UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)*
TELEMUNDO GROUP, INC.
------------------------------------
(Name of Issuer)
Common Stock, $0.01 Par Value
-------------------------------------
(Title of Class of Securities)
87943M306
87943M405
--------------------
(CUSIP Number)
Patrick J. Dooley, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
- -------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 24, 1997
---------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following page(s)
Page 1 of 51 Pages
<PAGE>
Page 2 of 51 Pages
SCHEDULE 13D
CUSIP No. 87943M306 & 87943M405
1 Name of Reporting Person
I.R.S. Identification Nos. of Above Persons (Entities Only)
TLMD Partners II, L.L.C.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]**
3 SEC Use Only
4 Source of Funds*
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 1,550,465**
Shares
Beneficially 8 Shared Voting Power
Owned By 2,550,619**
Each
Reporting 9 Sole Dispositive Power
Person 1,550,465**
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,101,084**
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [_]
13 Percent of Class Represented By Amount in Row (11)
40.3%**
14 Type of Reporting Person*
OO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5 OF INITIAL SCHEDULE 13D AS AMENDED HEREBY.
<PAGE>
Page 3 of 51 Pages
SCHEDULE 13D
CUSIP No. 87943M306 & 87943M405
1 Name of Reporting Person
I.R.S. Identification Nos. of Above Persons (Entities Only)
Leon Black
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]**
3 SEC Use Only
4 Source of Funds*
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 0**
Each
Reporting 9 Sole Dispositive Power
Person 202,933**
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
202,933**
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain
Shares* [_]
13 Percent of Class Represented By Amount in Row (11)
2.0%**
14 Type of Reporting Person*
IN; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
**SEE ITEMS 4 AND 5 OF INITIAL SCHEDULE 13D AS AMENDED HEREBY.
<PAGE>
Page 4 of 51 Pages
This Amendment No. 3 to statement on Schedule 13D relates to shares of
common stock, $.01 par value (the "Shares"), of Telemundo Group, Inc., a
Delaware corporation (the "Issuer"). This Amendment No. 3 amends the initial
statement on Schedule 13D dated January 9, 1995, as heretofore amended (the
"Initial Schedule 13D"). Reference is made to the Initial Schedule 13D for
information concerning certain defined terms used herein and not otherwise
defined herein. The Initial Schedule 13D is supplementally amended as set forth
herein.
ITEM 4. PURPOSE OF TRANSACTION.
On November 24, 1997, TLMD Station Group, Inc. ("Parent") and its
wholly-owned subsidiary, TLMD Acquisition Co. ("Subsidiary"), entered into an
Agreement and Plan of Merger (the "Agreement") with the Issuer pursuant to which
Subsidiary is to be merged (the "Merger") with and into the Issuer and each
outstanding Series A Share and each outstanding Series B Share will be converted
into the right to receive $44 in cash per Share. Subject to certain conditions,
the purchase price per Series A Share and Series B Share will increase at the
rate of 8% per annum commencing on the earlier of August 1, 1998 or the date
which is seven months after Parent and Subsidiary have initially filed with the
Federal Communications Commission (the "FCC") the FCC Form 315 seeking approval
of the change in control of the Issuer's FCC broadcasting licenses. Parent is a
corporation formed by Apollo Investment Fund III, L.P., a private securities
investment fund managed by Apollo Management, L.P. of which Mr. Black is a
founding principal ("Apollo"), Bastion, Liberty Media Corporation and Sony
Pictures Entertainment Inc. The transaction was negotiated under the direction
of and recommended by directors of the Issuer unaffiliated with Mr. Black or
Bastion, and approved by the Board of Directors of the Issuer.
Completion of the Merger is subject to several conditions as set forth
in the Agreement, including, without limitation, approval of the Merger by the
holders of a majority of the outstanding Series A Shares and Series B Shares
(voting together as a single class), approval by the FCC of the transfer of the
Issuer's broadcast licenses without the imposition of certain specified
conditions or restrictions that are not acceptable to Parent, and receipt by
Parent of financing sufficient to perform its obligations under the Agreement,
to provide working capital for the business of the Issuer and to consummate the
transactions contemplated by the Agreement, including the payment of related
fees and expenses, pursuant to certain debt and equity commitments which have
been arranged (or pursuant to alternative financing arrangements).
The foregoing summary of the Agreement is qualified in its entirety by
reference to the Agreement, a copy of which is attached hereto as Exhibit (n)
and incorporated herein by reference.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
(n) Agreement and Plan of Merger, dated as of November 24, 1997, by
and among TLMD Station Group, Inc., TLMD Acquisition Co. and Telemundo Group,
Inc.
<PAGE>
Page 5 of 51 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this Statement is
true, complete and correct.
Date: November 26, 1997 TLMD PARTNERS II, L.L.C.
By: AIF II, L.P., Manager
By: Apollo Advisors, L.P.
Managing General Partner
By: Apollo Capital Management, Inc.
General Partner
By: /s/ John Hannan
----------------------------------
Name: John Hannan
Title: Vice President
Date: November 26, 1997 /s/ Leon Black
------------------
LEON BLACK
<PAGE>
Page 6 of 51 Pages
EXHIBIT INDEX
Exhibit No.
(n) Agreement and Plan of Merger, dated as of November 24, 1997, by and
among TLMD Station Group, Inc., TLMD Acquisition Co. and Telemundo
Group, Inc.
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TLMD STATION GROUP, INC.,
TLMD ACQUISITION CO.
AND
TELEMUNDO GROUP, INC.
Dated as of November 24, 1997
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS......................................................1
Section 1.1. Definitions...........................................1
ARTICLE II. THE MERGER......................................................6
Section 2.1. The Merger............................................6
Section 2.2. Effective Time........................................6
Section 2.3. Effects of the Merger.................................6
Section 2.4. Certificate of Incorporation and By-Laws..............6
Section 2.5. Directors.............................................6
Section 2.6. Officers..............................................6
Section 2.7. Conversion of Shares..................................6
Section 2.8. Conversion of Sub Common Stock........................7
Section 2.9. Dissenting Shares.....................................7
Section 2.10. Payment for Shares...................................8
Section 2.11. No Further Rights or Transfers.......................9
Section 2.12. Stock Options........................................9
Section 2.13. Warrants............................................10
Section 2.14. Adjustments.........................................10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY..............................................10
Section 3.1. Organization.........................................10
Section 3.2. Capitalization.......................................11
Section 3.3. Authority Relative to This Agreement.................12
Section 3.4. No Violation.........................................12
Section 3.5. SEC Reports; No Undisclosed Liabilities..............13
Section 3.6. Proxy Statement; Other Information...................14
Section 3.7. Compliance...........................................14
Section 3.8. Absence of Certain Changes...........................15
Section 3.9. Certain Fees.........................................15
Section 3.10. FCC Qualifications..................................15
Section 3.11. Section 203.........................................15
Section 3.12. Litigation..........................................15
Section 3.13. Intellectual Property...............................16
Section 3.14. Labor Matters.......................................16
Section 3.15. Employee Benefit Plans: ERISA......................17
Section 3.16. Taxes...............................................18
Section 3.17. Affiliation Agreements..............................18
Section 3.18. Environmental Matters...............................18
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND
SUB..................................................19
Section 4.1. Organization.........................................19
Section 4.2. Authority Relative to This Agreement.................19
Section 4.3. No Violation.........................................20
Section 4.4. Proxy Statement......................................20
Section 4.5. Financing............................................21
Section 4.6. No Prior Activities..................................21
Section 4.7. Surviving Corporation after the Merger...............21
Section 4.8. Certain Fees.........................................22
Section 4.9. FCC Qualifications...................................22
ARTICLE V. COVENANTS .....................................................22
Section 5.1. Conduct of Business of the Company...................22
Section 5.2. Access to Information................................24
Section 5.3. No Solicitation......................................25
Section 5.4. Stockholders' Meeting................................27
Section 5.5. Cooperation..........................................27
Section 5.6. Public Announcements.................................28
Section 5.7. Indemnification and Insurance........................28
Section 5.8. FCC Covenants........................................30
Section 5.9. Notification of Certain Matters......................30
Section 5.10. Employee Benefits...................................30
Section 5.11. Acknowledgment of Parent and Sub....................30
Section 5.12. Renewal.............................................31
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER.......................31
Section 6.1. Conditions to Each Party's Obligation
To Effect the Merger.................................31
Section 6.2. Conditions to the Obligation of Parent
and Sub to Effect the Merger.........................32
Section 6.3. Conditions to the Obligation of the
Company to Effect the Merger.........................33
ARTICLE VII. TERMINATION; AMENDMENT; WAIVER................................34
Section 7.1. Termination..........................................34
Section 7.2. Certain Actions Prior to Termination.................35
Section 7.3. Effect of Termination................................35
Section 7.4. Termination Fees.....................................35
Section 7.5. Amendment............................................36
Section 7.6. Extension; Waiver....................................36
ARTICLE VIII. MISCELLANEOUS................................................36
Section 8.1. Non-Survival of Representations,
Warranties and Agreements............................36
Section 8.2. Entire Agreement; Assignment.........................37
Section 8.3. Validity.............................................37
Section 8.4. Notices..............................................37
Section 8.5. Governing Law........................................39
Section 8.6. Interpretation.......................................39
Section 8.7. Parties in Interest..................................39
Section 8.8. Counterparts.........................................39
Section 8.9. Expenses.............................................40
Section 8.10. Obligation of Parent................................40
Section 8.11. Sale of the Company.................................40
Section 8.12. Actions by the Company..............................40
SIGNATURES ....................................................S-1
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), is dated as of November 24,
---------
1997, by and among TLMD Station Group, Inc., a Delaware corporation ("Parent"),
------
TLMD Acquisition Co., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Sub"), and Telemundo Group, Inc., a Delaware corporation (the
---
"Company").
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ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used herein, the terms below shall have the
-----------
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending on the reference.
"Acceptable FCC Order" shall have the meaning set forth in Section 6.1.
--------------------
"Additional Amount" shall have the meaning set forth in Section 2.7.
-----------------
"Affiliation Agreements" shall have the meaning set forth in Section 3.17.
----------------------
"Affirmed Condition" shall have the meaning set forth in Section 6.2(a).
------------------
"Agreement" shall have the meaning set forth in the Preamble.
---------
"Alternative Proposal" shall have the meaning set forth in Section 5.3(a).
--------------------
"Benefit Plan" shall have the meaning set forth in Section 3.15(a).
------------
"By-Laws" shall mean the Amended and Restated By-Laws of the Company in
-------
effect as of the date hereof.
"Certificate of Incorporation" shall mean the Restated Certificate of
------------------------------
Incorporation of the Company in effect as of the date hereof.
"Certificate of Merger" shall have the meaning set forth in Section 2.2.
---------------------
"Certificates" shall have the meaning set forth in Section 2.10(b).
------------
"Claim" shall have the meaning set forth in Section 5.7(c).
-----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Communications Act" shall mean the Communications Act of 1934, as amended,
------------------
and the rules, regulations and policies of the FCC thereunder.
"Company" shall have the meaning set forth in the Preamble.
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<PAGE>
"Company Complying Certificate" shall have the meaning set forth in Section
-----------------------------
6.2(a).
"Company Disclosure Schedule" shall mean the schedule prepared and
------------------------------
delivered by the Company to and for Parent and Sub and dated as of the date
hereof, which sets forth the exceptions to the representations and warranties of
the Company contained herein and certain other information called for by this
Agreement.
"Company Material Adverse Effect" shall mean a material adverse effect on
---------------------------------
the financial condition, results of operations or business of the Company and
its Subsidiaries, taken as a whole.
"Confidentiality Agreement" shall mean, collectively, the confidentiality
--------------------------
agreements between the Financial Advisor, acting on behalf of the Company, and
Liberty Media Corporation, dated as of July 23, 1997, between the Financial
Advisor, acting on behalf of the Company, and Sony Pictures Entertainment Inc.,
dated as of April 30, 1997 and as amended as of July 25, 1997, and between the
Financial Advisor, acting on behalf of the Company, and Apollo Management, L.P.,
dated as of November 12, 1997.
"Debt Commitment Letters" shall have the meaning set forth in Section 4.5.
-----------------------
"DGCL" shall mean the General Corporation Law of the State of Delaware.
----
"Dissenting Shares" shall have the meaning set forth in Section 2.9(a).
-----------------
"Effective Time" shall have the meaning set forth in Section 2.2.
--------------
"Environmental Laws" shall have the meaning set forth in Section 3.18.
------------------
"Equity Commitments" shall have the meaning set forth in Section 4.5.
------------------
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall have the meaning set forth in Section 3.15(a).
---------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
------------
"Exchange Agent" shall have the meaning set forth in Section 2.10(a).
--------------
"FCC" shall mean the Federal Communications Commission or any successor
---
agency thereto.
"FCC Order" shall mean an order or decision of the FCC which grants all
---------
consents or approvals required under the Communications Act for the transfer of
control of all FCC licenses held by the Company to Parent and/or Sub and the
consummation of the Merger and the other Transactions, whether or not any appeal
2
<PAGE>
or request for reconsideration or review of such order is pending, or whether
the time for filing any such appeal or request for reconsideration or review, or
for any sua sponte action by the FCC with similar effect, has expired. For
purposes of this definition, the "FCC" shall mean the FCC or its staff.
"FCC Permits" shall have the meaning set forth in Section 3.7(a).
-----------
"Filed SEC Reports" shall have the meaning set forth in Section 3.7(a).
-----------------
"Financial Advisor" shall mean Lazard Freres & Co. LLC.
-----------------
"Fund" shall have the meaning set forth in Section 2.10(a).
----
"Governmental Entity" shall mean any federal, state or local government or
-------------------
regulatory agency, authority, commission or instrumentality.
"Hazardous Substance" shall have the meaning set forth in Section 3.18.
-------------------
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 5.7(c).
-------------------
"Intellectual Property" shall mean: (i) registered and unregistered
-----------------------
trademarks, service marks, slogans, trade names, domain names, logos and trade
dress; (ii) registered and unregistered copyrights, including, but not limited
to, copyrights in software programs, databases, and the content contained on any
Internet site(s); (iii) software programs and databases; (iv) rights in names,
likenesses, images and other attributes of individuals; and (v) agreements
pursuant to which the Company has obtained the right to use any of the foregoing
(together with other agreements to which the Company or any Subsidiary is a
party relating to the development, acquisition or use of Intellectual Property,
"License Agreements").
"knowledge" shall mean the knowledge, after reasonable inquiry, of the
---------
officers of the Company, Parent or Sub, as applicable, with the title of Vice
President or higher and, with respect to the Company, the general managers of
each of the Stations.
"Letter of Transmittal" shall have the meaning set forth in Section
-----------------------
2.10(b).
"Merger" shall have the meaning set forth in Section 2.1.
------
"Merger Consideration" shall have the meaning set forth in Section 2.7.
--------------------
"NMS" shall mean the Nasdaq National Market.
---
"Non-Affirmed Condition" shall have the meaning set forth in Section
-----------------------
6.2(a).
"Non-Complying Certificate" shall have the meaning set forth in Section
--------------------------
6.2(a).
3
<PAGE>
"Option" shall have the meaning set forth in Section 2.12.
------
"Parent" shall have the meaning set forth in the Preamble.
------
"Parent Disclosure Documents" shall have the meaning set forth in Section
-----------------------------
5.4(b).
"Parent Response" shall have the meaning set forth in Section 6.2(a).
---------------
"Parent Stockholder" shall mean each of the persons who, at the date
-------------------
hereof, are, and as of the Effective Time will be, stockholders of Parent.
"Pending Proposal" shall have the meaning set forth in Section 7.4.
----------------
"Preferred Stock" shall have the meaning set forth in Section 3.2(a).
---------------
"Proxy Statement" shall have the meaning set forth in Section 3.6.
---------------
"Representatives" shall have the meaning set forth in Section 5.3(a).
---------------
"SBI" shall mean Salomon Brothers Inc.
---
"SEC" shall mean the Securities and Exchange Commission or any successor
---
thereto.
"SEC Reports" shall have the meaning set forth in Section 3.5.
-----------
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Series A Common Stock" shall mean the Series A common stock, $.01 par
----------------------
value, of the Company.
"Series B Common Stock" shall mean the Series B common stock, $.01 par
----------------------
value, of the Company.
"Share" shall mean a share of Stock.
-----
"Significant Subsidiaries" shall mean any Subsidiary which (i) is a
-------------------------
"significant subsidiary," as defined in Rule 1-02 of Regulation S-X under the
Exchange Act; (ii) holds any FCC Permits; (iii) owns, directly or indirectly,
any interest in any Subsidiary included in clause (i) or (ii); or (iv) is
otherwise material to the Company and its Subsidiaries, taken as a whole.
"Special Meeting" shall have the meaning set forth in Section 5.4(a)(i).
---------------
"Stations" shall mean the full-power and low-power television stations
--------
owned and operated by the Company.
"Stock" shall mean, collectively, the Series A Common Stock, par value
-----
$.01, of the Company together with the Series B Common Stock, par value $.01, of
the Company.
4
<PAGE>
"Stock Option Plans" shall have the meaning set forth in Section 2.12.
------------------
"Sub" shall have the meaning set forth in the Preamble.
---
"Subsidiary" shall mean, with respect to any person, (A) (i) a corporation
----------
in which such person, a subsidiary of such person, or such person and one or
more subsidiaries of such person, directly or indirectly, at the date of
determination, has either (a) a 50% or greater ownership interest or (b) the
power, under ordinary circumstances, to elect or to direct the election of 50%
or more of the board of directors of such corporation, (ii) a partnership in
which such person, a subsidiary of such person or such person and one or more
subsidiaries of such person (a) is, at the date of determination, general
partner or (b) has a 50% or greater ownership interest in such partnership or
the right to elect, or direct the election of, 50% or more of the governing body
of such partnership and (iii) any other person (other than corporation or a
partnership) in which such person, directly or indirectly, at the date of
determination, has either (a) a 50% or greater ownership interest or (b) the
power to elect, or direct the election of 50% or more of the directors or other
governing body of such other person and (B) any other person which is
consolidated with such person in accordance with generally accepted accounting
principles. For purposes of this Agreement, the term "parent," when not
capitalized, means, with respect to any person, any other person of which such
person is, directly or indirectly, a Subsidiary.
"Superior Offer" shall have the meaning set forth in Section 7.1(e).
--------------
"Surviving Corporation" shall have the meaning set forth in Section 2.1.
---------------------
"Third Parties" shall have the meaning set forth in Section 5.3(a).
-------------
"Transactions" shall have the meaning set forth in Section 5.3(a).
------------
"Trigger Date" shall mean the date which is seven months after the date on
-------------
which Parent and Sub shall have initially filed with the FCC the FCC Form 315
for approval of the changes of control of the FCC Permits; provided, however,
that if it has not earlier occurred, such date shall be deemed to be August 1,
1998.
"Warrants" shall mean, collectively, (i) those certain warrants dated
--------
December 30, 1994 issued to the Company's bondholders and general unsecured
creditors as of such date entitling the holder of each such warrant to purchase
one share of Series A Common Stock at a price equal to $7.00 per share (of which
624,094 of such warrants were outstanding as of November 12, 1997 (ii) that
certain warrant dated as of December 30, 1994 issued to Reliance Insurance
Company and its subsidiaries entitling the holder of each such warrant to
purchase one share of Series A Common Stock at a price equal to $7.19 per share
(of which 416,667 of such warrants were outstanding as of November 12, 1997).
"1994 Plan" shall have the meaning set forth in Section 2.12.
---------
"1996 Plan" shall have the meaning set forth in Section 2.12.
---------
5
<PAGE>
ARTICLE II
THE MERGER
Section 2.1. The Merger. At the Effective Time (as hereinafter defined),
----------
upon the terms and subject to the conditions hereof, and in accordance with the
DGCL, Sub shall be merged with and into the Company (the "Merger") as soon as
------
practicable following the satisfaction of the conditions set forth in Article VI
hereof. Following the Merger, the Company shall continue as the surviving
corporation (the "Surviving Corporation") and the separate corporate existence
----------------------
of Sub shall cease.
Section 2.2. Effective Time. The Merger shall be consummated by and shall
--------------
be effective at the time of acceptance for filing by the Delaware Secretary of
State of a certificate of merger (the "Certificate of Merger") in such form as
----------------------
is required by, and executed in accordance with, the relevant provisions of the
DGCL, and such other documents as shall be required by the provisions of the
DGCL (the time of such filing being the "Effective Time").
--------------
Section 2.3. Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the DGCL. As of the Effective Time, the Company shall be a wholly-owned
subsidiary of Parent.
Section 2.4. Certificate of Incorporation and By-Laws. Subject to Section
----------------------------------------
5.7 hereof, the Certificate of Incorporation and By-Laws of the Company as in
effect at the Effective Time shall be the Certificate of Incorporation and
By-Laws of the Surviving Corporation and thereafter may be amended in accordance
with their respective terms, the DGCL and Section 5.7 hereof.
Section 2.5. Directors. The directors of Sub at the Effective Time shall
---------
be the directors of the Surviving Corporation and will hold office from the
Effective Time until the next annual stockholders' meeting of the Surviving
Corporation and until their successors shall be elected or appointed and shall
be duly qualified.
Section 2.6. Officers. The officers of the Company at the Effective Time
--------
shall be the initial officers of the Surviving Corporation and will hold office
from the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the certificate of
incorporation and by-laws of the Surviving Corporation, or as otherwise provided
by law.
Section 2.7. Conversion of Shares. Each Share issued and outstanding
----------------------
immediately prior to the Effective Time (other than Shares held by Parent, Sub
or any other wholly-owned subsidiary of Parent, or in the treasury of the
Company or by any wholly-owned subsidiary of the Company, all of which shall be
canceled and no payment will be made with respect thereto, and Dissenting
Shares, as hereinafter defined) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
from Parent the Merger Consideration (as defined below), subject to applicable
withholding or back-up withholding taxes, if any, payable by the holder thereof,
without interest thereon, upon surrender of the certificate formerly
representing such Share. As used in this Agreement, the term "Merger
Consideration" shall mean the sum, in cash, of $44.00 plus the Additional Amount
6
<PAGE>
(as defined below). As used in this Agreement, the term "Additional Amount"
------------------
shall mean, subject to Section 6.1(a), an amount equal to the product of: (a)
$44.00; multiplied by (b) 8%, multiplied by (c) a fraction, the numerator of
which shall be the number of days in the period from and including the Trigger
Date to but excluding the date on which the Effective Time of the Merger occurs,
and the denominator of which shall be 365.
Section 2.8. Conversion of Sub Common Stock. Each share of common stock,
------------------------------
par value $.01 per share, of Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted into and represent the right to receive one
share of common stock of the Surviving Corporation, which thereafter will
constitute all of the issued and outstanding common stock of the Surviving
Corporation.
Section 2.9. Dissenting Shares.
-----------------
(a) General. Notwithstanding anything in this Agreement to the
-------
contrary, Shares which are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have not voted such Shares
in favor of the Merger, who shall have delivered a written demand for appraisal
of such Shares in the manner provided in the DGCL and who, as of the Effective
Time, shall not have effectively withdrawn or lost such right to appraisal
("Dissenting Shares") shall not be converted into or represent a right to
------------------
receive the Merger Consideration pursuant to Section 2.7 hereof, but the holders
thereof shall be entitled only to such rights as are granted by Section 262 of
the DGCL. Each holder of Dissenting Shares who becomes entitled to payment for
such Shares pursuant to Section 262 of the DGCL shall receive payment therefor
from the Surviving Corporation in accordance with the DGCL; provided, however,
that (i) if any such holder of Dissenting Shares shall have failed to establish
his entitlement to appraisal rights as provided in Section 262 of the DGCL, (ii)
if any such holder of Dissenting Shares shall have effectively withdrawn his
demand for appraisal of such Shares or lost his right to appraisal and payment
for his Shares under Section 262 of the DGCL or (iii) if neither any holder of
Dissenting Shares nor the Surviving Corporation shall have filed a petition
demanding a determination of the value of all Dissenting Shares within the time
provided in Section 262 of the DGCL, such holder or holders (as the case may be)
shall forfeit the right to appraisal of such Shares and each such Share shall
thereupon be deemed to have been converted, as of the Effective Time, into and
represent the right to receive payment from the Surviving Corporation of the
Merger Consideration, without interest thereon, as provided in Section 2.7
hereof.
(b) Notice of Appraisal Demands. The Company shall give Parent
----------------------------
and Sub (i) prompt notice of any written demands for appraisal, withdrawals of
demands for appraisal and any other instruments served pursuant to Section 262
of the DGCL received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under Section
262 of the DGCL. The Company shall not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for appraisal
or offer to settle or settle any such demands.
7
<PAGE>
Section 2.10 Payment for Shares.
------------------
(a) Exchange Mechanics. Prior to the Effective Time, Parent
-------------------
shall designate a bank or trust company reasonably satisfactory to the Company
to act as Exchange Agent in the Merger (the "Exchange Agent"). At or prior to
---------------
the Effective Time, Parent will, or will take all steps necessary to enable and
cause the Surviving Corporation to, provide the Exchange Agent funds (the
"Fund") necessary to make the payments contemplated by Section 2.7. Out of the
----
Fund, the Exchange Agent shall, pursuant to irrevocable instructions, make the
payments referred to in Section 2.7. The Fund shall not be used for any other
purpose. The Exchange Agent may invest portions of the Fund, as directed by
Parent (so long as such directions do not impair the Exchange Agent's ability to
make the payments referred to in Section 2.7 hereof or otherwise impair the
rights of holders of Shares), provided that no such investments may be made
other than in direct obligations of the United States of America, obligations
for which the full faith and credit of the United States of America is pledged
to provide for the payment of principal and interest, commercial paper rated of
the highest quality by Moody's Investors Services, Inc. or Standard & Poor's
Corporation, or certificates of deposit issued by a commercial bank having
capital exceeding $500,000,000. Any net earnings resulting from, or interest or
income produced by, such investments shall be paid to the Surviving Corporation
as and when requested by Parent. The Surviving Corporation shall replace any
monies lost through any investment made pursuant to this Section 2.10. Deposit
of funds pursuant hereto shall not relieve Parent or the Surviving Corporation
of their obligations to make payments in respect of Shares and Parent hereby
guarantees the Surviving Corporation's obligations in respect thereof.
(b) Letter of Transmittal. Promptly after the Effective Time,
----------------------
the Surviving Corporation shall cause the Exchange Agent to mail to each record
holder, as of the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented Shares (the
"Certificates") a form letter of transmittal (the "Letter of Transmittal") for
------------ ---------------------
return to the Exchange Agent (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent) and instructions for
use in effecting the surrender of the Certificates, for payment therefor. Upon
surrender to the Exchange Agent of a Certificate, together with the Letter of
Transmittal duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor cash in an amount equal to the product of the
number of Shares represented by such Certificate multiplied by the Merger
Consideration subject to any required withholding taxes, and such Certificate
shall forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Certificates. If payment is to be made to a
person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the Certificate surrendered or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.10, each
Certificate (other than Certificates representing Shares held by Parent, Sub or
any other wholly-owned subsidiary of Parent, the Company or any wholly-owned
8
<PAGE>
subsidiary of the Company which shall have been canceled, or Dissenting Shares)
shall represent for all purposes the right to receive the Merger Consideration
in cash multiplied by the number of Shares evidenced by such Certificate,
without any interest thereon.
(c) Return of Unclaimed Funds. Any cash provided to the Exchange
-------------------------
Agent pursuant to this Section 2.10 and not exchanged for Certificates within
six months after the Effective Time will be returned by the Exchange Agent to
the Surviving Corporation, which thereafter will act as Exchange Agent.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat and similar
laws.
Section 2.11. No Further Rights or Transfers. At and after the Effective
-------------------------------
Time, each holder of a Certificate that represented issued and outstanding
Shares immediately prior to the Effective Time shall cease to have any rights as
a stockholder of the Company, except for the right to surrender his or her
Certificate or Certificates in exchange for the payment provided pursuant to
Sections 2.7 and 2.10 hereof or to perfect his or her right to receive payment
for his or her Shares pursuant to Section 262 of the DGCL and Section 2.9 hereof
if such holder has validly exercised and perfected and not withdrawn his or her
right to receive payment for his or her Shares, and there shall be no transfers
on the stock transfer books of the Surviving Corporation of the Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates formerly representing Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for cash as provided
in this Article II, subject to applicable law in the case of Dissenting Shares.
Section 2.12. Stock Options. Immediately prior to the Effective Time, each
-------------
holder of a then-outstanding Company stock option issued pursuant to either (a)
the Company's 1994 Stock Plan, as amended (the "1994 Plan"), or (b) the
----------
Company's 1996 Non-Employee Director Stock Option Plan (the "1996 Plan" and,
---------
collectively, with the 1994 Plan, the "Stock Option Plans"), whether or not then
------------------
presently exercisable, to purchase Shares (an "Option") will be entitled to
------
receive, and shall receive, in settlement of such Option a cash payment from the
Company equal to the product of (i) the total number of Shares then subject to
each such Option with an exercise price per Share less than the Merger
Consideration multiplied by (ii) the excess of the Merger Consideration over the
exercise price per Share subject to such Option, subject to any required
withholding of taxes. If necessary or appropriate under the Stock Option Plans,
the Company will, upon the request of Parent, use its reasonable best efforts to
obtain the written acknowledgment of each person holding an Option that the
payment of the amount of cash referred to above will satisfy in full the
Company's obligation to such person pursuant to such Option. By virtue of the
foregoing treatment of the Options, at the Effective Time all Options shall be
canceled and shall cease to exist. Prior to the Effective Time, the Company
shall make any amendments to the terms of the Stock Option Plans that are
necessary to give effect to the transactions contemplated by this Section 2.12.
9
<PAGE>
Section 2.13 Warrants. Immediately prior to the Effective Time, each
--------
holder of a then-outstanding Warrant will be entitled to receive, and shall
receive, in settlement of such Warrant a cash payment from the Company equal to
the product of (i) the total number of Shares then subject to each such Warrant
with an exercise price per Share less than the Merger Consideration multiplied
by (ii) the excess of the Merger Consideration over the exercise price per Share
subject to such Warrant, subject to any required withholding of taxes. If
necessary or appropriate under the terms of such Warrant, the Company will, upon
the request of Parent, use its reasonable best efforts to obtain the written
acknowledgment of each person holding a Warrant that the payment of the amount
of cash referred to above will satisfy in full the Company's obligation to such
person pursuant to such Warrant. By virtue of the foregoing treatment of the
Warrants, at the Effective Time all Warrants shall be canceled and shall cease
to exist. Prior to the Effective Time, the Company shall make any amendments to
the terms of the Warrants that are necessary and give effect to the transactions
contemplated by this Section 2.13.
Section 2.14. Adjustments. If, between the date of this Agreement and the
-----------
Effective Time, the outstanding Shares shall be changed into a different number
of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date prior to the
Effective Time, the amount of consideration to be received pursuant to this
Article II in exchange for each outstanding Share, Option, or Warrant shall be
correspondingly adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents, warrants and, with respect to the covenants contained in
Section 3.6 only, covenants to Parent and Sub as follows:
Section 3.1. Organization. Except as set forth in Section 3.1 of the
------------
Company Disclosure Schedule, the Company and each of its Significant
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its state or jurisdiction of incorporation and is in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification and where failure to be in good standing or to so qualify would,
individually or in the aggregate, have a Company Material Adverse Effect. The
Company has made available to Parent true and correct copies of the certificate
of incorporation and By-Laws or equivalent organizational documents, each as
amended to the date hereof, of the Company and each Significant Subsidiary. Such
certificates of incorporation, by-laws and equivalent organizational documents
are in full force and effect. The Company is not in violation of its Certificate
of Incorporation or By-Laws. No Significant Subsidiary is in violation of its
certificate of incorporation, by-laws or equivalent organizational documents,
except for violations that would not, individually or in the aggregate, have a
Company Material Adverse Effect.
10
<PAGE>
Section 3.2. Capitalization.
--------------
(a) Company Capitalization. The authorized capital stock of the
----------------------
Company consists of 14,388,394 shares of Series A Common Stock, 5,611,606 shares
of Series B Common Stock and 1,000,000 shares of preferred stock ("Preferred
---------
Stock"). As of September 30, 1997, there were (i) 6,966,895 shares of Series A
- -----
Common Stock issued and outstanding and (ii) 3,198,761 shares of Series B Common
Stock issued and outstanding and (iii) no shares of Preferred Stock issued and
outstanding. Since September 30, 1997, no Shares have been issued (except for
(x) the issuance of Shares pursuant to the exercise of Options outstanding under
the Stock Option Plans at such date, the issuance of Shares pursuant to the
exercise of the Warrants outstanding on such date, and (y) the issuance pursuant
to the terms of the Certificate of Incorporation of Shares of Series A Common
Stock upon the sale of Shares of Series B Common Stock issued and outstanding on
such date), and no shares of Preferred Stock have been issued. Except as set
forth in Section 3.2(a) of the Company Disclosure Schedule and except for
2,080,761 shares of Series A Common Stock issuable (i) upon exercise of Options
outstanding as of September 30, 1997 or issued in compliance with Section 5.1
issued pursuant to the Stock Option Plans and (ii) upon exercise of the
Warrants, there are not now, and at the Effective Time there will not be, any
existing options, warrants, calls, subscriptions, convertible or exchangeable
securities, or other rights, or other agreements or commitments, obligating the
Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock of the Company or any of
its Subsidiaries. All issued and outstanding Shares are validly issued, fully
paid, nonassessable and free of preemptive rights. None of the outstanding
shares of capital stock of the Company is held by the Company or any of its
Subsidiaries.
(b) Subsidiary Capitalization. Except as set forth in Section
--------------------------
3.2(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of each of the Significant Subsidiaries have been validly issued
and are fully paid and non-assessable and are owned directly or indirectly by
the Company free and clear of all liens, charges, claims or encumbrances or as
imposed by applicable securities laws. Except as set forth in Section 3.2(b) of
the Company Disclosure Schedule, there are no outstanding options, warrants,
calls, subscriptions, or other rights, or other agreements or commitments,
obligating any Significant Subsidiary of the Company to issue, transfer or sell
any shares of its capital stock. There are no proxies outstanding with respect
to any shares of capital stock of the Company's Subsidiaries.
(c) Except as set forth in Section 3.2(c) of the Company
Disclosure Schedule and interests in the Subsidiaries, neither the Company nor
any Significant Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or entity (other than non-controlling investments in
the ordinary course of business and corporate partnering, development,
cooperative marketing and similar undertakings and arrangements entered into in
the ordinary course of business).
11
<PAGE>
Section 3.3. Authority Relative to This Agreement.
------------------------------------
(a) Company Approvals. The Company has full corporate power and
-----------------
authority to execute and deliver this Agreement and, subject to obtaining the
necessary approval of this Agreement by the affirmative vote of a majority of
the outstanding shares of Class A Common Stock and Class B Common Stock, voting
together as a single class (the "Stockholder Approval"), to consummate the
---------------------
Transactions. The execution and delivery of this Agreement by the Company and
the consummation of the Transactions have been duly authorized by the Board of
Directors of the Company, and no other corporate proceedings on the part of the
Company are necessary for the execution and delivery of this Agreement by the
Company and, subject to the filing of the Certificate of Merger pursuant to
Section 2.2 and obtaining the Stockholder Approval, the performance by the
Company of its obligations hereunder and the consummation by the Company of the
Transactions. This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of each
of Parent and Sub, this Agreement constitutes a valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except to the extent that its enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors rights generally or by general equitable principles.
(b) Other Authorizations. Except as set forth in Section 3.3(b)
--------------------
of the Company Disclosure Schedule, other than in connection with, or in
compliance with, applicable requirements of (i) the DGCL with respect to the
filing of the Certificate of Merger, (ii) the Exchange Act (including, without
limitation, the filing of the Proxy Statement), (iii) the requirements of the
NMS, (iv) the HSR Act and (v) the Communications Act (including, without
limitation, requirements related to the transfer of control licenses in
connection with the operation of the Stations), no authorization, consent or
approval of, or filing with, any court or any public body or authority is
necessary for the execution and delivery of this Agreement and the consummation
by the Company of the Transactions other than authorizations, consents and
approvals the failure to obtain, or filings the failure to make, which would
not, in the aggregate, have a Company Material Adverse Effect.
Section 3.4 No Violation. None of the execution or delivery of this
-------------
Agreement by the Company, the performance by the Company of its obligations
hereunder or the consummation by the Company of the Transactions will (a)
subject to obtaining the Stockholder Approval, constitute a breach or violation
of any provision of the Certificate of Incorporation or By-Laws of the Company,
(b) except as set forth in Section 3.4 of the Company Disclosure Schedule,
constitute a breach, violation or default (or any event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the payment or performance required by, or result
in the creation of any lien or encumbrance upon any of the properties or assets
of the Company or any of its Subsidiaries or permit any person to require the
Company or any Subsidiary to repurchase or repay any obligation under, any note,
bond, mortgage, indenture, deed of trust, license, agreement or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which they or any of their respective properties or assets are bound, (c)
12
<PAGE>
constitute a violation of any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to the Company, any
of its Subsidiaries or any of their properties or assets, or (d) except as set
forth in Section 3.4 of the Company Disclosure Schedule, give any person the
right to require the Company or any Subsidiary to purchase any assets from, or
sell any assets to, such person or trigger any "change of control" provisions in
any agreement to which the Company or any of its Subsidiaries is a party, other
than, in the case of clauses (b), (c) and (d) above, such breaches, violations,
defaults, terminations, accelerations or creation of liens and encumbrances or
rights to require the Company or any Subsidiary to purchase or sell any assets
or trigger any "change of control" provisions which, in the aggregate, would not
have a Company Material Adverse Effect or as set forth in Section 3.4 of the
Company Disclosure Schedule.
Section 3.5. SEC Reports; No Undisclosed Liabilities. Since September 30,
---------------------------------------
1995, the Company has filed all forms, reports and documents ("SEC Reports")
------------
with the SEC required to be filed by it pursuant to the Securities Act, and the
Exchange Act and the SEC rules and regulations promulgated thereunder. True and
correct copies of all such SEC Reports have been made available to Parent by the
Company. All of the SEC Reports complied (as of their respective filing dates)
in all material respects with the applicable requirements of the Securities Act,
the Exchange Act and the SEC rules and regulations promulgated thereunder. None
of such SEC Reports (as of their respective filing dates) contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited and
unaudited consolidated financial statements of the Company included in the SEC
Reports have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise stated in such
financial statements included in the Filed SEC Reports, including the related
notes, and except that the interim financial statements do not contain all of
the footnote disclosures required by generally accepted accounting principles)
and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
results of their operations and their cash flows for the periods then ended,
subject, in the case of the interim unaudited financial statements, to normal
year-end audit adjustments, which, except as disclosed in the Filed SEC Reports,
would not be material in amount or effect. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on, or
reserved against in, the consolidated financial statements of the Company or in
the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except for (i) liabilities or obligations that
were so reserved on, or reflected in (including the notes to), the consolidated
balance sheet of the Company as of December 31, 1996 or September 30, 1997; (ii)
liabilities or obligations arising in the ordinary course of business consistent
with past practice since September 30, 1997; (iii) liabilities or obligations
which would not, individually or in the aggregate, have a Company Material
Adverse Effect; (iv) liabilities or obligations related to this Agreement or the
Transactions; and (v) payments required as a result of the consummation of the
Merger under the acceleration provisions of the terms existing on the date
hereof of the Company's employment agreements, severance agreements or Benefit
13
<PAGE>
Plans which would not, individually or in the aggregate, have a Company Material
Adverse Effect. No Subsidiary of the Company is required to file any report or
form with the SEC.
Section 3.6. Proxy Statement; Other Information. None of the information
----------------------------------
included or incorporated by reference in the letter to stockholders, notice of
meeting, proxy statement and form of proxy, or the information statement
(including, without limitation, the proxy or information statement containing
information required by Regulation 14A under the Exchange Act, and, if
applicable, Rule 13e-3 and Schedule 13E-3 under the Exchange Act), as the case
may be, to be distributed to stockholders of the Company in connection with the
Merger, or any schedules required to be filed with the SEC in connection
therewith (collectively referred to herein as the "Proxy Statement"), if
----------------
required, except information supplied by Parent or Sub in writing for inclusion
in the Proxy Statement or in such schedules (as to which the Company makes no
representation), will, as of the date the Proxy Statement is first mailed to
such stockholders, and on the date of the Special Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No representation
is made by the Company with respect to any forward-looking information which may
have been supplied by the Company whether or not included in the Proxy
Statement. The Proxy Statement will comply (at the time of its mailing) as to
form in all material respects with the Exchange Act and the rules and
regulations thereunder. The Company will promptly correct any statements in the
Proxy Statement that to its knowledge have become false or misleading and take
all steps necessary to cause such Proxy Statement as so corrected to be filed
with the SEC and disseminated to the stockholders of the Company in accordance
with applicable law.
Section 3.7 Compliance.
----------
(a) Except as disclosed by the Company in the SEC Reports filed
with the SEC prior to the date hereof (the "Filed SEC Reports") or as set forth
------------------
in Section 3.7(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries hold all permits, licenses, waivers, exemptions, orders, franchises
and approvals necessary for the lawful conduct of their respective businesses in
the manner in which they are currently being conducted (including, but not
limited to, those required under the Communications Act or the rules and
regulations of the FCC (the "FCC Permits")), except where the failure to possess
-----------
the same would not, individually or in the aggregate, have a Company Material
Adverse Effect. The Company and its Subsidiaries are in compliance with the
terms of all FCC Permits, except where the failure to so comply would not have a
Company Material Adverse Effect.
(b) The FCC Permits are in full force and effect unimpaired by
any condition that could have a material adverse effect on the financial
condition, results of operations, or business of the Stations. Except as set
forth in the Filed SEC Reports or identified in Section 3.7(b) of the Company
Disclosure Schedule, no application, action or proceeding is pending for the
renewal or modification of any of the FCC Permits and, except for actions or
proceedings affecting television broadcast stations generally, no application,
14
<PAGE>
complaint, action or proceeding is pending or, to the Company's knowledge,
threatened that is reasonably likely to result in (i) the denial of an
application for renewal, (ii) the revocation, modification, non-renewal or
suspension of any of the Station licenses and other material FCC Permits, (iii)
the issuance of a cease-and-desist order, or (iv) the imposition of any
administrative or judicial sanction with respect to any of the Stations,
individually or in the aggregate, with respect to this clause (iv) that would
have a Company Material Adverse Effect.
(c) The Stations, their respective physical facilities,
electrical and mechanical systems and transmitting and studio equipment (i) are
being operated in all material respects in compliance with the specification of
the applicable Station licenses and other material FCC Permits, and (ii) are
being operated in all material respects in compliance with all material
requirements of the Communications Act. The Company and the Stations have
complied in all material respects with all requirements of the FCC and the
Federal Aviation Administration with respect to the construction and/or
alteration of the Company's antenna structures and "no hazard" determinations
for each antenna structure owned by the Stations have been obtained.
Section 3.8. Absence of Certain Changes. Except as set forth in the Filed
--------------------------
SEC Reports or identified in Section 3.8 of the Company Disclosure Schedule,
since September 30, 1997 there has not been any material adverse change in the
financial condition, results of operations or business of the Company and its
Subsidiaries, taken as a whole.
Section 3.9. Certain Fees. With the exception of the fees payable to the
------------
Financial Advisor and SBI pursuant to the respective engagement letters dated
July 17, 1997 and November 20, 1997 which have been delivered to Parent, neither
the Company, any of its Subsidiaries nor any of their officers, directors or
employees has employed any broker or finder or incurred any liability for any
financial advisory, brokerage or finder's fees or commissions to any brokers or
finders in connection with the Transactions.
Section 3.10. FCC Qualifications. After due investigation, except for
-------------------
matters described in Section 3.10 of the Company Disclosure Schedule, the
Company is not aware of any facts or circumstances related to the Company that
are likely to prevent or delay prompt consent to the transfer of control
applications (as described in Section 5.8(b)) to a qualified purchaser and the
issuance of the FCC Order.
Section 3.11. Section 203. The Board of Directors of the Company has
------------
approved this Agreement and the Merger. Section 203 of the DGCL has been
rendered inapplicable to the consummation of the Merger and the other
Transactions.
Section 3.12. Litigation. Except as disclosed in the Filed SEC Reports or
----------
identified in Section 3.12 of the Company Disclosure Schedule, there are no
civil, criminal or administrative actions, suits, claims, hearings,
investigations or proceedings pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries at law or in equity,
or before or by any federal or state commission, board, bureau, agency or
instrumentality, that could reasonably be expected, individually or together
15
<PAGE>
with any other action, suit, claim, hearing, investigation or proceeding arising
out of or based upon the same or substantially the same facts or circumstances,
to have a Company Material Adverse Effect.
Section 3.13. Intellectual Property. Except as disclosed in the Filed SEC
---------------------
Reports or identified in Section 3.13 of the Company Disclosure Schedules and
except to the extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in the aggregate,
could not reasonably be expected to have a Company Material Adverse Effect:
(a) The Company or its Subsidiaries own or have the valid right
to use all Intellectual Property used in or necessary for the conduct of their
businesses as currently conducted or proposed by the Company to be conducted,
free and clear of all liens, charges, claims or encumbrances and the Company has
not granted to any third party a license to use the trademark "Telemundo" or any
related logo, except as displayed or embedded as part of video programming
licensed for exhibition to third parties or pursuant to the Affiliation
Agreements or for customary cross-promotional or advertising purposes.
(b) To the knowledge of the Company, (i) neither the Company's
nor any Subsidiary's use of any Intellectual Property nor the conduct of the
Company's nor any Subsidiary's business infringes any Intellectual Property
rights of any third party, and no such claims have been asserted against the
Company or any Subsidiary which have not been resolved, and (ii) no third party
is materially infringing any of the Company's or any Subsidiary's Intellectual
Property rights, and no such claims are pending or threatened by the Company or
any Subsidiary against any third party.
Section 3.14. Labor Matters. Except as set forth in the Filed SEC Reports
-------------
or identified in Section 3.14 of the Company Disclosure Schedules, there is no
labor strike, dispute, slowdown, work stoppage or lockout actually pending or,
to the knowledge of the Company, threatened against or affecting the Company or
any Subsidiary and, since January 1, 1995, there has not been any such action.
Except as set forth in the Filed SEC Reports or identified in Section 3.14 of
the Company Disclosure Schedule, neither the Company nor any Subsidiary is a
party to or bound by any collective bargaining, guild or similar agreement with
any labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company or
any Subsidiary. The Company and its Subsidiaries have at all times been in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work, and
occupational safety and health, except where any failure to be in compliance
could not reasonably be expected to have a Company Material Adverse Effect, and
are not engaged in any unfair labor practices as defined in the National Labor
Relations Act or other applicable law, ordinance or regulation which could
reasonably be expected to have a Company Material Adverse Effect. There is no
grievance or arbitration proceeding arising out of any collective bargaining or
guild agreement or other grievance procedure relating to the Company or its
Subsidiaries which could reasonably be expected to have a Company Material
Adverse Effect.
16
<PAGE>
Section 3.15. Employee Benefit Plans: ERISA
-----------------------------
(a) Section 3.15(a) of the Company Disclosure Schedule sets
forth a true and complete list of each material compensation plan and each other
material "employee benefit plan" (within the meaning of Section 3(2) of ERISA)
----------------------
that is maintained or contributed to, or was maintained or contributed to, at
any time since January 1, 1995, by the Company, any Subsidiary or by any trade
or business, whether or nor incorporated, which together with the Company would
be deemed a "single employer" within the meaning of Section 4001(b) of ERlSA (an
"ERISA Affiliate") for the benefit of any employee, former employee, consultant,
---------------
officer, or director of the Company or any Subsidiary (a "Benefit Plan").
------------
(b) Except as set forth in the Filed SEC Reports or identified
in Section 3.15(b) of the Company's Disclosure Schedule: (i) no Benefit Plan is
a "multiemployer plan," as such term is defined in Section (3)(37) of ERISA, or
a "multiple employer plan" within the meaning of Section 413(c) of the Code;
(ii) each of the Benefit Plans is, and has always been, operated in all respects
in accordance with the requirements of all applicable law; (iii) each of the
Benefit Plans intended to be "qualified" within the meaning of Section 401(a) of
the Code has received a favorable determination letter from the Internal Revenue
Service to that effect; (iv) no Benefit Plan has an accumulated or waived
funding deficiency within the meaning of Section 412 of the Code; (v) neither
the Company nor any ERISA Affiliate has incurred, directly or indirectly, any
liability (including any material contingent liability) to or on account of a
Benefit Plan pursuant to Title IV of ERISA; (vi) no proceedings have been
instituted to terminate any Benefit Plan that is subject to Title IV of ERISA;
(vii) no "reportable event," as such term is defined in Section 4043(b) of
ERISA, has occurred with respect to any Benefit Plan that is not reflected on an
applicable annual report filed on behalf of such plan; and (viii) no condition
exists that presents a risk to the Company or any ERISA Affiliate of incurring a
liability to or on account of a Benefit Plan pursuant to Title IV of ERISA;
provided, however, that the representations made in the foregoing clauses (ii)
through (viii) of this Section 3.15(b) shall be deemed to be true and correct
except to the extent that their untruth would, individually or in the aggregate,
have a Company Material Adverse Effect.
(c) Except as would not, individually or in the aggregate, have
a Company Material Adverse Effect, (i) there are no pending, or to the knowledge
of the Company, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Benefit Plans, or any trusts
related thereto or any trustee or administrator thereof, and (ii) no litigation
or administrative or other proceeding (including, without limitation, any
litigation or proceeding under Title IV of ERlSA) has occurred or, to the
knowledge of the Company, is threatened involving any Benefit Plan or any trusts
related thereto or any trustee or administrator thereof.
17
<PAGE>
Section 3.16. Taxes Except as set forth in Section 3.16 of the Company
-----
Disclosure Schedule:
(a) Each of the Company and its Subsidiaries has filed all
material tax returns and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely filed and granted
and have not expired, and all tax returns and reports are complete and accurate
in all respects, except to the extent that such failures to file, have
extensions granted that remain in effect or be complete and accurate in all
respects, as applicable, would not, individually or in the aggregate, have a
Company Material Adverse Effect. The Company and each of its Subsidiaries has
paid (or the Company has paid on its behalf) all taxes shown as currently due on
such tax returns and reports. The most recent financial statements contained in
the SEC Reports reflect an adequate reserve for all taxes payable by the Company
and its Subsidiaries for all taxable periods and portions thereof accrued
through the date of such financial statements in accordance with generally
accepted accounting principles, and no deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any Subsidiary that are
not adequately reserved for, except for inadequately reserved taxes and
inadequately reserved deficiencies that would not, individually or in the
aggregate, have a Company Material Adverse Effect. No requests for waivers of
the time to assess any taxes against the Company or any Subsidiary have been
granted and are pending, except for requests with respect to such taxes that
have been adequately reserved for in the most recent financial statements
contained in the SEC Reports, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) As used in this Section 3.16 and in Section 5.1, "taxes"
shall include all Federal, state, local and foreign income, franchise, property,
sales, use, excise and other taxes, including obligations for withholding taxes
from payments due or made to any other person and any interest, penalties or
additions to tax.
Section 3.17. Affiliation Agreements. The Company has provided Parent with
----------------------
access to true and correct copies of all affiliation agreements between the
Company or any of its Subsidiaries and a television broadcast station pursuant
to which such station has agreed to broadcast the network programming of the
Company (the "Affiliation Agreements"). Each of the Affiliation Agreements is in
----------------------
full force and effect, is the valid and binding obligation of the parties
thereto and is enforceable in accordance with its terms. The Company is not and,
to the knowledge of the Company, no other party to any Affiliation Agreement is
in material breach or default with respect to its obligations thereunder, or has
given notice of, or, to the Company's knowledge, has any basis for, any action
to terminate, cancel, rescind or procure a judicial reformation thereof.
Section 3.18. Environmental Matters. The Company and its Subsidiaries are
----------------------
in material compliance with all federal, state, and local laws governing
pollution or the protection of human health or the environment ("Environmental
-------------
Laws"), except in each case where noncompliance with Environmental Laws would
- ----
18
<PAGE>
not reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor any of its Subsidiaries has received any written notice with
respect to the business of, or any property owned or leased by, the Company or
any of its Subsidiaries from any Governmental Entity or third party alleging
that the Company or any of its Subsidiaries is not in material compliance with
any Environmental Law. To the knowledge of the Company, there has been no
release of a "Hazardous Substance," as that term is defined in the Comprehensive
-------------------
Environmental Response, Compensation, and Liability Act, 42 U.S.C. ss. 9601 et
seq., in excess of a reportable quantity on any real property owned or leased by
the Company or any of its Subsidiaries.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and Sub represent and warrant and, with respect to the covenants
contained in Section 4.4 only, covenant to the Company as follows:
Section 4.1. Organization. Each of Parent and Sub is a corporation duly
------------
organized, validly existing and in good standing under the laws of its state or
jurisdiction of incorporation and is in good standing as a foreign corporation
in each other jurisdiction where the properties owned, leased or operated, or
the business conducted, by it require such qualification and where failure to be
in good standing or so to qualify would, individually or in the aggregate, have
a material adverse effect on the financial condition, results of operations or
businesses of Parent and Sub, taken as a whole.
Section 4.2. Authority Relative to This Agreement.
------------------------------------
(a) Parent and Sub Approvals. Each of Parent and Sub has full
--------------------------
corporate power and authority to execute and deliver this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Sub and the consummation of the Transactions have been duly
authorized by the respective Boards of Directors of Parent and Sub, and by
Parent as the sole stockholder of Sub, and no other corporate proceedings on the
part of Parent or Sub are necessary for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of Parent and Sub
of their respective obligations hereunder and the consummation by each of Parent
and Sub of the transactions so contemplated. This Agreement has been duly
executed and delivered by each of Parent and Sub and, assuming this Agreement
constitutes a valid and binding obligation of the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and Sub, enforceable
against each of Parent and Sub in accordance with its terms, except to the
extent that its enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors
rights generally or by general equitable principles.
(b) Other Authorizations. Other than in connection with, or in
---------------------
compliance with, applicable requirements of (i) the DGCL with respect to the
Transactions, (ii) the Exchange Act (including, without limitation, the filing
of the Proxy Statement), (iii) the HSR Act and (iv) the Communications Act
19
<PAGE>
(including, without limitation, requirements related to the transfer of licenses
in connection with the operation of the television stations owned and operated
by the Company), no authorization, consent or approval of, or filing with, any
court or any public body or authority is necessary for the consummation by
Parent and Sub of the Transactions other than authorizations, consents and
approvals the failure to obtain, or filings the failure to make, would not, in
the aggregate, have a material adverse effect on the financial condition,
results of operations or business of Parent and its Subsidiaries, taken as a
whole, or on the ability of Parent and Sub to consummate the Transactions.
Section 4.3. No Violation. Neither the execution or delivery of this
-------------
Agreement by Parent and Sub, the performance by Parent and Sub of their
respective obligations hereunder nor the consummation by them of the
Transactions will (a) constitute a breach or violation under the certificate of
incorporation or by-laws of Parent or Sub or (b) constitute a breach, violation
or default (or any event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of any lien or encumbrance
upon any of the properties or assets of Parent or any of its Subsidiaries under,
any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument to which Parent or any of its Subsidiaries is a party or by
which they or any of their respective properties or assets are bound or (c)
constitute a violation of any order, writ, injunction, decree, statute, rule or
regulation of any court or governmental authority applicable to Parent or Sub or
any of their respective properties or assets, give any person the right to
require Parent or Sub to purchase any assets from, or sell any assets to, such
person or trigger any "change of control" provisions in any material agreement
to which Parent or Sub is a party other than, in the case of clauses (b), (c)
and (d) above, such breaches, violations, defaults, terminations, accelerations
or creation of liens and encumbrances which, in the aggregate, would not,
individually or in the aggregate, have a material adverse effect on the
financial condition, results of operations or business of Parent and Sub, taken
as a whole, or on the ability of Parent and Sub to consummate the Transactions.
Section 4.4. Proxy Statement.
---------------
(a) None of the information supplied in writing by Parent, Sub
or their respective affiliates specifically for inclusion in the Proxy Statement
will, at the time the Proxy Statement is mailed or at the time of the Special
Meeting (as defined in Section 5.4) or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any time
prior to the Special Meeting any event with respect to Parent or Sub, or with
respect to information supplied by Parent or Sub for inclusion in the Proxy
Statement, shall occur which is required to be described in an amendment of, or
a supplement to, such documents, such event shall be so described to the Company
in a timely manner.
(b) Parent Disclosure. The Parent Disclosure Documents, will (as
-----------------
of their respective filing dates) comply in as to form in all material respects
with the applicable requirements of the Securities Act and the Exchange Act and
20
<PAGE>
the SEC rules and regulations promulgated thereunder. None of Parent Disclosure
Documents will, at the time they are filed, at the time of any distribution
thereof or at the time of the Special Meeting, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; provided, however, that this representation and warranty
will not apply to statements or omissions in the Parent Disclosure Documents
based solely upon information furnished to Parent in writing by the Company
specifically for use therein.
Section 4.5. Financing. Parent has received binding written commitments
---------
(the "Equity Commitments") from its stockholders to contribute equity capital to
------------------
the Parent in the aggregate amount of $273,200,000 plus additional amounts
necessary to fund the Additional Amount (if any) hereunder and Sub has received
from Parent a binding written commitment from Parent that Parent will
immediately thereafter contribute the Equity Commitments to Sub. The Equity
Commitments include an unconditional commitment from each of the Parent
Stockholders that an aggregate of $100,000,000 will be contributed to Parent,
whether or not the Merger is consummated, to satisfy the obligations of Parent
and Sub hereunder, including without limitation, claims made as a result of any
breaches by Parent or Sub of the terms of this Agreement. Parent and Sub have or
have access to the funds, or have, at the date hereof, binding written
commitments from responsible financial institutions to provide Parent or Sub
with the funds (the "Debt Commitment Letters") necessary, together with the
-------------------------
Equity Commitments, to consummate the Merger and the other Transactions and to
provide working capital for the business of the Company, and to consummate the
Transactions, including the payment of related fees and expenses. True and
correct copies of all such financing commitments have previously been furnished
to the Company along with letters from each of Parent Stockholders stating that
the Company may rely on the Equity Commitments as if they were addressed to the
Company. As of the date hereof, none of the Equity Commitments or commitments
represented by the Debt Commitment Letters has been withdrawn and Parent and Sub
do not know of any facts or circumstances existing at the date hereof that would
result in any of the conditions contained in the Debt Commitment Letters not
being satisfied.
Section 4.6. No Prior Activities. Sub has not incurred, directly or
---------------------
indirectly, any material liabilities or obligations, except those incurred in
connection with its organization or with the negotiation of this Agreement and
the Transactions. Sub has not engaged, directly or indirectly, in any business
or activity of any type or kind, or entered into any agreement or arrangement
with any person or entity, and is not subject to or bound by any material
obligation or undertaking, that is not contemplated by or in connection with
this Agreement and the Transactions.
Section 4.7. Surviving Corporation after the Merger. At the Effective
----------------------------------------
Time and after giving effect to any changes in the Surviving Corporation's
assets and liabilities as a result of the Merger and after giving effect to the
financing for the Merger and the use of proceeds therefrom, the Surviving
Corporation will not (a) be insolvent (either because its financial condition is
such that the sum of its debts is greater than the fair market value of its
assets or because the present fair saleable value of its assets will be less
21
<PAGE>
than the amount required to pay its debts as they become due), (b) have
unreasonably small capital with which to engage in its business or (c) have
incurred or plan to incur debts beyond its ability to pay as they become
absolute and matured.
Section 4.8. Certain Fees. Neither the Parent or Sub nor any affiliates
------------
thereof nor any of their respective officers, directors or employees has
employed any broker or finder or incurred any liability required to be paid by
the Company prior to the Closing for any financial advisory, brokerage or
finder's fees or commissions to any brokers or finders in connection with the
Transactions.
Section 4.9. FCC Qualifications. Parent and Sub, to their knowledge after
------------------
consulting with regulatory counsel and based on the FCC's current practice and
precedent, are, for purposes of obtaining the FCC Order, legally, technically,
financially and otherwise qualified to acquire control of the Company, and
Parent and Sub are not aware of any facts or circumstances related to Parent or
Sub that are likely to prevent consent to the transfer of control applications
(as described in Section 5.8(b)) and issuance of the FCC Order. Parent's equity
ownership is structured as described in the bid letter dated November 17, 1997
and delivered by Parent and Sub to the Financial Advisor on behalf of the
Company. Parent and Sub, to their knowledge after consulting with regulatory
counsel, are not aware, except for the continuation of existing waivers, that
any waiver of any FCC rule or policy is necessary to be obtained for the grant
of the applications for transfer of control of the Company to Parent and Sub,
nor will processing pursuant to any exception to any rule of general
applicability be requested or required in connection with the consummation of
the Transactions.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business of the Company. Except as expressly
-------------------------------------
contemplated by this Agreement or as set forth in Section 5.1 of the Company
Disclosure Schedule, during the period from the date of this Agreement to the
Effective Time, the Company will, and will cause each of its Subsidiaries to,
conduct its respective operations according to its ordinary and usual course of
business and consistent with past practice and use reasonable efforts to (i)
preserve intact its business organizations' goodwill, (ii) keep available the
services of its present officers and key employees, and (iii) preserve the
goodwill and business relationships with suppliers, distributors and others
having business relationships with it. Without limiting the generality of the
foregoing, and except as expressly contemplated by this Agreement or as set
forth in Section 5.1 of the Company Disclosure Schedule, prior to the Effective
Time, the Company will not, and the Company will cause its Subsidiaries not to,
without the prior written consent of Parent (such consent, except in the cases
of clauses (a), (h) and (i) below, not to be unreasonably withheld):
(a) issue, sell, pledge or otherwise dispose of, grant or
otherwise create any additional shares of, or authorize or propose the issuance,
sale, pledge, disposal, grant or creation of any shares of capital stock of the
Company and its Subsidiaries, or securities convertible into or exchangeable for
such shares, or any rights, warrants or options to acquire such shares or other
22
<PAGE>
convertible or exchangeable securities, other than the issuance of Shares
pursuant to the exercise of Options or Warrants as outstanding on the date
hereof or otherwise issuable pursuant to the automatic grant provisions of the
1996 Plan as in effect on the date hereof, relating to director options;
(b) purchase, redeem or otherwise acquire or retire, or offer to
purchase, redeem or otherwise acquire or retire, any shares of its capital
stock, other than in transactions between the Company and its wholly-owned
subsidiaries and any required repurchases of options or stock upon termination
of employment to the extent required by agreements in effect on the date hereof;
(c) declare, set aside, make or pay any dividend or
distribution, payable in cash, stock, property or otherwise, on any shares of
its capital stock (other than dividends paid by wholly-owned Subsidiaries of the
Company to the Company);
(d) other than with respect to intercompany payables and
receivables and intercompany debt, incur or become contingently liable with
respect to any indebtedness or guarantee of any indebtedness or issue any debt
securities other than indebtedness incurred to finance working capital
requirements in the ordinary course of business consistent with past practice;
(e) merge, consolidate with or consummate any other business
combination with any person or acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business entity;
(f) sell, lease, license (other than exhibition licenses entered
into in the ordinary course of business consistent with past practice),
mortgage, transfer or otherwise dispose of any properties or assets which are
material to the Company and its Subsidiaries, taken as a whole;
(g) except as disclosed in Section 5.1 of the Company Disclosure
Schedule or as may be required by applicable law or by contracts existing as of
the date hereof, (i) increase the compensation payable or to become payable to
its officers or employees, except for non-officer employees and production and
talent personnel, increases in the ordinary course of business consistent with
past practice; (ii) enter into any written employment agreement with any
employee, except in the ordinary course of business which, in any event, shall
be terminable, without penalty, on not more than six months notice; (iii) grant
any severance or termination pay to any director, officer or employee
inconsistent with Company policy; or (iv) establish, adopt, enter into,
terminate, withdraw from or amend in any material respect or take any action to
accelerate any rights or benefits under any collective bargaining agreement, any
stock option plan, or any material Benefit Plan;
(h) enter into any programming commitment other than in the
ordinary course of business consistent with past practice;
23
<PAGE>
(i) enter into any local marketing, joint marketing or similar
agreements, modify or amend any such existing agreements on terms less favorable
to the Company than such existing agreements, if such terms would, individually
or in the aggregate, have a Company Material Adverse Effect;
(j) incur any commitments for capital expenditures (as such term
is used in accordance with generally accepted accounting principles) in excess
of $10,000,000 in any twelve month period.
(k) incur any obligations to make any payment of, or in respect
of, any tax, except in the ordinary course of business consistent with past
practice, settle any material tax audit, make or change any tax election or file
any amended tax returns; in each case other than (i) in connection with the
current audit of the Company's federal income tax returns for the years ended
December 31, 1994 and December 31, 1995, details of which have previously been
provided to representatives of Parent or Sub and (ii) obligations and actions
which action would not result in a Company Material Adverse Effect;
(l) cancel or waive any claim or right of substantial value or
settle any material pending litigation;
(m) enter into any paid programming or infomercial agreement or
any agreement granting any person the right to program any block of network or
local time, in each case which is not terminable at the Company's discretion
upon not more than 30 days notice or which does not extend beyond June 30, 1998;
(n) except as set forth in Section 5.1 of the Company Disclosure
Schedule or in the ordinary course of business consistent with past practice,
pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) before they are due or fail to pay
accounts payable in accordance with their terms;
(o) propose or adopt any amendments to its certificate of
incorporation or by-laws;
(p) agree, in writing or otherwise, to take any of the foregoing
actions; or
(q) take, or agree or commit to take, any action that would make
any representation or warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the Effective Time or result in any of
the conditions to the Merger set forth in this Agreement not being satisfied.
Section 5.2 Access to Information.
---------------------
(a) General. So long as this Agreement has not been terminated,
-------
between the date of this Agreement and the Effective Time, the Company will give
Parent and its authorized representatives reasonable access during normal
24
<PAGE>
business hours to all offices, stations, studios, production facilities and
other facilities and to all books and records of it and its Subsidiaries, will
permit Parent to make such inspections as it may reasonably require and will
cause its officers and those of its Subsidiaries to furnish Parent (at such time
as it would otherwise become available in the ordinary and usual course of
business and consistent with past practice) with such financial and operating
data and other information (consistent with that which is currently being
prepared by the Company) with respect to the business and properties of the
Company and its Subsidiaries as Parent may from time to time reasonably request.
(b) Confidentiality. Subject to any additional requirements of
---------------
law (including, without limitation, FCC regulations) and the terms of the
Confidentiality Agreement, Parent and Sub (i) will hold and will cause their
respective representatives, advisors and financing sources to hold in strict
confidence, unless compelled to disclose by judicial or administrative process,
or, in the written opinion of its counsel with a copy sent to the Company, by
other requirements of law, all documents and information concerning the Company
and its Subsidiaries furnished to Parent, Sub or any of their respective
representatives, advisors and financing sources in connection with the
Transactions, provided, however, that, prior to any disclosure pursuant to the
foregoing, Parent shall notify the Company and afford the Company an opportunity
to obtain a protective order against such disclosure (except to the extent that
such information can be shown to have been (x) previously known by Parent, (y)
in the public domain through no fault of Parent, its representatives or advisors
or (z) later lawfully acquired by Parent from other sources, unless Parent knows
that such other sources are not entitled to disclose such information) and (ii)
will not release or disclose such information to any other person, except in
connection with this Agreement to (1) its auditors, attorneys, financial
advisors and other representatives and advisors with a need to know such
information and (2) responsible financial institutions in connection with
obtaining the financing contemplated by Section 4.5 hereof, provided that such
person shall have first been advised of the confidentiality provisions of this
Section 5.2 and the Confidentiality Agreement and agreed to be bound thereby. If
the Transactions are not consummated, such confidence shall be maintained except
to the extent such information can be shown to have been (i) previously known by
Parent, (ii) in the public domain through no fault of Parent, its
representatives or advisors or (iii) later lawfully acquired by Parent from
other sources, unless Parent knows that such other sources are not entitled to
disclose such information and, if requested by the Company, Parent will return
to the Company all copies of information furnished by the Company to Parent or
its agents, representatives, advisors or financing sources, or derived
therefrom, or shall in writing confirm the destruction of such information.
Section 5.3. No Solicitation.
---------------
(a) The Company shall not, nor shall it permit any of its
Subsidiaries, or any officer, director, employee, agent or representative of the
Company or any of its Subsidiaries (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) (collectively, "Representatives"), directly or indirectly, to (i)
---------------
initiate, solicit or encourage any inquiries or proposals that constitute, or
could reasonably be expected to lead to, a proposal or offer for a merger,
consolidation, business combination, sale of assets representing a substantial
25
<PAGE>
portion of the assets of the Company and its Subsidiaries, taken as a whole, or
a sale of shares representing 20% or more of the capital stock of the Company,
including, without limitation, by way of a tender offer or exchange offer by any
person for 20% or more of the shares of capital stock of the Company, other than
the Merger and the other transactions contemplated by this Agreement (the
"Transactions") (any of the foregoing inquiries or proposals being referred to
------------
in this Agreement as an "Alternative Proposal"), (ii) engage in negotiations or
--------------------
discussions concerning, or provide to any person or entity any non-public
information or data relating to the Company or any of its Subsidiaries for the
purposes of, or otherwise cooperate with or assist or participate in, facilitate
or encourage, any inquiries relating to or the making of any Alternative
Proposal, (iii) agree to, approve or recommend any Alternative Proposal or (iv)
take any other action inconsistent with the obligations and commitments of the
Company pursuant to this Section 5.3; provided, however, that nothing contained
in this Agreement shall prevent the Company or its Board of Directors from (A)
furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited bona
fide written Alternative Proposal (for which financing, to the extent required,
is then committed or which, in the good faith judgment of the Company's board of
directors after consultation with the Company's financial advisor, is reasonably
capable of being obtained) to the Company or its stockholders from persons other
than Parent and its affiliates (a "Third Party"), if and only to the extent that
-----------
(1) the Board of Directors of the Company, by action of a majority of the
members of the Board of Directors who are not affiliated with either the Parent
or the person making such Alternative Proposal or their respective affiliates,
determines in good faith, after consultation with the Company's outside counsel
and its financial advisors, that (x) such Alternative Proposal is more favorable
from a financial point of view to the Company's stockholders than the Merger and
the other Transactions and (y) failure by the Board of Directors to furnish such
information to or enter into discussions or negotiations with such Third Party
could reasonably be expected to result in a breach of its fiduciary duties to
the Company's stockholders under applicable law, and (2) prior to furnishing
such non-public information to, or entering into discussions or negotiations
with, such Third Party, the Board of Directors of the Company receives from such
person or entity an executed confidentiality agreement with terms no less
favorable to such party than those contained in the Confidentiality Agreement;
or (B) complying with Rule 14d-9 or Rule 14e-2 promulgated under the Exchange
Act with regard to an Alternative Proposal or making any other public disclosure
that, based upon advice of the Company's outside counsel, the Board of Directors
determines in its good faith judgment is required by applicable law, rule or
regulation; provided, that prior to making any such other public disclosure the
Company shall to the extent reasonably practicable inform the Parent that it
intends to make such disclosure. The Company will immediately cease and cause to
be terminated any existing activities, discussions or negotiations by the
Company or its Representatives with any parties conducted heretofore with
respect to any of the foregoing.
(b) The Company shall (i) promptly notify the Parent in writing
after receipt by the Company or its Representatives of any Alternative Proposal
or any inquiries indicating that any person is considering making or wishes to
make an Alternative Proposal, (ii) promptly notify the Parent in writing after
receipt of any request for non-public information relating to the Company or any
26
<PAGE>
of its Subsidiaries or for access to the Company's or any of its Subsidiaries'
properties, books or records by any person that, to the Company's knowledge, may
be considering making, or has made, an Alternative Proposal and (iii) keep the
Parent advised of the status and principal terms of any such Alternative
Proposal, indication or request.
Section 5.4. Stockholders' Meeting.
---------------------
(a) General. The Company shall, in accordance with its charter
-------
documents:
(i) duly call, give notice of, convene and hold an annual or
special meeting (the "Special Meeting") of its stockholders as soon as
----------------
practicable for the purpose of considering and taking action upon this
Agreement;
(ii) subject to its fiduciary duties under applicable law as
advised in writing by counsel, include in the Proxy Statement the
recommendation of its Board of Directors that stockholders of the Company
vote in favor of the approval and adoption of this Agreement and the
Transactions contemplated hereby; and
(iii)use its reasonable best efforts (x) (1) to obtain and
furnish the information required to be included by it in the Proxy
Statement, (2) to file the Proxy Statement with the SEC, (3) to respond
promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and (4) to cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable time
and (y) subject to its fiduciary duties under applicable law as advised in
writing by counsel, to obtain the Stockholder Approval.
(b) Parent Disclosure Documents. As soon as practicable after
-----------------------------
the date of this Agreement, Parent and/or Sub shall file (separately, or as part
of the Proxy Statement) with the SEC, if required, a Rule 13E-3 Transaction
Statement with respect to the Merger (together with any supplements or
amendments thereto, the "Parent Disclosure Documents"). Each of Sub and Parent
----------------------------
agrees to correct any information provided by it for use in the Sub Disclosure
Documents if and to the extent that it shall have become false or misleading in
any material respect. Sub agrees to take all steps necessary to cause the Sub
Disclosure Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment on each Sub Disclosure Document
prior to its being filed with the SEC.
(c) Voting of Shares by Parent and Sub. Parent agrees that, at
----------------------------------
the Special Meeting, all Shares owned by Parent, Sub or any other affiliate of
Parent will be voted in favor of the Merger.
Section 5.5. Cooperation. Subject to the terms and conditions herein
-----------
provided (including, without limitation, Section 5.8), each of the parties
hereto agrees to use its reasonable best efforts (a) to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary, proper
27
<PAGE>
or advisable under applicable laws and regulations to consummate and make
effective the Transactions including, without limitation, (i) promptly making
their respective filings, and thereafter using their reasonable best efforts
promptly to make any required submissions, under the HSR Act and (ii) promptly
making any filings that are required to be made or seeking any consents,
approvals, permits or authorizations that are required to be obtained under any
other federal, state or foreign law or regulation (including those required
under the Communications Act and by the FCC as are more fully described in
Section 5.8 of this Agreement) and (b) to refrain from taking, directly or
indirectly, any action that would result in a breach of this Agreement. Parent
shall notify the Company and keep it reasonably apprised of developments
relating to its ability to satisfy the conditions set forth in Sections 6.1(d),
6.2(d) and 6.2(e). In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their respective reasonable best efforts to take all such necessary action.
Section 5.6. Public Announcements. Parent, Sub and the Company will
---------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or any securities exchange or similar authority (in which
case prior notice of at least 24 hours by the Company to Parent or by Parent or
Sub to the Company, as applicable, of such issuance of a press release or making
of a public statement shall be required).
Section 5.7. Indemnification and Insurance.
-----------------------------
(a) Continuation of Charter Obligations. The Company shall and
------------------------------------
from and after the Effective Time, Parent and the Surviving Corporation shall,
maintain the right to indemnification and exculpation of officers and directors
provided for in the Certificate of Incorporation and By-Laws of the Company as
in effect on the date hereof, with respect to indemnification and exculpation
for acts and omissions occurring prior to the Effective Time, including, without
limitation, the Transactions.
(b) Continuation of D&O Insurance. For six years after the
-------------------------------
Effective Time, Parent or the Surviving Corporation shall maintain officers' and
directors' liability insurance covering the persons who are presently covered by
the Company's officers' and directors' liability insurance policies (copies of
which have heretofore been delivered to Parent) with respect to actions and
omissions occurring prior to the Effective Time, on terms which are not
materially less favorable, in the aggregate, than the terms of such current
insurance in effect for the Company on the date hereof.
(c) Indemnification. The Company shall and from and after the
---------------
Effective Time, the Surviving Corporation shall, (i) to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present and
former director and officer of the Company (collectively, the "Indemnified
-----------
Parties") against any costs or expenses (including attorneys' fees), judgments,
- -------
28
<PAGE>
fines, losses, claims, damages, liabilities and amounts paid in settlement in
connection with any pending, threatened or completed claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action or omission occurring
prior to the Effective Time (including, without limitation, any claim, action,
suit, proceeding or investigation arising out of or pertaining to the
Transactions (a "Claim")) and (ii) in the event of any such Claim (whether
-----
arising before or after the Effective Time), upon receipt from the Indemnified
Party to whom expenses are advanced of an undertaking to repay such advances
required under the DGCL, advance expenses to each such Indemnified Party,
including the payment of the fees and expenses of counsel selected by such
Indemnified Party, which counsel shall be reasonably satisfactory to the Company
or the Surviving Corporation, as the case may be, promptly after statements
therefor are received, provided, that the Company shall not, in connection with
any one Claim or separate but substantially similar or related Claims, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties, and
provided, further, that the Company shall be entitled to participate in the
defense thereof, and (iii) cooperate fully in the defense of any such matter.
Promptly after receipt by an Indemnified Party of notice of any Claim as to
which such persons intends to seek indemnification hereunder, such person shall
give notice thereof to the Company; except that the failure to promptly give
notice of any such Claim to the Company shall not affect such persons right to
indemnification, unless the Company's ability to defend the Claim is materially
impaired as a result. Neither the Company nor the Surviving Corporation shall be
liable for any settlement effected without its written consent (which consent
shall not be unreasonably withheld).
(d) Eligibility for Indemnification. Notwithstanding any
-----------------------------------
provision to the contrary contained in the Certificate of Incorporation or
By-Laws of the Company as in effect on the date hereof, any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under the DGCL, under such charter
provisions shall be made by independent counsel selected by the Indemnified
Party and reasonably acceptable to the Company, Parent, Sub or the Surviving
Corporation, which shall pay such counsel's fees and expenses (it being agreed
that neither the Company, Parent, Sub nor the Surviving Corporation shall
challenge any such determination by such independent counsel which is favorable
to an Indemnified Party).
(e) Survival. This Section 5.7 shall survive the Closing, is
--------
intended to benefit the Company, Parent, Sub or the Surviving Corporation and
each of the Indemnified Parties (each of whom shall be entitled to enforce this
Section 5.7 against the Company, Parent or the Surviving Corporation, as the
case may be) and shall be binding on all successors and assigns of Parent and
the Surviving Corporation.
(f) Merger, Assignment, etc. In the event Parent, the Surviving
------------------------
Corporation or any of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation assume the
obligations set forth in this Section 5.7.
29
<PAGE>
Section 5.8. FCC Covenants
-------------
(a) Each of Parent and Sub shall use its reasonable best efforts
to take, or cause to be taken, all action and to do or satisfy, or cause to be
done or satisfied, all things and conditions necessary, proper or advisable to
obtain the FCC Order and to satisfy all conditions and take all actions required
thereby, in each case so as to come into compliance with FCC requirements and to
consummate the Merger as promptly as practicable; provided, however, this
Section 5.8 shall not be interpreted as obligating Parent, Sub, any Parent
Stockholder or any affiliates thereof, to consent to the imposition of any
condition or restriction set forth in Section 6.1(d) hereof; provided, further,
that Parent and Sub shall make all reasonable modifications and adjustments to
their respective relationships and arrangements among the Parent Stockholders
(including the grant of proxies to other Parent Stockholders with respect to
general voting rights) with respect to Parent that are required in order to
obtain an Acceptable FCC Order, so long as such modifications and adjustments do
not modify in any material respect the contemplated minority stockholder
protective provisions or modify in any material respect the economic arrangement
among and between the Parent Stockholders. The Company shall also use such
efforts, but shall not be required to take any action that would be effective
prior to the Effective Time.
(b) As promptly as practicable, following the date of this
Agreement (but in no event later than January 1, 1998), the Company and Parent
and Sub shall prepare and file with the FCC all necessary applications for
approval of the Merger and the other Transactions. Without limiting the
foregoing, the Company, Parent and Sub shall submit to the FCC an application to
be filed on FCC Form 315 pursuant to the Communications Act.
Section 5.9. Notification of Certain Matters. Between the date of this
---------------------------------
Agreement and the consummation of the Merger, the Company will promptly notify
Parent and Sub in writing if it becomes aware of any fact or condition that
causes or constitutes a breach of its representations and warranties as of the
date of this Agreement, or if it becomes aware of the occurrence after the date
of this Agreement of any fact or condition which would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Notwithstanding
the foregoing provisions of this Section 5.9, no party shall be required to give
notice with respect to events that are reported in the financial or general
interest newspapers that do not specifically relate to such party or the
Transactions.
Section 5.10. Employee Benefits. Parent agrees to honor, and from and
------------------
after the Effective Time shall cause the Surviving Corporation to honor, in
accordance with their respective terms as in effect on the date hereof, the
employment, severance, bonus, and commission agreements and similar arrangements
to which the Company is a party which are set forth in Section 5.10 of the
Company Disclosure Schedule.
Section 5.11. Acknowledgment of Parent and Sub. Parent and Sub acknowledge
--------------------------------
that any projections prepared by the Company and provided to Parent and/or Sub
30
<PAGE>
as part of the due diligence process were and are merely estimates made by the
Company as of the time they were provided and Parent and Sub have in no way
relied on any such projections. Parent and Sub agree and acknowledge that
neither the Company nor any of its affiliates has made or is making any
representation or warranty as to the accuracy or completeness of the
Confidential Information Memorandum furnished by the Financial Advisor on behalf
of the Company or any supplement thereto provided by such person. Without
limiting the foregoing, Parent and Sub agree and acknowledge that the only
representations and warranties made by the Company with respect to the
Transactions are those representations and warranties contained in this
Agreement (together with the exceptions to such representations and warranties
set forth in the Company Disclosure Schedule) and only those representations and
warranties have and will have any legal effect following the date hereof which
effect will continue solely to the extent specifically set forth herein.
Section 5.12. Renewal. To the extent permitted by FCC regulations, with
-------
respect to each Affiliation Agreement which requires that a notice be given, or
other action be taken, prior to the Effective Time in order to exercise the
Company's option to extend the scheduled expiration date of, or otherwise renew,
such Affiliation Agreement, the Company shall consult with Parent with respect
thereto and shall give such notice and shall take such other action unless,
after such consultation, Parent shall otherwise agree in writing.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions to Each Party's Obligation To Effect the Merger.
-----------------------------------------------------------
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where legally permissible, prior to the Effective Time
of the following conditions:
(a) Stockholder Approval of this Agreement shall have been
obtained;
(b) No statute, rule, regulation, order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court or
governmental authority of competent jurisdiction which restrains, enjoins or
otherwise prohibits the consummation of the Merger; provided, however, that the
Company, Parent and Sub shall use their reasonable best efforts to have any such
order, decree or injunction vacated;
(c) The applicable waiting period under the HSR Act shall have
expired or been terminated; and
(d) The FCC Order shall have been obtained without the
imposition of any conditions or restrictions that (i) seek to prohibit or limit
the ownership or operation by any of the Parent Stockholders or the Surviving
Corporation or any portion of its or their respective businesses or assets, or
to compel any Parent Stockholder or the Surviving Corporation to dispose of or
hold separate any portion of their business or assets, (ii) seek to impose
material limitations on the ability of any Parent Stockholder to acquire or hold
equity interests of the Parent, exercise the minority protective provisions
31
<PAGE>
contemplated by the Parent or modify in any material respect the economic
arrangement among and between the Parent Stockholders, (iii) seek to prohibit
any Parent Stockholder from effectively controlling in any respect any of the
business or operations of such Parent Stockholder, or (iv) which otherwise is
reasonably likely to adversely effect the financial condition, results of
operations or business of any Parent Stockholder, the Parent or the Surviving
Corporation, that, in the case of conditions or restrictions of the type
referred to in clauses (i), (ii) or (iii), are not acceptable to Parent in its
sole discretion ("Acceptable FCC Order").
--------------------
Section 6.2. Conditions to the Obligation of Parent and Sub to Effect the
------------------------------------------------------------
Merger. The obligation of Parent and Sub to effect the
------
Merger are subject to the satisfaction or waiver, where legally permissible,
prior to the Effective Time of the following conditions:
(a) The representations and warranties of the Company set forth
in this Agreement shall be true and correct as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date or as specifically set forth below) as of immediately before the Effective
Time, except as otherwise contemplated by this Agreement, and the Company shall
have performed all obligations required to be performed by it at or prior to the
Effective Time, except to the extent the failure of such representations and
warranties to be true and correct as of immediately before the Effective Time or
the failure to perform obligations hereunder would not, individually or in the
aggregate, have a Company Material Adverse Effect. Notwithstanding the
foregoing, on June 30, 1998, the Company shall deliver a certificate signed on
behalf of the Company by the chief financial officer of the Company certifying
that, in the good faith judgment of such officer upon inquiry of the other
officers of the Company (Vice President level and above), on such date such
officer believes that the representation and warranty of the Company contained
in Section 3.8 hereof is true and correct, as if made at that date (a "Company
-------
Complying Certificate") or, if such representation and warranty is not true and
- ----------------------
correct, then stating with specificity in what respect such representation is
not true and correct (a "Non-Complying Certificate"). If on June 30, 1998, the
--------------------------
Company shall have delivered a Complying Certificate, then, from and after June
30, 1998, the representation in Section 3.8 shall be deemed to be true and
correct, except as may be specifically set forth below. If the Company shall
have delivered a Non-Complying Certificate then the representation and warranty
contained in Section 3.8 shall, to the extent of the matters so noticed, be
deemed not to be satisfied unless such matters shall have been cured.
Notwithstanding the foregoing, if (i) within 15 days of the delivery of a
Company Complying Certificate or a Company Non-Complying Certificate, as
applicable, the chief financial officer of Parent delivers a certificate to the
Company certifying that in the good faith judgment of such officer upon
reasonable inquiry, such officer believes, as of June 30, 1998, that the
representation and warranty of the Company set forth in Section 3.8 is not true
and correct, stating with specificity in what respect such representation is not
true and correct (the "Parent Response") and (ii) the Company shall confirm in
----------------
writing that such matter renders such representation not true and correct (an
"Affirmed Condition"), then the representation and warranty of the Company
-------------------
contained in Section 3.8 shall be deemed not to be satisfied, to the extent of
the Affirmed Condition, unless the Affirmed Condition shall be cured. If the
Company does not confirm in writing that any matter contained in the Parent
32
<PAGE>
Response renders the representation and warranty made in Section 3.8 not true
and correct (a "Non-Affirmed Condition"), each of the parties hereby reaffirms
-----------------------
that it shall retain its right to exercise any and all remedies and/or defenses
available to it with respect to such Non-Affirmed Condition. If cured prior to
December 31, 1998, no matter set forth in a Company Non-Complying Certificate or
a Parent Response shall thereafter render the representation and warranty of the
Company set forth in Section 3.8 to be not true and correct, and upon cure, each
such matter shall be deemed waived. In no event shall any matter arising after
June 30, 1998 or not set forth in a Company Non-Complying Certificate or Parent
Response be deemed to render the representation and warranty of the Company set
forth in Section 3.8 not true and correct. No Additional Amount shall accrue or
be payable with respect to any period beginning on the date on which all of the
conditions set forth in Section 6.1 and 6.2 hereof have been finally satisfied
and ending on the date on which all matters that are specified in any
Non-Complying Certificate or are Affirmed Conditions are cured.
(b) Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer and the chief financial officer of
the Company to the effect of clause (a) above;
(c) Subject to the provisions of Section 5.12 of this Agreement,
the Company shall have exercised its option to extend any Affiliation Agreement
which the Company or any Subsidiary has the option to extend and which expires
(or which requires notice to be given or other action to be taken in order to so
extend such Affiliation Agreement) prior to the Effective Time, or, after
consulting with Parent, shall have executed an Affiliation Agreement in such
market with a comparable affiliate;
(d) The FCC Order shall not have been reversed, stayed,
enjoined, annulled or suspended; or
(e) The Parent shall have obtained funds pursuant to the Debt
Commitment Letters (or such alternative financing as is reasonably acceptable to
the Parent) sufficient, together with the Equity Commitments (the provision of
which is not a condition to the respective obligations of Parent and Sub to
effect the Merger), to perform its obligations under this Agreement, to provide
working capital for the business of the Company, and to consummate the
Transactions, including the payment of related fees and expenses.
Section 6.3. Conditions to the Obligation of the Company to Effect the
------------------------------------------------------------
Merger. The obligation of the Company to effect the Merger are subject to the
- ------
satisfaction or waiver, where legally permissible, prior to the Effective Time
of the following conditions:
(a) The representations and warranties of Parent and Sub set
forth in this Agreement shall be true and correct as of the date of this
Agreement and (except to the extent such representations and warranties speak as
of an earlier date) as of immediately before the Effective Time, except as
otherwise contemplated by this Agreement, and Parent and Sub shall have
performed all obligations required to be performed by them at or prior to the
Effective Time, except to the extent the failure of such representations and
33
<PAGE>
warranties to be true and correct as of immediately before the Effective Time or
the failure to perform obligations hereunder would not, individually or in the
aggregate, have a Company Material Adverse Effect;
(b) The Company shall have received a certificate signed on
behalf of Parent and Sub by their respective chief executive officers and the
chief financial officers to the effect of clause (a) above.
ARTICLE VII
TERMINATION; AMENDMENT; WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
-----------
contemplated hereby may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company:
(a) by mutual written consent duly authorized by the boards of
directors of Parent and the Company;
(b) subject to Section 7.4(b), by the Company or the Parent if
the Effective Time shall not have occurred on or before December 31, 1998;
provided, however, that the right of the Company or the Parent to terminate this
Agreement pursuant to this Section 7.1(b) shall not be available in the event
that the Company's or the Parent's, as the case may be, failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date;
(c) by Parent or the Company if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling or
other action shall have become final and nonappealable;
(d) by the Company or the Parent, if, at the Special Meeting
(including any adjournment or postponement thereof) called pursuant to Section
5.4 hereof, the Stockholder Approval shall not have been obtained; or
(e) by the Company, subject to Section 7.2, if the Board of
Directors of the Company shall concurrently approve, and the Company shall
concurrently enter into, a definitive agreement providing for the implementation
of a Superior Offer, provided, however, that (i) the Company is not then in
breach of Section 5.3, (ii) the Board of Directors of the Company shall have
complied with Section 7.2 in connection with such Superior Offer, and (iii) the
Company shall simultaneously make the payments required by Section 7.4(a). For
purposes of this Agreement, "Superior Offer" means an Alternative Proposal which
--------------
is superior from a financial point of view to the Company's stockholders (other
than any stockholders affiliated with the Parent) to the Merger and the other
Transactions contemplated hereby and for which financing, to the extent
required, is then committed or which, in the good faith judgment of the
Company's board of directors after consultation with the Company's financial
advisors is reasonably capable of being obtained.
34
<PAGE>
Section 7.2. Certain Actions Prior to Termination. The Company shall
---------------------------------------
provide to the Parent written notice of its intention to terminate this
Agreement pursuant to Section 7.1(e) advising the Parent (a) that the Board of
Directors of the Company has determined, by action of a majority of the members
of the Board of Directors of the Company who are not affiliated with either the
Parent or the person making such Alternative Proposal or their respective
affiliates, that such Alternative Proposal is a Superior Offer and that, in the
exercise of its good faith judgment as to fiduciary duties to stockholders under
applicable law, after consultation with the Company's outside legal counsel,
failure by the Board of Directors to terminate this Agreement could reasonably
be expected to result in a breach of such duties and (b) as to the material
terms of any such Alternative Proposal. At any time after the fifth business day
following receipt of such notice, the Company may terminate this Agreement as
provided in Section 7.1(e) only if the Board of Directors of the Company
determines, by action of a majority of the members of the Board of Directors of
the Company who are not affiliated with either the Parent or the person making
such Alternative Proposal or their respective affiliates, that failure by the
Board of Directors to terminate this Agreement continues to be reasonably
expected to result in a breach of its fiduciary duties to stockholders under
applicable law (which determination shall be made in light of any revised
proposal made by the Parent prior to the expiration of such five business day
period) and concurrently enters into a definitive agreement providing for the
implementation of such Alternative Proposal.
Section 7.3. Effect of Termination. In the event of termination of this
----------------------
Agreement by the Company or the Parent as provided in Section 7.1 hereof, this
Agreement shall forthwith become void (except as set forth (i) in the last
sentence of Section 5.2(b), (ii) in Sections 7.4, 8.2, 8.3, 8.4 and 8.9 and
(iii) in this Section 7.3); provided that no party hereto shall be relieved from
liability for any breach of this Agreement.
Section 7.4 Termination Fees.
----------------
(a) If this Agreement is terminated pursuant to (a) Section
7.1(d) or (b) Section 7.1(e), and if the Company is not at that time entitled to
terminate this Agreement by reason of Section 7.1(b) or 7.1(c), then the Company
shall promptly (and in any event within two days of receipt by the Company of
written notice from the Parent) pay to the Parent (by wire transfer of
immediately available funds to an account designated by the Parent) concurrently
with the execution of a definitive agreement with respect to any Alternative
Proposal, a termination fee of $15,000,000 plus an amount equal to documented
fees and expenses incurred by or on behalf of the Parent and its affiliates and
investors in connection with this Agreement and the Transactions up to an
aggregate maximum amount of $2,500,000; provided, however, that the Company
shall not be obligated to pay such fee to the Parent if this Agreement is
terminated pursuant to Section 7.1(d) unless (a)(i) at the time of the Company
Meeting, the Company has received an Alternative Proposal (a "Pending Proposal")
----------------
or (ii) prior to the termination of this Agreement the Board of Directors of the
Company shall have withdrawn, or modified in a manner adverse to the Parent, its
approval or recommendation of the Merger and the other Transactions, and (b)
within one year after the termination of this Agreement, the Company enters into
a definitive agreement or otherwise consummates with any person such or any
35
<PAGE>
other Alternative Proposal, and, provided, further, that if such termination fee
becomes payable as a result of a termination pursuant to Section 7.1(d), then
such termination fee shall be paid promptly following the earlier of the
execution of such definitive agreement providing for an Alternative Proposal and
the consummation of an Alternative Proposal, as the case may be.
(b) If (i) this Agreement is terminated pursuant to (i) Section
7.1(b) and (ii) Parent is not at that time entitled to terminate this Agreement
by reason of Section 7.1(c) or 7.1(d), and (iii) Parent has not received an
Acceptable FCC Order, and (iv) the conditions set forth in Sections 6.1(c) and
6.2(a), (b), (c) and (e) have been, or if the FCC Order had been obtained, would
have been, otherwise satisfied, then Parent shall promptly (and in any event
within two days of receipt by Parent of written notice from the Company) pay to
the Company (by wire transfer of immediately available funds to an account
designated by the Company) a termination fee of $17,500,000; provided, however,
that Parent shall not be obligated to pay such fee to the Company if the sole
reason that Parent and Sub have failed to obtain the Acceptable FCC Order is due
to changes, after the date hereof, in the Communications Act or the rules and
regulations of the FCC, in effect as of the date hereof (except those which have
been proposed in formal rulemaking proceedings and have been subject to public
comment prior to the date hereof).
Section 7.5. Amendment. To the extent permitted by applicable law, this
---------
Agreement may be amended by action taken by the Company, Parent and Sub (and the
stockholders of the Company, if required by applicable law) at any time before
or after adoption of this Agreement by the Company's stockholders; provided,
however, that after the adoption of this Agreement by the Company's
stockholders, no amendment shall be made which decreases the price per Share,
changes the form of consideration to be received by the holders of Shares in the
Merger or which adversely affects the rights of stockholders of the Company
hereunder without the approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
Section 7.6. Extension; Waiver. At any time prior to the Effective Time,
------------------
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions contained herein unless
waiver is unlawful or specifically prohibited. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Non-Survival of Representations, Warranties and Agreements.
-----------------------------------------------------------
The representations and warranties made herein shall terminate at the Effective
Time or the earlier termination of this Agreement pursuant to Section 7.1 as the
case may be; provided, however, that if the Merger is consummated, Sections
2.10, 2.11, 5.5 (with respect to the last sentence thereof), 5.7 and 5.10 will
36
<PAGE>
survive the Effective Time to the extent contemplated by such sections, and
provided further that the last sentence of Section 5.2(b) and Sections 7.3, 7.4
and 8.9 will in all events survive the termination of this Agreement.
Section 8.2. Entire Agreement; Assignment. This Agreement, the Annexes
-----------------------------
and Schedules referred to herein, the letter(s) contemplated by Section 4.5
hereof and the Confidentiality Agreement (a) constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
other prior agreements and understandings, both written and oral, among the
parties or any of them with respect to the subject matter hereof and (b) shall
not be assigned by operation of law or otherwise, provided that Parent may
assign its rights and obligations or those of Sub to any wholly-owned, direct or
indirect, Subsidiary of Parent, but no such assignment shall relieve Parent of
its obligations hereunder if such assignee does not perform such obligations.
Section 8.3. Validity. The invalidity or unenforceability of any
--------
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 8.4. Notices. All notices and other communications among the
-------
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person, or (ii) one business day after delivery to a reputable
overnight courier service (i.e., Federal Express), postage pre-paid, or (iii)
delivered by telecopy and promptly confirmed by telephone and by delivery of a
copy in person or overnight as aforesaid, in each case with postage prepaid,
addressed as follows:
If to Parent or Sub:
TLMD Station Co.
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10013
Facsimile: (212) 261-4102
Attention: Michael Weiner
with a copy to:
Liberty Media Corporation
8101 East Prentice Avenue, Suite 500
Englewood, Colorado 80111
Facsimile: (303) 721-5443
Attention: David B. Koff
37
<PAGE>
Sony Pictures Entertainment, Inc.
10202 West Washington Boulevard
Culver City, California 90232-3195
Facsimile: (310) 244-1818
Attention: Alan Sokol
Apollo Management, L.P.
1301 Avenue of the Americas, 38th Floor
New York, New York 10019
Facsimile: (212) 261-4102
Attention: Michael Weiner
Bastion Capital Corporation
1999 Avenue of the Stars, Ste. 2960
Los Angeles, California 90067
Facsimile: (31) 277-7582
Attention: Guillermo Bron
With a courtesy copy to (which shall not constitute notice):
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
Facsimile: (213) 687-5600
Attention: Thomas C. Janson, Jr.
Troop Meisinger Steuber & Pasich, LLP
10940 Wilshire Boulevard, Suite 800
Los Angeles, California 90024-3902
Facsimile: (310) 443-8512
Attention: C.N. Franklin Reddick III
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Facsimile: (212) 872-1002
Attention: Patrick Dooley
Irell & Manella, LLP
333 South Hope Street
Suite 3300
Los Angeles, California 90071
Facsimile: (213) 872-1002
Attention: Edmund Kaufman
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If to the Company:
Telemundo Group, Inc.
2290 West 8th Avenue
Hialeah, Florida 33010
Telecopy: 310/306-7313
Attention: Osvaldo F. Torres, General Counsel
with a courtesy copy to (which shall not constitute notice):
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Telecopy: 213/891-8763
Attention: Paul D. Tosetti, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 8.5. Governing Law. This Agreement shall be governed by and
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construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 8.6 Interpretation. For purposes of this Agreement neither the
--------------
Company nor any Subsidiary of the Company shall be deemed to be an affiliate or
Subsidiary of Sub or Parent. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Inclusion of information in the Company
Disclosure Schedule, does not constitute an admission or acknowledgment of the
materiality of such information. If an ambiguity or question of intent or
interpretation arises, then this Agreement will be construed as if drafted
jointly by the parties to this Agreement, and no presumption or burden of proof
will arise favoring or disfavoring any party to this Agreement by virtue of the
authorship of any of the provisions of this Agreement.
Section 8.7. Parties in Interest. This Agreement shall be binding upon
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and inure solely to the benefit of each party hereto, and except for the
provisions of Sections 2.7, 2.12, 2.13, 5.7 and 5.10 (which are intended to be
for the benefit of the persons referred to therein and their beneficiaries, and
may be enforced by such persons as intended third-party beneficiaries), nothing
in this Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 8.8. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
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Section 8.9. Expenses. All costs and expenses incurred in connection with
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the Transactions shall be paid by the party incurring such expenses.
Section 8.10. Obligation of Parent. Whenever this Agreement requires Sub
--------------------
to take any action, such requirement will be deemed to include an undertaking on
the part of Parent to cause Sub to take such action.
Section 8.11. Sale of the Company. The parties hereto agree and
-----------------------
acknowledge that for the purposes of this Agreement no "sale" of the Company
shall be deemed to have occurred until the consummation of the Merger at the
Effective Time.
Section 8.12. Actions by the Company. Any action or decision requiring the
----------------------
approval of the Board of Directors of the Company which is to be taken or which
is made or required to be taken or made by or for the benefit of the Company
pursuant to, in connection with or in furtherance of this Agreement (including,
without limitation, with respect to Sections 7.5 and 7.6 hereof) shall be made
or taken, as applicable, at the discretion and with the approval of the members
of the Board of Directors of the Company who are not affiliated with Parent or
Sub or their respective affiliates or stockholders.
* * * * * * * * * *
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IN WITNESS WHEREOF, each of the parties has caused this Agreement and Plan of
Merger to be executed on its behalf by its officers thereunto duly authorized,
all as of the day and year first above written.
TLMD STATION GROUP, INC.
("Parent")
By: /s/ Edward Yorke
---------------------------------------
Name: Edward Yorke
Title: President
TLMD ACQUISITION CO.
("Sub")
By: /s/ Edward Yorke
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Name: Edward Yorke
Title: President
<PAGE>
TELEMUNDO GROUP, INC.
("Company")
By: /s/ Roland A. Hernandez
---------------------------------------
Name: Roland A. Hernandez
Title: President and CEO
