<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934 (Amendment No. )*
PAXSON COMMUNICATIONS CORPORATION
---------------------------------
(Name of Issuer)
Class A Common Stock, $0.001 Par Value
(Title of Class of Securities)
704231109
(CUSIP Number)
William J. Grant, Jr., Esq.
Willkie Farr & Gallagher
153 East 53rd Street
New York, New York 10022
(212) 821-8000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 11, 1997
-------------
(Date of Event which Requires Filing
of this Statement)
If the 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 |_|.
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
"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).
Exhibit Index: Page __
<PAGE>
SCHEDULE 13D
CUSIP No. 704231109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Landmark Communications, Inc.
2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |x|
3 SEC Use Only
4 Source of Funds
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
Virginia
7 Sole Voting Power
Number of 4,773,097
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 4,773,097
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,773,097
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
|_|
13 Percent of Class Represented By Amount in Row (11)
10.1%
14 Type of Reporting Person
CO
2
<PAGE>
SCHEDULE 13D
CUSIP No. 704231109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Landmark Broadcasting, Inc.
2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |x|
3 SEC Use Only
4 Source of Funds
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
Virginia
7 Sole Voting Power
Number of 4,773,097
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 4,773,097
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,773,097
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
|_|
13 Percent of Class Represented By Amount in Row (11)
10.1%
14 Type of Reporting Person
CO
3
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SCHEDULE 13D
CUSIP No. 704231109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Landmark Television, Inc.
2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |x|
3 SEC Use Only
4 Source of Funds
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
Nevada
7 Sole Voting Power
Number of 4,773,097
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 4,773,097
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,773,097
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
|_|
13 Percent of Class Represented By Amount in Row (11)
10.1%
14 Type of Reporting Person
CO
4
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SCHEDULE 13D
CUSIP No. 704231109
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
The Travel Channel, Inc.
2 Check the Appropriate Box If a Member of a Group
a. |_|
b. |x|
3 SEC Use Only
4 Source of Funds
OO
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) |_|
6 Citizenship or Place of Organization
Virginia
7 Sole Voting Power
Number of 4,773,097
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 4,773,097
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,773,097
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares
|_|
13 Percent of Class Represented By Amount in Row (11)
10.1%
14 Type of Reporting Person
CO
5
<PAGE>
Item 1. Security and Issuer
This statement on Schedule 13D (the "Statement") relates to
shares of Class A Common Stock, $0.001 par value per share (the "Class A Common
Stock"), of Paxson Communications Corporation, a Delaware corporation (the
"Issuer" or "Paxson"). The principal executive offices of the Issuer are located
at 601 Clearwater Park Road, West Palm Beach, Florida 33401. This Statement is
being filed by the Reporting Persons (as defined herein) to report transactions
in the Class A Common Stock as a result of which each of the Reporting Persons
may be deemed to be the beneficial owners of in excess of 5% of the total number
of outstanding Class A Common Stock.
Item 2. Identity and Background.
This Statement is being filed on behalf of Landmark
Communications, Inc., a Virginia corporation ("Landmark"), and its wholly owned
subsidiaries Landmark Broadcasting, Inc., a Virginia corporation
("Broadcasting"), Landmark Television, Inc., a Nevada corporation
("Television"), and The Travel Channel, Inc., a Virginia corporation ("Travel,"
and together with Landmark, Broadcasting and Television, the "Reporting
Persons"). Travel is a wholly owned subsidiary of Television, which is wholly
owned by Broadcasting, which is a wholly owned subsidiary of Landmark. Pursuant
to regulations promulgated under Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), each of Landmark, Broadcasting and
Television may be deemed a beneficial owner of the shares of Class A Common
Stock held by Travel and reported herein.
Each of Landmark and Broadcasting has its principal office at
150 West Brambleton Avenue, Norfolk, Virginia 23510-2075. Television has its
principal office at 3228 Channel 8 Drive, Las Vegas, Nevada 89109. Travel has
its principal office at 2690 Cumberland Parkway, Suite 500, Atlanta, Georgia.
Landmark operates its principal business, which consists of
(i) newspaper publishing and (ii) serving as a holding company for wholly owned
subsidiaries engaged in newspaper publishing, television broadcasting and cable
television programming services, from its principal offices. Broadcasting and
Television each serve as holding companies for wholly owned subsidiaries engaged
in television broadcasting and cable television programming services, and each
operate their principal business from their respective principal offices.
Travel's principal business was, until July 11, 1997, the broadcast and
operation of The Travel Channel (a cable television network providing
programming related to leisure travel through original, co-produced and acquired
non-fiction features to viewers in the United States) and its principal business
is located in Atlanta, Georgia.
Pursuant to an Asset Acquisition Agreement dated as of June
13, 1997 (the "Acquisition Agreement"), by and among Landmark, Travel and Paxson
(filed as Exhibit A hereto), Travel Channel Acquisition Corporation ("TCAC"), a
wholly owned subsidiary of Paxson, acquired substantially all of the assets
owned or rights held by Travel (the "Assets") for use in connection with the
operations of The Travel Channel. In consideration for the transfer and delivery
of the Assets, and in accordance with the terms of the Acquisition Agreement, on
July 11, 1997 Paxson (i) paid to the account of Travel, the sum of $20,000,000
in cash and (ii) issued to Travel the 4,773,097 fully paid and nonassessable
shares of Class A Common Stock reported herein.
During the past five years, none of the Reporting Persons has
been (a) convicted in a criminal proceeding, or (b) a party to any civil
proceeding as a result of which it has been 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.
6
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Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the Acquisition Agreement, on July 11, 1997 the
Issuer (i) paid to the account of Travel the sum of $20,000,000 in cash and (ii)
issued to Travel the 4,773,097 fully paid and nonassessable shares of Class
A Common Stock reported herein as consideration for the transfer and delivery of
the Assets, as described above.
Item 4. Purpose of Transaction.
All of the shares of Class A Common Stock reported herein were
acquired for investment purposes. None of the Reporting Persons has any plans or
proposals that relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) Each of the Reporting Persons may be deemed the
beneficial owner of 4,773,097 shares of Class A Common Stock (approximately
10.07% of the total number of shares of Class A Common Stock outstanding as of
July 11, 1997 (representing approximately 3.66% of the aggregate voting power of
Paxson's outstanding Common Stock, which currently consists of Class A
Common Stock and Class B Common Stock, par value $0.001 per share)).
(b) Travel, as beneficial owner of record, may exercise sole
power to vote and dispose of the 4,773,097 shares of Class A Common Stock
reported herein. Each of Landmark, Broadcasting and Television, as direct or
indirect owner of all equity interest in Travel, may be deemed to have sole
power to direct the voting and disposition of the 4,773,097 shares of Class A
Common Stock held by Travel.
(c) Except for the transaction described in Exhibit A hereto,
there have been no transactions effected with respect to the shares of Class A
Common Stock since May 22, 1997 (sixty days prior to the date of this filing) by
any of the Reporting Persons.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings in Relationship with Respect
to Securities of the Issuer.
The Reporting Persons were granted "piggy-back" registration
rights for the shares of Class A Common Stock obtained under the Acquisition
Agreement pursuant to a certain Registration Rights Agreement, dated as of July
11, 1997, by and between Travel and Paxson, filed as Exhibit B hereto.
Pursuant to a certain Agreement Regarding Ownership
Restrictions, dated as of July 11, 1997, by and between Landmark and Paxson,
filed as Exhibit C hereto, and subject to the limited exceptions set forth
therein, neither Landmark nor any affiliate of Landmark may acquire any
beneficial interest in additional shares of Class A Common Stock without prior
written consent of Paxson, which consent may not be unreasonably withheld.
7
<PAGE>
Item 7. Material to be Filed as Exhibits.
A. Asset Acquisition Agreement, dated as of June 13,
1997, by and among Landmark Communications, Inc., The Travel Channel, Inc.
and Paxson Communications Corporation.
B. Registration Rights Agreement, dated as of July
11, 1997, by and between The Travel Channel, Inc. and Paxson Communications
Corporation.
C. Agreement Regarding Ownership Restrictions, dated
as of July 11, 1997, by and between Landmark Communications, Inc. and Paxson
Communications Corporation.
D. Joint Filing Agreement dated July 21, 1997 by and
among Landmark, Broadcasting, Television and Travel.
8
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SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: July 21, 1997 LANDMARK COMMUNICATIONS, INC.
By:/s/ Louis F.Ryan
-----------------------------
Louis F. Ryan
Executive Vice President,
General Counsel & Secretary
LANDMARK BROADCASTING, INC.
By:/s/ Louis F.Ryan
-----------------------------
Louis F. Ryan
Vice President & Secretary
LANDMARK TELEVISION, INC.
By:/s/ Louis F.Ryan
------------------------------
Louis F. Ryan
Assistant Secretary
THE TRAVEL CHANNEL, INC.
By:/s/ Louis F.Ryan
-----------------------------
Louis F. Ryan
Vice President & Secretary
9
<PAGE>
EXHIBIT INDEX
A. Asset Acquisition Agreement, dated as of June 13, 1997, by and among
Landmark Communications, Inc., The Travel Channel, Inc. and Paxson
Communications Corporation.
B. Registration Rights Agreement, dated as of July 11, 1997, by and
between The Travel Channel, Inc. and Paxson Communications Corporation.
C. Agreement Regarding Ownership Restrictions, dated as of July 11, 1997,
by and between Landmark Communications, Inc. and Paxson
Communications Corporation.
D. Joint Filing Agreement dated July 21, 1997 by and among Landmark,
Broadcasting, Television and Travel.
<PAGE>
EXHIBIT A
ASSET ACQUISITION AGREEMENT
DATED AS OF JUNE 13, 1997
BY AND AMONG
LANDMARK COMMUNICATIONS, INC., THE TRAVEL
CHANNEL, INC., AND PAXSON COMMUNICATIONS
CORPORATION
<PAGE>
ASSET ACQUISITION AGREEMENT
DATED AS OF JUNE 13, 1997
BY AND AMONG
LANDMARK COMMUNICATIONS, INC., THE TRAVEL
CHANNEL, INC., AND PAXSON COMMUNICATION
CORPORATION
________________________________________________________________________________
TABLE OF CONTENTS
Page
SECTION 1. CERTAIN DEFINITIONS..............................................1
1.1. Terms Defined in this Section................................1
1.2. Terms Defined Elsewhere in this Agreement....................4
1.3. Terms Generally..............................................6
SECTION 2. ACQUISITION OF ASSETS AND CONSIDERATION..........................6
2.1. Acquisition of Assets........................................6
2.2. Excluded Assets..............................................8
2.3. Consideration................................................9
2.4. Proration of Expenses........................................9
2.5. Assumption of Liabilities and Obligations...................13
2.6. Liabilities Not Assumed.....................................13
2.7. Allocation of Consideration.................................14
SECTION 3. REPRESENTATIONS AND WARRANTIES OF LCI AND TRAVEL................14
3.1. Organization, Standing, and Authority.......................14
3.2. Authorization and Binding Obligation........................15
3.3. Absence of Conflicting Agreements; Consents.................15
3.4. Licenses....................................................16
3.5. Real Property...............................................16
3.6. Tangible Personal Property..................................16
3.7. Contracts...................................................17
3.8. Intangible Property.........................................17
3.9. Financial Statements........................................18
3.10. Personnel...................................................18
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3.11. Claims and Legal Actions...................................19
3.12. Compliance with Laws.......................................20
3.13. Environmental Matters......................................20
3.14. Transactions with Affiliates; Completeness of Assets.......21
3.15. Cable Subscribers..........................................21
3.16. Ownership of Shares........................................21
3.17. Investment.................................................22
3.18. Conduct of Business........................................22
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PCC..........................22
4.1. Organization, Standing, and Authority......................22
4.2. Authorization and Binding Obligation.......................23
4.3. Absence of Conflicting Agreements..........................23
4.4. Shares.....................................................23
4.5. SEC Reports................................................23
SECTION 5. OPERATIONS OF THE CHANNEL PRIOR TO CLOSING.....................24
5.1. Generally..................................................24
5.2. Contracts..................................................24
5.3. Disposition of Assets......................................24
5.4. Encumbrances...............................................24
5.5. Licenses...................................................25
5.6. Obligations................................................25
5.7. Access to Information......................................25
5.8. Consents...................................................25
5.9. Maintenance of Assets......................................26
5.10. Notification...............................................26
5.11. Financial Information......................................26
5.12. Compliance with Laws.......................................27
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS...............................27
6.1. HSR Act Filing.............................................27
6.2. Agreement Regarding Ownership Restrictions.................27
6.3. Confidentiality............................................27
6.4. Cooperation................................................28
6.5. Access to Books and Records................................28
6.6. Noncompetition.............................................29
6.7. Accounts Receivable........................................30
6.8. Environmental Audit........................................30
6.9. Bulk Sales Law.............................................30
6.10. No Inconsistent Action.....................................30
6.11. Rule 144 Information.......................................30
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6.12. Services Agreement........................................31
6.13. Change of Name of Travel..................................31
6.14. Registration Rights Agreement.............................31
SECTION 7. CONDITIONS TO OBLIGATIONS OF PARTIES AT CLOSING................31
7.1. Conditions to Obligations o PCC...........................31
7.2. Conditions to Obligations of LCI and Travel...............32
SECTION 8. CLOSING AND CLOSING DELIVERIES.................................33
8.1. Closing...................................................33
8.2. Deliveries by LCI and Travel..............................33
8.3. Deliveries by PCC.........................................34
SECTION 9. TERMINATION....................................................35
9.1. Termination by LCI.........................................35
9.2. Termination by PCC.........................................35
9.3. Rights on Termination......................................35
9.4. Specific Performance.......................................36
9.5. Attorneys' Fees............................................36
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES..............................................36
10.1. Representations and Warranties............................36
10.2. Indemnification by LCI....................................36
10.3. Indemnification by PCC....................................37
10.4. Procedure for Indemnification.............................38
10.5. Certain Limitations.......................................39
SECTION 11. MISCELLANEOUS.................................................40
11.1. Fees and Expenses.........................................40
11.2. Notices...................................................40
11.3. Benefit and Binding Effect................................41
11.4. Further Assurances........................................41
11.5. GOVERNING LAW.............................................42
11.6. Headings..................................................42
11.7. Entire Agreement..........................................42
11.8. Waiver of Compliance; Consents............................42
11.9. Counterparts..............................................42
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<PAGE>
ASSET ACQUISITION AGREEMENT
This ASSET ACQUISITION AGREEMENT is dated as of June 13, 1997, by and among
Landmark Communications, Inc., a Virginia corporation; The Travel Channel, Inc.,
a Virginia corporation; and Paxson Communications Corporation, a Delaware
corporation.
PRELIMINARY STATEMENT
---------------------
Landmark Communications, Inc. ("LCI") and Landmark Television, Inc., a Nevada
corporation ("Television"), collectively, own directly or indirectly all of the
issued and outstanding capital stock of The Travel Channel, Inc. ("Travel"). LCI
owns directly or indirectly all of the issued and outstanding capital stock of
The Weather Channel, Inc. Travel owns or has rights to use substantially all of
the assets used in the business and operations of the Channel (as defined
herein). LCI and Travel now desire that Travel convey to Paxson Communications
Corporation ("PCC"), and PCC wishes to acquire, all of the assets owned or
rights held by Travel for use in the business or operations of the Channel,
except as set forth in this Agreement, for the consideration and on the terms
and conditions set forth in this Agreement. PCC may designate an Affiliate of
PCC to receive such assets and may direct that Travel transfer such assets
directly to such Affiliate of PCC.
AGREEMENTS
----------
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, PCC, LCI, and Travel, intending to be
bound legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1. Terms Defined in this Section.
-----------------------------
The following terms, as used in this Agreement, have the meanings set
forth in this Section:
"Affiliate," with respect to any Person, means any other Person
controlling, controlled by, or under common control with such Person. For
purposes of this definition, the term "control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise, and the terms "controlled by" and "under common control
with" have meanings corresponding to the meaning of "control."
"Agreement" means this Asset Acquisition Agreement, as it may be
amended from time to time.
"Assets" means the assets specified in Section 2.1.
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"Assumed Contracts" means (a) all Contracts listed on Schedule 3.7, (b)
Contracts in existence on the date of this Agreement that are not required to be
listed on Schedule 3.7, and (c) Contracts entered into by Travel between the
date of this Agreement and the Closing Date in compliance with Section 5.2.
"Business Day" means any day (other than a day which is a Saturday or
Sunday) on which banks are permitted to be open for business in the City of New
York.
"Channel" means The Travel Channel, a cable television network
providing viewers in the United States with programming relating to leisure
travel and related topics through original, co-produced, and acquired
non-fiction programming, but does not include the business or operations in
Latin America, Europe, and South Africa conducted by Travel Channel Latin
America, Inc., Landmark Travel Channel Limited, Voyage SAS, or any other Person.
"Class A Common Stock" means the Class A Common Stock, par value $.001
per share, of PCC.
"Closing" means the consummation of the acquisition of the Assets
pursuant to this Agreement in accordance with the provisions of Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consents" means the consents, permits, or approvals of governmental
authorities and other third parties that are necessary to transfer the Assets to
PCC or to the Designated Affiliate, if applicable, or otherwise to consummate
the transactions contemplated by this Agreement in compliance with any provision
of law or the terms of any mortgage, indenture, lease, contract, agreement,
instrument, license, or permit to which any party to this Agreement is a party
or by which any party to this Agreement or its properties may be bound legally,
regardless whether the obtaining of such consent, permit, or approval is a
condition to the obligations of any party at the Closing under this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses, and
other agreements, commitments, or arrangements (including leases for personal or
real property and employment agreements), written or oral, to which Travel is a
party or which are binding upon Travel and that relate to or affect the Assets
or the business or operations of the Channel, and (a) that are in effect on the
date of this Agreement or (b) that are entered into by Travel between the date
of this Agreement and the Closing Date.
"Effective Time" means 12:01 a.m., Eastern time, on the Closing Date.
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"Environmental Laws" means all currently effective federal, state,
local, and foreign statutes, regulations, ordinances, and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, and all common law concerning public health, and pollution or
protection of the environment, including all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances,
or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FCC" means the Federal Communications Commission.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangible Property" means any trademark, trade name, logo, service
mark, brand mark, brand name, computer program, database, industrial design,
copyright, invention, drawing, customer list, proprietary know-how, or
information owned by Travel, and Travel's rights to use any trademark, trade
name, logo, service mark, brand mark, brand name, computer program, database,
industrial design, copyright, invention, drawing, customer list, proprietary
know-how, or information that is not owned by Travel, for use in connection with
the conduct of the business or operations of the Channel (including the name
"The Travel Channel" and all rights relating to the use of such name and any
logos or characters developed by or on behalf of Travel for use in connection
with the Channel), and all registrations thereof and pending applications
therefor, together with any renewals, extensions, modifications, or additions
thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by any federal, state, or local
governmental authorities to Travel, used or held by Travel for use in connection
with the conduct of the business or operations of the Channel, and all
applications therefor, together with any renewals, extensions, modifications, or
additions thereto between the date of this Agreement and the Closing Date.
"Material Adverse Effect" means a material adverse effect on the
business, results of operations, properties, operations, financial condition,
assets, or liabilities of the Channel, taken as a whole.
"Permitted Liens" means, with respect to any Asset, (a) liens for
current taxes not yet due and payable or taxes that in good faith are being
contested or litigated and are not material to be business or operations of the
Channel, (b) landlord's liens for property taxes not delinquent, (c) statutory
liens that were created in the ordinary course of business, and (d) easements
and restrictions that are disclosed on Schedule 3.5.
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"Person" means an individual, corporation, association, partnership,
joint venture, trust, estate, limited liability company, limited liability
partnership, governmental entity, or other entity or organization.
"Real Property" means all real property, and all buildings, fixtures,
and other improvements thereon, whether or not owned or held by Travel, used in
the business or operations of the Channel.
"Real Property Interests" means all interests in real property,
including fee estates, leaseholds and subleaseholds, purchase options,
easements, licenses, rights to access, and rights of way, and all buildings, and
other improvements thereon, used or held by Travel for use in connection with
the conduct of the business or operations of the Channel, other than Excluded
Assets described in Section 2.2(k), together with any additions, improvements,
and replacements thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, fixtures, leasehold improvements, office equipment,
materials and supplies, plant, inventory, video libraries and archives, spare
parts, and other tangible personal property of every kind and description used
or held by Travel for use in connection with the conduct of the business or
operations of the Channel, other than Excluded Assets described in Section
2.2(k), together with any additions, improvements, and replacements thereto
between the date of this Agreement and the Closing Date.
"Taxes" means all taxes, charges, fees, levies, or other assessments
imposed by any federal, state, local, or foreign taxing authority, whether
disputed or not, including income, capital, estimated, excise, property, sales,
transfer, withholding, employment, payroll, and franchise taxes and any
interest, penalties, or additions attributable to or imposed on or with respect
to such assessments.
"Transponder Agreement" means the C-4 Satellite Transponder Service
Agreement between GE American Communications, Inc. and Travel, as assignee,
dated as of November 9, 1990, as amended on April 7, 1997.
"Uplink Agreement" means the Service Agreement by and between Travel
and Crawford Communications, dated as of February 18, 1997.
1.2. Terms Defined Elsewhere in this Agreement.
-----------------------------------------
For purposes of this Agreement, the following terms have the meanings
set forth in the sections indicated:
Term Section
---- -------
Accounts Receivabe Section 6.7
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Term Section
---- -------
Affiliation Agreement Section 3.7
Average Trading Price Section 2.3(b)
Benefit Arrangements Section 3.10(a)(iii)
Channel Preliminary Statement
Claimant Section 10.4(a)
Designated Affiliate Section 2.1
DOJ Section 6.1
Employees Section 3.10(a)
ERISA Affiliate Section 3.10(c)
Excluded Assets Section 2.2
Financial Statements Section 3.9
FTC Sction 6.1
Indemnifying Party Section 10.4(a)
LCI Preliminary Statement
Losses Section 10.2
PCC Peliminary Statement
PCC's SEC Reports Sction 4.5
Pension Plan Section 3.10(b)
Programming Agreements Section 3.7
Registration Rights Agreement Section 6.14
Restricted Business Section 6.6(a)
Rule 144 Section 6.11(a)
Sandler Partnerships Section 3.16
Services Agreement Section 6.12
Television Preliminary Statement
Travel Preliminary Statement
Welfare Plan Section 3.10(a)(i)
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1.3. Terms Generally.
---------------
The definitions in Section 1.1 and elsewhere in this Agreement shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context requires, any pronoun includes the corresponding masculine,
feminine, and neuter forms. The words "include," "includes," and "including" are
not limiting. Any reference in this Agreement to a "day" or number of "days"
(without the explicit qualification of "Business") shall be interpreted as a
reference to a calendar day or number of calendar days. If any action or notice
is to be taken or given on or by a particular calendar day, and such calendar
day is not a Business Day, then such action or notice shall be deferred until,
or may be taken or given on, the next Business Day. As used in this Agreement,
"knowledge" of LCI or Travel is limited to the actual knowledge of Alfred F.
Ritter, Jr., Executive Vice President of LCI, Louis F. Ryan, Executive Vice
President and General Counsel of LCI, and Bahns Stanley, General Manager of
Travel.
SECTION 2. ACQUISITION OF ASSETS AND
CONSIDERATION
2.1. Acquisition of Assets.
---------------------
Subject to the terms and conditions set forth in this Agreement
(including the representations and warranties made and relied upon hereunder),
LCI and Travel hereby agree that Travel will transfer, convey, assign, and
deliver to PCC, or to an Affiliate of PCC designated by PCC to receive the
Assets (the "Designated Affiliate"), on the Closing Date, and PCC agrees to
acquire, itself or by transfer directly to the Designated Affiliate, all of
Travel's right, title, and interest as of the Closing Date in all of the
tangible and intangible assets used or held by Travel for use in connection with
the conduct of the business or operations of the Channel, whether or not
reflected on the books and records of Travel, together with any additions
thereto between the date of this Agreement and the Closing Date, but excluding
the Excluded Assets, free and clear of any claims, liabilities, liens, security
interests, mortgages, pledges, encumbrances, or restrictions (except for liens
for current taxes not yet due and payable and landlord's liens for property
taxes not delinquent), including the following:
(a) The Tangible Personal Property;
(b) The Real Property Interests;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangible Property;
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(f) All proprietary information, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics relating to the business or operations of
the Channel, other than Excluded Assets described in Section 2.2(k);
(g) All claims or causes of action of Travel to the extent they
relate to the Assets;
(h) Copies of all books and records, including files, books of
account, computer programs, tapes, electronic data processing software, customer
lists, and other records relating to the Assets or the business or operations of
the Channel, including executed copies of the Assumed Contracts and Travel's
database of program rights; provided, however, that Travel may redact or remove
from any such books and records any information contained therein that does not
relate to the Channel or the Assets;
(i) All insurance proceeds arising out of damage, destruction, or
loss of any Asset or any other property or asset used or held by Travel on the
date of this Agreement (other than an Excluded Asset described in Section
2.2(k)) to the extent of any damage or destruction that remains unrepaired, or
to the extent any destroyed property or asset that remains unreplaced, at the
Closing Date;
(j) All orders and agreements now existing or entered into in the
ordinary course of business between the date of this Agreement and the Closing
Date, for the sale of advertising time on the Channel, except for those that, on
the Closing Date, have already been filled or have expired;
(k) All programs, program rights, and programming materials and
elements of whatever form or nature owned or held by Travel, whether recorded on
film, tape, or any other medium or intended for live performance, broadcast, or
other manner of presentation and whether completed or in production (such as
outlines, scripts, or otherwise);
(l) All rights under manufacturers' and vendors' warranties
relating to Assets;
(m) All goodwill in, and going concern value of, the Channel;
(n) All security deposits under any Assumed Contract to the extent
a credit was made in favor of Travel as a result of such security deposits in
making prorations pursuant to Section 2.4(a); and
(o) All prepaid expenses as of the Closing Date to the extent a
credit was made in favor of Travel as a result of such prepaid expenses in
making prorations pursuant to Section 2.4(a).
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2.2. Excluded Assets.
---------------
The Assets shall exclude the following (the "Excluded Assets") (and
without any implication that Travel is conveying any asset not expressly
excluded):
(a) Travel's cash and cash equivalents on hand as of the Closing
and Travel's interest in its bank or savings accounts and any stocks, bonds,
certificates of deposit, and similar investments;
(b) Any insurance policies, promissory notes, amounts due to
Travel from employees, bonds, letters of credit, certificates of deposit, or
other similar items, and any cash surrender value in regard thereto;
(c) Any pension, profit-sharing, or employee benefit plans;
(d) All tax returns and supporting materials, all original
financial statements and supporting materials, all of Travel's corporate minute
books and other books and records related to internal corporate matters and
financial relationships with Travel's lenders and Affiliates, all books and
records that Travel is required by law to retain, and all records of Travel
relating to the disposition of the Assets;
(e) Any interest in and to any refunds of Taxes for periods prior
to the Closing Date;
(f) Any assets and properties of Travel that are disposed of prior
to the Closing Date in compliance with this Agreement;
(g) Any claim or cause of action by Travel relating to the period
before the Effective Time;
(h) Any collective bargaining agreements;
(i) Any shares of capital stock of any Person;
(j) Any assets owned by The Weather Channel, Inc., none of which
shall be tangible personal property located on the premises leased by Travel
from Prentiss Properties Acquisition Partners, L.P.; and
(k) Travel's interest in any assets that are owned jointly by
Travel and The Weather Channel, Inc. and described generally on Schedule 2.2,
none of which shall be tangible personal property located on the premises leased
by Travel from Prentiss Properties Acquisition Partners, L.P.
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<PAGE>
2.3. Consideration.
-------------
(a) In consideration of the transfer, conveyance, assignment, and
delivery to PCC (or directly to the Designated Affiliate, if applicable) of the
Assets pursuant to this Agreement, at the Closing,
(i) PCC shall issue to Travel a number of validly issued,
fully paid, and nonassessable shares of Class A Common Stock equal to the
quotient of $55,000,000 divided by the Average Trading Price of the Class A
Common Stock as of the Closing Date; and
(ii) PCC shall pay or cause to be paid to or for the account
of Travel, the sum of $20,000,000, by federal wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Travel to PCC at least
two Business Days prior to the Closing Date.
(b) The "Average Trading Price" of the Class A Common Stock
equals, as of a particular date, the average of the reported closing market
prices per share of the Class A Common Stock for the 30 consecutive trading days
ending on the third trading day prior to such date. The closing market price for
each day in question shall be the last sale price, regular way or, if no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system of the principal national securities exchange on
which the Class A Common Stock is listed or admitted to trading or, if the Class
A Common Stock is not listed or admitted to trading on any national securities
exchange, the last quoted sale price or, if no such sale price is quoted, the
average of the high bid and low asked prices in the over-the-counter market, as
reported by the Nasdaq National Market System or such other system then in use
or, if on any such trading day the Class A Common Stock is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by the professional market maker who has been most active in making a market in
the Class A Common Stock during the preceding twelve months. The Average Trading
Price of the Class A Common Stock shall be appropriately adjusted to reflect the
effects of any stock dividend, stock split, reclassification, recapitalization,
or combination affecting such stock, the record date, ex-dividend date, or
similar date of which occurs during the period in which the Average Trading
Price is to be determined or thereafter prior to the Effective Time.
2.4. Proration of Expenses.
---------------------
(a) Prorations. Subject to Section 2.4(b), all expenses arising
from the operation of the Channel, including business and license fees, utility
charges, real and personal property taxes and assessments levied against the
Assets, property and equipment rentals, applicable copyright or other fees,
sales and service charges, and similar prepaid and deferred items, shall be
prorated between PCC and Travel in accordance with the principle that Travel
shall be responsible for all expenses, costs, liabilities, and obligations
allocable to the operations of the Channel for the period prior to the Effective
Time, and PCC or the Designated Affiliate, if applicable, shall be responsible
for all expenses, costs, liabilities, and obligations allocable to
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the operations of the Channel for the period after the Effective Time. To
effectuate the proration of expenses pursuant to this Section 2.4(a), but
subject to Section 2.4(b), Travel shall receive a credit equal to the amount of
any expenses, costs, liabilities, or obligations that are paid or incurred by
Travel and are allocable to the operations of the Channel for the period after
the Effective Time and PCC shall receive a credit equal to the amount of any
expenses, costs, liabilities, or obligations that are paid or incurred by PCC or
the Designated Affiliate, if applicable, and are allocable to the operations of
the Channel for the period before the Effective Time. Any determination whether
any expense, cost, liability, or obligation is allocable to or relates to the
period before or after the Effective Time, for purposes of calculating
prorations pursuant to this Section 2.4(b) or the assumption of liabilities and
obligations pursuant to Section 2.5 (or the exclusion therefrom pursuant to
Section 2.6(c)) shall be based on the extent to which all facts and
circumstances necessary for the accrual of such expense, cost, liability, or
obligation in accordance with generally accepted accounting principles have been
satisfied as of the Effective Time, except that any payment obligation arising
under any Programming Agreement that is an Assumed Contract shall be allocable
to and shall relate to the period during which the payment is required to be
made.
(b) Expenses Not Prorated.
---------------------
(i) There shall be no proration of, and Travel shall remain
solely liable with respect to, expenses, costs, liabilities, and obligations
arising under any Contracts not included in the Assumed Contracts and any other
expenses, costs, liabilities, and obligations that are not assumed by PCC or the
Designated Affiliate in accordance with Section 2.5.
(ii) PCC shall receive a credit pursuant to Section 2.4(a) to
the extent that PCC or the Designated Affiliate assumes any liability under any
Assumed Contract to refund (or to credit against payments otherwise due) any
security deposit or similar prepayment paid to Travel by any lessee or other
third party.
(iii) There shall be no proration of any employee
compensation (including accrued vacation, sick leave, or severance benefits)
with respect to employees of the Channel, including employees of the Channel who
are hired by PCC or the Designated Affiliate at or following the Closing. Travel
shall be solely responsible for the payment of all compensation owed to the
Channel's employees up to the Effective Time. PCC or the Designated Affiliate
may, as of the Effective Time, employ those employees of the Channel as PCC or
the Designated Affiliate may elect on terms and conditions determined by PCC or
the Designated Affiliate.
(iv) There shall be no proration of any Taxes, other than
real and personal property taxes and assessments levied against the Assets.
(v) There shall be no proration of music license fees payable
to ASCAP or BMI; Travel shall be responsible for paying all music license fees
with respect to the Channel relating to the period prior to the Effective Time
(including any music license fees determined
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to be payable after the Effective Time) and shall be entitled to any refunds of
music license fees previously paid by Travel with respect to the Channel
relating to the period prior to the Effective Time, and PCC or the Designated
Affiliate, if applicable, shall be responsible for paying all music license fees
with respect to the Channel relating to the period after the Effective Time and
shall be entitled to any refunds of music license fees paid by PCC or the
Designated Affiliate, if applicable, with respect to the Channel relating to the
period after the Effective Time.
(c) Manner of Determining Prorations and Credits. The prorations
required by Section 2.4(a) will be determined finally in accordance with the
following procedures:
(i) Travel shall prepare and deliver to PCC not later than two
Business Days before the Closing Date a preliminary settlement statement which
shall set forth Travel's good faith estimate of the prorations under Section
2.4(a). The preliminary settlement statement (A) shall contain all information
reasonably necessary to determine the credits to each party, taking into account
all prorations under Section 2.4(a), to the extent such prorations can be
determined or estimated as of the date of the preliminary settlement statement,
and such other information as may be reasonably requested by PCC, (B) shall be
certified by Travel to be true and complete to Travel's knowledge as of the date
thereof, and (C) shall be based upon expenses as of the date of the most recent
unaudited monthly financial statements of Travel furnished to PCC pursuant to
Section 5.11.
(ii) Not later than sixty days after the Closing Date, PCC will
deliver to Travel a statement setting forth PCC's determination of the
prorations pursuant to Section 2.4(a). PCC's statement (A) shall contain all
information reasonably necessary to determine the credits to each party, taking
into account all prorations under Section 2.4(a), and such other information as
may be reasonably requested by Travel and (B) shall be certified by PCC to be
true and complete to PCC's knowledge as of the date thereof. During the
thirty-day period following its delivery to Travel of its statement, PCC shall
grant Travel and its accountants, counsel, and other representatives full and
complete access to all books and records relating to the Channel that Travel
deems necessary to determine the credits to each party, taking into account all
prorations under Section 2.4(a). If Travel disputes the prorations determined by
PCC, it shall deliver to PCC within thirty days after its receipt of PCC's
statement a statement setting forth its determination of the amount of the
prorations. If Travel notifies PCC of its acceptance of PCC's statement, or if
Travel fails to deliver its statement within the thirty-day period specified in
the preceding sentence, PCC's determination of the prorations shall be
conclusive and binding on Travel as of the last day of the thirty-day period.
(iii) If Travel disputes the amount of the prorations determined
by PCC, PCC and Travel shall use good faith efforts to resolve any dispute
involving the determination of the prorations as expeditiously as practicable.
If the parties are unable to resolve the dispute within fifteen days following
the delivery of Travel's statement pursuant to Section 2.4(c)(ii), PCC and
Travel shall jointly designate an independent certified public accountant to
resolve the dispute. The accountant's resolution of the dispute shall be final
and binding on the parties, and
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a judgment may be entered thereon in any court of competent jurisdiction. Any
fees of this accountant shall be split equally between PCC and Travel.
(d) Payments at Closing With Respect to Prorations.
----------------------------------------------
(i) Except as provided in Section 2.4(d)(iii), Travel shall pay or
cause to be paid to or for the account of PCC at Closing the amount, if any, by
which the credits to PCC pursuant to Section 2.4(a) exceed the credits to the
Travel pursuant to Section 2.4(a), each as estimated in Travel's preliminary
settlement statement pursuant to Section 2.4(c)(i), by federal wire transfer of
same-day funds pursuant to wire instructions which shall be delivered by PCC to
Travel at least two Business Days prior to the Closing Date
(ii) Except as provided in Section 2.4(d)(iii), PCC shall pay or
cause to be paid to or for the account of Travel at Closing the amount, if any,
by which the credits to Travel pursuant to Section 2.4(a) exceed the credits to
PCC pursuant to Section 2.4(a), each as estimated in Travel's preliminary
settlement statement pursuant to Section 2.4(c)(i), by federal wire transfer of
same-day funds pursuant to wire instructions which shall be delivered by Travel
to PCC at least two Business Days prior to the Closing Date.
(iii) If the amount to be paid to or for the account of PCC
pursuant to Section 2.4(d)(i) or the amount to be paid to or for the account of
Travel pursuant to Section 2.4(d)(ii), but for this Section 2.4(d)(iii), would
be less than $50,000, then no payments under these sections will be made at
Closing, and all payments to effectuate the proration of expenses pursuant to
Section 2.4(a) shall be made pursuant to Section 2.4(e).
(e) Payments to Reflect Final Determination of Prorations. Within five
Business Days after the date on which the prorations are finally determined
pursuant to Section 2.4(c):
(i) Travel shall pay or cause to be paid to or for the account of
PCC, in immediately available funds, the amount, if any, by which the sum of the
credits to PCC pursuant to Section 2.4(a), as finally determined pursuant to
Section 2.4(c), plus the amount of any payment made by PCC pursuant to Section
2.4(d)(ii) exceeds the sum of the credits to Travel pursuant to Section 2.4(a),
as finally determined pursuant to Section 2.4(c), plus the amount of any payment
made by Travel pursuant to Section 2.4(d)(i).
(ii) PCC shall pay or cause to be paid to or for the account of
Travel, in immediately available funds, the amount, if any, by which the sum of
the sum of the credits to Travel pursuant to Section 2.4(a), as finally
determined pursuant to Section 2.4(c), plus the amount of any payment made by
Travel pursuant to Section 2.4(d)(i) exceeds the sum of the credits to PCC
pursuant to Section 2.4(a), as finally determined pursuant to Section 2.4(c),
plus the amount of any payment made by PCC pursuant to Section 2.4(d)(ii).
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2.5. Assumption of Liabilities and Obligations.
-----------------------------------------
As of the Closing Date, PCC or the Designated Affiliate, if applicable,
shall assume and undertake to pay, discharge, and perform all obligations and
liabilities of Travel under the Licenses and the Assumed Contracts to the extent
that either (a) the obligations and liabilities relate to the time after the
Effective Time or (b) PCC received a credit under Section 2.4(a) as a result of
the proration of such obligations and liabilities, regardless of whether any
Consent to the assignment of any License or Assumed Contract to PCC or the
Designated Affiliate has been obtained.
2.6. Liabilities Not Assumed.
-----------------------
Any provision of this Agreement to the contrary notwithstanding (and
without implication that PCC or the Designated Affiliate, if applicable, is
assuming any liability not expressly excluded and, where applicable, without
implication that any of the following have been included in the liabilities
described in Section 2.5), except for the liabilities described in Section 2.5,
neither PCC nor the Designated Affiliate shall assume by virtue of this
Agreement or the transactions contemplated hereby, and neither PCC nor the
Designated Affiliate shall have any liability for, any obligations or
liabilities of Travel of any kind, character, or description whatsoever,
including any of the following liabilities:
(a) any obligations of LCI or Travel hereunder;
(b) any liabilities relating to any of the Excluded Assets, or any
obligations or liabilities under any Contract not included in the Assumed
Contracts;
(c) any obligations or liabilities under the Assumed Contracts relating
to the period prior to the Effective Time except to the extent that PCC received
a credit under Section 2.4(a) as a result of the proration of such obligations
or liabilities;
(d) any liability arising from, or in connection with, the conduct of
the business and operations of the Channel or the Assets prior to the Closing;
(e) any intercompany liabilities or any liabilities by Travel to any of
its shareholders, directors, or officers or Affiliates, or to any shareholders,
directors, or officers of any of its Affiliates, or any liabilities relating to
the capital stock of Travel;
(f) any liabilities to or with respect to Travel's employees, whether
or not any such employee is offered employment by PCC or the Designated
Affiliate, if applicable, at or after the Closing, relating in any way to such
employee's employment with Travel prior to the Closing (including deferred
compensation liabilities and obligations for severance benefits, vacation time,
or sick leave accrued prior the Closing);
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(g) any liability in respect of any past, present, or future
litigation, action, suit, proceeding, or arbitration arising out of or relating
to the ownership or operation of the Assets or the business and operations of
the Channel prior to the Closing (whether asserted, accrued, or commenced before
or after the Closing);
(h) any liabilities with respect to or arising from indebtedness for
borrowed money incurred or accrued before the Closing; and
(i) any liabilities of Travel for Taxes, including Taxes arising from
the business and operations of the Channel prior to the Effective Time, other
than real and personal property taxes and assessments levied against the Assets
for which PCC received a credit under Section 2.4(a).
2.7. Allocation of Consideration.
---------------------------
The parties agree that $225,000 of the consideration payable by PCC to
Travel at the Closing pursuant to this Agreement shall be allocated for purposes
of Section 1060 of the Code and Temporary Treasury Regulation Section 1.1060-1T
to the covenant contained in Section 6.6(a). The parties further agree that the
portion of the consideration payable by PCC to Travel at the Closing that is
allocated to the covenant contained in Section 6.6(a) is being paid to and
received by Travel as agent for LCI. The parties shall allocate the balance of
the consideration payable by PCC to Travel at the Closing pursuant to this
Agreement among the Assets for purposes of Section 1060 of the Code and
Temporary Treasury Regulation Section 1.1060-1T in accordance with an appraisal
to be conducted within six months after Closing by an appraisal firm selected
and retained by PCC, at PCC's expense, with experience in the valuation and
appraisal of businesses similar to the Channel. Each party agrees to file with
its federal income tax returns an initial asset acquisition statement and any
supplemental statements on Internal Revenue Service Form 8594 required by
Temporary Treasury Regulation Section 1.1060-1T, all in accordance with and
accurately reflecting such allocation of the consideration payable by PCC to
Travel at the Closing pursuant to this Agreement. Notwithstanding the foregoing,
no party shall have any obligation under this Section 2.7 to take any tax
position that such party determines, after consultation with its advisers, would
constitute fraud.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
LCI AND TRAVEL
LCI and Travel, jointly and severally, represent and warrant to PCC as
follows:
3.1. Organization, Standing, and Authority.
-------------------------------------
Each of LCI and Travel is a corporation duly organized, validly
existing, and in good standing under the laws of the Commonwealth of Virginia.
Travel has all requisite corporate power and authority (a) to own, lease, and
use the Assets as now owned, leased, and used by it, (b) to conduct the business
and operations of the Channel as now conducted by it, and (c) to
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execute and deliver this Agreement and the documents contemplated hereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Travel hereunder and thereunder. Travel is duly
qualified to transact business in each jurisdiction in which the nature of its
business makes such qualification necessary except where failure to so qualify
would not have a Material Adverse Effect or impair or hinder the ability of
Travel to perform its obligations under this Agreement. LCI has all requisite
corporate power and authority to execute and deliver this Agreement and the
documents contemplated hereby, and to perform and comply with all of the terms,
covenants, and conditions to be performed and complied with by LCI hereunder and
thereunder. LCI is duly qualified to transact business in each jurisdiction in
which the nature of its business makes such qualification necessary except where
failure to so qualify would not impair or hinder the ability of LCI to perform
its obligations under this Agreement.
3.2. Authorization and Binding Obligation.
------------------------------------
The execution, delivery, and performance of this Agreement by each of
LCI and Travel have been duly authorized by all necessary corporate actions on
the part of LCI and Travel. This Agreement has been duly executed and delivered
by each of LCI and Travel and constitutes the legal, valid, and binding
obligation of each of LCI and Travel, enforceable against each of LCI and Travel
in accordance with its terms except as the enforceability of this Agreement may
be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally, and by judicial discretion in the enforcement of equitable
remedies.
3.3. Absence of Conflicting Agreements; Consents.
-------------------------------------------
Subject to obtaining the governmental Consent provided for in Section
6.1 and the other Consents listed on Schedule 3.3, the execution, delivery, and
performance of this Agreement and the documents contemplated hereby by each of
LCI and Travel (with or without the giving of notice, the lapse of time, or
both): (a) do not require the consent of any third party (including any
governmental or regulatory authority); (b) will not conflict with any provision
of the Articles of Incorporation or By-Laws of either LCI and Travel; (c) will
not violate or result in a breach of, or contravene any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to either LCI and Travel; (d) will not
violate, conflict with, or result in a material breach of any terms of,
constitute grounds for termination of, constitute a default under, or result in
the acceleration of any performance required by the terms of, any mortgage,
indenture, lease, contract, agreement, instrument, license, or permit to which
either LCI and Travel is a party or by which either LCI and Travel or their
respective properties may be bound legally; and (e) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, encumbrance, or other
security interest upon any of the Assets.
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3.4. Licenses.
--------
Schedule 3.4 is a true and complete list as of the date of this
Agreement of all Licenses. Each License has been validly issued, and Travel is
the authorized legal holder thereof. The Licenses are in full force and effect,
and the conduct of the business and operations of the Channel is in accordance
therewith in all material respects. As of the date of this Agreement, there is
no proceeding pending or, to Travel's knowledge, threatened, seeking the
revocation or limitation of any Licenses. Travel is the holder of all Licenses
necessary or appropriate to enable it to continue to conduct the business as now
conducted.
3.5. Real Property.
-------------
Schedule 3.5 contains a complete and accurate description of all the
Real Property and Travel's interests therein (including street address (where
known), legal description (where known), owner, and Travel's use thereof). No
fee estates are included in the Real Property Interests. Except as set forth on
Schedule 3.5, Travel has good title to all Real Property Interests, free and
clear of all liens, security interests, mortgages, pledges, encumbrances, or
restrictions on the Real Property Interests, except for Permitted Liens;
provided, however, that neither LCI nor Travel makes any representation or
warranty hereby regarding any liens, security interests, mortgages, pledges,
encumbrances, or restrictions on any fee estate underlying any Real Property
Interest. All Real Property (including the improvements thereon) is in good
condition and repair consistent with its present use and is available for
immediate use in the conduct of the business and operations of the Channel.
Except for that portion of the Real Property and Real Property Interests subject
to leases where Travel is lessor or sublessor (as identified on Schedule 3.5),
Travel is in possession of the Real Property. As of the date of this Agreement,
to the knowledge of Travel, there are no pending or threatened condemnation or
appropriation proceedings against any of the Real Property or the Real Property
Interests. Travel has full legal and practical access to all Real Property. With
respect to each leasehold or subleasehold interest included in the Real Property
Interests, Travel has enforceable rights to nondisturbance and quiet enjoyment,
and no third party holds any interest in the leased premises with the right to
foreclose upon Travel's leasehold or subleasehold interest.
3.6. Tangible Personal Property.
--------------------------
Schedule 3.6 lists all material items of Tangible Personal Property
used to conduct the business and operations of the Channel as now conducted.
Except as described in Schedule 3.6 and except for Tangible Personal Property
leased pursuant to any Assumed Contract, Travel owns and has good title to each
item of Tangible Personal Property and none of the Tangible Personal Property is
subject to any liens, security interests, mortgages, pledges, encumbrances, or
restrictions, except for Permitted Liens. The items of Tangible Personal
Property listed on Schedule 3.6 are in good working condition (ordinary wear and
tear excepted) and are available for immediate use in the business and
operations of the Channel.
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3.7. Contracts.
---------
Schedule 3.7 is a true and complete list as of the date of this
Agreement of all Contracts as of the date of this Agreement, including all of
Travel's (a) cable television system affiliation agreements ("Affiliation
Agreements") or other agreements or understandings with cable television system
operators, (b) program license agreements and other agreements with respect to
the production, development, broadcast, distribution, or other use of television
programs, films, music, and other audio, visual, and audio-visual works
("Programming Agreements"), (c) leases and rental agreements, and (d) agreements
to buy or sell advertising or engage in other promotional activities. Travel has
delivered or made available to PCC true and complete copies of all written
Assumed Contracts and accurate descriptions of all oral Assumed Contracts listed
on Schedule 3.7. Except as disclosed on Schedule 3.7, all of the Assumed
Contracts are in full force and effect and are valid and binding agreements of
the parties enforceable in accordance with their terms. Except as disclosed on
Schedule 3.7, to the knowledge of Travel, no party is in default in any material
respect under any of the Assumed Contracts, nor does any condition exist that
with the notice or lapse of time or both would constitute such a default. Except
for the need to obtain the Consents listed on Schedule 3.3 (but this
representation and warranty does not create any obligation on the part of Travel
or LCI to obtain any such Consent or make the obtaining of any such Consent a
condition to any party's obligations at Closing, other than as expressly
provided elsewhere in this Agreement), Travel has full legal power and authority
to assign its rights under the Assumed Contracts to PCC or the Designated
Affiliate, if applicable, in accordance with this Agreement, and such assignment
will not affect the validity, enforceability, or continuation of any of the
Assumed Contracts. Except as disclosed on Schedule 3.7, as of the date of this
Agreement, to the knowledge of Travel, no party to any Assumed Contract has
informed Travel of its intention (a) to terminate such Assumed Contract or amend
the terms thereof, (b) to refuse to renew the Assumed Contract upon expiration
of its term, or (c) to renew the Assumed Contract upon expiration only on terms
and conditions that are more onerous than those now existing.
3.8. Intangible Property.
-------------------
Schedule 3.8 is a list of all Intangible Property and indicates, with
respect to each item of Intangible Property, the owner thereof and, if
applicable, the name of the licensor and licensee thereof. Except as set forth
on Schedule 3.8, to Travel's knowledge, each item of Intangible Property is in
good standing and no other Person has any claim of ownership or right of use
with respect thereto. To Travel's knowledge, the use of the Intangible Property
by Travel does not, and the use thereof by PCC or the Designated Affiliate, if
applicable, immediately after the Closing will not, conflict with, infringe
upon, violate, or interfere with or constitute an appropriation of any right,
title, interest, or goodwill, including any intellectual property right,
trademark, trade name, service mark, brand mark, brand name, computer program,
database, industrial design, copyright, or any pending application therefor of
any other Person, and there have been no claims made and Travel has not received
any notice or otherwise acquired any knowledge that any item of Intangible
Property is invalid or conflicts with the asserted rights of any Person or has
not been used or
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<PAGE>
enforced or has been failed to be used or enforced in a manner that would result
in the abandonment, cancellation, or unenforceability of any of the Intangible
Property. Except as set forth on Schedule 3.8, Travel is not a party to or bound
by any contract, license, or other agreements relating to the Intangible
Property.
3.9. Financial Statements.
--------------------
Travel has furnished PCC with true and complete copies of an unaudited
balance sheet and income statement of the Channel as at and for the fiscal years
ended December 31, 1996, December 31, 1995, and December 31, 1994, and as at and
for the five months ended May 31, 1997 (collectively, the "Financial
Statements"). The Financial Statements have been prepared from the books and
records of Travel on a consistent basis in accordance with the accounting
principles applied by LCI in preparing its consolidated financial statements
which, on a consolidated basis, have been prepared in accordance with generally
accepted accounting principles and present fairly, in all material respects, the
consolidated financial condition of LCI as at their respective dates and the
results of operations for the periods then ended.
3.10. Personnel.
---------
(a) Employees and Compensation. Schedule 3.10 contains a true and
complete list as of the date of this Agreement of all employees of Travel
engaged in the business and operations of the Channel (collectively, the
"Employees") and a description of all compensation arrangements affecting them.
Schedule 3.10 also contains a true and complete list of all material employee
benefit plans or arrangements maintained or administered by Travel or to which
Travel contributes or is required to contribute and that cover any Employee,
including any:
(i) "Employee welfare benefit plan," as defined in Section 3(1) of
ERISA (a "Welfare Plan");
(ii) Employee plan that is maintained in connection with any trust
described in Section 501(c)(9) of the Code; and
(iii) Employment, severance, or other similar contract,
arrangement, or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, or retirement benefits or for deferred compensation, profit-sharing,
bonuses, stock options, stock appreciation rights, stock purchases, or other
forms of incentive compensation or post-retirement insurance, compensation, or
benefits that is not a Welfare Plan (collectively, "Benefit Arrangements").
(b) Pension Plans. Except as disclosed in Schedule 3.10, there is no
"employee pension benefit plan," as defined in Section 3(2) of ERISA (a "Pension
Plan"), that is subject to Title IV or ERISA or Section 412 of the Code, that
covers any Employee and to which Travel contributes or is required to
contribute.
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<PAGE>
(c) Multiemployer Plans. Neither Travel nor any entity required be
combined with Travel under Section 414(b), Section 414(c), Section 414(m), or
Section 414(o) of the Code (an "ERISA Affiliate") has at any time been a
participant in any "multiemployer pension plan," as defined in Section 3(37) of
ERISA, that covers any Employee.
(d) Plan Liabilities. Neither Travel nor any ERISA Affiliate has
incurred, or expects to incur as a result of the consummation of the
transactions contemplated under this Agreement, any cost, fee, expense,
liability, claim, suit, obligation, or other damage with respect to any Pension
Plan, any Welfare Plan, or any Benefit Arrangement that could give rise to the
imposition of any liability, cost, fee, expense, or obligation on PCC or any of
its Affiliates, and, to Travel's knowledge, no facts or circumstances exist that
could give rise to any such cost, fee, expense, liability, claim, suit,
obligation, or other damage.
(e) Delivery of Copies of Relevant Documents and Other Information.
Travel has delivered or made available to PCC true and complete copies of each
of the following documents:
(i) Each Welfare Plan (and, if applicable, related trust
agreements) and all amendments thereto, and each summary plan description
together with any summary of material modifications;
(ii) Each written Benefit Arrangement and written descriptions
thereof that have been distributed to Employees (including descriptions of the
number and level of employees covered thereby); and
(iii) Each employee handbook or similar document describing any
Pension Plan, Welfare Plan, or Benefit Arrangement applicable to Employees.
(f) Labor Relations. Except as set forth in Schedule 3.10, Travel is
not a party to or subject to any written or oral employment contract with any
Employee. Travel is not subject to any contract prohibiting the termination of
any Employee. Except as disclosed on Schedule 3.10, no controversies, disputes,
or proceedings are pending or, to Travel's knowledge, threatened, between Travel
and any Employee. No labor union or other collective bargaining unit represents
or, to Travel's knowledge, claims to represent any of the employees of the
Channel. To Travel's knowledge, there is no union campaign being conducted to
solicit cards from employees to authorize a union to request a National Labor
Relations Board Certification election with respect to any employees at the
Channel.
3.11. Claims and Legal Actions.
------------------------
Except as disclosed on Schedule 3.11, as of the date of this Agreement,
there is no claim, legal action, counterclaim, suit, arbitration, or other
legal, administrative, or tax proceeding, nor any order, decree, or judgment, in
progress or pending, or to Travel's knowledge threatened, against or relating to
Travel or any of its Affiliates with respect to the Assets or the
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<PAGE>
business or operations of the Channel, that could be expected to have a Material
Adverse Effect or impair or hinder the ability of LCI or Travel to perform their
respective obligations under this Agreement.
3.12. Compliance with Laws.
--------------------
Travel has complied with the Licenses and all federal, state, and local
laws, rules, regulations, ordinances, judgments, orders, and decrees applicable
or relating to the business and operation of the Channel, except for any
noncompliance that would not have a Material Adverse Effect or impair or hinder
the ability of LCI or Travel to perform their respective obligations under this
Agreement.
3.13. Environmental Matters.
---------------------
(a) Travel and its predecessors and Affiliates, with respect to
the Channel, have complied and are in compliance with all Environmental Laws.
Without limiting the generality of the foregoing, each of Travel and its
predecessors and Affiliates have obtained and complied with, or filed timely
applications for, and are in compliance with, all permits, licenses, and other
authorizations that are required pursuant to Environmental Laws for the
occupation of the Assets and the operation of the Channel. Schedule 3.13 is a
list of all permits, licenses, and other authorizations that are required
pursuant to Environmental Laws for the occupation of the Assets and the
operation of the Channel.
(b) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has received any written notice regarding any
actual or alleged violation of Environmental Laws, or any liabilities or
potential liabilities, including any investigatory, remedial, or corrective
obligations, relating to any of them or their facilities arising under
Environmental Laws.
(c) To Travel's knowledge, none of the following exists at any
Real Property: (1) underground storage tanks, (2) asbestos-containing material
in any form or condition, (3) materials or equipment containing polychlorinated
biphenyls, or (4) landfills.
(d) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any substance,
including any hazardous substance, or owned or operated any property or facility
in a manner that has given or would give rise to liabilities, including any
liability for response costs, corrective action costs, personal injury, property
damage, or natural resources damages, pursuant to any Environmental Laws.
(e) Neither this Agreement nor the assignment of the Assets
pursuant to this Agreement will result in any obligations for site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to any "transaction-triggered" or "responsible property
transfer" Environmental Laws.
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<PAGE>
(f) Neither Travel nor any of its predecessors and Affiliates,
with respect to the Channel, has, either expressly or by operation of law,
assumed or undertaken any liability, including any obligation for corrective or
remedial action, of any other Person relating to Environmental Laws.
3.14. Transactions with Affiliates; Completeness of Assets.
----------------------------------------------------
Except as set forth on Schedule 3.14, there are no agreements relating
to the business or operations of the Channel between Travel and any of its
Affiliates, Travel has not been involved in any material business arrangement or
relationship relating to the Channel with any of its Affiliates, and no
Affiliate of Travel owns any material property or right, tangible or intangible,
that is used in the business or operations of the Channel. Except as set forth
on Schedule 3.14, the Assets, together with those assets and properties to be
used in the performance of services by The Weather Channel, Inc. pursuant to the
Services Agreement, constitute all tangible and intangible assets and properties
necessary for the conduct of the business and operations of the Channel as now
conducted.
3.15. Cable Subscribers.
-----------------
Schedule 3.15 sets forth, with respect to each cable television system
operator so listed, under the column "Network Subs," as of a recent date, the
number of cable system subscribers to which such cable television system
operator makes the Channel available, based upon the Affiliation Agreement with
such cable television system operator (if an Affiliation Agreement with such
cable television system operator exists) and such other information that Travel
reasonably and in good faith deems relevant to such determination. Schedule 3.15
also designates those cable television system operators that, to Travel's
knowledge, make the Channel available to subscribers without an Affiliation
Agreement.
3.16. Ownership of Shares.
-------------------
LCI owns directly or indirectly all of the issued and outstanding
capital stock of Television, and Television owns directly all of the issued and
outstanding capital stock of Travel. LCI owns directly or indirectly all of the
issued and outstanding capital stock of The Weather Channel, Inc. Neither LCI
nor any Affiliate of LCI owns any shares of Class A Common Stock.
Notwithstanding the foregoing, LCI could be deemed to be the beneficial owner of
securities of PCC by virtue of its investment in one or more of the following
limited partnerships (which in turn own securities of PCC): Sandler Mezzanine
Partners, L.P., Sandler Mezzanine T-E Partners, L.P., and Sandler Mezzanine
Foreign Partners, L.P. (collectively, the "Sandler Partnerships"). The foregoing
shall not be considered an acknowledgment of beneficial ownership of such
securities by LCI.
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<PAGE>
3.17. Investment.
----------
Each of LCI and Travel (a) understands that the shares of Class A
Common Stock to be issued to Travel pursuant to this Agreement have not been,
and will not be, registered under the Securities Act of 1933, as amended, or
under any state securities laws, and are being offered and sold in reliance upon
federal and state exemptions for transactions not involving any public offering,
and (b) to the extent it or any of its Affiliates acquires any of the shares of
Class A Common Stock to be issued to Travel pursuant to this Agreement, it or
its Affiliate will be acquiring such shares solely for its own account for
investment purposes, and not with a view to the distribution thereof.
3.18. Conduct of Business.
-------------------
Since December 31, 1996, Travel has not:
(a) Suffered any damage, destruction, or loss affecting any assets
used or useful in the conduct of the business of the Channel that has had or
would have a Material Adverse Effect;
(b) Except in this Agreement, made or agreed to make any sale,
assignment, lease, or other transfer or disposition of any of the Channel's
assets of the types described in Section 2.1 other than in the normal and usual
course of business with suitable replacements being obtained therefor;
(c) Canceled, amended, or modified, or agreed to cancel, amend, or
modify, any Affiliation Agreement or any Programming Agreement that has had or
would have a Material Adverse Effect; or
(d) Entered into any settlement regarding the breach or
infringement of, any license, patent, copyright, trademark, trade name,
franchise, or similar right, or modified any existing right relating to the
Channel.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF
PCC
PCC represents and warrants to LCI and Travel as follows:
4.1. Organization, Standing, and Authority.
-------------------------------------
PCC is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware. On the Closing Date, PCC or
the Designated Affiliate, if applicable, will be duly qualified to conduct
business in the Commonwealth of Virginia and the State of Georgia. PCC has all
requisite corporate power and authority to execute and deliver
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<PAGE>
this Agreement and the documents contemplated hereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by PCC hereunder and thereunder.
4.2. Authorization and Binding Obligation.
------------------------------------
The execution, delivery, and performance of this Agreement by PCC have
been duly authorized by all necessary actions on the part of PCC. This Agreement
has been duly executed and delivered by PCC and constitutes the legal, valid,
and binding obligation of PCC, enforceable against PCC in accordance with its
terms except as the enforceability of this Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3. Absence of Conflicting Agreements.
---------------------------------
Subject to obtaining the governmental Consent provided for in Section
6.1, execution, delivery, and performance by PCC of this Agreement and the
documents contemplated hereby (with or without the giving of notice, the lapse
of time, or both): (a) do not require the consent of any third party (including
any governmental or regulatory authority); (b) will not conflict with the
Certificate of Incorporation or By-Laws of PCC; and (c) will not violate,
conflict with, or result in a breach of, or constitute a default under, any law,
judgment, order, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality applicable to PCC; and (d) will not violate,
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any mortgage, indenture, lease, contract,
agreement, instrument, license, or permit to which PCC is a party or by which
PCC may be bound legally.
4.4. Shares.
------
The shares of Class A Common Stock to be issued to Travel pursuant to
this Agreement, upon their issuance in accordance with the terms of this
Agreement, will be validly issued, fully paid, and nonassessable.
4.5. SEC Reports.
-----------
PCC has filed all forms, reports, and documents required to be filed by
PCC with the Securities and Exchange Commission since January 1, 1996
(collectively, "PCC's SEC Reports"). PCC's SEC Reports have complied in all
material respects with all applicable requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934, as amended. As of
their respective dates, none of PCC's SEC Reports, including any financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. As of the date of this
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<PAGE>
Agreement, since the date of each of PCC's SEC Reports, there have been no
material changes to the business, operations, or capitalization of PCC that have
not been disclosed in a subsequent PCC's SEC Report or otherwise disclosed to
LCI.
SECTION 5. OPERATIONS OF THE CHANNEL PRIOR TO
CLOSING
Between the date of this Agreement and the Closing Date, LCI and Travel
shall comply with the covenants in this Section 5, except as otherwise consented
to in writing by PCC:
5.1. Generally.
---------
Travel shall operate the Channel in the ordinary course of business
consistent with past practices (except where such conduct would conflict with
the following covenants or with the other obligations of LCI and Travel under
this Agreement) and use commercially reasonable efforts to preserve the business
of the Channel and its present relationships with suppliers, customers, and
others having business relations with it.
5.2. Contracts.
---------
Travel will not amend in any material respect or (except as provided
below in this Section 5.2) terminate any Contract (or waive any material right
thereunder), or enter into any contract or commitment relating to the Channel or
the Assets, or incur any obligation that will be binding on PCC after Closing,
except for cash time sales agreements made in the ordinary course of business
consistent with past practices. Prior to the Closing Date, Travel shall deliver
to PCC a list of all Contracts entered into between the date of this Agreement
and the Closing Date and shall make available to PCC copies of such Contracts.
Prior to the Closing Date, Travel shall terminate or permit to expire without
renewal the Agreement, dated February 21, 1996, between Travel and CUC
International, Inc. and the Agreement, dated February 1, 1996, between Travel
and DDB Needham Worldwide, Inc.
5.3. Disposition of Assets.
---------------------
Travel shall not sell, assign, lease, or otherwise transfer or dispose
of any of the Assets, except where no longer used in the business or operations
of the Channel or in connection with the acquisition of replacement property of
equivalent kind and value.
5.4. Encumbrances.
------------
Travel shall not create, assume, or permit to exist any liens, security
interests, mortgages, pledges, encumbrances, or restrictions upon the Assets,
except for Permitted Liens.
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<PAGE>
5.5. Licenses.
--------
Travel shall not cause or permit, by any act or failure to act, any of
the Licenses required to be listed on Schedule 3.4 to expire or to be revoked,
suspended, or modified.
5.6. Obligations.
-----------
Travel shall pay all obligations relating to the Channel as they become
due, consistent with past practices.
5.7. Access to Information.
---------------------
(a) Travel shall give PCC and its counsel, accountants, engineers,
and other authorized representatives reasonable access, upon reasonable notice,
to the Assets, the business and operations of the Channel, and to all other
books, records, and documents of Travel relating to the Channel (or true and
complete copies thereof) for the purpose of audit and inspection, and will
furnish or cause to be furnished to PCC or its authorized representatives, upon
reasonable notice, all information with respect to the affairs and business of
the Channel that PCC may reasonably request.
(b) Without limiting the generality of the foregoing, LCI and
Travel shall give PCC and its counsel, accountants, and other authorized
representatives reasonable access to their financial records and their
employees, counsel, accountants, and other representatives for the purpose of
preparing and auditing such financial statements as PCC determines, in its
judgment, are required or advisable to comply with federal or state securities
laws and the rules and regulations of securities markets as a result of the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby. LCI and Travel agree to provide one or more audit
representation letters as to the information made available to PCC in connection
with any audit performed under this Section 5.7(b). The representation letters
will be in such form and make all representations reasonably required by the
accountants preparing such audit to enable them to issue an opinion acceptable
to the Securities and Exchange Commission or other governmental authority for
purposes of any registration statement or other governmental filing by PCC that
requires such audit, but LCI and Travel shall not be required to provide any
representation letter that is substantively more extensive than the
representation letters that LCI provides to its accountants in connection with
the preparation of its audited financial statements. LCI and Travel will also
request that their independent accountants provide any consents that are
necessary for the inclusion of their opinion with respect to any audited
financial statements prepared by them in any governmental filing by PCC.
5.8. Consents.
--------
Travel shall use commercially reasonable efforts to obtain (a) Consents
of GE American Communications, Inc. and Crawford Communications to the
assignment to PCC or the
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<PAGE>
Designated Affiliate, if applicable, of the Transponder Agreement and the Uplink
Agreement, (b) estoppel certificates of GE American Communications, Inc. and
Crawford Communications with respect to the Transponder Agreement and the Uplink
Agreement, (c) any other Consents that PCC requests that Travel attempt to
obtain, (d) estoppel certificates of the lessors of all leasehold and
subleasehold interests included in the Real Property Interests, and (d) any
other estoppel certificates of contracting parties to Assumed Contracts that PCC
requests that Travel attempt to obtain. Travel shall promptly advise PCC of any
difficulties experienced in obtaining any of the Consents or estoppel
certificates and of any conditions proposed, considered, or requested for any of
the Consents or estoppel certificates. Notwithstanding the foregoing, and except
as otherwise expressly provided in this Agreement, Travel shall have no
obligation to expend funds to obtain any Consents or estoppel certificates
except to the extent required to cure any breach or default by Travel under any
Contract and except for customary administrative costs.
5.9. Maintenance of Assets.
---------------------
Travel shall maintain all of the Tangible Personal Property in good
condition (ordinary wear and tear excepted), consistent with their overall
condition on the date of this Agreement, and use, operate, and maintain all of
the Tangible Personal Property in a reasonable manner. Travel shall maintain
inventories of spare parts and expendable supplies at levels consistent with
past practices. Travel shall repair or replace any Intangible Property, Tangible
Personal Property, or Real Property Interests (other than Travel's rights under
the Transponder Agreement, if applicable) that are lost, damaged, confiscated,
or condemned prior to the Closing.
5.10. Notification.
------------
Travel shall promptly notify PCC in writing (a) if, to Travel's
knowledge, any party to any Assumed Contract has informed Travel of its
intention (i) to terminate such Assumed Contract or amend the terms thereof,
(ii) to refuse to renew the Assumed Contract upon expiration of its term, or
(iii) to renew the Assumed Contract upon expiration only on terms and conditions
that are more onerous than those now existing, (b) of any damage, destruction,
or loss affecting any material portion of the assets used or useful in the
conduct of the business of the Channel, (c) of any failure of performance by any
party under either the Transponder Agreement or the Uplink Agreement, or (d) of
any interruption in the transmission of the Channel's programming to cable
television systems.
5.11. Financial Information.
---------------------
Travel shall furnish PCC within twenty days after the end of each month
ending between the date of this Agreement and the Closing Date an unaudited
balance sheet and income statement of the Channel as at and for the month just
ended and such other financial information as PCC may reasonably request.
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<PAGE>
5.12. Compliance with Laws.
--------------------
Travel shall comply with all laws, rules, and regulations applicable or
relating to the business and operations of the Channel, except for any
noncompliance that would not have a Material Adverse Effect or impair or hinder
the ability of LCI or Travel to perform their respective obligations under this
Agreement.
SECTION 6. SPECIAL COVENANTS AND AGREEMENTS
6.1. HSR Act Filing.
--------------
LCI and PCC agree to (a) file, or cause to be filed, with the U.S.
Department of Justice ("DOJ") and Federal Trade Commission ("FTC") all filings,
if any, that are required in connection with the transactions contemplated
hereby under the HSR Act within five Business Days of the date of this
Agreement; (b) submit to the other party, prior to filing, their respective HSR
Act filings to be made hereunder (other than any portion thereof containing
confidential information regarding such party's ultimate parent entity), and to
discuss with the other any comments the reviewing party may have; (c) cooperate
with each other in connection with such HSR Act filings, which cooperation shall
include furnishing the other with any information or documents that may be
reasonably required in connection with such filings; (d) promptly file, after
any request by the FTC or DOJ and after appropriate negotiation with the FTC or
DOJ of the scope of such request, any information or documents requested by the
FTC or DOJ; and (e) furnish each other with any correspondence from or to, and
notify each other of any other communications with, the FTC or DOJ that relates
to the transactions contemplated hereunder, and to the extent practicable, to
permit each other to participate in any conferences with the FTC or DOJ.
6.2. Agreement Regarding Ownership Restrictions.
------------------------------------------
At the Closing, PCC and LCI will enter into an Agreement Regarding
Ownership Restrictions substantially in the form of Schedule 6.2 hereto.
6.3. Confidentiality.
---------------
(a) Except as and to the extent required by law or as provided in
Section 6.3(c), each party will keep confidential any information obtained from
the other party in connection with the transactions contemplated by this
Agreement. If this Agreement is terminated, each party will return to the
disclosing party or destroy all information obtained by such party from any
other party in connection with the transactions contemplated by this Agreement.
(b) Except as provided in Section 6.3(c), no party shall publish
any press release or make any other public announcement concerning this
Agreement or the transactions
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<PAGE>
contemplated hereby without the prior written consent of each other party, which
shall not be withheld unreasonably.
(c) Nothing contained in this Agreement shall prevent any party,
after notification to each other party, from making any filings with
governmental authorities, including in connection with any securities filings
with any governmental authorities or exchanges that, in its judgment, may be
required or advisable in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
6.4. Cooperation.
-----------
PCC, LCI, and Travel shall cooperate fully with each other and their
respective counsel and accountants in connection with any actions required to be
taken as part of their respective obligations under this Agreement, and PCC,
LCI, and Travel shall use commercially reasonable efforts to take or cause to be
taken all actions necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including making such filings with governmental and regulatory
authorities, providing information, using commercially reasonable efforts to
obtain all necessary or appropriate waivers, consents, and approvals, and
executing such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use
commercially reasonable efforts to consummate the transaction contemplated
hereby and to fulfill their obligations under this Agreement. Notwithstanding
the foregoing, and except as otherwise expressly provided in this Agreement, PCC
shall have no obligation to expend funds to obtain any of the Consents or to
agree to any adverse change in any License or Assumed Contract in order to
obtain a Consent required with respect thereto, and neither LCI nor Travel shall
have any obligation to expend funds to obtain any of the Consents or any
estoppel certificates except as provided in Section 5.8. If PCC elects to
designate a Designated Affiliate, PCC agrees to deliver to GE American
Communications, Inc., on or before the Closing, a guaranty (similar in form to
that previously delivered to GE American Communications, Inc. by LCI) of the
performance by the Designated Affiliate of those obligations under the
Transponder Agreement that are required to be assumed by the Designated
Affiliate at the Closing.
6.5. Access to Books and Records.
---------------------------
To the extent requested for any reasonable business purposes hereunder,
and subject to the following two sentences of this Section 6.5, (a) LCI and
Travel shall provide PCC and the Designated Affiliate, if applicable, access and
the right to copy for a period of five years from the Closing Date any books and
records of Travel (or true and complete copies thereof) relating to the Channel
or the Assets but not included in the Assets and (b) PCC and the Designated
Affiliate, if applicable, shall provide LCI and Travel access and the right to
copy for a period of five years after the Closing Date any books and records (or
true and complete copies thereof) relating to the Channel or the Assets with
respect to periods prior to the Closing that are included in the Assets. Any
party that is required to grant any other party access and the right
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to copy any books and records (or true and complete copies thereof) pursuant to
this Section 6.5 may, before doing so, redact or remove therefrom any
information contained therein that does not relate to the Channel or the Assets.
Except as and to the extent required by law or as provided in Section 6.3(c),
each party will keep confidential any information to which it is given access
pursuant to this Section 6.5.
6.6. Noncompetition.
--------------
(a) LCI covenants and agrees that for a period of two years after
the Closing Date, neither LCI nor any Affiliate of LCI will, directly or
indirectly, own, manage, operate, control, or engage or participate in the
ownership, management, operation, or control of, or be connected as a
shareholder, director, officer, partner, joint venturer, or otherwise with, any
business or organization which engages as one of its principal activities in the
business (the "Restricted Business") of producing or distributing (by any means,
other than through the sale of videotapes, videodiscs, or similar media to
consumers), to persons within the United States, video programming relating to
travel or tourism or otherwise similar in subject matter to that currently
produced or distributed by the Channel. Notwithstanding the foregoing, and
without any implication that any activity listed below would be prohibited by
this Section 6.6(a) or that any activity not listed below is prohibited by this
Section 6.6(a), this Section 6.6(a) shall not prohibit LCI or any Affiliate of
LCI from:
(i) acquiring or owning securities of any Person that engages
in the Restricted Business or owns, directly or indirectly, any interest in any
business or organization which engages as one of its principal activities in the
Restricted Business, if such securities constitute less than twenty percent of
the voting stock of such Person and do not represent control over such Person;
(ii) continuing to hold securities in any Person that
commences engaging in the Restricted Business after the acquisition by LCI or an
Affiliate of LCI of such securities if neither LCI nor its Affiliate has control
over the conduct by such entity of the Restricted Business;
(iii) owning, managing, operating, and controlling The
Weather Channel (including the
Internet website of The Weather Channel); or
(iv) owning, managing, operating, and controlling television
broadcast stations.
(b) The parties acknowledge and agree that the time, scope,
geographic area, and other provisions of Section 6.6(a) have been specifically
negotiated by sophisticated parties and agree that such time, scope, geographic
area, and other provisions are reasonable under the circumstances. If, despite
this express agreement of the parties, a court should hold any portion of
Section 6.6(a) to be unenforceable for any reason, the maximum restrictions of
time, scope,
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and geographic area that the court determines are reasonable under the
circumstances will be substituted for the restrictions held to be unenforceable.
6.7. Accounts Receivable.
-------------------
At the Closing, Travel will designate PCC or the Designated Affiliate,
if applicable, as its agent solely for the purposes of collecting all accounts
receivable from the sale by the Channel of advertising time and other goods and
services sold prior to the Closing Date ("Accounts Receivable"). If PCC or the
Designated Affiliate receives monies from an account debtor of PCC or the
Designated Affiliate that is also an account debtor of Travel with respect to
any the Accounts Receivable, PCC or the Designated Affiliate shall credit the
sums received to the oldest account due unless the account debtor directs
otherwise (and neither PCC nor any Affiliate of PCC will encourage any account
debtor to so direct). On or before the fifth business day after the end of each
full calendar month after the Closing, PCC or the Designated Affiliate shall
remit to Travel all amounts collected by PCC or the Designated Affiliate before
the end of such month with respect to the Accounts Receivable.
6.8. Environmental Audit.
-------------------
PCC may, at its option and expense, retain an environmental consultant
to be selected by PCC to perform Phase I environmental surveys of the Real
Property and associated Assets. Prior to performing any Phase I environmental
surveys, PCC shall obtain the consent of the landlord of the subject Real
Property and shall comply with any conditions placed on such consent by the
landlord, and Travel shall cooperate with PCC in obtaining any such consent. If
any survey discloses any material environmental hazard or material possibility
of future liability for environmental damages or clean-up costs, PCC shall so
notify Travel.
6.9. Bulk Sales Law.
--------------
PCC hereby waives compliance by Travel with the provisions of any
applicable bulk sales laws.
6.10. No Inconsistent Action.
----------------------
No party to this Agreement shall take any action that is inconsistent
with its obligations under this Agreement or that could reasonably be expected
to hinder or delay the consummation of the transactions contemplated by this
Agreement.
6.11. Rule 144 Information.
--------------------
Until such time as all shares of Class A Common Stock issued to Travel
at the Closing have become freely transferable or are no longer held by LCI or
an Affiliate thereof:
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(a) prior to the second anniversary of the Closing Date, PCC (or
any successor thereto) shall comply with the public information requirements set
forth in Rule 144(c) under the Securities Act of 1933, as amended from time to
time, or any successor rule or regulation ("Rule 144"); and
(b) at any time and for so long as LCI would be considered an
"affiliate" under Rule 144, PCC (or any successor thereto) shall comply with the
public information requirements set forth in Rule 144 with respect to sales by
affiliates.
6.12. Services Agreement.
------------------
At the Closing, LCI shall cause The Weather Channel, Inc. to enter into
with PCC or the Designated Affiliate, if applicable, and PCC or the Designated
Affiliate, if applicable, shall enter into with The Weather Channel, Inc., a
Services Agreement substantially in the form of Schedule 6.12 (the "Services
Agreement").
6.13. Change of Name of Travel.
------------------------
LCI and Travel agree that Travel shall change its corporate name within
thirty days after the Closing to eliminate the words "Travel Channel."
6.14. Registration Rights Agreement.
-----------------------------
At the Closing, PCC and Travel will enter into a Registration Rights
Agreement incorporating the provisions of Schedule 6.14 (the "Registration
Rights Agreement").
SECTION 7. CONDITIONS TO OBLIGATIONS OF
PARTIES AT CLOSING
7.1. Conditions to Obligations of PCC.
--------------------------------
All obligations of PCC at the Closing are subject at PCC's option to
the fulfillment prior to or at the Closing Date of each of the following
conditions:
(a) HSR Act. The waiting period under the HSR Act shall have been
terminated or shall have expired without action by the DOJ or the FTC to prevent
the Closing.
(b) Injunction, etc. There shall be no effective injunction, writ,
or preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that transactions
contemplated by this Agreement may not be consummated as herein provided, no
proceeding or lawsuit shall have been commenced and be continuing by any federal
or state governmental or regulatory agency for the purpose of obtaining any such
injunction, writ, or preliminary restraining order, and no written notice
directed to either LCI, Travel, or PCC shall have been received from any such
federal or state
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agency indicating an intent to restrain, prevent, materially delay, or
restructure the transactions contemplated by this Agreement; provided, however,
that (i) PCC shall have used all commercially reasonable efforts to prevent the
entry of any such injunction or other order that may be entered and (ii) PCC
shall be in compliance with Section 6.1.
(c) Transponder Agreement. The Transponder Agreement shall be in
full force and effect and GE American Communications, Inc. shall have granted
its Consent to the assignment of the Transponder Agreement to PCC or the
Designated Affiliate, if applicable, pursuant to this Agreement and shall have
executed and delivered an estoppel certificate with respect to the Transponder
Agreement in form and substance reasonably satisfactory to PCC. Notwithstanding
the foregoing, the Consent of GE American Communications, Inc. to the assignment
of the Transponder Agreement to the Designated Affiliate, rather than to PCC,
shall not be a condition to PCC's obligations at the Closing unless PCC notifies
LCI of its designation of the Designated Affiliate on or before June 23, 1997.
(d) Deliveries. LCI and Travel shall have made or stand willing to
make all the deliveries to PCC or the Designated Affiliate, if applicable, set
forth in Section 8.2.
7.2. Conditions to Obligations of LCI and Travel.
-------------------------------------------
All obligations of LCI and Travel at the Closing are subject at
Travel's option to the fulfillment prior to or at the Closing Date of each of
the following conditions:
(a) HSR Act. The waiting period under the HSR Act shall have been
terminated or shall have expired without action by the DOJ or the FTC to prevent
the Closing.
(b) Injunction, etc. There shall be no effective injunction, writ,
or preliminary restraining order or any order of any nature issued by a court or
governmental agency of competent jurisdiction to the effect that transactions
contemplated by this Agreement may not be consummated as herein provided, no
proceeding or lawsuit shall have been commenced and be continuing by any federal
or state governmental or regulatory agency for the purpose of obtaining any such
injunction, writ, or preliminary restraining order, and no written notice
directed to either LCI, Travel, or PCC shall have been received from any such
federal or state agency indicating an intent to restrain, prevent, materially
delay, or restructure the transactions contemplated by this Agreement; provided,
however, that (i) LCI and Travel shall have used all commercially reasonable
efforts to prevent the entry of any such injunction or other order that may be
entered and (ii) LCI shall be in compliance with Section 6.1.
(c) Deliveries. PCC and the Designated Affiliate, if applicable,
shall have made or stand willing to make all the deliveries set forth in Section
8.3.
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SECTION 8. CLOSING AND CLOSING DELIVERIES
8.1. Closing.
-------
(a) Closing Date. Except as provided in the following sentence or
as otherwise agreed to by PCC and Travel, the Closing shall take place at 10:00
a.m. on the first Friday that is at least five Business Days after the day on
which the waiting period under the HSR Act expires or is terminated.
(b) Closing Place. The Closing shall be held at the offices of
Dow, Lohnes & Albertson, PLLC, 1200 New Hampshire Avenue, N.W., Suite 800,
Washington, D.C. 20036, or any other place that is agreed upon by PCC and
Travel.
8.2. Deliveries by LCI and Travel.
----------------------------
Prior to or on the Closing Date, LCI and Travel shall deliver to PCC or
the Designated Affiliate, if applicable, the following, in form and substance
reasonably satisfactory to PCC and its counsel:
(a) Transfer Documents. Duly executed instruments of conveyance
and transfer, including bills of sale, motor vehicle titles, assignments, and
other transfer documents that are sufficient to vest good and marketable title
to the Assets in the name of PCC or the Designated Affiliate, if applicable,
free and clear of all liens, security interests, mortgages, pledges,
encumbrances, or restrictions (other than any liens, security interests,
mortgages, pledges, encumbrances, or restrictions resulting from the failure to
obtain any Consent), except for liens for current taxes not yet due and payable
and landlord's liens for property taxes not delinquent.
(b) Payment with Respect to Prorations. Any payment required to be
made pursuant to Section 2.4(d)(i).
(c) Consents. Copies of all instruments evidencing receipt of any
Consents and estoppel certificates that have been obtained prior to the Closing
(but this delivery requirement does not create any obligation on the part of
Travel or LCI to obtain any Consent or estoppel certificate or make the
obtaining of any Consent or estoppel certificate a condition to any party's
obligations at Closing, other than as expressly provided elsewhere in this
Agreement).
(d) Licenses, Contracts, Business Records, Etc. Copies of all
Licenses, Assumed Contracts, blueprints, schematics, working drawings, plans,
projections, engineering records, and all files and records included in the
Assets.
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(e) Agreement Regarding Ownership Restrictions. The Agreement
Regarding Ownership Restrictions, substantially in the form of Schedule 6.2,
duly executed by LCI.
(f) Services Agreement. The Services Agreement, substantially in
the form of Schedule 6.12, duly executed by The Weather Channel, Inc.
(g) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by Travel.
(h) Opinion of Counsel. An opinion of counsel to LCI and Travel
dated as of the Closing Date, substantially in the form of Schedule 8.2(h)
hereto.
(i) Other Documents. Such additional documents, information, and
materials as PCC shall reasonably request.
8.3. Deliveries by PCC.
-----------------
Prior to or on the Closing Date, PCC shall deliver to LCI and Travel
the following, in form and substance reasonably satisfactory to LCI and Travel
and their counsel:
(a) Shares. Certificates evidencing the shares of Class A Common
Stock to be issued to Travel pursuant to Section 2.3(a)(i).
(b) Cash Consideration. The payment provided in Section
2.3(a)(ii).
(c) Payment with Respect to Prorations. Any payment required
to be made pursuant to Section 2.4(d)(ii).
(d) Assumption Agreements. Appropriate assumption agreements
pursuant to which PCC or the Designated Affiliate, if applicable, shall assume
and undertake to perform Travel's obligations under the Licenses and Assumed
Contracts to the extent provided in Section 2.5.
(e) Agreement Regarding Ownership Restrictions. The Agreement
Regarding Ownership Restrictions, substantially in the form of Schedule 6.2,
duly executed by PCC.
(f) Services Agreement. The Services Agreement, substantially in
the form of Schedule 6.12, duly executed by PCC or the Designated Affiliate, if
applicable.
(g) Registration Rights Agreement. The Registration Rights
Agreement, duly executed by PCC.
(h) Opinion of Counsel. An opinion of PCC's counsel dated as of
the Closing Date, substantially in the form of Schedule 8.3(h) hereto.
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(i) Other Documents. Such additional documents, information, and
materials as Travel shall reasonably request.
SECTION 9. TERMINATION
9.1. Termination by LCI.
------------------
This Agreement may be terminated by LCI prior to the Closing and the
acquisition of the Assets abandoned, if neither LCI nor Travel is then in
material default, upon written notice to PCC, upon the occurrence of any of the
following:
(a) Conditions. If on the date on which the Closing is required to
take place pursuant to Section 8.1(a) any of the conditions precedent to the
obligations of LCI and Travel set forth in this Agreement has not been satisfied
or waived in writing by LCI and Travel.
(b) Judgments. If there shall be in effect on the date on which
the Closing is required to take place pursuant to Section 8.1(a) any judgment,
decree, or order that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
before December 13, 1997.
9.2. Termination by PCC.
------------------
This Agreement may be terminated by PCC and the acquisition of the
Assets abandoned, if PCC is not then in material default, upon written notice to
LCI, upon the occurrence of any of the following:
(a) Conditions. If on the date on which the Closing is required to
take place pursuant to Section 8.1(a) any of the conditions precedent to the
obligations of PCC set forth in this Agreement has not been satisfied or waived
in writing by PCC.
(b) Judgments. If there shall be in effect on the date on which
the Closing is required to take place pursuant to Section 8.1(a) any judgment,
decree, or order that would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred on or
before December 13, 1997.
9.3. Rights on Termination.
---------------------
Upon the termination of this Agreement, each party shall have all
rights and remedies available to it at law or equity.
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9.4. Specific Performance.
--------------------
The parties recognize that if any party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the other parties for their injury.
Each party shall therefore be entitled, in addition to any other remedies that
may be available, including money damages, to obtain specific performance of the
terms of this Agreement. If any action is brought by any party to enforce this
Agreement, the other parties shall waive the defense that there is an adequate
remedy at law.
9.5. Attorneys' Fees.
---------------
In the event of a default by any party that results in a lawsuit or
other proceeding for any remedy available under this Agreement, the prevailing
party shall be entitled to reimbursement from the other party of its reasonable
legal fees and expenses (whether incurred in arbitration, at trial, or on
appeal).
SECTION 10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1. Representations and Warranties.
------------------------------
Without prejudice to representations and warranties in other agreements
delivered hereunder, all representations and warranties contained in this
Agreement shall be deemed continuing representations and warranties and shall
survive the Closing Date for a period of twelve months. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation, warranty, or covenant contained in this Agreement. No notice
or information delivered by any party shall affect any other party's right to
rely on any representation, warranty, or covenant made by such party or relieve
such party of any obligations under this Agreement as the result of a breach of
any of its representations and warranties.
10.2. Indemnification by LCI.
----------------------
After the Closing, and regardless of any investigation made at any time
by or on behalf of PCC or any information PCC may have, LCI hereby agrees to
indemnify and hold harmless PCC and the Designated Affiliate, if applicable,
from and against, and to reimburse PCC and the Designated Affiliate, if
applicable, for, any and all losses, liabilities, and damages (including
punitive and exemplary damages and fines or penalties and any interest thereon),
costs and expenses (including reasonable fees and disbursements of counsel and
expenses of investigation and defense), claims, or other obligations of any
nature (collectively, "Losses") that result from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of LCI or
Travel contained in this
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Agreement or in any certificate, document, or instrument delivered to PCC or the
Designated Affiliate under this Agreement;
(b) Any failure to comply with applicable bulk sales laws;
(c) All obligations of LCI or Travel not required to be assumed by
PCC or the Designated Affiliate, if applicable, pursuant to this Agreement,
including any liabilities arising at any time under any mortgage, indenture,
lease, contract, or other agreement that is not included in the Assumed
Contracts;
(d) The operation or ownership of the Channel and the Assets prior
to the Closing, including any liabilities arising under the Licenses or the
Assumed Contracts that relate to events occurring prior the Closing Date except
to the extent that PCC received a credit under Section 2.4(a) as a result of the
proration of such liabilities;
(e) Any payment obligations assumed by PCC or the Designated
Affiliate, if applicable, pursuant to this Agreement, under any Programming
Agreement in existence on the date of this Agreement, to the extent that the
total payment obligations assumed by PCC or the Designated Affiliate, if
applicable, under all such Programming Agreements, as in effect on the date of
this Agreement, exceed $1,923,175; and
(f) Any claim relating to or arising in connection with any
Pension Plan, Welfare Plan, or Benefit Arrangement established or maintained by
LCI, Travel, or any ERISA Affiliate, including any claim relating to any
severance pay program or any obligation to provide "continuation coverage"
(within the meaning of Sections 601 through 609 of ERISA or Section 4980B of the
Code) to any Employee as the result of any act or omission of LCI, Travel, or
any ERISA Affiliate, or arising as the result of any determination that PCC or
any Affiliate of PCC is a successor employer to such entity.
10.3. Indemnification by PCC.
----------------------
After the Closing, and regardless of any investigation made at any time
by or on behalf of LCI or Travel or any information that LCI or Travel may have,
PCC hereby agrees to indemnify and hold harmless LCI and Travel from and
against, and to reimburse LCI and Travel for, any and all Losses which result
from:
(a) Any inaccuracy in or breach of any representation and
warranty, or any breach or nonfulfillment of any covenant or agreement of PCC
contained in this Agreement or in any certificate, document, or instrument
delivered to LCI or Travel under this Agreement, or
(b) Any and all obligations required to be assumed by PCC or the
Designated Affiliate, if applicable, pursuant to this Agreement; and
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(c) The operation or ownership of the Channel and the Assets after
the Closing.
10.4. Procedure for Indemnification.
-----------------------------
The procedure for indemnification shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim. If
the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within ten Business
Days after written notice of such action, suit, or proceeding was given to
Claimant. The Claimant's failure to give such notice timely shall not relieve
the Indemnifying Party from any liability that it otherwise may have to the
Claimant except to the extent the Indemnifying Party is actually prejudiced by
such failure.
(b) With respect to claims solely between the parties, following
receipt of notice from the Claimant of a claim, the Indemnifying Party shall
have thirty days to make such investigation of the claim as the Indemnifying
Party deems necessary or desirable. For the purposes of such investigation, the
Claimant agrees to make available to the Indemnifying Party and its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnifying Party agree at or prior to the
expiration of the thirty-day period (or any mutually agreed upon extension
thereof) to the validity and amount of such claim, the Indemnifying Party shall
immediately pay to the Claimant the full amount of the claim. If the Claimant
and the Indemnifying Party do not agree within the thirty-day period (or any
mutually agreed upon extension thereof), the Claimant may seek appropriate
remedy at law or equity.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification under this Agreement, if the
Indemnifying Party notifies the Claimant in writing within ten Business Days of
its receipt of notice from the Claimant of the third-party claim that the
Indemnifying Party acknowledges its potential liability to the Claimant under
this Agreement, the Indemnifying Party shall have the right at its own expense,
to participate in or assume control of the defense of such claim (subject to
Section 10.4(d)), and the Claimant shall cooperate fully with the Indemnifying
Party, subject to reimbursement for actual out-of-pocket expenses incurred by
the Claimant as the result of a request by the Indemnifying Party. If the
Indemnifying Party elects to assume control of the defense of any third-party
claim, the Claimant shall have the right to participate in the defense of such
claim at its own expense (except that the Claimant shall have the right to
participate in the defense of such claim at the Indemnifying Party's expense if
(i) the Claimant has been advised by its counsel that use of the same counsel to
represent both the Indemnifying Party and the Claimant would present a conflict
of interest, which shall be deemed to include any case where there may be a
legal defense or claim available to the Claimant that is different from or
additional to those available to the Indemnifying Party,
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or (ii) the Indemnifying Party fails vigorously to defend or prosecute such
claim within a reasonable time). If the Indemnifying Party fails timely to
notify the Claimant in writing that the Indemnifying Party acknowledges its
potential liability to the Claimant under this Agreement or if the Indemnifying
Party does not elect to assume control or otherwise participate in the defense
of any third-party claim, the Indemnifying Party shall be bound by the results
obtained by the Claimant with respect to such claim.
(d) The Indemnifying Party may not control the defense of any
claim, without the written consent of the Claimant, if (i) the Claimant has been
advised by its counsel that use of the same counsel to represent both the
Indemnifying Party and the Claimant would present a conflict of interest, or
(ii) the claim involves any material risk of the sale, forfeiture, or loss of,
or the creation of any lien (other than a judgment lien) on, any material
property of the Claimant or could entail a risk of criminal liability to the
Claimant.
10.5. Certain Limitations.
-------------------
Notwithstanding anything in this Agreement to the contrary,
(a) no party shall indemnify or otherwise be liable to any other
party with respect to any claim for any breach of a representation or warranty,
or for the breach of any covenant contained in Section 5 of this Agreement,
unless notice of the claim is given within twelve months after the Closing Date;
(b) LCI shall not be required to indemnify or otherwise be liable
to PCC or the Designated Affiliate, if applicable, for any breach of a
representation or warranty, or for the breach of any covenant contained in
Section 5 of this Agreement, unless the Losses of PCC and the Designated
Affiliate, if applicable, from all such breaches exceed in the aggregate One
Hundred Thousand Dollars, in which event LCI shall be required to indemnify PCC
and the Designated Affiliate, if applicable, for all such Losses (subject to the
other limitations in this Agreement);
(c) PCC shall not be required to indemnify or otherwise be liable
to LCI or Travel for any breach of a representation or warranty unless the
Losses of LCI and Travel from all such breaches exceed in the aggregate One
Hundred Thousand Dollars, in which event PCC shall be required to indemnify LCI
and Travel for all such Losses (subject to the other limitations in this
Agreement);
(d) LCI shall not be required to indemnify or otherwise be liable
to PCC or the Designated Affiliate, if applicable, for any breach of a
representation or warranty, or for the breach of any covenant contained in
Section 5 of this Agreement, to the extent that the Losses of PCC and the
Designated Affiliate, if applicable, from all such breaches exceed in the
aggregate Twenty-Five Million Dollars;
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(e) PCC shall not be required to indemnify or otherwise be liable
to LCI or Travel for any breach of a representation or warranty to the extent
that the Losses of LCI and Travel from all such breaches exceed in the aggregate
Twenty-Five Million Dollars;
(f) the amount of Losses for which a Claimant may be entitled to
indemnification under this Agreement (but not the amount of Losses suffered by a
Claimant for purposes of the foregoing provisions of this Section 10.5) shall be
determined on an after-tax basis, after giving effect to any tax benefit arising
from the incurring of any Loss and any tax detriment arising from the
indemnification thereof;
(g) indemnification of Losses under this Agreement shall be net of
any insurance proceeds actually paid to the Claimant with respect to the event
giving rise to such Loss, but no Claimant shall have any obligation under this
Agreement to make any claim under any insurance policy that may be applicable to
such event.
SECTION 11. MISCELLANEOUS
11.1. Fees and Expenses.
-----------------
Except as otherwise provided in this Agreement, each party shall pay
its own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses of
counsel, accountants, agents, and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar Person retained by or on behalf of such party (including, for LCI,
Donaldson, Lufkin & Jenrette). Travel and PCC shall each pay one-half of any
filing fees, transfer taxes, recordation taxes, sales taxes, document stamps, or
other charges levied by any governmental entity in connection with the
transactions contemplated by this Agreement, including any the fee imposed by
the FTC in connection with filings made pursuant to the HSR Act.
11.2. Notices.
-------
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be (a) in writing, (b) delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, or sent by facsimile transmission, (c)
deemed to have been given on the date of personal delivery or the date set forth
in the records of the delivery service or on the return receipt or by facsimile
confirmation, and (d) addressed as follows:
If to PCC: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Telecopier: 561-659-4252
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With a copy to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Telecopier: 202-776-2222
If to LCI or Travel: c/o Landmark Communications, Inc.
150 West Brambleton Avenue
Norfolk, Virginia 23510-2075
Attention: Alfred F. Ritter Jr., Executive Vice
President, and Louis F. Ryan , Executive Vice President
and General Counsel
Telecopier: 757-664-2164
With a copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Attention: William J. Grant, Jr.
Telecopier: 212-821-8111
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 11.2.
11.3. Benefit and Binding Effect.
--------------------------
No party may assign this Agreement without the prior written consent of
each other party hereto, except that, any party may assign any or all of its
rights under this Agreement to any Affiliate (which assignment shall not relieve
the assigning party of any obligations or liabilities under this Agreement).
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and permitted assigns.
11.4. Further Assurances.
------------------
The parties shall take any actions and execute any other documents that
may be necessary or desirable to the implementation and consummation of this
Agreement, including, in the case of Travel, any additional deeds, bills of
sale, or other transfer documents that, in the reasonable opinion of PCC, may be
necessary to ensure, complete, and evidence the full and effective transfer of
the Assets to PCC or the Designated Affiliate, if applicable, pursuant to this
Agreement.
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11.5. GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF).
11.6. Headings.
--------
The headings in this Agreement are included for ease of reference only
and shall not control or affect the meaning or construction of the provisions of
this Agreement.
11.7. Entire Agreement.
----------------
This Agreement, the schedules, hereto, and all documents, certificates,
and other documents to be delivered by the parties pursuant hereto, collectively
represent the entire understanding and agreement among PCC, LCI, and Travel with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior negotiations among the parties and cannot be amended, supplemented, or
changed except by an agreement in writing that makes specific reference to this
Agreement and that is signed by each party against which enforcement of any such
amendment, supplement, or modification is sought. This document shall not
constitute or otherwise evidence an agreement among the parties hereto relating
to the subject matter hereof unless and until it has been executed and delivered
by the parties hereto.
11.8. Waiver of Compliance; Consents.
------------------------------
Except as otherwise provided in this Agreement, any failure of any of
the parties to comply with any obligation, representation, warranty, covenant,
agreement, or condition herein may be waived by the party entitled to the
benefits thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, representation, warranty, covenant, agreement, or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner consistent
with the requirements for a waiver of compliance as set forth in this Section
11.8.
11.9. Counterparts.
------------
This Agreement may be signed in counterparts with the same effect as if
the signature on each counterpart were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties as
of the date first written above.
LANDMARK COMMUNICATIONS, INC.
By: /s/ Alfred F. Ritter
-----------------------------
Name: Alfred F. Ritter
-----------------------------
Title: Executive Vice President
-----------------------------
THE TRAVEL CHANNEL, INC.
By: /s/ Alfred F. Ritter
-----------------------------
Name: Alfred F. Ritter
-----------------------------
Title: President
-----------------------------
PAXSON COMMUNICATIONS
CORPORATION
By: /s/ Lowell W. Paxson
-----------------------------
Name: Lowell W. Paxson
-----------------------------
Title: President
-----------------------------
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<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of July 11, 1997, by and
between The Travel Channel, Inc., a Virginia corporation, and Paxson
Communications Corporation, a Delaware corporation.
PRELIMINARY STATEMENT
---------------------
The Travel Channel, Inc. ("Travel") and Paxson Communications Corporation
("PCC"), together with Landmark Communications, Inc. ("LCI"), have entered into
an Asset Acquisition Agreement, dated as of June 13, 1997 (the "Asset
Acquisition Agreement"), pursuant to which Travel Channel Acquisition
Corporation ("TCAC") has on the date of this Agreement acquired certain assets
owned or rights held by Travel in consideration for, among other things, the
issuance by PCC to Travel of certain shares of Class A Common Stock. The parties
desire to enter into this Agreement to provide Travel with certain rights with
respect to the registration of such shares. The delivery of this Agreement by
PCC and Travel was a condition to the obligations of the parties at the closing
under the Asset Acquisition Agreement.
AGREEMENTS
----------
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, PCC and Travel, intending to be bound
legally, agree as follows:
Section 1. Definitions. As used in this Schedule 6.14, the following terms
have the meanings specified below and include the plural as well as the
singular:
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing; provided, however, that, for purposes of Section 5, any "Person" or
"group" (each as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act)
that is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act)
of more than 10% of the capital stock having ordinary voting power in the
election of directors of such Person (if a corporation) or more than 10% of the
partnership or other ownership interests of such Person (if other than a
corporation) will be deemed to control such Person.
"Class A Common Stock" means the Company's Class A Common Stock, par value
$0.001 per share.
<PAGE>
"Class B Common Stock" means the Company's Class B Common Stock, par value
$0.001 per share.
"Class C Common Stock" means the Company's Class C Common Stock, par value
$0.001 per share.
"Common Stock" means Class A Common Stock, Class B Common Stock, Class C
Common Stock and all securities of any issuer issued, in exchange for, or as a
dividend or other distribution on, outstanding shares of the Common Stock.
"Company" means Paxson Communications Corporation, a Delaware corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof and any court, panel, judge, board, bureau,
commission, agency or other entity, body or other Person exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holder" means any holder of Registrable Shares.
"NASD" means the National Association of Securities Dealers, Inc.
"Other Senior Registrable Shares" means (i) all Common Stock and all Common
Stock issuable with respect to any Rights designated from time to time prior to
the Closing Date (as defined in the Asset Acquisition Agreement to which this
Schedule 6.14 is attached) by the Company as "Other Senior Registrable Shares,"
(ii) all Common Stock issued upon conversion of any Common Stock referred to in
clause (i) above, (iii) all Common Stock issued with respect to any securities
referred to in clause (i) or (ii) above by way of a stock dividend or stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation, reorganization or otherwise, and (iv) all other Common Stock held
from time to time by any holder of Common Stock described in clause (i), (ii) or
(iii) above.
"Parity Holder" means any party designated from time to time by the Company
as a "Parity Holder" who shall have registration rights with respect to Parity
Registrable Shares having priority on Piggy Back Registration generally on
parity in all material respects with the priority rights of Travel under Section
2(e) hereof.
"Parity Registrable Shares" means all Common Stock held from time to time by
a Parity Holder that is designated from time to time by the Company as "Parity
Registrable Shares."
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<PAGE>
"Person" means an individual or corporation, partnership, trust,
unincorporated organization, association or other entity and includes any
Governmental Authority.
"Registrable Shares" means the Senior Registrable Shares, the Travel
Registrable Shares and shares of Common Stock held by a Parity Holder. As to any
particular Registrable Shares, such securities will cease to be Registrable
Shares when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 or Rule 144A under the
Securities Act (or any similar rule then in force) or repurchased by the
Company. For purposes of this Schedule 6.14, a Person will be deemed to be a
Holder of Registrable Shares, and the Registrable Shares will be deemed to be in
existence, whenever such Person has the right to acquire directly or indirectly
such Registrable Shares upon conversion or exercise of other securities,
disregarding any restrictions or limitations upon such conversion or exercise,
whether or not such acquisition has actually been effected (it being understood
that the Company will not be required to include in any registration hereunder
any securities other than Common Stock).
"Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Schedule 6.14, including, without
limitation, all SEC and stock exchange or NASD registration and filing fees and
expenses, fees and expenses of compliance with securities or blue sky laws
(including, without limitation, reasonable fees and disbursements of counsel for
the underwriters in connection with blue sky qualifications of the Registrable
Shares), printing expenses, messenger and delivery expenses, the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange or national market system on which
similar securities issued by the Company are then listed, fees and disbursements
of counsel for the Company and all independent certified public accountants
(including the expenses of any annual audit, special audit, if necessary, and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, the fees and expenses of any special experts
retained by the Company in connection with such registration, and fees and
expenses of other persons retained by the Company; provided, however, that the
Company will not be responsible for any underwriting discounts or commissions,
fees and expenses of counsel to Travel, or transfer taxes, if any, attributable
to the sale of Travel Registrable Shares.
"Rights" shall mean, with respect to any Person, any subscription, option,
warrant, right, convertible security or other agreement, instrument or
commitment of any character obligating (contingently or absolutely) such Person
to issue or sell any capital stock or other securities.
"SEC" means the Securities and Exchange Commission or any successor thereof.
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<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Selling Holder" means a Holder of the Registrable Shares covered by a
registration statement.
"Senior Registrable Shares" means, collectively, all Common Stock issued
directly or indirectly to BT Investment Partners, Inc., First Union Corporation
of Virginia, National Union Fire Insurance Company of Pittsburgh, PA, Paribas
North America, Inc., Paxson Enterprises, Inc., Sandler Mezzanine Partners, L.P.,
Sandler Mezzanine Foreign Partners, L.P., Sandler Mezzanine T-E Partners, L.P.,
Second Crystal Diamond, L.P., Union Venture Corporation, or any such parties'
successors and assigns, all Common Stock issued with respect to any such
securities by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, reorganization
or otherwise, and all Other Senior Registrable Shares.
"Travel" means The Travel Channel, Inc., a Virginia corporation, or any
Affiliate of The Travel Channel, Inc. that acquires the Travel Registrable
Shares.
"Travel Registrable Shares" means all Common Stock issued to Travel pursuant
to the terms of the Asset Acquisition Agreement to which this Schedule 6.14 is
attached and all Common Stock issued with respect to such Common Stock by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, reorganization or otherwise.
Section 2. Piggyback Registration Rights.
(a) Right to Company Piggyback. If at any time the Company proposes to file
on its own behalf or, except as provided below, on behalf of any other Person, a
registration statement under the Securities Act with respect to any Class A
Common Stock (a "Registration Statement"), other than a registration statement
on Form S-8, Form S-4 or any successor form, and pursuant to which the Company
or such other Person proposes to sell Class A Common Stock (a "Proposed
Registration"),and the registration form to be used may be used for the
registration of Registrable Shares (a "Piggyback Registration"), then the
Company will give written notice to Travel if it holds Travel Registrable Shares
as soon as practicable (but in no event less than 10 days before the anticipated
initial filing date with the SEC). Such notice will: (i) subject to the
provisions of this Section 2, offer Travel the opportunity to include in such
filing such number of Travel Registrable Shares as Travel may request; and (ii)
specify the proposed distribution arrangements. The Company shall not have any
obligation to offer Travel the opportunity to include any Travel Registrable
Shares in any such filing that does not involve the sale of Class A Common Stock
by the Company (a "Secondary Registration") to the extent that doing so would be
inconsistent with any contractual obligations of the Company as of the Closing
Date to the Person on whose behalf such filing was made.
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<PAGE>
(b) Requests to Piggyback. If Travel holds Travel Registrable Shares and
desires to have any such Travel Registrable Shares registered under this Section
2, it will advise the Company in writing (a "Piggyback Registration Request")
within five days after the date the Company sends the notice pursuant to Section
2(a) hereof (the "Piggyback Notice"). Such notice will set forth the amount of
Travel Registrable Shares that Travel desires to have registered. Travel will be
permitted to withdraw all or any part of its Registrable Shares from a Piggyback
Registration at any time prior to the effective date of the related registration
statement upon giving five days (or such other period specified by the Company
if the Proposed Registration is for an underwritten public offering) prior
written notice of such withdrawal to the Company.
(c) Distribution Methods. Subject to Sections 2(d) and 2(g) below, if Travel
delivers a Piggyback Registration Request in accordance with Section 2(b)
hereof, the Travel Registrable Shares will only be distributed in an
underwritten public offering if the Company (or, in the case of a Secondary
Offering, the Person on whose behalf the Piggyback Registration is being
effected) is also distributing shares in an underwritten public offering.
(d) Change in Distribution Method. If the Proposed Registration is for (or
includes) an underwritten public offering of securities to be sold for the
account of the Company or the Holder of any Senior Registrable Shares, and if
Travel has selected any other method of distribution for any of the Travel
Registrable Shares that it has requested be included in the Piggyback
Registration and if the managing underwriter of such proposed offering advises
the Company in writing that, in its opinion, the distribution of such Travel
Registrable Shares by such method will materially adversely affect the success
of such offering of all such securities to be sold for the account of the
Company or the Holder of any Senior Registrable Shares, then Travel shall not be
entitled to include in such Piggyback Registration such number of such
Registrable Shares that the managing underwriter determines will materially
adversely affect the success of such offering (the "Non-Participating Shares"),
unless Travel elects, by written notice to the Company within five days after
receipt of such written advice, to include, subject to Section 2(e) hereof, in
such underwritten public offering either all the Travel Registrable Shares
requested to be registered by it or the Non-Participating Shares. If the
Proposed Registration is not (and does not include) an underwritten public
offering and such Proposed Registration includes securities to be sold for the
account of the Company or the Holder of any Senior Registrable Shares, and if
Travel has selected any method of distribution of any Travel Registrable Shares
that is materially different from the method selected by the Company or the
Holder of any Senior Registrable Shares for the distribution of such securities
to be sold for its account, and if the Company shall determine that the
distribution of such Travel Registrable Shares by such method will materially
adversely affect the success of such sale of all such securities to be sold for
the account of the Company or the Holder of any Senior Registrable Shares, then
Travel, in order to have any Travel Registrable Shares registered, must select,
by written notice to the Company within five days after such notice is sent by
the Company, another method of distribution that in the reasonable judgment of
the Company will not have such effect.
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<PAGE>
(e) Priority on Piggyback Registrations. If the managing underwriter advises
the Company that in its opinion (or, in the case of a Proposed Registration that
is not for (and does not include) an underwritten offering of securities to be
distributed for the account of the Company or the Holder of any Senior
Registrable Shares, the Company determines) the amount or kind of securities
proposed to be included in such offering (including, but not limited to,
Registrable Shares to be included in accordance with Sections 2(c) and 2(d)
above) will materially adversely affect the success of the offering of all
securities proposed to be distributed for the account of the Company or the
Holder of any Senior Registrable Shares, then the Company will include in such
offering the amount and kind of securities, if any, that, in the opinion of such
managing underwriter or the reasonable judgment of the Company, as the case may
be, can be sold as follows:
(1) first, the securities the Company propose(s) to
sell for its own account and any Senior Registrable Shares allocated among such
parties as specified by the Company;
(2) second, the Registrable Shares requested to be included in
such offering by Travel or Parity Holders who have delivered Piggyback
Registration Requests, distributed among such Holders according to their
respective Allocation Percentage of Available Shares (as described below); and
(3) third, the securities held by Persons other than the
Holders of Senior Registrable Shares, Travel and Parity Holders requested to be
included in such offering.
To the extent that the Company has been advised or has determined (as the case
may be) that the number of Travel Registrable Shares and other securities
requested to be included in such offering exceeds the number that can be sold in
such offering without having a materially adverse effect on the success of such
offering, the Company will include in such registration, prior to the inclusion
of any securities that are not Registrable Shares, the number of Registrable
Shares requested to be included that, in the opinion of the Company, can be sold
in such offering without having such a materially adverse effect (the "Available
Shares"), allocated first among the Company and the Holders of Senior
Registrable Shares (as the Company and any such party may agree from time to
time), second among the Holders of Travel Registrable Shares and Parity Shares
who have delivered Piggy Back Registration Requests pro rata amongst such
Holders on the basis of the number of securities requested to be included in
such offering by such Holders.
(f) Selection of Underwriters. If any Piggyback Registration is for an
underwritten offering, the Company (or, in the case of a Secondary Offering, the
Person on whose behalf the Piggyback Registration is being effected) will
engage, on terms and conditions satisfactory to it, an investment banking firm
to serve as managing underwriter for such offering.
(g) Abandonment. The Company will have the right, upon prompt written notice
to Travel delivering a Piggyback Registration Request, to abandon a Piggyback
Registration.
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<PAGE>
Section 3. Expenses. The Company (or Persons other than Travel) will pay all
Registration Expenses in connection with each registration pursuant to Section 2
hereof, whether or not such registration becomes effective under the Securities
Act; provided, however, that Travel will pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale of Travel
Registrable Shares pursuant to any such registration; provided, further, that
Travel will pay its pro rata share of the incremental SEC registration filing
fees attributable to any such registration pursuant to Section 2 hereof and will
pay all fees and disbursements of its counsel incurred in connection therewith.
Section 4. Registration Procedures.
(a) With respect to any Piggyback Registration, the Company, subject to
section 2 above will use reasonable efforts to effect the registration of all
Travel Registrable Shares that Travel has requested to be included therein in
accordance, subject to section 2, with the intended method(s) of distribution
thereof reasonably promptly, and in connection with any such request, the
Company will do the following:
(1) prepare and file with the SEC a registration statement on any
form selected by it for which the Company then qualifies and that is available
for the registration of the Registrable Shares requested to be registered in
accordance with the intended method(s) of distribution thereof, include (subject
to Sections 2(d) and 2(e) above) in the registration on such form all
Registrable Shares requested to be included, and use reasonable efforts to cause
such registration statement to become effective;
(2) prepare and file with the SEC such amendments and post-effective
amendments and supplements to the registration statement or any prospectus as
may be necessary to keep the registration statement effective for a period that
will terminate on the earlier of sixty (60) days after the registration
statement is officially declared effective by the SEC or when all Travel
Registrable Shares covered by such registration statement have been disposed of;
(3) notify Travel, at any time when a prospectus relating to Travel
Registrable Shares covered by the registration statement is required to be
delivered under the Securities Act, of the occurrence of any event as a result
of which the preliminary prospectus or prospectus included in such registration
statement or any prospectus supplement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, and the Company will, as promptly as reasonably practicable
thereafter, prepare and file with the SEC and furnish to Travel a supplement or
amendment to such preliminary prospectus, prospectus or prospectus supplement so
that, as thereafter delivered to the prospective purchasers of the Travel
Registrable Shares being distributed by Travel, such preliminary prospectus,
prospectus or prospectus supplement will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make
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<PAGE>
the statements therein, in light of the circumstances under which they were
made, not misleading;
(4) if requested by Travel, the Company will cooperate and will
promptly incorporate in a prospectus supplement or post-effective amendment to
the registration statement at Travel's cost and expense such information
concerning Travel and its intended method of distribution as it reasonably
requests to be included therein (and which is not inappropriate, in the
reasonable judgment of the Company, after consultation with its outside legal
counsel), including, without limitation, with respect to any change in the
intended method of distribution, the amount or kind of Travel Registrable Shares
being offered by Travel, the offering price for such Travel Registrable Shares
or any other terms of the offering or distribution of the Registrable Shares and
make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment;
(5) on or prior to the date on which the registration statement is
declared effective, use reasonable efforts to register or qualify, and cooperate
with Travel and its counsel, in connection with the registration or
qualification of the Travel Registrable Shares covered by the registration
statement for offer and sale under the securities or "blue sky" laws of each
state and other U.S. jurisdiction as Travel reasonably (in light of the intended
plan of distribution) requests in writing, use reasonable efforts to keep each
such registration or qualification effective, including through new filings,
amendments or renewals, during the period the registration statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to permit the disposition in all such jurisdictions of
the Travel Registrable Shares; provided, however, the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to so qualify, (ii) take any action that would
subject it to general service of process in any jurisdiction where it would not
otherwise be subject to such general service of process or (iii) subject itself
to general taxation in any jurisdiction where it would not otherwise be subject;
(6) cooperate with Travel, its legal counsel and any other
interested party (including any interested broker-dealer) in making any
reasonably-required filings or submissions required to be made, and the
furnishing of all reasonably-required information in connection therewith, with
the NASD; and
(7) use reasonable efforts to cause all Travel Registrable Shares
included in such registration statement to be listed, by the date of the first
sale of Registrable Shares pursuant to such registration statement, on each
securities exchange or interdealer quotation system on which similar securities
issued by the Company issuing such Travel Registrable Shares then are listed or
proposed to be listed, if any.
(b) Travel, upon receipt of any notice from the Company of the occurrence
of any event of the kind described in clause 3 of Section 4(a) above, will
forthwith discontinue
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<PAGE>
disposition of the Travel Registrable Shares pursuant to the registration
statement covering such Travel Registrable Shares until Travel's receipt of the
copies of the supplemented or amended preliminary prospectus or prospectus
contemplated by such Section, and, if so directed by the Company, Travel will
deliver to the Company all copies, other than permanent file copies then in
Travel's possession, of the most recent preliminary prospectus or prospectus
covering such Travel Registrable Shares at the time of receipt of such notice.
Travel, upon receipt of any notice from the Company of the issuance of any stop
order or blue sky order will forthwith, in the case of any stop order,
discontinue disposition of the Travel Registrable Shares pursuant to the
registration statement covering such Travel Registrable Shares or, in the case
of any blue sky order, discontinue disposition of the Travel Registrable Shares
in the applicable jurisdiction, until advised in writing of the lifting or
withdrawal of such order. In the event the Company will give any notice pursuant
to this Section 4(b), the Company will extend the period during which such
registration statement will be maintained effective (including the period
referred to in Section 4(a)(2) above) by the number of days during the period
from and including the date of the giving of such notice to and including (i) in
the case of a notice pursuant to the first sentence of this Section, the date
when Travel will have received the copies of the supplemented or amended
preliminary prospectus or prospectus contemplated by clause (4) of Section 4(a)
above or (ii) in the case of a notice pursuant to the second sentence of this
Section, the lifting or withdrawal of such stop order or blue sky order, as the
case may be.
(c) Not less than five days before the expected filing date of a
registration statement pursuant to this Schedule 6.14, Travel shall provide the
Company all information relating to Travel and Travel's disposition of the
Travel Registrable Shares required to be included in such registration statement
and any other information reasonably requested from Travel from time to time
(the "Travel Information"). If the Company has not received, on or prior to the
fifth day before the expected filing date, the Travel Information from Travel,
the Company may file the registration statement without including Travel
Registrable Shares. The failure to include in any registration statement the
Travel Registrable Shares will not in and of itself result in any liability on
the part of the Company to Travel. Travel shall immediately notify the Company
in writing at any time when a prospectus relating to Travel Registrable Shares,
to the extent it relates to Travel and Travel's disposition of the Travel
Registrable Shares, contains any untrue statement of a material fact or a
misstatement of a material fact necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, whereupon
the Company will promptly prepare and file with the SEC (at Travel's expense if
such circumstances are caused by Travel's failure to fulfill its obligations
hereunder or by an untrue statement or omission relating to the Travel
Information) a supplemental amendment to such prospectus so that, as thereafter
delivered to prospective purchasers of registrable shares being distributed
under any such prospectus, such prospectus or prospectus supplement will not
contain any 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, in
light of the circumstances under which they were made, not misleading. In
addition, Travel shall take all such other acts, deliver such other information
and execute and deliver such documents and
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<PAGE>
instruments in connection with the matters referenced herein (including, but not
limited to, a custody agreement, power of attorney, lock-up letter and
underwriting agreement), as the Company may reasonably request.
(d) Notwithstanding any other provisions hereof, if the Company determines
in its reasonable judgment after the filing of a Registration Statement that the
fulfillment of its obligations hereunder would be detrimental to the Company,
the Company may suspend its obligations hereunder for such period for which such
obligations would be detrimental. In the case of any such suspension, the number
of days from the commencement of the suspension until the Company advises the
Travel that the suspension has been terminated shall not be counted in
determining the thirty-day period referred to in Section 4(a)(2) hereof.
Section 5. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and hold
harmless Travel and its directors, officers and controlling persons against any
and all losses, claims, damages or liabilities, joint or several, and expenses
to which any of them may become subject under the Securities Act, the Exchange
Act or other federal or state law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses (each an "Indemnified Loss") arise
out of or are based upon (i) any untrue statement or alleged untrue statement of
any material fact contained in any registration statement as originally filed or
in any amendment thereof, or in any preliminary, final or summary prospectus, or
in any amendment thereof or supplement thereto, or (ii) any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, the Company will
not be liable in any such case to the extent that any such Indemnified Loss (x)
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in the registration statement or in any
amendment thereof or in any preliminary, final or summary prospectus or in any
amendment thereof or supplement thereto in reliance upon and in conformity with
written information furnished to the Company by or on behalf of Travel
specifically for use in the registration statement or prospectus (or an
amendment thereof or supplement thereto) or (y) results from the fact that
Travel sold Travel Registrable Shares to a Person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the final
prospectus or of the final prospectus as then amended or supplemented, whichever
is most recent, if the Company had previously furnished copies thereof to Travel
and such final prospectus, as then amended or supplemented, corrected such
misstatement or omission. Company will pay or reimburse the indemnified parties
upon request for any legal or other costs or expenses incurred by them in
connection with any such Indemnified Loss.
(b) Indemnification by Holders. Travel will indemnify and hold harmless
the Company and its directors, officers and controlling persons and each
underwriter, dealer manager or similar securities industry professional
participating in the distribution of Travel's
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<PAGE>
Registrable Shares and such securities industry professional's respective
directors, officers, partners and controlling persons and any other party
registering securities under such registration statement against any and all
Indemnified Losses that (i) arise out of or are based on any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon written information furnished to
the Company by or on behalf of Travel specifically for use in such registration
statement or prospectus (or amendment thereof or supplement thereto) or (ii)
result from the fact that Travel sold Travel Registrable Shares to a Person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if the Company had previously
furnished copies thereof to Travel and such final prospectus, as then amended or
supplemented, corrected such misstatements or omission. Travel will pay or
reimburse the indemnified parties upon request for any legal or other costs or
expenses incurred by them in connection with any such Indemnified Loss.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified party
under Section 5(a) or (b) of notice of any claim or the commencement of any
action or proceeding subject to indemnification thereunder, the indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under either of such Sections, promptly notify the indemnifying party in
writing of the claim or the commencement of the action or proceeding; provided
that the failure to so notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to an indemnified party
under Section 5(a) or (b) or otherwise, except to the extent the indemnifying
party will have been materially prejudiced by such failure to give notice. If
any such claim, action or proceeding will be brought against an indemnified
party, and it will timely notify the indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its election to
assume the defense of such claim, action or proceeding, the indemnifying party
will not be liable to the indemnified party under, Section 5(a) or (b) for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, such indemnified party will have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel will be the expense of such
indemnified party unless (1) the indemnifying party has agreed to pay such fees
and expenses, (2) the indemnifying party will have failed to assume the defense
of such claim, action or proceeding or has failed to employ counsel reasonably
satisfactory to such indemnified party in any such claim, action or proceeding
or (3) the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party will have been advised by counsel that there
may be one or more legal defenses available to such indemnified party which are
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<PAGE>
inconsistent or in conflict with those available to the indemnifying party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party will not have the right to assume the defense of
such action or proceeding on behalf of such indemnified party), it being
understood, however, that the indemnifying party will not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for such
indemnified party and any other indemnified parties similarly situated, which
firm will be designated in writing by such indemnified parties. The indemnifying
party will not be liable for any settlement of any such action or proceeding
effected without its written consent (which consent will not be unreasonably
withheld), but if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the indemnifying
party agrees to indemnify and hold harmless such indemnified parties from and
against any loss or liability by reason of such settlement or judgment.
(d) Contribution. If the indemnification provided for in Section 5(a) or
(b) is unavailable or insufficient to hold harmless an indemnified party, then
each indemnifying party will contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or, liabilities (or
actions or proceedings in respect thereof) or expenses referred to in Section
5(a) or (b), (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and Travel on other hand from
the sale of the Travel Registrable Shares, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and Travel on
the other hand in connection with statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and Travel on the
other hand will be deemed to be in the same proportion as the total net proceeds
from the issuance and sale of such Registrable Shares (before deducting
expenses) received by the Company bear to the total compensation or profit
(before deducting expenses) received or realized by Travel of Travel Registrable
Shares from the resale of such Registrable Shares. The relative fault will be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or Travel of
Travel Registrable Shares and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and Travel agree that it would not be just and equitable
if contributions pursuant to this Section 5(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the first sentence of this Section
5(d). The amount paid by an indemnified party as a result of the losses, claims,
damages or
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<PAGE>
liabilities (or actions or proceedings in respect thereof) or expenses referred
to in the first sentence of this Section 5(d) will be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any claim, action or proceeding
(which will be limited as provided in Section 5(c) above if the indemnifying
party has assumed the defense of any such action in accordance with the
provisions thereof) which is the subject of this Section 5(d). No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
against such party in respect of which a claim for contribution may be made
against' an indemnifying party under this Section 5(d), such indemnified party
will notify the indemnifying party in writing of the commencement thereof if the
notice specified in Section 5(c) above has not been given with respect to such
action or proceeding; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
under this Section 5(d) or otherwise, except to the extent the indemnifying
party will have been materially prejudiced by such failure to give notice.
Section 6. Miscellaneous.
(a) Amendments and Waivers.
(1) Company's Consent. No waiver, amendment, modification or supplement
of any provision of the Registration Rights Agreement incorporating the terms of
this Schedule 6.14, including this Section 6(a), that adversely affects the
Company shall be effective against the Company unless it is approved in writing
by the Company.
(2) Holders' Consent. No waiver, amendment, modification or supplement
of any provision of the Registration Rights Agreement incorporating the terms of
this Schedule 6.14, including this Section 6(a), that adversely affects Travel
shall be effective against Travel unless it is approved in writing by Travel.
(b) Termination. The Registration Rights Agreement incorporating the terms
of this Schedule 6.14 will terminate with respect to a Travel Registrable Share,
other than the provisions of Section 5 hereof, which will survive any such
termination, at the earlier of Travel ceasing to own such Travel Registrable
Share or such Travel Registrable Shares being eligible to be sold by Travel to
the public through a broker, dealer or market maker in compliance with Rule 144
of the Securities Act.
(c) Fees and Expenses. Except as otherwise provided in this Agreement,
each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives.
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<PAGE>
(d) Notices. All notices, demands, and requests required or permitted to
be given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or sent by facsimile
transmission, (c) deemed to have been given on the date of personal delivery or
the date set forth in the records of the delivery service or on the return
receipt or by facsimile confirmation, and (d) addressed as follows:
If to PCC: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Telecopier: 561-659-4252
With a copy to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Telecopier: 202-776-2222
If to Travel: The Travel Channel, Inc.
150 West Brambleton Avenue
Norfolk, Virginia 23510-2075
Attention: Alfred F. Ritter Jr., Executive Vice
President, and Louis F. Ryan , Executive
Vice President and General Counsel
Telecopier: 757-664-2164
With a copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Attention: William J. Grant, Jr.
Telecopier: 212-821-8111
or to any other or additional Persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 6.
(e) Benefit and Binding Effect. Neither party may assign this Agreement
without the prior written consent of the other party. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and permitted assigns.
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<PAGE>
(f) Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
(h) Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
(i) Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between PCC and Travel with respect to the subject matter of this Agreement.
This Agreement supersedes all prior negotiations between the parties and cannot
be amended, supplemented, or changed except by an agreement in writing that
makes specific reference to this Agreement and that is signed by each party
against which enforcement of any such amendment, supplement, or modification is
sought.
(j) Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of either party to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be waived
by the other party only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, representation, warranty, covenant, agreement, or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of either party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 6.
(k) Counterparts. This Agreement may be signed in counterparts with the
same effect as if the signature on each counterpart were upon the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first written above.
THE TRAVEL CHANNEL, INC.
By: /s/ Alfred F. Ritter, Jr.
---------------------------------------
Name: Alfred F. Ritter, Jr.
---------------------------------------
Title: President
---------------------------------------
PAXSON COMMUNICATIONS CORPORATION
By: /s/ William L. Watson
----------------------------------------
Name: William L. Watson
----------------------------------------
Title: Vice President and Assistant Secretary
----------------------------------------
<PAGE>
EXHIBIT C
AGREEMENT REGARDING OWNERSHIP RESTRICTIONS
This AGREEMENT REGARDING OWNERSHIP RESTRICTIONS is dated as of July 11,
1997, by and between Landmark Communications, Inc., a Virginia corporation, and
Paxson Communications Corporation, a Delaware corporation.
PRELIMINARY STATEMENT
Landmark Communications, Inc. ("LCI") and Paxson Communications Corporation
("PCC"), together with The Travel Channel, Inc. ("Travel"), have entered into an
Asset Acquisition Agreement, dated as of June 13, 1997 (the "Asset Acquisition
Agreement"), pursuant to which Travel Channel Acquisition Corporation ("TCAC")
has on the date of this Agreement acquired certain assets owned or rights held
by Travel in consideration for, among other things, the issuance by PCC to
Travel of certain shares of Class A Common Stock. The parties desire to enter
into this Agreement to address certain regulatory issues arising from the
ownership of Class A Common Stock by LCI or any of its Affiliates.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements and
covenants contained in this Agreement, PCC and LCI, intending to be bound
legally, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
1.1. Terms Defined in this Section.
-----------------------------
The following terms, as used in this Agreement, have the meanings set forth
in this Section:
"Affiliate," with respect to any Person, means any other Person controlling,
controlled by, or under common control with such Person. For purposes of this
definition, the term "control" means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract, or
otherwise, and the terms "controlled by" and "under common control with" have
meanings corresponding to the meaning of "control."
"Agreement" means this Agreement Regarding Ownership Restrictions, as it may
be amended from time to time.
"Average Trading Price" of the Class A Common Stock equals, as of a
particular date, the average of the reported closing market prices per share of
the Class A Common Stock for the 30 consecutive trading days ending on the third
trading day prior to such date. The closing
<PAGE>
market price for each day in question shall be the last sale price, regular way
or, if no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system of the principal national securities
exchange on which the Class A Common Stock is listed or admitted to trading or,
if the Class A Common Stock is not listed or admitted to trading on any national
securities exchange, the last quoted sale price or, if no such sale price is
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the Nasdaq National Market System or such other system
then in use or, if on any such trading day the Class A Common Stock is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by the professional market maker who has been most active in making
a market in the Class A Common Stock during the preceding twelve months. The
Average Trading Price of the Class A Common Stock shall be appropriately
adjusted to reflect the effects of any stock dividend, stock split,
reclassification, recapitalization, or combination affecting such stock, the
record date, ex-dividend date, or similar date of which occurs during the period
in which the Average Trading Price is to be determined or during the subsequent
three trading days.
"Class A Common Stock" means the Class A Common Stock, par value $.001 per
share, of PCC and all securities of any issuer issued, in exchange for, or as a
dividend or other distribution on, outstanding shares of the Class A Common
Stock of PCC.
"Closing" means the consummation of the acquisition of the Assets (as
defined in the Asset Acquisition Agreement) pursuant to the Asset Acquisition
Agreement in accordance with the provisions of Section 8 thereof.
"FCC" means the Federal Communications Commission.
"Ownership Restriction" means any provision of the Communications Act of
1934, as amended, or any rule, regulation, or policy of the FCC promulgated
thereunder restricting the ownership and control of communications properties
(including television broadcast stations, radio broadcast stations, cable
television systems, and newspapers), including those relating to foreign
ownership, multiple ownership, cross-ownership, cross-interests, and duopolies,
as those terms are commonly understood in the communications industry.
"PCC Stock" means any shares of capital stock of PCC (including the Class A
Common Stock) or any option, warrant, or other debt or equity interest
convertible into or evidencing the right to acquire (whether or not for
additional consideration) any shares of capital stock of PCC.
"Person" means an individual, corporation, association, partnership, joint
venture, trust, estate, limited liability company, limited liability
partnership, governmental entity, or other entity or organization.
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<PAGE>
1.2. Terms Generally.
---------------
The definitions in Section 1.1 and elsewhere in this Agreement shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context requires, any pronoun includes the corresponding masculine, feminine,
and neuter forms. The words "include," "includes," and "including" are not
limiting.
SECTION 2. COVENANTS
2.1. LCI's Covenant Regarding Acquisitions.
-------------------------------------
(a) LCI agrees that neither LCI nor any Affiliate of LCI will acquire
any beneficial interest in or any voting power over any PCC Stock, other than
the shares of Class A Common Stock received by Travel at the Closing, without
the prior written consent of PCC, which shall not be withheld unreasonably;
provided, however, that this Section 2.1(a) shall not prohibit LCI or any
Affiliate of LCI from;
(i) continuing to own securities in any Person that acquires any
beneficial interest in or any voting power over any PCC Stock after the
acquisition by LCI or an Affiliate of LCI of such securities if neither LCI nor
its Affiliate has control over such Person or such Person's investment decisions
with respect to any PCC Stock and the ownership of such securities by LCI or an
Affiliate of LCI would not cause PCC or any Affiliate of PCC to be in violation
of any Ownership Restriction; and
(ii) owning passive, non-controlling invest-ments in Sandler
Mezzanine Partners, L.P., Sandler Mezzanine T-E Partners, L.P., and Sandler
Mezzanine Foreign Partners, L.P. or any other similarly structured and
controlled investment fund that may own, directly or indirectly, PCC Stock, if
the ownership of such investments by LCI or an Affiliate of LCI would not cause
PCC or any Affiliate of PCC to be in violation of any Ownership Restriction.
(b) LCI agrees that neither LCI nor any Affiliate of LCI will acquire
any interest of any kind in any communications properties (including television
broadcast stations, radio broadcast stations, cable television systems, and
newspapers) that are the subject of any Ownership Restrictions if the effect of
such acquisition would be to cause PCC or any Affiliate of PCC to be in
violation of any Ownership Restriction; provided, however, that LCI shall not be
in violation of this Section 2.1(b) to the extent that such acquisition of an
interest in a communications property by LCI or an Affiliate of LCI only caused
a violation of an Ownership Restriction as a result of the ownership by PCC or
any Affiliate of PCC of an interest in a communications property that was not
disclosed to LCI pursuant to Section 2.4(b) or otherwise known to LCI prior to
the time that LCI or an Affiliate of LCI had entered into a binding obligation
to effect such acquisition.
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<PAGE>
2.2. PCC's Covenant Regarding Acquisitions and Changes in Capital Structure
----------------------------------------------------------------------
(a) PCC agrees that, without the prior written consent of LCI, which
shall not be withheld unreasonably, it will not effect any redemption,
reclassification, recapitalization, combination, or other similar transaction,
affecting its capital stock or make any amendment to its Certificate of
Incorporation, the effect of which would be to increase the percentage of
beneficial ownership in or voting control of PCC by LCI or any Affiliate of LCI,
for purposes of determining compliance with any Ownership Restriction then in
effect, as a result of the ownership by LCI or any Affiliate of LCI of the
shares of Class A Common Stock received by Travel at the Closing.
(b) PCC agrees that neither PCC nor any Affiliate of PCC will acquire
any interest of any kind in any communications properties (including television
broadcast stations, radio broadcast stations, cable television systems, and
newspapers) that are the subject of any Ownership Restrictions if the effect of
such acquisition would be to cause LCI or any Affiliate of LCI to be in
violation of any Ownership Restriction; provided, however, that PCC shall not be
in violation of this Section 2.2(b) to the extent that such acquisition of an
interest in a communications property by PCC or an Affiliate of PCC only caused
a violation of an Ownership Restriction as a result of the ownership by LCI or
any Affiliate of LCI of an interest in a communications property that was not
disclosed to PCC pursuant to Section 2.4(a) or otherwise known to PCC prior to
the time that PCC or an Affiliate of PCC had entered into a binding obligation
to effect such acquisition.
2.3. Compliance with Ownership Restrictions.
--------------------------------------
(a) If PCC determines in good faith at any time that the ownership by
LCI or any Affiliate of LCI, directly or indirectly, of a beneficial interest in
the shares of Class A Common Stock received by Travel at the Closing, or the
possession by LCI or any Affiliate of LCI, directly or indirectly, of voting
power with respect to such shares of Class A Common Stock, could cause PCC or
any Affiliate of PCC to be in violation of any Ownership Restriction or prevent
PCC or any Affiliate of PCC from consummating any contemplated transaction or
series of transactions as a result of any Ownership Restriction, then LCI
agrees, at PCC's request, but only to the extent necessary to eliminate such
violation or to permit the consummation of such contemplated transaction or
series of transactions, that LCI and its Affiliates will do one or more of the
following:
(i) jointly with PCC, prepare and file with the FCC a request for
waiver of the Ownership Restriction at issue, prosecute the request with all
reasonable diligence, use commercially reasonable efforts to obtain a grant of
the request as expeditiously as practicable, and oppose any petitions to deny or
other objections filed with respect to the request;
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<PAGE>
(ii) transfer any or all shares of Class A Common Stock held by
LCI or any Affiliate of LCI to a voting trust pursuant to which all voting power
with respect to such shares would be exercised by Persons designated by PCC (but
all economic rights, including dispositive rights, with respect to such shares
would continue to be held by the transferor); or
(iii) divest itself of any or all shares of Class A Common Stock
held by LCI or any Affiliate of LCI, as promptly as practicable; any such
divestiture shall be effected, at LCI's option, through:
(A) to the extent that a sale under this Section
2.3(a)(iii)(A) is permitted under applicable securities laws and would not
significantly delay the completion of the divestiture required by Section
2.3(a)(iii), the sale of any or all shares of Class A Common Stock held by LCI
or any Affiliate of LCI on any national securities exchange on which the Class A
Common Stock is listed or admitted to trading or, if the Class A Common Stock is
not listed or admitted to trading on any national securities exchange, in the
over-the-counter market; or
(B) the sale of any or all shares of Class A Common Stock
held by LCI or any Affiliate of LCI to PCC or to one or more Persons designated
by PCC.
(b) If LCI determines in good faith at any time that the ownership by
LCI or any Affiliate of LCI, directly or indirectly, of a beneficial interest in
the shares of Class A Common Stock received by Travel at the Closing, or the
possession by LCI or any Affiliate of LCI, directly or indirectly, of voting
power with respect to such shares of Class A Common Stock, could cause LCI or
any Affiliate of LCI to be in violation of any Ownership Restriction or prevent
LCI or any Affiliate of LCI from consummating any contemplated transaction or
series of transactions as a result of any Ownership Restriction, then PCC
agrees, at LCI's request, but only to the extent necessary to eliminate such
violation or to permit the consummation of such contemplated transaction or
series of transactions, that PCC will do one or more of the following:
(i) jointly with LCI, prepare and file with the FCC a request for
waiver of the Ownership Restriction at issue, prosecute the request with all
reasonable diligence, use commercially reasonable efforts to obtain a grant of
the request as expeditiously as practicable, and oppose any petitions to deny or
other objections filed with respect to the request; or
(ii) use reasonable efforts to assist LCI in locating a suitable
buyer for any or all shares of Class A Common Stock held by LCI or any Affiliate
of LCI and cooperate reasonably with LCI and any such buyer in permitting the
sale to such buyer of any or all such shares to be consummated.
(c) If PCC is in violation of its covenant in Section 2.2(b) such that
LCI or any Affiliate of LCI is in violation of any Ownership Restriction, then
PCC agrees, at LCI's request, but only to the extent necessary to eliminate such
violation, to purchase any or all shares of Class A Common Stock held by LCI or
any Affiliate of LCI.
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<PAGE>
(d) Any sale of shares of Class A Common Stock to PCC or to one or more
Persons designated by PCC pursuant to Section 2.3(a)(iii)(B) or Section 2.3(c)
shall, except as otherwise agreed to between PCC and LCI, be on the following
terms:
(i) Any shares of Class A Common Stock sold pursuant to Section
2.3(a)(iii)(B) or Section 2.3(c) shall be transferred to the buyer free and
clear of all liens, security interests, mortgages, pledges, encumbrances, or
restrictions (other than restrictions arising under applicable securities laws);
(ii) The purchase price per share of any shares of Class A Common
Stock sold pursuant to Section 2.3(a)(iii)(B) or Section 2.3(c) shall be the
Average Trading Price of the Class A Common Stock as of the date of the sale.
(e) Nothing in this Agreement shall prohibit LCI or any Affiliate of
LCI from taking any action otherwise permitted to be taken by LCI or any
Affiliate of LCI to eliminate any violation of any Ownership Restriction or to
permit the consummation of any contemplated transaction or series of
transactions referred to in Section 2.3(a) and, if such action eliminates such
violation or permits the consummation of such contemplated transaction or series
of transactions, PCC shall no longer have the right to require that LCI or any
Affiliate of LCI take any action pursuant to Section 2.3(a) with respect to such
violation or such contemplated transaction or series of transactions.
2.4. Disclosure of Information.
-------------------------
(a) LCI has furnished PCC with an accurate and complete list of all
interests owned or held by LCI or any of its Affiliates in any communications
properties (including television broadcast stations, radio broadcast stations,
cable television systems, and newspapers) that are the subject of any Ownership
Restrictions. LCI shall notify PCC promptly of any changes in the information
previously provided to PCC.
(b) PCC has furnished LCI with an accurate and complete list of all
interests owned or held by PCC or any of its Affiliates in any communications
properties (including television broadcast stations, radio broadcast stations,
cable television systems, and newspapers) that are the subject of any Ownership
Restrictions. PCC shall notify LCI promptly of any changes in the information
previously provided to LCI.
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<PAGE>
SECTION 3. CERTAIN REMEDIES
3.1. Specific Performance.
--------------------
The parties recognize that if either party breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the other party for its injury. Each
party shall therefore be entitled, in addition to any other remedies that may be
available, including money damages, to obtain specific performance of the terms
of this Agreement. If any action is brought by either party to enforce this
Agreement, the other party shall waive the defense that there is an adequate
remedy at law.
3.2. Attorneys' Fees.
---------------
In the event of a default by either party that results in a lawsuit or
other proceeding for any remedy available under this Agreement, the prevailing
party shall be entitled to reimbursement from the other party of its reasonable
legal fees and expenses (whether incurred in arbitration, at trial, or on
appeal).
SECTION 4. MISCELLANEOUS
4.1. Fees and Expenses.
-----------------
Except as otherwise Fees and Expenses provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives.
4.2. Notices.
-------
All notices, demands, and requests required or permitted to be given
under the provisions of this Agreement shall be (a) in writing, (b) delivered by
personal delivery, or sent by commercial delivery service or registered or
certified mail, return receipt requested, or sent by facsimile transmission, (c)
deemed to have been given on the date of personal delivery or the date set forth
in the records of the delivery service or on the return receipt or by facsimile
confirmation, and (d) addressed as follows:
If to PCC: Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, Florida 33401
Attention: Lowell W. Paxson, President
Telecopier: 561-659-4252
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With a copy to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Attention: John R. Feore, Jr.
Telecopier: 202-776-2222
If to LCI: Landmark Communications, Inc.
150 West Brambleton Avenue
Norfolk, Virginia 23510-2075
Attention: Alfred F. Ritter Jr., Executive
Vice President, and Louis F. Ryan , Executive
Vice President and General Counsel
Telecopier: 757-664-2164
With a copy to: Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4669
Attention: William J. Grant, Jr.
Telecopier: 212-821-8111
or to any other or additional Persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 4.2.
4.3. Benefit and Binding Effect.
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Neither party may assign this Agreement without the prior written consent of
the other party. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and permitted assigns.
4.4. Further Assurances.
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The parties shall take any actions and execute any other documents that may
be necessary or desirable to the implementation and consummation of this
Agreement.
4.5. GOVERNING LAW.
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THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE CHOICE OF LAW
PROVISIONS THEREOF).
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<PAGE>
4.6. Headings.
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The headings in this Agreement are included for ease of reference only and
shall not control or affect the meaning or construction of the provisions of
this Agreement.
4.7. Entire Agreement.
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This Agreement, the schedules, hereto, and all documents, certificates, and
other documents to be delivered by the parties pursuant hereto, collectively
represent the entire understanding and agreement between PCC and LCI with
respect to the subject matter of this Agreement. This Agreement supersedes all
prior negotiations between the parties and cannot be amended, supplemented, or
changed except by an agreement in writing that makes specific reference to this
Agreement and that is signed by each party against which enforcement of any such
amendment, supplement, or modification is sought.
4.8. Waiver of Compliance; Consents.
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Except as otherwise provided in this Agreement, any failure of either party
to comply with any obligation, representation, warranty, covenant, agreement, or
condition herein may be waived by the other party only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of either party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 4.8.
4.9. Counterparts.
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This Agreement may be signed in counterparts with the same effect as if the
signature on each counterpart were upon the same instrument.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties as of
the date first written above.
LANDMARK COMMUNICATIONS, INC.
By: /s/ Alfred F. Ritter, Jr.
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Name: Alfred F. Ritter, Jr.
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Title: Executive Vice President
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PAXSON COMMUNICATIONS CORPORATION
By: /s/ William L. Watson
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Name: William L. Watson
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Title: Vice President and Assistant Secretary
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<PAGE>
EXHIBIT D
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule
13D with respect to the Class A Common Stock of Paxson Communications
Corporation dated July 21, 1997 is, and any amendments thereto signed by each of
the undersigned shall be, filed on behalf of each of us pursuant to and in
accordance with the provisions of Rule 13d-1(f) under the Securities Exchange
Act of 1934.
Dated as of: July 21, 1997 LANDMARK COMMUNICATIONS, INC.
By:/s/ Louis F. Ryan
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Louis F. Ryan
Executive Vice President, General Counsel
& Secretary
LANDMARK BROADCASTING, INC.
By:/s/ Louis F. Ryan
-----------------------------------------
Louis F. Ryan
Vice President & Secretary
LANDMARK TELEVISION, INC.
By:/s/ Louis F. Ryan
-----------------------------------------
Louis F. Ryan
Assistant Secretary
THE TRAVEL CHANNEL, INC.
By:/s/ Louis F. Ryan
-----------------------------------------
Louis F. Ryan
Vice President & Secretary
