stock.
(f) For purposes of this Section 4:
"Control" (and the related terms "Controlling" and "Controlled") shall
mean the power to direct or change the direction of the management or policies
of the Controlled entity.
"Controlled Affiliate" shall mean (i) with respect to SPE, Sony
Corporation and any person which is Controlled by SPE or Sony Corporation, and
(ii) with respect to Liberty, Tele-Communications, Inc. ("TCI") and any person
which is Controlled by Liberty or TCI.
A "Change in Control" shall be deemed to occur if the Common Stock
owned by Liberty or SPE, as applicable, is not beneficially owned (as defined in
Rule 13d-3 of the Securities and Exchange Act of 1934, as amended) at least 50%
by the Ultimate Beneficial Owner (as defined herein) of Liberty or SPE, as
applicable.
"Ultimate Beneficial Owner" shall mean, with respect to SPE, SPE or
Sony Corporation and, with respect to Liberty, TCI or Liberty.
5. Effectuation of the Acquisition. The parties hereto acknowledge
-------------------------------
that the exact terms and structure of the proposed Acquisition have not yet been
determined and agree to work together in good faith to finalize such terms and
structure in order to accomplish the proposed Acquisition on terms more fully
set forth herein, as expeditiously as practicable. Liberty, SPE, Apollo and
Bastion agree, during the Term (as defined below) of this Agreement, to promptly
and diligently negotiate in good faith and to use their respective best efforts
to reach agreement on the definitive terms for the completion of the Acquisition
and the terms of definitive agreements, including, without limitation, one or
more Stockholders' Agreements, Stock Purchase Agreements or similar agreements a
Network Agreement, a Station Group Agreement and a Program ming or Affiliation
Agreement necessary or appropriate for the completion of the Acquisition
(collectively, the "Definitive Agreements"), each of which shall be consistent
with the terms hereof and shall contain such representations, warranties,
covenants and conditions as are set forth below as well as those customary for
Acquisitions similar to those provided herein and therein. In addition, the
parties agree to cooperate in any efforts to secure all necessary financing,
consents and approval for the Acquisition, including, without limitation, all
necessary approvals or waivers of the FCC under the Communications Act.
Notwithstanding the foregoing, no party will be required to
14
modify any internal relationship or relationship with affiliates, divest or
limit its rights with respect to any assets, agree to any restriction of its
activities or modify any transaction with affiliates in order to obtain the
approval of any regulatory agency in order to consummate the Acquisition. Each
party shall consult with the other parties regarding the nature of any
discussions with regulatory authorities and keep each other informed of such
discussions. Nothing in this Section 5 shall be deemed to limit in any way each
party's rights pursuant to Section 9.
6. Management.
----------
(a) Governance. (i) The operations of Station Co. shall be
----------
governed by a Board of Directors consisting of nine directors, four of whom will
be nominated by Station Holdings, two of whom will be nominated by SPE, one of
whom will be nominated by Liberty and two of whom will be independent directors.
One of the independent directors shall be nominated by Station Holdings, subject
to approval by Liberty and SPE, which approval shall not be unreasonably
withheld. The remaining independent director shall be nominated by Liberty and
SPE, acting jointly, subject to approval by Station Holdings, which approval
shall not be unreasonably withheld. All actions of the Board of Directors shall
require a majority of the votes entitled to be cast as if all directors were
present. A director may be removed only by the party which originally designated
the director or, in the event of any independent director, by agreement of
Station Holdings, Liberty and SPE. Station Co. will not take any actions
requiring a Major Decision (as defined below) without the required approval set
forth in Section 6 (a)(iii) below.
(ii) Day-to-day management of the operations of Station Co. will be
delegated to the officers of Station Co., who will (except as otherwise
specified herein) serve at the pleasure of the Board of Directors, and who will
operate Station Co.'s business in accordance with the Business Plan (defined
below) and the Budget (as defined below). The initial Business Plan shall
include provisions for the planned capital expenditures and expanded local
programming as discussed among the parties hereto. The officers of Station Co.
shall consist of a Chief Executive Officer, a Chief Financial Officer, and such
other officers as the Board of Directors determines from time to time to be
appropriate ("Management"). The Chief Executive Officer shall report to the
Board of Directors and all other officers shall report to the Chief Executive
Officer or another officer designated by him or her. Neither the Board of
Directors nor Management shall take any action constituting a Major Decision
without the unanimous approval of the stockholders.
15
(iii) Station Co.'s charter documents shall provide that (x) the
Board of Directors shall not authorize, and Management shall not effect any
Major Decision without the unanimous approval of SPE, Liberty and Station
Holdings, in their capacity as stockholders and (y) any determination not
specifically included in the definition of "Major Decision" or otherwise
identified in Section 6(a)(iv) or (v) as requiring approval of the stockholders
shall, except to the extent required by Delaware law, be made by the Board of
Directors.
(iv) The Company's management shall prepare and submit the Budget (as
defined below) to the Board of Directors and the stockholders for their review.
Each Budget shall be approved by the Board of Directors and shall not require
the approval of the stockholders except in the case of (i) the initial Budget
and (ii) any subsequent Budget if, during the period of 12 months immediately
preceding the submission of such Budget for approval, the Company has been in
non-compliance (without giving effect to any waivers or modifications within
such 12 month period) under one or more of the material financial covenants
contained in Station Co.'s senior credit facility (unless the Company shall have
been in compliance with such covenants (without giving effect to any waivers or
modifications to such covenants within such 12 month period) for the two fiscal
quarters immediately preceding the submission of such Budget for approval). If
such approval is so required, the Budget shall not be effective or be
implemented until such approval is obtained. Notwithstanding anything to the
contrary in this Section 6, if for a particular year, the Board of Directors (or
if required, the stockholders) do not approve a budget, then the Budget for that
year will be the Budget from the prior year ("Rollover Budget") (excluding the
prior year's extraordinary and nonrecurring items but including any
contractually obligated or legally required commitments or expenditures for that
year in the Business Plan), adjusted by a 5% increase for all fixed expenses,
together with an adjustment for all variable expenses (such as utilities and
insurance) in accordance with the projected variances in their bases and
contractual commitments in accordance with their terms. Changes to any approved
Budget shall be approved in the same manner as would be required at the time for
approval of a Budget.
(v) The appointment or dismissal of the Chief Executive Officer and
Chief Financial Officer, on the recommendation of Station Holdings, shall be
approved by at least two of the three stockholders of Station Co., one of which
must be Station Holdings.
(vi) Notwithstanding anything to the contrary contained herein, so
long as (x) Station Holdings or any permitted assignee owns any shares of Common
Stock and (y) any of SPE, Liberty or any affiliate of SPE, Liberty or
16
any Ultimate Beneficial Owner of SPE or Liberty, beneficially owns both shares
of Common Stock and any equity interest in Network Co., all determinations
regarding the enforcement of Station Co.'s rights under the Affiliation
Agreement and any amendment, modification, change or waiver thereto shall be
made on behalf of Station Co. solely by Station Holdings (other than a decision
to terminate or fail to renew the Affiliation Agreement in a circumstance where
there is no breach on the part of Network Co.).
(vii) For purposes of this Section 4(a):
"Business Plan" shall mean the initial business plan for Station Co.
unanimously approved by the stockholders, and any subsequent business plan
approved as set forth in (iv) above.
"Budget" shall mean the initial budget for the first fiscal year,
unanimously approved by the stockholders, and any subsequently approved budget
(or if no budget is approved, the Rollover Budget).
"Major Decision" shall mean any of the following:
(1) Any substantial change in the nature or scope of Station
Co.'s Spanish language broadcast business or the acquisition of
an additional broadcast station or other substantial business;
(2) Issuing any equity or debt securities of Station Co.;
(3) Any merger, consolidation, or reorganization of Station
Co.;
(4) The sale or other transfer in a single transaction or series
of related transactions, of all or substantially all of the
assets of Station Co., of any broadcast station or of any other
assets with a purchase price in excess of $10 million;
(5) Taking any action relating to the termination, dissolution,
liquidation or winding-up of Station Co.;
(6) Taking any action that would constitute an Insolvency Event
of Station Co. For purposes of this Agreement, an "Insolvency
Event" shall occur if Station Co. institutes proceedings to be
adjudicated voluntarily bankrupt, consents to the filing of a
bankruptcy proceeding against Station Co., files a petition or
17
answer or consent seeking reorganization under any bankruptcy or
similar law or statute, consents to the filing of any such
petition, or to the appointment of a Custodian, receiver, liquida
tor, trustee, or assignee in bankruptcy or insolvency of Station
Co. or any substantial part of its assets or property, makes a
general assignment for the benefit of creditors, or takes any
corporate action in furtherance of any of the foregoing;
(7) Except as set forth in Section 6(a)(vi), permitting any
station owned, directly or indirectly, by Station Co. to enter
into, amend, take any action to terminate or fail to renew any
affiliation agreement (which approval shall not be unreasonably
withheld after applying commercial standards of review prevailing
among investors in companies comparable to Station Co.); and
(8) Any related party transaction between any station or Station
Co. and any of its stockholders or affiliates thereof, but
excluding transactions between Station Co. and Network Co.
(b) Affiliation Agreements. Contemporaneously with the Closing,
----------------------
Station Co. and Network Co. shall enter into affiliation agreements, containing
terms and conditions agreed upon by the parties and as are otherwise customary
in agreements of this type (the "Affiliation Agreement"), with respect to all of
the television stations owned by the Company, other than WKAQ (Puerto Rico).
(c) Transfer of Network Assets. Prior to the Closing, Station Co. and
--------------------------
Network Co. will enter into an Asset Purchase Agreement providing for the sale
of the Network Assets for $50 million (or such greater amount as may be
determined jointly by Liberty and SPE pursuant to Section 2 of this Agreement)
to Network Co. which will acquire and operate the existing network operations of
the Company and will enter into the Affiliation Agreements.
(d) Observer Status. For so long as Station Holdings holds the
---------------
Rights, it shall have the right to attend meetings of the Board of Directors of
Network Co. as an observer.
18
7. Conditions. (a) Each party's obligations to purchase the shares
----------
of Common Stock, the Network Interest and the Rights, as applicable, are
subject to the satisfaction or waiver of the following conditions:
(i) all conditions to Station Co.'s obligations to consummate the
transactions set forth in the Acquisition Agreement shall have been
fulfilled or waived by Station Co.
(ii) any waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, shall have expired or been
terminated, including, without limitation, any waiting period required in
connection with the formation of Station Co.
8. Letter Regarding Confidentiality. Nothing set forth in this
--------------------------------
Agreement shall be deemed to supersede the agreements and understandings of the
parties set forth in that certain agreement regarding confidentiality between
Liberty, SPE and Apollo, dated as of October 6, 1997, which agreement shall
remain in full force and effect.
9. Exclusive Dealing; Best Efforts.
-------------------------------
(a) During the Term, each of Apollo and Bastion, in its capacity as a
stockholder of the Company, and its officers, directors, and related persons and
others acting on its or their behalf (collectively, "Representatives") shall use
their reasonable best efforts consistent with this Agreement, subject in every
case to the exercise of their fiduciary duties, as determined by such person in
good faith after consultation with counsel, to effect the Acquisition, and
subject to the foregoing (i) shall, as expeditiously as practicable, take, or
cause to be taken, all actions necessary or desirable in connection with the
consummation of the Acquisition, and (ii) shall not take, or permit to be taken,
any action if the effect, directly or indirectly, of such action is to prevent,
delay, hinder, or make more difficult the consummation of the Acquisition.
(b) During the Term, neither Apollo, Bastion, SPE nor Liberty nor any
of their Representatives shall, directly or indirectly, initiate, solicit or
induce any alternative acquisition proposal with respect to the Company,
including, without limitation, a merger or other business combination involving
the Company, any subsidiary of the Company or any part of its business, or an
offer to acquire in any manner, directly or indirectly, an equity interest in,
any equity securities of, or all or a substantial portion of the assets of the
Company, any subsidiary of the Company or its business, any strategic alliance,
relationship or similar transaction between the Company
19
and any other person, or any transaction that could result in a change of
control of the Company except as contemplated by this Agreement (an "Alternative
Proposal"). During the Term each of Apollo, Bastion, Liberty, SPE and their
Representatives shall not (i) participate with any other person in any
Alternative Proposal including any Alternative Proposal that results in the
retention of all or a portion of the existing equity interests in the Company
providing debt or equity financing to any person in connection with any
Alternative Proposal or financing the operations of the successor following
consummation of an Alternative Proposal, purchasing or otherwise acquiring any
securities of the Company, any successor or acquiring entity, any entity
participating in an Alternative Proposal or any affiliate or related person
thereof, (ii) provide any other form of support to any other person in
connection with an Alternative Proposal, (iii) act as an advisor to any other
person in connection with any Alternative Proposal or (iv) enter into any
agreement with any other person with respect to an Alternative Proposal.
(c) Each of Apollo, Bastion, Liberty, SPE and their Representatives
shall forthwith cease all negotiations or discussions with any third parties
with respect to any Alternative Proposal (other than the Acquisition) and none
of Apollo, Bastion, Liberty or SPE or any of their Representatives shall,
during the Term, engage in any negotiations with respect to any Alternative
Proposal or provide any non-public information regarding the Company or its
business to any person that may be interested in making any Alternative
Proposal.
(d) Nothing contained in this Agreement shall prohibit Apollo, Bastion
or any of their Representatives (including any persons serving as a director of
the Company) from taking any action, or refraining from taking any action, which
such person determines in good faith after consultation with counsel is
necessary in order to fulfill such person's fiduciary duties to the investors in
Apollo's or Bastion's, as the case may be, existing fund which is a stockholder
of the Company or to the stockholders of the Company generally and any such
action or inaction shall not constitute a breach of this Agreement. Nothing
contained in this Agreement shall prohibit either Apollo or Bastion from
selling, transferring or otherwise disposing of their interest in the Company as
a result of an Alternative Proposal that has been approved by a majority of the
disinterested directors on the Board of Directors of the Company and by the
requisite vote of the stockholders of the Company.
10. Public Announcements. None of the parties nor their respective
--------------------
Representatives shall make any public announcement with respect to this
Agreement or the transactions contemplated hereby, except as required by
applicable law, and no such public announcement (including any required filing
that is publicly available) shall be
20
made, to the extent reasonably practicable, without prior consultation with the
other parties hereto.
11. Termination. This Agreement may be terminated and the proposed
-----------
Acquisition abandoned as follows:
(a) by mutual agreement of the parties;
(b) by Apollo Fund or Bastion Capital if Liberty or SPE has
committed a material breach of this Agreement (other than Section 9 which is
subject to Section (c) below) and such breach is not cured within 30 days after
notice thereof by Apollo to Liberty and SPE;
(c) by Apollo Fund or Bastion Capital if Liberty or SPE or their
respective Representatives breach the terms of Section 9 of this Agreement;
(d) if no Acquisition Agreement has been executed prior to
March 31, 1998 (the "Outside Date") or an Acquisition Agreement previously
executed has been subsequently terminated in accordance with its terms, by any
party at any time after the Outside Date;
(e) upon consummation by the Company of an Alternative Proposal;
(f) by Liberty or SPE if Apollo Fund or Bastion Capital has
committed a material breach of this Agreement (other than Section 9, which is
subject to (g), below) and such breach is not cured within 30 days after notice
thereof by Liberty or SPE to such party;
(g) by Liberty or SPE if Apollo Fund or Bastion Capital or their
respective Representatives breach the terms of Section 9 of this Agreement; or
(h) by any party, in the event that the parties are unable to
agree upon the amount or terms of any Bid or subsequent Bid pursuant to Section
2.
As used in this Agreement, "Term" shall mean the period beginning on
the date hereof and ending on the termination of this Agreement in accordance
with its terms pursuant to this Section 11. Further, the parties acknowledge
that the foregoing provisions may require adjustment to reflect the terms of the
Acquisition Agreement and agree to cooperate with one another to reach mutual
agreement with respect thereto.
21
12. Fees and Expenses. Each party shall bear its own costs and
-----------------
expenses incurred in connection with this Agreement, the Definitive Agreements
and the Acquisition and the other transactions contemplated by this letter or
incident to the foregoing.
13. Effect of Agreement. Liberty, SPE, Apollo Fund and Bastion
-------------------
Capital each acknowledge that this Agreement specifies our agreement as to
certain of the conditions to our respective obligations and certain other terms
of the Acquisition, and that this Agreement is a binding agreement of the
parties, effective and enforceable upon the execution of this Agreement.
14. Representations and Warranties. (a) Each of Liberty, SPE, Apollo
------------------------------
Fund and Bastion Capital, severally and not jointly, represents and warrants to
the other that: (i) it has the requisite corporate or partnership power and
corporate or partnership authority to execute and deliver this Agreement and to
perform its obligations hereunder; (ii) the execution and delivery of this
Agreement and the performance by it of its obligations hereunder have been duly
authorized by its board of directors or other governing body and no other
corporate or partnership proceedings on its part are necessary for the execution
and delivery of this Agreement and the performance of its obligations provided
for herein; and (iii) this Agreement has been duly executed and delivered by it,
and assuming this Agreement is a binding obligation of the other parties, this
Agreement constitutes a valid and binding obligation of it enforceable against
it in accordance with its terms.
(b) Apollo Fund represents and warrants that to its knowledge no alien
owns any interest in Station Co. within the meaning of the Communications Act,
as a result of the investment by Station Holdings in Station Co. Apollo Fund
agrees that, subsequent to the date hereof, if Apollo Fund becomes aware that
any alien has an attributable interest in Station Co. as a result of the
investment by Station Holdings in Station Co., it will restructure its
investment in Station Holdings or take any other action necessary so that such
alien interest will not be attributable to Station Co. consistent with the
requirements of the Communications Act and the rules and regulations of the FCC
thereunder and Liberty and SPE will cooperate with all reasonable requests of
Apollo Fund in connection therewith.
(c) Bastion Capital represents and warrants that to its knowledge no
alien owns any interest in Station Co. within the meaning of the Communications
Act, as a result of the investment by Station Holdings in Station Co. Bastion
Capital agrees that, subsequent to the date hereof, if Bastion Capital becomes
aware that any alien has an interest in Station Co. as a result of the
investment by Station Holdings in Station Co., it will restructure its
investment in Station Holdings or take any other action necessary so that such
alien interest will not be attributable to Station Co. consistent with the
22
requirements of the Communications Act and the rules and regulations of the FCC
thereunder and Liberty and SPE will cooperate with all reasonable requests of
Bastion Capital in connection therewith.
(d) Liberty and SPE represent and warrant that to their knowledge
aliens will own less than a 25% interest in Station Co. within the meaning of
the Communications Act, as a result of the investment by Liberty and SPE in
Station Co. Liberty and SPE agree that, subsequent to the date hereof, if they
become aware that aliens own a greater percentage interest in Station Co. as a
result of their investment in Station Co., they will restructure their
investment in Station Co. consistent with the requirements of the Communications
Act and the rules and regulations of the FCC thereunder and Apollo and Bastion
will cooperate with all reasonable requests of Liberty and SPE in connection
therewith.
15. Notices. All notices and other communications hereunder shall be
-------
in writing and shall be deemed given if delivered personally, sent by facsimile
(receipt of which is confirmed by the person to whom sent) or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Liberty, to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice) to:
Tele-Communications, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
23
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
(b) If to SPE, to:
Sony Pictures Entertainment Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
Troop ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Troop
(c) If to Apollo Fund or Station Holdings, to:
Apollo Advisors, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy (which shall not constitute notice) to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
24
(d) If to Bastion Capital, to:
Bastion Capital Fund, L.P.
1999 Avenue of the Stars, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice) to:
Irell & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
16. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York applicable to contracts to
be performed in such state.
17. Assignment. Except as provided herein, this Agreement shall not
----------
be assignable by either party hereto without the prior written consent of the
other party hereto.
18. Third Party Beneficiaries. This Agreement is solely for the
-------------------------
benefit of the parties hereto and is not intended to create any rights in any
third parties other than permitted assignees.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which taken together shall be deemed to constitute one and
the same agreement.
25
In witness whereof, the parties have executed this agreement as of the
17th day of November, 1997.
APOLLO INVESTMENT FUND III
By: Apollo Advisors II, L.P., its General
Partner
By: Apollo Capital Management II,
Inc., its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: V.P.
BASTION CAPITAL FUND, L.P.
By: Bastion Partner, L.P., its General Partner
By: Bron Corp., its General Partner
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
__________________________________
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President
LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
SONY PICTURES ENTERTAINMENT INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
__________________________________
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
26