SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
July 9, 1996
------------
Date of Report
TRIBUNE COMPANY
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-8572 36-1880355
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(Commission File Number) (IRS Employer Identification No.)
435 North Michigan Avenue, Chicago, Illinois 60611
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 222-9100
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Item 5. Other Events
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On July 1, 1996, Tribune Company (the "Company") entered into an Agreement
and Plan of Merger with Renaissance Communications Corp., a publicly traded
company owning six television stations. The Agreement and Plan of Merger is
attached hereto as Exhibit 99.1 and is incorporated herein by reference. In
connection with the Agreement and Plan of Merger, on July 1, 1996, the Company
entered into Stockholder Agreements with Warburg, Pincus Capital Company, L.P.
and Michael Finkelstein. Such agreements are attached hereto as Exhibit 99.2 and
are incorporated herein by reference. In addition, on July 1, 1996, the Company
issued a press release announcing the execution of the Agreement and Plan of
Merger, which press release is attached hereto as Exhibit 99.3 and incorporated
herein by reference. The transaction is subject to regulatory and Renaissance
shareholder approval and is expected to be completed in early 1997.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
99.1 Agreement and Plan of Merger, dated as of July 1, 1996, between
Tribune Company and Renaissance Communications Corp.
99.2 Stockholder Agreements, dated as of July 1, 1996, among Tribune
Company and Warburg, Pincus Capital Company, L.P. and Michael
Finkelstein.
99.3 Press release issued by Tribune Company dated July 1, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIBUNE COMPANY
By /s/ R. Mark Mallory
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R. Mark Mallory
Vice President and Controller
July 9, 1996
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EXHIBIT INDEX
Exhibit No. Exhibit Description
99.1 Agreement and Plan of Merger, dated as of July 1, 1996, between Tribune
Company and Renaissance Communications Corp.
99.2 Stockholder Agreements, dated as of July 1, 1996, among Tribune Company
and Warburg, Pincus, Capital Company, L.P. and Michael Finkelstein.
99.3 Press release issued by Tribune Company dated July 1, 1996.
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AGREEMENT AND PLAN OF MERGER
Among
TRIBUNE COMPANY,
TOWER ACQUISITION COMPANY, INC.
and
RENAISSANCE COMMUNICATIONS CORP.
Dated as of July 1, 1996
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TABLE OF CONTENTS
Page
ARTICLE I ----
The Merger
SECTION 1.01. The Merger.............................................2
SECTION 1.02. Closing................................................2
SECTION 1.03. Effective Time.........................................3
SECTION 1.04. Effects of the Merger..................................3
SECTION 1.05. Certificate of Incorporation and
Bylaws...............................................3
SECTION 1.06. Directors..............................................3
SECTION 1.07. Officers...............................................3
ARTICLE II
Effect of the Merger on the Capital Stock of
Sub and the Company; Exchange of Certificates
SECTION 2.01. Effect on Capital Stock................................4
SECTION 2.02. Exchange of Certificates...............................5
ARTICLE III
Representations and Warranties of the Company
SECTION 3.01. Organization...........................................7
SECTION 3.02. Subsidiaries...........................................8
SECTION 3.03. Capitalization.........................................8
SECTION 3.04. Authority..............................................9
SECTION 3.05. Consent and Approvals; No Violations..................10
SECTION 3.06. SEC Reports and Financial Statements..................11
SECTION 3.07. Absence of Certain Changes or Events..................12
SECTION 3.08. No Undisclosed Liabilities............................13
SECTION 3.09. Information Supplied..................................14
SECTION 3.10. Benefit Plans.........................................14
SECTION 3.11. Contracts; Indebtedness...............................16
SECTION 3.12. Litigation............................................17
SECTION 3.13. Compliance with Applicable Law........................18
SECTION 3.14. Tax Matters...........................................18
SECTION 3.15. State Takeover Statutes...............................21
SECTION 3.16. Environmental Matters.................................21
SECTION 3.17. Intellectual Property.................................22
SECTION 3.18. FCC Qualifications....................................23
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Page
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SECTION 3.19. Required Vote.........................................23
SECTION 3.20. Brokers; Schedule of Fees and Expenses................23
SECTION 3.21. Opinion of Financial Advisor..........................23
ARTICLE IV
Representations and Warranties of Parent and Sub
SECTION 4.01. Organization..........................................24
SECTION 4.02. Authority.............................................24
SECTION 4.03. Consents and Approvals; No Violations.................25
SECTION 4.04. Information Supplied..................................25
SECTION 4.05. Interim Operations of Sub.............................26
SECTION 4.06. Brokers...............................................26
SECTION 4.07. Financing.............................................26
SECTION 4.08. FCC Qualifications....................................26
SECTION 4.09. Litigation............................................26
ARTICLE V
Covenants
SECTION 5.01. Covenants of the Company..............................27
SECTION 5.02. No Solicitation.......................................31
SECTION 5.03. Third Party Standstill Agreements.....................34
SECTION 5.04. Other Actions.........................................34
ARTICLE VI
Additional Agreements
SECTION 6.01. Stockholder Approval; Preparation
of Proxy Statement..................................34
SECTION 6.02. Access to Information.................................36
SECTION 6.03. Reasonable Efforts....................................36
SECTION 6.04. Company Stock Options and
Management Warrants.................................37
SECTION 6.05. Fees and Expenses.....................................39
SECTION 6.06. Indemnification.......................................41
SECTION 6.07. Obligations of Sub....................................43
SECTION 6.08. Employee Benefits.....................................43
SECTION 6.09. Certain Litigation....................................43
SECTION 6.10. Transfer of Ownership of Channel 61...................44
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Page
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ARTICLE VII
Conditions Precedent
SECTION 7.01. Conditions to Each Party's
Obligation To Effect the Merger.....................44
SECTION 7.02. Conditions to the Company's
Obligation to Effect the Merger.....................46
SECTION 7.03. Conditions to the Parent's and Sub's
Obligations to Effect the Merger....................46
ARTICLE VIII
Termination and Amendment
SECTION 8.01. Termination...........................................48
SECTION 8.02. Effect of Termination.................................50
SECTION 8.03. Amendment.............................................50
SECTION 8.04. Extension; Waiver.....................................51
ARTICLE IX
Tender Offer
SECTION 9.01. Tender Offer..........................................51
ARTICLE X
Miscellaneous
SECTION 10.01. Nonsurvival of Representations,
Warranties and Agreements..........................53
SECTION 10.02. Notices..............................................53
SECTION 10.03. Interpretation.......................................54
SECTION 10.04. Counterparts.........................................55
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries......................................55
SECTION 10.06. Governing Law........................................56
SECTION 10.07. Publicity............................................56
SECTION 10.08. Assignment...........................................56
SECTION 10.09. Enforcement..........................................56
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of July 1, 1996 among
Tribune Company, a Delaware corporation ("Parent"), Tower Acquisition Company,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Sub"),
and Renaissance Communications Corp., a Delaware corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, the respective
Boards of Directors of Parent, Sub and the Company have each approved the merger
of Sub with and into the Company (the "Merger"), upon the terms and subject to
the conditions set forth in this Agreement, whereby each issued and outstanding
share of Common Stock, par value $.01 per share, of the Company (the "Company
Common Stock"; the shares of Company Common Stock being hereinafter referred to
as the "Shares"), other than Shares owned directly or indirectly by Parent or
the Company and Dissenting Shares (as defined in Section 2.01(d)), will be
converted into the right to receive $36.00 per share in cash;
WHEREAS, the Board of Directors of the Company has adopted
resolutions approving the Merger and recommending that the Company's
stockholders approve this Agreement;
WHEREAS, the Board of Directors of the Company has approved
the terms of the Stockholder Agreements (the "Stockholder Agreements") to be
entered into by Parent, Sub and certain stockholders of the Company concurrently
with the execution of this Agreement as an inducement to Parent to enter into
this Agreement, pursuant to which such stockholders have, among other things,
agreed to vote their Shares for approval of the Merger and this Agreement; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
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NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Sub and the Company hereby agree as follows:
ARTICLE I
The Merger
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SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Sub shall be merged with and into the
Company at the Effective Time (as defined in Section 1.03). Following the
Effective Time, the separate corporate existence of Sub shall cease and the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Sub in accordance with the DGCL. At the election of Parent, any direct or
indirect wholly owned subsidiary (as defined in Section 10.03) of Parent may be
substituted for Sub as a constituent corporation in the Merger. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect the foregoing. Notwithstanding the foregoing, Sub may, with the
consent of the Company (which consent shall not be unreasonably withheld), elect
at any time prior to the Merger, instead of merging into the Company as provided
above, to merge the Company with and into Sub; provided, however, that the
Company shall not be deemed to have breached any of its representations,
warranties or covenants herein solely by reason of such election. In such event,
the parties agree to execute an appropriate amendment to this Agreement in order
to reflect and, where appropriate, to provide that Sub shall be the Surviving
Corporation.
SECTION 1.02. Closing. The closing of the Merger will take
place at 10:00 a.m. on a date to be mutually agreed by Parent and the Company
(and, failing such agreement, on the second business day) after satisfaction or
waiver of the conditions set forth in Article VII (the "Closing Date"), at the
offices of Sidley & Austin, One First National Plaza, Chicago, Illinois 60603,
unless another date, time or place is agreed to in writing by the parties
hereto.
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SECTION 1.03. Effective Time. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as Sub and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 1.04. Effects of the Merger. The Merger shall have the
effects set forth in Section 259 of the DGCL.
SECTION 1.05. Certificate of Incorporation and Bylaws. (a) The
Restated Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time so that
Article FOURTH of such Restated Certificate of Incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock that
the Corporation shall have authority to issue is 1,000 shares of Common Stock,
par value $.01 per share" and, as so amended, such Restated Certificate of
Incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of Sub as in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 1.06. Directors. The directors of Sub immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.07. Officers. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation, until the earlier of their resignation
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or removal or until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE II
Effect of the Merger on the Capital Stock of
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Sub and the Company; Exchange of Certificates
---------------------------------------------
SECTION 2.01. Effect on Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on
the part of the holder of any Shares or any shares of capital
stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.01 per share, of
the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock.
Each Share that is owned by the Company or by any subsidiary of the
Company and each Share that is owned by Parent, Sub or any other
subsidiary of Parent shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Subject to Section 2.01(d), each
Share issued and outstanding (other than Shares to be canceled in
accordance with Section 2.01(b)) shall be converted into the right to
receive $36.00 in cash (the "Merger Consideration"). As of the
Effective Time, all such Shares shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist,
and each holder of a certificate representing any such Shares shall
cease to have any rights with respect thereto, except the right to
receive the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders.
Notwithstanding anything in this Agreement to the
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contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who objects to the Merger and complies with
all the provisions of Delaware law concerning the right of holders of
Shares to dissent from the Merger and require appraisal of their Shares
("Dissenting Shares") shall not be converted as described in Section
2.01(c), but shall become the right to receive such consideration as
may be determined to be due to such Dissenting Stockholder pursuant to
the laws of the State of Delaware. If, after the Effective Time, such
Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant
to the DGCL, his Shares shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The
Company shall give Parent (i) prompt notice of any demands for
appraisal of Shares received by the Company and (ii) the opportunity to
participate in and direct all negotiations and proceedings with respect
to any such demands. The Company shall not, without the prior written
consent of Parent, make any payment with respect to, or settle, offer
to settle or otherwise negotiate, any such demands.
SECTION 2.02. Exchange of Certificates. (a) Paying Agent.
Prior to the Effective Time, Parent shall designate The First National Bank of
Chicago (or such other bank or trust company reasonably acceptable to the
Company) to act as paying agent in the Merger (the "Paying Agent"), and Parent
shall, at or prior to the Effective Time, deposit or cause to be deposited with
the Paying Agent in a separate fund established for the benefit of the holders
of Shares (the "Payment Fund") funds in an amount necessary for the payment of
the Merger Consideration upon surrender of certificates representing Shares as
part of the Merger pursuant to Section 2.01 (it being understood that any and
all interest earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to Parent). At the Effective Time, Parent shall
also make available to the Surviving Corporation funds in an amount necessary
for the payment of the Option Consideration and the Warrant Consideration (as
defined in Section 6.04).
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(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of record
of a certificate or certificates that immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and shall be in a form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the amount of cash into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 2.01, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares that is not
registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 2.01. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Shares. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article II
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed,
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and there shall be no further registration of transfers on the stock transfer
books of the Surviving Corporation of the Shares that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Paying Agent for
any reason, they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Payment Fund. Any portion of the Payment
Fund which remains undistributed to the holders of Shares for six months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
Shares who have not theretofore complied with this Article II and the
instructions set forth in the letter of transmittal mailed to such holders after
the Effective Time shall thereafter look only to Parent for payment of the
Merger Consideration to which they are entitled.
(e) No Liability. None of Parent, Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificates shall not have been surrendered prior to seven
years after the Effective Time (or immediately prior to such earlier date on
which any payment pursuant to this Article II would otherwise escheat to or
become the property of any Governmental Entity (as defined in Section 3.05)),
the cash payment in respect of such Certificate shall, unless otherwise provided
by applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interests of any person previously entitled thereto.
ARTICLE III
Representations and Warranties of the Company
---------------------------------------------
The Company represents and warrants to Parent and Sub as
follows:
SECTION 3.01. Organization. The Company and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now being
conducted. The
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Company and each of its subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except in such jurisdictions where
the failure to be so duly qualified or licensed and in good standing would not
have a material adverse effect (as defined in Section 10.03) on the Company or
prevent or materially delay the consummation of the Merger. The Company has
delivered to Parent complete and correct copies of its Restated Certificate of
Incorporation and By-laws and the certificates of incorporation and by-laws (or
similar organizational documents) of its subsidiaries.
SECTION 3.02. Subsidiaries. Item 3.02 of the letter from the
Company to Parent dated the date hereof, which letter relates to this Agreement
and is designated therein as the Company Disclosure Letter (the "Company
Disclosure Letter"), lists each subsidiary of the Company. Except as set forth
in Item 3.02 of the Company Disclosure Letter, all the outstanding shares of
capital stock of each such subsidiary are owned by the Company, by another
wholly owned subsidiary of the Company or by the Company and another wholly
owned subsidiary of the Company, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens"), and are duly authorized, validly issued, fully paid and
nonassessable. Except for the capital stock of its subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other ownership
interest in any corporation, partnership, joint venture or other entity.
SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of 97,500,000 Shares and 2,500,000 shares of Preferred
Stock, par value $1.00 per share. At the close of business on June 26, 1996, (i)
30,337,206 Shares were issued and outstanding, (ii) no Shares were held by the
Company in its treasury, (iii) 675,000 Shares were reserved for issuance upon
exercise of options to purchase Shares ("Company Stock Options") issued pursuant
to the Company's stock option plans and (iv) 450,000 Shares were reserved for
issuance upon exercise of the warrants to purchase Shares granted to the chief
executive officer of the Company (and assigned, in part, to certain other
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individuals) ("Management Warrants"). Except as set forth above, as of the date
of this Agreement, no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding. All outstanding shares
of capital stock of the Company are, and all shares which may be issued will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth above or on Item 3.02
of the Company Disclosure Letter, as of the date of this Agreement, there are
not any securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Except as set forth on Item 3.02 of the Company Disclosure Letter, as of the
date of this Agreement, there are not any outstanding contractual obligations of
the Company or any of its subsidiaries (i) to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or (ii) to vote or to dispose
of any shares of the capital stock of any of the Company's subsidiaries.
SECTION 3.04. Authority. The Board of Directors of the
Company, at a meeting duly called and held, at which all directors were present,
has duly and unanimously adopted resolutions approving this Agreement, the
Merger and the Stockholder Agreements, determining that the terms of the Merger
are fair to, and in the best interests of the Company's stockholders and
recommending that the Company's stockholders approve and adopt this Agreement.
The Company has the requisite corporate power and authority to execute and
deliver this Agreement and, subject to the approval and adoption of this
Agreement by the holders of a majority of the Shares outstanding and entitled to
vote thereon (the "Company Stockholder Approval"), to consummate the
transactions contemplated hereby.
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The execution, delivery and performance of this Agreement and the consummation
by the Company of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (in each case, other than, with respect to the Merger, the Company
Stockholder Approval). This Agreement has been duly executed and delivered by
the Company and, assuming this Agreement constitutes a valid and binding
obligation of Parent and Sub, constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and to general principles of equity.
SECTION 3.05. Consent and Approvals; No Violations. Except as
set forth in Item 3.05 of the Company Disclosure Letter, and except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including the filing with the SEC of a proxy
statement in definitive form relating to any required Company Stockholder
Approval (the "Proxy Statement")), the Communications Act of 1934, as amended,
and the rules, regulations and policies of the Federal Communications Commission
or any successor entity (the "FCC") thereunder (the "Communications Act")
(including in connection with the transfer of licenses relating to the
television broadcast stations owned and operated by the Company or its
subsidiaries (the "Stations")), the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), the DGCL, the laws of other states in which
the Company is qualified to do or is doing business and state takeover laws,
neither the execution, delivery or performance of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of the Restated
Certificate of Incorporation or By-laws of the Company or of the similar
organizational documents of any of its subsidiaries, (ii) require any filing
with, or permit, authorization, consent or approval of, any Federal, state or
local government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or
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agency, domestic, foreign or supranational (a "Governmental Entity") (except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings would not have a material adverse effect on the Company
or would not reasonably be expected to prevent or materially delay the
consummation of the Merger), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license, contract, agreement or other instrument or obligation to
which the Company or any of its subsidiaries is a party or by which any of them
or any of their properties or assets may be bound or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any of its subsidiaries or any of their properties or assets, except in the case
of clauses (iii) or (iv) for violations, breaches or defaults that would not,
individually or in the aggregate, have a material adverse effect on the Company
or that would not, individually or in the aggregate, be reasonably expected to
prevent or materially delay the consummation of the Merger.
SECTION 3.06. SEC Reports and Financial Statements. The
Company and each of its subsidiaries has filed with the SEC, and has heretofore
made available to Parent true and complete copies of, all forms, reports,
schedules, statements and other documents required to be filed by it since
December 31, 1994, under the Exchange Act or the Securities Act of 1933 (the
"Securities Act") (such forms, reports, schedules, statements and other
documents, including any financial statements or schedules included therein, are
referred to as the "Company SEC Documents"). The Company SEC Documents, at the
time filed, (a) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. Except
to the extent revised or superseded by a subsequently filed Company Filed SEC
Document (as defined in
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Section 3.07) (a copy of which has been provided to Parent prior to the date
hereof), none of the Company SEC Documents contains an untrue statement of a
material fact or omits 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. The financial statements of the Company included in the Company SEC
Documents comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments, none of which were or are expected, individually or in the
aggregate, to be material in amount) the consolidated financial position of the
Company and its consolidated subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended.
SECTION 3.07. Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Company Filed SEC Documents") or as disclosed in
Item 3.07 of the Company Disclosure Letter, since December 31, 1995, the Company
and its subsidiaries have conducted their respective businesses only in the
ordinary course, and there has not been (i) through the date hereof any material
adverse change (as defined in Section 10.03) with respect to the Company, (ii)
any declaration, setting aside or payment of any dividend or other distribution
with respect to its capital stock or any redemption, purchase or other
acquisition of any of its capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (x) any granting by the
Company or any of its subsidiaries to any officer of the Company or any of its
subsidiaries of any increase in compensation, except in the ordinary course of
business (including in connection with promotions) consistent with past practice
or as was required under employment agreements in effect as of December 31,
1995,
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(y) any granting by the Company or any of its subsidiaries to any such officer
of any increase in severance or termination pay, except as part of a standard
employment package to any person promoted or hired (but not including the five
most senior officers), or as was required under employment, severance or
termination agreements in effect as of December 31, 1995, or (z) any entry by
the Company or any of its subsidiaries into any employment, severance or
termination agreement with any such employee or executive officer, (v) any
damage, destruction or loss, whether or not covered by insurance, that has or
reasonably could be expected to have a material adverse effect on the Company,
(vi) any revaluation by the Company of any of its material assets, (vii) any
material change in accounting methods, principles or practices by the Company or
(viii) through the date hereof any written notice given to, or other written
communication with the Company or any of its subsidiaries (or any oral notice
given to, or other oral communication with, any director, executive officer or
general manager of the Company, any subsidiary of the Company or any Station),
to the effect that the existing network affiliation agreements relating to the
Stations will not be renewed for a term at least as long as their current term.
SECTION 3.08. No Undisclosed Liabilities. Except as and to the
extent set forth in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 previously filed with the SEC under the Exchange Act, as
of December 31, 1995, neither the Company nor any of its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of the Company and its subsidiaries
(or disclosed in the notes thereto). Since December 31, 1995 and to the date of
this Agreement, except as and to the extent set forth in the Company Filed SEC
Documents, neither the Company nor any of its subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be reflected on
a consolidated balance sheet of the Company and its subsidiaries (or disclosed
in the notes thereto) and that would be reasonably expected to have a material
adverse effect on the Company.
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SECTION 3.09. Information Supplied. None of the information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in the Proxy Statement, will, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 6.01), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub specifically for inclusion or incorporation by reference therein.
The Proxy Statement will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 3.10. Benefit Plans. (a) Except as disclosed in the
Company Filed SEC Documents or as disclosed in Item 3.10 of the Company
Disclosure Letter, since the date of the most recent audited financial
statements included in the Company Filed SEC Documents, there has not been any
adoption or amendment in any material respect by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other plan, arrangement
or understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of the Company or any of its
subsidiaries (collectively, "Benefit Plans"). Except as disclosed in the Company
Filed SEC Documents or in Item 3.10 of the Company Disclosure Letter, there
exist no employment, consulting, severance, termination or indemnification
agreement, arrangements or understandings between the Company or any of its
subsidiaries and any current or former employee, officer or director of the
Company or any of its subsidiaries.
(b) Item 3.10 of the Company Disclosure Letter contains a list
and brief description of all "employee pension benefit plans" (as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee
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welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other
Benefit Plans maintained, or contributed to, by the Company or any of its
subsidiaries for the benefit of any current or former employees, officers or
directors of the Company or any of its subsidiaries. The Company has delivered
to Parent true, complete and correct copies of (i) each Benefit Plan (or, in the
case of any unwritten Benefit Plans, descriptions thereof), (ii) the most recent
annual report on Form 5500 filed with the Internal Revenue Service with respect
to each Benefit Plan (if any such report was required), (iii) the most recent
summary plan description for each Benefit Plan for which such summary plan
description is required and (iv) each trust agreement and group annuity contract
relating to any Benefit Plan.
(c) Except as disclosed in Item 3.10 of the Company Disclosure
Letter, all Pension Plans have been the subject of determination letters from
the Internal Revenue Service to the effect that such Pension Plans are qualified
and exempt from Federal income taxes under Section 401(a) and 501(a),
respectively, of the Internal Revenue Code of 1986, as amended (the "Code"), and
no such determination letter has been revoked nor, to the best knowledge of the
Company, has revocation been threatened, nor has any such Pension Plan been
amended since the date of its most recent determination letter or application
therefor in any respect that would adversely affect its qualification or
materially increase its costs.
(d) No Pension Plan that the Company or any of its
subsidiaries maintains, or to which the Company or any of its subsidiaries is
obligated to contribute, other than any Pension Plan that is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA; collectively, the
"Multiemployer Pension Plans"), had, as of the respective last annual valuation
date for each such Pension Plan, an "unfunded benefit liability" (as such term
is defined in Section 4001(a)(18) of ERISA), based on actuarial assumptions
which have been furnished to Parent. None of the Pension Plans has an
"accumulated funding deficiency" (as such term is defined in Section 302 of
ERISA or Section 412 of the Code), whether or not waived. None of the Company,
any of its subsidiaries, any officer of the Company or any of its subsidiaries
or any of the Benefit Plans which are subject to ERISA, including the Pension
Plans, any trusts created thereunder or any trustee or administrator thereof,
has engaged in a
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"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could subject the Company, any of its subsidiaries or any officer of the Company
or any of its subsidiaries to any material tax or penalty on prohibited
transactions imposed by such Section 4975 or to any material liability under
Section 502(i) or (1) of ERISA. None of such Benefit Plans or trusts has been
terminated, nor has there been any "reportable event" (as that term is defined
in Section 4043 of ERISA) with respect thereto, during the last five years.
Neither the Company nor any of its subsidiaries has suffered or otherwise caused
a "complete withdrawal", or a "partial withdrawal" (as such terms are defined in
Section 4203 and Section 4205, respectively, of ERISA) since the effective date
of such Sections 4203 and 4205 with respect to any of the Multiemployer Pension
Plans.
(e) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Item 3.10 of the Company Disclosure
Letter, (i) no such Benefit Plan is unfunded or funded through a "welfare
benefits fund", as such term is defined in Section 419(e) of the Code, (ii) each
such Benefit Plan that is a "group health plan", as such term is defined in
Section 5000(b)(1) of the Code, complies with the applicable requirements of
Section 4980B(f) of the Code and (iii) each such Benefit Plan (including any
such Plan covering retirees or other former employees) may be amended or
terminated without material liability to the Company or any of its subsidiaries
on or at any time after the consummation of the Merger.
SECTION 3.11. Contracts; Indebtedness. (a) Except as disclosed
in the Company Filed SEC Documents or as set forth on Item 3.11 of the Company
Disclosure Letter, there are no contracts or agreements that are material to the
business, properties, assets, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole. Neither the
Company nor any of its subsidiaries is in (nor has the Company or any subsidiary
thereof received written notice (nor has any director, executive officer or
general manager of the Company, any subsidiary of the Company or any Station
received oral notice) from any third party alleging that the Company or any
subsidiary thereof is in) violation of or in default under (nor does there exist
any condition which upon the
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passage of time or the giving of notice would cause such a violation of or
default under) any loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other contract, agreement,
arrangement or understanding, to which it is a party or by which it or any of
its properties or assets is bound, except for violations or defaults that could
not, individually or in the aggregate, reasonably be expected to result in a
material adverse effect on the Company.
(b) Except as set forth in Item 3.11(b) of the Company
Disclosure Letter, neither the Company nor any of its subsidiaries is a party to
or is bound by any employment agreement, television network affiliation
agreement, any credit agreement, mortgage or indenture, or any material talent,
programming or joint venture agreement which (i) provides that the terms thereof
or any or all of the benefits or burdens thereunder will be affected or altered
(including, without limitation, by means of acceleration) by, or are contingent
upon, or (ii) will be subject to termination or cancellation as a result of, the
execution of this Agreement or the consummation of the transactions contemplated
hereby.
(c) Set forth on Item 3.11(c) of the Company Disclosure Letter
is (i) a list of all agreements, instruments and other obligations pursuant to
which any indebtedness for borrowed money or capitalized lease obligations of
the Company or any of its subsidiaries in an aggregate principal amount in
excess of $100,000 is outstanding or may be incurred and (ii) the respective
principal amounts outstanding thereunder.
SECTION 3.12. Litigation. As of the date of this Agreement,
there is no suit, claim, action, proceeding or investigation pending or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries that could reasonably be expected to have a material adverse effect
on the Company or prevent or materially delay the consummation of the Merger. As
of the date of this Agreement, neither the Company nor any of its subsidiaries
is subject to any outstanding order, writ, injunction or decree that could
reasonably be expected to have a material adverse effect on the Company or
prevent or materially delay the consummation of the Merger.
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SECTION 3.13. Compliance with Applicable Law. The Company and
its subsidiaries hold all permits, licenses, variances, exemptions, orders,
concessions, franchises, and approvals of all Governmental Entities necessary
for the lawful conduct of their respective businesses (the "Company Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders, concessions, franchises and approvals that would not have a material
adverse effect on the Company or prevent or materially delay the consummation of
the Merger. The Company and its subsidiaries are in compliance with the terms of
the Company Permits, except where the failure so to comply would not have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Merger. Except as disclosed in the Company Filed SEC
Documents, to the best knowledge of the Company, the businesses of the Company
and its subsidiaries are not being conducted in violation of any law, ordinance
or regulation of any Governmental Entity, except for possible violations that
would not have a material adverse effect on the Company or reasonably prevent or
materially delay the consummation of the Merger. Except as set forth in Item
3.13 of the Company Disclosure Letter, the Stations have been operated in all
material respects in full compliance with The Childrens Television Act of 1990
and the rules, regulations and policies of the FCC thereunder. As of the date of
this Agreement, to the best knowledge of the Company no investigation or review
by any Governmental Entity with respect to the Company or any of its
subsidiaries is pending or threatened, nor has any Governmental Entity indicated
an intention to conduct any such investigation or review, other than, in each
case, those the outcome of which would not be reasonably expected to have a
material adverse effect on the Company or prevent or materially delay the
consummation of the Merger.
SECTION 3.14. Tax Matters. Except as set forth in
Item 3.14 of the Company Disclosure Letter:
(a) The Company and each of its subsidiaries has filed all
Federal income tax returns and all other material tax returns and
reports required to be filed by it. All such returns are complete and
correct in all material respects. The Company and each of its
subsidiaries has paid (or the Company has paid on its subsidiaries'
behalf) all taxes shown as due on such
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returns and all material taxes (as defined below) for which no return
was required to be filed, and the most recent financial statements
contained in the Company Filed SEC Documents reflect an adequate
reserve for all taxes payable by the Company and its subsidiaries for
all taxable periods and portions thereof through the date of such
financial statements.
(b) No material tax return of the Company or any of its
subsidiaries is under audit or examination by any taxing authority, and
no written or unwritten notice of such an audit or examination has been
received by the Company or any of its subsidiaries. Each material
deficiency resulting from any audit or examination relating to taxes by
any taxing authority has been paid, except for deficiencies being
contested in good faith. No material issues relating to taxes were
raised in writing by the relevant taxing authority during any presently
pending audit or examination, and no material issues relating to taxes
were raised in writing by the relevant taxing authority in any
completed audit or examination that can reasonably be expected to recur
in a later taxable period. None of the Federal income tax returns of
the Company nor any of its subsidiaries consolidated in such returns
for any period have been examined by the Internal Revenue Service.
(c) There is no agreement or other document extending, or
having the effect of extending, the period of assessment or collection
of any taxes and no power of attorney with respect to any taxes has
been executed or filed with any taxing authority.
(d) No material liens for taxes exist with respect to any
assets or properties of the Company or any of its subsidiaries, except
for statutory liens for taxes not yet due.
(e) None of the Company or any of its subsidiaries is a party
to or is bound by any tax sharing agreement, tax indemnity obligation
or similar agreement, arrangement or practice with respect to
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taxes (including any advance pricing agreement, closing agreement or
other agreement relating to taxes with any taxing authority).
(f) None of the Company or any of its subsidiaries shall be
required to include in a taxable period ending after the Effective Time
taxable income attributable to income that accrued in a prior taxable
period but was not recognized in any prior taxable period as a result
of the installment method of accounting, the completed contract method
of accounting, the long-term contract method of accounting, the cash
method of accounting or Section 481 of the Code or comparable
provisions of state, local or foreign tax law.
(g) The disallowance of a deduction under Section 162(m) of
the Code for employee remuneration will not apply to any amount paid or
payable by the Company or any of its subsidiaries under any contract,
plan, program, arrangement or understanding currently in effect.
(h) Any amount or other entitlement that could be received
(whether in cash or property or the vesting of property) as a result of
any of the transactions contemplated by this Agreement by any employee,
officer or director of the Company or any of its affiliates who is a
"disqualified individual" (as such term is defined in proposed Treasury
Regulation Section 1.280G-1) under any employment, severance or
termination agreement, other compensation arrangement or Company
Benefit Plan currently in effect would not be characterized as an
"excess parachute payment" (as such term is defined in Section
280G(b)(1) of the Code).
(i) As used in this Agreement, "taxes" shall include all
Federal, state, local and foreign income, profits, franchise, gross
receipts, payroll, employment, property, sales, excise, withholding and
other taxes, tariffs or governmental charges of any nature whatsoever,
together with all interest,
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penalties and additions imposed with respect to such
amounts.
SECTION 3.15. State Takeover Statutes. The action of the Board
of Directors of the Company in approving the Merger, this Agreement and the
Stockholder Agreements is sufficient to render inapplicable to the Merger, this
Agreement and the Stockholder Agreements and the transactions contemplated by
this Agreement and the Stockholder Agreements the provisions of Section 203 of
the DGCL. To the best knowledge of the Company, no other state takeover statute
or similar statute or regulation applies or purports to apply to the Merger,
this Agreement, the Stockholder Agreements or any of the transactions
contemplated by this Agreement or the Stockholder Agreements.
SECTION 3.16. Environmental Matters. (a) Neither the Company
nor any of its subsidiaries has (i) placed, held, located, released, transported
or disposed of any Hazardous Substances (as defined below) on, under, from or at
any of the Company's or any of its subsidiaries' properties or any other
properties, other than in a manner that could not, in all such cases taken
individually or in the aggregate, reasonably be expected to result in a material
adverse effect on the Company, (ii) any knowledge or reason to know of the
presence of any Hazardous Substances on, under or at any of the Company's or any
of its subsidiaries' properties or any other property but arising from the
Company's or any of its subsidiaries' properties, other than in a manner that
could not, in all such cases taken individually or in the aggregate, reasonably
be expected to result in a material adverse effect on the Company, or (iii)
received any written notice (A) of any violation of any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment, environmental
regulation or control or regarding Hazardous Substances on, under or emanating
from any of the Company's or any of its subsidiaries' properties or any other
properties (collectively, "Environmental Laws"), (B) of the institution or
pendency of any suit, action, claim, proceeding or investigation by any
Governmental Entity or any third party in connection with any such violation,
(C) requiring the response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its subsidiaries' properties or any
other properties or (D) demanding payment for
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response to or remediation of Hazardous Substances at or arising from any of the
Company's or any of its subsidiaries' properties or any other properties, except
in each case for the notices set forth in Item 3.16 of the Company Disclosure
Letter and except for notices relating to matters that are not material. To the
best knowledge of the Company, neither the Company nor any subsidiary of the
Company has received any notice of a nature described in clauses (A) through
(D), inclusive, of the immediately preceding sentence. For purposes of this
Agreement, the term "Hazardous Substance" shall mean any toxic or hazardous
materials or substances, including asbestos, buried contaminants, chemicals,
flammable explosives, radioactive materials, petroleum and petroleum products
and any substances defined as, or included in the definition of, "hazardous
substances", "hazardous wastes," "hazardous materials" or "toxic substances"
under any Environmental Law.
(b) Except as set forth in Item 3.16 of the Company Disclosure
Letter, no Environmental Law imposes any obligation upon the Company or its
subsidiaries arising out of or as a condition to any transaction contemplated by
this Agreement or the Stockholder Agreements, including any requirement to
modify or to transfer any permit or license, any requirement to file any notice
or other submission with any Governmental Entity, the placement of any notice,
acknowledgment or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree. No
Lien has been placed upon any of the Company's or it subsidiaries' properties
under any Environmental Law.
SECTION 3.17. Intellectual Property. The Company and its
subsidiaries own, or are validly licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service mark rights, copyrights, know how, FCC call
signs and other proprietary intellectual property rights and computer programs
(collectively, "Intellectual Property Rights") that are material to the conduct
of the business of the Company and its subsidiaries taken as a whole. Item 3.17
of the Company Disclosure Letter sets forth a description of all Intellectual
Property Rights that are material to the conduct of the business of the Company
and its subsidiaries taken as a whole. Except as set forth in Item 3.17 of the
Company Disclosure Letter, no
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claims are pending or, to the best knowledge of the Company, threatened that the
Company or any of its subsidiaries is infringing or otherwise adversely
affecting the rights of any person with regard to any Intellectual Property
Right. To the best knowledge of the Company, except as set forth in Item 3.17 of
the Company Disclosure Letter, no person is infringing the rights of the Company
or any of its subsidiaries with respect to any Intellectual Property Right.
SECTION 3.18. FCC Qualifications. After due investigation,
except for the matters described in Item 3.18 of the Company Disclosure Letter,
the Company is not aware of any facts or circumstances relating to the Company
or any of its subsidiaries that might prevent or delay prompt consent to the
transfer of control applications with respect to the Stations and the issuance
of the FCC Order (as defined in Section 7.01(b)).
SECTION 3.19. Required Vote. The affirmative vote of the
holders of at least a majority of the Shares outstanding is the only vote of the
holders of any class or series of capital stock of the Company necessary under
applicable law or otherwise to approve the Merger and this Agreement and the
transactions contemplated hereby.
SECTION 3.20. Brokers; Schedule of Fees and Expenses. No
broker, investment banker, financial advisor or other person, other than Morgan
Stanley & Co. Incorporated, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company. The
Company has heretofore furnished Parent with a true and complete copy of its
engagement letter with Morgan Stanley & Co. Incorporated (which letter sets
forth the method of calculation of any fees to be payable to Morgan Stanley &
Co. Incorporated). In connection with this Agreement and the transactions
contemplated hereby, the Company is not subject to any obligation or commitment
to pay the legal fees or related expenses of any stockholder of the Company.
SECTION 3.21. Opinion of Financial Advisor. The
Company has received the opinion of Morgan Stanley & Co. Incorporated, dated the
date of this Agreement, to the effect
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that, as of the date of this Agreement, the Merger Consideration to be received
in the Merger by the Company's stockholders is fair to the Company's
stockholders from a financial point of view, and a complete and correct signed
copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to Parent, and such opinion has not been withdrawn or modified.
ARTICLE IV
Representations and Warranties
------------------------------
of Parent and Sub
-----------------
Parent and Sub represent and warrant to the Company as
follows:
SECTION 4.01. Organization. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted.
SECTION 4.02. Authority. Parent and Sub have requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and Sub (including approval of the Merger and this
Agreement by the Board of Directors of Parent) and no other corporate
proceedings on the part of Parent and Sub are necessary to authorize this
Agreement or to consummate such transactions. No vote of Parent stockholders is
required to approve this Agreement or the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and Sub, as the case
may be, and, assuming this Agreement constitutes a valid and binding obligation
of the Company, constitutes a valid and binding obligation of each of Parent and
Sub enforceable against them in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and to general principles of equity.
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SECTION 4.03. Consents and Approvals; No Violations. Except
for filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, the
Communications Act (including approvals or waivers of the FCC in connection with
the transfer of the licenses in connection with the ownership or operation of
the Stations), the HSR Act, the DGCL, the laws of other states in which Parent
is qualified to do or is doing business and state takeover laws, neither the
execution, delivery or performance of this Agreement by Parent and Sub nor the
consummation by Parent and Sub of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or by-laws of Parent and Sub, (ii) require any
filing with, or permit, authorization, consent or approval of, any Governmental
Entity (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not be reasonably expected
to prevent or materially delay the consummation of the Merger), (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any loan or credit agreement, note, bond, mortgage, indenture, permit,
concession, franchise, license, lease, contract, agreement or other instrument
or obligation to which Parent or any of its subsidiaries is a party or by which
any of them or any of their properties or assets may be bound or (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its subsidiaries or any of their properties or assets, except in
the case of clauses (iii) and (iv) for violations, breaches or defaults which
would not, individually or in the aggregate, be reasonably expected to prevent
or materially delay the consummation of the Merger.
SECTION 4.04. Information Supplied. None of the information
supplied or to be supplied by Parent or Sub specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in
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light of the circumstances under which they are made, not misleading.
SECTION 4.05. Interim Operations of Sub. Sub was formed solely
for the purpose of engaging in the transactions contemplated hereby, has engaged
in no other business activities and has conducted its operations only as
contemplated hereby.
SECTION 4.06. Brokers. No broker, investment banker, financial
advisor or other person, other than Merrill Lynch & Co., the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
SECTION 4.07. Financing. At the Effective Time, Parent will
have sufficient funds available to purchase, or to cause Sub to purchase, all
the Shares pursuant to the Merger and to pay all fees and expenses related to
the transactions contemplated by this Agreement.
SECTION 4.08. FCC Qualifications. Except as set forth in Item
4.08 of the letter from Parent to the Company dated the date hereof, which
letter relates to this Agreement and is designated therein as the Parent
Disclosure Letter (the "Parent Disclosure Letter"), and after due investigation,
Parent and Sub are not aware of any other facts or circumstances relating to
Parent or any of its subsidiaries that might prevent or delay prompt consent by
the FCC to the transfer of control applications relating to the Stations and the
issuance of the FCC Order.
SECTION 4.09. Litigation. As of the date of this Agreement,
there is no suit, claim, action, proceeding or investigation pending or, to the
best knowledge of Parent, threatened against Parent or any of its subsidiaries
that could reasonably be expected to prevent or materially delay the
consummation of the Merger. As of the date of this Agreement, neither Parent nor
any of its subsidiaries is subject to any outstanding order, writ, injunction or
decree that could reasonably be expected to prevent or materially delay the
consummation of the Merger.
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ARTICLE V
Covenants
---------
SECTION 5.01. Covenants of the Company. During the period from
the date of this Agreement through the Effective Time, the Company agrees as to
itself and its subsidiaries that (except as expressly contemplated or permitted
by this Agreement, or to the extent that Parent shall otherwise consent in
writing):
(a) Ordinary Course. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted and
shall use all reasonable efforts to preserve intact their present business
organizations, keep available the services of their present officers and key
employees and preserve their relationships with customers, suppliers and others
having business dealings with the Company and its subsidiaries.
(b) Dividends; Changes in Stock. The Company shall not, and
shall not permit any of its subsidiaries to, (i) declare or pay any dividends on
or make other distributions in respect of any of its capital stock except for
dividends by a direct or indirect wholly owned subsidiary of the Company to its
parent, (ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock or (iii) repurchase,
redeem or otherwise acquire any shares of capital stock of the Company or its
subsidiaries or any other securities thereof or any rights, warrants or options
to acquire any such shares or other securities.
(c) Issuance of Securities. The Company shall not, and shall
not permit any of its subsidiaries to, issue, deliver, sell, pledge or encumber,
or authorize or propose the issuance, delivery, sale, pledge or encumbrance of,
any shares of its capital stock of any class or any securities convertible into,
or any rights, warrants, calls, subscriptions or options to acquire, any such
shares or convertible securities, or any other ownership interest (including
stock appreciation rights or phantom stock)
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other than (i) the issuance of Shares upon the exercise of Company Stock Options
outstanding on the date of this Agreement and in accordance with the terms of
such Company Stock Options and (ii) the issuance of Shares upon the exercise of
Management Warrants outstanding on the date of this Agreement and in accordance
with the terms of such Management Warrants.
(d) Governing Documents. The Company shall not, and
shall not permit any of its subsidiaries to, amend or propose to
amend its certificate of incorporation or by-laws (or similar
organizational documents).
(e) No Acquisitions. The Company shall not, and shall not
permit any of its subsidiaries to, acquire or agree to acquire (i) by merging or
consolidating with, or by purchasing a substantial equity interest in or
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, limited liability company, joint venture,
association or other business organization or division thereof or (ii) any
assets that are material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole.
(f) No Dispositions. Other than dispositions in the ordinary
course of business consistent with past practice which are not material,
individually or in the aggregate, to the Company and its subsidiaries taken as a
whole, the Company shall not, and shall not permit any of its subsidiaries to,
sell, lease, license, encumber or otherwise dispose of, or agree to sell, lease,
license, encumber or otherwise dispose of, any of its assets.
(g) Indebtedness. The Company shall not, and shall not permit
any of its subsidiaries to, (i) incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or warrants
or rights to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of others, enter into any "keep-
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for working capital borrowings incurred in the ordinary
course of business consistent with past practice, or (ii) make any loans,
advances
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or capital contributions to, or investments in, any other person, other than (A)
to the Company or any direct or indirect wholly owned subsidiary of the Company
or (B) any advances to employees in accordance with past practice.
(h) Advice of Changes; Filings. To the extent permitted by FCC
regulations, the Company shall confer on a regular and frequent basis with
Parent, report on operational matters and promptly advise Parent orally and in
writing of any material adverse change with respect to the Company. The Company
shall promptly provide to Parent (or its counsel) copies of all filings made by
the Company with any Governmental Entity in connection with this Agreement and
the transactions contemplated hereby.
(i) Tax Matters. The Company shall not make any tax election
that would have a material effect on the tax liability of the Company or any of
its subsidiaries or settle or compromise any material income tax liability of
the Company or any of its subsidiaries. The Company shall, before filing or
causing to be filed any material tax return of the Company or any of its
subsidiaries, consult with Parent and its advisors as to the positions and
elections that may be taken or made with respect to such return, and shall take
such positions or make such elections as the Company and Parent shall jointly
agree or, failing such agreement, shall take positions or make elections
consistent with its past practices.
(j) Capital Expenditures. Neither the Company nor any
of its subsidiaries shall make or agree to make any new capital
expenditure or expenditures that, individually, exceeds
$1,000,000 or, in the aggregate, exceed $5,000,000.
(k) Discharge of Liabilities. The Company shall not, and shall
not permit any of its subsidiaries to, pay, discharge, settle or satisfy any
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction, in the ordinary course of business consistent with past practice
or in accordance with their terms, of liabilities recognized or disclosed in the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company Filed SEC Documents or incurred since the date
of such
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financial statements in the ordinary course of business consistent with past
practice, or waive the benefits of, or agree to modify in any manner, any
confidentiality, standstill or similar agreement to which the Company or any of
its subsidiaries is a party.
(l) Material Contracts. Neither the Company nor any of its
subsidiaries shall (i) enter into, modify in any material respect, amend in any
material respect or terminate any (w) television network affiliation agreement
relating to any of the Stations, (x) any programming agreement having a term
longer than one year or having an aggregate value over its term greater than
$500,000, (y) retransmission consent agreement relating to any of the Stations
or (z) any other material contract or agreement to which the Company or such
subsidiary is a party or (ii) waive, release or assign any material rights or
claims.
(m) Employee Matters. Neither the Company nor any of its
subsidiaries shall (i) grant any increases in the compensation of any of its
directors, officers or key employees, except for increases required under
employment agreements existing on the date hereof and increases for officers and
employees in the ordinary course of business consistent with past practice that,
in any event, do not increase such officer's or employee's aggregate
compensation by more than 10% over his aggregate compensation in effect on the
date hereof, (ii) pay or agree to pay any pension retirement allowance or other
employee benefit not required or contemplated by any of the existing Benefit
Plans as in effect on the date hereof to any such director, officer or key
employee, whether past or present, (iii) enter into any new, or materially amend
any existing, employment, severance or termination agreement with any such
director, officer or key employee, (iv) except as required to comply with
applicable law, become obligated under any new Benefit Plan which was not in
existence on the date hereof, or amend any such plan or arrangement in existence
on the date hereof if such amendment would have the effect of enhancing any
benefits thereunder. The Company shall provide Parent with copies of any
amendments to any Benefit Plan prior to the Effective Time or (v) terminate the
employment, demote, reassign or otherwise make any change in the employment
status of any existing general manager of any Station. Notwithstanding the
foregoing, the Company may pay "stay bonuses"
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to employees who are not parties to employment agreements in an
aggregate amount not exceeding $200,000.
(n) Accounting. The Company shall not adopt any material
change, other than in the ordinary course of business consistent with past
practice or as required by the SEC or by law, in its accounting policies,
procedures or practices.
(o) FCC License Renewals. The Company will, and shall cause
its subsidiaries to, timely file with the FCC all license renewal applications
with respect to the Stations as they become due and shall take all necessary
action to effectuate such license renewals.
In the event the Company shall request Parent to consent in writing to an action
otherwise prohibited by this Section 5.01, Parent shall use its reasonable best
efforts to respond in a prompt and timely fashion, but may otherwise respond
affirmatively or negatively in its sole discretion.
SECTION 5.02. No Solicitation. (a) The Company and its
subsidiaries and their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, financial advisor, attorney or accountant retained by the
Company or any of its subsidiaries) shall immediately cease any discussions or
negotiations with any parties that may be ongoing with respect to a Takeover
Proposal (as hereinafter defined). The Company shall not, nor shall it permit
any of its subsidiaries to, and it shall use its best efforts to cause its
officers, directors, employees, agents, affiliates or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries not to, directly or indirectly, (i) solicit, initiate
or knowingly encourage (including by way of furnishing information, other than
the Company SEC Documents), or knowingly take any other action to facilitate,
any inquiries or the making of any proposal which constitutes, or would
reasonably be expected to lead to, any Takeover Proposal or (ii) participate in
any discussions or negotiations regarding any Takeover Proposal; provided,
however, that if the Board of Directors of the Company determines in good faith,
after consultation with and based on the advice of outside counsel, that it is
required to do so in order to comply with its fiduciary duties to the Company's
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stockholders under applicable law, the Company may, in response to an
unsolicited Takeover Proposal, and subject to compliance with Section 5.02(c),
(x) furnish information with respect to the Company to any person pursuant to a
confidentiality agreement containing terms no less favorable to the Company than
the form entered into between the Company and Parent and (y) participate in
negotiations regarding such Takeover Proposal. For purposes of this Agreement,
"Takeover Proposal" means any inquiry, proposal or offer from any person
relating to any direct or indirect acquisition or purchase of 20% or more of the
assets of the Company and its subsidiaries taken as a whole or 20% or more of
any class of equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 20% or more of any class of equity securities of the Company
or any of its subsidiaries, any merger, consolidation, business combination,
sale of substantially all the assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement, or any other transaction
the consummation of which could reasonably be expected to prevent or materially
delay the Merger or which would reasonably be expected to dilute materially the
benefits to Parent of the transactions contemplated by this Agreement and the
Stockholder Agreements.
(b) Except as set forth in this Section 5.02, neither the
Board of Directors of the Company nor any committee thereof shall (i) withdraw
or modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of the
Merger or this Agreement, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that the Board of
Directors of the Company determines in good faith, after consultation with and
based on the advice of outside counsel, that it is required to do so in order to
comply with its fiduciary duties to the Company's stockholders under applicable
law, the Board of Directors of the Company may (subject to the following
sentences) withdraw or modify its approval or
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recommendation of the Merger and this Agreement (or not to recommend it before
the Proxy Statement is sent to stockholders), approve or recommend a Superior
Proposal (as defined below) or terminate this Agreement, but in each case only
at a time that is after the fifth business day following Parent's receipt of
written notice (a "Notice of Superior Proposal") advising Parent that the Board
of Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person (and, if known and applicable, its "ultimate parent entity" as defined in
the rules and regulations promulgated under the HSR Act) making such Superior
Proposal. In addition, if the Company proposes to terminate this Agreement, it
shall upon such times set forth in Section 6.05(b) pay to Parent the Expenses
and Termination Fee (each as defined in Section 6.05(b)). For purposes of this
Agreement, a "Superior Proposal" means any bona fide proposal made by a third
party to acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the Company Common Stock then outstanding or
all or substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on the advice of a financial advisor of nationally recognized reputation)
to be more favorable to the Company's stockholders than the Merger.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.02, the Company shall immediately
advise Parent orally and in writing of any request for information (other than
the Company SEC Documents) or of any Takeover Proposal, the material terms and
conditions of such request or Takeover Proposal and the identity of the person
making such request or Takeover Proposal. The Company will keep Parent fully
informed of the status and details (including amendments or proposed amendments)
of any such request or Takeover Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with and based on the
advice of outside counsel, failure so to disclose
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would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law; provided, however, neither the Company nor its Board of
Directors nor any committee thereof shall, except as permitted by Section
5.02(b), withdraw or modify, or propose to withdraw or modify, its position with
respect to this Agreement or the Merger or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
SECTION 5.03. Third Party Standstill Agreements. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill agreement to which it or any of its subsidiaries is a party (other
than any involving Parent or its subsidiaries). During such period, the Company
agrees to enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreements, including, but not limited to, obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
SECTION 5.04 Other Actions. The Company shall not, and shall
not permit any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of the representations and
warranties of the Company set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that are not so qualified becoming untrue in any material respect, or (iii) any
of the conditions set forth in Section 7.01 or Section 7.03 not being satisfied
(subject to the Company's right to take actions specifically permitted by
Section 5.02).
ARTICLE VI
Additional Agreements
---------------------
SECTION 6.01. Stockholder Approval; Preparation of Proxy
Statement. (a) The Company shall as soon as practicable following the date
hereof, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company shall, through its Board of
Directors, recommend to
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its stockholders that the Company Stockholder Approval be given; provided that
in the event that the Board of Directors of the Company determines in good
faith, after consultation with and based on the advice of outside counsel, that
it is required to do so in order to comply with its fiduciary duties to the
Company's stockholders under applicable law, the Board of Directors of the
Company may decline to make such recommendation. Without limiting the generality
of the foregoing, the Company agrees that its obligations pursuant to the first
sentence of this Section 6.01(a) shall not be affected by (i) the commencement,
public proposal, public disclosure or communication to the Company of any
Takeover Proposal or (ii) the withdrawal or modification by the Board of
Directors of the Company of its approval or recommendation of this Agreement or
the Merger.
(b) The Company shall as soon as practicable following the
date hereof, prepare and file a preliminary Proxy Statement with the SEC and
shall use its reasonable efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of such staff. Parent shall as soon as practicable following
the date hereof supply such information for inclusion in the Proxy Statement as
shall reasonably be requested by the Company. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company shall promptly prepare and mail to its
stockholders such an amendment or supplement. The Company shall not mail any
Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects.
(c) At the Stockholders Meeting, Parent agrees to cause all
Shares owned by Parent or any subsidiary of Parent to be voted in favor of the
Company Stockholder Approval.
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SECTION 6.02. Access to Information. To the extent permitted
by FCC regulations and subject to restrictions contained in confidentiality
agreements to which the Company is subject (from which it shall use reasonable
efforts to be released), upon reasonable notice the Company shall, and shall
cause each of its subsidiaries to, afford to Parent and to the officers,
employees, accountants, counsel and other representatives of Parent access,
during normal business hours during the period prior to the Effective Time, to
all their respective properties, books, contracts, commitments and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to Parent (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirement of the Federal or state securities laws, the Communications
Act or the Federal tax laws and (b) all other information concerning its
business, properties and personnel as Parent may reasonably request. Except as
otherwise agreed to by the Company, unless and until the consummation of the
Merger, and notwithstanding termination of this Agreement, the terms of the
Confidentiality Agreements dated as of November 8, 1995 and June 5, 1996 between
Parent and the Company (the "Confidentiality Agreements") shall apply to all
information furnished thereunder or hereunder.
SECTION 6.03. Reasonable Efforts. (a) Each of the Company,
Parent and Sub agree to use its reasonable efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements that
may be imposed on itself with respect to the Merger (which actions shall include
furnishing all information required under the Communications Act, the HSR Act
and in connection with approvals of or filings with any other Governmental
Entity) and shall promptly cooperate with and furnish information to each other
in connection with any such requirements imposed upon any of them or any of
their subsidiaries in connection with the Merger. Each of the Company, Parent
and Sub shall, and shall cause its subsidiaries to, use its reasonable efforts
to take all reasonable actions necessary to obtain (and shall cooperate with
each other in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public or private third party
required to be obtained or made by Parent, Sub, the Company or any of their
subsidiaries in connection with the Merger or the
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taking of any action contemplated thereby or by this Agreement, except that no
party need waive any substantial rights or agree to any substantial limitation
on its operations or to dispose of any assets not contemplated by the terms of a
Temporary Waiver (as hereinafter defined); provided that in no event shall
Parent be required to dispose of any assets or operations owned by it or any of
its subsidiaries on the date hereof or otherwise acquired prior to the Effective
Time pursuant to an agreement entered into by Parent or any of its subsidiaries
prior to the date hereof.
(b) Each of Parent, Sub and the Company shall use its
reasonable efforts to file the applications for the FCC Order within twenty
business days from the date hereof and to take, or cause to be taken, all
actions necessary, proper or advisable to obtain the FCC Order and to satisfy
all conditions therein (including the acceptance of a Temporary Waiver), in each
case so as to come into compliance with FCC requirements and to consummate the
Merger as promptly as practicable, except that no party need waive any
substantial rights or agree to any substantial limitation on its operations or
to dispose of any assets not contemplated by the terms of a Temporary Waiver;
provided that in no event shall Parent be required to dispose of any assets or
operations owned by it or any of its subsidiaries on the date hereof or
otherwise acquired prior to the Effective Time pursuant to an agreement entered
into by Parent or any of its subsidiaries prior to the date hereof. "Temporary
Waiver", as used herein, shall mean a waiver of the prohibitions contained in 47
C.F.R. ss. 73.3555, which waiver shall expire not earlier than six months from
the date of the FCC Order and which, among other things, shall suspend any
obligation of Parent or any of its subsidiaries to dispose of any assets or
operations of the Surviving Corporation or any subsidiary thereof or to agree to
limitations on its or their operations and which shall not require Parent to
dispose of any assets or operations owned by it or any of its subsidiaries on
the date hereof or otherwise acquired prior to the Effective Time pursuant to an
agreement entered into by Parent or any of its subsidiaries prior to the date
hereof.
SECTION 6.04. Company Stock Options and Management
Warrants. (a) At the Effective Time, each holder of a then outstanding Company
Stock Option, whether or not then exercisable, shall, in settlement thereof,
receive from the
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Company for each Share subject to such Company Stock Option an amount (subject
to any applicable withholding tax) in cash equal to the excess, if any, of the
Merger Consideration over the per Share exercise price of such Company Stock
Option (such amount being hereinafter referred to as the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Exchange Act, any such amount shall be paid as soon as
practicable after the first date payment can be made without liability to such
person under Section 16(b) of the Exchange Act. Upon receipt of the Option
Consideration, the Company Stock Option and any coupled SAR (as defined in the
Company's Executive Stock Option Plan) shall be canceled. The surrender of any
Company Stock Option (and any coupled SAR) to the Company in exchange for the
Option Consideration shall be deemed a release of any and all rights the holder
had or may have had in respect of such Company Stock Option (and any such
coupled SAR). Prior to the Effective Time, the Company shall use its best
efforts to obtain all necessary consents or releases from holders of Company
Stock Options and to take all such other lawful action as may be necessary to
give effect to the transactions contemplated by this Section 6.04(a) (except for
such action that may require the approval of the Company's stockholders). Except
as otherwise agreed to by the parties, (a) the Company's Executive Stock Option
Plan shall terminate as of the Effective Time and the provisions in any other
plan, program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any of its
subsidiaries shall be canceled as of the Effective Time and (b) the Company
shall take all action necessary to ensure that following the Effective Time no
participant in the Company's Executive Stock Option Plan or other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any subsidiary of the
Company or the Surviving Corporation and to terminate all such plans, programs
or arrangements.
(b) At the Effective Time, each holder of a then outstanding
Management Warrant, whether or not then exercisable, shall, in settlement
thereof, receive from the Company for each Share subject to such Management
Warrant an amount (subject to any applicable withholding tax) in cash equal to
the excess, if any, of the Merger Consideration over the per Share exercise
price of such Management Warrant (such amount being hereinafter
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referred to as the "Warrant Consideration"); provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
Upon receipt of the Warrant Consideration, the related Management Warrant shall
be canceled. The surrender of any Management Warrant to the Company in exchange
for the Warrant Consideration shall be deemed a release of any and all rights
the holder had or may have had in respect of such Management Warrant. Prior to
the Effective Time, the Company shall use its best efforts to obtain all
necessary consents or releases from the holders of the Management Warrants and
to take all such other lawful action as may be necessary to give effect to the
transactions contemplated by this Section 6.04(b) (except for such action that
may require the approval of the Company's stockholders). Except as otherwise
agreed to by the parties, the Company shall take all action necessary to ensure
that following the Effective Time no holder of Management Warrants shall have
any right thereunder to acquire equity securities of the Company, the Surviving
Corporation or any subsidiary of the Company or the Surviving Corporation and to
cancel the Management Warrants upon payment of the Warrant Consideration
relating thereto.
SECTION 6.05. Fees and Expenses. (a) Except as provided below
in this Section 6.05, all fees and expenses incurred in connection with the
Merger, this Agreement and the transactions contemplated by this Agreement shall
be paid by the party incurring such fees or expenses, whether or not the Merger
is consummated.
(b) The Company shall pay, or cause to be paid, in same day
funds to Parent the sum of (x) the Expenses (as hereinafter defined) and (y)
$30,000,000 (the "Termination Fee") under the circumstances and at the times set
forth as follows:
(i) if Parent or Sub terminates this Agreement under Section
8.01(e) and at the time of such termination there is no pending
Takeover Proposal, the Company shall pay the Expenses and the
Termination Fee upon demand;
(ii) if Parent or Sub terminates this Agreement under
Section 8.01(e) and at the time of such termination a
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Takeover Proposal shall then be pending, the Company shall pay the
Expenses, upon demand; in addition, if within twelve months after such
termination, the Company shall enter into an Acquisition Agreement
providing for a Takeover Proposal or a Takeover Proposal shall be
consummated, the Company shall pay the Termination Fee concurrently
with the earlier of the entering into of such Acquisition Agreement or
the consummation of such Takeover Proposal;
(iii) if the Company terminates this Agreement under Section
8.01(f), the Company shall pay the Expenses concurrently therewith; in
addition, if within twelve months after such termination, the Company
shall enter into an Acquisition Agreement providing for a Takeover
Proposal or a Takeover Proposal shall be consummated, the Company shall
pay the Termination Fee concurrently with the earlier of the entering
into of such Acquisition Agreement or the consummation of such Takeover
Proposal; and
(iv) if, at the time of any other termination of this
Agreement (other than (A) a termination by the Company pursuant to
Section 8.01(g) or (B) provided that the Company is not at the time of
such termination in breach of its obligations under Section 5.02 or
Section 6.03, a termination pursuant to Section 8.01(a), Section
8.01(b)(i) or Section 8.01(b)(iii)), a Takeover Proposal shall have
been made (other than a Takeover Proposal made prior to the date
hereof), the Company shall pay the Expenses, if terminated by the
Company, concurrently therewith or, if terminated by Parent, upon
demand; in addition, if within twelve months of such termination, the
Company shall enter into an Acquisition Agreement providing for a
Takeover Proposal or a Takeover Proposal shall be consummated, the
Company shall pay the Termination Fee concurrently with the earlier of
the entering into of such Acquisition Agreement or the consummation of
such Takeover Proposal.
"Expenses" shall mean documented out-of-pocket fees and expenses up to an
aggregate $2,500,000 incurred prior to any termination of this Agreement or
otherwise paid by or on behalf of Parent or Sub in connection with the Merger or
the consummation of any of the transactions contemplated by this Agreement,
including all fees and expenses of law firms, commercial banks, investment
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banking firms, accountants, experts and consultants to Parent or Sub. In no
event shall more than one Termination Fee be payable.
SECTION 6.06. Indemnification. (a) The Certificate of
Incorporation and By-Laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Restated Certificate
of Incorporation and By-Laws of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of persons who at any time prior to the Effective Time were
identified as prospective indemnitees under the Restated Certificate of
Incorporation or By-Laws of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by law.
Parent will not permit the provisions with respect to
indemnification set forth in the Certificate of Incorporation and By-Laws of any
of the Company's subsidiaries on the date of this Agreement to be amended,
repealed or otherwise modified for a period of six years after the Effective
Time in any manner that would adversely affect the rights thereunder of persons
who at any time prior to the Effective Time were identified as prospective
indemnitees under any such Certificate of Incorporation or By-Laws in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by law.
(b) From and after the Effective Time, the Surviving
Corporation shall indemnify, defend and hold harmless the present and former
officers, directors, agents and employees of the Company and its subsidiaries
(collectively, the "Indemnified Parties") against all losses, expenses, claims,
damages, liabilities or amounts that are paid in settlement of, with the
approval or Parent and the Surviving Corporation (which approval shall not be
unreasonably withheld), or otherwise in connection with, any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole or in part on the
fact that such person is or was such a director, officer, agent or employee of
the Company or any subsidiary and arising out of actions or omissions occurring
at or prior to the Effective Time (including the
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transactions contemplated by this Agreement), in each case to the fullest extent
permitted under the DGCL (and, from and after the Effective Time, shall pay
expenses in advance of the final disposition of any such action or proceeding to
each Indemnified Party to the fullest extent permitted under the DGCL, upon
receipt from the Indemnified Party to whom expenses are advanced of the
undertaking to repay such advances contemplated by Section 145(e) of the DGCL).
Parent hereby guarantees the Surviving Corporation's obligations to the
Indemnified Parties pursuant to this Section 6.06.
(c) Without limiting the foregoing, in the event any Claim is
brought against any Indemnified Party (whether arising before or after the
Effective Time) after the Effective Time (i) the Surviving Corporation shall pay
all reasonable fees and expenses of counsel for the Indemnified Parties relating
to such claim (which counsel shall be reasonably acceptable to Parent) and (ii)
the Surviving Corporation shall not be liable for any settlement of any Claim
effected without its written consent, which consent shall not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 6.06, upon learning of any such Claim, shall promptly notify the
Surviving Corporation (although the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability which
the Surviving Corporation may have under this Section 6.06, except to the extent
such failure prejudices the Surviving Corporation ), and shall deliver to the
Surviving Corporation the undertaking contemplated by Section 145(e) of the
DGCL. Notwithstanding anything contained herein to the contrary, the Surviving
Corporation shall not be obligated pursuant to this Section to pay the fees and
expenses of more than one law firm (in addition to any appropriate local
counsel) for all Indemnified Parties as a group with respect to each such matter
unless there is, under applicable standards of professional conduct (as
reasonably determined by counsel to such Indemnified Parties), a conflict on any
significant issue between the positions of any two or more of such Indemnified
Parties, in which event, any additional counsel as may be reasonably required
and shall be reasonably satisfactory to Parent may be retained by such
Indemnified Parties.
(d) This Section 6.06 shall survive the consummation of the
Merger and is intended to be for the benefit of, and shall
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be enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on Parent and Sub and the
Surviving Corporation and their respective successors and assigns.
SECTION 6.07. Obligations of Sub. Subject to the terms and
conditions set forth in this Agreement, Parent shall take all actions necessary
to cause Sub to perform its obligations under this Agreement and to consummate
the Merger on the terms and conditions set forth in this Agreement.
SECTION 6.08. Employee Benefits. (a) For at least twelve
months following the Effective Time, Parent shall cause the Surviving
Corporation to maintain employee benefits and programs for officers and
employees of the Company and its subsidiaries (other than benefits based on
equity securities or any equivalent thereof or any incentive based compensation,
bonus, phantom stock or similar arrangement) that are no less favorable in the
aggregate than those in place on the date hereof. For purposes of eligibility to
participate in and vesting in benefits provided under employee benefit plans
maintained by Parent and its affiliates (but not for purposes of determining
benefits (or accruals thereof) under such plans), all persons previously
employed by the Company or its subsidiaries and then employed by Parent or its
affiliates shall be credited with their years of service with the Company and
its subsidiaries. Nothing contained herein shall be construed to obligate Parent
or any subsidiary thereof to employ, or cause the Company or its subsidiaries
from and after the Effective Time to continue to employ, any officer or employee
of the Company or its subsidiaries.
(b) From and after the Effective Time, Parent shall cause the
Surviving Corporation to assume and perform the Company's obligations as they
exist on the date hereof under the Employment Agreements, each as amended by the
Amendment to Employment Agreement dated as of December 20, 1995, between the
Company and each of Michael Finkelstein, Edward T. Karlik and John C. Ferrara.
SECTION 6.09. Certain Litigation. The Company agrees that
it shall not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating to
the Merger, this Agreement
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or the Stockholder Agreements, without the prior written consent of Parent. In
addition, the Company shall not voluntarily cooperate with any third party that
may hereafter seek to restrain or prohibit or otherwise oppose the Merger and
shall cooperate with Parent and Sub to resist any such effort to restrain or
prohibit or otherwise oppose the Merger, unless the Board of Directors of the
Company determines in good faith, after consultation with and based on the
advice of outside counsel, that failing so to cooperate with such third party or
cooperating with Parent or Sub, as the case may be, would constitute a breach of
the Board's fiduciary duties under applicable law.
SECTION 6.10. Transfer of Ownership of Channel 61. The Company
agrees that, promptly after the execution of this Agreement, it shall (a)
withdraw its pending FCC application with respect to the transfer of ownership
of WTIC-TV, Channel 61, Hartford, Connecticut to William Grimes (which
withdrawal may be conditioned upon completion of the Merger, if such conditional
withdrawal is permitted by the FCC) and (b) upon such withdrawal, terminate or
amend, in accordance with the terms and conditions set forth in Item 6.10 of the
Company Disclosure Letter, the Stockholders' Agreement dated March 11, 1994, as
amended, among Hartford Television, Inc., William Grimes and 61 Licensee, Inc.
relating to such transfer of ownership.
ARTICLE VII
Conditions Precedent
--------------------
SECTION 7.01. Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. The Company
Stockholder Approval shall have been obtained.
(b) FCC Order. The FCC shall have issued the FCC Order and any
condition or action required to be satisfied or taken to legally effect
the Merger in compliance with the FCC Order shall have been so
satisfied or taken (provided, that in no event shall the foregoing
require the
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satisfaction of any condition or the taking of any action that could
under the terms of the FCC Order be so satisfied or taken subsequent to
consummation of the Merger). As used in this Agreement, the term "FCC
Order" means an order or decision of the FCC which grants all consents
or approvals required under the Communications Act for the transfer of
control of all FCC licenses held by the Company to Parent and/or Sub
and the consummation of the Merger and the other transactions
contemplated by this Agreement, whether or not any appeal or request
for reconsideration or review of such order is pending, or whether the
time for filing any such appeal or request for reconsideration or
review, or for any sua sponte action by the FCC with similar effect,
has expired. For purposes of this paragraph, the "FCC" shall mean the
FCC or its staff.
(c) HSR Period. The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated.
(d) No Injunctions Or Restraints. No statute, rule,
regulation, executive order, decree, temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Merger
shall be in effect; provided, however, that each of the parties shall
have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any
injunction or other order that may be entered except that no party need
waive any substantial rights or agree to any substantial limitation on
its operations or to dispose of any assets not contemplated by the
terms of a Temporary Waiver and in no event shall Parent be required to
dispose of any assets or operations owned by it or any of its
subsidiaries on the date hereof or otherwise acquired prior to the
Effective Time pursuant to an Agreement entered into by Parent prior to
the date hereof.
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SECTION 7.02. Conditions to the Company's Obligation to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the satisfaction at or prior to the Closing Date of the following additional
conditions:
(a) Performance of Obligations; Representations and
Warranties. Parent and Sub shall have performed in all material
respects each of their agreements contained in this Agreement required
to be performed on or prior to the Closing Date, each of the
representations and warranties of Parent and Sub contained in this
Agreement that is qualified by materiality shall be true and correct on
and as of the Closing Date as if made on and as of such date (other
than to the extent that any such representation and warranty, by its
terms, is expressly limited to a specific date, in which case such
representation and warranty shall be true and correct as of such date)
and each of the representations and warranties that is not so qualified
shall be true and correct in all material respects on and as of the
Closing Date as if made on and as of such date (other than to the
extent that any such representation and warranty, by its terms, is
expressly limited to a specific date, in which case such representation
and warranty shall be true and correct as of such date), in each case
except as contemplated or permitted by this Agreement.
(b) Officer's Certificate. Parent shall have furnished to the
Company a certificate, dated the Closing Date, signed on behalf of
Parent by an appropriate officer of Parent, certifying to the effect
that the conditions set forth in this Section 7.02, insofar as they
relate to Parent, have been satisfied in full.
(c) Other Documents. Parent and Sub shall have furnished to
the Company at the closing of the Merger such other customary
documents, certificates or instruments as the Company may reasonably
request evidencing compliance by Parent and Sub with the terms of this
Agreement.
SECTION 7.03. Conditions to the Parent's and Sub's
Obligations to Effect the Merger. The obligations of Parent and Sub to effect
the Merger shall be subject to the satisfaction at
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or prior to the Closing Date of the following additional
conditions:
(a) Performance of Obligations; Representations and
Warranties. The Company shall have performed in all material respects
each of its agreements contained in this Agreement required to be
performed on or prior to the Closing Date, each of the representations
and warranties of the Company contained in this Agreement that is
qualified by materiality shall be true and correct on and as of the
Closing Date as if made on and as of such date (other than to the
extent that any such representation and warranty, by its terms, is
expressly limited to a specific date, in which case such representation
and warranty shall be true and correct as of such date) and each of the
representations and warranties that is not so qualified shall be true
in all material respects on and as of the Closing Date as if made on
and as of such date (other than to the extent that any such
representation and warranty is, by its terms, expressly limited to a
specific date, in which case such representation and warranty shall be
true and correct as of such date), in each case except as contemplated
or permitted by this Agreement.
(b) Absence of Certain Changes. Since the date of this
Agreement, (i) there shall have occurred no extraordinary adverse
change (as hereinafter defined) with respect to the Company, (ii) no
license renewal application filed by the Company or any of its
subsidiaries with the FCC relating to any Station shall have been
denied and (iii) there shall not have occurred and continued to exist
for more than three business days (A) any general suspension of trading
in, or limitation on prices for, securities on a national securities
exchange in the United States (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market
index), (B) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (C) any limitation
(whether or not mandatory) by any Governmental Entity (exclusive of any
foreign Governmental Entity) on, or other event that materially
adversely affects, the extension of credit by banks or other lending
institutions in the United States, or (D) a commencement of a war or
armed hostilities
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or other national or international calamity directly or indirectly
involving the United States which in any case is reasonably expected to
have a material adverse effect on the Company or to materially
adversely affect Parent's or Sub's ability to complete the Merger or
materially delay the consummation of the Merger.
(c) Company Stock Options and Management Warrants. All
required elections, consents and releases from holders of Company Stock
Options or Management Warrants contemplated by Section 6.04 shall have
been made or obtained.
(d) Officer's Certificate. The Company shall have furnished to
Parent a certificate, dated the Closing Date, signed by an appropriate
officer of the Company, certifying to the effect that the conditions
set forth in this Section 7.03, insofar as they relate to the Company,
have been satisfied.
(e) Other Documents. The Company shall have furnished to
Parent at the closing of such Merger such other customary documents,
certificates or instruments as Parent may reasonably request evidencing
compliance by the Company with the terms of this Agreement.
ARTICLE VIII
Termination and Amendment
-------------------------
SECTION 8.01. Termination. This Agreement may be
terminated at any time prior to the Effective Time, whether
before or after approval of the terms of this Agreement by the
stockholders of the Company:
(a) by mutual written consent of Parent and the
Company;
(b) by either Parent or the Company:
(i) if any Governmental Entity shall
have issued an order, decree or ruling or
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taken any other action permanently enjoining, restraining or
otherwise prohibiting the consummation of the Merger and such
order, decree or ruling or other action shall have become
final and nonappealable;
(ii) if, at the Stockholders Meeting (including any
adjournment thereof) this Agreement shall fail to be adopted
and approved by the requisite vote of the stockholders of the
Company;
(iii) if the Merger shall not have been consummated
on or before the one year anniversary of the date hereof
unless the failure to consummate the Merger is the result of a
material breach of this Agreement by the party seeking to
terminate this Agreement;
(c) by Parent or Sub, if the Company shall have failed to
perform in any material respect any material obligation or to comply in
any material respect with any material agreement or covenant of the
Company to be performed or complied with by it under this Agreement,
which failure cannot be or has not been cured within 20 business days
after the giving of written notice thereof to the Company;
(d) by Parent or Sub, if there has been a breach of any of the
representations and warranties of the Company set forth in this
Agreement that are qualified as to materiality or there has been a
material breach of any such representations and warranties that are not
so qualified, in each case which breach cannot be or has not been cured
within 20 business days after the giving of written notice thereof to
the Company;
(e) by Parent or Sub, if (i) the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Sub its approval or recommendation of the
Merger or this Agreement, or approved or recommended
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any Takeover Proposal or (ii) the Board of Directors of
the Company or any committee thereof shall have
resolved to do any of the foregoing;
(f) by the Company in accordance with Section 5.02(b),
provided it has complied with all provisions thereof, including the
notice provisions therein, and that it complies with applicable
requirements relating to the payment (to the extent required to be paid
upon such termination) of the Expenses and the Termination Fee; or
(g) by the Company, if Sub or Parent shall have (i) failed to
perform in any material respect any material obligation or to comply in
any material respect with any material agreement or covenant of Sub or
Parent to be performed or complied with by it under this Agreement or
(ii) breached in any material respect any of their respective
representations or warranties contained in this Agreement, which
failure or breach described in clause (i) or (ii) above is incapable of
being cured or has not been cured within 20 business days after the
giving of written notice thereof to Parent or Sub, as applicable, and
except, in any case described in clause (i) or (ii) above, for such
failures and breaches which are not reasonably likely to affect
adversely Parent's or Sub's ability to complete the Merger.
SECTION 8.02. Effect of Termination. In the event of a
termination of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Parent, Sub or the Company or their
respective officers or directors, except with respect to Section 3.20, Section
4.06, the last sentence of Section 6.02, Section 6.05, this Section 8.02 and
Article X; provided, however, that nothing herein shall relieve any party for
liability for any breach hereof.
SECTION 8.03. Amendment. This Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors at any time before or after obtaining the Company Stockholder Approval
(if required by law),
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but, after any such approval, no amendment shall be made which by law requires
further approval by such stockholders without obtaining such further approval.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
SECTION 8.04. Extension; Waiver. At any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Board of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE IX
Tender Offer
------------
SECTION 9.01. Tender Offer. (a) If (i) there is a bona fide
proposal made by a person other than Parent, Sub or any respective affiliate
thereof to effect a Takeover Proposal or (ii) the FCC will otherwise permit the
filing and grant of an application for special temporary authority, Parent shall
have the right, in its sole discretion, upon no less than five days' notice to
the Company, to commence a cash tender offer to purchase all the outstanding
Shares (with at least a majority of the fully-diluted Shares minimum condition,
which cannot be waived without the written consent of the Company) at a price
equal to or in excess of what would have been the Merger Consideration. There
shall be no conditions to the acceptance of Shares pursuant to such tender offer
except (x) such conditions as are expressly set forth in Section 7.01 and 7.03
of this Agreement, (y) grant or approval by the FCC of special temporary
authority pursuant to the Communications Act to consummate the
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offer and (z) any additional conditions set forth in Item 9.01 of
the Parent Disclosure Letter.
(b) Notwithstanding Parent's exercise of such option to
commence such a tender offer, this Agreement shall remain in full force and
effect and, to the extent applicable, the provisions thereof shall apply to such
tender offer and subsequent merger. Without limiting the foregoing, the parties
hereto agree to amend this Agreement to include customary provisions pertaining
to cash tender offers, including provisions relating to the extension of any
such offer, the preparation, filing and dissemination of such documents as shall
be required under applicable law in connection with tender offers (and the
provision of information required to be included therein), the recommendation of
the offer by the Company's Board of Directors and the appointment by Parent (or
the trustee referred to below) of directors to the Company's Board of Directors.
Any Shares not purchased by Parent in such tender offer shall be, as promptly as
possible, acquired by Parent at the same purchase price paid for Shares accepted
in such tender through a short-form merger (if available) or a long-form merger,
subject to any required approval or order of the FCC.
(c) Parent or Sub, as appropriate, will enter into a voting
trust agreement with respect to the Shares purchased pursuant to the offer with
one or more voting trustees acceptable to the FCC, and the Company will
cooperate with the trustee, Parent and Sub to effect a sale of the Shares if
Shares must be sold pursuant to the voting trust agreement.
(d) The Company agrees that it will, at the time after
commencement of the tender offer, to the extent permitted by applicable law and
contractual obligations of the Company on the date hereof, enter into a loan
agreement with Parent pursuant to which the Company will lend to Parent, during
the period from the consummation of the offer until the sale of all the Shares
held by the trustee as a result of the FCC Order not having been obtained, the
Company's excess cash flow (which will have the meaning, to be set forth in the
loan agreement, customarily ascribed to such term). The terms of any such loan
(which will be unsecured) will be based upon market terms for loans of this
nature.
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(e) Each of the parties hereto represent that all necessary
corporate action has been taken to duly authorize the consummation of the
transactions contemplated by this Section 9.01.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Nonsurvival of Representations, Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time of
the Merger.
SECTION 10.02. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Attention: Dennis J. FitzSimons
Telecopy No.: 312/222-3203
with a copy to :
Tribune Company
435 North Michigan Avenue
Chicago, Illinois 60611
Attention: Crane H. Kenney
Telecopy No.: 312/222-4206; and
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Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq. and
Larry A. Barden, Esq.
Telecopy No: 312/853-7036
(b) if to the Company, to
Renaissance Communications Corp.
One Fawcett Place - Suite 120
Greenwich, Connecticut 06830
Attention: Michael Finkelstein
Telecopy No.: 203/629-9821
with a copy to :
Stroock & Stroock & Lavan
Seven Hanover Square
New York, New York 10004-2594
Attention: Martin H. Neidell
Telecopy No.: 212/806-6006
SECTION 10.03. Interpretation. When a reference is made in
this Agreement to an Article or a Section, such reference shall be to an Article
or a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. As used in this Agreement, the
term "subsidiary" of any person means another person, an amount of the voting
securities, other voting ownership or voting partnership interests of which is
sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or
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more of the equity interests of which) is owned directly or indirectly by such
first person. As used herein, "knowledge" or "best knowledge," as it relates to
the Company or its Subsidiaries, means, with respect to any matter, that any
executive officer or director of the Company or its subsidiaries or any general
manager of the Stations has actual knowledge of such matter. As used in this
Agreement, "material adverse change" or "material adverse effect" means, when
used in connection with the Company, any change or effect (or any development
that, insofar as can reasonably be foreseen is likely to result in any change or
effect) that, individually or in the aggregate with any such other changes or
effects, is materially adverse to the business, properties, assets, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries taken as a whole. As used in this Agreement, "extraordinary adverse
change" means (i) the revocation of the FCC license relating to any Station or
the receipt by the Company of an order to show cause with respect to such a
revocation, or (ii) the physical destruction of any facility which has or will
have the effect of a loss of broadcast capability at a Station for three
consecutive days or more (provided that a Station shall not be deemed to have
lost broadcast capability with respect to any day during which such Station's
programming is carried on a complete and uninterrupted basis on such cable
television system or systems as are then serving the principal broadcast market
applicable to such Station and which carry such Station); provided, however,
that any such change resulting from a failure to obtain an authorization,
consent or approval relating to the Merger from, or the exercise of a right to
terminate resulting from the Merger by, a party to any of the Company's network
affiliation or programming agreements identified in Item 3.11(b) of the Company
Disclosure Letter shall not constitute an extraordinary adverse change.
SECTION 10.04. Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; No Third Party
Beneficiaries. This Agreement (including the Confidentiality
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Agreements and the other documents and the instruments referred to herein) (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.04 and 6.06, are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State
of Delaware without regard to any applicable conflicts of law.
SECTION 10.07. Publicity. Except as otherwise required by law
or the rules of the New York Stock Exchange, for so long as this Agreement is in
effect, neither the Company nor Parent shall, or shall permit any of its
subsidiaries to, issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in a Delaware state court,
this being in addition to any other remedy to which they are entitled at law or
in equity. In addition, each of the parties hereto (i) consents to
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submit such party to the personal jurisdiction of any Federal court located in
the State of Delaware or any Delaware state court in the event any dispute
arises out of this Agreement or any of the transactions contemplated hereby,
(ii) agrees that such party will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (iii)
agrees that such party will not bring any action relating to this Agreement or
any of the transactions contemplated hereby in any court other than a Federal
court sitting in the State of Delaware or a Delaware state court and (iv) waives
any right to trial by jury with respect to any claim or proceeding related to or
arising out of this Agreement or any of the transactions contemplated hereby.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
TRIBUNE COMPANY
By /s/ Donald C. Grenesko
------------------------
Name: Donald C. Grenesko
Title: Sr. Vice President and
Chief Financial Officer
TOWER ACQUISITION COMPANY, INC.
By /s/ Dennis J. FitzSimons
--------------------------
Name: Dennis J. FitzSimons
Title: President
RENAISSANCE COMMUNICATIONS CORP.
By /s/ Michael Finkelstein
-------------------------
Name: Michael Finkelstein
Title: Chief Executive Officer
-57-
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of July 1, 1996 among Tribune
Company, a Delaware corporation ("Parent"), Tower Acquisition Company, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
Warburg, Pincus Capital Company, L.P., a Delaware limited partnership (the
"Stockholder").
WHEREAS Parent, Sub and Renaissance Communications Corp., a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, concurrently with the execution of this
Agreement, Parent is entering into a substantially identical agreement with
Mr. Michael Finkelstein;
WHEREAS, the Stockholder owns in the aggregate 17,223,412
shares of Common Stock, par value $0.01 per share, of the Company (the "Company
Common Stock"); such shares of Company Common Stock, as such shares may be
adjusted by any stock dividend, stock split, recapitalization, combination or
exchange of shares, merger, consolidation, reorganization or other change or
transaction of or by the Company (each, an "Adjustment Event"), being referred
to herein as the "Subject Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder.
The Stockholder hereby represents and warrants to Parent as follows:
(a) Authority. The Stockholder has all requisite power and
authority to enter into this Agreement and to
<PAGE>
consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and to general principles of equity. The
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated hereby and compliance with the terms
hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under any
provision of, any trust agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets, the effect of
which would be material and adverse to the ability of the Stockholder
to perform its obligations under this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with,
any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the ability of Stockholder
to perform its obligations contemplated hereby.
(b) The Subject Shares. The Stockholder has good and
marketable title to the Subject Shares, free and clear of any claims,
liens, encumbrances and security interests whatsoever. The Stockholder
owns no shares of Company Common Stock other than the Subject Shares.
2. Representations and Warranties of Parent and Sub.
Parent and Sub hereby represent and warrant to the Stockholder that each of
Parent and Sub has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by Parent and Sub, and the consummation
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Parent and Sub. This Agreement has
been duly executed and delivered by Parent and
-2-
<PAGE>
Sub and constitutes a valid and binding obligation of Parent and Sub enforceable
in accordance with its terms.
3. Covenants of the Stockholder.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares, and any other voting securities of the Company, owned by
Stockholder whether issued heretofore or hereafter, that such person
owns or has the right to vote, in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not
have been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares, and
any other voting securities of the Company, owned by Stockholder
whether issued heretofore or hereafter, that such person owns or has
the rights to vote, against (i) any merger agreement or merger (other
than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any
other Takeover Proposal, or (ii) any amendment of the Company's
certificate of incorporation or by-laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any
of the other transactions contemplated by the Merger Agreement or which
could result in any of the conditions to the Company's obligations
under the Merger Agreement not being fulfilled.
(c) The Stockholder agrees not to (i) sell, transfer,
pledge, assign or otherwise dispose of, or enter into any
-3-
<PAGE>
contract, option or other arrangement (including any profit sharing
arrangement) with respect to the sale, transfer, pledge, assignment or
other disposition of, the Subject Shares to any person other than Sub
or Sub's designee or (ii) enter into any voting arrangement, whether by
proxy, voting arrangement, voting agreement or otherwise, in
connection, directly or indirectly, with any Takeover Proposal.
(d) Until the Merger Agreement is terminated and subject to
Section 8 hereof, the Stockholder shall not, and shall use its best
efforts to cause any investment banker, attorney or other adviser or
representative of the Stockholder not to, (i) directly or indirectly
solicit, initiate or knowingly encourage the submission of, any
Takeover Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or knowingly take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover
Proposal.
(e) In the event Parent elects to exercise its rights under
Article IX of the Merger Agreement to commence a cash tender offer (the
"Tender Offer") for the Company Common Stock, Stockholder shall tender
all of the Subject Shares in the Tender Offer and shall not withdraw
any of the Subject Shares tendered pursuant to the Tender Offer.
4. Further Assurances. The Stockholder will, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent or Sub may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will
-4-
<PAGE>
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
6. Termination. This Agreement shall terminate upon the
earliest of (i) the close of business on the first anniversary of the date
hereof, (ii) the Effective Time (as defined in the Merger Agreement), (iii) the
termination of the Merger Agreement in accordance with its terms (other than
pursuant to Section 8.01(e) and (f) thereof) and (iv) the receipt by Parent of
the Termination Fee pursuant to Section 6.05(b) of the Merger Agreement.
7. General Provisions.
(a) Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions
of this Agreement and agree that the obligations of the parties
hereunder shall be specifically enforceable.
(b) Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
(c) Amendments. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.
(d) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Parent, to:
Tribune Company
435 N. Michigan Avenue
Chicago, Illinois 60611
Facsimile: (312) 222-3203
Attention: Dennis J. FitzSimons
-5-
<PAGE>
with a copy to:
Tribune Company
435 N. Michigan Avenue
Chicago, Illinois 60611
Facsimile: (312) 222-4206
Attention: Crane H. Kenney
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Facsimile: (312) 853-7036
Attention: Thomas A. Cole, Esq. and
Larry A. Barden, Esq.; and
(ii) if to the Stockholder, to
Warburg, Pincus Capital Company, L.P.
466 Lexington Avenue
New York, New York 10017
Attention: Sidney Lapidus
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Facsimile: (212) 821-8111
Attention: Steven A. Seidman, Esq.
(e) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement
unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words
"include", "includes", or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Capitalized terms used herein but not otherwise defined herein shall
have the meanings set forth in the Merger Agreement.
-6-
<PAGE>
(f) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered to
the other party, it being understood that each party need not sign the
same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or
remedies hereunder.
(h) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware.
8. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Subject Shares and
nothing herein shall limit or affect any actions taken by any officer, director,
partner, employee or affiliate of the Stockholder in his or her capacity as an
officer or director of the Company to the extent specifically permitted by the
Merger Agreement.
9. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party
-7-
<PAGE>
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
-8-
<PAGE>
IN WITNESS WHEREOF, Parent and Sub have caused this Agreement
to be signed by their respective officers thereunto duly authorized and the
Stockholder has caused this Agreement to be signed by its general partner, all
as of the date first written above.
TRIBUNE COMPANY
By: /s/ Donald C. Grenesko
------------------------
Name: Donald C. Grenesko
Title: Sr. Vice President and
Chief Financial Officer
TOWER ACQUISITION COMPANY, INC.
By: /s/ Dennis J. FitzSimons
--------------------------
Name: Dennis J. FitzSimons
Title: President
WARBURG, PINCUS CAPITAL COMPANY,
L.P.
By: Warburg, Pincus & Co.,
General Partner
By: /s/ Sidney Lapidus
--------------------
Name: Sidney Lapidus
Title: Partner
-9-
<PAGE>
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of July 1, 1996 among Tribune
Company, a Delaware corporation ("Parent"), Tower Acquisition Company, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and
Michael Finkelstein (the "Stockholder").
WHEREAS Parent, Sub and Renaissance Communications Corp., a
Delaware corporation (the "Company"), propose to enter into an Agreement and
Plan of Merger of even date herewith (as the same may be amended or
supplemented, the "Merger Agreement") providing for the merger of Sub with and
into the Company (the "Merger");
WHEREAS, concurrently with the execution of this Agreement,
Parent is entering into a substantially identical agreement with Warburg, Pincus
Capital Company, L.P. (the "Warburg Agreement");
WHEREAS, the Stockholder owns in the aggregate 602,067 shares
of Common Stock, par value $0.01 per share, of the Company (the "Company Common
Stock"); such shares of Company Common Stock, as such shares may be adjusted by
any stock dividend, stock split, recapitalization, combination or exchange of
shares, merger, consolidation, reorganization or other change or transaction of
or by the Company (each, an "Adjustment Event"), being referred to herein as the
"Subject Shares"; and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement, Parent and Sub have requested that the Stockholder enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Stockholder. The
Stockholder hereby represents and warrants to Parent as follows:
(a) Authority. The Stockholder has all requisite
power and authority to enter into this Agreement and to
<PAGE>
consummate the transactions contemplated hereby. This Agreement has
been duly authorized, executed and delivered by the Stockholder and
constitutes a valid and binding obligation of the Stockholder
enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and to general principles of equity. The
execution and delivery of this Agreement does not, and the consummation
of the transactions contemplated hereby and compliance with the terms
hereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time or both) under any
provision of, any trust agreement, loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise, license, judgment, order, notice,
decree, statute, law, ordinance, rule or regulation applicable to the
Stockholder or to the Stockholder's property or assets, the effect of
which would be material and adverse to the ability of the Stockholder
to perform its obligations under this Agreement. No consent, approval,
order or authorization of, or registration, declaration or filing with,
any court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to the Stockholder in connection with the
execution and delivery of this Agreement or the ability of the
Stockholder to perform his obligations contemplated hereby.
(b) The Subject Shares. The Stockholder has good and
marketable title to the Subject Shares, free and clear of any claims,
liens, encumbrances and security interests whatsoever; provided,
however, that the Subject Shares are subject to (i) Rule 144 under the
Securities Act of 1933, as amended, (ii) that certain Stock Purchase
Agreement dated as of October 28, 1989 among the Company, the
Stockholder and Warburg Pincus Capital Company, L.P., as amended, and
(iii) existing margin arrangements entered into by the Stockholder with
Goldman, Sachs & Co. As of the date hereof, the Stockholder owns no
shares of Company Common Stock other than the Subject Shares and
certain Company Stock Options and Management Warrants.
-2-
<PAGE>
2. Representations and Warranties of Parent and Sub. Parent
and Sub hereby represent and warrant to the Stockholder that each of Parent and
Sub has all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Parent and Sub, and the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by Parent and Sub and constitutes a valid and binding
obligation of Parent and Sub enforceable in accordance with its terms.
3. Covenants of the Stockholder.
(a) At any meeting of stockholders of the Company called to
vote upon the Merger and the Merger Agreement or at any adjournment
thereof or in any other circumstances upon which a vote, consent or
other approval with respect to the Merger and the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the Subject
Shares, and any other voting securities of the Company, owned by
Stockholder whether issued heretofore or hereafter, that such person
owns or has the right to vote, in favor of the Merger, the adoption by
the Company of the Merger Agreement and the approval of the terms
thereof and each of the other transactions contemplated by the Merger
Agreement, provided that the terms of the Merger Agreement shall not
have been amended to adversely affect the Stockholder.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares, and
any other voting securities of the Company, owned by Stockholder
whether issued heretofore or hereafter, that such person owns or has
the rights to vote, against (i) any merger agreement or merger (other
than the Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any
other Takeover Proposal, or (ii) any amendment of the Company's
certificate of incorporation or by-laws or other proposal or
transaction involving the
-3-
<PAGE>
Company or any of its subsidiaries, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement or which could result
in any of the conditions to the Company's obligations under the Merger
Agreement not being fulfilled.
(c) The Stockholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of, or enter into any contract, option or
other arrangement (including any profit sharing arrangement) with
respect to the sale, transfer, pledge, assignment or other disposition
of, the Subject Shares to any person other than Sub or Sub's designee
or (ii) enter into any voting arrangement, whether by proxy, voting
arrangement, voting agreement or otherwise, in connection, directly or
indirectly, with any Takeover Proposal; provided, however, that nothing
contained in clause (i) above shall affect the Stockholder's
obligations under his currently existing margin arrangements with
Goldman, Sachs & Co.
(d) Until the Merger Agreement is terminated and subject to
Section 8 hereof, the Stockholder shall not, and shall use its best
efforts to cause any investment banker, attorney or other adviser or
representative of the Stockholder not to, (i) directly or indirectly
solicit, initiate or knowingly encourage the submission of, any
Takeover Proposal or (ii) directly or indirectly participate in any
discussions or negotiations regarding, or furnish to any person any
information with respect to, or knowingly take any other action to
facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Takeover
Proposal.
(e) In the event Parent elects to exercise its rights under
Article IX of the Merger Agreement to commence a cash tender offer (the
"Tender Offer") for the Company Common Stock, Stockholder shall tender
all of the Subject Shares in the Tender Offer and shall not withdraw
any of the Subject Shares tendered pursuant to the Tender Offer.
-4-
<PAGE>
(f) The Stockholder agrees, as to each Company Stock Option
and Management Warrant held by him, to the treatment thereof contemplated by
Section 6.04 of the Merger Agreement. The Stockholder further agrees to pay, or
cause payment of, (i) the Promissory Note dated June 24, 1996 in the principal
amount of $3,062,218.75, issued by himself and (ii) promissory notes issued by
his children (or trusts for their benefit), in the aggregate principal amount of
$2,000,000, such payments to be made at the Effective Time. In the event such
Notes are not paid, then the Stockholder agrees that the Company may (A) direct
the Paying Agent to pay an amount equal to principal of and accrued but unpaid
interest thereon to the Company from the Merger Consideration which would be
payable in respect of the Subject Shares or (B) deduct such amount from the
payment which would otherwise be made under Section 6.04 of the Merger
Agreement.
4. Further Assurances. The Stockholder will, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Parent or Sub may reasonably request for the purpose of
effectively carrying out the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
6. Termination. This Agreement shall terminate upon the
earliest of (i) the close of business on the first anniversary of the date
hereof, (ii) the Effective Time (as defined in the Merger Agreement), (iii) the
termination of the Merger Agreement in accordance with its terms (other than
pursuant to Section 8.01(e) and (f) thereof), (iv) the receipt by Parent of the
Termination Fee pursuant to Section 6.05(b) of the Merger Agreement and (v) the
termination of the Warburg Agreement in accordance with it terms. In the event
that the Warburg
-5-
<PAGE>
Agreement is amended, modified or waived, Parent and Sub shall notify the
Stockholder promptly and, at the Stockholder's option, this Agreement shall be
so amended, modified or waived.
7. General Provisions.
(a) Specific Performance. The parties hereto acknowledge that
damages would be an inadequate remedy for any breach of the provisions
of this Agreement and agree that the obligations of the parties
hereunder shall be specifically enforceable.
(b) Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expense.
(c) Amendments. Subject to Section 6 hereof, this Agreement
may not be amended except by an instrument in writing signed by each of
the parties hereto.
(d) Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to Parent, to:
Tribune Company
435 N. Michigan Avenue
Chicago, Illinois 60611
Facsimile: (312) 222-3203
Attention: Dennis J. FitzSimons
with a copy to:
Tribune Company
435 N. Michigan Avenue
Chicago, Illinois 60611
Facsimile: (312) 222-4206
Attention: Crane H. Kenney
-6-
<PAGE>
and
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attention: Thomas A. Cole, Esq. and
Larry A. Barden, Esq.; and
(ii) if to the Stockholder, to
Michael Finkelstein
c/o Renaissance Communications Corp.
One Fawcett Place - Suite 120
Greenwich, Connecticut 06830
with a copy to:
Nixon, Hargrave, Devans & Doyle
437 Madison Avenue
New York, New York 10022
Attention: Lauren E. Wiesenberg, Esq.
(e) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section to this Agreement
unless otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Wherever the words
"include", "includes", or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Capitalized terms used herein but not otherwise defined herein shall
have the meanings set forth in the Merger Agreement.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the
counterparts have been signed by each of the parties and delivered to
the other party, it being understood that each party need not sign the
same counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries.
This Agreement (including the documents and instruments
-7-
<PAGE>
referred to herein) (i) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and (ii) is not
intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware.
8. Stockholder Capacity. The Stockholder signs solely in its
capacity as the record holder and beneficial owner of the Subject Shares and
nothing herein shall limit or affect any actions taken by the Stockholder in his
capacity as an officer or director of the Company to the extent specifically
permitted by the Merger Agreement.
9. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in a Delaware state court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit such party to the
personal jurisdiction of any Federal court located in the State of Delaware or
any Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court sitting in the State
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby.
-8-
<PAGE>
IN WITNESS WHEREOF, Parent and Sub have caused this Agreement
to be signed by their respective officers thereunto duly authorized and the
Stockholder has signed this Agreement, all as of the date first written above.
TRIBUNE COMPANY
By: /s/ Donald C. Grenesko
------------------------
Name: Donald C. Grenesko
Title: Sr. Vice President and
Chief Financial Officer
TOWER ACQUISITION COMPANY, INC.
By: /s/ Dennis J. FitzSimons
--------------------------
Name: Dennis J. FitzSimons
Title: President
/s/ Michael Finkelstein
-----------------------
Michael Finkelstein
-9-
Exhibit 99.3
TRIBUNE TO ACQUIRE RENAISSANCE COMMUNICATIONS CORP.,
FORMING LARGEST U.S. TELEVISION STATION GROUP
CHICAGO, Mon., July 1, 1996 -- Tribune has agreed to acquire Renaissance
Communications Corp., a publicly traded company owning six television stations
(NYSE:RRR), for $1.13 billion in cash ($36 a share).
The transaction would make Tribune the nation's largest television group in
terms of household coverage with 33.4 percent. Following the transaction,
Tribune would own and operate stations in 8 of the top 11 markets.
Renaissance stations in Dallas and Miami are WB Network affiliates; those in
Sacramento, Indianapolis, Hartford, and Harrisburg are affiliated with the Fox
Network. The six stations together reach 7 percent of U.S. TV households with
UHF signals and would join Tribune Television's current group of 10 stations.
"Tribune will be a much larger independent information and entertainment company
in the next century," John W. Madigan, chairman, president and CEO, said.
"Today's television transaction demonstrates Tribune's commitment to grow
significantly in a consolidating media marketplace, just as our recent education
acquisitions have made us a national leader in supplemental education. This is
unquestionably an excellent move to drive shareholder value."
"Renaissance stations are very similar to the ones we own -- well managed, in
excellent markets and with strong ties to their local communities," Dennis
FitzSimons, Tribune Broadcasting executive vice president, said. "Loosening of
ownership restrictions is opening doors for transactions such as this, which
will allow Tribune to stay in the first tier of all broadcast groups. Our
industry is growing more competitive and that will result in better products and
services for the viewer."
"Each acquisition makes us more attractive to program distributors and expands
the launchpad for Tribune Entertainment shows," James C. Dowdle, executive vice
president/ media operations, said. "We also benefit on the newsgathering side
and can negotiate better prices for capital equipment, which is important as we
retool for digital TV."
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The transaction is subject to regulatory and Renaissance shareholder approval
and is expected to be completed in early 1997; there will be no impact to 1996
earnings. The transaction should be accretive on a cash flow per share basis
during the first full year. Dilution to 1997 earnings, due primarily to the
amortization of goodwill, is expected to be in the 10 percent range.
More than 50 percent of Renaissance's outstanding stock is owned by Warburg,
Pincus, Capital Company L.P., an investment company based in New York, which has
agreed to vote in favor of the transaction. Warburg, Pincus, Capital Company
L.P. and Renaissance chairman Michael Finkelstein launched the company in 1989
and took it public in February 1994. Renaissance had 1995 revenues of $179
million.
Tribune Broadcasting owns and operates television stations in New York, Los
Angeles, Chicago, Philadelphia, Boston, Atlanta, Houston, Denver, San Diego and
New Orleans, and manages a station in Washington, D.C. Adding Renaissance
stations will bring Tribune Television's national household coverage to 25.0
percent by FCC rules, which count UHF stations at half credit. Tribune also owns
a minority interest in the WB network and in Qwest Broadcasting LLC., which
operates WATL-TV in Atlanta and WNOL-TV in New Orleans.
Tribune is a leading information, entertainment and education company. Tribune
publishes four daily newspapers, owns and operates five radio stations in
addition to its television businesses, produces and syndicates programming and
information, and provides educational products and services for the school and
consumer markets.
More information on Tribune is available on the Internet:
http://www.tribune.com.
Station chart to follow.
NOTE: A conference call is scheduled for 2 p.m. Chicago time today (Monday, July
1). Participants are expected to include John Madigan, chairman, president and
CEO; Jim Dowdle, EVP/media operations; Dennis FitzSimons, EVP/Tribune
Broadcasting; Don Grenesko, SVP/chief financial officer, and Ruthellyn Musil,
VP/corporate relations. Please call a contact below if you wish to join.
BUSINESS MEDIA CONTACT: TRADE CONTACT: INVESTOR CONTACT:
Robert D. Carr Megan Bueschel Ruthellyn Musil
312/222-3763 (Office) 312/222-3456 (Office) 312/222-3787 Office)
708/545-0746 (Home) 847/202-9116 (Home) 847/559-0852 (Home)
312/222-1573 (Fax) 312/222-1573 (Fax) 312/222-1573 (Fax)
[email protected] [email protected] [email protected]
