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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 15)*
--
TELEMUNDO GROUP, INC.
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(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
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(Title of Class of Securities)
87999410
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(CUSIP Number)
Howard E. Steinberg, Senior Vice President and General Counsel
Reliance Group Holdings, Inc.
Park Avenue Plaza, New York, New York 10055 (212) 909-1100
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
July 19, 1994
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(Date of Event which Requires Filing of this Statement)
If a filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
CUSIP No. 87999410 Page 2 of Pages
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Reliance Group Holdings, Inc.
IRS Employer's Identification No.: 13-3082071
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [_]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(d) or 2(e)
[X]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
7 SOLE VOTING POWER
21,633,137
8 SHARED VOTING POWER
9 SOLE DISPOSITIVE POWER
21,633,137
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
21,633,137
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
58.4%
14 TYPE OF REPORTING PERSON*
HC
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
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ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, $.01 par value per share (the
"Security") of Telemundo Group, Inc. (the "Issuer"), whose principal executive
offices are located at 2290 West 8th Avenue, Hialeah, Florida 33010. In
accordance with Section 101 of Regulation S-T of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), this statement restates the Schedule 13D
and all amendments thereto filed by Reliance Group Holdings, Inc., a Delaware
corporation ("RGH"), in respect of the Security prior to the date hereof.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by RGH. RGH is a holding company whose principal
business is the ownership of property and casualty and title insurance
companies. Reliance Insurance Company ("RIC") and its property and casualty
insurance subsidiaries and its title insurance subsidiaries underwrite a broad
range of standard commercial and specialty commercial lines of property and
casualty insurance, as well as title insurance. Approximately 97.9% of the
combined voting power of all RIC stockholders is owned by Reliance Financial
Services Corporation, a wholly owned subsidiary of RGH.
RIC owns all of the common stock of Reliance Capital Group, Inc., a
Delaware corporation ("Reliance Capital"). Reliance Capital is the general
partner of Reliance Associates, L.P. which is the general partner of Reliance
Capital Group, L.P. (the "Fund" and together with RGH, Reliance Capital and
Reliance Associates, L.P., the "Reliance Entities"). The Fund is a New York
limited partnership that was established by RGH for the purpose of investing in
a variety of businesses, partnerships and other projects that RGH believed had
the potential for capital appreciation but were not consistent with the then
current investment objectives of RGH.
Approximately 48% of the common voting stock of RGH is owned by Saul P.
Steinberg, members of his family and an affiliated trust. As a result of his
stock holdings in RGH, Saul P. Steinberg may be deemed to control RGH.
The principal executive offices of each of RGH and Reliance Capital are
located at Park Avenue Plaza, New York, New York 10055.
The names, addresses and principal occupations of the directors and
executive officers of RGH, all of whom are United States citizens, are as
follows:
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POSITION WITH RGH AND
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION
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Saul P. Steinberg Chairman of the Board,
Reliance Group Holdings, Inc. Chief Executive Officer
Park Avenue Plaza and Director, RGH
New York, NY 10055
Robert M. Steinberg President, Chief Operating
Reliance Group Holdings, Inc. Officer and Director, RGH;
Park Avenue Plaza Chairman of the Board and
New York, NY 10055 Chief Executive Officer,
RIC
George E. Bello Executive Vice President,
Reliance Group Holdings, Inc. Controller and Director, RGH
Park Avenue Plaza
New York, NY 10055
Lowell C. Freiberg Senior Vice President,
Reliance Group Holdings, Inc. Chief Financial Officer and
Park Avenue Plaza Director, RGH
New York, NY 10055
Henry A. Lambert Senior Vice President--
Reliance Group Holdings, Inc. Real Estate Investments
Park Avenue Plaza and Operations, RGH;
New York, NY 10055 President and Chief
Executive Officer,
Reliance Development
Group, Inc.
Dennis J. O'Leary Senior Vice President--
Reliance Group Holdings, Inc. Taxes, RGH
Park Avenue Plaza
New York, NY 10055
Fred M. Schriever Senior Vice President,
RCG International, Inc. RGH; Chairman of the
111 West 40th Street Board and President,
New York, NY 10018 RCG International, Inc.
Philip S. Sherman Senior Vice President--
Reliance Group Holdings, Inc. Group Controller, RGH
Park Avenue Plaza
New York, NY 10055
Bruce L. Sokoloff Senior Vice President--
Reliance Group Holdings, Inc. Administration, RGH
Park Avenue Plaza
New York, NY 10055
2
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POSITION WITH RGH AND
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION
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Howard E. Steinberg, Esq. Senior Vice President,
Reliance Group Holdings, Inc. General Counsel and
Park Avenue Plaza Corporate Secretary, RGH
New York, NY 10055
James E. Yacobucci Senior Vice President--
Reliance Insurance Company Investments and
Park Avenue Plaza Director, RGH and RIC;
New York, NY 10055
George R. Baker Director, RGH
WMS Industries Corporate director/advisor to
3401 North California Avenue various business enterprises
Chicago, Illinois 60618
Carter Burden Director, RGH; General
William A. M. Burden & Co. Partner, William A. M.
10 East 53rd Street Burden & Co.; Chairman of
New York, NY 10022 the Board, CRB
Broadcasting Corp.
Dennis A. Busti Director, RGH; President and
Reliance National Chief Executive Officer,
Risk Specialists, Inc. Reliance National Risk
77 Water Street Specialists, Inc.
New York, NY 10005
Dean W. Case Director, RGH; President
Reliance Insurance Company and Chief Operating Officer,
4 Penn Center Plaza RIC; President and Chief
Philadelphia, PA l9l03 Executive Officer, United
Pacific Insurance Company
Dr. Thomas P. Gerrity Director, RGH; Dean, The
The Wharton School Wharton School of the
University of Pennsylvania University of Pennsylvania
Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Jewell J. McCabe Director, RGH; President,
Jewell Jackson McCabe Associates Jewell Jackson McCabe Associates
50 Rockefeller Plaza
Suite 46
New York, NY 10020
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POSITION WITH RGH AND
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION
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Irving Schneider Director, RGH; Executive Vice
Helmsley-Spear, Inc. President, Helmsley--Spear,
60 East 42nd Street Inc.
New York, NY 10165
Bernard L. Schwartz Director, RGH; Chairman of
Loral Corporation the Board, President and
600 Third Avenue Chief Executive Officer,
New York, NY 10016 Loral Corporation
Richard E. Snyder Director, RGH
c/o MacMillan Publishing
866 Third Avenue
New York, NY 10022
Thomas J. Stanton, Jr. Director, RGH
240 South Mountain Avenue
Montclair, NJ 07042
The names of the directors and executive officers of Reliance Capital,
all of whom are United States citizens and have a business address of c/o
Reliance Group Holdings, Inc., Park Avenue Plaza, New York, New York 10055, are
set forth below. The principal occupation of each such person is his position
with RGH listed above.
Name Position with Reliance Capital
- ---- ------------------------------
Saul P. Steinberg Chairman of the Board
Lowell C. Freiberg President; Chief Executive Officer;
Director
Robert M. Steinberg Director
George E. Bello Director
Neither RGH nor, to the best of its knowledge, Reliance Capital or any
other person named in this Item 2 has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) nor, except as set forth below, been party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, Federal or State securities laws or finding any violation with respect to
such laws.
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On February 17, 1994, in settlement of an administrative proceeding
concerning the accounting treatment for certain transactions in 1986 in the
fixed income portfolio of RIC, without admitting or denying the allegations
against it, RGH agreed to the entry of an order by the Securities and Exchange
Commission that RGH cease and desist from committing or causing any violation,
and from committing or causing any future violation of, Section 13(a) of the
Exchange Act and Rules 13a-1 and 13a-3 thereunder.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Not Applicable.
ITEM 4. PURPOSE OF TRANSACTION.
On July 30, 1993, the Issuer agreed with its largest creditors and RIC to
the terms of a restructuring plan (the "Plan"). Under the terms of the Plan,
the Issuer's outstanding common stock and warrants will be extinguished.
However, the Issuer's existing stockholders will receive rights ("Rights") to
purchase their pro rata portion of 1,450,000 shares of the new common stock
(14.5% of the then outstanding new common stock) to be issued under the Plan by
the reorganized issuer (the "New Common Stock"). As part of the Plan, RIC would
act as a standby purchaser of any New Common Stock not acquired by the Issuer's
other stockholders and RIC would receive warrants to purchase up to an
additional 416,667 shares of New Common Stock for serving as such standby
purchaser. The terms of the Plan also permit certain creditors to require RIC
to purchase up to 300,000 shares of New Common Stock from such creditors.
The purchase price for the New Common Stock purchased by RIC as the standby
purchaser or from the creditors and the warrant exercise price will be
$7.19 per share. RIC will be granted certain registration rights with respect
to the New Common Stock acquired by it.
A copy of the terms of the Plan, which was filed as Exhibit 1 to
Amendment No. 14, is incorporated herein by reference and qualifies the
description above. Copies of the Standby Purchase Agreement dated as of July 20,
1994 and the Warrant Agreement and the Registration Rights Agreement, each of
which pursuant to the Plan is to be executed on the date the Plan is
consummated (the "Consummation Date") are filed as Exhibits 2, 3 and 4 hereto,
respectively, are incorporated herein by reference and qualify the descriptions
above.
The response to Item 5 is incorporated herein by reference.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The Securities owned by RGH total 21,633,137 shares, and to the best
knowledge of RGH, comprise 58.4% of the Securities outstanding (based on a total
of 37,042,924 Securities outstandng as reflected in the Issuer's quarterly
report on Form 10-Q for the period ended March 31, 1994). RIC, the Fund and
Reliance Capital directly own 12,924,295 (including 3,572,953 shares over which
the Fund used to hold proxies which were released by the Fund on July 12, 1994),
7,280,851 and 889,404 of such shares, respectively. The 21,633,137 shares owned
by RGH include 538,587 shares of Security over which the Fund, by agreement with
certain co-investors, has sole voting and dispositive power.
On July 19, 1994, the Fund distributed to its partners on a pro rata
basis in accordance with the terms of the partnership agreement, substantially
all of the assets of the Fund, including an aggregate of 8,093,066 shares of the
Security. 7,280,851 shares of the Security were retained by the Fund to be used
in connection with the settlement of the Action (as defined in Item 6 below).
889,404 of the 8,093,066 shares distributed to the partners were distributed to
Reliance Capital as a limited partner in the Fund. Except for the distribution
by the Fund, neither RGH, Reliance Capital nor, to the best of RGH's knowledge,
any other person named in Item 2 of this statement has effected any transactions
in the Security in the past 60 days.
To the best knowledge of RGH, set forth below is a list of the persons in
Item 2 who beneficially own (with sole voting and dispositive power) the
Securities:
<TABLE>
<CAPTION>
Percent of
Name Shares Owned Outstanding Shares (1)
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<S> <C> <C>
George E. Bello 228,900 *
Dean W. Case 500 *
Philip S. Sherman 4,200 *
Howard E. Steinberg (2) 5,605 *
Saul P. Steinberg (3) 2,435 *
</TABLE>
(1) An asterisk indicates that the shares owned are less than 1% of the class.
(2) Includes 2,438 shares held by Howard E. Steinberg as custodian for his
children, as to which he disclaims beneficial ownership.
(3) Owned by spouse and as to which he disclaims beneficial ownership.
6
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Reliance Entities, the Issuer and several other parties are
defendants in an action brought in December 1987 entitled John Blair
Communications, Inc., et. al. v. Reliance Capital Group, L.P., et. al. (the
"Action"). On May 16, 1994, the parties to the Action entered into a
settlement agreement (the "Blair Settlement Agreement") with respect to the
Action pursuant to which, subject to certain conditions, the Issuer has agreed
to issue to the plaintiffs in the Action (hereinafter referred to as the "Blair
Entities") Rights to purchase 285,000 shares of New Common Stock (the "Blair
Rights") on the same date (the "Rights Delivery Date") that Rights are issued to
the stockholders of the Issuer. At any time on or before the 21st day following
the Rights Delivery Date, the Blair Entities may elect to transfer to RGH, and
RGH must accept, all or any portion of the Blair Rights at a price of $7 per
Right. In addition to the election described above, if, prior to the 21st day
following the Rights Delivery Date, the Blair Entities have exercised all or any
portion of the Blair Rights, then at any time on or before such 21st day the
Blair Entities may transfer to RGH their right to receive from the Issuer on the
Consummation Date any number of shares of New Common Stock up to the number of
shares for which the Blair Rights have been exercised for a price per share
equal to $14.19, payable upon receipt by RGH of the transferred shares on the
Consummation Date. If the Blair Entities exercise any of the Blair Rights, they
may not exercise fewer than 142,500 of such Rights.
In addition, pursuant to the Blair Settlement Agreement, within five (5)
days of the Rights Delivery Date, the Fund will convey 285,000 Rights issued to
it as an existing stockholder to the Issuer, who shall extinguish them.
A copy of the Blair Settlement Agreement which is attached hereto as
Exhibit 5, is incorporated herein by reference and qualifies the description
above. The response to Item 4 is incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1. Term Sheet, dated July 30, 1993 (incorporated herein by
reference to Exhibit 1 to Amendment No. 14 to Schedule 13D filed in paper
format).
Exhibit 2. Standby Purchase Agreement, dated as of July 20, 1994, between
the Issuer and RIC.
7
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Exhibit 3. Warrant Agreement, to be dated as of the Consummation Date,
between the Issuer and RIC.
Exhibit 4. Registration Rights Agreement, to be dated as of the
Consummation Date, among the Issuer, RIC and certain other parties.
Exhibit 5. Settlement Agreement, dated May 16, 1994, by and among John
Blair Communications, Inc., the Issuer, RGH, Reliance Capital, the Fund and
certain other parties.
8
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 21, 1994
RELIANCE GROUP HOLDINGS, INC.
By: /s/ James E. Yacobucci
____________________________
Name: James E. Yacobucci
Title: Senior Vice President
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EXHIBIT INDEX
Page No.
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Exhibit 1. Term Sheet, dated July 30, 1993 (incorporated
herein by reference to Exhibit 1 to Amendment
No. 14 to Schedule 13D filed in paper format).
Exhibit 2. Standby Purchase Agreement, dated as of
July 20, 1994, between the Issuer and RIC.
Exhibit 3. Warrant Agreement, to be dated as of the
Consummation Date, between the Issuer and RIC.
Exhibit 4. Registration Rights Agreement, to be dated
as of the Consummation Date, among the Issuer,
RIC and certain other parties.
Exhibit 5. Settlement Agreement, dated May 16, 1994, by
and among John Blair Communications, Inc.,
the Issuer, RGH, Reliance Capital, the Fund and
certain other parties.
10
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EXHIBIT 99.2
STANDBY PURCHASE AGREEMENT
STANDBY PURCHASE AGREEMENT (the "Agreement"), dated as of July 20, 1994
between Telemundo Group, Inc., a Delaware corporation ("Telemundo"), and
Reliance Insurance Company, a Pennsylvania corporation ("Purchaser").
WHEREAS, Telemundo is the debtor and debtor-in-possession in case number
93-B-42967(JLG), in the Bankruptcy Court, under chapter 11 of the Bankruptcy
Code and the Bankruptcy Rules (the "Chapter 11 Case");
WHEREAS, the Plan of Reorganization of Telemundo, confirmed by final
order of the Bankruptcy Court on July 20, 1994 (the "Plan"), provides, among
other things, for the reorganization of Telemundo (Telemundo, as it shall have
been reorganized pursuant to the Plan, is referred to herein as "Reorganized
Telemundo");
WHEREAS, pursuant to section 7.01 of the Plan and the Rights Plan, Telemundo
will distribute to record holders of Telemundo Common Stock as of the Rights
Record Date an aggregate number of up to 1,450,000 Rights to purchase in the
aggregate 1,450,000 shares of Reorganized Telemundo Common Stock at a price of
$7.19 per share;
WHEREAS, each Right will entitle the holder thereof to receive, upon payment
of $7.19 per Right exercised, one share of Reorganized Telemundo Common Stock;
WHEREAS, each Right, which will not be issued prior to the Confirmation
Date, will be exercisable through the date that is thirty (30) days after the
Confirmation Date, or if the latter date is not a Business Day, the next
succeeding Business Day (the date on which such period expires being the
"Expiration Date").
NOW, THEREFORE, in consideration of the respective premises, mutual
covenants and agreements of the parties hereto, and other good and valuable
consideration and subject to the conditions hereof, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
I. DEFINITIONS
When used herein, the following terms shall have the following
meanings (such meanings to be applicable to both the singular and plural forms
of the terms defined):
Bankruptcy Code: Title 11 of the United States Code, as amended from time to
time.
Bankruptcy Court: The United States Bankruptcy Court for the Southern
District of New York, having jurisdiction over the Chapter 11 Case.
Bankruptcy Rules: The Federal Rules of Bankruptcy Procedure, as amended from
time to time.
Business Day: Any day other than a Saturday, Sunday or other day on
which banking institutions in the State of New York are not required to be open.
Confirmation Date: Shall have the meaning assigned to such term in the Plan.
Confirmation Order: Shall have the meaning assigned to such term in the
Plan.
Consummation Date: Shall have the meaning assigned to such term in the Plan.
Disclosure Statement: The Disclosure Statement dated April 29, 1994 and
filed by Telemundo with the Bankruptcy Court on April 29, 1994, as amended or
modified from time to time.
Payment Deadline: The close of business on the day that is three (3)
Business Days prior to the Consummation Date.
Person: Any natural person, corporation, partnership, joint venture,
association, joint stock company, estate, trust, unincorporated organization,
government, governmental unit, authority, agency or political subdivision
thereof or any other entity, whether acting in an individual, fiduciary or other
capacity.
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Reorganized Telemundo Common Stock: The shares of Series A Common Stock, par
value $.01 per share, of Telemundo from and after the Consummation Date.
Rights: The rights to purchase shares of Reorganized Telemundo Common Stock
to be issued under the Rights Plan and in accordance with section 7.01 of the
Plan.
Rights Plan: The rights plan substantially in the form annexed to the Plan.
Rights Record Date: The record date for the receipt of Rights under the
Rights Plan that shall be set forth in the Confirmation Order.
Standby Shares: A number of shares of Reorganized Telemundo Common Stock
equal to (i) 1,450,000 less (ii) the aggregate number of shares of Reorganized
Telemundo Common Stock issuable upon (a) the valid exercise of the Rights prior
to the Expiration Date and (b) the receipt of payment for such shares prior to
the Payment Deadline.
Telemundo Common Stock: The shares of common stock, par value $.01 per
share, of Telemundo.
II. PURCHASE AND SALE OF SHARES
2.1 Purchase and Sale of Necessary Shares. (a) Upon the terms and
subject to the conditions of this Agreement and the Plan, at the Closing (as
hereinafter defined), (i) Purchaser shall purchase from Reorganized Telemundo,
and Reorganized Telemundo shall issue and sell to Purchaser, the Standby Shares
and (ii) Purchaser shall pay to Reorganized Telemundo in immediately available
funds an amount (the "Purchase Price") equal to the product of (x) $7.19
multiplied by (y) the number of Standby Shares. Telemundo shall deliver to
Purchaser, at least two Business Days prior to the Consummation Date, a
certificate signed by the appropriate officers of Telemundo, setting forth the
number of Standy Shares.
(b) The closing of the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Fried, Frank, Harris, Shriver &
Jacobson, One New York Plaza, New York, New York 10004-1980, or at such other
place as the parties hereto shall mutually agree, on the Consummation Date.
2.2 Delivery of Shares. At the Closing and upon payment in full of the
Standby Purchase Price, Reorganized Telemundo shall issue and deliver to
Purchaser a stock certificate or certificates representing the Standby Shares
registered in the name of such Person or Persons, and in such denomination or
denominations, as Purchaser shall designate in writing. Each certificate issued
to Purchaser under this Section 2.2 shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND,
ACCORDINGLY, THE TRANSFER, RESALE OR OTHER DISPOSITION OF
SUCH SECURITIES MAY ONLY BE MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR A VALID
EXEMPTION THEREFROM AND IN COMPLIANCE WITH ALL APPLICABLE
STATE SECURITIES LAWS, AND BY DELIVERY OF AN OPINION OF
COUNSEL SATISFACTORY TO COUNSEL FOR THE COMPANY THAT THERE
IS SUCH AN EXEMPTION.
III. REPRESENTATIONS AND WARRANTIES OF TELEMUNDO
Telemundo hereby represents and warrants to Purchaser as follows:
3.1 Due Organization, Power and Authority, etc. Telemundo is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to own, lease and operate its
assets and to carry on its business as now and as heretofore conducted.
3.2 Execution and Delivery; No Breach. (a) Subject to the entry of the
Confirmation Order, (i) Telemundo has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
2
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hereby and (ii) this Agreement has been duly executed and delivered by Telemundo
and is the legal, valid and binding obligation of Telemundo, enforceable against
it in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the rights of creditors generally.
(b) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby by Telemundo or Reorganized
Telemundo, as the case may be, will (i) conflict with or result in a breach or
violation of any of the terms, conditions or provisions of the corporate
governance documents of Telemundo or Reorganized Telemundo; (ii) require any
consent, approval, waiver, permit, order or authorization of, or registration,
declaration, notification or filing with, any federal, state, local or foreign
governmental judicial or regulatory authority (each, an "Authority") including,
but not limited to, any required approvals of the Federal Communications
Commission and the termination or expiration of the applicable waiting period
(and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, that has not been obtained or accomplished; (iii)
result in a breach or constitute a default, or give rise to any right of
termination, amendment, cancellation or acceleration of, or result in the
creation of any lien, under any of the terms, conditions or provisions of any
material note, license, agreement, contract or other instrument or obligation to
which Reorganized Telemundo is a party or by which any of its assets will be
bound after the Consummation Date; or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable after the Consummation Date to
Reorganized Telemundo or any of its assets. As used in this Agreement, "Lien"
means any lien, pledge, claim, option, encumbrance, mortgage, hypothecation,
equity, charge or any other similar limitation, except any such limitation
contemplated by this Agreement.
3.3 Capitalization. As of the Consummation Date, the equity capitalization
of Reorganized Telemundo will consist of (i) 20,000,000 shares of Common Stock,
divided into two series, Series A Common Stock and Series B Common Stock; (ii)
1,000,000 shares of preferred stock, par value $.01 per share, none of which
will be outstanding; (iii) warrants to purchase up to 1,060,129 shares of
Reorganized Telemundo Common Stock; and (iv) options, if granted, to purchase up
to 1,000,000 shares of Reorganized Telemundo Common Stock. All of the shares
comprising the Reorganized Telemundo Common Stock will be validly issued, fully
paid and non-assessable. Except as set forth in the first sentence of this
Section 3.3, as of the Consummation Date, there will not be any outstanding
securities convertible into, exchangeable for, or carrying the right to acquire,
equity securities of Reorganized Telemundo, or subscriptions, warrants, options,
rights or other arrangements or commitments obligating Reorganized Telemundo to
issue or dispose of any of its equity securities or any ownership interest
therein.
3.4 Reorganized Telemundo Common Stock. The certificates representing the
Standby Shares shall be in due and proper form, and the Standby Shares shall
have been duly authorized by all necessary corporate action on the part of
Reorganized Telemundo and, when issued and delivered by Reorganized Telemundo in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable. Purchaser will acquire valid title to the Reorganized Telemundo
Common Stock delivered to it by Reorganized Telemundo pursuant to this
Agreement, free and clear of any Liens other than any Liens that may be granted
by, or derived from or through, Purchaser.
3.5 Adverse Change. Since the date of the Disclosure Statement, there has
not been any material adverse change, or any development which Telemundo has
reasonable cause to believe will result in a material adverse change, in the
business, financial position or results of operations of Reorganized Telemundo
and its subsidiaries taken as a whole, other than as set forth in the Disclosure
Statement.
3.6 Securities Laws. The Confirmation Order provides that the Rights
issuable under the Rights Plan and the shares of Reorganized Telemundo Common
Stock issuable upon exercise of the Rights are exempt from the registration
requirements of the Securities Act (and of equivalent state securities or "blue
sky" laws).
IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Telemundo as follows:
4.1 Due Organization, Power and Authority. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Purchaser has full power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby.
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4.2 Execution and Delivery; No Breach. The execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary action of
Purchaser. This Agreement has been duly executed and delivered by Purchaser, is
the legal, valid and binding obligation of Purchaser, and is enforceable against
Purchaser in accordance with its terms. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby by
Purchaser will (i) conflict with or result in a breach or violation of any of
the terms, conditions or provisions of the Certificate of Incorporation of
Purchaser, (ii) with or without notice or lapse of time (or both), conflict with
or result in a breach or violation of or default under, or permit the
acceleration of any obligation under any provision of any agreement, indenture,
mortgage, lien, lease or other instrument or restriction of any kind to which
Purchaser is a party or by which Purchaser is otherwise bound or affected, (iii)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser, or (iv) require on the part of Purchaser any consent,
approval, waiver, permit, order or authorization of, or registration,
declaration, notification or filing with, any Authority that has not been
obtained or accomplished.
4.3 Investment Representation. Purchaser is an "accredited investor"
as defined in Regulation D of the Securities Act. Any shares of Reorganized
Telemundo Common Stock acquired by Purchaser pursuant to this Agreement will be
purchased by Purchaser solely for its own account for the purpose of investment
and not with a view to the public distribution thereof; provided, that the
disposition of the Standby Shares shall be within the sole discretion of
Purchaser. Purchaser understands that the shares of Reorganized Telemundo Common
Stock have not been registered under the Securities Act and may only be sold or
otherwise disposed of in compliance with the Securities Act.
V. CONDITIONS TO THE OBLIGATIONS OF THE PARTIES
5.1 Conditions to the Obligations of Purchaser. The obligations of Purchaser
to consummate the transactions contemplated by this Agreement on the
Consummation Date are subject to the fulfillment, on or before the Consummation
Date, of all of the following conditions (except such of the following
conditions as shall have been expressly waived in writing by Purchaser):
(a) The representations and warranties of Telemundo contained in this
Agreement shall have been true and correct in all material respects as of the
date of this Agreement and at and as of the Consummation Date as if made on and
as of the Consummation Date, and Telemundo shall have performed and complied in
all material respects with all covenants and agreements required by this
Agreement to be performed or complied with by it hereunder at or prior to the
Consummation Date.
(b) Telemundo shall have issued no more than the number of Rights determined
in accordance with the Rights Plan.
(c) The consummation of the Plan shall occur contemporaneously with
the purchase of the Standby Shares pursuant to Section 2.1 of this Agreement.
(d) At or prior to the Consummation Date, Telemundo and Purchaser shall have
entered into a registration rights agreement substantially in the form of
Exhibit P-8 to the Plan.
5.2 Conditions to the Obligations of Telemundo. The obligations of
Telemundo and Reorganized Telemundo to consummate the transactions contemplated
by this Agreement on the Consummation Date are subject to the fulfillment, on or
before the Consummation Date, of all of the following conditions (except such of
the following conditions as shall have been expressly waived in writing by
Telemundo or Reorganized Telemundo):
(a) The representations and warranties of Purchaser contained in this
Agreement shall have been true and correct in all material respects at and as
of the date of this Agreement and as of the Consummation Date, as if made on and
as of the Consummation Date, and Purchaser shall have performed and complied in
all material respects with all of its covenants and agreements required by this
Agreement to be performed or complied with by it hereunder at or prior to the
Consummation Date.
(b) The consummation of the Plan shall occur contemporaneously with
the purchase of the Standby Shares pursuant to Section 2.1 of this Agreement.
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VI. MISCELLANEOUS
6.1 Termination. This Agreement may be terminated at any time upon the
mutual agreement of Telemundo or Reorganized Telemundo, as the case may be, and
Purchaser; provided, however, this Agreement may not be terminated without the
consent of the Creditors' Committee (as defined in the Plan). In addition, this
Agreement may be terminated by Purchaser at any time after the day that is one-
hundred twenty (120) days after the Confirmation Date by written notice of the
same to Telemundo if the Consummation Date has not occurred on or before such
date. Anything herein to the contrary notwithstanding, this Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Consummation Date by either Purchaser or Telemundo, if a default or
breach shall have occurred by the other party with respect to the due and timely
performance of its covenants and agreements contained herein, or with respect to
its representations and warranties contained herein and such default or breach
would give Purchaser or Telemundo, as the case may be, the right not to
consummate the transaction pursuant to Section 5.1 or 5.2, as the case may be;
provided, however, that if such default or breach is reasonably capable of being
cured before the Consummation Date, and if the defaulting party promptly
commences and continues to attempt to cure such default or breach and diligently
pursues such cure, then the right of the other party to terminate shall be
suspended for as long as the defaulting party continues diligently to pursue
such cure, but only until the date upon which the Consummation Date would occur,
but for the breach or default.
6.2 Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are not consummated as provided above, this
Agreement shall become null and void and shall be of no further force and
effect, and there shall be no liability on the part of Purchaser, Telemundo or
Reorganized Telemundo, except for any liability for any willful breach hereof.
6.3 Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall survive the Closing of the
transactions contemplated by this Agreement.
6.4 Fees and Expenses. Telemundo and Reorganized Telemundo shall bear
all costs and expenses incurred in connection with the negotiation, preparation,
execution and Closing of this Agreement and the transactions contemplated
hereby.
6.5 Notices. All notices or communications hereunder shall be in
writing (including facsimile transmission) and shall be addressed as follows:
(i) if to Purchaser, to:
Reliance Insurance Company
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Attention: Lowell C. Freiberg
Senior Vice President
Telephone: (212) 909-1100
Facsimile: (212) 909-1241
with a copy to:
Reliance Group Holdings, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055
Attention: Howard E. Steinberg, Esq.
Senior Vice President and General Counsel
Telephone: (212) 909-1136
Facsimile: (212) 909-1864
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(ii) if to Telemundo or Reorganized Telemundo, to:
Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Attention: Chief Financial Officer
Telephone: (305) 889-7999
Facsimile: (305) 889-7998
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attention: Brad Eric Scheler, Esq.
Telephone: (212) 820-8000
Facsimile: (212) 820-8583
Notices given by mail shall be deemed to have been given no later than five
Business Days after the date sent, if sent by registered or certified mail,
postage prepaid, and addressed to the applicable party at the address shown
above (or such other address designated by such party subsequent to the date
hereof). Notices given by facsimile or hand delivery transmission shall be
deemed to have been given when sent or delivered, if properly addressed to the
party to whom sent or delivered. Any party may, by notice to the other party
given in accordance with this Section 6.5, designate another address or person
for receipt of notices or communications hereunder.
6.6 Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the matters described herein,
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
6.7 Waivers and Amendments. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the parties or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede, cancel, renew or extend this
Agreement or to waive compliance with one or more of the terms hereof, as the
case may be. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
6.8 Governing Law. This Agreement shall be governed in all respects,
including validity, construction, interpretation and effect, by the laws of the
State of New York (without regard to principles of conflicts of law), except to
the extent that the Delaware General Corporation Law shall specifically and
mandatorily apply to the issuance of the certificate or certificates
representing the Standby Shares and the terms thereof and except to the extent
that the Bankruptcy Code or Bankruptcy Rules apply.
6.9 Binding Effect; No Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement is not assignable without the prior written
consent of each of the parties hereto or by operation of law.
6.10 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts which together shall constitute one and the same
instrument.
6.11 Further Assurances. Each party shall, at the request of the other
party, at any time and from time to time following the Closing promptly execute
and deliver, or cause to be executed and delivered, to such requesting party all
such further instruments and take all such further action as may be reasonably
necessary or appropriate to confirm or carry out the provisions and intents of
this Agreement and of the instruments delivered pursuant to this Agreement.
6.12 Captions. All section titles or captions contained in this Agreement
are for convenience only, shall not be deemed a part of this Agreement and shall
not affect the meaning or interpretation of this Agreement. All references
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herein to sections shall be deemed references to such parts of this Agreement,
unless the context shall otherwise require.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of
the date first written above.
TELEMUNDO GROUP, INC.
By: /s/ Peter J. Housman II
----------------------------
Name: Peter J. Housman II
Title: President, Business and
Corporate Affairs
RELIANCE INSURANCE COMPANY
By: /s/ James E. Yacobucci
----------------------------
Name: James E. Yacobucci
Title: Senior Vice President
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EXHIBIT 99.3
TELEMUNDO GROUP, INC. WARRANT
AGREEMENT AND FORM OF WARRANT
WARRANT AGREEMENT (the "Agreement"), dated as of , 1994, between
Telemundo Group, Inc., a Delaware corporation (the "Company"), and Reliance
Insurance Company, a Pennsylvania corporation (the "Holder").
WHEREAS, the authorized common stock of the Company consists of 20,000,000
shares of common stock, par value $.01 per share (the "Common Stock"), divided
into two series consisting of shares of Series A Common Stock
(the "Series A Common Stock") and shares of Series B Common Stock
(the "Series B Common Stock");
WHEREAS, in accordance with the plan of reorganization of the Company,
confirmed by final order of the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court") on , 1994 (the "Plan"), the
Company proposes to issue an aggregate of 416,667 Warrants in three series (the
"Warrants") to the Holder, each Warrant entitling the Holder to purchase, upon
the terms and subject to the conditions contained in this Agreement and the
Warrant Certificates (as defined below), one share of Series A common stock of
the Company, subject to adjustment as provided in Section 11 hereof;
WHEREAS, the Company will issue certificates evidencing the Warrants
(the "Warrant Certificates") and other matters as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Warrant Certificates. The Warrant Certificates (and the Forms of
Exercise, Assignment and Partial Assignment to be set forth on the reverse
thereof) shall be substantially in the forms set forth in Exhibits A-D attached
hereto, and may have such letters, numbers or other marks of identification and
such legends printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement.
Section 2. Execution and Countersignature of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by its Chief Executive
Officer, President, Chief Financial Officer or Treasurer (each, a "Company
Officer") under its corporate seal reproduced thereon attested by its Secretary
or Assistant Secretary. The signature of any of these Company Officers on any
Warrant Certificate may be manual or facsimile. The name, incumbency and
specimen signature of each Company Officer authorized to act and give
instructions and notices under this Agreement shall be certified by the
Secretary or Assistant Secretary of the Company. Warrant Certificates bearing
the manual or facsimile signatures of individuals who were at any time Company
Officers shall bind the Company even if any such individual ceased to be a
Company Officer prior to the execution and delivery of such Warrant Certificate
or was not a Company Officer at the date of this Agreement.
Each Warrant Certificate shall be countersigned by the manual signature of an
authorized officer of the Holder and shall not be valid for any purpose unless
so countersigned. The Holder is hereby authorized to countersign Warrant
Certificates for issuance pursuant to any provision of this Agreement.
Each Warrant Certificate shall be dated the date of its countersignature by
the Holder.
Section 3. Distribution of Warrant Certificates. On the date hereof, the
Company shall execute and authenticate Warrant Certificates representing an
aggregate of 416,667 Warrants (as described below). The Company shall promptly
thereupon deliver to the Holder, (i) one Warrant Certificate representing
138,889 Warrants to purchase an equal number of shares of Series A Common Stock
of the Company (the "Series 1 Warrants"); (ii) one Warrant Certificate
representing 138,889 Warrants to purchase an equal number of shares of Series A
Common Stock of the Company (the "Series 2 Warrants"); and (iii) one
Warrant Certificate representing 138,889 Warrants to purchase an equal number of
shares of Series A Common Stock of the Company (the "Series 3 Warrants"). The
terms and conditions of each series of Warrants described in the preceding
sentence shall be identical, except for the Exercise Date and Expiration Date
(each as defined below) of each such series, which are set forth in Section 5 of
this Agreement. The
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Company shall effect the foregoing as expeditiously as possible and execute,
authenticate and deliver, from time to time, such other Warrant Certificates as
are required by the terms of this Agreement.
Section 4. Transfers; Exchanges and Purchases by the Company. Subject to
Section 14, each Warrant shall be transferable, in whole or in part, upon
surrender of the Warrant Certificate to the Company together with a written
assignment of the Warrant Certificate, on the Form of Assignment or Partial
Assignment, as the case may be, set forth on the reverse thereof or in other
form satisfactory to the Company, duly executed by the Holder, and together with
funds to pay any transfer taxes payable in connection with such transfer. Upon
such surrender and payment, a new Warrant Certificate, in the name of the
assignee and in the denomination or denominations specified in such instrument
of assignment, shall be issued and delivered. If less than all of a Warrant
Certificate is being transferred, a new Warrant Certificate or Certificates
shall be issued for the portion of the Warrant not being transferred. The
Warrant Certificate surrendered shall be cancelled by the Company.
A Warrant Certificate may be divided or combined with other Warrant
Certificates upon surrender thereof to the Company, together with a written
notice specifying the names and denominations in which new Warrant Certificates
are to be issued, signed by the Holder, and together with the funds to pay any
transfer taxes payable in connection with such transfer. Upon such surrender and
payment, a new Warrant Certificate or Certificates shall be issued and delivered
in accordance with such notice. The Warrant Certificate surrendered shall be
cancelled by the Company.
The Company shall make no service or other charge in connection with any such
transfer or exchange of Warrant Certificates, except for any transfer taxes or
other governmental charges payable in connection therewith.
Warrant Certificates cancelled pursuant to any provisions of this Agreement
shall not be reissued, and shall be returned to the Company.
The Company shall have the right, except as limited by law, other agreements
or herein, to purchase or otherwise acquire in negotiated transactions Warrants
evidenced by the Warrant Certificates at such times, in such manner and for such
consideration as it may deem appropriate through privately negotiated
transactions, open market purchases, tender offers or otherwise. In the event
the Company shall purchase or otherwise acquire Warrants, the Warrant
Certificate(s) evidencing such Warrants shall thereupon be cancelled by the
Company.
Section 5. Duration and Exercise of Warrants. Each series of Warrants shall
expire at 5:00 p.m. New York City time on the fifth anniversary of the Exercise
Date (as defined below) for such series, provided, that if such date falls on a
day other than a Business Day, then the Warrants shall expire at 5:00 p.m. New
York City time on the next succeeding Business Day (such date of expiration
being herein referred to as the "Expiration Date"). A "Business Day" shall mean
a day other than a Saturday, Sunday or a public or national bank holiday or the
equivalent for banks generally under the laws of the State of New York.
The "Exercise Date" shall be (i) , 1995 with respect to the Series 1
Warrants evidenced by the Series 1 Warrant Certificate, substantially in the
form attached hereto as Exhibit A, and the Series 1 Warrants shall be
exercisable from such date through and including , 2000, (ii)
, 1996 with respect to the Series 2 Warrants, evidenced by the Series 2
Warrant Certificate, substantially in the form attached hereto as Exhibit B, and
the Series 2 Warrants shall be exercisable from such date through and including
, 2001, and (iii) , 1997 with respect to the Series 3 Warrants,
evidenced by the Series 3 Warrant Certificate, substantially in the form
attached hereto as Exhibit C, and the Series 3 Warrants shall be exercisable
from such date through and including , 2002. The Warrants represented
by each Warrant Certificate shall only be exercisable for shares of Series A
Common Stock from the Exercise Date with respect to such Warrants through and
including the Expiration Date with respect to such Warrants. Each Warrant may
be exercised on any Business Day on or prior to 5:00 p.m. New York City time on
the Expiration Date. After 5:00 p.m. New York City time on the Expiration Date,
unexercised Warrants will become wholly void and of no value.
Subject to the provisions of this Agreement, the Holder shall have the right
to purchase from the Company (and the Company shall issue and sell to the
Holder) one fully paid and nonassessable share of Series A Common Stock at the
exercise price (the "Exercise Price") at the time in effect hereunder, upon
surrender to the Company of the Warrant Certificate evidencing such Warrant,
with the Form of Exercise on the reverse thereof duly completed and signed,
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and upon payment of the Exercise Price in lawful money of the United States of
America by certified or official bank check payable to the order of the
Company. The Exercise Price shall be as provided in Section 6. The Exercise
Price and the number of shares of Series A Common Stock purchasable upon
exercise of a Warrant shall be subject to adjustment as provided in Section 11.
Except as provided in Section 11, no adjustment shall be made for any cash
dividends or other distributions on or in respect of the Common Stock or other
securities purchasable upon the exercise of a Warrant.
Subject to Section 7, upon surrender of a Warrant Certificate and payment of
the Exercise Price at the time in effect hereunder and an amount equal to any
applicable transfer tax in cash or by certified check or bank draft payable to
the order of the Company, the Company shall thereupon promptly cause to be
issued and shall deliver to or upon the Holder, within a reasonable time, not
exceeding fifteen days after each Warrant represented by the Warrant Certificate
shall have been exercised, a certificate for the shares of Series A Common Stock
issuable upon the exercise of each Warrant evidenced by such Warrant
Certificate. Such certificate shall be deemed to have been issued and the Holder
shall be deemed to have become the holder of record of such shares of Series A
Common Stock (a "Shareholder") as of the date of the surrender of such Warrant
Certificate and payment of the Exercise Price.
The Warrants evidenced by a Warrant Certificate shall be exercisable, at the
election of the Holder, either as an entirety or from time to time for part only
of the number of Warrants evidenced by the Warrant Certificate. In the event
that less than all of the Warrants evidenced by a Warrant Certificate
surrendered upon the exercise of Warrants are exercised, a new Warrant
Certificate or Certificates shall be issued for the remaining number of Warrants
evidenced by the Warrant Certificate so surrendered. All Warrant Certificates
surrendered upon exercise of Warrants shall be cancelled by the Company.
The Company shall deposit to the account of the Company all monies received in
payment of the Exercise Price of any Warrant and any applicable transfer taxes.
Section 6. Exercise Price. The Exercise Price of each Warrant shall be
equal to $ per share of Series A Common Stock, subject to adjustment as
provided in Section 11. [Note: the exercise price will be a sum certain on the
Consummation Date and it will be equal to the sum of (i) $7.00, plus (ii) an
amount equal to interest thereon at a rate of 5% per annum based on the actual
number of days elapsed from and including January 31, 1994 through and including
the 30th day after the Confirmation Date calculated on a year of 365 days].
Section 7. Payment of Taxes. The Company shall pay all documentary stamp
taxes, if any, attributable to the issuance of Warrants and the issuance of
Series A Common Stock upon the exercise of any Warrant; provided, however, that
the Company shall not be required to pay any tax or taxes which may be payable
in respect of any transfer involved in the issuance of any certificates for
shares of Series A Common Stock in a name other than that of the Holder of a
Warrant Certificate surrendered upon the exercise of a Warrant and the Company
shall not be required to issue or deliver such certificates unless or until the
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
Section 8. Mutilated or Missing Warrant Certificates. In case any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
shall issue, in exchange and substitution for and upon cancellation of the
mutilated Warrant Certificate, or in lieu of and in substitution for the Warrant
Certificate lost, stolen or destroyed, a new Warrant Certificate of like tenor
and representing an equivalent number of Warrants, but only upon receipt of
evidence satisfactory to the Company of such loss, theft or destruction of such
Warrant Certificate and indemnity, if requested, also satisfactory to the
Company. Applicants for such substitute Warrant Certificates shall also comply
with such other reasonable requirements and pay such other reasonable charges as
the Company may prescribe.
Section 9. Reservation of Series A Common Stock. The Company will at all times
reserve and keep available, free from preemptive rights, out of the aggregate of
its authorized but unissued shares of Series A Common Stock and shares of Series
A Common Stock held in its Treasury, for the purpose of enabling it to satisfy
any obligation to issue shares of Series A Common Stock upon the exercise of
Warrants, the maximum number of shares of Series A Common Stock which are
required to be delivered upon the exercise of all outstanding Warrants.
The Company covenants that all shares of Series A Common Stock which may be
issued upon the exercise of Warrants will, upon issuance, be duly issued and
outstanding, fully paid and nonassessable and free from all taxes, liens,
charges and security interests with respect to the issuance thereof.
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The Company is authorized to requisition from time to time from a transfer
agent for the Series A Common Stock (including the Company if then acting as a
transfer agent) stock certificates required to honor the exercise of outstanding
Warrants. The Company hereby authorizes its present and any future such transfer
agent to comply with all such requests. The Company will supply such transfer
agent with duly executed Series A Common Stock certificates for such purposes
and will itself provide or otherwise make available any cash which may be
payable as provided in Section 12.
Section 10. Obtaining of Governmental Approvals and Stock Exchange Listings.
The Company will in good faith and as expeditiously as possible take all action
which may be necessary to obtain and keep effective any and all permits,
consents and approvals of governmental agencies and authorities, and will make
any and all filings under federal and state securities laws necessary in
connection with the issuance, distribution and transfer of Warrant Certificates,
the exercise of the Warrants and the issuance, sale, transfer and delivery of
shares of Series A Common Stock upon the exercise of Warrants, provided, that
the foregoing provisions of this sentence shall not be deemed to require the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or similar state securities laws of the Warrants or the shares of Series
A Common Stock issuable upon the exercise of the Warrants. The Company will use
reasonable efforts to have the shares of Series A Common Stock which are
issuable upon the exercise of the Warrants listed for trading on any securities
exchanges on which the then outstanding Series A Common Stock is listed (or on
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ")).
Section 11. Adjustment of Exercise Price and Number and Kind of Securities
Purchasable upon Exercise of Warrants.
(a) Adjustment of Exercise Price and Number of Warrants. The Exercise Price
shall be subject to adjustment from time to time as hereinafter in this Section
11 provided. No adjustment of the Exercise Price, however, shall be made in an
amount less than $.01 per share, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment, which together with any subsequent adjustments so carried forward
shall amount to $.01 per share or more. Upon each adjustment of the Exercise
Price, except pursuant to subsection (f) of this Section, the Holder shall
thereafter, at or prior to the Expiration Date, be entitled to purchase, at the
Exercise Price resulting from such adjustment, the number of shares issuable
upon exercise of the Warrants (calculated to the nearest whole share) obtained
by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares issuable upon exercise of the Warrants
immediately prior to such adjustment and dividing the product so obtained by the
Exercise Price resulting from such adjustment.
(b) Adjustment of Exercise Price upon Certain Issuances of Common Stock. If
and whenever after the date hereof, the Company shall issue or sell any shares
of Common Stock for a consideration per share less than the current market price
(as hereinafter defined) in effect immediately prior to the time of such issue
or sale, then, forthwith upon such issue or sale, the Exercise Price shall be
reduced to the price (calculated to the nearest cent) determined by multiplying
the Exercise Price in effect immediately prior to the time of such issue or sale
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding immediately prior to such issue or sale
multiplied by the current market price immediately prior to such issue or sale,
plus (ii) the consideration received by the Company upon such issue or sale, and
the denominator of which shall be the product of (i) the total number of shares
of Common Stock outstanding immediately after such issue or sale, multiplied by
(ii) the current market price immediately prior to such issue or sale.
(c) Constructive Issuances of Stock; Convertible Securities; Rights and
Options. For purposes of subsection (b) of this Section, the following clauses
shall also be applicable:
(i) Issuance of Rights or Options. In case at any time the Company shall
in any manner grant any rights or options to subscribe for or to purchase, or
any options for the purchase of, Common Stock or stock or securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being hereinafter called "Convertible
Securities"), whether or not such rights or options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
rights or options or upon conversion or exchange of such Convertible
Securities (determined as provided below) shall be less than the current
market price determined as of the date of granting such rights or options,
then the total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon conversion or exchange of the total
maximum
4
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amount of such Convertible Securities issuable upon the exercise of such
rights or options shall (as of the date of granting of such rights or options)
be deemed to be outstanding and to have been issued for such price per share.
For the purposes of calculations under this clause (i), the price per share
for which Common Stock is issuable upon the exercise of any such rights or
options or upon conversion or exchange of any such Convertible Securities
shall be determined by dividing (a) the total amount, if any, received or
receivable by the Company as consideration for the granting of such rights or
options, plus the minimum aggregate amount of additional consideration payable
to the Company upon the exercise of all such rights or options, plus, in the
case of such rights or options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (b) the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon the conversion or
exchange of all such Convertible Securities issuable upon the exercise of such
rights or options. Except as provided in clause (iii) of this subsection (c),
no further adjustments of any Exercise Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise of
such rights or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. In case at any time the Company
shall in any manner issue or sell any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon conversion or
exchange of such Convertible Securities (determined as provided below) shall
be less than the current market price determined as of the date of such issue
or sale of such Convertible Securities, then the total maximum number of
shares of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale of such
Convertible Securities) be deemed to be outstanding and to have been issued
for such price per share, provided that if any such issue or sale of such
Convertible Securities is made upon exercise of any rights to subscribe for or
to purchase or any option to purchase any such Convertible Securities for
which adjustments of any Exercise Price have been or are to be made pursuant
to other provisions of this subsection (c), no further adjustment of the
Exercise Price shall be made by reason of such issue or sale. For the purposes
of calculations under this clause (ii), the price per share for which Common
Stock is issuable upon conversion or exchange of Convertible Securities shall
be determined by dividing (a) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (b) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities. Except as provided in clause
(iii) of this subsection, no further adjustments of any Exercise Price shall
be made upon the actual issue of such Common Stock upon conversion or exchange
of such Convertible Securities.
(iii) Change in Option Price or Conversion Rate; Expiration or Termination
of Rights or Convertible Securities. If the purchase price provided for in any
rights or options referred to in clause (i) above, or the additional
consideration, if any, payable upon the conversion or exchange of Convertible
Securities referred to in clause (i) or (ii) above, or the rate at which any
Convertible Securities referred to in clause (i) or (ii) above are convertible
into or exchangeable for Common Stock, shall change (other than under or by
reason of provisions designed to protect against dilution), then the Exercise
Price then in effect shall forthwith be readjusted to the Exercise Price which
would have then been in effect had such then outstanding rights, options or
Convertible Securities provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold. If the purchase price provided for in any such right
or option referred to in clause (i) above or the rate at which any Convertible
Securities referred to in clause (i) or (ii) above are convertible into or
exchangeable for Common Stock, shall decrease at any time under or by reason
of provisions with respect thereto designed to protect against dilution, the
Exercise Price then in effect hereunder shall forthwith be decreased to such
Exercise Price as would have been obtained had the adjustments made upon
issuance of such right or option or such Convertible Securities been made upon
the basis of the actual issuance of (and the total consideration received for)
the shares of Common Stock delivered upon such exercise, conversion or
exchange. Upon the expiration of any rights, options or Convertible
Securities, if any thereof shall not have been exercised, converted or
exchanged, as the case may be, the Exercise Price and the number of shares
issuable upon exercise of the Warrants shall, upon such expiration, be
readjusted and shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been required, as the
case may be) as
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if (a) the only shares of Common Stock so issued were the shares of Common
Stock, if any, actually issued or sold upon the exercise, conversion or
exchange, as the case may be, of such rights, options or Convertible
Securities and (b) such shares of Common Stock, if any, were issued or sold
for the consideration actually received by the Company upon such exercise,
conversion or exchange, as the case may be, plus the aggregate consideration,
if any, actually received by the Company for the issuance, sale or grant of
all of such rights, options or Convertible Securities, whether or not
exercised, converted or exchanged.
(iv) Stock Dividends. In case at any time the Company shall declare a
dividend or make any other distribution upon any stock of the Company which is
payable in shares of Common Stock or Convertible Securities, any shares of
Common Stock or Convertible Securities, as the case may be, issuable in
payment of such dividend or distribution shall be deemed to have been issued
or sold without consideration
(v) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such shares of
Common Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the issuance or sales
price therefor, without deducting therefrom any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such shares of
Common Stock or Convertible Securities shall be issued or sold for a
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be deemed to be the fair value of such
consideration as determined reasonably and in good faith by the Board of
Directors of the Company, without deducting any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed by the
Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any shares of
Common Stock or Convertible Securities shall be issued in connection with any
merger of another corporation into the Company, the amount of consideration
therefor shall be deemed to be the fair value as determined reasonably and in
good faith by the Board of Directors of the Company of such portion of the
assets of such merged corporation as the Board shall determine to be
attributable to such shares of Common Stock, Convertible Securities, rights or
options, as the case may be.
(vi) Definition of Current Market Price. For the purpose of any computation
hereunder, the "current market price" shall mean (1) if the Common Stock is
listed on one or more stock exchanges or is quoted on the National Market
System of NASDAQ (the "National Market System"), the average of the closing
sales prices of a share of such Common Stock on the primary national or
regional stock exchange on which such shares are listed or on the National
Market System if quoted thereon or (2) if the Common Stock is not so listed or
quoted but is traded in the over-the-counter market (other than the National
Market System), the average of the closing bid and asked prices of a share of
such Common Stock, in the case of clauses (1) and (2), for the 30 trading days
(or such lesser number of trading days as such Common Stock shall have been so
listed, quoted or traded) next preceding the date of measurement; provided,
however, that if no such sale prices or bid and asked prices have been quoted
during the preceding 30-day period, "current market price" means the value as
determined reasonably and in good faith by the Board of Directors of the
Company; and provided, further, however, that in the event the current market
price of a share of such Common Stock is determined during a period following
the announcement by the Company of (i) a dividend or distribution on the
Common Stock payable in shares of Common Stock or Convertible Securities, (ii)
a dividend of the type referred to in subsection (d) of this Section 11, or
(iii) any subdivision, combination or reclassification of the Common Stock,
and prior to the expiration of 30 trading days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the "current
market price" shall be appropriately adjusted to take into account ex-dividend
trading. Anything herein to the contrary notwithstanding, in case the Company
shall issue any shares of Common Stock, rights, options or Convertible
Securities in connection with the acquisition by the Company of the stock or
assets of any other corporation or the merger of any other corporation into
the Company, the current market price shall be determined as of the date the
number of shares of Common Stock, rights, options or Convertible Securities
(or in the case of Convertible Securities other than stock, the aggregate
principal amount of Convertible Securities) was determined (as set forth in a
written agreement between the Company and the other party to the transaction)
rather than on the date of issuance of such shares of Common Stock, rights,
options or Convertible Securities.
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(d) Adjustment for Certain Special Dividends. In case the Company shall
declare a dividend upon the Common Stock payable otherwise than out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles, and otherwise than in shares of Common Stock or Convertible
Securities, the Exercise Price in effect immediately subsequent to the
declaration of such dividend shall be determined by multiplying the Exercise
Price in effect immediately prior to such declaration by a fraction, the
numerator of which shall be the current market price immediately prior to such
distribution less the amount of cash (or, if the distribution is for property
other than cash, the fair market value of such property determined reasonably
and in good faith by the Board of Directors of the Company) distributed in
respect of one share of Common Stock, and the denominator of which shall be the
current market price immediately prior to such distribution. For the purposes of
the foregoing, a dividend other than in cash shall be considered payable out of
earnings or earned surplus (other than revaluation of paid-in-surplus) only to
the extent that such earnings or earned surplus are charged an amount equal to
the fair value of such dividend as determined, reasonably and in good faith, by
the Board of Directors of the Company. Such reductions shall take effect as of
the date on which a record is taken for the purpose of such dividend, or, if a
record is not taken, the date as of which the holders of Common Stock of record
entitled to such dividend are determined.
(e) Subdivision or Combination of Stock. In case the Company shall at any time
subdivide the outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of shares issuable upon exercise of
the Warrants immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined at any time into a smaller number of shares, the Exercise Price in
effect immediately prior to such combination shall be proportionately increased
and the number of shares issuable upon exercise of the Warrants immediately
prior to such combination shall be proportionately reduced.
(f) Adjustments for Consolidation, Merger, Sale of Assets, Reorganization,
etc. In case the Company (i) consolidates with or merges into any other
corporation and is not the continuing or surviving corporation of such
consolidation or merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or substantially
all of its properties and assets to any other corporation, or (iv) effects a
capital reorganization or reclassification of the capital stock of the Company
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash or assets with respect to or in exchange for Common Stock,
then, and in each such case, proper provision shall be made so that, upon the
basis and upon the terms and in the manner provided in this subsection (f), the
Holder, upon the exercise of the Warrants at any time after the consummation of
such consolidation, merger, transfer, reorganization or reclassification, shall
be entitled to receive (at the aggregate Exercise Price in effect for shares
issuable upon such exercise of the Warrants immediately prior to such
consummation), in lieu of shares issuable upon such exercise of the Warrants
prior to such consummation, the stock and other securities, cash and assets to
which such Holder would have been entitled upon such consummation if such Holder
had so exercised such Warrants immediately prior thereto (subject to adjustments
subsequent to such corporate action as nearly equivalent as possible to the
adjustments provided for in this Section 11). Notwithstanding the foregoing, in
the event that a definitive agreement (a "Sale Agreement") is executed with
respect to an all cash transaction involving (i) either a merger or
consolidation of the Company with and into another corporation or (ii) the sale
of all or substantially all of the outstanding shares of Common Stock of the
Company, the Company shall have the right, on three (3) days prior written
notice to the Holder, to (a) accelerate all of the Warrants not theretofore
exercisable so that all of the Warrants issued pursuant to this Agreement are
immediately exercisable and (b) to pay or cause to be paid to the Holder on or
immediately prior to the closing date of the transactions under the Sale
Agreement in full and complete satisfaction and cancellation of the Warrants, an
amount in cash equal to (A) the product of (x) the price per share of Common
Stock payable to the holders of Common Stock under the Sale Agreement and (y)
the number of shares of Common Stock issuable upon exercise of the Warrants on
such date minus (B) the product of (x) the Exercise Price in effect at such date
and (y) the number of shares of Common Stock issuable upon exercise of the
Warrants on such date.
(g) Notice of Adjustment. Whenever the number of shares issuable upon the
exercise of the Warrants or the Exercise Price is adjusted, as provided in this
Section 11, the Company shall prepare and mail to the Holder a certificate
setting forth (i) the Exercise Price and the number of shares issuable upon the
exercise of the Warrants after such adjustment, (ii) a brief statement of the
facts requiring such adjustment and (iii) the computation by which such
adjustment was made.
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(h) No Change of Warrant Necessary. Irrespective of any adjustment in the
Exercise Price or in the number or kind of shares issuable upon exercise of the
Warrants, unless the Holder otherwise requests, the Warrants may continue to
express the same price and number and kind of shares as are stated in the
Warrants as initially issued.
(i) Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares of Common Stock owned or held by or for the
account of the Company. The disposition of any shares of Common Stock owned or
held by or for the account of the Company shall be considered an issue of Common
Stock for the purposes of this Section 11.
(j) Certain Adjustment Rules.
(i) The provisions of this Section 11 shall similarly apply to successive
transactions.
(ii) If the Company shall declare any dividend referred to in paragraph
(iv) of subsection (c) of this Section 11 or subsection (d) of this Section 11
and if the Holder exercises all or any part of the Warrants after such
declaration but before the payment of such dividend, the Company may elect to
defer, until the payment of such dividend, issuing to the Holder the shares
issuable upon such exercise of the Warrants over and above the shares issuable
upon such exercise of the Warrants on the basis of the Exercise Price in
effect prior to such adjustment; provided, however, that the Company shall
deliver to the Holder a due bill or other appropriate instrument evidencing
the Holder's right to receive such additional shares upon the payment of such
dividend.
(iii) If the Company shall declare any dividend referred to in paragraph
(iv) of subsection (c) of this Section 11 or subsection (d) of this Section 11
and shall legally abandon such dividend prior to payment, then no adjustment
shall be made pursuant to this Section 11 in respect of such declaration.
(k) Exceptions to Adjustment to Purchase Price. Notwithstanding anything
herein to the contrary, no adjustment to the Exercise Price or the number of
shares issuable upon exercise of the Warrants shall be made in the case of the
following:
(i) the issuance of any Warrant or the issuance of any shares upon any
exercise of any Warrant or any adjustment of the Exercise Price with respect
thereto;
(ii) the issuance of any Creditor Warrant (as defined in the Plan) or the
issuance of any shares upon any exercise of any Creditor Warrant or any
adjustment of the Exercise Price (as defined therein) with respect thereto;
(iii) the grant of options to purchase shares of Series A Common Stock to
employees, or officers of the Company, or the adjustment of the exercise price
thereof;
(iv) the issuance of shares of Series A Common Stock to any employees, or
officers of the Company, including without limitation, upon the exercise of
any options to purchase Series A Common Stock (whether such options were
granted prior to the date hereof or are granted on or after the date hereof);
(v) sales of shares of Series A Common Stock pursuant to a Company plan
for the reinvestment of dividends or stated interest; or
(vi) any change in the par value of the Series A Common Stock.
(l) Other Exercise Price Reductions. Anything in this Section 11 to the
contrary notwithstanding, the Company shall be entitled to reduce the Exercise
Price, in addition to those adjustments required by this Section 11, to the
extent necessary so that any consolidation or subdivision of the Common Stock,
issuance wholly for cash of any Common Stock at less than the current market
price, issuance wholly for cash of Common Stock or Convertible Securities or
dividends on Common Stock payable in Common Stock or other assets, hereafter
made by the Company to the holders of its Common Stock, shall not be taxable to
them.
(m) Certain Events. In case any event shall occur as to which the other
provisions of this Section 11 are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principles of such
provisions, then the Company shall make an adjustment, in its sole discretion,
in accordance with such essential intent and principles, so as to protect,
without dilution, the purchase rights represented by this Warrant.
Section 12. Fractional Shares of Series A Common Stock. The Company may, but
will not be required to, issue fractions of shares of Series A Common Stock or
to distribute shares of Series A Common Stock certificates
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<PAGE>
which evidence fractions of shares upon the exercise of the Warrants; provided,
however, that in lieu of fractional shares of Series A Common Stock the Company
shall make a cash payment therefor equal in amount to the product of the
applicable fraction multiplied by the current market price then in effect.
Section 13. Notices of Certain Events. In the event that the Company shall
propose (a) to pay any dividend payable in stock of any class to the holders of
shares of Common Stock or to make any other distribution to the holders of
shares of Common Stock (other than a regular quarterly cash dividend out of
earnings or retained earnings of the Company), (b) to offer to the holders of
shares of Common Stock rights or warrants to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any other
securities, rights or options, (c) to effect any reclassification of its Common
Stock, (d) to effect any consolidation or merger into or with, or to effect any
sale or other transfer (or to permit one or more of its subsidiaries to effect
any sale or other transfer) in one or more transactions, of more than fifty
percent (50%) of the assets or earning power of the Company and its subsidiaries
(taken as a whole) to, any other person or entity, or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to the Holder, in accordance with this Section 13, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, distribution of rights or warrants, or the date
on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least twenty (20) days prior to the record date for
determining holders of the shares of Common Stock for purposes of such action,
and in the case of any such other action, at least twenty (20) days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the shares of Common Stock whichever shall be the earlier.
Notices authorized or required by this Agreement to be given by the Company to
the Holder shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed to the Holder's address as shown herein. Failure to mail or
receive such notice or any defect therein or in the mailing thereof shall not
affect the validity of any action taken in connection with such dividend,
distribution or subscription rights, or such proposed dissolution, liquidation
or winding up.
Section 14. Restrictions on Transferability.
The Warrant Certificates and the shares of capital stock issuable upon
exercise of the Warrants shall not be transferable except upon the conditions
specified in this Section 14, which conditions are intended to insure compliance
with the provisions of the Securities Act in respect of the transfer of any
Warrant Certificate or any shares of capital stock issuable upon exercise of the
Warrants.
(a) Restrictive Legend; Holder's Representation. Unless and until otherwise
permitted by this Section 14, each certificate representing shares of capital
stock issuable upon exercise of the Warrants, and any certificate issued at any
time upon transfer of, or in exchange for or replacement of, any certificate
bearing the legend set forth below shall be stamped or otherwise imprinted with
a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OR ANY STATE SECURITIES LAWS AND, ACCORDINGLY, THE
TRANSFER, RESALE OR OTHER DISPOSITION OF SUCH SECURITIES MAY ONLY BE MADE
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR A
VALID EXEMPTION THEREFROM AND IN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES LAWS, AND BY DELIVERY OF AN OPINION OF COUNSEL SATISFACTORY TO
COUNSEL FOR THE COMPANY THAT THERE IS SUCH AN EXEMPTION.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THAT CERTAIN WARRANT AGREEMENT DATED AS OF , 1994, BY AND
----- --
BETWEEN THE HOLDER AND THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY."
The Holder represents to the Company that it is acquiring the Warrants and
will acquire the shares of capital stock issuable upon exercise of the Warrants
(if at all) for its own account and not with a view to any public distribution
thereof, subject to any requirement of law that the disposition of such
securities shall at all times be within the control of the owner thereof. The
acquisition of any Warrants or shares of capital stock issuable upon exercise of
the Warrants by the Holder on the date of this Agreement or upon exercise of a
Warrant shall constitute the Holder's reaffirmation of such representation. The
Holder further represents to the Company that it is an "accredited investor" as
defined in
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Regulation D of the Securities Act. The Holder understands that the Warrants and
the shares of capital stock issuable upon exercise of the Warrants have not been
registered under the Securities Act and may only be sold or otherwise disposed
of in compliance with the Securities Act. The Holder by its acceptance of such
security further understands that such security may bear a legend as
contemplated by this Section 14.
(b) Registration Rights. The Holder is entitled to the benefits of the
registration rights contained in that certain registration rights agreement,
dated as of the date hereof, between the Company and the Holder (the
"Registration Rights Agreement").
(c) Termination of Restrictions. Notwithstanding the foregoing provisions of
this Section 14, the restrictions imposed by this Section 14 upon the
transferability of (i) the shares of capital stock issuable upon exercise of the
Warrants shall cease and terminate as to any particular shares of capital stock
when such shares of capital stock cease to be Registrable Securities (as defined
in the Registration Rights Agreement) and (ii) the Warrant Certificates shall
cease and terminate as to any particular Warrant Certificate when (i) such
Warrant Certificate shall have been effectively registered under the Securities
Act and sold by the Holder in accordance with such registration or (ii) in the
opinion of counsel for the Holder, if such opinion is satisfactory in form and
substance to the Company, such restrictions are no longer required in order to
insure compliance with the Securities Act. If and whenever the restrictions
imposed by this Section 14 shall terminate as to a Warrant Certificate (or to
any shares of capital stock) as hereinabove provided, the Holder may and the
Company shall, as promptly as practicable upon the request of the Holder and at
the Company's expense, cause to be stamped or otherwise imprinted upon such
Warrant Certificate or such shares of capital stock a legend in substantially
the following form:
"The restrictions on transferability of this [these] [Warrant
Certificate/securities] terminated on 199 [20 ], and are of no further force
or effect."
All Warrant Certificates issued upon transfer, division or combination of, or
in substitution for, any Warrant Certificate or Warrant Certificates entitled to
bear such legend shall have a similar legend endorsed thereon. Whenever the
restrictions imposed by this Section 14 shall terminate as to any Warrant
Certificate or as to any shares of capital stock, as hereinabove provided, the
Holder shall be entitled to receive from the Company without expense, a new
Warrant Certificate or new shares of capital stock not bearing the restrictive
legend set forth in subsection (a) of this Section 14.
Section 15. Representations and Warranties.
The Company represents and warrants that:
(a) Organization, Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware; and has all requisite power and authority to own or lease
and operate its properties and to carry on its business as now conducted.
(b) Authority. The Company has all requisite power and authority to enter
into and perform all of its obligations under this Agreement, to issue the
Warrants and to carry out the transactions contemplated hereby. The Company
has taken all corporate or stockholder actions necessary to authorize it to
enter into and perform all of its obligations under this Agreement and to
consummate the transactions contemplated hereby.
(c) Validity. This Agreement and the Warrants are the legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
rights of creditors generally.
(d) Capitalization. As of the date hereof, the equity capitalization of
the Company consists of (i) 20,000,000 shares of Common Stock, divided into
two series, consisting of shares of Series A Common Stock and
shares of Series B Common Stock, and of which shares of Series A Common
Stock and shares of Series B Common Stock will be initially
outstanding; (ii) 1,000,000 shares of preferred stock, $.01 per share, none of
which will be outstanding; (iii) warrants (including the Warrants) to purchase
up to 1,060,129 shares of Series A Common Stock; and (iv) options, if granted,
to purchase up to 1,000,000 shares of Series A Common Stock. All of the shares
comprising the Common Stock will, when issued, be validly issued, fully paid
and non-assessable. Except as set forth in the first sentence of this Section
15(d), as of the date hereof, there will not be any outstanding securities
convertible into, exchangeable for, or carrying the right to acquire,
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equity securities of the Company, or subscriptions, warrants, options, rights
or other arrangements or commitments obligating the Company to issue or
dispose of any of its equity securities or any ownership interest therein.
Section 16. Notice. Any notice, demand, request, instruction or other
communication which any party hereto may be required or may desire to give shall
be deemed to have been properly given (a) if by hand delivery, telecopy, telex
or other facsimile transmission, upon delivery to such party at the address,
telecopier or telex number specified below; (b) if by registered or certified
mail, on the third Business Day after the day deposited with the United States
Postal Service, postage prepaid, return receipt requested, addressed to such
party at the address specified below; or (c) if by Federal Express or other
reputable express mail service, on the next Business Day after delivery to such
express mail service, addressed to such party at the following address:
To the Company, at: Telemundo Group, Inc.
1740 Broadway
New York, New York 10019
Attn: Chief Financial Officer
Telephone: (212) 492-5500
Telecopier: (212) 459-9498
To the Holder, at: Reliance Insurance Company
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn: Lowell C. Freiberg
Senior Vice President
Telephone: (212) 909-1100
Telecopier: (212) 909-1241
or at such other address, telex, telecopier, or other facsimile transmission
number as the party to be served with notice may have furnished in writing to
the party seeking or desiring to serve notice as a place or number for the
service of notice.
Section 17. Identity of Transfer Agent. Forthwith upon the appointment of any
subsequent transfer agent for the Series A Common Stock, or any other shares of
the Company's capital stock issuable upon the exercise of the Warrants, the
Company will provide to the Holder a statement setting forth the name and
address of such subsequent transfer agent.
Section 18. Supplements and Amendments.
(a) The Company may from time to time supplement or amend this Agreement
without the approval of the Holder in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions with regard to
matters or questions arising hereunder which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the Holder.
(b) Any term, covenant, agreement or condition contained in this Agreement may
be amended, or compliance therewith may be waived (either generally or in a
particular instance and either retroactively or prospectively), by a written
instrument signed by the Company and the Holder.
Section 19. No Rights as Stockholders. Nothing contained in this Agreement or
in any of the Warrant Certificates shall be construed as conferring upon the
Holder any rights of a stockholder, including without limitation, the right to
vote, to receive dividends or to consent to, or receive notice as a stockholder
in respect of, any meeting of stockholders for the election of directors of the
Company or for any other matter.
Section 20. Successors. All the covenants and provisions of this Agreement by
or for the benefit of the Company or the Holder shall bind and inure to the
benefit of their respective successors and permitted assigns hereunder.
Section 21. Termination. This Agreement shall terminate and be of no further
force and effect at, and no Warrant may be exercised after, 5:00 p.m. New York
City time on the last of the Expiration Dates provided for in
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Section 5 of this Agreement. Notwithstanding the foregoing, this Agreement will
terminate on such earlier date when all Warrants have been exercised and no
Warrants remain outstanding.
Section 22. Governing Law. This Agreement and each Warrant issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be governed by and construed in accordance with the
laws of such state applicable to contracts to be made and performed entirely
within such state.
Section 23. Benefits of this Agreement; Rights of Action. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the Holder any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Holder.
Section 24. Damages. The Company recognizes and agrees that the Holder will
not have an adequate remedy if the Company fails to comply with the terms of
this Agreement and the Warrant Certificates and that damages will not readily be
ascertainable, and the Company expressly agrees that, in the event of such
failure, it shall not oppose an application by the Holder requiring specific
performance of any and all provisions of the Warrant or this Agreement or
enjoining the Company from continuing to commit any such breach of the terms of
the Warrant or this Agreement.
Section 25. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
Section 26. Headings. The headings used in this Agreement are inserted for
convenience only and neither constitute a portion of this Agreement nor in any
manner affect the construction of the provisions of this Agreement.
Section 27. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
TELEMUNDO GROUP, INC.
By:
------------------------
Name:
Title:
Attest: RELIANCE INSURANCE COMPANY
- -------------------------------------------------
By:
------------------------
Name:
Title:
Attest:
- -------------------------------------------------
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EXHIBIT 99.4
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement (the "Agreement"), dated as of , 1994,
by and among Telemundo Group, Inc., a Delaware corporation (the "Company"),
Apollo Advisors, L.P., a Delaware partnership ("Apollo"), and Reliance Insurance
Company, a Pennsylvania corporation ("Reliance") (each, a "Holder" and
collectively, the "Holders").
WHEREAS, in connection with the consummation of the plan of reorganization of
the Company, dated November 18, 1993 and filed with the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") on November
19, 1993, as amended or modified from time to time (the "Plan") and as so
confirmed by a final order of the Bankruptcy Court, Apollo is to receive $
in aggregate principal amount of New Senior Notes, shares of Series B
Common Stock [and Warrants, each Warrant entitling Apollo to purchase
(subject to adjustment) one share of Series A Common Stock], and Reliance is to
receive shares of Series A Common Stock and 416,667 Warrants, each Warrant
entitling Reliance to purchase (subject to adjustment) one share of Series A
Common Stock;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. Definitions. As used herein. unless the context otherwise requires, the
following terms have the following respective meanings:
(a) "Affiliate" means a Person who directly or through one or more
intermediaries controls, is controlled by or is under common control with,
another Person. The term "control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of stock, by contract or otherwise.
(b) "Business Day " means a day other than a Saturday, Sunday or a public
or national bank holiday or the equivalent for banks generally under the laws of
the State of New York.
(c) "Commission" means the Securities and Exchange Commission or any other
Federal Agency at the time administering the Securities Act.
(d) "Common Stock" means Series A Common Stock and Series B Common Stock.
(e) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
(f) "New Senior Notes" means the New Senior Notes of the Company, in the
aggregate principal amount of $107,694,460 issued pursuant to that certain
Indenture dated as of the date hereof, by and between the Company and ,
as indenture trustee.
(g) "Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.
(h) "Registrable Securities" means (i) the New Senior Notes owned by the
Holders and their respective Affiliates, (ii) the Common Stock owned by the
Holders and their respective Affiliates and (iii) any additional Common Stock
issued to the Holders and their respective Affiliates upon exercise, surrender,
exchange or conversion of the Warrants (the "Warrant Common Stock"). The New
Senior Notes and the Common Stock shall each constitute a separate class of
Registrable Securities. As to any particular Registrable Securities, once issued
such securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities have been sold
thereunder, (b) in the opinion of counsel for the Company, which should be
addressed to the Holder and reasonably acceptable to the Holder and its counsel,
public distribution of such securities shall not require registration of such
securities under the Securities Act and new certificates for such securities not
bearing a legend restricting further transfer shall have been delivered by the
Company, or (c) such securities shall have ceased to be outstanding.
<PAGE>
(i) "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with Section 2 of this Agreement, including,
without limitation, all registration, filing and applicable national securities
exchange fees, all fees and expenses of complying with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with
blue sky qualifications of the Registrable Securities), rating agency fees, all
printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and disbursements of
counsel for the Company and of its independent public accountants, including the
expenses of any special audits required by or incident to such performance and
compliance, and the fees and expenses of underwriters customarily paid by
issuers of securities; provided, however, that Registration Expenses shall
exclude, and the Holders shall pay, the fees and expenses of their respective
counsel and accountants, underwriters' fees and expenses and underwriting
discounts and commissions and transfer taxes in respect of the Registrable
Securities being registered (the "Excluded Expenses").
(j) "Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
(k) "Series A Common Stock" means the Series A Common Stock, par value $.01
per share, of the Company as constituted on the date hereof, any stock into
which such Common Stock shall have been changed or any stock resulting from any
stock split, reverse stock split, stock dividend or any reclassification of such
Common Stock.
(l) "Series B Common Stock" means the Series B Common Stock, par value $.01
per share, of the Company as constituted on the date hereof, any stock into
which such Common Stock shall have been changed or any stock resulting from any
stock split, reverse stock split, stock dividend or any reclassification of such
Common Stock.
(m) "Warrants" means the Warrants issued to the Holders pursuant to the
Plan, and any Warrants issued in exchange, substitution or otherwise in
replacement therefor.
2. Registration under Securities Act.
2.1 Registration on Request.
(a) Request. At any time within (x) the five-year period commencing on the
date of this Agreement, in the case of the registration of New Senior Notes or
Common Stock (other than Warrant Common Stock) and (y) the later of (A) the five
year period commencing on the date of this Agreement and (B) the two-year period
commencing on the date any Warrant Common Stock is issued, in the case of
Warrant Common Stock, upon the written request of the Holder requesting that the
Company effect the registration under the Securities Act of all or part of such
Holder's Registrable Securities and specifying the intended method of
disposition thereof (including, without limitation, the name of any proposed
managing underwriter to be selected in accordance with Section 2.1(f), below),
the Company will thereupon use reasonable diligence to effect and maintain for
not more than 90 days the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
such Holder to the extent requisite to permit the disposition (in accordance
with the intended methods thereof as aforesaid, which shall include resale to
the public on a continuing basis) of the Registrable Securities so to be
registered; provided, that in the case of Apollo, the Company shall not be
obligated to effect (i) more than one (1) registration with respect to the New
Senior Notes held by Apollo and (ii) more than two (2) registrations with
respect to the Common Stock held by Apollo and, in the case of Reliance, the
Company shall not be obligated to effect more than two (2) registrations of
Common Stock held by Reliance and its Affiliates pursuant to this Section
2.1(a). A registration of Registrable Securities requested by Apollo or Reliance
pursuant to this Section 2.1 will be deemed to have been effected if a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and not withdrawn or suspended whether
or not the Registrable Securities covered by such registration statement have
been sold thereunder.
(b) Registration of Other Securities; Priority in Requested Registration.
The Company may elect to include in any registration statement and offering made
pursuant to this Section 2.1, authorized unissued shares
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<PAGE>
of Common Stock or shares of Common Stock held by the Company as treasury shares
or currently outstanding shares, provided, that such inclusion shall be
permitted only to the extent that it is pursuant to and subject to the terms of
any underwriting agreement or arrangements entered into by the Company and the
Holder. Notwithstanding the foregoing, if the managing underwriter of any
underwritten offering shall advise the Company in writing (with copies to the
Holder) that, in its opinion, the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
within a price range acceptable to the Holder (or that inclusion of the
securities requested to be included by the Company in such registration would
otherwise adversely affect such offering), then there shall be included in such
registration the number of securities which in the opinion of such managing
underwriter can be sold under the terms and conditions of the underwriting
agreement; provided, however, that no Registrable Securities of the Holder shall
be excluded from such registration unless and until all shares of Common Stock
proposed to be included in such registration by the Company and/or any other
Holder have been excluded from such registration.
(c) Registration Statement Form. Each registration requested pursuant to
this Section 2.1 shall be on such appropriate registration form of the
Commission as shall be selected by the Company.
(d) Expenses. The Company will pay all Registration Expenses incurred in
connection with each registration requested pursuant to this Section 2.1, and
the Holder will pay all Excluded Expenses incurred in connection with each such
registration.
(e) Effective Registration Statement. A registration requested pursuant to
this Section 2.1 will not be deemed to have been effected (i) unless a
registration statement with respect thereto has become effective, (ii) if after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court for any reason not attributable to the Holder and has not
thereafter become effective, or (iii) if the conditions to closing specified in
the underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived, other than by reason of a failure on
the part of the Holder.
(f) Selection of Underwriters. The underwriter or underwriters of each
underwritten offering of the Registrable Securities so to be registered shall be
selected by the mutual agreement of the Company and the Holder, the approval of
such underwriter or underwriters by either party hereto not to be unreasonably
withheld.
(g) Limitations on Registration on Request. The Company shall not be
required to effect a registration if (i) the Company has filed previously a
registration statement under the Securities Act which became effective within
the nine-month period immediately prior to receipt of the written request and
which was kept current for the period referred to in Section 2.4(ii); (ii) the
Company would be required to undergo a special interim audit in order to comply
with the request; (iii) the Holder could sell in accordance with the provisions
of Rule 144 (or any successor or supplemental rule) promulgated under the
Securities Act the number of shares of Common Stock that it proposes to have
registered; (iv) the Company is prohibited from effecting the registration under
the terms of any underwriting agreement, the terms of which bind the Company and
which is in effect at the time of receipt of the written request; or (v) in the
opinion of counsel for the Company, the securities may be publicly sold without
registration under the Securities Act.
The Company shall be entitled to postpone for a reasonable period of time
(but not exceeding 135 days) the filing of any registration statement otherwise
required to be prepared and filed by it pursuant to this Section 2.1 if the
Company determines, in its sole discretion, that such registration and offering
is not desirable or could interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company or any of its
Affiliates or would require premature disclosure thereof and promptly gives the
holders of Registrable Securities requesting registration thereof pursuant to
this Section 2.1 written notice of such determination. If the Company shall so
postpone the filing of a registration statement, the Holder shall have the right
to withdraw the request for registration by giving written notice to the Company
within 30 days after receipt of the notice of postponement and, in the event of
such withdrawal, such request shall not be counted for purposes of the requests
for registration to which the Holder is entitled pursuant to this Section 2.1.
2.2 "Piggyback"and Incidental Registration.
(a) Right to Include Registrable Securities. So long as any Registrable
Securities are outstanding, if the Company at any time proposes to register any
of its securities under the Securities Act whether or not for sale for its
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<PAGE>
own account (other than securities to be issued pursuant to an employee
compensation program or dividend reinvestment plan or securities issued in a
merger, recapitalization, consolidation, acquisition or similar transaction), in
a manner which would permit registration of Registrable Securities for sale to
the public under the Securities Act, it will each such time give written notice
to the Holders of its intention to do so and, upon the written request of any
Holder within 15 days after the receipt of any such notice (seven days if the
Company states in such written notice or gives telephonic notice to the Holder,
with written confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date) (which request shall specify the
Registrable Securities intended to be disposed of by such Holder and the
intended method of disposition thereof), the Company will, subject to Section
2.1(g) of this Agreement, use reasonable diligence to effect the registration of
the Registrable Securities that it has been so requested to register by the
Holder, to the extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered; provided, however, that if, at any time after giving written
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to the Holder and, thereupon, the Company, (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of the Holder to request
that such registration be effected as a registration under Section 2.1 of this
Agreement and (ii) in the case of a determination to delay registration, shall
be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Company of its obligation to
effect registrations upon request under Section 2.1, except as otherwise
expressly provided therein. The Company will pay all Registration Expenses in
connection with each registration of Registrable Securities requested pursuant
to this Section 2.2, and the Holder shall pay all Excluded Expenses in
connection with such registration.
(b) Priority in Company Registrations. If the managing underwriter of any
underwritten offering pursuant to Section 2.2(a) shall advise the Company in
writing (with copies to the Holders) that, in its opinion, the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering within a price range acceptable to the
Company (or that inclusion of the securities requested to be included by the
Holders in such registration would otherwise adversely affect such offering),
the Company or the managing underwriter, at its option, may require either that
(i) all securities to be sold by the Company or any Person who pursuant to
contractual right has caused the registration statement to be filed be included
in the offering and the number of securities to be sold for the account of the
Holders and/or any other selling stockholder having so-called "piggyback"
registration rights with respect to such offering ("Other Stockholders") be
reduced proportionately to an aggregate number acceptable to the Company and the
managing underwriter, if any, and any partial rejection shall be made pro rata
among the Holders and all Other Stockholders requesting registration (such
proration to be in the ratio of the total number of shares proposed to be sold
in such offering by the Holders and the Other Stockholders to the actual number
to be so sold in such offering by the Holders and the Other Stockholders); or
(ii) the offering of securities for the account of the Holders and/or all Other
Stockholders requesting registration be postponed until 90 days after the
effective date of the registration statement (in which case the Company will
keep the registration statement current until at least 180 days after the
effective date thereof), provided that no securities of the Company shall be
excluded from such registration unless and until all Registrable Securities of
each Holder have been excluded from such registration. In any such case, each
Holder shall have the right to withdraw its request for inclusion of any or all
of its Registrable Securities in the registration statement.
2.3 Registration of Series B Common Stock. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be required to effect the
registration of any shares of Series B Common Stock pursuant to Section 2.1 or
2.2 of this Agreement and the obligation of the Company to effect the
registration of such shares pursuant to this Agreement shall be conditioned upon
the conversion of such shares into shares of Series A Common Stock pursuant to
Section 4(d) of Article FOURTH of the Company's Restated Certificate of
Incorporation.
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<PAGE>
2.4 Registration Procedures. If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities
Act as provided in Section 2.1 or 2.2 of this Agreement, the Company will as
expeditiously as possible:
(i) prepare and file with the Commission a registration statement with
respect to such securities and use reasonable diligence to cause such
registration statement to become effective:
(ii) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective and current
and to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until such
time as all of such securities have been disposed of in accordance with the
intended methods of disposition by the Holder set forth in such registration
statement, but in no event for a period of more than 90 days after such
registration statement becomes effective;
(iii) furnish to the Holder and each underwriter, if any, of such
securities such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any summary
prospectus) and any other prospectus filed under Rule 424 under the Securities
Act, in conformity with the requirements of the Securities Act, and such other
documents, as such Holder or such underwriter may reasonably request in order to
facilitate the disposition of the securities owned by such Holder, but only
while the Company is required under the provisions hereof to cause the
registration statement to remain current;
(iv) use reasonable diligence to register or qualify such securities
covered by such registration statement under such securities or blue sky laws of
such jurisdictions where an exemption is not available and as the sellers of
Registrable Securities covered by such registration statement shall reasonably
request, and to take any and all other action which may be necessary or
advisable to enable such sellers to consummate the disposition in such
jurisdictions of the securities owned by such sellers; provided, however, that
the Company shall not for any such purpose be required (A) to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this clause (iv) be obligated to be so qualified,
(B) to conform the composition of its assets at the time to the securities or
blue sky laws of any jurisdiction, (C) to subject itself to taxation in any such
jurisdiction, or (D) to consent to general service of process in any such
jurisdiction;
(v) furnish to the Holder a signed counterpart of (x) an opinion of counsel
for the Company to the underwriters, if any, of such offering, and (y) a
"comfort" letter signed by the independent public accountants who have certified
the Company's financial statements included or incorporated by reference in such
registration statement, covering substantially the same matters with respect to
the registration statement (and the prospectus included therein) and, in the
case of the accountants' letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten public offerings of securities;
(vi) notify the Holder at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing
(whereupon the Holder shall forthwith discontinue use of such prospectus until
receipt of notice from the Company that use of such prospectus may be resumed or
receipt of the prospectus supplement or amendment hereinafter referred to), and,
at the request of the Holder, promptly prepare and file with the Commission and
furnish to the Holder and each underwriter, if any, a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
(vii) otherwise use reasonable diligence to comply with all applicable
rules and regulations of the Commission, and make available to its securities
holders, as soon as reasonably practicable, an earnings statement covering the
period of twelve months beginning with the first month of the Company's first
fiscal
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<PAGE>
quarter commencing after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder; and
(viii) use reasonable diligence to list all Registrable Securities covered
by such registration statement on any national securities exchange on which the
Company's securities of the same class are then listed (or, if not so listed, to
qualify for trading on NASDAQ=NMS or NASDAQ, if eligible and if securities of
the same class are then so traded), if such securities are not already so listed
or qualified and if such listing or qualification is then permitted under the
rules of such exchange or market system.
The Company may require each seller of Registrable Securities as to which any
registration is being effected to furnish the Company with such information
regarding such seller and the intended method of distribution of such securities
as the Company may from time to time reasonably request in writing and as shall
be required by law in connection therewith, including, without limitation,
notice of sales effected by such seller under such registration statement. In
the event that the Company seeks registration of securities under this Agreement
and a registration statement does not become effective notwithstanding the
Company's compliance with the procedures contained in this Section 2.4, the
Company shall not be liable in any manner whatsoever to the Holder with respect
to the same.
2.5 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the underwriters for any offering
pursuant to a registration requested under Section 2.1, the Company
will use reasonable efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, the Holder and the underwriters and to
contain such representations and warranties by the Company, the Holder and any
other selling securityholders and such other terms and provisions as are
customarily contained in agreements of this type, including, without limitation,
indemnities to the effect and to the extent provided in Section 2.7 of this
Agreement. The Holder shall be a party to such underwriting agreement and the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of the Holder, and the Holder may, at its option, require that
any or all of the conditions precedent to the obligations of the underwriters
under such underwriting agreement be conditions precedent to the obligations of
the Holder. In addition, the Holder shall pay all Excluded Expenses in
connection with each underwriting pursuant to this Section 2.5.
(b) Incidental Underwritten Offerings. Subject to Section 2.2 of this
Agreement, if the Company proposes to register any of its securities under the
Securities Act for sale for its own account and such securities are to be
distributed by or through one or more underwriters, the Company will, subject to
Sections 2.2(b) and 2.1(g) of this Agreement, if requested by the Holder, use
its best efforts to arrange for such underwriters to, and the Holder will, if
requested by the Company, include the Registrable Securities to be offered and
sold by the Holder among those to be distributed by such underwriters. The
Holder shall be a party to the underwriting agreement between the Company and
such underwriters and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such Holder and the
Holder may, at its option, require that any or all of the conditions precedent
to the obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of the Holder.
(c) Holdback Agreements. (i) If any registration of Registrable Securities
shall be in connection with an underwritten public offering, each Holder
agrees not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities,
and not to effect any such public sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten public offering) during the 15 days prior to, and
during the 90-day period (or such longer period as each Holder agrees with the
underwriter of such offering) beginning on, the effective date of such
registration statement (except as part of such registration), provided that each
Holder has received written notice of such registration at least 15 days prior
to such effective date.
(ii) If any registration of Registrable Securities shall be in connection
with an underwritten public offering, the Company agrees not to effect any
public sale or distribution of any of its equity securities or of any security
convertible into or exchangeable or exercisable for any equity security of the
Company (other than any such sale or distribution of such securities in
connection with any merger or consolidation by the Company or any subsidiary of
the Company of the capital stock or substantially all the assets of any other
Person or in connection with an employee
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<PAGE>
compensation or other benefit plan or a dividend reinvestment plan) during the
15 days prior to, and during the 90-day period (or such longer period as the
underwriters retained by the Company may reasonably request) beginning on, the
effective date of such registration statement (except as part of such
registration).
2.6 Preparation; Reasonable Investigation. In connection with the preparation
and filing of each registration statement registering Registrable Securities
under the Securities Act pursuant to this Agreement, the Company will give the
Holders, their respective underwriters, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and, to the extent practicable, each amendment thereof or supplement
thereto, and will give each of them (provided such Person agrees not to use the
information so obtained for any purpose other than preparation of the
registration statement) such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such Holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
2.7 Indemnification.
(a) Indemnification by the Company. In the event of any registration
of any Registrable Securities under the Securities Act pursuant to Section 2.1
or 2.2 of this Agreement, the Company will, and hereby does, indemnify and hold
harmless the Holder, its directors, officers, partners, agents and Affiliates
and each other Person who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls such Holder or
any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such Holder
or any such director, officer, partner, agent or Affiliate or participating or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or (ii)
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
the Company will reimburse such Holder and each such director, officer, partner,
agent, Affiliate, participating person and controlling person for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, liability, action or proceeding, provided,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such Holder
or such underwriter, as the case may be; and provided, further, that the Company
shall not be liable to the Holder or any Person who participates as an
underwriter in the offering or sale of Registrable Securities or any other
Person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Holder's or Person's failure to send or give a copy of the final
prospectus, as the same may be, then supplemented or amended, to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of Registrable
Securities to such Person if such statement or omission was corrected in such
final prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder or any such
director, officer, partner, agent, Affiliate, participating person or
controlling person and shall survive the transfer of such securities by such
Holder.
(b) Indemnification by the Holder. The Company may require, as a condition to
including any Registrable Securities in any registration statement, that the
Company shall have received an undertaking satisfactory to it from the Holder to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 2.7(a)) the Company, each director of the Company, each officer
of the Company, each other Person, if any, who controls the Company within the
meaning of the Securities Act and any underwriter of the Registrable Securities,
with respect to any statement or alleged statement in or omission or alleged
omission from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Holder or such
underwriter, as
7
<PAGE>
the case may be. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Company or any such director,
officer or controlling person and shall survive the transfer of such securities
by the Holder.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party of
notice of the commencement of any action or proceeding involving a claim
referred to in Section 2.7(a) or (b), such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 2.7(a) or (b),
except to the extent that the indemnifying party is actually prejudiced by such
failure to give notice. In case any action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and, unless in
the reasonable judgment of such indemnified party, and in the opinion of such
indemnified party's counsel, a conflict of interest may exist between such
indemnified party and the indemnifying party with respect to such claim, each
indemnified party agrees to permit the indemnifying party to assume the defense
of such claim with counsel reasonably satisfactory to such indemnified party,
and after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation. If the indemnifying party is not entitled to,
or elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for all indemnified parties with
respect to such claim, unless in the reasonable judgment of an indemnified
party, and in the opinion of such indemnified party's counsel, a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional counsel
or counsels. No indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation. No
indemnified party will enter into any settlement without the written consent of
the indemnifying party (which consent will not be unreasonably withheld).
(d) Contribution. If the indemnification provided for in this Section 2.7 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages or liabilities referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative fault of such indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations or, if the allocation provided above is not permitted by
applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by the indemnifying party and the indemnified parties
from the offering of the securities covered by the registration statement that
gave rise to the indemnification claim. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth in Section 2.7, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.7(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this Section 2.7(d). No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement of
any action or claim effected without such Person's consent, which consent shall
not be unreasonably withheld.
(e) Other Indemnification. Indemnification similar to that specified in the
preceding paragraphs of this Section 2.7 (with appropriate modifications) shall
be given by the Company and the Holder with respect to any required registration
or other qualification of Registrable Securities under any Federal or state law
or regulation of any governmental authority other than the Securities Act.
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(f) Indemnification Payments. The indemnification and contribution required
by this Section 2.7 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(g) Additional Rights. Any indemnification agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party.
3. Rule 144. From and after the date any of the Registrable Securities
may be sold by the Holders without registration under the Securities Act within
the limitations of the exemptions provided by Rule 144 under the Securities Act,
as such Rule may be amended from time to time or any similar rule or regulation
hereafter adopted by the Commission, the Company shall use its best efforts to
file in a timely fashion, all reports required to be filed by it pursuant to
the Exchange Act in order to enable the Holders to exercise their rights under
Rule 144. Upon the request of each Holder, the Company shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
4. Notices. All notices or communications provided for hereunder shall
be in writing (including facsimile transmission) and shall be addressed as
follows:
(a) If to the Company:
Telemundo Group, Inc.
1740 Broadway
New York, New York 10019
Attn.: Chief Financial Officer
Tel. (212) 492-5500
Fax: (212) 459-9498
(b) If to Apollo:
Apollo Advisors, L.P.
Suite 1900
1999 Avenue of the Stars
Los Angeles, California 90067
Attn.: Mr. Arthur H. Bilger
Tel. (310) 201-4100
Fax: (310) 201-4197
with a copy to:
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Attn.: Edward S. Weisfelner, Esq.
Tel. (212) 704-0100
Fax: (212) 704-0196
(c) If to Reliance:
Reliance Insurance Company
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn.: Lowell C. Freiberg
Senior Vice President
Tel. (212) 909-1100
Fax: (212) 909-1241
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<PAGE>
with a copy to:
Reliance Group Holdings, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attn.: Howard E. Steinberg, Esq.
Senior Vice President
and General Counsel
Tel. (212) 909-1136
Fax: (212) 909-1864
Notices given by mail shall be deemed to have been given no later than five
Business Days after the date sent, if sent by registered or certified mail,
postage prepaid, and addressed to the applicable party at the address shown
above (or such other address designated by such party subsequent to the date
hereof). Notices given by facsimile or hand delivery transmission shall be
deemed to have been given when sent or delivered, if properly addressed to the
party to whom sent or delivered. Any party may, by notice to the other party
given in accordance with this Section 4, designate another address or Person for
receipt of notices or communications hereunder.
5. Entire Agreement. This agreement constitutes the entire agreement and
understanding between the parties with respect to the matters described herein,
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
6. Waivers and Amendments. This agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the parties or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede, cancel, renew or extend this
Agreement or to waive compliance with one or more of the terms hereof, as the
case may be. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any such right, power or privilege, or any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
7. Governing Law. This agreement shall be governed in all respects,
including validity, construction, interpretation and effect, by the laws of the
State of New York without giving effect to the conflict of laws provisions
thereof. To the extent permitted by law, each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America
located in the City of New York for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby
(and agrees not to commence any action, suit or proceeding relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in Section 4 shall be effective service of process for any action, suit or
proceeding brought against it in any such court. Each of the parties hereto
hereby irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the courts of the State of New York or the
United States of America located in the City of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
8. Binding Effect; Assignment. This agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns, except that neither Apollo nor Reliance may assign its rights hereunder
without the prior written consent of the Company.
9. Counterparts. This agreement may be executed by the parties hereto in
separate counterparts which together shall constitute one and the same
instrument.
10. Further Assurances. Each party shall, at the request of any other party
hereto, at any time and from time to time following the date of this Agreement
promptly execute and deliver, or cause to be executed and delivered, to such
requesting party all such further instruments and take all such further action
as may be reasonably necessary or appropriate to confirm or carry out the
provisions and intents of this Agreement.
11. Captions. All section titles or captions contained in this Agreement are
for convenience only, shall not be deemed a part of this Agreement and shall not
affect the meaning or interpretation of this Agreement. All references
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<PAGE>
herein to sections shall be deemed references to such parts of this Agreement,
unless the context shall otherwise require.
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all as of
the date first written above.
Telemundo Group, Inc.
By:
---------------------------
Name:
Title:
Apollo Advisors, L.P.
By:
---------------------------
Name:
Title:
Reliance Insurance Company
By:
---------------------------
Name:
Title:
11
<PAGE>
EXHIBIT 99.5
SETTLEMENT AGREEMENT
This Agreement entered into this 16th day of May, 1994 by and between John
Blair Communications, Inc. ("Communications"), a Delaware corporation, John
Blair & Company, Inc. ("John Blair"), a New York corporation, Blair
Entertainment Corporation, a New York corporation ("Entertainment," and
collectively with Communications and John Blair, "Blair"), JHR Acquisition
Corp., a Delaware corporation ("JHR")(predecessor-in-interest to
Communications), Telemundo Group, Inc. ("Telemundo"), a Delaware corporation
and a debtor and debtor-in-possession in a case under chapter 11 of title 11 of
the United States Code (the "Bankruptcy Code") currently pending in the United
States Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"), Reliance Capital Group, L.P., a New York partnership, ("Reliance
Capital"), Reliance Associates, L.P., a New York partnership, ("Reliance
Associates"), Reliance Capital Group, Inc., a Delaware corporation ("RCG"),
Reliance Group Holdings, Inc., a Delaware corporation ("RGH," and together with
Reliance Capital, Reliance Associates, and RCG, collectively referred to herein
as the "Reliance Entities"), Deloitte & Touche as successor-in-interest to
Touche Ross & Co. ("Deloitte"), Mr. Henry R. Silverman ("Silverman"), Mr. Donald
G. Raider ("Raider"), Mr. Peter J. Housman II ("Housman") and the Official
Committee of Unsecured Creditors in Telemundo's chapter 11 case (the
"Committee"). For purposes of this Agreement, Blair and JHR are collectively
referred to as the "Plaintiffs". Telemundo, the Reliance Entities, Deloitte,
Silverman, Raider and Housman are collectively referred to as the "Defendants".
The Plaintiffs, Defendants and the Committee are each referred to herein as a
"Party" and are collectively referred to herein as the "Parties".
Capitalized terms used in this Agreement and not otherwise defined herein
shall have the meanings ascribed to such terms in the Amended Plan (as
hereinafter defined) annexed hereto as Exhibit "A". Whenever from the context it
appears appropriate, each term stated in either the singular or the plural shall
include the singular and the plural.
In computing any period of time prescribed or allowed by this Agreement the
day of the act or event from which the designated period begins to run shall not
be included. The last day of the computed period shall be included, unless it
is a Saturday, Sunday or legal holiday, in which event the period runs until the
end of the next Business Day.
RECITALS
WHEREAS, on June 8, 1993 (the "Filing Date"), certain debentureholders of
Telemundo and the indenture trustee for such debentures filed an involuntary
petition for relief under chapter 11 of the Bankruptcy Code against Telemundo;
WHEREAS, on July 30, 1993, Telemundo consented to the entry of an order for
relief in its chapter 11 case--Case No.93-B-42967(JLG)(the "Chapter 11 Case")
and is continuing to operate its businesses and manage its properties as a
debtor-in-possession pursuant to sections 1107 and 1108 of the Bankruptcy Code;
WHEREAS, the Committee has been appointed by the United States Trustee for the
Southern District of New York pursuant to section 1102 of the Bankruptcy Code;
WHEREAS, on April 10, 1987, the Plaintiffs purchased two divisions from
Telemundo's predecessor-in-interest, John Blair & Company ("Old Blair");
WHEREAS, on December 29, 1987, the Plaintiffs commenced an action entitled
John Blair Communications, Inc., et al. v. Reliance Capital Group, L.P., et al.,
No. 5204/88 (Shainswit, J.), in the Supreme Court of New York, County of New
York, asserting claims for fraud, breach of warranty and negligent
misrepresentation against Telemundo, the Reliance Entities and Deloitte (the
"New York Action");
WHEREAS, on October 22, 1990, Plaintiffs filed an amended complaint (the
"Amended Complaint"), asserting claims against and naming as additional
defendants in the New York Action Housman, Silverman and Raider (Housman,
Silverman and Raider had each served as executives of Old Blair, and
subsequently served as Telemundo officers and/or directors);
WHEREAS, prior to the Filing Date, certain Plaintiffs commenced a separate
action against Telemundo in the Supreme Court of the State of New York, County
of New York, asserting breach of contract claims relating to the syndicated
television show "Divorce Court," which action was subsequently consolidated into
the New York Action;
<PAGE>
WHEREAS, in the New York Action, the Plaintiffs seek not less than $69 million
in compensatory damages, plus pre-judgement interest, and not less than $25
million in punitive damages;
WHEREAS, in The New York Action Telemundo has asserted counterclaims against
Blair and third-party claims against JHR (collectively, the "Counterclaims");
WHEREAS, under a Lawsuit Proceeds Assignment Agreement (the "Lawsuit Proceeds
Assignment Agreement"), dated June 28, 1989, by and between Blair, The
Prudential Insurance Company of America ("Prudential"), The Travelers Insurance
Company ("TIC"), The Travelers Idemnity Company ("Travelers Indemnity"), The
Travelers Insurance Group Inc., ("Travelers Group", successor by assignment to
The Travelers Corporation and, together with TIC and Travelers Indemnity,
collectively, "Travelers") and other beneficiaries (collectively referred to
hereinafter as the "Beneficiaries"), Blair assigned, transferred and conveyed to
the Beneficiaries certain proceeds, if any, received or obtained by Blair in
connection with the New York Action;
WHEREAS, Prudential and Travelers, each for itself, acknowledge to the
Defendants that each of them has no claim or any basis upon which to assert a
claim against the Defendants relating to the acts alleged in the New York Action
or relating to the Lawsuit Proceeds Assignment Agreement;
WHEREAS, Plaintiffs acknowledge to the Defendants that Prudential and
Travelers have no claim or any basis upon which to assert a claim against the
Defendants relating to acts alleged in the New York Action or relating to the
Lawsuit Proceeds Assignment Agreement;
WHEREAS, on September 28, 1993, Telemundo commenced an adversary proceeding
against Blair, captioned Telemundo Group, Inc.v.John Blair Communications, Inc.,
No.93-9663A (the "Adversary Proceeding") and filed with the Bankruptcy Court a
motion to stay and enjoin the New York Action as against all non-debtor
defendants pending the Bankruptcy Court's resolution of Blair's claims asserted
against Telemundo in the New York Action (the "Motion");
WHEREAS, Blair objected to the Motion and cross-moved for relief from the
automatic stay under section 362 of the Bankruptcy Code to permit the New York
Action to proceed against Telemundo;
WHEREAS, on November 12, 1993, Blair filed with the Bankruptcy Court a proof
of claim (claim No. 71) against the Debtor in the amount of $157,705,704.87 in
connection with the subject matter of the New York Action (the "Blair Claim");
WHEREAS, on November 12, 1993, Reliance Capital filed a proof of claim (claim
No. 56), Reliance Associates filed a proof of claim (claim No. 57), RCG filed a
proof of claim (claim No. 58), RGH filed a proof of claim (claim No. 59), Mr.
Housman filed a proof of claim (claim No. 77), Mr. Raider filed two proofs of
claim (claim Nos. 107 and 110), and Mr. Silverman filed two proofs of claim
(claim Nos. 108 and 111), all against the Debtor's estate;
WHEREAS, on November 19, 1993 Telemundo filed with the Bankruptcy Court a
proposed Plan of Reorganisation (the "November Plan") and a proposed Disclosure
Statement, each dated November 18, 1993;
WHEREAS, on January 3, 1994, Blair filed with the Bankruptcy Court its
objections to the adequacy of Telemundo's proposed Disclosure Statement;
WHEREAS, Telemundo, as sublessor, and JHR Entertainment, Inc., as sublessee,
entered into a sublease agreement (the "Sublease"), dated as of April 10, 1987,
with respect to a portion of those certain premises located at 1290 Avenue of
the Americas, which premises are the subject of a lease agreement (the "O & Y
Lease") by and between Telemundo and O & Y Equity Corp., Olympia & York Holdings
Corporation, Fame Associates and 1290 Associates (hereinafter collectively
referred to as the "1290 Landlord");
WHEREAS, subject to Bankruptcy Court authorization and approval, on April
25, 1994, Telemundo entered into a letter agreement with the Landlord resolving
and settling all claims (collectively the "O & Y Claim") related to and arising
from and in connection with the O & Y Lease (the "O & Y Letter Agreement",
attached hereto as Exhibit "B");
WHEREAS, Telemundo will file with the Bankruptcy Court its Second Ammended
Plan of Reorganization (the "Amended Plan"); and
WHEREAS, the parties desire to avoid the expense, disruption and uncertainty
of further litigation by settling fully and finally all differences or disputes
that have arisen or might arise or are in any way related to the claims or the
Counterclaims in the New York Action and all matters related to and arising from
and in connection therewith;
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WITNESSETH
NOW, THEREFORE, for good and valuable consideration, including the mutual
premises, releases, representations, covenants and obligations contained herein,
the sufficiency of which is hereby acknowledged, the Parties hereto hereby agree
as follows:
1. Payment and Releases. (A) Except as specifically set forth below, on the
Consummation Date, the distributions provided for in this paragraph 1(A) shall
be made:
(i) RGH and RCG shall pay $2,500,000 and $4,005,000, respectively, (a total
of $6,505,000) by certified checks or wire transfers of immediately available
funds as follows: (a) $3,865,625 to Blair and (b) $2,639,375 to Telemundo. RGH
and RCG shall determine, in their sole discretion, the allocation of their
payments set forth in the first clause of this paragraph 1(A)(i) as between
Blair and Telemundo.
(ii) In partial consideration for the settlement of the Blair Claim,
Reorganized Telemundo shall issue to Blair $26,000,000 in aggregate principal
face amount of New Senior Notes, plus accrued interest, if any, in the same
form and at the same time as the other recipients of the New Senior Notes.
(iii) (a) In partial consideration for the settlement of the Blair Claim,
and subject to the terms and conditions of the Amended Plan and the Rights
Plan, Telemundo shall issue to Blair Rights to purchase 285,000 shares of
Series A Common Stock (the "Blair Rights") on the same date and in the same
manner that Rights are issued generally under the Rights Plan. (The day on
which Rights are issued and transmitted generally under the Rights Plan to
eligible recipients is referred to as the "Rights Delivery Date.")
(b) Subject to the last sentence of paragraph 1(A)(iii)(e), at any time on
or before the 21st day following the Rights Delivery Date, Blair, at its
election, may assign, transfer and convey to RGH, and RGH shall accept, all or
any portion of the Blair Rights (the "Unexercised Rights Amount") in exchange
for a cash payment equal to the product of $7 times the Unexercised Rights
Amount, which shall be paid by RGH on the Consummation Date by certified check
or wire transfer of immediately available funds.
(c) In addition to any rights Blair has under paragraph 1(A)(iii)(b) and
subject to the last sentence of paragraph 1(A)(iii)(e), if prior to the 21st
day following the Rights Delivery Date Blair has exercised all or any portion
of the Rights (the "Exercised Rights Amount"), then at any time on or before
such 21st day, Blair may transfer to RGH its right to receive from Telemundo
on the Consummation Date any amount of shares of Series A Common Stock up to
an amount equal in number to the Exercised Rights Amount (the "Transferred
Shares Amount") and RGH shall pay to Blair by certified check or wire transfer
of immediately available funds the sum of (a) the product of $14 times the
Transferred Shares Amount, plus (b) the product of the Buy-In Price
Appreciation (if actually paid by Blair) times the Transferred Shares Amount,
simultaneously with the receipt by RGH of the Transferred Shares on the
Consummation Date.
(d) If Blair exercises all or any portion of the Blair Rights, Blair's
obligations under the Rights Plan to pay the product of (a) $7 plus the Buy-In
Price Appreciation times (b) the amount of Rights Blair has exercised (the
"Exercised Rights Payment") to Telemundo shall be deferred until the
Consummation Date and shall be satisfied by Blair giving an irrevocable
direction to RGH and RCG to pay the Exercised Rights Payment directly to
Telemundo on the Consummation Date, out of the $3,865,625 to be paid by RGH
and/or RCG pursuant to paragraph 1(A)(i) hereof, with the balance of that
$3,865,625 to be paid directly to Blair.
(e) The Rights Plan shall provide appropriate provisions to implement the
terms of this paragraph 1(A)(iii). Notwithstanding anything to the contrary
contained herein, Blair agrees that it will not exercise the Blair Rights in
part unless it exercises a minimum of 142,500 of the Blair Rights.
(iv) In partial consideration for the settlement of the New York Action,
Reliance Capital will not exercise 285,000 of the Rights and within five (5)
days of the Rights Delivery Date, Reliance Capital shall transfer, assign,
and convey to Telemundo 285,000 Rights, which Rights shall be extinguished by
Telemundo.
The $3,865,625 cash payment, the $26,000,000 in principal amount of New Senior
Notes and the Rights to purchase 285,000 shares are hereinafter collectively
referred to as the "Plaintiffs' Distribution". In addition to providing the
Plaintiffs with the Plaintiffs' Distribution, as provided in paragraph 4 herein,
the Defendants shall also deliver to the Plaintiffs a duly executed release in
the form of Exhibit "C" attached hereto. Such release and the Plaintiffs'
Distribution are hereinafter collectively referred to as the "Settlement
Consideration".
3
<PAGE>
(B) At any time prior to the Consummation Date, Telemundo, with the
Committee's consent, shall have the option to elect to reduce the $26,000,000
in aggregate principal amount of New Senior Notes to be issued to Blair pursuant
to the foregoing paragraph by an amount up to $11,000,000 in aggregate principal
amount (such reduction in principal amount referred to as the "Reduction in
Principal Amount") by paying to Blair cash in an amount equal to the sum of(i)
102% of the Reduction in Principal Amount and (ii) either (a) if such election
and payment is made at any time on or prior to June 1, 1994, 3 months' accrued
interest on such Reduction in Principal Amount calculated at a rate per annum
equal to 10.25% (the "Rate"), or (b) if such election and payment is made at any
time after June 1, 1994, 3 months' accrued interest on such Reduction in
Principal Amount at the Rate plus any additional accrued interest thereon at the
Rate calculated for the period commencing June 2, 1994 to and including the date
such payment is made.
(C) As a condition of the Plaintiffs' receipt of the Settlement Consideration,
as provided in paragraph 4 herein, the Plaintiffs shall deliver to Telemundo a
release in the form of Exhibit "D-1" attached hereto. As a further condition to
the Plaintiffs' receipt of the Settlement Consideration, Prudential and
Travelers, each for itself, hereby agrees that it shall not assert any claims
against the Defendants or their affiliates (including, but not limited to,
partners and principals of Deloitte) in connection with or relating in any way
to the subject matter of the New York Action or the Lawsuit Proceeds Assignment
Agreement.
2. Material Changes. Telemundo shall file the Amended Plan. Unless otherwise
mutually agreed by Telemundo, Reliance Capital, RGH, the Plaintiffs and the
Committee, no change shall be made in the amended Plan: (i) to Sections 10.01,
10.02, 10.03 or 16.01 of the Amended Plan; (ii) to the interest rate, scheduled
payments, priority, call protection or aggregate principal amount to be issued
of the New Senior Notes, or to the aggregate amount, exercise price or exercise
date of the Rights, or the aggregate amount of the Series A Common Stock to be
issued under the Amended Plan; or (iii) that materially impacts the value of, or
Blair's rights to receive, the New Senior Notes, the Rights, or the Series A
Common Stock to be issued under the Amended Plan, or Blair's rights under this
Agreement. Unless otherwise mutually agreed by the Parties or ordered by the
Bankruptcy Court, no material change shall be made in the release and
indemnification provisions of the Amended Plan. Unless otherwise mutually agreed
by the Parties, no change shall be made to the first sentence of the third
paragraph of Section 17.01 of the Amended Plan.
3. Voting; Support for Settlement of O & Y Claim. (A) The Parties agree not to
propose or support, either individually or collectively, any plan in Telemundo's
Chapter 11 Case which is inconsistent with paragraph 2 of this Agreement or
would preclude the fulfillment of the terms of this Agreement. Nothing in the
Amended Plan or the order entered by the Bankruptcy Court confirming the Amended
Plan (the "Confirmation Order") shall be interpreted in any manner that would
be inconsistent with paragraph 2 of this Agreement or would preclude fulfillment
of the terms of this Agreement. Provided that the Amended Plan is consistent
with the terms hereof, the Parties hereby agree to vote to accept the Amended
Plan (to the extent they have voting rights), to fully support confirmation of
the Amended Plan and to take all other steps unnecessary to implement this
Agreement.
(B) The Parties agree that the settlement of the O & Y Claim pursuant to the
O & Y Letter Agreement is integral to this Agreement. Each Party shall support
and not object to any motion seeking entry of an order approving the provisions
of the O & Y Letter Agreement, including, but not limited to, the assumption and
assignment of the O & Y Lease and Telemundo's payment of $7 million to the
landlord, in the form and substance annexed hereto as Exhibit "B". No Party
shall take any action inconsistent with efforts to fully and completely settle
and satisfy the O & Y Claim pursuant to the O & Y Letter Agreement in the form
and substance annexed hereto as Exhibit "B". Nothing contained in this paragraph
3(B) shall affect, enlarge or impair Blair's rights and actions as a sublessee
under the lease that is the subject of the O & Y Letter Agreement, including,
but not limited to, the rights, if any, to challenge the validity or
enforceability of the sublease, or negotiate with the 1290 Landlord to revise
the terms of the sublease.
4. Escrow and Delivery of Releases. Within five Business Days of the date
that this Agreement is fully executed by all the Parties to this Agreement and
all required consents are delivered, (i) Defendants will deliver to counsel for
the Plaintiffs six (6) original validly executed Exhibit "C" releases, (ii)
Plaintiffs will deliver to counsel for Telemundo six (6) original validly
executed Exhibit "D-1" releases, and six (6) original validly executed Exhibit
"D-1" releases for each of the other Defendants and (iii) each of the Defendants
will deliver to counsel for each of the other Defendants six (6) original
validly executed Exhibit "D-2" releases. Counsel will hold all such releases
(collectively the "Releases") in escrow until the Consummation Date. On the
date that payment is made to Plaintiffs of Plaintiffs' Distribution, the escrow
shall terminate and on that date the Releases will be distributed by counsel to
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<PAGE>
each beneficiary. Unless otherwise agreed by Telemundo, Reliance Capital, RGH,
the Plaintiffs and the Committee, if the Consummation Date has not occurred on
or prior to December 31, 1994, the Releases will be null and void and of no
further force and effect, and shall be returned promptly to the Releasors'
respective counsel.
5. Withdrawal of Claims; No Reconsideration. On the Consummation Date, any
and all proofs of claim filed against Telemundo by the Plaintiffs (including,
but not limited to, the Blair Claim) shall be deemed to be expunged, withdrawn
and dismissed with prejudice and without costs. On the Consummation Date, any
and all proofs of claim filed against Telemundo by any of the other Defendants,
only to the extent such proofs of claim relate to the New York Action or to
claims of indemnification or contribution, except as otherwise provided in the
Plan, shall be expunged, withdrawn and dismissed with prejudice and without
costs. Any and all such proofs of claim that are expunged, withdrawn and
dismissed as provided herein shall not be subject to reconsideration under
section 502(j) of the Bankruptcy Code or Rule 3008 of the Federal Rules of
Bankruptcy Procedure (the "Bankruptcy Rules") and the Parties will not seek any
such reconsideration. Notwithstanding the foregoing, nothing in this Agreement
shall be deemed to be the expunging, withdrawal or dismissal of any claims,
defenses, counterclaims or causes of action that any of the parties to this
Agreement holds or may hold arising out of, relating to, or in connection with
this Agreement and/or the Plaintiffs' Distribution (which claims, defenses,
counterclaims and causes of action, if any, are hereby expressly preserved),
and, subject to paragraph 10 of this Agreement, nothing in this Agreement shall
affect the rights of any such parties to enforce the same.
6. Stipulations and Notices of Discontinuance and Dismissal. (A) Within five
(5) Business Days of the date that this Agreement is fully executed by all of
the Parties to this Agreement and all required consents are delivered, counsel
for the Plaintiffs and the Defendants shall execute a Stipulation of
Discontinuance with prejudice of the New York Action and all claims, defenses
and the Counterclaims asserted therein, substantially in the form annexed hereto
as Exhibit "E", and deliver such Stipulation to counsel for Telemundo. Counsel
for Telemundo shall hold the Stipulation of Discontinuance in escrow and shall
not file it with the Supreme Court of New York, County of New York, until
payment and transfer to Plaintiffs of the Settlement Consideration. The
Stipulation of Discontinuance shall be filed with the State Court promptly after
the payment and transfer to Plaintiffs of the Settlement Consideration. Until
that time, all proceedings in the New York Action will be stayed. Unless
otherwise agreed by Telemundo, Reliance Capital, RGH, the Plaintiffs and the
Committee, if the Consummation Date has not occurred on or prior to December 31,
1994, the Stipulation of Discontinuance will be null and void and of no
further force and effect, and the Parties to this Agreement will be free to
pursue all rights and remedies in connection with the New York Action as if this
Agreement had not been entered into.
(B) Within five (5) Business Days of the date that this Agreement is fully
executed by all of the Parties to this Agreement and all required consents are
delivered, counsel for Telemundo and counsel for Blair shall execute a
Stipulation dismissing with prejudice the Adversary Proceeding, substantially in
the form annexed hereto as Exhibit "F", and shall deliver it to counsel for the
Plaintiffs, who will hold such Stipulation in escrow and not file it with the
Bankruptcy Court until payment and transfer to Plaintiffs of the Settlement
Consideration. The Stipulation of Dismissal shall be filed with the Bankruptcy
Court promptly after the payment and transfer to Plaintiffs of the Settlement
Consideration. Unless otherwise agreed by Telemundo, Reliance Capital, RGH, the
Plaintiffs and the Committee, if the Consummation Date has not occurred on or
prior to December 31, 1994, the Stipulation of Dismissal will be null and void
and of no further force and effect, and the Parties to this Agreement will be
free to pursue all rights and remedies in connection with the Adversary
Proceeding as if this Agreement had not been entered into.
7. Motion for Order. Following the receipt by counsel for Telemundo of
executed duplicate originals of this Agreement from each of the Parties and
consents from all parties required to consent to this Agreement, Telemundo will
promptly file with the Bankruptcy Court a motion for an order approving and
authorizing this Agreement (the "Approval Order"). Each Party shall support and
not object to the motion for the Approval Order and no Party shall take any
action inconsistent with efforts to obtain the Approval Order. Other than as
expressly set forth herein, this Agreement shall be effective only when the
conditions to consummation set forth in the Amended Plan have been satisfied or
waived. The foregoing notwithstanding, the obligations of the Parties under
paragraphs 2, 3, 4, 6, 7, 10 and 11 shall be effective when this Agreement is
fully executed by all of the Parties to this Agreement and all required consents
are delivered.
8. Term; No Admission. In the event that (i) the motion for the Approval
Order is denied by Final Order or (ii) the Consummation Date has not occurred on
or prior to December 31, 1994, then this Agreement shall be null,
5
<PAGE>
void and of no force or effect, and none of the provisions herein (including the
"Whereas" clauses) shall prejudice or impair any of the rights and remedies of
the Parties. Moreover, in the event that the motion for approval of the O & Y
Letter Agreement is denied by Final Order, within 21 days of such Final Order of
denial, Telemundo and the Committee may jointly terminate this Agreement, in
which event this Agreement shall be null, void and of no force or effect, and
none of the provisions herein (including the "Whereas" clauses) shall prejudice
or impair any of the rights and remedies of the Parties. The right to terminate
in the preceding sentence may not be exercised by either Telemundo or the
Committee without the express written agreement of the other. If Telemundo and
the Committee do not terminate this Agreement within the time period provided
in the second preceding sentence, then this Agreement shall remain in full force
and effect and the conditions set forth in sections 10.01(c) and 10.02(g) of the
Plan shall be waived. Each of the Parties acknowledges and agrees that this
Agreement is a settlement agreement only and is not (and shall not be deemed to
be) an admission or concession of any type, including liability, by any Party
with respect to any matters, claims and defenses pleaded, raised or related to
and arising from and in connection with the New York Action and the Blair Claim.
This provision shall survive the termination of this Agreement.
9. Publicity. Except as required by applicable laws, rules or regulations,
accounting principles, auditing standards or order of any Court, the Parties to
this Agreement shall not issue any press release or make any other statement for
general public dissemination with respect to this Agreement and the transactions
contemplated hereby; provided, however, that such prohibition shall not extend
to or limit Telemundo's service of, filing with the Bankruptcy Court and
prosecution of the Amended Plan and the related disclosure statement and all
motions related to this Agreement or any statements by Telemundo or the
Committee relating to the Amended Plan or related disclosure statement.
10. Jurisdiction; Applicable Law. The validity, performance and enforcement of
this Agreement shall be governed by the substantive laws of the State of New
York, without giving regard to the choice of law provisions thereof. All matters
relating to the interpretation of this Agreement or any controversy arising with
respect to this Agreement among the Parties shall be determined by the
Bankruptcy Court. The Parties hereby expressly consent to the personal and
subject matter jurisdiction of the Bankruptcy Court with respect to the
interpretation and enforcement of this Agreement. If any Party to this Agreement
is required to enforce any of the provisions of this Agreement as against any
Party and prevails in such enforcement, the other Party (or Parties) shall
indemnify and hold harmless the prevailing Party against all costs associated
with such enforcement including, without limitation, reasonable attorneys' fees.
11. Modifications; Representations; Amendments; Integration; Entire Agreement.
The Parties represent that they are authorized and empowered to execute this
Agreement and that this Agreement constitutes the entire agreement and
understanding between the Parties and may not be modified or amended except by a
writing signed by each of the respective Parties or their attorneys. The
Plaintiffs, Prudential and Travelers represent to the Defendants that they are
authorized and empowered to settle and compromise the New York Action and that,
under the Lawsuit Proceeds Assignment Agreement and otherwise, Blair has the
exclusive right to receive from the Defendants any and all proceeds as a result
of any such settlement or compromise of the New York Action. The Plaintiffs,
Prudential and Travelers further represent that Blair has the sole and exclusive
responsibility to remit payment or any portion of the proceeds of any such
settlement or compromise to the Beneficiaries. This agreement and the exhibits
hereto shall constitute the sole and entire agreement between the Parties with
respect to the subject matter hereof and supersedes all previous agreements,
promises, representations, warranties, understandings, and negotiations between
the Parties and respecting the subject matter hereof.
12. Cooperation. From and after the date of this Agreement, each Party at the
request of any other Party, shall execute and deliver to the other Party all
documents and instruments and take such other action as the other Party may
reasonably request in order to effectuate the purposes of this Agreement.
13. Benefits; Binding Effect. This Agreement shall inure to the benefit of,
and shall be binding upon, the undersigned Parties and each of their respective
predecessors, successors and assigns, direct and indirect parent companies,
subsidiaries, affiliates, partnerships or joint ventures, other partners or
joint ventures in such partnership and joint ventures, partners, officers,
directors, employees, agents, direct and indirect shareholders and owners.
14. Construction. The Parties hereto agree that the terms and conditions of
this Agreement are the result of negotiations between the Parties or their
counsel, and that this Agreement shall not be construed in favor of or against
any Party by reason of the extent to which any Party or its counsel participated
in the drafting of this Agreement.
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<PAGE>
15. Waiver. No failure or delay on the part of any Party in the exercise of
any power, right or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercises of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
16. No Representations. Each Party to this Agreement hereby acknowledges that
in entering into this Agreement it has not received or relied upon any
representations, warranties, guarantees, promises, statements or estimates,
whether written or oral, express or implied, by any of the Parties, any
affiliate, agent, employee, accountant, attorney-in-fact or at-law or other
person representing or purporting to represent any Party, except as expressly
set forth in this Agreement.
17. Captions. Captions contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit, extend or describe the scope
of this Agreement or the intent of any provision hereof.
18. Notice. Such notices as may be given under this Agreement shall be in
writing and shall be transmitted by telecopier and by overnight courier, as
follows:
(i) If to the Plaintiffs, to:
John Blair Communications, Inc.
John Blair Entertainment, Inc.
John Blair & Company, Inc.
JHR Acquisition Corp.
1290 Avenue of the Americas
New York, New York 10104
Attention: Ronald J. Brooks, Esq.
Phone: (212) 603-5000
Fax: (212) 603-5003
with copies to:
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Peter M. Fishbein, Esq.
Phone: (212) 836-8000
Fax: (212) 836-8700
-and-
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attention: Marcia Goldstein, Esq.
Phone: (212) 310-8000
Fax: (212) 310-8007
(ii) If to Telemundo, to:
1740 Broadway
New York, New York 10019
Attention: General Counsel
Phone: (212) 492-5500
Fax: (212) 459-9498
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004-1980
Attention: Ira S. Sacks, Esq.
Phone: (212) 820-8000
Fax: (212) 747-1526
7
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-and-
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Mark A. Belnick, Esq.
Phone: (212) 373-3000
Fax: (212) 373-2354
(iii) If to the Reliance Entities, to:
Reliance Group Holdings, Inc.
Park Avenue Plaza
55 East 52nd Street
New York, New York 10055
Attention: Howard E. Steinberg, Esq.
Phone: (212) 909-1100
Fax: (212) 909-1241
with copies to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Mark A. Belnick, Esq.
Phone: (212) 373-3000
Fax: (212) 373-2354
(iv) If to Deloitte, to:
Deloitte & Touche
1633 Broadway
9th Floor
New York, New York 10019
Attention: Howard Smith, Esq.
Phone: (212) 492-4155
Fax: (212) 492-4201
with copies to:
Carter, Ledyard & Milburn
114 West 47th Street
17th Floor
New York, New York 10036
Attention: Robert R. Salman, Esq.
Phone: (212) 944-7711
Fax: (212) 944-9738
(v) If to Peter J. Housman II, to:
Peter J. Housman II
51 North Mountain Avenue
Apartment #7
Montclair, New Jersey 07042
with copies to:
Richards Spears Kibbe & Orbe
1 Chase Manhattan Plaza
New York, New York 10005
Attention: Lee S. Richards III, Esq.
Phone: (212) 530-1800
Fax: (212) 530-1801
8
<PAGE>
-and-
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Mark A. Belnick, Esq.
Phone: (212) 373-3000
Fax: (212) 373-2354
(vi) If to Donald G. Raider, to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Mark A. Belnick, Esq.
Phone: (212) 373-3000
Fax: (212) 373-2354
with copies to:
Donald J. Cohn, Esq.
425 Park Avenue, 21st Floor
New York, New York 10022
Phone: (212) 355-1444
Fax: (212) 233-1942
(vii) If to Henry R. Silverman, to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Mark A. Belnick, Esq.
Phone: (212) 373-3000
Fax: (212) 373-2354
with copies to:
Michael Kennedy, Esq.
425 Park Avenue, 26th Floor
New York, New York 10022
Phone: (212) 935-4500
Fax: (212) 980-6881
(viii) If to the Committee, to its Chairperson:
Apollo Advisors, L.P.
1999 Avenue of the Stars
Suite 1900
Los Angeles, California 90067
Attention: Mr. Arthur H. Bilger
Phone: (310) 201-4100
Fax: (310) 201-4197
with copies to:
Berlack, Israels & Liberman
120 West 45th Street
New York, New York 10036
Attention: Edward S. Weisfelner, Esq.
Phone: (212) 704-0100
Fax: (212) 704-0196
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-and-
Moses & Singer
1301 Avenue of the Americas
New York, New York 10019
Attention: Alan Kolod, Esq.
Phone: (212) 554-7800
Fax: (212) 554-7700
Any Party may from time to time change its address, its telephone number, or its
telecopier number, for the purpose of notice to that Party, by a notice given in
accordance with this Paragraph 18 specifying such change.
19. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties, intending to be legally bound hereby, have
executed this Agreement as of the date first above written.
JOHN BLAIR COMMUNICATIONS, INC.
By: /s/ Sanford S. Ackerman
------------------------------
TITLE: SECRETARY
JOHN BLAIR ENTERTAINMENT, INC.
By: /s/ Sanford S. Ackerman
------------------------------
TITLE: SECRETARY
JOHN BLAIR & COMPANY, INC.
By: /s/ Sanford S. Ackerman
------------------------------
TITLE: SECRETARY
JHR ACQUISITION CORP.
By: /s/ Sanford S. Ackerman
------------------------------
TITLE: SECRETARY OF JOHN BLAIR
COMMUNICATIONS, INC. (FORMERLY
KNOWN AS JHR ACQUISITION CORP.)
TELEMUNDO GROUP, INC.
By: /s/ Peter J. Housman II
------------------------------
TITLE: PRESIDENT--BUSINESS AND
CORPORATE AFFAIRS
RELIANCE CAPITAL GROUP, L.P.
By Reliance Associates, L.P., its
General Partner, by Reliance Capital
Group, Inc., its General Partner
By: /s/ Lowell C. Freiberg
------------------------------
TITLE: PRESIDENT
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<PAGE>
RELIANCE ASSOCIATES, L.P.
By Reliance Capital Group, Inc.
its General Partner
By: /s/ Lowell C. Freiberg
------------------------------
TITLE: PRESIDENT
RELIANCE GROUP HOLDINGS, INC.
By: /s/ Lowell C. Freiberg
------------------------------
TITLE: SENIOR VICE-PRESIDENT
RELIANCE CAPITAL GROUP, INC.
By: /s/ Lowell C. Freiberg
------------------------------
TITLE: PRESIDENT
DELOITTE & TOUCHE
By: /s/ Alan S. Bernikow
------------------------------
TITLE: PARTNER
PETER J. HOUSMAN II
By: /s/ Peter J. Housman II
------------------------------
TITLE:
DONALD G. RAIDER
By: /s/ Donald G. Raider
------------------------------
TITLE:
HENRY R. SILVERMAN
By: /s/ Henry R. Silverman
------------------------------
TITLE:
OFFICIAL COMMITTEE OF UNSECURED
CREDITORS
By: /s/ Arthur H. Bilger
------------------------------
TITLE: CHAIRPERSON
11
<PAGE>
The undersigned hereby consent to the foregoing Agreement and specifically
agree to the Recitals and the provisions of paragraphs 1(C) and 11 of this
Agreement:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Anthony F. Torre
------------------------------
TITLE: VICE-PRESIDENT
THE TRAVELERS INSURANCE COMPANY
By: /s/ William C. Stinton
------------------------------
TITLE: SECOND VICE-PRESIDENT
THE TRAVELERS INDEMNITY COMPANY
By: /s/ William C. Stinton
------------------------------
TITLE: SECOND VICE-PRESIDENT
THE TRAVELERS INSURANCE GROUP, INC.
(as successor by assignment to
The Travelers Corporation)
By: /s/ John R. Britt
------------------------------
TITLE: ASSISTANT SECRETARY
12
