Page 1 of 6
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
------------------
HEARST-ARGYLE TELEVISION, INC.
(Name of Issuer)
SERIES A COMMON STOCK
(Title of Class of Securities)
422317 10 7
(CUSIP Number)
--------------
JODIE W. KING, ESQ.
THE HEARST CORPORATION
959 EIGHTH AVENUE
NEW YORK, NEW YORK 10019
(212) 649-2025
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
------------------------
Copy to:
Steven A. Hobbs, Esq.
Rogers & Wells
200 Park Avenue
New York, New York 10166
(212) 878-8000
------------------------
AUGUST 29, 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.
<square>
Check the following box if a fee is being paid with this statement <square> (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class
of securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
- -------------------------------------------------------------------------------
<PAGE>
Page 2 of 6
CUSIP No. 422317 10 7 13D
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
THE HEARST CORPORATION
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (see item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7. SOLE VOTING POWER
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 38,611,002
OWNED BY
EACH 9. SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH 10. SHARED DISPOSITIVE POWER
38,611,002
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
38,611,002
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.35% (Based on a total of 46,888,056 shares, representing
the estimated number of shares outstanding after the Merger and the
Reporting Persons' shares subject to conversion privileges, on a fully
diluted basis)
14. TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE>
Page 3 of 6
CUSIP No. 422317 10 7 13D
<TABLE>
<CAPTION>
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
THE HEARST FAMILY TRUST
<S> <C> <C> <C>
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)<square>
(b)<square>
3. SEC USE ONLY
4. SOURCE OF FUNDS
OO (see item 3)
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
<square>
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7. SOLE VOTING POWER
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 38,611,002
OWNED BY 9. SOLE DISPOSITIVE POWER
EACH
REPORTING 10. SHARED DISPOSITIVE POWER
PERSON WITH
38,611,002
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
38,611,002
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
<square>
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
82.35% (Based on a total of 46,888,056 shares, representing the number
estimated of shares outstanding after the Merger and the Reporting
Persons' shares subject to conversion privileges, on a fully diluted basis)
14. TYPE OF REPORTING PERSON
CO
</TABLE>
<PAGE>
Page 4 of 6
SCHEDULE 13D
This Amendment No. 2, which relates to shares of Series A Common Stock,
$0.01 par value per share ("Series A Common Stock") of Hearst-Argyle
Television, Inc., a Delaware corporation (the "Issuer"), is being filed jointly
by The Hearst Corporation, a Delaware corporation ("Hearst") and The Hearst
Family Trust, a testamentary trust (the "Trust," and together with Hearst, the
"Reporting Persons"), supplements and amends the statement on Schedule 13D
originally filed with the Commission on April 4, 1997 (as amended, the
"Statement").
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the shares of Series A Common Stock, $0.01 par
value per share ("Series A Common Stock") of Hearst-Argyle Television, Inc., a
Delaware corporation (the "Issuer"). The Issuer's principal executive offices
are located at 888 Seventh Avenue, New York, New York 10106.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Hearst contributed certain of its television broadcast assets to Argyle
Television, Inc. ("Argyle") for which it received 38,611,000 shares of Series B
Common Stock of Argyle, and Contribution Sub, a wholly-owned subsidiary of
Hearst, contributed all of its assets to Argyle for which it received one share
of Series B Common Stock of Argyle. Thereafter, Merger Sub, a wholly-owned
subsidiary of Hearst, merged with and into Argyle (which was renamed Hearst-
Argyle Television, Inc.) for which Hearst received one share of Series B Common
Stock of the Issuer. By virtue of the Merger each share of Argyle Series B
Common Stock was converted into a share of Series B Common Stock of the Issuer.
Certain of the assets contributed by Contribution Sub were borrowed pursuant to
a Demand Promissory Note, dated August 29, 1997, issued to The Chase Manhattan
Bank, which was assumed by Argyle and cancelled after the contribution.
ITEM 4. PURPOSE OF THE TRANSACTION.
As of March 26, 1997, Hearst, Merger Sub, Contribution Sub and Argyle
entered into an Amended and Restated Agreement and Plan of Merger, providing
for the contribution of certain assets by Hearst and Contribution Sub to Argyle
and the merger of Merger Sub with and into Argyle in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"). The Merger
become effective and the Voting Agreements were terminated on August 29, 1997.
Argyle was the surviving corporation in the Merger and was renamed Hearst-
Argyle Television, Inc., and the outstanding shares of capital stock of Merger
Sub and Argyle were converted or canceled in the manner described below.
Prior to the effective time of the Merger, Argyle executed and filed an
amended and restated Certificate of Incorporation (the "Restated Charter"),
with the Secretary of State of Delaware, as provided in Section 245 of the
DGCL, in order to reclassify Argyle's capital stock. In such reclassification,
Argyle's existing Series B Common Stock and Series C Common Stock became Series
A Common Stock and a new Series B Common Stock was authorized which may only be
held by Hearst or entities controlled by Hearst. The existing Series A Common
Stock is entitled to elect two directors and the new Series B Common Stock is
entitled to elect the remaining directors, but not less than a majority. In
<PAGE>
Page 5 of 6
addition, Argyle's existing Series A Preferred Stock and Series B Preferred
Stock was given voting rights and will vote with the Series A Common Stock as a
single class.
Immediately thereafter and prior to the Merger, Hearst contributed certain
assets used in its television broadcast business to Argyle in exchange for
38,611,000 shares of Argyle Series B Common Stock. In addition, Contribution
Sub contributed all of its assets in exchange for one share of Argyle Series B
Common Stock.
At the effective time of the Merger, (i) each issued and outstanding share
of the Common Stock, par value $0.01 per share, of Merger Sub ("Merger Sub
Common Stock") was converted into and became one share of Series B Common Stock
of the Issuer; (ii) each share of Argyle Series A Common Stock, and Argyle
Series B Common Stock, and each share of Argyle Series A Preferred Stock and
Argyle Series B Preferred Stock that was owned by Argyle as treasury stock was
canceled and retired and ceased to exist and no stock of the Issuer or other
consideration was delivered in exchange therefor; (iii) each issued and
outstanding share of Argyle Series B Common Stock was converted into and became
one fully paid and nonassessable share of Series B Common Stock of the Issuer;
and (iv) each issued and outstanding share of Argyle Series A Preferred Stock
was converted into one share of Series A Preferred Stock of the Issuer, and
each issued and outstanding share of Argyle Series B Preferred Stock was
converted into one share of Series B Preferred Stock of the Issuer.
At the effective time of the Merger, each issued and outstanding share of
Argyle Series A Common Stock was converted into, at the election of each holder
(i) the right to receive one share of Series A Common Stock of the Issuer; (ii)
the right to receive cash, without interest, in an amount equal to $26.50; or
(iii) the right to receive 0.50 shares of Series A Common Stock of the Issuer
and cash, without interest, in the amount of $13.25. In addition, options
outstanding with respect to Argyle Series A Common Stock, at the election of
each optionholder, will (x) continue to represent options for an equal number
of Series A Common Stock of the Issuer (a "Rollover Election") or (y) will be
converted into the same consideration as a share of Argyle Series A Common
Stock (subject to reduction for the option exercise price). Stockholders and
optionholders who elect all cash or all stock will be subject to proration to
the extent that less than $100 million or more than approximately $160 million
in cash consideration is elected by all stockholders.
Because approval of Argyle's stockholders was required by applicable law
in order to adopt the Restated Charter and consummate the transactions
contemplated by the Merger Agreement, Argyle submitted the Restated Charter,
the Merger and the Merger Agreement to its stockholders for approval and
received the requisite vote.
The directors and executive officers of the Issuer are the individuals
listed on Schedule II.
In addition, Hearst and the Issuer entered into a Pension Asset Transfer
Agreement, dated August 29, 1997, whereby Hearst intends to contribute certain
pension plan assets related to the contributed broadcast business to the
Issuer. In exchange for the contributed pension plan assets, Hearst will
receive 1,000,000 shares of Series B Common Stock of the Issuer. Hearst and
the Issuer expect the pension plan asset transfer to occur as soon as
practicable after the Merger and the establishment of a pension plan by the
Issuer.
The Merger Agreement provides that, if at any time the Issuer desires to
issue to Hearst, or Hearst desires to purchase from the Issuer and the Issuer
desires to issue and sell to Hearst, any additional shares of common stock of
<PAGE>
Page 6 of 6
the Issuer, then Hearst shall have the right to elect at its sole option to
receive or purchase such shares of common stock in the form of either Issuer
Series A Common stock or Issuer Series B Common Stock.
The Amended and Restated Agreement and Plan of Merger, the Pension Plan
Transfer Agreement and the Demand Promissory Note, conformed copies of which
are filed as Exhibits 7.11, 7.12 and 7.13 hereto, are incorporated herein for
reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) As of August 29, 1997, the Reporting Persons owned no shares
of Series A Common Stock of the Issuer. Each share of Series B Common Stock of
the Issuer is, however, immediately convertible into one share of Series A
Common Stock of the Issuer. Therefore, the 38,611,001 shares of Series B
Common Stock received by Hearst in the Merger and the one share of Series B
Common Stock received by Contribution Sub in the Merger represent, if
converted, 38,611,002 shares of Series A Common Stock of the Issuer. Under the
definition of "beneficial ownership" as set forth in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, Hearst and the Trust are deemed to
have beneficial ownership of each of the 38,611,002 converted shares (the
"Securities"). The Trust, as the owner of all of Hearst's issued and
outstanding common stock, may be deemed to have the power to direct the voting
of and disposition of the Securities. Hearst, as the owner of all of
Contribution Sub's issued and outstanding common stock, may be deemed to have
the power to direct the voting of and disposition of the one share of Series B
Common Stock owned by Contribution Sub. As a result, Hearst and the Trust may
be deemed to share the power to direct the voting of and the disposition of the
Securities. The Securities constitute approximately 82.35% of the shares of
Series A Common Stock outstanding of the Issuer, based on the estimated number
of outstanding shares after the Merger (the actual number of outstanding shares
after the Merger may differ based on the proration calculations) and the
Reporting Persons' shares subject to conversion privileges, on a fully diluted
basis.
(e) No other person is known to have the right to receive or the power
to direct the receipt of dividends from, or the proceeds from the sale of, the
Securities.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 7.11 Amended and Restated Agreement and Plan of Merger, dated as
of March 26, 1997, by and among The Hearst Corporation, HAT
Merger Sub, Inc., HAT Contribution Sub, Inc. and Argyle
Television, Inc.
Exhibit 7.12 Pension Plan Asset Transfer Agreement, dated August 29, 1997,
by and between The Hearst Corporation and Argyle Television,
Inc.
Exhibit 7.13 Demand Promissory Note, dated August 29, 1997, executed by
HAT Contribution Sub, Inc. for the benefit of The Chase
Manhattan Bank.
<PAGE>
SCHEDULE II
DIRECTORS AND EXECUTIVE OFFICERS OF THE ISSUER
Set forth in the table below is the name and class/office of each director and
executive officer of the Issuer.
NAME CLASS/OFFICE
David J. Barrett Series B Director; Executive Vice President and
Chief Operating Officer
Frank A. Bennack, Jr. Series B Director
Dean H. Blythe Senior Vice President-Corporate Development,
Secretary and General Counsel
John G. Conomikes Series B Director; President and Co-Chief
Executive Officer
Victor F. Ganzi Series B Director
Harry T. Hawks Senior Vice President and Chief Financial Officer
George R. Hearst, Jr. Series B Director
William R. Hearst, III Series B Director
Bob Marbut Series B Director; Chairman of the Board of
Directors and Co-Chief Executive Officer
Gilbert C. Maurer Series B Director
Ibra Morales Senior Vice President-Sales
David Pulver Series A Director
Virginia H. Randt Series B Director
Anthony J. Vinciquerra Executive Vice President
Caroline Williams Series A Director
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete
and correct.
Dated: September 3, 1997
THE HEARST CORPORATION
By: /S/ JODIE W. KING
---------------------------
Name: Jodie W. King
Title: Vice President
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 3, 1997
THE HEARST FAMILY TRUST
By: /S/ VICTOR F. GANZI
---------------------------
Name: Victor F. Ganzi
Title: Trustee
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
Exhibit 7.11 Amended and Restated Agreement and Plan of Merger, dated
as of March 26, 1997, by and among The Hearst Corporation,
HAT Merger Sub, Inc., HAT Contribution Sub, Inc. and Argyle
Television, Inc.
Exhibit 7.12 Pension Plan Asset Transfer Agreement, dated August 29,
1997, by and between The Hearst Corporation and Argyle
Television, Inc.
Exhibit 7.13 Demand Promissory Note, dated August 29, 1997, executed
by HAT Contribution Sub, Inc. for the benefit of The Chase
Manhattan Bank.
<PAGE>
EXHIBIT 7.11
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
dated as of March 26, 1997
by and among
THE HEARST CORPORATION,
HAT MERGER SUB, INC.,
HAT CONTRIBUTION SUB, INC.
and
ARGYLE TELEVISION, INC.
<PAGE>
TABLE OF CONTENTS
Page
No.
ARTICLE I.
THE MERGER
1.01 The Merger ......................................................... 3
1.02 Effective Time ..................................................... 3
1.03 Closing ............................................................ 4
1.04 Certificate of Incorporation and Bylaws of the
Surviving Corporation............................................... 4
1.05 Directors and Officers of the Surviving Corporation ................ 4
1.06 Effects of the Merger .............................................. 4
1.07 Further Assurances ................................................. 4
ARTICLE II.
CERTAIN PRE-MERGER TRANSACTIONS
2.01 Restated Charter ................................................... 5
2.02 Contribution of Contributed Cash and Parent Station Assets;
Assumption of Bridge Debt, Private Placement Debt and Parent........ 5
2.03 Issuance of Company Series B Common Stock .......................... 10
ARTICLE III.
CONVERSION OF SHARES
3.01 Conversion of Capital Stock ........................................ 11
3.02 Election Procedures ................................................ 13
3.03 Selection of Company Common Stock and Company Options............... 15
3.04 The Company To Make Cash and Certificates Available ................ 19
3.05 Dividends .......................................................... 20
3.06 Dissenting Shares .................................................. 21
3.07 Electing Optionholders Supplemental Election ....................... 21
ARTICLE IV.
CERTAIN ADJUSTMENTS
4.01 Parent Station Business Adjustment ................................. 22
<PAGE>
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
5.01 Organization and Qualification ..................................... 23
5.02 Capital Stock ...................................................... 23
5.03 Authority Relative to this Agreement; Restated Charter.............. 25
5.04 Non-Contravention; Approvals and Consents .......................... 25
5.05 SEC Reports and Financial Statements ............................... 26
5.06 Absence of Certain Changes or Events ............................... 27
5.07 Absence of Undisclosed Liabilities ................................. 28
5.08 Legal Proceedings .................................................. 28
5.09 Compliance with Laws and Orders .................................... 28
5.10 Taxes .............................................................. 29
5.11 Employee Benefit Plans; ERISA ...................................... 30
5.12 Labor Matters ...................................................... 31
5.13 Environmental Matters .............................................. 31
5.14 Intangible Property ................................................ 31
5.15 Title; Condition ................................................... 32
5.16 Opinion of Financial Advisor ....................................... 32
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARENT
6.01 Organization and Qualification ..................................... 32
6.02 Capital Stock ...................................................... 32
6.04 Non-Contravention; Approvals and Consents .......................... 33
6.05 Financial Statements ............................................... 34
6.06 Absence of Certain Changes or Events ............................... 34
6.07 Absence of Undisclosed Liabilities ................................. 35
6.08 Legal Proceedings .................................................. 35
6.09 Compliance with Laws and Orders .................................... 35
6.10 Material Contracts ................................................. 36
6.11 Employee Benefit Plans ............................................. 36
6.12 Labor Matters ...................................................... 37
6.13 Title to Parent Station Assets; Entire Business .................... 38
6.14 Condition of Parent Station Assets ................................. 38
6.15 Environmental Matters .............................................. 38
6.16 Intangible Property ................................................ 38
ii
<PAGE>
ARTICLE VII.
COVENANTS RELATING TO CONDUCT OF BUSINESS
7.01 Conduct of Business by Company ..................................... 39
7.02 Conduct of Parent Station Business by Parent ....................... 41
ARTICLE VIII.
ADDITIONAL AGREEMENTS
8.01 No Solicitations ................................................... 43
8.03 Access to Information; Audited Financial Statements;
Confidentiality..................................................... 44
8.04 Registration Statement ............................................. 45
8.05 Approval of Stockholders and Board Recommendation .................. 47
8.06 Regulatory and Other Approvals ..................................... 47
8.07 Tax Matters ........................................................ 48
8.08 Affiliate Letters; Resales ......................................... 49
8.09 Governance ......................................................... 49
8.10 Directors' and Officers' Indemnification and Insurance ............. 49
8.11 Expenses ........................................................... 50
8.12 Brokers or Finders ................................................. 50
8.13 Fulfillment of Conditions .......................................... 51
8.14 Indemnification .................................................... 51
8.15 Cross-Ownership .................................................... 51
8.16 Issuance of Additional Shares of Surviving Corporation Common
Stock............................................................... 52
ARTICLE IX.
CONDITIONS
9.01 Conditions to Each Party's Obligation to Effect the Contribution
and the Merger...................................................... 52
9.02 Conditions to Obligation of Parent, Merger Sub and Cash Sub to
Effect the Contribution and the Merger.............................. 54
9.03 Conditions to Obligation of the Company to Effect the Merger ....... 55
ARTICLE X.
TERMINATION, AMENDMENT AND WAIVER
10.01 Termination ........................................................ 56
10.02 Effect of Termination and Abandonment .............................. 57
10.03 Amendment .......................................................... 58
iii
<PAGE>
10.04 Waiver ............................................................. 58
ARTICLE XI.
GENERAL PROVISIONS
11.01 Non-Survival of Representations, Warranties, Covenants and
Agreements.......................................................... 58
11.02 Certain Definitions ................................................ 59
11.03 Notices ............................................................ 68
11.04 Entire Agreement ................................................... 70
11.05 Public Announcements ............................................... 70
11.06 No Third Party Beneficiary ......................................... 70
11.07 No Assignment; Binding Effect ...................................... 70
11.08 Headings ........................................................... 70
11.09 Invalid Provisions ................................................. 70
11.10 Governing Law ...................................................... 70
11.11 Counterparts ....................................................... 71
iv
<PAGE>
EXHIBITS
Exhibit A Form of Restated Charter
Exhibit B Form of Registration Rights
Agreement
Exhibit 1.05 Directors and Officers of the
Surviving Corporation
Exhibit 8.08 Form of Affiliate Letter
Exhibit 9.01(i) Terms of Management Contract,
TV Option Contract, and Radio
Facilities Lease
Exhibit 9.02(f) Form of Tax Sharing Agreement
Exhibit 9.02(g) Form of License Agreement
Exhibit 9.02(h)(A) List of Persons Delivering
Management Transfer
Restriction Agreements
Exhibit 9.02(h)(B) Form of Management Transfer
Restriction Agreement
v
<PAGE>
This AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as
of March 26, 1997, is made and entered into by and among The Hearst
Corporation, a Delaware corporation ("PARENT"), HAT Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("MERGER
SUB"), HAT Contribution Sub, Inc., a Delaware corporation and a wholly
owned subsidiary of Parent ("CASH SUB"), and Argyle Television, Inc., a
Delaware corporation (the "COMPANY").
WHEREAS, Parent is engaged in the business of owning and
operating the following television broadcast stations: KMBC-TV in Kansas
City, Missouri, WBAL-TV in Baltimore, Maryland, WCVB-TV in Boston,
Massachusetts, WDTN-TV in Dayton, Ohio, WISN-TV in Milwaukee, Wisconsin,
and WTAE-TV in Pittsburgh, Pennsylvania (collectively, the "PARENT
STATIONS");
WHEREAS, the Company is engaged in the business of owning and
operating the following television broadcast stations: WLWT-TV in
Cincinnati, Ohio, KOCO-TV in Oklahoma City, Oklahoma, WNAC-TV in
Providence, Rhode Island, KITV-TV in Honolulu, Hawaii, WAPT-TV in Jackson,
Mississippi, KHBS-TV in Ft. Smith, Arkansas, and KHOG-TV in Fayetteville,
Arkansas (collectively, the "COMPANY STATIONS");
WHEREAS, the Board of Directors of the Company has approved and
determined it advisable that the Company adopt certain amendments to the
Company's Certificate of Incorporation and a restatement of such
Certificate of Incorporation reflecting such amendments, in the form
attached hereto as EXHIBIT A (the "RESTATED CHARTER"), which Restated
Charter shall be in effect immediately prior to the consummation of the
Merger described below;
WHEREAS, the Boards of Directors of Parent, Cash Sub, Merger Sub
and the Company each have approved the execution and delivery of this
Agreement and have determined, as applicable, that it is advisable and in
the best interests of their respective stockholders for (i) Parent to
contribute, or cause to be contributed, to the Company certain of the
assets and liabilities of the Parent Stations in exchange for shares of
Company Series B Common Stock (as hereinafter defined), (ii) Cash Sub to
contribute to the Company the Contributed Cash and the Bridge Debt (each as
hereinafter defined) in exchange for one (1) share of Company Series B
Common Stock, (iii) the Company to contribute the assets and liabilities of
the Parent Stations to one or more direct or indirect wholly owned
subsidiaries of the Company (collectively, the "BROADCAST SUBSIDIARIES"),
and (iv) Merger Sub to merge with and into the Company, as a result of
which the Company shall be the surviving corporation (the "MERGER");
WHEREAS, for federal income tax purposes, it is intended that the
Contribution (as hereinafter defined) will qualify as a tax-free exchange
under the provisions of Section 351 of the Internal Revenue Code of 1986,
as amended (the "CODE");
WHEREAS, for federal income tax purposes, it is intended that the
Merger will qualify as a redemption under the provisions of Section 302 of
the Code with respect to those stockholders of the Company who receive cash
pursuant to the Merger;
<PAGE>
WHEREAS, Argyle Television Investors, L.P. (together with any
successor partnership, "ATILP") is the holder of 6,600,000 shares of the
Series C Common Stock of the Company, par value $.01 per share ("EXISTING
SERIES C COMMON STOCK"); Television Investment Partners L.P. ("TIP") is the
holder of 700,000 shares of Existing Series C Common Stock; Argyle
Television Partners, L.P. ("ATP") is the holder of 36,000 shares of the
Series B Common Stock of the Company, par value $.01 per share ("EXISTING
SERIES B COMMON STOCK"); and Robin (a/k/a Robert) Hernreich ("HERNREICH")
is the holder of 159,358 shares of the Series A Common Stock of the
Company, par value $.01 per share (the "EXISTING SERIES A COMMON STOCK");
Argyle Foundation is the holder of 99,000 shares of Existing Series A
Common Stock; and Skylark Foundation is the holder of 65,000 shares of
Existing Series A Common Stock;
WHEREAS, ATILP (and its general partner) has adopted a plan of
liquidation of ATILP (the "ATILP LIQUIDATION PLAN") providing for the
distribution of shares of Existing Series A Common Stock (into which shares
of Existing Series C Common Stock held by ATILP will be converted pursuant
to the Voting Agreements described below) to the partners of ATILP in
accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of ATILP;
WHEREAS, TIP (and its general partner) has adopted a plan of
liquidation of TIP (the "TIP LIQUIDATION PLAN") providing for the
distribution of shares of Existing Series A Common Stock (into which shares
of Existing Series C Common Stock will be converted pursuant to the Voting
Agreements described below) to the partners of TIP in accordance with the
terms of the Amended and Restated Agreement of Limited Partnership of TIP;
WHEREAS, ATP (and its general partner) has adopted a plan of
liquidation of ATP (the "ATP LIQUIDATION PLAN") providing for the
distribution to the partners of ATP in accordance with the terms of the
Agreement of Limited Partnership of ATP, as amended, of (i) 36,000 shares
of Existing Series B Common Stock and (ii) Existing Series A Common Stock
which will be received by ATP upon its receipt of liquidating distributions
from ATILP, TIP and ATI General Partner, L.P. ("ATIGP");
WHEREAS, ATIGP (and its general partner) has adopted a plan of
liquidation of ATIGP (the "ATIGP LIQUIDATION PLAN") providing for the
distribution to the partners of ATIGP in accordance with the terms of the
ATIGP partnership agreement of Existing Series A Common Stock which will be
received by ATIGP upon its receipt of a liquidating distribution from
ATILP;
WHEREAS, although ATILP, TIP, ATP and ATIGP respectively, desire
to effectuate the ATILP Liquidation Plan, the TIP Liquidation Plan, the ATP
Liquidation Plan and the ATIGP Liquidation Plan as soon as practicable,
Parent, Merger Sub and Cash Sub are unwilling to enter into this Agreement
unless each of ATILP, TIP, ATP, Hernreich, Argyle Foundation and Skylark
Foundation concurrently with the execution and delivery of this Agreement,
enter into agreements (the "VOTING AGREEMENTS") pursuant to which, subject
to the terms thereof, (i) each of ATILP and TIP agrees to convert all of
the shares of Existing Series C Common Stock held by it into shares of the
Existing Series A Common Stock into which such shares of Existing Series C
Common Stock are convertible, and (ii) each of ATILP and TIP agrees to vote
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such shares of Existing Series A Common Stock held by it, ATP agrees to
vote all shares of Existing Series B Common Stock held by it, and each of
Hernreich, Argyle Foundation and Skylark Foundation agrees to vote all
shares of Existing Series A Common Stock held by each of them, in favor of
the Restated Charter and the Merger; and the Board of Directors of the
Company has approved the execution and delivery of the Voting Agreements;
WHEREAS, on behalf of the partners of ATILP, TIP, and ATP, each
of ATILP, TIP and ATP have agreed pursuant to the Voting Agreements that
they will not effectuate the ATILP Liquidation Plan, the TIP Liquidation
Plan or the ATP Liquidation Plan until the day immediately following
stockholder approval;
WHEREAS, upon consummation of the Merger, the Company intends to
enter into a Registration Rights Agreement with certain holders described
therein in substantially the form attached hereto as EXHIBIT B (the
"REGISTRATION RIGHTS AGREEMENT");
WHEREAS, certain capitalized terms used herein have the meanings
ascribed to such terms in Section 11.02; and
WHEREAS, the parties hereto have determined to amend certain
provisions of this Agreement and to amend and restate this Agreement in
accordance herewith.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.01 THE MERGER. At the Effective Time (as defined in Section
1.02), upon the terms and subject to the conditions of this Agreement,
Merger Sub shall be merged with and into the Company in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"). The Company
shall be the surviving corporation in the Merger (the "SURVIVING
CORPORATION"). Merger Sub and the Company are sometimes referred to herein
as the "CONSTITUENT CORPORATIONS." As a result of the Merger, the
outstanding shares of capital stock of the Constituent Corporations shall
be converted or cancelled in the manner provided in Article III.
1.02 EFFECTIVE TIME. At the Closing (as defined in Section
1.03), a certificate of merger (the "CERTIFICATE OF MERGER") shall be duly
prepared and executed by the Surviving Corporation and thereafter delivered
to the Secretary of State of the State of Delaware (the "SECRETARY OF
STATE") for filing, as provided in Section 251 of the DGCL, on, or as soon
as practicable after, the Closing Date (as defined in Section 1.03). The
Merger shall become effective at the time of the filing of the Certificate
of Merger with the Secretary of State or, if the Certificate of Merger
specifies a subsequent time for effectiveness, then at such specified time
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(the date and time of such filing or as specified in the Certificate of
Merger being referred to herein as the "EFFECTIVE TIME").
1.03 CLOSING. The closing of the Merger (the "CLOSING") will
take place at the offices of Rogers & Wells, 200 Park Avenue, New York, New
York 10166, or at such other place as the parties hereto mutually agree, on
a date and at a time to be specified by the parties, which shall in no
event be later than 10:00 a.m., local time, on the third Business Day after
the conditions set forth in Article IX have been satisfied or, if
permissible, waived in accordance with this Agreement, or on such other
date as the parties hereto mutually agree (the "CLOSING DATE"). At the
Closing there shall be delivered to Parent and the Company the certificates
and other documents and instruments required to be delivered under Article
IX or under other provisions of this Agreement.
1.04 CERTIFICATE OF INCORPORATION AND BYLAWS OF THE SURVIVING
CORPORATION. At the Effective Time, (i) the Certificate of Incorporation
of the Company as in effect immediately prior to the Effective Time (as
amended and restated, as provided in Section 2.01) shall be the Certificate
of Incorporation of the Surviving Corporation, except that Article "One" of
the Certificate of Incorporation of the Surviving Corporation shall be
amended to read as follows: "The name of the Corporation is Hearst-Argyle
Television, Inc.," and (ii) the Bylaws of the Company as in effect
immediately prior to the Effective Time shall be the Bylaws of the
Surviving Corporation, except that the Bylaws shall be amended such that
Section 2 of Article III thereof shall be amended and restated in its
entirety to read as follows until thereafter amended as provided by law:
Section 2. NUMBER OF DIRECTORS. Effective upon the
merger of HAT Merger Sub, Inc. with and into the
corporation, the number of directors shall be eleven
(11); thereafter, the number of directors shall consist
of no fewer than seven (7) members and no more than
fifteen (15) members as determined from time to time in
accordance with these Bylaws by resolution of the Board
of Directors, but no decrease in the number of
directors shall have the effect of shortening the term
of any incumbent director.
1.05 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. From
and after the Effective Time, the directors and officers of the Surviving
Corporation shall be the persons set forth on EXHIBIT 1.05 hereto, until
their successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's Certificate of Incorporation and Bylaws.
1.06 EFFECTS OF THE MERGER. Subject to the provisions of this
Agreement, the effects of the Merger shall be as provided in the applicable
provisions of the DGCL.
1.07 FURTHER ASSURANCES. Each party hereto will execute such
further documents and instruments and take such further actions as may
reasonably be requested by one or more of the others to consummate the
Merger, to vest the Surviving Corporation with full title to all assets,
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properties, rights, approvals, immunities and franchises of either of the
Constituent Corporations or to effect the other transactions and purposes
of this Agreement.
ARTICLE II.
CERTAIN PRE-MERGER TRANSACTIONS
2.01 RESTATED CHARTER. At the Closing but prior to the Effective
Time, the Company shall duly execute and file the Restated Charter with the
Secretary of State, as provided in Section 245 of the DGCL, so that the
Restated Charter shall be in effect and operative as the Certificate of
Incorporation of the Company at the Effective Time (the date and time of
such Restated Charter filing being referred to herein as the "AMENDMENT
TIME").
2.02 CONTRIBUTION OF CONTRIBUTED CASH AND PARENT STATION ASSETS;
ASSUMPTION OF BRIDGE DEBT, PRIVATE PLACEMENT DEBT AND PARENT STATION
LIABILITIES.
(a) CONTRIBUTION OF CONTRIBUTED CASH AND PARENT STATION ASSETS.
Upon the terms and subject to the conditions of this Agreement (and except
as contemplated by Section 8.15), at the Closing and immediately prior to
the Merger but after the Amendment Time, (x) Cash Sub shall contribute,
transfer, assign, convey and deliver to the Company, and the Company shall
receive, acquire and accept from Cash Sub, cash in the amount of Two
Hundred Million and Twenty-Six Dollars and Fifty Cents ($200,000,026.50)
(the "CONTRIBUTED CASH") and (y) Parent shall contribute, transfer, assign,
convey and deliver to the Company and immediately following such
transactions the Company shall contribute, transfer, assign, convey and
deliver to the Broadcast Subsidiaries, and the Company shall receive,
acquire and accept from Parent, and thereupon the Company shall cause the
Broadcast Subsidiaries to receive, acquire and accept from the Company, all
of Parent's right, title and interest in and to all of the assets,
properties and rights of Parent owned or used by Parent solely in the
conduct of the business and operations of the Parent Stations and of Hearst
Broadcasting Productions (collectively, the "PARENT STATION BUSINESS"), of
every type and description, real, personal and mixed, tangible and
intangible, wherever located, as and to the extent existing at the time of
the Contribution, other than those assets, properties and rights which are
specifically excluded pursuant to Section 2.02(b) (the assets, properties
and rights described in this clause (y) are hereinafter collectively
referred to as the "PARENT STATION ASSETS"). The contribution by Cash Sub
to the Company of the Contributed Cash and the contribution by Parent to
the Company of the Parent Station Assets is hereinafter referred to
collectively as the "CONTRIBUTION.") Without limitation of the foregoing,
but except as specifically excluded pursuant to Section 2.02(b), the Parent
Station Assets shall include the following as and to the extent existing at
the time of the Contribution:
(i) TANGIBLE PERSONAL PROPERTY. All equipment, machinery,
vehicles, furniture, fixtures, transmitters,
transmitting towers, antennae, computer hardware and
software, office materials and supplies, spare parts
and other tangible personal property of every kind and
description, owned, leased, used or held for use by
Parent and which relate solely to the conduct of the
Parent Station Business, and any additions,
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improvements, replacements and alterations thereto
("PARENT STATION TANGIBLE PROPERTY");
(ii) OWNED REAL PROPERTY. All real property described in
SECTION 2.02(A)(II) OF THE PARENT DISCLOSURE LETTER (as
hereinafter defined), together with all easements,
licenses and other interests and rights arising out of
the ownership thereof or appurtenant thereto, and all
buildings, transmitters, towers and antennae, fixtures
and improvements thereon;
(iii) REAL PROPERTY LEASES. The leases or subleases of real
property, buildings, transmitters, tower and antennae
as to which Parent is the lessor/sublessor or
lessee/sublessee set forth in SECTION 2.02(A)(III) OF
THE PARENT DISCLOSURE LETTER, together with any options
to purchase the underlying property and leasehold
improvements thereon, to which Parent is a party or by
which the Parent Station Business is bound, and which
relate solely to the conduct of the Parent Station
Business (the "PARENT STATION LEASES");
(iv) CONTRACTS. All contracts and other agreements (other
than the Parent Station Leases), to which Parent is a
party or by which the Parent Station Business is bound,
and which relate solely to the conduct of the Parent
Station Business, including, but not limited to, all
orders and agreements for the sale of advertising,
program agreements, network affiliation agreements and
employment contracts with television talent, all leases
of Parent Station Tangible Property as to which Parent
is the lessor/sublessor or lessee/sublessee together
with any options to purchase the underlying property
(the "PARENT STATION CONTRACTS");
(v) PERMITS. To the extent transferable under applicable
law, all franchises, approvals, permits, licenses,
orders, registrations, certificates, variances and
similar rights and applications for any of the
foregoing and which relate solely to the conduct of the
Parent Station Business, including but not limited to
FCC Licenses ("PARENT STATION PERMITS");
(vi) ACCOUNTS RECEIVABLE. All trade accounts receivable and
all notes, bonds and other evidences of indebtedness of
and rights to receive payments arising out of sales
occurring in the conduct of the Parent Station Business
and the security agreements related thereto, including
any rights of Parent with respect to any third party
collection procedures which have been commenced in
connection therewith, to the extent related solely to
the conduct of the Parent Station Business;
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(vii) PREPAID EXPENSES. All prepaid expenses relating solely
to the conduct of the Parent Station Business;
(viii) SECURITY DEPOSITS. All security deposits deposited or
made by Parent and which relate solely to the Parent
Station Assets (including but not limited to those made
as lessee or sublessee under any of the Parent Station
Leases and Parent Station Contracts);
(ix) INTANGIBLE PROPERTY. All patents and applications
therefor, copyrights and applications therefor
(including rights to renew), trademarks and
applications therefor, trade names and applications
therefor, service marks and applications therefor,
computer software and television station call letters
("INTANGIBLE PROPERTY") which relate solely to the
Parent Station Business;
(x) BOOKS AND RECORDS. All general, financial and
personnel records, correspondence and other files and
records, including all FCC logs and other records, of
Parent pertaining solely to the conduct of the Parent
Station Business; and
(xi) GOODWILL. All of Parent's goodwill in the Parent
Station Business;
(b) EXCLUDED ASSETS. Any provision of this Agreement to the
contrary notwithstanding, the Company shall not acquire from Parent and
there shall be excluded from the Parent Station Assets the following (the
"PARENT STATION EXCLUDED ASSETS"):
(i) CASH. All cash, marketable securities, commercial
paper, certificates of deposit and other bank deposits,
treasury bills and other cash equivalents (the
"EXCLUDED CASH");
(ii) BANK ACCOUNTS. All rights with respect to bank
accounts;
(iii) RADIO ASSETS. All assets, properties and rights of
Parent owned, used or held for the use by Parent in the
ownership or operation of radio broadcast stations (the
"RADIO ASSETS");
(iv) TAX REFUNDS. All rights of Parent with respect to any
federal, state, local or foreign income, franchise,
excise, stamp, real property, personal property, sales,
use, customs, transfer, gains or value added tax,
tariff, import, fee, duty, levy or other governmental
charge (collectively, "TAXES") incurred by Parent in
the conduct of the Parent Station Business or with
respect to the Parent Station Assets before the
Contribution (collectively, "TAX REFUNDS"), other than
any Tax Refunds attributable to Taxes accrued for on
the Parent Station Balance Sheet;
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(v) FLORIDA STATION. All assets, properties and rights of
Parent owned, used or held for use by Parent and/or
WWWB-TV Company solely in the ownership or operation of
the WWWB-TV (Tampa, Florida) television broadcast
station (the "FLORIDA STATION ASSETS");
(vi) MISSOURI LMA. The local marketing agreement of Parent
with respect to the operations of KCWB-TV (Kansas City,
Missouri), including all assets, properties and rights
of Parent with respect thereto (the "MISSOURI LMA");
(vii) INTERCOMPANY ACCOUNTS. All rights with respect to any
obligations of Parent, any Affiliate of Parent or any
director or officer of Parent or of any Affiliate of
Parent;
(viii) CERTAIN NAMES. All rights to use the corporate names,
logos, trademarks or tradenames set forth in SECTION
2.02(B) OF THE PARENT DISCLOSURE LETTER or any
derivatives or variances thereof, including but not
limited to the name "Hearst,", "The Hearst
Corporation," or any derivatives or variances thereof;
(ix) INSURANCE. All insurance policies and all rights of
every nature and description under or arising out of
such policies, except as provided in Section 2.02(g) of
this Agreement;
(x) CERTAIN PROGRAMS. All rights to the television program
"Rebecca's Garden"; and
(xi) OTHER MATTERS. All rights of Parent under this
Agreement and the agreements and instruments delivered
to Parent by the Company or the Broadcast Subsidiaries
pursuant to this Agreement and all other assets,
properties and rights of Parent which are not owned or
used by Parent solely in the conduct of the Parent
Station Business.
(c) ASSUMPTION OF BRIDGE DEBT, PRIVATE PLACEMENT DEBT AND
PARENT STATION LIABILITIES. Subject to the terms set forth in this
Agreement and except as provided in Section 2.02(d), in consideration for
the Contribution and simultaneously therewith, (x) the Company shall assume
and thereafter pay, perform and discharge when due: (i) the Bridge Debt,
(ii) the Private Placement Debt and (iii) any and all obligations and
liabilities of Parent to the extent related to the Parent Station Business,
whether fixed, contingent, choate, inchoate or otherwise, as and to the
extent existing at the time of the Contribution other than the Parent
Station Excluded Liabilities (as defined below) (the "PARENT STATION
ASSUMED LIABILITIES"), and (y) immediately following such transactions the
Company shall cause the Broadcast Subsidiaries to assume and thereafter
pay, perform and discharge when due the Private Placement Debt and the
Parent Station Assumed Liabilities. Without limitation of the foregoing,
but except as provided in Section 2.02(d) and Section 2.02(f), the Parent
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Station Assumed Liabilities shall include the following as and to the
extent existing at the time of the Contribution:
(i) BALANCE SHEET LIABILITIES. All liabilities set forth
on the balance sheet of the Parent Station Business as
of December 31, 1996 referred to in Section 6.05;
(ii) OBLIGATIONS UNDER LEASES, CONTRACTS AND PERMITS. All
liabilities and obligations of Parent under any Parent
Station Leases, Parent Station Contracts and Parent
Station Permits;
(iii) EMPLOYEES. All liabilities and obligations of Parent
relating to the Parent Station Employees (as defined
below);
(d) LIABILITIES NOT ASSUMED. Anything contained in this
Agreement to the contrary notwithstanding, the Company shall not assume
and there shall be excluded from the Parent Station Assumed Liabilities the
following obligations and liabilities of Parent (collectively, the "PARENT
STATION EXCLUDED LIABILITIES"):
(i) NON-TRADE INDEBTEDNESS. All liabilities under any
bonds, notes, debentures or similar instruments, any
indebtedness for borrowed money or any guarantees
thereof other than the Private Placement Debt;
(ii) TAX LIABILITIES. Any liabilities for Taxes incurred by
Parent in the conduct of the Parent Station Business or
with respect to the Parent Station Assets before the
Contribution, except to the extent accrued for on the
Parent Station Balance Sheet or as provided in Section
8.11;
(iii) PARENT STATION EMPLOYEE BENEFIT PLANS. All liabilities
and obligations (x) of Parent under the Parent Station
Employee Benefit Plans, other than collective
bargaining agreements and employment agreements with
respect to Parent Station Employees, (y) to employees
of Parent who are not Parent Station Employees (as
hereinafter defined), and (z) under the employment
agreements set forth in SECTION 2.02(D)(III) OF THE
PARENT DISCLOSURE LETTER;
(iv) INTERCOMPANY ACCOUNTS. All liabilities to Parent or
any affiliate of Parent (other than amounts owed to
Parent Station Employees);
(v) EXCLUDED ASSETS. All liabilities or obligations to the
extent relating to the acquisition, ownership,
operations or use of any of the Parent Station Excluded
Assets.
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Parent shall pay, perform and discharge in a timely manner or shall make
adequate provision for all of the Parent Station Excluded Liabilities;
PROVIDED, HOWEVER, that Parent may contest, in good faith, any claim of
liability asserted by a third party in respect thereof.
(e) NONASSIGNABLE PARENT STATION CONTRACTS AND PARENT STATION
PERMITS. To the extent that transfer and assignment hereunder by Parent to
the Company or by the Company to the Broadcast Subsidiaries of any Parent
Station Lease, Parent Station Contract or Parent Station Permit is not
permitted or is not permitted without the consent of any third party, this
Agreement shall not be deemed to constitute an undertaking to assign the
same if such consent is not given or if such an undertaking otherwise would
constitute a breach thereof or cause a loss of benefits thereunder. Parent
will use commercially reasonable efforts to obtain any and all such third
party consents; PROVIDED, HOWEVER, that except as otherwise provided in
Section 8.06, Parent shall not be required to pay or incur any cost or
expense to obtain any third party consent which Parent is not otherwise
required to pay or incur in accordance with the terms of the applicable
Parent Station Lease, Parent Station Contract or Parent Station Permit. If
any such third party consent is not obtained before the transfer of the
Parent Station Business contemplated by this Section 2.02, Parent will
cooperate with the Company, at its expense, in any reasonable arrangement
designed to thereafter provide to the Broadcast Subsidiaries the benefits
under the applicable Parent Station Lease, Parent Station Contract or
Parent Station Permit.
(f) PARENT STATION EMPLOYEES. Effective upon the Contribution,
all employees of Parent employed in the Parent Station Business, except
those employees identified in SECTION 2.02(F) OF THE PARENT DISCLOSURE
LETTER, shall become employees (the "PARENT STATION EMPLOYEES") of the
Company or one or more of the Broadcast Subsidiaries at the Closing and
simultaneous with the Contribution.
(g) RISK OF LOSS. The risk of loss or damage to any of the
Parent Station Assets to be contributed by Parent to the Company and by the
Company to the Broadcast Subsidiaries shall be on Parent prior to the
Closing and thereafter shall be on the Company. If any of the Parent
Station Assets shall suffer any material damage, destruction or loss after
the date of this Agreement but before the Closing Date, and such Parent
Station Asset and the related casualty are covered by any insurance policy
maintained by Parent or the Parent Station Business with a third party
insurer: Parent shall pay the Company at the Closing or as soon as
practicable after receipt by Parent, if later than the Closing, in cash,
the amount by which the proceeds from such policy in respect of such
damage, destruction or loss exceed the sum of (i) any amount accrued for on
the Parent Station Balance Sheet as a current liability with respect to
repair, restoration or replacement related to such damage, destruction or
loss and (ii) the amount by which the current assets included in the Parent
Station Balance Sheet shall have been reduced by reason of any current
asset so damaged, destroyed or lost.
2.03 ISSUANCE OF COMPANY SERIES B COMMON STOCK. In exchange for
the transfer of the Contributed Cash and the Parent Station Assets to the
Company pursuant to Section 2.02 above, and simultaneously therewith but
after the Restated Charter has been duly filed and is in effect as provided
in Section 2.01, (i) the Company shall issue to Parent 38,611,000 shares of
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the Company Series B Common Stock and (ii) the Company shall issue to Cash
Sub one share of the Company Series B Common Stock.
ARTICLE III.
CONVERSION OF SHARES
3.01 CONVERSION OF CAPITAL STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of
any share of capital stock of Merger Sub or the Company:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding
share of the common stock, par value $.01 per share, of Merger Sub ("MERGER
SUB COMMON STOCK") shall be converted into and become one fully paid and
nonassessable share of Series B Voting Common Stock, par value $.01 per
share, of the Surviving Corporation ("SURVIVING CORPORATION SERIES B COMMON
STOCK"). Each certificate representing outstanding shares of Merger Sub
Common Stock shall at the Effective Time represent an equal number of
shares of Surviving Corporation Series B Common Stock.
(b) CANCELLATION OF TREASURY STOCK. Each share of Company
Series A Common Stock and Company Series B Common Stock, and each share of
the Company Series A Preferred Stock and Company Series B Preferred Stock
that is owned by the Company as treasury stock shall be cancelled and
retired and shall cease to exist and no stock of the Company or other
consideration shall be delivered in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Each issued and
outstanding share of Company Series B Common Stock shall be converted into
and become one fully paid and nonassessable share of Surviving Corporation
Series B Common Stock. Each certificate representing outstanding shares of
Company Series B Common Stock shall at the Effective Time represent an
equal number of shares of Surviving Corporation Series B Common Stock.
Except as otherwise provided in Section 3.06 and subject to Section
3.01(b), at the Effective Time each issued and outstanding share of Company
Series A Common Stock shall be converted into one of the following:
(i) Each share of Company Series A Common Stock which under
the terms of Section 3.03 is to be converted into the
right to receive solely shares of Series A Voting
Common Stock, par value $.01 per share, of the
Surviving Corporation ("SURVIVING CORPORATION SERIES A
COMMON STOCK") shall be converted into the right to
receive one share of Surviving Corporation Series A
Common Stock (the "STOCK CONSIDERATION");
(ii) Each share of Company Series A Common Stock which under
the terms of Section 3.03 is to be converted into the
right to receive solely cash shall be converted into
the right to receive cash, without interest, in an
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amount equal to $26.50 (the "CASH CONSIDERATION"); and
(iii) Each share of Company Series A Common Stock which under
the terms of Section 3.03 is to be converted into the
right to receive a combination of shares of Surviving
Corporation Series A Common Stock and cash, shall be
converted into the right to receive 0.50 shares of
Surviving Corporation Series A Common Stock and $13.25
in cash, without interest (the "MIXED CONSIDERATION").
(d) CONVERSION OF COMPANY PREFERRED STOCK. Except as otherwise
provided in Section 3.06 and subject to Section 3.01(b), at the Effective
Time each issued and outstanding share of Company Series A Preferred Stock
shall be converted into one share of the Surviving Corporation's Series A
Voting Preferred Stock, par value $.01 per share (the "SURVIVING
CORPORATION SERIES A PREFERRED STOCK"), and each issued and outstanding
share of Company Series B Preferred Stock shall be converted into one share
of the Surviving Corporation's Series B Voting Preferred Stock, par value
$.01 per share (the "SURVIVING CORPORATION SERIES B PREFERRED STOCK").
Each certificate representing outstanding shares of Company Series A
Preferred Stock or shares of Company Series B Preferred Stock shall at the
Effective Time represent an equal number of shares of Surviving Corporation
Series A Preferred Stock or Surviving Corporation Series B Preferred Stock,
as the case may be.
(e) COMPANY OPTIONS. Each option or similar right to purchase
shares of Company Series A Common Stock which is outstanding at the
Effective Time (each such option, as it relates to each such share, being
referred to herein as a "COMPANY OPTION") shall be cancelled, by virtue of
the Merger and without further action by the Company or the holder of a
Company Option, without consideration except as provided in this Section
3.01(e). Each person shown on the books of the Company to be a holder of a
Company Option, whether or not immediately exercisable, shall be entitled
to receive subject to and in accordance with the terms of Section 3.03, as
soon as practicable after the Effective Time, at such holder's election,
one of the following:
(i) an option to purchase shares of Surviving Corporation
Series A Common Stock ("SURVIVING CORPORATION
OPTIONS"), into which the Company Options shall be
converted and assumed by the Surviving Corporation.
Each Surviving Corporation Option shall be fully vested
and shall otherwise be exercisable upon the same terms
and conditions as set forth in the option agreement
respecting the Company Option converted into such
Surviving Corporation Option (an "OPTION ROLLOVER"); or
(ii) a number of shares of Surviving Corporation Series A
Common Stock ("OPTION STOCK") equal to (x) the number
of shares of Company Series A Common Stock underlying
such Company Option multiplied by (y) a fraction, of
which the numerator is the amount by which the Cash
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Consideration exceeds the per share exercise or
purchase price provided under such Company Option and
the denominator is an amount equal to the Cash
Consideration; or
(iii) cash ("OPTION CASH") in an amount equal to (x) the Cash
Consideration multiplied by (y) the number of shares of
Option Stock which such holder would be entitled to
receive pursuant to paragraph (ii) above; or
(iv) the sum of (A) a number of shares of Surviving
Corporation Series A Common Stock equal to (x) the
number of shares of Option Stock which such holder
would be entitled to receive pursuant to paragraph (ii)
above multiplied by (y) 50%, plus (B) cash in an amount
equal to (x) the Cash Consideration multiplied by
(y) the number of shares by which the Option Stock
which such holder would be entitled to receive pursuant
to paragraph (ii) above exceeds the number of shares of
Surviving Corporation Series A Common Stock which such
holder is entitled to receive pursuant to this
paragraph (iv) (the "OPTION MIXED CONSIDERATION").
Except as permitted by the terms of this Agreement or as
otherwise agreed to by the parties, the Company shall use reasonable
efforts to ensure that no person shall have any right under any stock
option plan (or any option granted thereunder) or other plan, program or
arrangement with respect to, including any right to acquire, equity
securities of the Surviving Corporation following the Effective Time.
(f) PER SHARE AMOUNT. The applicable consideration into which
each share of any class or series of the capital stock of the Company shall
be converted pursuant to Section 3.01(c) or 3.01(d) above shall be
hereinafter referred to, collectively and individually, as the "PER SHARE
AMOUNT."
3.02 ELECTION PROCEDURES.
(a) COMPANY COMMON STOCK. Each holder of Company Series A
Common Stock (other than holders of Company Series A Common Stock to be
cancelled as set forth in Section 3.01(b)) shall have the right to choose
to receive (subject to the allocation and proration procedures set forth
below) one of the following in exchange for each share of such holder's
Company Series A Common Stock in the Merger:
(i) only cash (a "CASH ELECTION");
(ii) only shares of Surviving Corporation Series A Common
Stock (a "STOCK ELECTION"); or
(iii) the Mixed Consideration (a "MIXED ELECTION").
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As used herein, the term "ELECTION" shall refer to either a Cash Election,
a Stock Election or a Mixed Election.
(b) COMPANY OPTIONS. Each holder of a Company Option shall have
the right to choose to receive (subject to the allocation and proration
procedures set forth below) one of the following in exchange for
cancellation of such holder's Company Option in the Merger:
(i) an Option Rollover (a "ROLLOVER ELECTION");
(ii) only Option Cash (an "OPTION CASH ELECTION");
(iii) only Option Stock (an "OPTION STOCK ELECTION"); or
(iv) the Option Mixed Consideration (an "OPTION MIXED
ELECTION").
As used herein, the term "OPTION ELECTION" shall refer to either a Rollover
Election, an Option Cash Election, an Option Stock Election or an Option
Mixed Election.
(c) Parent and the Company shall authorize one or more persons
to receive Elections and to act as Exchange Agent hereunder (the "EXCHANGE
AGENT") pursuant to an agreement or agreements satisfactory to Parent and
the Company.
(d) Parent and the Company shall prepare a form (the "FORM OF
ELECTION") (i) pursuant to which each holder of record (other than Parent
and Cash Sub) of Company Series A Common Stock may make an Election with
respect to each share of Company Series A Common Stock and (ii) which will
include as part of such form a letter of transmittal for surrender of
certificates therewith representing shares of such holder's Series A Common
Stock (which shall specify that delivery shall be effective, and risk of
loss and title to such certificates shall pass, only upon delivery of such
certificates to the Exchange Agent), and instructions for use in effecting
the surrender of such certificates. The Form of Election shall be mailed
to stockholders of record of the Company as of the record date for the
Company Stockholders' Meeting contemplated by Section 8.05 (and shall
accompany the Proxy Statement/Prospectus referred to in Section 8.04).
Parent and the Company also shall prepare a form pursuant to which each
holder of a Company Option may make an Option Election and which shall be
provided to each person shown on the books of the Company to be a holder of
a Company Option (the "OPTION ELECTION FORM").
(e) The Company will use its best efforts to make the Form of
Election (accompanied by the Proxy Statement/Prospectus) available to all
persons who become Company stockholders of record during the period between
such record date and the Business Day immediately prior to the Election
Date (including those partners of ATILP, TIP, and ATP and ATIGP to whom
shares of Existing Series A Common Stock or Existing Series B Common Stock
have been distributed pursuant to the Liquidation Plans). As used herein,
"ELECTION DATE" means a date mutually agreed upon by Parent and the Company
and announced by the Company, in a news release delivered to the Dow Jones
News Service or otherwise publicly announced by the Company, as the last
day on which Forms of Election will be accepted, PROVIDED, HOWEVER, that
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such day shall be a Business Day no earlier than 20 Business Days prior to
the Effective Time and no later than the date of the Company Stockholders'
Meeting (as defined in Section 8.05).
(f) Any Election shall have been properly made only if the
Exchange Agent at its office designated in the Form of Election shall have
received in the city in which, for purposes of this Agreement, such
Exchange Agent is located, by 5:00 p.m. local time on the Election Date
(the "ELECTION DEADLINE"), a Form of Election properly completed and
signed. Any Election relating to shares of Company Series A Common Stock
with respect to which the holder thereof has filed and not withdrawn as of
the Effective Time a written demand for payment of the fair value of
Company Series A Common Stock in accordance with the provisions of Section
3.06 hereof shall be deemed to have been automatically revoked as of the
Election Date.
(g) Holders of record of shares of Company Series A Common Stock
who hold such shares as nominees, trustees or in other representative
capacities (a "HOLDER REPRESENTATIVE") may submit multiple Forms of
Election, provided that such Holder Representative certifies that each such
Form of Election covers all the shares of Company Series A Common Stock
held by each Holder Representative for a particular beneficial owner.
(h) Any holder of Company Series A Common Stock at any time
prior to the Election Deadline may change his Election by written notice
received by the Exchange Agent at or prior to the Election Deadline
accompanied by a properly completed, revised Form of Election.
(i) Any holder of Company Series A Common Stock at any time
prior to the Election Deadline may revoke his Election by written notice
received by the Exchange Agent at or prior to the Election Deadline.
(j) The Company and Parent shall have the right to make rules
not inconsistent with the terms of this Agreement governing the validity of
the Forms of Election and the Option Election Forms, the manner and extent
to which Elections and Option Elections are to be taken into account in
making the determinations prescribed by this Article III, the issuance and
delivery of certificates for Surviving Corporation Series A Common Stock
into which Company Series A Common Stock and Company Options are converted
in the Merger and the payment for shares of Company Series A Common Stock
and Company Options converted into the right to receive cash in the Merger.
All such rules and determinations thereunder shall be final and binding on
all holders of shares of Company Series A Common Stock and all holders of
Company Options.
3.03 SELECTION OF COMPANY COMMON STOCK AND COMPANY OPTIONS. The
manner in which each share of Company Series A Common Stock (other than
shares of Company Series A Common Stock to be cancelled as set forth in
Section 3.01(b)) and each Company Option shall be converted at the
Effective Time into cash or Surviving Corporation Series A Common Stock
shall be as set forth below in this Section 3.03:
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(a) As is more fully set forth below, the number of shares of
Company Series A Common Stock and Company Options to be converted into the
right to receive cash in the Merger pursuant to this Agreement (the "CASH
CONVERSION NUMBER") shall not exceed the amount which is equal as nearly as
practicable to 6,025,319 shares. The number of shares of Company Series A
Common Stock and Company Options to be converted into Surviving Corporation
Series A Common Stock in the Merger pursuant to this Agreement (the "STOCK
CONVERSION NUMBER") shall not exceed the amount which is equal as nearly as
practicable to 8,277,054 shares.
(b) If the sum of (i) the aggregate number of shares of Company
Series A Common Stock covered by effective Cash Elections (the "CASH
ELECTION SHARES"), (ii) the aggregate number of such shares covered by
Mixed Elections (the "MIXED ELECTION SHARES") to be acquired for cash
(determined by multiplying the number of Mixed Election Shares by 50%)
(such number of shares referred to as the "MIXED ELECTION CASH SHARES"),
(iii) the aggregate number of shares of Company Series A Common Stock
calculated pursuant to Section 3.01(e) (iii) with respect to Company
Options covered by Option Cash Elections (the "OPTION CASH SHARES") and
(iv) the aggregate number of shares of Company Series A Common Stock
calculated pursuant to Section 3.01(e)(iv) with respect to Company Options
covered by Option Mixed Elections to be cancelled for cash (the "MIXED
OPTION CASH SHARES") exceeds the Cash Conversion Number, then (i) each
share of Company Series A Common Stock for which a Stock Election has been
made, each Company Option for which an Option Stock Election has been made,
and each Non-Electing Company Common Share (as defined in Section 3.03(h)),
shall be converted into a right to receive Surviving Corporation Series A
Common Stock in the Merger, (ii) each share of Company Series A Common
Stock for which a Mixed Election has been made and each Common Option for
which an Option Mixed Election has been made shall be converted into the
right to receive the Mixed Consideration or the Option Mixed Consideration,
respectively, in the Merger, and (iii) each share of Company Series A
Common Stock for which a Cash Election has been made and each Company
Option for which an Option Cash Election has been made shall be converted
into a right to receive cash or Surviving Corporation Series A Common Stock
in the following manner:
(i) A cash proration factor (the "CASH PRORATION FACTOR")
shall be determined by dividing (i) the Cash Conversion
Number minus the sum of (A) the number of Mixed
Election Cash Shares and (B) the number of Mixed Option
Cash Shares, by (ii) the sum of (A) the total number of
Cash Election Shares and (B) the total number of Option
Cash Shares;
(ii) The number of shares of Company Series A Common Stock
covered by each Cash Election to be converted into the
right to receive cash shall be determined by
multiplying the Cash Proration Factor by the total
number of shares of Company Series A Common Stock
covered by such Cash Election, rounded to the next
higher integer;
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(iii) The number of Company Options covered by each Option
Cash Election to be converted into the right to receive
cash shall be determined by multiplying the Cash
Proration Factor by the total number of Company Options
covered by such Option Cash Election, rounded to the
next higher integer; and
(iv) Each share of Company Series A Common Stock covered by
a Cash Election and each Company Option covered by an
Option Cash Election which in each case are not
converted into a right to receive cash as set forth
above shall be converted into the right to receive
shares of Surviving Corporation Series A Common Stock
in the Merger.
(c) If the sum of (i) the aggregate number of shares of Company
Series A Common Stock covered by effective Stock Elections (the "STOCK
ELECTION SHARES"), (ii) the aggregate number of Mixed Election Shares to be
acquired for stock (determined by multiplying the number of Mixed Election
Shares by 50%) (such number of shares referred to as the "MIXED ELECTION
STOCK SHARES"), (iii) the aggregate number of shares of Company Series A
Common Stock calculated pursuant to Section 3.01(e)(ii) with respect to
Company Options covered by Option Stock Elections (the "OPTION STOCK
SHARES") and (iv) the aggregate number of shares of Company Series A Common
Stock calculated pursuant to Section 3.01(e)(iv) with respect Company
Options covered by Option Mixed Elections to be cancelled for stock (the
"MIXED OPTION STOCK SHARES") exceeds the Stock Conversion Number, then
(i) each share of Company Series A Common Stock for which a Cash Election
has been made, each Company Option for which an Option Cash Election has
been made, and each Non-Electing Company Common Share shall be converted
into the right to receive cash in the Merger, (ii) each share of Company
Series A Common Stock for which a Mixed Election has been made and each
Company Option for which an Option Mixed Election has been made shall be
converted into the right to receive the Mixed Consideration or the Option
Mixed Consideration, respectively, in the Merger, and (iii) the shares of
Company Series A Common Stock for which a Stock Election has been made and
each Company Option for which an Option Stock Election has been made shall
be converted into Surviving Corporation Series A Common Stock or the right
to receive cash in the following manner:
(i) A stock proration factor (the "STOCK PRORATION FACTOR")
shall be determined by dividing (i) the Stock
Conversion Number minus the sum of (A) the number of
Mixed Election Stock Shares and (B) the number of Mixed
Option Stock Shares, by (ii) the sum of (A) the total
number of Stock Election Shares and (B) the total
number of Option Stock Shares;
(ii) The number of shares of Company Series A Common Stock
covered by each Stock Election to be converted into
Surviving Corporation Series A Common Stock shall be
determined by multiplying the Stock Proration Factor by
the total number of shares of Company Series A Common
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Stock covered by such Stock Election, rounded to the
next lower integer;
(iii) The number of Company Options covered by each Option
Stock Election to be converted into Surviving
Corporation Series A Common Stock shall be determined
by multiplying the Stock Proration Factor by the total
number of shares of Company Series A Common Stock
covered by such Option Stock Election, rounded to the
next higher integer; and
(iv) Each share of Company Series A Common Stock covered by
a Stock Election and each Company Option covered by an
Option Stock Election which in each case are not
converted into a right to receive Surviving Corporation
Series A Common Stock as set forth above shall be
converted into the right to receive the cash in the
Merger.
(d) If Cash Elections and Option Cash Elections are received for
a number of shares of Company Series A Common Stock which is in the
aggregate equal to or less than the Cash Conversion Number, each share of
Company Series A Common Stock covered by a Cash Election and each Company
Option covered by an Option Cash Election shall be converted into a right
to receive the Cash Consideration and the Option Cash, respectively.
(e) If Stock Elections and Option Stock Elections are received
for a number of shares of Company Series A Common Stock which is in the
aggregate equal to or less than the Stock Conversion Number, each share of
Company Series A Common Stock covered by a Stock Election and each Company
Option covered by an Option Stock Election shall be converted into the
right to receive the Stock Consideration and the Option Stock,
respectively.
(f) Each share of Company Series A Common Stock covered by a
Mixed Election and each Company Option covered by an Option Mixed Election
shall be converted into the right to receive the Mixed Consideration and
the Option Mixed Consideration, respectively.
(g) If Non-Electing Company Common Shares are not converted
under either Section 3.03(b) or Section 3.03(c), the Exchange Agent shall
determine by lot (or by such other method as is deemed reasonable by Parent
and the Company) which of the holders of Non-Electing Company Common Shares
shall receive in the Merger the right to receive cash for each Non-Electing
Company Common Share held of record by such holder, provided that such
selection by lot (or by such other method) will cease when the sum of
shares converted in such manner, plus the total number of Cash Election
Shares and Mixed Election Cash Shares for which Cash Elections and Mixed
Elections have been received, is as close as is practicable to the Cash
Conversion Number. Each Non-Electing Company Common Share not so converted
into the right to receive cash shall be converted into Surviving
Corporation Series A Common Stock in the Merger.
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(h) For the purposes of this Section 3.03, outstanding shares of
Company Series A Common Stock as to which an Election is not in effect as
of the Election Deadline shall be called "NON-ELECTING COMPANY COMMON
SHARES." Notwithstanding anything to the contrary contained in this
Agreement, an Election shall be deemed not to be in effect if a holder has
not surrendered to the Exchange Agent certificates representing such
holder's shares of Series A Common Stock pursuant to, and in accordance
with, the Form of Election. If Parent and the Company shall determine for
any reason that any Election was not properly made with respect to shares
of Company Series A Common Stock, such Election shall be deemed to be not
in effect and shares of Company Series A Common Stock covered by such
Election shall for purposes hereof be deemed to be Non-Electing Company
Common Shares.
(i) If Parent and the Company shall determine for any reason
that any Option Election was not properly made with respect to Company
Options, such Option Election shall be deemed not to be in effect and
instead a Rollover Election shall be deemed to have been made with respect
to such Company Option.
3.04 THE COMPANY TO MAKE CASH AND CERTIFICATES AVAILABLE.
(a) The Company shall make available to the Exchange Agent at
the Effective Time, an amount in cash equal to at least One Hundred Million
Dollars ($100,000,000) and such additional amount of cash to the extent
necessary under this Article III to pay cash consideration to holders of
the Company Series A Common Stock and Company Options. As soon as
practicable after the Effective Time, the Exchange Agent shall distribute
to holders of shares of Company Series A Common Stock converted into the
right to receive cash pursuant to Article III, upon surrender to the
Exchange Agent of one or more Certificates for cancellation, a check for an
amount equal to the Cash Consideration for each share of Company Series A
Common Stock so converted. In no event shall the holder of any such
surrendered Certificates be entitled to receive interest on any of the
funds to be received in the Merger. If such check is to be sent to a
person other than the person in whose name the Certificates surrendered for
exchange are registered, it shall be a condition of the exchange that the
person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of the delivery of such check to
a person other than the registered holder of the certificate surrendered,
or shall establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Notwithstanding the foregoing, neither
the Exchange Agent nor any party hereto shall be liable to a holder of
shares of Company Series A Common Stock for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar
law.
(b) As soon as practicable after the Effective Time, each holder
of shares of Company Series A Common Stock converted into shares of
Surviving Corporation Series A Common Stock pursuant to Article III upon
surrender to the Exchange Agent (to the extent not previously surrendered
with a Form of Election) of one or more Certificates of such shares of
Company Series A Common Stock for cancellation, will be entitled to receive
certificates representing the number of shares of Surviving Corporation
Series A Common Stock to be issued in respect of the aggregate number of
such shares of Company Series A Common Stock previously represented by the
Certificates surrendered. Notwithstanding any other provision hereof, no
fractional shares of Surviving Corporation Series A Common Stock and no
certificates or scrip therefor, or other evidence of ownership thereof,
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<PAGE>
will be issued, and no right to receive cash in lieu thereof shall entitle
the holder thereof to any voting or other rights of a holder of shares or
fractional share interests. All fractional shares of Surviving Corporation
Series A Common Stock to which a holder of Company Series A Common Stock
immediately prior to the Effective Time would otherwise be entitled, at the
Effective Time, shall be aggregated. If a fractional share results from
such aggregation, such stockholder shall be entitled after the later of the
Effective Time and the surrender of such stockholder's Certificate or
Certificates which represent such shares of Company Series A Common Stock,
to receive from the Surviving Corporation an amount in cash in lieu of such
fractional share, based on the Cash Consideration. The Surviving
Corporation will make available to the Exchange Agent, as required, without
regard to any other cash being provided to the Exchange Agent, cash
necessary for this purpose. Notwithstanding the foregoing, neither Parent,
the Surviving Corporation, the Exchange Agent nor any party hereto shall be
liable to a holder of shares of Company Series A Common Stock for any
Surviving Corporation Series A Common Stock or dividends thereon delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law.
(c) As soon as practicable after the Effective Time, the
Exchange Agent shall mail upon request the Form of Election to each holder
of record (other than Parent and Cash Sub) of a certificate or certificates
that immediately prior to the Effective Time represented outstanding shares
of Company Series A Common Stock (the "CERTIFICATES").
(d) The cash paid and shares of Surviving Corporation Series A
Common Stock issued, upon the surrender of Certificates in accordance with
the terms hereof, shall be deemed to have been paid and issued in full
satisfaction of all rights pertaining to such shares of Company Series A
Common Stock, as the case may be.
3.05 DIVIDENDS. No dividends or other distributions, if any,
that are declared after the Effective Time with respect to Surviving
Corporation Series A Common Stock payable to holders of record thereof
after the Effective Time shall be paid to the Company's stockholders
entitled to receive certificates representing Surviving Corporation Series
A Common Stock until such stockholders surrender their Certificates. Upon
such surrender, there shall be paid to the stockholder in whose name the
certificates representing such Surviving Corporation Series A Common Stock
shall be issued any dividends which shall have become payable with respect
to such Surviving Corporation Series A Common Stock between the Effective
Time and the time of such surrender, without interest. After such
surrender, there shall also be paid to the stockholder in whose name the
certificates representing such Surviving Corporation Series A Common Stock
shall be issued any dividend on such Surviving Corporation Series A Common
Stock that shall have a record date subsequent to the Effective Time and
prior to such surrender and a payment date after such surrender and such
payment shall be made on such payment date. In no event shall the
stockholders entitled to receive such dividends be entitled to receive
interest on such dividends. All dividends or other distributions declared
after the Effective Time with respect to Surviving Corporation Series A
Common Stock and payable to the holders of record thereof after the
Effective Time that are payable to the holders of Certificates not
theretofore surrendered and exchanged for certificates representing shares
of Surviving Corporation Series A Common Stock pursuant to this Section
3.05 shall be paid or delivered by the Surviving Corporation to the
Exchange Agent, in trust, for the benefit of such holders. All such
dividends or other distributions held by the Exchange Agent for payment or
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delivery to the holders of unsurrendered Certificates and unclaimed at the
end of one year from the Effective Time shall be repaid or redelivered by
the Exchange Agent to the Surviving Corporation, after which time any
holder of Certificates who has not theretofore surrendered such
Certificates to the Exchange Agent, subject to applicable law, shall look
as a general creditor only to the Surviving Corporation for payment or
delivery of such dividends or distributions, as the case may be. Any
Surviving Corporation Series A Common Stock delivered or made available to
the Exchange Agent pursuant to Section 3.04 hereof and not exchanged for
Certificates within one year after the Effective Time pursuant to this
Section 3.05 shall be returned by the Exchange Agent to the Surviving
Corporation which shall thereafter act as Exchange Agent subject to the
rights of holders of unsurrendered Certificates under this Article III.
Notwithstanding the foregoing, neither Parent, the Surviving Corporation,
the Exchange Agent nor any other party hereto shall be liable to a holder
of Company Common Stock for any Surviving Corporation Series A Common
Stock, or dividends or distributions thereon, delivered to a public
official pursuant to applicable abandoned property, escheat or similar
laws.
3.06 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the
contrary, each outstanding share of Company Common Stock or Company
Preferred Stock, the holder of which has not voted in favor of the Merger,
has perfected such holder's right to an appraisal of such holder's shares
in accordance with the applicable provisions of the DGCL and has not
effectively withdrawn or lost such right to appraisal (a "DISSENTING
SHARE"), shall not be converted into or represent a right to receive the
applicable Per Share Amount, but the holder thereof shall be entitled only
to such rights as are granted by the applicable provisions of the DGCL;
PROVIDED, HOWEVER, that any Dissenting Share held by a person at the
Effective Time who shall, after the Effective Time, withdraw the demand for
appraisal or lose the right of appraisal, in either case pursuant to the
DGCL, shall be deemed to be converted into, as of the Effective Time, the
right to receive the applicable Per Share Amount.
(b) The Company (or the Surviving Corporation, as the case may
be) shall give Parent (x) prompt notice of any written demands for
appraisal, withdrawals of demands for appraisal and any other instruments
served pursuant to the applicable provisions of the DGCL relating to the
appraisal process received by the Company (or the Surviving Corporation, as
the case may be) and (y) the opportunity to participate in all negotiations
and proceedings with respect to demands for appraisal under the DGCL.
Prior to the Effective Time, the Company will not voluntarily make any
payment with respect to any demands for appraisal and will not, except with
the prior written consent of Parent, settle or offer to settle any such
demands.
3.07 ELECTING OPTIONHOLDERS SUPPLEMENTAL ELECTION.
Notwithstanding any other provision of this Article III, an Electing
Optionholder may make a supplemental election for the Option Cash Election
of Section 3.01(e)(iii) not to be subject to any pro ration under Section
3.03 provided that (i) the aggregate amount of cash to be received pursuant
to Section 3.03 under any Section 3.01(c) election made by such Electing
Optionholder shall be reduced by the difference between (x) the Option Cash
to be received by such Electing Optionholder making this supplemental
election less (y) the Option Cash that would have been received by such
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Electing Optionholder were such Option Cash election subject to any pro
ration under Section 3.03 (with the difference of (x) minus (y) being the
"OPTION CASH DIFFERENCE"); and (ii) the number of shares of stock to be
received pursuant to Section 3.03 under any Section 3.01(c) election made
by such Electing Optionholder shall be increased by a number equal to the
Option Cash Difference divided by $26.50. An Electing Optionholder may
only make the supplemental election provided by this Section 3.07 in the
event that the aggregate amount of cash that would be received pursuant to
any Section 3.01(c) election by such Electing Optionholder absent a
supplemental election under this Section 3.07 equals or exceeds the Option
Cash Difference.
ARTICLE IV.
CERTAIN ADJUSTMENTS
4.01 PARENT STATION BUSINESS ADJUSTMENT.
(a) As promptly as practicable, but in any event not later
than sixty (60) days after the Closing Date, Parent shall cause to be
prepared and delivered to the Surviving Corporation a balance sheet for the
Parent Station Business as of the Closing Date (the "PARENT STATION BALANCE
SHEET"), prepared in accordance with generally accepted accounting
principles consistently applied ("GAAP") and in substantially the manner
used to prepare the Parent Station Financial Statements (as hereinafter
defined). The Parent Station Balance Sheet shall be accompanied by a
statement (the "PARENT STATION STATEMENT OF NET ASSETS") setting forth the
Parent Station Net Assets, which shall be calculated by reference to the
Parent Station Balance Sheet.
(b) Within thirty (30) days after delivery of the Parent
Station Balance Sheet and the Parent Station Statement of Net Assets
pursuant to Section 4.01(a) above, (i) Parent shall pay to the Surviving
Corporation the amount, if any, by which the amount of the Parent Station
Net Assets is less than Thirty Million Dollars ($30,000,000) or (ii) the
Surviving Corporation shall pay to Parent the amount (the "PARENT
ADJUSTMENT AMOUNT"), if any, by which the amount of the Parent Station Net
Assets exceeds Thirty Million Dollars ($30,000,000); PROVIDED, HOWEVER,
that Parent at its option may elect to receive in lieu of such payment from
the Surviving Corporation additional shares of Surviving Corporation Series
B Common Stock or any combination thereof. The number of shares of
Surviving Corporation Series B Common Stock which Parent shall be entitled
to receive shall be determined by dividing the Parent Adjustment Amount by
$26.50. Payments, if any, by the Surviving Corporation or Parent pursuant
to this subsection (b) shall be made by wire transfer of immediately
available funds. It is understood and agreed that to the extent any
payments are made by the Company to Parent pursuant to this subsection (b),
such payments shall be deemed for tax purposes to effectively reduce the
amount contributed by Parent to the Company of the Parent Station Assets.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company SEC Reports filed by the
Company prior to the execution and delivery of this Agreement or in the
disclosure letter delivered to Parent by the Company at or prior to the
execution and delivery of this Agreement (the "COMPANY DISCLOSURE LETTER"),
the Company represents and warrants to Parent as follows:
5.01 ORGANIZATION AND QUALIFICATION. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has full
corporate power and authority to conduct its business as and to the extent
now conducted and to own, use and lease its assets and properties, except
(in the case of any Subsidiary) for such failures to be so organized,
existing and in good standing or to have such power and authority which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a Company Material Adverse Effect (as defined
below). Each of the Company and its Subsidiaries is duly qualified,
licensed or admitted to do business and is in good standing in each
jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such
qualification, licensing or admission necessary, except for such failures
to be so qualified, licensed or admitted and in good standing which,
individually or in the aggregate, (i) are not having and could not be
reasonably expected to have a Company Material Adverse Effect, or (ii)
could not be reasonably expected to adversely affect in any material
respect the ability of the Company to perform its obligations hereunder.
For purposes of this Agreement, "COMPANY MATERIAL ADVERSE EFFECT" means a
material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries, taken as a whole.
SECTION 5.01 OF THE COMPANY DISCLOSURE LETTER sets forth the name and
jurisdiction of incorporation of each Subsidiary of the Company. The
Company does not directly or indirectly own any equity or similar interest
in, or any interest convertible into or exchangeable or exercisable for,
any equity or similar interest in, any corporation, partnership, joint
venture or other business association or entity. For purposes of this
Agreement, "SUBSIDIARY" means, with respect to any party, any corporation
or other organization whether incorporated or unincorporated, of which more
than fifty percent (50%) of either the equity interests in, or voting
control of, such corporation or other organization is, directly or
indirectly through Subsidiaries or otherwise, beneficially owned by such
party.
5.02 CAPITAL STOCK.
(a) The authorized capital stock of the Company consists solely
of (i) 50,000,000 shares of common stock, of which 35,000,000 shares are
designated as Existing Series A Common Stock, 200,000 shares are designated
as Existing Series B Common Stock, and 14,800,000 shares are designated as
Existing Series C Common Stock and (ii) 2,000,000 shares of preferred
stock, of which 12,500 shares are designated as Existing Series A Preferred
Stock, and 12,500 shares are designated as Existing Series B Preferred
Stock. Each share of Existing Series B Common Stock and Existing Series C
Common Stock is convertible into one share of Existing Series A Common
Stock. As of the date of this Agreement, (i) 4,010,914 shares of Existing
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Series A Common Stock are issued and outstanding, (ii) 36,000 shares of
Existing Series B Common Stock are issued and outstanding, all or which are
held by ATP, (iii) 7,300,000 shares of Existing Series C Common Stock are
issued and outstanding, of which 6,600,000 shares are held the ATILP and
700,000 shares are held by TIP, (iv) 10,938 shares of Existing Series A
Preferred Stock are issued and outstanding; (v) 10,938 shares of Existing
Series B Preferred Stock are issued and outstanding; (vi) no shares of
Existing Common Stock and no shares of Existing Preferred Stock are held in
the treasury of the Company; (vii) 15,312,515 shares of Existing Series A
Common Stock are reserved for issuance upon conversion of the Existing
Series B Common Stock, the Existing Series C Common Stock, the Existing
Series A Preferred Stock and the Existing Series B Preferred Stock, and
(viii) 6,000,000 shares of Existing Series A Common Stock are reserved for
issuance under the Company's stock option plans (such plans having been
amended prior to the Company's execution and delivery of this Agreement so
that such options are not with respect to Existing Series C Common Stock).
Other than as described above, there are no other shares or series of
Existing Common Stock or Existing Preferred Stock issued and outstanding,
held in treasury or reserved for issuance. All of the issued and
outstanding shares of each series of Existing Common Stock and Existing
Preferred Stock are, and all shares reserved for issuance will be, upon
issuance in accordance with the terms specified in the instruments or
agreements pursuant to which they are issuable, duly authorized, validly
issued, fully paid and nonassessable. All of the shares of Company Series
B Common Stock to be issued to Parent and Cash Sub pursuant to Section
2.03, when so issued, will be duly authorized, validly issued, fully paid
and non-assessable. Except pursuant to this Agreement and the Voting
Agreements, there are no outstanding subscriptions, options, warrants,
rights (including "phantom" stock rights), preemptive rights or other
contracts, commitments, understandings or arrangements, including any right
of conversion or exchange under any outstanding security, instrument or
agreement (together, "OPTIONS"), obligating the Company or any of its
Subsidiaries to issue or sell any shares of capital stock of the Company or
to grant, extend or enter into any Option with respect thereto.
(b) All of the outstanding shares of capital stock of each
Subsidiary of the Company are duly authorized, validly issued, fully paid
and nonassessable and are owned, beneficially and of record, by the Company
or a Subsidiary wholly owned, directly or indirectly, by the Company, free
and clear of any liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind (each a "LIEN"). There are no
(i) outstanding Options obligating the Company or any of its Subsidiaries
to issue or sell any shares of capital stock of any Subsidiary of the
Company or to grant, extend or enter into any such Option or (ii) voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than the Company or a Subsidiary
wholly owned, directly or indirectly, by the Company with respect to the
voting of or the right to participate in dividends or other earnings on any
capital stock of any Subsidiary of the Company.
(c) There are no outstanding contractual obligations of the
Company or any Subsidiary of the Company to repurchase, redeem or otherwise
acquire any shares of any series of Company Common Stock or any capital
stock of any Subsidiary of the Company or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in,
any Subsidiary of the Company or any other person.
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5.03 AUTHORITY RELATIVE TO THIS AGREEMENT; RESTATED CHARTER. The
Company has full corporate power and authority to enter into this Agreement
and, subject only to obtaining (i) with respect to the adoption of this
Agreement, and the issuance of shares of Company Series B Common Stock to
Parent and Cash Sub pursuant to Section 2.03, the affirmative vote of a
majority of the holders of record of the Existing Series A Common Stock and
Existing Series B Common Stock, voting together as one class, and (ii) with
respect to the approval of the Restated Charter (and assuming the
conversion by ATI and TIP of all shares of Existing Series C Common Stock
held by them into shares of Existing Series A Common Stock pursuant to the
Voting Agreements), (A) the affirmative vote of two-thirds of the holders
of record of the Existing Series A Common Stock and Existing Series B
Common Stock, voting together as one class, (B) the affirmative vote of
two-thirds of the holders of record of the Existing Series A Common Stock
outstanding, voting as one class, and (C) the affirmative vote of two-
thirds of the holders of record of the Existing Series B Common Stock
outstanding, voting as one class (collectively, the "COMPANY STOCKHOLDER
APPROVAL"), to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The transactions contemplated by the
Voting Agreements have been duly and validly approved by the Board of
Directors of the Company prior to the execution and delivery of such Voting
Agreements in accordance with Section 203 of the DGCL. The execution,
delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby
including but not limited to the adoption of the Restated Charter
(including the amendments to the Company's Certificate of Incorporation
reflected therein) have been duly and validly approved by the Board of
Directors of the Company, the Board of Directors of the Company has
declared the advisability of the Restated Charter and recommended adoption
of the Restated Charter and this Agreement by the stockholders of the
Company and directed that the Restated Charter and this Agreement be
submitted to the stockholders of the Company for their consideration, and
no other corporate proceedings on the part of the Company or its
stockholders are necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby, other than obtaining the
Company Stockholder Approval. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.04 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company
do not, and the performance by the Company of its obligations hereunder and
the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or give to any
person any right of payment or reimbursement, termination, cancellation,
modification or acceleration of, or result in the creation or imposition of
any Lien upon any of the assets or properties of the Company or any of its
Subsidiaries under, any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or bylaws (or other comparable
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charter documents) of the Company or any of its Subsidiaries, or (ii)
subject to the taking of the actions and obtaining the approvals described
in paragraph (b) of this Section, (x) any statute, law, rule, regulation or
ordinance (together, "LAWS"), or any judgment, decree, order, writ, permit
or license (together, "ORDERS"), of any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of the
United States or any domestic, state, county, city or other political
subdivision (a "GOVERNMENTAL OR REGULATORY AUTHORITY"), applicable to the
Company or any of its Subsidiaries or any of their respective assets or
properties, or (y) any note, bond, mortgage, security agreement, indenture,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together, "CONTRACTS") to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, reimbursements, terminations,
cancellations, modifications, accelerations and creations and impositions
of Liens which, individually or in the aggregate, could not be reasonably
expected to have a Company Material Adverse Effect or adversely affect in
any material respect the ability of the Company to consummate the
transactions contemplated by this Agreement.
(b) Except (i) for the filing of a premerger notification report
by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR ACT"),
(ii) for the filing of the Proxy Statement/Prospectus (as defined in
Section 8.04) with the Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "SECURITIES ACT") and the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"EXCHANGE ACT"), and filings on Schedules 13G or 13D by certain affiliates
of the Company pursuant to the Exchange Act, and filings required to be
made with the National Association of Securities Dealers, Inc., (iii) for
the filing of the Restated Charter, the Certificate of Merger and other
appropriate merger documents required by the DGCL with the Secretary of
State and appropriate documents with the relevant authorities of other
states in which the Constituent Corporations are qualified to do business,
and (iv) filings with, and approvals or orders of the FCC as may be
required under the Communications Act of 1934, as amended (the
"COMMUNICATIONS ACT") and the FCC's rules and regulations ("FCC
REGULATIONS") in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(collectively, "FCC APPROVAL"), no consent, approval or action of, filing
with or notice to any Governmental or Regulatory Authority is necessary or
required for the execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder or the
consummation of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the failure to make
or obtain, as the case may be, individually or in the aggregate, could not
be reasonably expected to have a Company Material Adverse Effect or
adversely affect in any material respect the ability of the Company to
consummate the transactions contemplated by this Agreement.
5.05 SEC REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, schedules,
registration statements, and other documents required to be filed by it
with the SEC since the date of the Company's formation (as such documents
have since the time of their filing been amended or supplemented, the
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"COMPANY SEC REPORTS"). As of their respective dates, the Company SEC
Reports (i) complied as to form in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may
be, and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has delivered to Parent
(and SECTION 5.05 OF THE COMPANY DISCLOSURE LETTER includes) true, correct
and complete copies of the unaudited consolidated balance sheet of the
Company as of December 31, 1996 and the related unaudited statements of
operations, stockholder's equity and cash flows for the year then ended
(the "UNAUDITED 1996 FINANCIAL STATEMENTS"). The Unaudited 1996 Financial
Statements and the audited consolidated financial statements and audited
interim consolidated financial statements (including, in each case, the
notes, if any, thereto) included in the Company SEC Reports (together with
the Unaudited 1996 Financial Statements, the "COMPANY FINANCIAL
STATEMENTS") (A) complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, (B) were
prepared in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated therein or in the notes
thereto and except with respect to unaudited statements as permitted by
Forms 10-Q and 8-K of the SEC) and (C) fairly present in all material
respects (subject, in the case of the unaudited interim financial
statements, to normal, recurring year-end audit adjustments which are not
expected to be, individually or in the aggregate, materially adverse to the
Company and its Subsidiaries taken as a whole) the consolidated financial
position of the Company and its consolidated subsidiaries as at the
respective dates thereof and the consolidated results of their operations
and cash flows for the respective periods then ended. Each Subsidiary of
the Company is treated as a consolidated subsidiary of the Company in the
Company Financial Statements for all periods covered thereby.
(b) The Company has delivered to Parent (and SECTION 5.05 OF THE
COMPANY DISCLOSURE LETTER includes) true, correct and complete copies of
the unaudited pro forma consolidated balance sheets of the Company as of
December 31, 1995 and December 31, 1996 and the related unaudited pro forma
statements of operations, stockholder's equity and cash flows for each of
the years then ended, giving effect to the Gannett Exchange Transactions
(the "PRO FORMA FINANCIAL STATEMENTS"). The Pro Forma Financial Statements
comply as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with GAAP applied on a consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto and except as permitted
by Form 8-K of the SEC) and fairly present in all material respects the pro
forma consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the pro forma consolidated results
of their operations and cash flows for the periods then ended.
5.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1996 there has not been any change, event or development having, or that
could be reasonably expected to have, individually or in the aggregate, a
Company Material Adverse Effect. Between December 31, 1996 and the date
hereof (i) the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course consistent with past practice and
(ii) neither the Company nor any of its Subsidiaries has taken any action
which, if taken after the date hereof, would constitute a breach of any
provision of clause (ii) of Section 7.01(b).
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5.07 ABSENCE OF UNDISCLOSED LIABILITIES. Except for matters
reflected or reserved against in the consolidated balance sheet of the
Company as of December 31, 1996 (or the footnotes thereto) included in the
Company Financial Statements or in the Pro Forma Financial Statements,
neither the Company nor any of its Subsidiaries had at such date, or has
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due)
of any nature that would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries (including
the notes thereto), except liabilities or obligations (i) which were
incurred in the ordinary course of business consistent with past practice
since such date, and (ii) which have not had, and could not be reasonably
expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
5.08 LEGAL PROCEEDINGS. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of the Company and
its Subsidiaries, threatened against, relating to or affecting, nor to the
knowledge of the Company and its Subsidiaries are there any Governmental or
Regulatory Authority investigations or audits pending or threatened
against, relating to or affecting, the Company or any of its Subsidiaries
or any of their respective assets and properties which, if determined
adversely to the Company or any of its Subsidiaries, individually or in the
aggregate, could be reasonably expected to have a Company Material Adverse
Effect or adversely affect in any material respect the ability of the
Company to consummate the transactions contemplated by this Agreement.
Neither the Company nor any of its Subsidiaries is subject to any Order of
any Governmental or Regulatory Authority which, individually or in the
aggregate, is having or could be reasonably expected to have a Company
Material Adverse Effect or adversely affect in any material respect the
ability of the Company to consummate the transactions contemplated by this
Agreement.
5.09 COMPLIANCE WITH LAWS AND ORDERS.
(a) The Company and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals (other than FCC Licenses) of
all Governmental and Regulatory Authorities necessary for the lawful
conduct of their respective businesses (the "COMPANY PERMITS"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could
not be reasonably expected to have a Company Material Adverse Effect. The
Company and its Subsidiaries are in compliance with the terms of the
Company Permits, except failures so to comply which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
Company Material Adverse Effect. The Company and its Subsidiaries are not
in violation of any Law or Order of any Governmental or Regulatory
Authority, except for violations which, individually or in the aggregate,
are not having and could not be reasonably expected to have a Company
Material Adverse Effect.
(b) Except as does not materially jeopardize the operation by
the Company or applicable Subsidiary of the Company of any of the Company
Stations to which FCC Licenses apply: (i) the Company and those of its
Subsidiaries that are required to hold FCC Licenses, or that control FCC
Licenses, to the knowledge of the Company, are qualified to hold such FCC
Licenses or to control such FCC Licenses, as the case may be; (ii) the
Company and those of its Subsidiaries that are required to hold FCC
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Licenses hold such FCC Licenses; (iii) except as provided in Section 8.06
with respect to the divestiture of certain assets described therein, the
Company is not aware of any facts or circumstances relating to the Company
or any of its Subsidiaries that would prevent the granting of FCC Approval;
(iv) each Company Station is in material compliance with all FCC Licenses
held by it; and (v) there is not pending or, to the knowledge of the
Company, threatened any application, petition, objection or other pleading
with the FCC or other Governmental or Regulatory Authority which challenges
the validity of, or any rights of the holder under, any FCC License held by
the Company or one of its Subsidiaries, except for rule making or similar
proceedings of general applicability to persons engaged in substantially
the same business conducted by the Company Stations.
5.10 TAXES.
(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 such tax returns and reports are
complete and accurate in all respects, except to the extent that such
failures to file, or to have extensions granted that remain in effect, as
applicable, individually or in the aggregate, would not 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 due on such tax
returns and reports. The most recent financial statements contained in the
Company 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, and no
deficiencies for any taxes have been proposed, asserted or assessed against
the Company or any of its Subsidiaries 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 of its Subsidiaries have been
granted or 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 Company 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. SECTION 5.10(A) OF THE
COMPANY DISCLOSURE LETTER provides a list of all elections with respect to
Taxes which have been made by the Company and any of its Subsidiaries.
Section 5.10(a) of the Company Disclosure Letter also provides a
description of any tax audit, inquiry or controversy potentially involving
Taxes in excess of $50,000 of the Company or any Subsidiary.
(b) As a result of compliance with this Agreement and the
matters referred to herein, neither the Company nor any of its Subsidiaries
will be obligated to make a payment to an individual that would be a
"parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code, without regard to whether such payment
is to be performed in the future.
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5.11 EMPLOYEE BENEFIT PLANS; ERISA.
(a) None of the Company or any Company ERISA Affiliate sponsors,
maintains, has any obligation to contribute to, has liability under or is
otherwise a party to, any Company Employee Benefit Plan.
(b) To the knowledge of the Company, no prohibited transaction
within the meaning of Section 406 or 407 of ERISA, or Section 4975 of the
Code with respect to any Company Employee Benefit Plan has occurred which,
individually or in the aggregate, is having or could be reasonably expected
to have a Company Material Adverse Effect;
(c) There is no outstanding liability (except for premiums due)
under Title IV of ERISA with respect to any Company Employee Benefit Plan
which, individually or in the aggregate, is having or could be reasonably
expected to have a Company Material Adverse Effect; and, without limiting
the foregoing, full payment has been made of all amounts which the Company
was required to have paid as a contribution to each Company Employee
Benefit Plan as of the last day of the most recent fiscal year of each of
the Company Employee Benefit Plans ended prior to the date of this
Agreement, respectively, and no Company Employee Benefit Plan has incurred
any "accumulated funding deficiency" (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of such Company Employee Benefit Plan ended
prior to the date of this Agreement which, individually or in the
aggregate, is having or could be reasonably expected to have a Company
Material Adverse Effect;
(d) None of the Company or any Company ERISA Affiliate has at
any time (i) had any obligation to contribute to any "multiemployer plan"
(as defined in Section 3(37) of ERISA), or (ii) withdrawn in any complete
or partial withdrawal from any "multiemployer plan" (as defined in
Section 3(37) of ERISA), with respect to which there exists any unsatisfied
obligations;
(e) The value of accrued benefits under each of the Company
Employee Benefit Plans which is subject to Title IV of ERISA, based upon
the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Company Employee Benefit Plan's actuary
with respect to each such Company Employee Benefit Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such
Company Employee Benefit Plan;
(f) Each of the Company Employee Benefit Plans which is intended
to be "qualified" within the meaning of Section 401(a) of the Code has been
determined by the IRS to be so qualified and such determination has not
been modified, revoked or limited;
(g) Each of the Company Employee Benefit Plans is, and its
administration is and has been in all material respects in compliance with
all applicable laws and orders and prohibited transaction exemptions,
including, without limitation, the requirements of ERISA; and
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(h) None of the Company or any Company ERISA Affiliate maintains
or is obligated to provide benefits under any life, medical or health plan
which provides benefits to retirees or other terminated employees other
than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended; and there has been no violation of
Section 4980B of the Code or Sections 601 through 608 of ERISA with respect
to any Company Employee Benefit Plan that individually or in the aggregate,
is having or could be reasonably expected to have a Company Material
Adverse Effect.
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby constitutes or will
constitute an event in respect of which a change in, or acceleration of,
benefits under any Company Employee Benefit Plan will or may occur.
5.12 LABOR MATTERS. There is no material labor strike, slowdown,
work stoppage, lockout or other labor dispute in effect, or to the
knowledge of the Company, threatened, against or otherwise affecting the
Company or any of its Subsidiaries. To the knowledge of the Company, there
are no union organizational efforts presently being made involving any of
the unorganized employees of the Company or any of its Subsidiaries which
in any such case or all such cases together would have a Company Material
Adverse Effect.
5.13 ENVIRONMENTAL MATTERS. Except as for such matters that
individually or in the aggregate would not have a Company Material Adverse
Effect, to the knowledge of the Company: (i) the Company and its
Subsidiaries have complied with all applicable Environmental Laws; (ii) the
properties currently owned or operated by the Company and its Subsidiaries
(including soils, groundwater, surface water, buildings or other
structures) are not contaminated with any Hazardous Substances; (iii) the
properties formerly owned or operated by the Company or its Subsidiaries
were not contaminated with Hazardous Substances during the period of
ownership or operation by the Company or any of its Subsidiaries; (iv)
neither the Company nor any of its Subsidiaries is subject to liability for
any Hazardous Substance disposal or contamination on any third party
property; (v) neither the Company nor any of its Subsidiaries has received
any written notice, demand, letter, claim or request for information
alleging that the Company or any of its Subsidiaries may be in violation of
or liable under any Environmental Law; (vi) neither the Company nor any of
its Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental or Regulatory Authority or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; (vii) none
of the properties of the Company or its Subsidiaries contains any
underground storage tanks, asbestos-containing material, lead-based
products, or polychlorinated biphenyls; and (viii) neither the Company nor
any of its Subsidiaries has engaged in any activities involving the
generation, use, handling or disposal of any Hazardous Substances.
5.14 INTANGIBLE PROPERTY. The Company and its Subsidiaries own
or have rights to use all material items of Intangible Property used by the
Company or any such Subsidiary. To the knowledge of the Company, such use
does not conflict with any rights of others with respect thereto, except
for such conflicts that have not had and would not have a Company Material
Adverse Effect.
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5.15 TITLE; CONDITION. The Company and its Subsidiaries have
good title to all assets, properties and rights owned, used or held for use
by them in the conduct of their respective businesses (except for leasehold
and licensed interests) free and clear of any Liens, except for Permitted
Liens. All material items of equipment, machinery, vehicles, furniture,
fixtures, transmitters, transmitting towers, antennae and other tangible
personal property of every kind and description included in such assets and
properties are in good operating condition, normal wear and tear excepted.
5.16 OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of Merrill Lynch & Co., dated the date hereof, to the effect that,
as of the date hereof, the consideration to be received in the Merger by
the stockholders of the Company is fair from a financial point of view to
the stockholders of the Company, and a true and complete copy of such
opinion has been delivered to Parent prior to the execution of this
Agreement.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the disclosure letter delivered to the
Company by Parent at or prior to execution and delivery of this Agreement
(the "PARENT DISCLOSURE LETTER"), Parent represents and warrants to the
Company as follows:
6.01 ORGANIZATION AND QUALIFICATION. Each of Parent, Merger Sub
and Cash Sub is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and Parent has
full corporate power and authority to conduct the Parent Station Business
as and to the extent now conducted and to own, use and lease the Parent
Station Assets, except for such failures to be so organized, existing and
in good standing or to have such power and authority which, individually or
in the aggregate, are not having and could not be reasonably expected to
have a Parent Material Adverse Effect (as defined below). Merger Sub was
formed solely for the purpose of engaging in the transactions contemplated
by this Agreement and has engaged in no other business activities and has
conducted its operations only as contemplated hereby. Each of Parent and
Merger Sub is duly qualified, licensed or admitted to do business and in
good standing in each jurisdiction in which the ownership, use or leasing
of the Parent Station Assets, or the conduct or nature of the Parent
Station Business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed or
admitted and in good standing which, individually or in the aggregate,
(i) are not having and could not be reasonably expected to have a Parent
Material Adverse Effect, or (ii) could not be reasonably expected to
adversely affect in any material respect the ability of Parent or Merger
Sub to perform its obligations hereunder. For purposes of this Agreement,
"PARENT MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, results of operations or financial condition of the Parent
Station Business, taken as a whole.
6.02 CAPITAL STOCK. At the Closing, all of the outstanding
shares of capital stock of Merger Sub will be duly authorized, validly
issued, fully paid and nonassessable and owned, beneficially and of record
by Parent, free and clear of any Liens other than Liens securing the Bridge
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Debt or the Private Placement Debt. At the Closing, the authorized capital
stock of Merger Sub will consist solely of 1,000 shares of Merger Sub
Common Stock, of which one share will have been issued to Parent for cash
consideration equal to $26.50 per share. At the Closing, except as
contemplated by this Agreement, there will be no (i) outstanding Options
obligating Parent or Merger Sub to issue or sell any shares of capital
stock of Merger Sub and to grant, extend or enter into any such Option or
(ii) voting trusts, proxies or other commitments, understandings,
restrictions or arrangements in favor of any person with respect to the
voting of or the right to participate in dividends or other earnings on any
capital stock of Merger Sub.
6.03 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent,
Merger Sub and Cash Sub has full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by each of Parent, Merger Sub and Cash
Sub and the consummation by each of Parent, Merger Sub and Cash Sub of the
transactions contemplated hereby have been duly and validly approved by its
Board of Directors and stockholder(s) and no other corporate proceedings on
the part of Parent, Merger Sub, Cash Sub or their stockholders are
necessary to authorize the execution, delivery and performance of this
Agreement by Parent, Merger Sub and Cash Sub and the consummation by
Parent, Merger Sub and Cash Sub of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Parent,
Merger Sub and Cash Sub and constitutes a legal, valid and binding
obligation of each of Parent, Merger Sub and Cash Sub enforceable against
Parent, Merger Sub and Cash Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors'
rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
6.04 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent,
Merger Sub and Cash Sub do not, and the performance by Parent, Merger Sub
and Cash Sub of their obligations hereunder and the consummation of the
transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time
or both) a default under, result in or give to any person any right of
payment or reimbursement, termination, cancellation, modification or
acceleration of, or result in the creation or imposition of any Lien upon
any of the Parent Station Assets under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or bylaws
(or other comparable charter documents) of Parent, Merger Sub or Cash Sub,
or (ii) subject to the taking of the actions and obtaining the approvals
described in paragraph (b) of this Section, (x) any Law or Order of any
Governmental or Regulatory Authority applicable to Parent, Merger Sub, Cash
Sub or any Parent Station Assets, or (y) any Contract to which Parent,
Merger Sub or Cash Sub is a party or by which Parent, Merger Sub, Cash Sub
or any Parent Station Assets are bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults,
reimbursements, terminations, cancellations, modifications, accelerations
and creations and impositions of Liens which, individually or in the
aggregate, could not be reasonably expected to have a Parent Material
Adverse Effect or adversely affect in any material respect the ability of
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Parent, Merger Sub and Cash Sub to consummate the transactions contemplated
by this Agreement.
(b) Except (i) for the filing of a premerger notification report
by Parent under the HSR Act, (ii) for the filing of the Certificate of
Merger and other appropriate merger documents pursuant to the DGCL with the
Secretary of State and appropriate documents with the relevant authorities
of other states in which the Constituent Corporations are qualified to do
business, (iii) for the FCC Approval, and (iv) such reports under
Section 13(d) of the Exchange Act as may be required in connection with
this Agreement and the Voting Agreements and the transactions contemplated
hereby and thereby, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority for the execution and
delivery of this Agreement by Parent, Merger Sub and Cash Sub, the
performance by Parent, Merger Sub and Cash Sub of their respective
obligations hereunder or the consummation of the transactions contemplated
hereby, other than such consents, approvals, actions, filings and notices
which the failure to make or obtain, as the case may be, individually or in
the aggregate, could not be reasonably expected to have a Parent Material
Adverse Effect or adversely affect in any material respect the ability of
Parent, Merger Sub and Cash Sub to consummate the transactions contemplated
by this Agreement.
6.05 FINANCIAL STATEMENTS. Parent has delivered to the Company
(and SECTION 6.05 OF THE PARENT DISCLOSURE LETTER includes) true, correct
and complete copies of the unaudited balance sheet of the Parent Station
Business as of December 31, 1996 and the related unaudited statements of
income for each of the fiscal years ended December 31, 1994, December 31,
1995 and December 31, 1996 (such financial statements are hereinafter
collectively referred to as the "PARENT STATION FINANCIAL STATEMENTS").
The Parent Station Financial Statements for the fiscal years ended December
31, 1994 and December 31, 1995 set forth information which was contained in
Parent's audited consolidated financial statements for such fiscal years.
Except for the absence of (x) information that would ordinarily be
contained in the footnotes to audited financial statements of the Parent
Station Business and (y) information and/or adjustments that would
ordinarily be contained in audited financial statements of the Parent
Station Business but would not be reflected or adjusted in the
consolidating statements in which the Parent Station Business is not a
significant business in the consolidated group, the Parent Station
Financial Statements (A) were prepared from the books and records of Parent
in accordance with GAAP applied on a consistent basis during the periods
involved and (B) fairly present in all material respects the financial
condition and results of operations of the Parent Station Business, as of
the respective dates thereof and for the respective periods covered
thereby.
6.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1996, there has not been any adverse change, or any event or development
having, or that could be reasonably expected to have, individually or in
the aggregate, a Parent Material Adverse Effect. Between December 31, 1996
and the date hereof Parent has conducted the Parent Station Business only
in the ordinary course consistent with past practice and (ii) neither
Parent nor any of its Subsidiaries has taken any action which, if taken
after the date hereof, would constitute a breach of any provision of
clause (ii) of Section 7.02(b).
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6.07 ABSENCE OF UNDISCLOSED LIABILITIES. Except for matters
reflected or reserved against in the balance sheet for the period ended
December 31, 1996 included in the Parent Station Financial Statements (or
the footnotes thereto), the Parent Station Business did not have at such
date and has not incurred since that date, any liabilities or obligations
(whether absolute, accrued, contingent, fixed or otherwise, or whether due
or to become due) of any nature that are of a type that would be required
by GAAP to be reflected on a balance sheet of the Parent Station Business,
except liabilities or obligations (i) which were incurred in the ordinary
course of business consistent with past practice, and (ii) which have not
had, and could not be reasonably expected to have, individually or in the
aggregate, a Parent Material Adverse Effect.
6.08 LEGAL PROCEEDINGS. There are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of Parent,
threatened against, relating to or affecting, nor to the knowledge of
Parent are there any Governmental or Regulatory Authority investigations or
audits pending or threatened against, relating to or affecting, Parent, any
of Parent's Subsidiaries or any Parent Station Assets which, if determined
adversely to Parent or such Subsidiaries, individually or in the aggregate,
could be reasonably expected to have a Parent Material Adverse Effect or
adversely affect in any material respect the ability of Parent and Merger
Sub to consummate the transactions contemplated by this Agreement. Neither
Parent nor any of its Subsidiaries is subject to any Order of any
Governmental or Regulatory Authority which relates to the Parent Station
Business and which, individually or in the aggregate, could be reasonably
expected to have a Parent Material Adverse Effect or adversely affect in
any material respect the ability of Parent, Merger Sub and Cash Sub to
consummate the transactions contemplated by this Agreement.
6.09 COMPLIANCE WITH LAWS AND ORDERS.
(a) Parent and its Subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals (other than FCC Licenses) of
all Governmental and Regulatory Authorities necessary for the lawful
conduct of the Parent Station Business (the "PARENT PERMITS"), except for
failures to hold such permits, licenses, variances, exemptions, orders and
approvals which, individually or in the aggregate, are not having and could
not be reasonably expected to have a Parent Material Adverse Effect.
Parent and its Subsidiaries are in compliance with the terms of the Parent
Permits, except failures so to comply which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
Parent Material Adverse Effect. Parent and its Subsidiaries are not in
violation of any Law or Order of any Governmental or Regulatory Authority
which relates to the Parent Station Business, except for violations which,
individually or in the aggregate, are not having and could not be
reasonably expected to have a Parent Material Adverse Effect.
(b) Except as does not materially jeopardize the operation by
Parent of any of the Parent Stations to which FCC Licenses apply: (i) to
the knowledge of Parent, Parent is qualified to hold such FCC Licenses or
to control such FCC Licenses, as the case may be; (ii) Parent holds such
FCC Licenses; (iii) except as provided in Section 8.06 with respect to the
divestiture of certain assets described therein, Parent is not aware of any
facts or circumstances relating to Parent that would prevent the granting
of FCC Approval; (iv) each Parent Station is in material compliance with
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all FCC Licenses held by it; and (v) there is not pending or, to the
knowledge of Parent, threatened any application, petition, objection or
other pleading with the FCC or other Governmental or Regulatory Authority
which challenges the validity of, or any rights of the holder under, any
FCC License held by the Parent Stations, except for rule making or similar
proceedings of general applicability to persons engaged in substantially
the same business conducted by the Parent Stations.
6.10 MATERIAL CONTRACTS. SECTION 6.10 OF THE PARENT DISCLOSURE
LETTER sets forth a true, correct and complete list, as of the date of this
Agreement, of each Contract to which Parent or one of its Subsidiaries is a
party and which relate solely to the conduct of the Parent Station Business
(other than Contracts which (i) are not included in the Parent Station
Assumed Liabilities or (ii) are not included in the Parent Station Assets),
but only to the extent such contracts and agreements would be required to
be disclosed in an Annual Report on Form 10-K of the Parent Station
Business if the Parent Station Business was subject to the rules and
regulations of the Exchange Act (collectively, the "MATERIAL PARENT STATION
CONTRACTS"). Each of the Material Parent Station Contracts is a binding
agreement, enforceable in accordance with its terms, of Parent or one of
its Subsidiaries and, to the knowledge of Parent, of each other party
thereto; subject to the qualifications that enforcement of the rights and
remedies created thereby is subject to: (A) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and (B) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law), and none of Parent or any of its Subsidiaries is in
default in any material respect under any of such Material Parent Station
Contracts, nor does any condition exist that with notice or lapse of time
or both would constitute such a default. To the knowledge of Parent, no
other party to any such Material Parent Station Contract is in default in
any material respect thereunder, nor does any condition exist that with
notice or lapse of time or both would constitute such a default.
6.11 EMPLOYEE BENEFIT PLANS.
(a) None of Parent or any Parent ERISA Affiliate sponsors,
maintains, has any obligation to contribute to, has liability under or is
otherwise a party to, any Parent Station Employee Benefit Plan, PROVIDED,
HOWEVER, that any employment contract that is not a Parent Station Assumed
Liability shall not be required to be set forth on the Parent Disclosure
Letter.
(b) To the knowledge of Parent, no prohibited transaction within
the meaning of Section 406 or 407 of ERISA, or Section 4975 of the Code
with respect to any Parent Station Employee Benefit Plan has occurred
which, individually or in the aggregate, is having or could be reasonably
expected to have a Parent Material Adverse Effect;
(c) There is no outstanding liability (except for premiums due)
under Title IV of ERISA with respect to any Parent Station Employee Benefit
Plan which, individually or in the aggregate, is having or could be
reasonably expected to have a Parent Material Adverse Effect; and, without
limiting the foregoing, full payment has been made of all amounts which
Parent was required to have paid as a contribution to each Parent Station
Employee Benefit Plan as of the last day of the most recent fiscal year of
each of the Parent Station Employee Benefit Plans ended prior to the date
of this Agreement, respectively, and no Parent Station Employee Benefit
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Plan has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
as of the last day of the most recent fiscal year of such Parent Station
Employee Benefit Plan ended prior to the date of this Agreement which,
individually or in the aggregate, is having or could be reasonably expected
to have a Parent Material Adverse Effect;
(d) With respect to employees of the Parent Station Business,
none of Parent or any Parent ERISA Affiliate has at any time (i) had any
obligation to contribute to any "multiemployer plan" (as defined in
Section 3(37) of ERISA), or (ii) withdrawn in any complete or partial
withdrawal from any "multiemployer plan" (as defined in Section 3(37) of
ERISA), with respect to which there exists any unsatisfied obligations;
(e) The value of accrued benefits under each of the Parent
Station Employee Benefit Plans which is subject to Title IV of ERISA, based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Parent Station Employee Benefit Plan's
actuary with respect to each such Parent Station Employee Benefit Plan, did
not, as of its latest valuation date, exceed the then current value of the
assets of such Parent Station Employee Benefit Plan;
(f) Each of the Parent Station Employee Benefit Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the IRS to be so qualified and such determination
has not been modified, revoked or limited;
(g) Each of the Parent Station Employee Benefit Plans is, and
its administration is and has been in all material respects in compliance
with all applicable laws and orders and prohibited transaction exemptions,
including, without limitation, the requirements of ERISA;
(h) With respect to employees and former employees of the Parent
Station Business, none of Parent or any Parent ERISA Affiliate maintains or
is obligated to provide benefits under any life, medical or health plan
which provides benefits to retirees or other terminated employees other
than benefit continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended; and there has been no violation of
Section 4980B of the Code or Sections 601 through 608 of ERISA with respect
to any Parent Station Employee Benefit Plan that individually or in the
aggregate, is having or could be reasonably expected to have a Parent
Material Adverse Effect; and
(i) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby constitutes or will
constitute an event in respect of which a change in, or acceleration of,
benefits under any Parent Station Employee Benefit Plan will or may occur.
6.12 LABOR MATTERS. There is no material labor strike, slowdown,
work stoppage, lockout or other labor dispute in effect, or to the
knowledge of Parent threatened against or otherwise affecting the Parent
Station Business. To the knowledge of Parent, there are no union
organizational efforts presently being made involving any of the
unorganized Parent Station Employees which in any such case or all such
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cases together would have a Parent Material Adverse Effect.
6.13 TITLE TO PARENT STATION ASSETS; ENTIRE BUSINESS. Pursuant
to the Contribution, Parent will convey to the Company (or a Broadcast
Subsidiary) good title to all of the Parent Station Assets (except for
leasehold and licensed interests and except as contemplated by Section
8.15), free and clear of any Liens, except for assets and properties
disposed of in the ordinary course of business without violation of this
Agreement and Permitted Liens. Except as contemplated by Section 8.15, the
Parent Station Assets constitute all assets, properties and rights
necessary to operate the Parent Station Business in substantially the
manner in which it is currently being operated, except for the Excluded
Cash, the Florida Station Assets, the Missouri LMA, assets and properties
disposed of in the ordinary course of business without violation of this
Agreement and except for the services to be provided by Parent pursuant to
the services agreement referred to in Section 9.03(d).
6.14 CONDITION OF PARENT STATION ASSETS. All material items of
Parent Station Tangible Property included in the Parent Station Assets are
in good operating condition, normal wear and tear excepted.
6.15 ENVIRONMENTAL MATTERS. Except for such matters that
individually or in the aggregate would not have a Parent Material Adverse
Effect, and excluding all matters which are not related to the Parent
Station Business or the Parent Station Assets, to the knowledge of Parent:
(i) Parent and its Subsidiaries have complied with all applicable
Environmental Laws; (ii) the properties currently owned or operated by
Parent and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Parent or
its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Parent or any of its Subsidiaries; (iv)
neither Parent nor any of its Subsidiaries is subject to liability for any
Hazardous Substance disposal or contamination on any third party property;
(v) neither Parent nor any of its Subsidiaries has received any written
notice, demand, letter, claim or request for information alleging that
Parent or any of its Subsidiaries may be in violation of or liable under
any Environmental Law; (vi) neither Parent nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental or Regulatory Authority or is subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; (vii) none of the
properties of Parent or its Subsidiaries contains any underground storage
tanks, asbestos-containing material, lead-based products, or
polychlorinated biphenyls; and (viii) neither Parent nor any of its
Subsidiaries has engaged in any activities involving the generation, use,
handling or disposal of any Hazardous Substances.
6.16 INTANGIBLE PROPERTY. Parent and its Subsidiaries own or
have rights to use all material items of Intangible Property used by Parent
or any such Subsidiary solely in the conduct of the Parent Station
Business. To the knowledge of Parent, such use does not conflict with any
rights of others with respect thereto, except for such conflicts that have
not had and would not have a Parent Material Adverse Effect.
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ARTICLE VII.
COVENANTS RELATING TO CONDUCT OF BUSINESS
7.01 CONDUCT OF BUSINESS BY COMPANY. At all times from and after
the date hereof until the Effective Time, the Company covenants and agrees
as to itself and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement or to the extent that Parent shall otherwise
consent in writing, which consent shall not be unreasonably withheld):
(a) The Company and its Subsidiaries shall conduct their
respective businesses only in, and the Company and such Subsidiaries shall
not take any action except in, the ordinary course consistent with past
practice.
(b) Without limiting the generality of paragraph (a) of this
Section, (i) the Company and its Subsidiaries shall use all commercially
reasonable efforts to preserve intact in all material respects their
present business organizations and reputation, to keep available the
services of their key officers and employees, to maintain their assets and
properties in good working order and condition, ordinary wear and tear
excepted, to maintain insurance on their tangible assets and businesses in
such amounts and against such risks and losses as are currently in effect,
to preserve their relationships with customers and suppliers and others
having significant business dealings with them and to comply in all
material respects with all Laws and Orders of all Governmental or
Regulatory Authorities applicable to them, and (ii) neither the Company nor
any of its Subsidiaries shall:
(1) amend or propose to amend its certificate or articles of
incorporation or bylaws (or other comparable corporate charter
documents), expect as contemplated by the Restated Charter;
(2) (w) declare, set aside or pay any dividends on or make other
distributions in respect of any of its capital stock, except for the
declaration and payment of dividends by a wholly owned Subsidiary
solely to its parent corporation and except for the declaration and
payment of regular cash dividends on the Existing Preferred Stock
which are required to be declared and paid pursuant to the Company's
Certificate of Incorporation as in effect on the date of this
Agreement, (x) split, combine, reclassify or take similar action with
respect to any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except for the issuance
by the Company of shares of Existing Series A Common Stock upon the
conversion of the Existing Series B Common Stock or Existing Series C
Common Stock pursuant to the Company's Certificate of Incorporation as
in effect on the date of this Agreement, (y) adopt a plan of complete
or partial liquidation or resolutions providing for or authorizing
such liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization or (z)
directly or indirectly redeem, repurchase or otherwise acquire any
shares of its capital stock or any Option with respect thereto;
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(3) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
Option with respect thereto other than the issuance by a wholly owned
Subsidiary of its capital stock to its parent corporation, or modify
or amend any right of any holder of outstanding shares of capital
stock or Options with respect thereto;
(4) 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 organization or division
thereof or otherwise acquire or agree to acquire any assets other than
in the ordinary course of its business consistent with past practice
which in each case involve an amount not exceeding $1,000,000;
(5) other than dispositions in the ordinary course of its
business consistent with past practice of assets which are not,
individually or in the aggregate, material to the Company and its
Subsidiaries taken as a whole, sell, lease, grant any security
interest in or otherwise dispose of or encumber any of its assets or
properties;
(6) except to the extent required by applicable law and except
to the extent necessary to cause the properties covered by the Gannett
Exchange Transactions to comply with the policies and practices of the
Company, (x) permit any material change in (A) any accounting or
financial reporting practice or policy or any material pricing,
marketing, purchasing, investment, inventory, credit, allowance or tax
practice or policy or (B) any method of calculating any bad debt,
contingency or other reserve for accounting, financial reporting or
tax purposes or (y) make any material tax election or settle or
compromise any material income tax liability with any Governmental or
Regulatory Authority;
(7) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness other than borrowings in an aggregate principal
amount (net of repayments) not exceeding $10,000,000 (and an
additional $8,000,000 to the extent necessary in respect of the
Company's obligation to develop a new facility for its KITV television
station in Honolulu, Hawaii) pursuant to the Company's existing
revolving credit facility, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company
or any of its Subsidiaries, or guarantee any debt securities of
another person or enter into any arrangement having the economic
effect of any of the foregoing, or (y) voluntarily purchase, cancel,
prepay or otherwise provide for a complete or partial discharge in
advance of a scheduled repayment date with respect to, or waive any
right under, any indebtedness for borrowed money other than repayments
pursuant to the Company's existing revolving credit facility;
(8) (x) enter into, adopt, amend in any material respect (except
as may be required by applicable law) or terminate any Company
Employee Benefit Plan or other agreement, arrangement, plan or policy
between the Company or one of its Subsidiaries and one or more of its
directors, officers or employees, (y) except for normal increases in
the ordinary course of business consistent with past practice that, in
the aggregate, do not result in a material increase in benefits or
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compensation expense to the Company and its Subsidiaries taken as a
whole, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by
any plan or arrangement in effect as of the date hereof, or (z)
establish, adopt, enter into or amend in any material respect or take
action to accelerate any rights or benefits under any collective
bargaining agreement or any stock option, employee benefit plan,
agreement or policy except as contemplated by this Agreement;
(9) enter into any contract or amend or modify any existing
contract, or engage in any new transaction with any affiliate of the
Company or any of its Subsidiaries;
(10) make any capital expenditures or commitments for additions
to plant, property or equipment constituting capital assets (other
than any capital expenditures pursuant to commitments made prior to
the date of this Agreement) in an aggregate amount exceeding
$4,000,000;
(11) make any change in the lines of business in which it
participates or is engaged; or
(12) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing.
7.02 CONDUCT OF PARENT STATION BUSINESS BY PARENT. At all times
from and after the date hereof until the Effective Time, Parent covenants
and agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Agreement or to the extent that the
Company shall otherwise consent in writing, which consent shall not be
unreasonably withheld):
(a) Parent shall conduct the Parent Station Business only in,
and shall not take any action with respect to the Parent Station Business
except in, the ordinary course consistent with past practice.
(b) Without limiting the generality of paragraph (a) of this
Section, and except as contemplated by Section 8.15, (i) Parent and its
Subsidiaries shall use all commercially reasonable efforts to preserve
intact in all material respects the Parent Station Business' present
business organizations and reputation, to keep available the services of
the Parent Station Business' key officers and employees, to maintain the
Parent Station Assets in good working order and condition, ordinary wear
and tear excepted, to maintain insurance on the Parent Station Business in
such amounts and against such risks and losses as are currently in effect,
to preserve the Parent Station Business' relationships with customers and
suppliers and others having significant business dealings with the Parent
Station Business and to comply in all material respects with all Laws and
Orders of all Governmental or Regulatory Authorities applicable to the
Parent Station Business and (ii) Parent (but only insofar as it relates to
Parent's conduct of the Parent Station Business) and Merger Sub shall not:
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(1) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of capital stock of Merger
Sub (except as contemplated herein) or any Option with respect thereto
or modify or amend any right of any holder of outstanding shares of
capital stock or Options with respect thereto;
(2) cause the Parent Station Business 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 organization or division thereof or otherwise acquire or
agree to acquire any assets other than in the ordinary course of the
Parent Station Business consistent with past practice which in each
case involve an amount not exceeding $1,000,000;
(3) other than dispositions in the ordinary course of its
business consistent with past practice of assets which are not,
individually or in the aggregate, material to the Parent Station
Business, sell, lease, grant any security interest in or otherwise
dispose of or encumber any of the Parent Station Assets, except in
connection with the Bridge Debt, the Private Placement Debt or the
Refinancing (as hereinafter defined);
(4) except to the extent required by applicable law, (x) permit
any material change in (A) any accounting or financial reporting
practice or policy or any material pricing, marketing, purchasing,
investment, inventory, credit, allowance or tax practice or policy
(excluding from the foregoing the tax policies of Parent) or (B) any
method of calculating any bad debt, contingency or other reserve for
accounting, financial reporting or tax purposes (excluding from the
foregoing the taxes of Parent) or (y) make any material tax election
or settle or compromise any material income tax liability with any
Governmental or Regulatory Authority (excluding from the foregoing the
taxes of Parent);
(5) cause Merger Sub to (x) incur any indebtedness for borrowed
money or guarantee any such indebtedness, issue or sell any debt
securities or warrants or other rights to acquire any debt securities,
guarantee any debt securities of another person or enter into any
arrangement having the economic effect of any of the foregoing; or (y)
voluntarily purchase, cancel, prepay or otherwise provide for a
complete or partial discharge in advance of a scheduled repayment date
with respect to, or waive any right under, any indebtedness for
borrowed money; except, in the case of clauses (x) and (y), in
connection with the Bridge Debt, the Private Placement Debt or the
Refinancing;
(6) (x) with respect to Merger Sub, enter into, adopt, amend in
any material respect (except as may be required by applicable law) or
terminate any Parent Station Employee Benefit Plan or other agreement,
arrangement, plan or policy between such entities and one or more of
its directors, officers or employees, or (y) except for normal
increases in the ordinary course of business consistent with past
practice that, in the aggregate, do not result in a material increase
in benefits or compensation expense to the Parent Station Business,
increase in any manner the compensation or fringe benefits of any
director, officer or employee of the Parent Station Business or pay
any benefit to such persons not required by any plan or arrangement in
effect as of the date hereof;
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(7) with respect to the Parent Station Business, enter into any
contract or amend or modify any existing contract, or engage in a new
transaction with any other business unit or division of Parent, any
affiliate of Parent or any of its Subsidiaries;
(8) make any capital expenditures or commitments for additions
to plant, property or equipment constituting capital assets with
respect to the Parent Station Business in an aggregate amount
exceeding $10,000,000;
(9) make any change in the lines of business in which the Parent
Station Business participates or is engaged; or
(10) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing (except as
contemplated herein).
ARTICLE VIII.
ADDITIONAL AGREEMENTS
8.01 NO SOLICITATIONS. Prior to the Effective Time, the Company
agrees that neither it nor any of its Subsidiaries or their respective
officers, directors, employees, agents, counsel, accountants, financial
advisors, investment bankers, consultants and other representatives
(collectively, "REPRESENTATIVES"), directly or indirectly, shall initiate,
solicit, encourage, accept or take any other action knowingly to
facilitate, any inquiries or the making of, or participate in any
discussions or negotiations regarding, any proposal or offer with respect
to any direct or indirect (i) acquisition or purchase of fifteen per cent
(15%) or more of any Existing Common Stock outstanding, (ii) acquisition or
purchase of any equity securities of any Material Subsidiary of the
Company, (iii) acquisition or purchase of all or any significant portion of
the assets of the Company or any Material Subsidiary or (iv) any merger,
consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Material Subsidiaries (any such proposal or offer being hereinafter
referred to as an "ACQUISITION PROPOSAL"); PROVIDED, HOWEVER, that in
response to an unsolicited Acquisition Proposal (x) the Company or its
Representatives may furnish or cause to be furnished information concerning
the Company and its Subsidiaries and their business, properties or assets
to a third party, (y) the Company or its Representatives may engage in
discussions or negotiations with a third party regarding such Acquisition
Proposal, and (z) the Company may take and disclose to its stockholders a
position contemplated by Rule 14e-2 under the Exchange Act or otherwise
make public disclosures to its stockholders that are required by law, but
in each case referred to in the foregoing clauses (x) and (y), only to the
extent that the Board of Directors of the Company shall determine in good
faith on the basis of written advice from outside counsel (who may be the
Company's regularly retained outside counsel) that such action is necessary
in order for the Board of Directors to act in a manner consistent with its
fiduciary obligations to stockholders under applicable law. In the event
that the Company or any of its Subsidiaries or its or their Representatives
receive from any Person an Acquisition Proposal, the Company shall promptly
advise, orally and in writing, such Person of the terms of this Section
8.01, and (except to the extent that the Board of Directors shall determine
in good faith on basis of written advice from such outside counsel that to
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do otherwise is necessary in order for the Board of Directors to act in a
manner consistent with its fiduciary obligations to stockholders under
applicable law) shall promptly advise Parent of such Acquisition Proposal
and thereafter keep Parent reasonably and promptly informed of all material
facts and circumstances relating to said Acquisition Proposal and the
Company's actions relating thereto.
8.02 ADVICE OF CHANGES.
(a) The Company shall confer on a regular and frequent basis
with Parent with respect to its business and operations and other matters
relevant to the Merger and the other transactions contemplated hereby, and
shall promptly advise Parent, orally and in writing, of any change or
event, including, without limitation, any complaint, investigation or
hearing by any Governmental or Regulatory Authority (or communication
indicating the same may be contemplated) or the institution or threat of
litigation, having, or which, insofar as can be reasonably foreseen, could
have, a Company Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the transactions contemplated hereby.
(b) Parent shall confer on a regular and frequent basis with the
Company with respect to the Parent Station Business and other matters
relevant to the Merger and the other transactions contemplated hereby, and
shall promptly advise the Company, orally and in writing, of any change or
event, including, without limitation, any complaint, investigation or
hearing by any Governmental or Regulatory Authority (or communication
indicating the same may be contemplated) or the institution or threat of
litigation, having, or which, insofar as can be reasonably foreseen, could
have, a Parent Material Adverse Effect or a material adverse effect on the
ability of Parent, Merger Sub and Cash Sub to consummate the transactions
contemplated hereby.
8.03 ACCESS TO INFORMATION; AUDITED FINANCIAL STATEMENTS;
CONFIDENTIALITY.
(a) Each of the Company and Parent shall, and shall cause each
of its respective Subsidiaries to, throughout the period from the date
hereof to the Effective Time, (i) provide the other party and its
Representatives with full access, upon reasonable prior notice and during
normal business hours, to all officers, employees, agents and accountants
of the Company or Parent, as the case may be, and its respective
Subsidiaries and their respective assets, properties, books and records
(but in the case of Parent and its Subsidiaries, limited to the Parent
Station Business only), but only to the extent that such access does not
unreasonably interfere with the business and operations of the Company or
Parent, as the case may be, and its respective Subsidiaries, and (ii)
furnish promptly to such persons (x) a copy of each report, statement,
schedule and other document filed or received by the Company or Parent, as
the case may be, or any of its respective Subsidiaries pursuant to the
requirements of federal or state securities laws or filed with any other
Governmental or Regulatory Authority (but in the case of Parent, only to
the extent related to the Parent Station Business), (y) a copy of any
monthly financial reports and any "pacing" reports prepared by the Company
or Parent, as the case may be (but in the case of Parent, only to the
extent related to the Parent Station Business), and (z) all other
information and data (including, without limitation, copies of Contracts,
Company Employee Benefit Plans, as the case may be, and other books and
records) concerning the business and operations of the Company or Parent,
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as the case may be, and its respective Subsidiaries (but in the case of
Parent and its Subsidiaries, limited to the Parent Station Business only),
as the other party or any of such other persons reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to
the obligations of the parties hereto.
(b) On or prior to May 1, 1997 or as soon thereafter as is
reasonably practicable, (i) the Company shall deliver to Parent true,
correct and complete copies of the audited consolidated balance sheet of
the Company as of December 31, 1996 and the related audited consolidated
statements of operations, stockholder's equity and cash flows for the year
then ended, which shall be prepared in accordance with GAAP applied on a
basis consistent with the Company Financial Statements and pursuant to
Regulation S-X under the Securities Act and (ii) Parent shall deliver to
the Company true, correct and complete copies of the audited balance sheets
of the Parent Station Business as of December 31, 1995 and December 31,
1996 and the related audited statements of operations, stockholder's equity
and cash flows of the Parent Station Business for the three years ended
December 31, 1996, which shall be prepared in accordance with GAAP applied
on a basis consistent with the Parent Station Financial Statements and
pursuant to Regulation S-X under the Securities Act.
(c) Each party and its respective Subsidiaries will hold, and
will use its best efforts to cause its and its Subsidiaries'
Representatives to hold, in strict confidence, unless compelled to disclose
by judicial or administrative process or by other requirements of
applicable Laws of Governmental or Regulatory Authorities (including,
without limitation, in connection with obtaining the necessary approvals of
this Agreement or the transactions contemplated hereby of Governmental or
Regulatory Authorities), all documents and information concerning the other
party and its Subsidiaries furnished to it by such other party or its
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or
information can be shown to have been (x) previously known by the Company
or Parent, as the case may be, or its respective Subsidiaries or its or
their Representatives, on a non-confidential basis, or (y) in the public
domain (either prior to or after the furnishing of such documents or
information hereunder) through no fault of the Company or Parent, as the
case may be, its respective Subsidiaries or its or their Representatives.
In the event that this Agreement is terminated without the transactions
contemplated hereby having been consummated, upon the request of the
Company or Parent, as the case may be, the other party will, and will cause
its respective Subsidiaries or its or their Representatives to, promptly
(and in no event later than five (5) business days after such request)
redeliver or cause to be redelivered all copies of documents and
information furnished by the Company or Parent, as the case may be, its
respective Subsidiaries or its or their Representatives to such party and
its Representatives in connection with this Agreement or the transactions
contemplated hereby and destroy or cause to be destroyed all notes,
memoranda, summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the Company or Parent, as the case may
be, its respective Subsidiaries or its or their Representatives.
8.04 REGISTRATION STATEMENT. The Company shall promptly prepare
(and Parent shall cooperate in the preparation of) and file with the SEC on
or prior to the forty-fifth day after the date of this Agreement or as soon
thereafter as is reasonably practicable a Registration Statement on Form S-
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4 (the "FORM S-4") under the Securities Act, with respect to the Surviving
Corporation Series A Common Stock issuable in the Merger, a portion of
which Registration Statement shall also serve as the proxy statement with
respect to the meeting of the stockholders of the Company in connection
with the Merger (as amended or supplemented from time to time, the "PROXY
STATEMENT/PROSPECTUS"). The Company will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange
Act and the rules and regulations thereunder. The Company shall use
commercially reasonable efforts, and Parent will cooperate with the
Company, to have the Form S-4 declared effective by the SEC as promptly as
practicable and to keep the Form S-4 effective as long as necessary to
consummate the Merger. The Company shall, as promptly as practicable,
provide copies of any written comments received from the SEC with respect
to the Form S-4 to Parent and advise Parent of any verbal comments with
respect to the Form S-4 received from the SEC. The Company shall use its
best efforts to obtain, prior to the effective date of the Form S-4, all
necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement. Each of
Parent and the Company shall use all reasonable efforts to obtain "cold
comfort" letters from their respective independent certified public
accountants, dated a date within two Business Days before the date on which
the Form S-4 shall become effective, in form reasonably acceptable to the
other party and customary in form and substance for letters delivered by
independent certified public accountants in connection with registration
statements similar to the Form S-4. The Company agrees that the Proxy
Statement/Prospectus and each amendment or supplement thereto at the time
of mailing thereof and at the time of the meeting of stockholders of the
Company, or, in the case of the Form S-4 and each amendment or supplement
thereto, at the time it is filed or becomes effective, will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
PROVIDED, HOWEVER, that the foregoing shall not apply to the extent that
any such untrue statement of a material fact or omission to state a
material fact was made by the Company in reliance upon and in conformity
with written information concerning Parent or any of its Subsidiaries
furnished to the Company by Parent specifically for use in the Proxy
Statement/Prospectus. Parent agrees that the written information
concerning Parent and its Subsidiaries provided by it for inclusion in the
Proxy Statement/Prospectus and each amendment or supplement thereto, at the
time of mailing thereof and at the time of the meetings of stockholders of
the Company, or, in the case of written information concerning Parent and
its Subsidiaries provided by Parent for inclusion in the Form S-4 or any
amendment or supplement thereto, at the time it is filed or becomes
effective, will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No amendment or supplement to the Proxy
Statement/Prospectus will be made by the Company without the approval of
Parent. The Company will advise Parent, promptly after receipt of notice
thereof, of the time when the Form S-4 has become effective or any
supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the Surviving Corporation Series A
Common Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses
thereto or requests by the SEC for additional information.
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8.05 APPROVAL OF STOCKHOLDERS AND BOARD RECOMMENDATION. The
Company shall, through its Board of Directors, duly call, give notice of,
convene and hold a meeting of its stockholders (the "COMPANY STOCKHOLDERS'
MEETING") for the purpose of voting on the adoption of the Restated Charter
and the adoption of this Agreement and the transactions contemplated hereby
as soon as reasonably practicable after the date hereof, subject to the
requirements of Section 8.04 and applicable laws. The Company shall use
its reasonable efforts to solicit from its stockholders proxies, and,
except as provided in the last sentence of this Section 8.05, shall take
all other action necessary and advisable, to secure the vote of
stockholders required by applicable law to obtain the approval for this
Agreement. Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not, without the prior written consent of
Parent, establish or cause to be established a record date for the
Company's Stockholders' Meeting with respect to the Company Stockholder
Approval that is prior to the date that ATILP and TIP have converted all
shares of Existing Series C Common Stock held by them into shares of
Existing Series A Common Stock in order that ATILP and TIP may be eligible
to vote for the purposes of determining the Company Stockholder Approval,
as contemplated by the Voting Agreements. The Board of Directors of the
Company shall recommend to its stockholders the adoption of the Restated
Charter and the adoption of this Agreement; PROVIDED, HOWEVER, that such
recommendation may not be made or may be withdrawn, modified, or amended
after the receipt by the Company of an Acquisition Proposal to the extent
the Board of Directors of the Company shall determine, in good faith, upon
written advice of outside counsel (who may be the Company's regularly
retained outside counsel), that such action is necessary in order for the
Board of Directors of the Company to act in a manner which is consistent
with its fiduciary obligations to stockholders under applicable law.
8.06 REGULATORY AND OTHER APPROVALS. Subject to the terms and
conditions of this Agreement and without limiting the provisions of
Sections 8.04 and 8.05, each of the Company and Parent will proceed
diligently and in good faith and will use all commercially reasonable
efforts to do, or cause to be done, all things necessary, proper or
advisable to, as promptly as practicable, (a) obtain all consents,
approvals or actions of, make all filings with and give all notices to
Governmental or Regulatory Authorities or any other public or private third
parties required of Parent, the Company or any of their Subsidiaries to
consummate the Contribution and the Merger and the other transactions
contemplated hereby, and (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other
public or private third parties as the other party or such Governmental or
Regulatory Authorities or other public or private third parties may
reasonably request. In addition to and not in limitation of the foregoing,
(i) each of the parties will (w) take promptly all actions necessary to
make the filings required of Parent, the Company and their affiliates under
the Communications Act and the FCC Regulations and to receive FCC Approval,
(x) take promptly all actions necessary to make the filings required of
Parent and the Company or their affiliates under the HSR Act in respect of
the Contribution, the Merger and the transactions contemplated by the
Voting Agreements, (y) comply at the earliest practicable date with any
request for additional information received by such party or its affiliates
from the FCC pursuant to the Communications Act or the FCC Regulations, or
from the Federal Trade Commission (the "FTC") or the Antitrust Division of
the Department of Justice (the "ANTITRUST DIVISION") pursuant to the HSR
Act, and (z) cooperate with the other party (or ATILP and TIP, as the case
may be) in connection with such party's filings under the Communications
Act and the HSR Act and in connection with resolving any investigation or
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other inquiry in respect of the Merger and the transactions contemplated by
the Voting Agreements and this Agreement commenced by either the FTC or the
Antitrust Division or state attorneys general. The parties hereto
recognize and acknowledge that under applicable rules and regulations of
the FCC, certain assets currently held by, or attributable to, Parent, the
Company or their respective Subsidiaries cannot be held by, or be
attributable to, the Company (or the Surviving Corporation, as the case may
be) or its Subsidiaries after the Effective Time, unless appropriate
waivers of such rules and regulations are obtained. Subject to the next
sentence, the parties agree to seek temporary waivers consistent with
existing precedent (including commitments of the Company (or the Surviving
Corporation, as the case may be) and its Subsidiaries to divest such assets
or take such other actions as may be required) in order to obtain the FCC
Approval and to allow the consummation of the Merger. If necessary in
order to obtain the FCC's approval of the transactions contemplated hereby,
the parties agree that the Company (or the Surviving Corporation, as the
case may be) and its Subsidiaries will agree to divest of the following
assets or take other appropriate action with respect to such assets after
the Effective Time: WNAC-TV (Providence, Rhode Island) and WDTN-TV
(Dayton, Ohio); PROVIDED, HOWEVER, that the agreement to divest of any
other assets or at any other time will require the prior approval of Parent
and the Company (or the Surviving Corporation, as the case may be).
Anything contained herein to the contrary notwithstanding, in no event
shall Parent or any of its Subsidiaries be required to divest or take any
other action with respect to any assets, properties or businesses which are
not included in the Parent Station Assets or the Parent Station Business in
order to obtain the approvals of any Governmental or Regulatory Authorities
or any other public or private third parties for the Contribution, the
Merger or the other transactions contemplated thereby. The parties also
recognize that applications for renewal of one or more of the FCC Licenses
have been filed and may need to be filed prior to the Closing Date.
Accordingly, each party hereby agrees that it shall abide by the procedures
established in STOCKHOLDERS OF CBS, INC., FCC 95-469 (rel. Nov. 22, 1995)
<para><para>31-35 (or such other procedures established by the FCC), for
processing applications for transfer of control of a licensee during the
pendency of an application for renewal of a station license. The parties
further agree that the pendency of any such renewal application or
applications, or the fact that the FCC grant of any renewal application
shall not have become final (I.E., no longer subject to administrative or
judicial review or reconsideration (a "FINAL ORDER")), shall not be a cause
for delaying the Closing except as provided in Section 9.01(d). Without
limiting the generality of the foregoing, the parties agree to use their
respective commercially reasonable efforts to prosecute any such
application for renewal of a FCC License, and Parent and the Company agree
that any interest that may be acquired in such license at Closing is
subject to whatever action the FCC may ultimately take with respect to the
renewal application. Notwithstanding anything in this Agreement to the
contrary, this Section 8.06 shall survive the Closing until any order
issued by the FCC with respect to a renewal application pending, or granted
but not yet final, as of the Closing becomes a Final Order.
8.07 TAX MATTERS. Each of the parties hereto shall report the
Contribution as a transaction satisfying the requirements of Section 351 of
the Code and shall comply with the tax reporting and record keeping
requirements of Section 1.351-3 of the Treasury Regulations promulgated
under the Code with respect to such transaction. None of the parties
hereto shall take any action that would result in the Contribution failing
to satisfy the requirements of Section 351 of the Code. The Company (or
the Surviving Corporation, as the case may be) shall report the Merger as a
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redemption under the provisions of Section 302 of the Code with respect to
those stockholders of the Company who receive cash pursuant to the Merger.
None of the parties hereto shall take any action or position inconsistent
with such treatment as a redemption.
8.08 AFFILIATE LETTERS; RESALES. At least 30 days prior to the
Closing Date, the Company shall deliver to Parent a list of names and
addresses of those persons who were, in the Company's reasonable judgment,
at the record date for the Company Stockholders' Meeting, "affiliates"
(each such person, an "AFFILIATE") of the Company within the meaning of
Rule 145 of the rules and regulations promulgated under the Securities Act.
The Company shall use all reasonable efforts to deliver or cause to be
delivered to Parent prior to the Closing Date, from each of the Affiliates
of the Company identified in the foregoing list, an Affiliate Letter in the
form attached hereto as EXHIBIT 8.08. The Surviving Corporation shall be
entitled to place legends as specified in such Affiliate Letters on the
certificates evidencing any Surviving Corporation Series A Common Stock to
be received by such Affiliates pursuant to the terms of this Agreement, and
to issue appropriate stop transfer instructions to the transfer agent for
the Surviving Corporation Series A Stock, consistent with the terms of such
Affiliate Letters.
As soon as practicable after the date of this Agreement, the
Company and Parent jointly shall prepare and submit to the SEC a request
for a "no-action letter" to the effect that the provisions of Rule 145(d)
under the Securities Act will not be applicable immediately after the
Effective Time to those persons who will receive shares of Existing Series
A Common Stock and Existing Series B Common Stock pursuant to the
Liquidation Plans and who are not otherwise Affiliates of the Company at
the time of the Company Stockholders' Meeting (the "DISTRIBUTEES"). In the
event that a favorable no-action letter is not given by the SEC, then as
soon as practicable after the Effective Time, the Surviving Corporation
shall prepare and file with the SEC and use its best efforts to keep
effective a registration statement on Form S-3 covering the resale of any
shares of Surviving Corporation Series A Common Stock received by the
Distributees in the Merger until the earlier of the first anniversary of
the Effective Time or until all such shares have been resold pursuant
thereto.
8.09 GOVERNANCE. After the Effective Time, (i) Parent shall vote
its shares of Surviving Corporation Series B Common Stock and use its best
efforts to take such actions to cause Bob Marbut to continue to be elected
as a director of the Board of Directors of the Surviving Corporation for so
long as Mr. Marbut is employed by the Surviving Corporation or any of the
Surviving Corporation's Subsidiaries, and (ii) for as long as Parent holds
any shares of Surviving Corporation Series B Common Stock and to the extent
that Parent during such time also holds any shares of Surviving Corporation
Series A Common Stock, Parent shall vote its shares of Surviving
Corporation Series A Common Stock with respect to the election of directors
only in the same proportion as the shares of Surviving Corporation Series A
Common Stock not held by Parent are so voted.
8.10 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) Except to the extent required by law, until the sixth
anniversary of the Effective Time, the Surviving Corporation will keep in
effect provisions in its Certificate of Incorporation and By-Laws providing
for exculpation of director and officer liability and its indemnification
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of directors, officers, employees or agents of the Company or any of its
Subsidiaries (the "INDEMNITEES") which are no less favorable than such
provisions as in effect in the Company's Certificate of Incorporation and
By-Laws on the date hereof.
(b) The Surviving Corporation shall, until the sixth anniversary
of the Effective Time, cause to be maintained in effect, to the extent
available, the policies of directors' and officers' liability insurance
maintained by the Company and its Subsidiaries as of the date hereof (or
policies of at least the same coverage and amounts containing terms that
are no less advantageous to the insured parties) with respect to claims
arising from facts or events that occurred on or prior to the Effective
Time; PROVIDED, HOWEVER, that in no event shall the Surviving Corporation
be obligated to expend in order to maintain or procure insurance coverage
pursuant to this paragraph any amount per annum in excess of 200% of the
aggregate premiums currently paid by the Company and its Subsidiaries in
1997 (on an annualized basis) for such purpose (the "CAP") (which 1997
annual premium the Company represents and warrants to be approximately
$292,200); and PROVIDED FURTHER, that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual premium in excess of
the Cap, the Surviving Corporation shall only be required to obtain as much
coverage as can be obtained by paying an annual premium equal to the Cap.
(c) The provisions of this Section 8.10 are intended to be for
the benefit of, and shall be enforceable by, each Indemnitee.
8.11 EXPENSES. Except as set forth in Section 10.02, in the
event that the Merger is not consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such cost or expense except as
expressly provided herein and except that (a) the filing fee in connection
with the HSR Act filing, (b) the filing fee in connection with the filing
of the Form S-4 or Proxy Statement/Prospectus with the SEC, (c) the filing
fees in connection with necessary applications to the FCC and (d) the
expenses incurred in connection with printing and mailing the Form S-4 and
the Proxy Statement/Prospectus, shall be shared equally by the Company and
Parent. In the event that the Merger is consummated, the Surviving
Corporation shall bear or reimburse Parent for all of the costs and
expenses of Parent incurred in connection with this Agreement and the
transactions contemplated hereby, including but not limited to Transfer
Taxes, the fees and disbursements of counsel for Parent, fees and
disbursements for special accounting services provided by Parent's
independent outside accountants, fees and expenses of J.P. Morgan & Co.,
Parent's financial advisor, and the costs and expenses set forth in clauses
(a) through (d) of the preceding sentence.
8.12 BROKERS OR FINDERS. Each of Parent and the Company
represents, as to itself and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this
Agreement except Merrill Lynch & Co., and Credit Suisse First Boston whose
fees and expenses will be paid by the Company and J.P. Morgan & Co., whose
fees and expenses, except to the extent otherwise provided in Section 8.11
above, will be paid by Parent and each of Parent and the Company shall
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or commission
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or expenses related thereto asserted by any person on the basis of any act
or statement alleged to have been made by such party or its affiliate.
8.13 FULFILLMENT OF CONDITIONS. Subject to the terms and
conditions of this Agreement, each of Parent and the Company will use all
commercially reasonable efforts to take or cause to be taken all steps
necessary or desirable and proceed diligently and in good faith to satisfy
each condition to the other's obligations contained in this Agreement and
to consummate and make effective the transactions contemplated by this
Agreement, and neither Parent nor the Company will, nor will it permit any
of its Subsidiaries to, take or fail to take any action that could be
reasonably expected to result in the nonfulfillment of any such condition.
8.14 INDEMNIFICATION. If the Merger shall be consummated:
(a) Parent will indemnify, defend and hold harmless the
Surviving Corporation, its Subsidiaries and their affiliates and their
respective directors, officers and employees from and against all losses,
liabilities (including punitive or exemplary damages, fines or penalties
and any interest thereon), expenses (including fees and disbursements of
counsel and expenses of investigation and defense), claims or other
obligations of any nature whatsoever (collectively, "LOSSES") which
directly or indirectly arise (i) out of any Parent Station Excluded
Liabilities, (ii) with respect to or otherwise in connection with any
pension, welfare or other benefit plan maintained or contributed to by
Parent or any of its Subsidiaries (other than the Company or any of its
Subsidiaries) which arise under ERISA or the Code, by virtue of the Company
and its Subsidiaries being aggregated with Parent or any of its other
Subsidiaries for purposes of ERISA or the Code (including, without
limitation, under Section 414(b), (c), (m) or (o) of the Code or Section
4001 of ERISA) at any relevant time, or (iii) which result from any breach
of, or inaccuracy in, the representations and warranties contained in
Section 6.13 (but only to the extent such representations and warranties
survive the Merger pursuant to Section 11.01). Notwithstanding the
preceding sentence, Parent shall not be liable pursuant to this Section
8.14 for any Losses which are recovered pursuant to any insurance policy.
(b) The Surviving Corporation will, and will cause each of its
Subsidiaries to, indemnify, defend and hold harmless Parent, its
Subsidiaries (other than the Surviving Corporation and its Subsidiaries)
and their affiliates and their respective directors, officers and employees
from and against all Losses which directly or indirectly arise (i) out of
any Parent Station Assumed Liabilities, the Bridge Debt or the Private
Placement Debt, or (ii) with respect to or otherwise in connection with any
pension, welfare or other benefit plan maintained or contributed to by the
Company or any of its Subsidiaries which arise under ERISA or the Code, by
virtue of Parent and its other Subsidiaries being aggregated with the
Company and its Subsidiaries for purposes of ERISA or the Code (including,
without limitation, under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA) at any relevant time.
8.15 CROSS-OWNERSHIP. From and after the date hereof, if
(i) Parent or any of its respective Subsidiaries (other than the Company or
any of its Subsidiaries), on the one hand, or the Company or any of its
Subsidiaries, on the other hand (in each case a "PURCHASING PARTY"),
desires to acquire or purchase (including any acquisition or purchase by
way of merger or consolidation) any television or radio broadcast stations,
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newspapers or any other asset of any kind or nature and (ii) pursuant to
any Law or Order, (x) the party or any of such party's Subsidiaries not
making such acquisition or purchase (a "NON-PURCHASING PARTY") would be
required to divest or otherwise dispose of any television or radio
broadcast stations, newspapers or any other assets of any kind or nature,
or (y) divestiture of any of the Parent Stations or Company Stations would
be required prior to the Effective Time, then the Purchasing Party shall
not make such acquisition or purchase without the prior written consent of
the Non-Purchasing Party.
8.16 ISSUANCE OF ADDITIONAL SHARES OF SURVIVING CORPORATION
COMMON STOCK. From and after the Effective Time, if at any time the
Surviving Corporation desires to issue to Hearst, or Hearst desires to
purchase from the Surviving Corporation and the Surviving Corporation
desires to issue and sell to Hearst, any additional shares of common stock
of the Surviving Corporation, then Hearst shall have the right to elect at
its sole option to receive or purchase such shares of common stock in the
form of either Surviving Corporation Series A Common Stock or Surviving
Corporation Series B Common Stock.
ARTICLE IX.
CONDITIONS
9.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
CONTRIBUTION AND THE MERGER. The respective obligation of each party to
effect the Contribution and the Merger is subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(a) STOCKHOLDER APPROVAL. The Restated Charter, this Agreement
and transactions contemplated hereby shall have been approved and adopted
by the requisite vote of the stockholders of the Company under the DGCL,
the Company's Certificate of Incorporation and any other governing
instruments.
(b) FORM S-4. The Form S-4 shall have become effective and
shall be effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued, no action, suit,
proceeding or investigation by the SEC to suspend the effectiveness thereof
shall have been initiated and be continuing, or, to the knowledge of Parent
or the Company, threatened, and all necessary approvals under state
securities laws relating to the issuance or trading of the Surviving
Corporation Series A Common Stock to be issued in connection with the
Merger shall have been received.
(c) HSR ACT. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(d) FCC APPROVAL. FCC Approval shall have been obtained,
notwithstanding that any such order or orders may not have yet become a
Final Order, except that if one or more pre-grant objections shall have
been filed with respect to the filings or applications required by Section
8.06 hereof, the FCC Approval shall have become a Final Order. In either
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case the FCC Approval shall have been obtained without the imposition of
any condition or restriction that (i) would require the divestiture of any
Parent Stations or Company Stations other than those expressly contemplated
by Section 8.06 or (ii) would reasonably be expected to have a Parent
Material Adverse Effect, a material adverse effect on Parent and its
Subsidiaries, taken as a whole (it being understood and agreed that the
divestiture of any assets of Parent or any of its Subsidiaries other than
those expressly contemplated by Section 8.06 shall be deemed to be such a
material adverse effect), a Company Material Adverse Effect, or a material
adverse effect on the Surviving Corporation and its Subsidiaries, taken as
a whole, following the Effective Time.
(e) NO INJUNCTIONS OR RESTRAINTS. No court of competent
jurisdiction or other competent Governmental or Regulatory Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) which is then in effect and
has the effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger or the other transactions
contemplated by this Agreement.
(f) ADDITIONAL GOVERNMENTAL AND REGULATORY CONSENTS AND
APPROVALS. Other than FCC Approval and the filing of the Restated Charter
and the Certificate of Merger, all consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Authority of
Parent, the Company or any of their respective Subsidiaries to consummate
the Contribution, the Merger and the other transactions contemplated
hereby, the failure of which to be obtained or taken could be reasonably
expected to have a material adverse effect on Parent and its Subsidiaries,
taken as a whole, or on the Company and its Subsidiaries, taken as a whole,
or on the Surviving Corporation and its Subsidiaries, taken as a whole,
following the Effective Time or on the ability of Parent, Merger Sub, Cash
Sub or the Company to consummate the transactions contemplated hereby,
shall have been obtained.
(g) NASDAQ LISTING. The Surviving Corporation Series A Common
Stock to be issued in connection with the Merger shall have been approved
for quotation in the NASDAQ National Market System.
(h) FINANCING. The Company shall have obtained financing (the
"REFINANCING") on terms reasonably satisfactory to each of Parent and the
Company in an amount sufficient for the following purposes: (i) to enable
the Company to refinance immediately after the Effective Time the Private
Placement Debt (to the extent such refinancing is required by the holders
thereof); (ii) to provide the Company with the funds required to refinance
immediately after the Effective Time the Bridge Debt (to the extent such
refinancing is required by the holders thereof); (iii) to enable the
Company to redeem its 9-3/4% Senior Subordinated Notes immediately after
the Effective Time if required by the holders thereof; and (iv) to enable
the Company to refinance its $65,000,000 revolving credit facility under
that certain Credit Agreement dated January 31, 1997 between the Company
and the lenders named therein.
(i) MANAGEMENT AND TV OPTION CONTRACTS. Parent and the Company
shall have executed and delivered a management contract and a television
station option contract substantially on the terms attached hereto as
EXHIBIT 9.01(I).
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9.02 CONDITIONS TO OBLIGATION OF PARENT, MERGER SUB AND CASH SUB
TO EFFECT THE CONTRIBUTION AND THE MERGER. The obligation of Parent,
Merger Sub and Cash Sub to effect the Contribution and the Merger is
further subject to the fulfillment, at or prior to the Closing, of each of
the following additional conditions (all or any of which may be waived in
whole or in part by Parent, Merger Sub and Cash Sub in their sole
discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by the Company in this Agreement shall be true and
correct in all material respects as of the Closing Date as though made on
and as of the Closing Date or, in the case of representations and
warranties made as of a specified date earlier than the Closing Date, on
and as of such earlier date, and the Company shall have delivered to Parent
a certificate, dated the Closing Date and executed on behalf of the Company
by its Chairman of the Board, President or any Vice President, to such
effect.
(b) PERFORMANCE OF OBLIGATIONS. The Company shall have
performed and complied with, in all material respects, each agreement,
covenant and obligation required by this Agreement to be so performed or
complied with by the Company at or prior to the Closing, and the Company
shall have delivered to Parent a certificate, dated the Closing Date and
executed on behalf of the Company by its Chairman of the Board, President
or any Vice President, to such effect.
(c) DISSENTERS' RIGHTS. The period for execution and perfection
of statutory appraisal rights available in connection with the Merger
described in Section 3.06 shall have expired and such appraisal rights
shall have been exercised and perfected by the holders of shares of capital
stock of any class or series of the Company holding not more than 5% of the
outstanding common stock of any class or series of the Company (treating,
for this purpose, each share of the Company's Series A Preferred Stock,
$.01 par value, and Series B Preferred Stock, $.01 par value, as having
been converted into a number of shares of the Company's common stock equal
to $1,000 divided by (x) the Cash Consideration (in the case of the Series
A Preferred Stock) or (y) $35 (in the case of the Series B Preferred
Stock).
(d) OPINIONS OF COUNSEL. Parent shall have received the opinion
of Rogers & Wells, counsel to Parent, and the opinion of Locke Purnell Rain
Harrell, counsel to the Company, dated the date of the Proxy
Statement/Prospectus and the Closing Date, to the effect that the
Contribution will be treated as a transaction governed by Section 351 of
the Code.
(e) MATERIAL THIRD PARTY CONSENTS. All consents and approvals
from third parties to the contracts and agreements set forth in SECTION
9.02(E) OF THE COMPANY DISCLOSURE LETTER and SECTION 9.03(E) OF THE PARENT
DISCLOSURE LETTER to consummate the Contribution, the Merger and the other
transactions contemplated hereby shall have been obtained.
(f) TAX SHARING AGREEMENT. Parent and the Company shall have
executed and delivered a Tax Sharing Agreement substantially in the form
attached hereto as EXHIBIT 9.02(F).
(g) LICENSE AGREEMENT. Parent and the Company shall have
executed and delivered a License Agreement substantially in the form
attached hereto as EXHIBIT 9.02(G).
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(h) AFFILIATE LETTERS AND MANAGEMENT TRANSFER RESTRICTION
AGREEMENTS. Each of the Affiliates referred to in Section 8.08 shall have
executed and delivered to the Company an Affiliate Letter referred to
therein, and each of the persons listed on EXHIBIT 9.02(H)(A) shall have
executed and delivered a transfer restriction agreement substantially in
the form attached hereto as EXHIBIT 9.02(H)(B).
(i) RADIO FACILITIES LEASE. The Company or certain Broadcast
Subsidiaries, as the case may be, shall have executed and delivered to
Parent, on the terms attached hereto as EXHIBIT 9.01(I) leases in respect
of real property owned by the Surviving Corporation or certain Broadcast
Subsidiaries, as the case may be, pursuant to which Parent shall lease
premises for Parent's radio broadcast stations.
(j) CONVEYANCING DOCUMENTS. The Company shall have executed and
delivered to Parent the Assignment and Assumption Agreement referred to in
Section 9.03(c) below.
(k) FINANCING. Cash Sub shall have obtained financing on terms
reasonably satisfactory to Parent for the Bridge Debt and shall have
received the proceeds thereof.
9.03 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger is further
subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole
or in part by the Company in its sole discretion):
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties made by Parent in this Agreement shall be true and correct
in all material respects as of the Closing Date as though made on and as of
the Closing Date or, in the case of representations and warranties made as
of a specified date earlier than the Closing Date, on and as of such
earlier date, and Parent shall have delivered to the Company a certificate,
dated the Closing Date and executed on its behalf by its Chairman of the
Board, President or any Vice President to such effect.
(b) PERFORMANCE OF OBLIGATIONS. Parent, Merger Sub and Cash Sub
shall have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to be so
performed or complied with by Parent, Merger Sub and Cash Sub at or prior
to the Closing, and Parent, Merger Sub and Cash Sub shall each have
delivered to the Company a certificate, dated the Closing Date and executed
on its behalf by its Chairman of the Board, President or any Vice President
to such effect.
(c) CONVEYANCING DOCUMENTS. Parent shall have executed and
delivered to the Company an Assignment and Assumption Agreement and a Bill
of Sale effecting the transfer to the Company of the Parent Station Assets
and the assumption by the Company of the Parent Station Assumed Liabilities
in form reasonably satisfactory to the Company, and such further
instruments of transfer in forms customary for such transactions in the
jurisdictions in which such properties are located as may be reasonably
requested by the Company in order to complete the transfer of the Parent
Station Assets to the Company.
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(d) MATERIAL THIRD PARTY CONSENTS. All consents and approvals
from third parties to the Material Parent Station Contracts set forth in
Section 9.03(e) of the Parent Disclosure Letter to consummate the
Contribution, the Merger and the other transactions contemplated hereby
shall have been obtained.
ARTICLE X.
TERMINATION, AMENDMENT AND WAIVER
10.01 TERMINATION.
(a) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, before or after the
adoption and approval of this Agreement by the stockholders of the Company
referred to in Section 9.01(a), by the mutual consent of Parent and the
Company.
(b) This Agreement may be terminated and the Merger may be
abandoned by action of the Board of Directors of either Parent or the
Company if (i) the Merger shall not have been consummated by December 31,
1997, or (ii) the approval of the Company's stockholders required by
Section 9.01(a) shall not have been obtained at a meeting duly convened
therefor or at any adjournment thereof, or (iii) a Governmental or
Regulatory Authority of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such order, decree, ruling or other action shall have become
final and non-appealable; PROVIDED, HOWEVER, that the party seeking to
terminate this Agreement pursuant to this clause (iii) shall have used all
reasonable efforts to remove such order, decree or ruling; and PROVIDED
FURTHER, in the case of a termination pursuant to clause (i) above, that
the terminating party shall not have breached in any material respect its
obligations under this Agreement in any manner that shall have proximately
contributed to the failure to consummate the Merger by December 31, 1997.
Notwithstanding the foregoing, the Company's ability to terminate this
Agreement pursuant to this Section 10.01(b) is conditioned upon the prior
payment by the Company of any amounts owed by it pursuant to Section 10.02.
(c) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time before or after the
adoption and approval by the stockholders of the Company referred to in
Section 9.01(a), by action of the Board of Directors of the Company, if (i)
in the exercise of its good faith judgment as to fiduciary duties to its
stockholders imposed by law, on the basis of written advice given by
outside counsel (who may be the Company's regularly retained outside
counsel), the Board of Directors of the Company shall have approved an
Acquisition Proposal or shall have recommended an Acquisition Proposal to
the Company's stockholders; PROVIDED, HOWEVER, that the Company shall
notify Parent promptly of its intention to terminate this Agreement or
enter into a definitive agreement with respect to any Acquisition Proposal,
but in no event shall such notice be given less than 48 hours prior to the
public announcement of the Company's termination of this Agreement; or (ii)
there has been a breach by Parent of any representation or warranty
contained in this Agreement which would have or would be reasonably likely
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to have a Parent Material Adverse Effect; or (iii) there has been a
material breach of any of the covenants or agreements set forth in this
Agreement on the part of Parent, Merger Sub or Cash Sub which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by the Company to Parent. Notwithstanding the
foregoing, the Company's ability to terminate this Agreement pursuant to
this Section 10.01(c) is conditioned upon the prior payment by the Company
of any amounts owed by it pursuant to Section 10.02.
(d) This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, by action of the Board
of Directors of Parent, if (i) the Board of Directors of the Company shall
have withdrawn or modified in a manner materially adverse to Parent its
approval or recommendation of this Agreement or the Merger or shall have
approved an Acquisition Proposal or shall have recommended an Acquisition
Proposal to the Company's stockholders, or (ii) there has been a breach by
the Company of any representation or warranty contained in this Agreement
which would have or would be reasonably likely to have a Company Material
Adverse Effect, or (iii) there has been a material breach of any of the
covenants or agreements set forth in this Agreement on the part of the
Company, which breach is not curable, or, if curable, is not cured within
30 days after written notice of such breach is given by Parent to the
Company.
10.02 EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event that any person shall have made an Acquisition
Proposal and thereafter (i) this Agreement is terminated pursuant to
Section 10.01(c)(i) or Section 10.01(d)(i) or (ii) this Agreement is
terminated pursuant to Sections 10.01(b)(i) (but in case of a termination
pursuant to Section 10.01(b)(i), only if any of the conditions set forth in
Sections 9.01(h), 9.01(i), 9.02(f), 9.02(g), 9.02(i) and 9.03(d), shall
have failed to be satisfied and such failure shall have proximately
contributed to the failure to consummate the Merger by December 31, 1997),
10.01(b)(ii), 10.01(b)(iii) (except if the Governmental or Regulatory
Authority referred to in Section 10.01(b)(iii) shall be the FCC, the FTC or
the Antitrust Division), 10.01(d)(ii) or 10.01(d)(iii) and, in the case of
this clause (ii) only, a definitive agreement with respect to such
Acquisition Proposal is executed, or the transaction contemplated by such
Acquisition Proposal is consummated, within eighteen (18) months after such
termination, then the Company shall pay Parent a fee of Fifteen Million
Eight Hundred Fifty Thousand Dollars ($15,850,000), which amount shall be
payable by wire transfer of same day funds either on the date contemplated
in the last sentence of Section 10.01(b) or (c) if applicable or,
otherwise, within two business days after such amount becomes due. The
Company acknowledges that the agreements contained in this Section 10.02
are an integral part of the transactions contemplated in this Agreement,
and that, without these agreements, Parent would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 10.02, and, in order to obtain such payment,
Parent commences a suit which results in a judgment against the Company for
the fee set forth in this Section 10.02, the Company shall pay Parent its
costs and expenses (including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at the rate of 12%
per annum.
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(b) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to Section 10.01, all obligations of the
parties hereto shall terminate, except the obligations of the parties
pursuant to this Section 10.02 and Sections 8.03(c) and 8.11 which shall
survive such termination and remain in effect. Moreover, in the event of
termination of this Agreement pursuant to Section 10.01, nothing herein
shall prejudice the ability of the non-breaching party from seeking damages
from any other party for any willful breach of this Agreement, including
without limitation, attorneys' fees and the right to pursue any remedy at
law or in equity.
10.03 AMENDMENT. This Agreement may be amended, supplemented or
modified at any time prior to the Effective Time, whether prior to or after
adoption of this Agreement at the Company Stockholders' Meeting, but after
such adoption only to the extent permitted by applicable law. No such
amendment, supplement or modification shall be effective unless set forth
in a written instrument duly executed by or on behalf of each party hereto.
10.04 WAIVER. At any time prior to the Effective Time any party
hereto may to the extent permitted by applicable law (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties hereto contained herein or in any document
delivered pursuant hereto or (iii) waive compliance with any of the
covenants, agreements or conditions of the other parties hereto contained
herein. No such extension or waiver shall be effective unless set forth in
a written instrument duly executed by or on behalf of the party extending
the time of performance or waiving any such inaccuracy or non-compliance.
No waiver by any party of any term or condition of this Agreement, in any
one or more instances, shall be deemed to be or construed as a waiver of
the same or any other term or condition of this Agreement on any future
occasion.
ARTICLE XI.
GENERAL PROVISIONS
11.01 NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. The representations, warranties, covenants and agreements
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Merger but shall terminate at the Effective
Time, except for (i) the covenants and agreements contained in Articles II,
III and IV and in Sections 8.06 (to the extent expressly set forth in
Section 8.06), 8.07, 8.09, 8.10, 8.11, 8.12, 8.14, 8.15 and 8.16 which
shall survive the Merger, and (ii) the representations and warranties
contained in Section 6.13 which shall survive for a period of eighteen (18)
months after the Merger.
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11.02 CERTAIN DEFINITIONS. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
"ACQUISITION PROPOSAL" has the meaning ascribed to it in Section
8.01.
"AFFILIATE" has the meaning ascribed to it in Section 8.08.
"AMENDMENT TIME" has the meaning ascribed to it in Section 2.01.
"ANTITRUST DIVISION" has the meaning ascribed to it in Section
8.06.
"APPRAISER" means an independent nationally recognized investment
banking firm or a firm having experience or specializing in valuations of
television broadcast businesses.
"ATILP" has the meaning ascribed to it in the recitals to this
Agreement.
"ATILP LIQUIDATION PLAN" has the meaning ascribed to it in the
recitals to this Agreement.
"ATP" has the meaning ascribed to it in the recitals to this
Agreement.
"BRIDGE DEBT" means indebtedness of Cash Sub in the aggregate
principal amount of $200 million for the purposes of consummating the
transactions contemplated by this Agreement.
"BROADCAST SUBSIDIARIES" has the meaning ascribed to it in the
recitals to this Agreement.
"BUSINESS DAY" means a day other than Saturday, Sunday or any day
on which banks located in the State of New York are authorized or obligated
to close.
"CAP" has the meaning ascribed to it in Section 8.10(b).
"CASH CONSIDERATION" has the meaning ascribed to it in Section
3.01(c)(ii).
"CASH CONVERSION NUMBER" has the meaning ascribed to it in
Section 3.03(a).
"CASH ELECTION" has the meaning ascribed to it in Section
3.02(a)(i).
"CASH ELECTION SHARES" has the meaning ascribed to it in Section
3.03(b).
"CASH PRORATION FACTOR" has the meaning ascribed to it in Section
3.03(b)(i).
"CERTIFICATES" has the meaning ascribed to it in Section 3.04(c).
"CERTIFICATE OF MERGER" has the meaning ascribed to it in Section
1.02.
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"CLOSING" has the meaning ascribed to it in Section 1.03.
"CLOSING DATE" has the meaning ascribed to it in Section 1.03.
"CODE" has the meaning ascribed to it in the recitals to this
Agreement.
"COMMUNICATIONS ACT" has the meaning ascribed to it in Section
5.04(b).
"COMPANY DISCLOSURE LETTER" has the meaning ascribed to it in
Article V.
"COMPANY EMPLOYEE BENEFIT PLAN" means any Plan entered into,
established, maintained, contributed to or required to be contributed to by
the Company or any Company ERISA Affiliate providing benefits to employees,
former employees, independent contractors, former independent contractors
of the Company or any Company ERISA Affiliate, or their dependents or
beneficiaries.
"COMPANY ERISA AFFILIATE" means an entity required (at any
relevant time) to be aggregated with the Company under Sections 414(b),
(c), (m) or (o) of the Code or Section 4001 of ERISA.
"COMPANY FINANCIAL STATEMENTS" has the meaning ascribed to it in
Section 5.05(a).
"COMPANY MATERIAL ADVERSE EFFECT" has the meaning ascribed to it
in Section 5.01.
"COMPANY OPTION" has the meaning ascribed to it in Section
3.01(e).
"COMPANY PERMITS" has the meaning ascribed to it in Section
5.09(a).
"COMPANY PREFERRED STOCK" means the Series A Preferred Stock and
the Series B Preferred Stock.
"COMPANY SEC REPORTS" has the meaning ascribed to it in Section
5.05(a).
"COMPANY SERIES A COMMON STOCK" means the Series A Common Stock,
$.01 par value, of the Company authorized pursuant to the Restated Charter.
"COMPANY SERIES B COMMON STOCK" means the Series B Common Stock,
$.01 par value, of the Company authorized pursuant to the Restated Charter.
"COMPANY SERIES A PREFERRED STOCK" means the Series A Preferred
Stock, $.01 par value, of the Company authorized pursuant to the Restated
Charter.
"COMPANY SERIES B PREFERRED STOCK" means the Series B Preferred
Stock, $.01 par value, of the Company authorized pursuant to the Restated
Charter.
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"COMPANY STOCKHOLDER APPROVAL" has the meaning ascribed to it in
Section 5.03.
"COMPANY STOCKHOLDERS' MEETING" has the meaning ascribed to it in
Section 8.05.
"CONSTITUENT CORPORATIONS" has the meaning ascribed to it in
Section 1.01.
"CONTRACTS" has the meaning ascribed to it in Section 5.04(a).
"CONTRIBUTED CASH" has the meaning ascribed to it in Section
2.02(a).
"CONTRIBUTION" has the meaning ascribed to it in Section 2.02(a).
"DGCL" has the meaning ascribed to it in Section 1.01.
"DISSENTING SHARE" has the meaning ascribed to it in Section
3.06(i).
"EFFECTIVE TIME" has the meaning ascribed to it in Section 1.02.
"ELECTING OPTIONHOLDERS" means Bob Marbut, Blake Byrne, Ibra
Morales and Harry Hawks.
"ELECTION" has the meaning ascribed to it in Section 3.02(a).
"ELECTION DATE" has the meaning ascribed to it in Section
3.02(e).
"ELECTION DEADLINE" has the meaning ascribed to it in Section
3.02(f).
"ENVIRONMENTAL LAW" means any federal, state, local or foreign
law, regulation, treaty, order, decree, permit, authorization, policy,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and safety, or
natural resources; (B) the handling, use, presence, disposal, release or
threatened release of any chemical substance or waste; or (C) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to
persons or property.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" has the meaning ascribed to it in Section 5.04(b).
"EXCHANGE AGENT" has the meaning ascribed to it in Section
3.02(c).
"EXCLUDED CASH" has the meaning ascribed to it in Section
2.02(b)(i).
"EXISTING COMMON STOCK" means the Existing Series A Common Stock,
the Existing Series B Common Stock and the Existing Series C Common Stock.
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"EXISTING PREFERRED STOCK" means the Existing Series A Preferred
Stock and the Existing Series B Preferred Stock.
"EXISTING SERIES A COMMON STOCK" has the meaning ascribed to it
in the recitals to this Agreement.
"EXISTING SERIES B COMMON STOCK" has the meaning ascribed to it
in the recitals to this Agreement.
"EXISTING SERIES C COMMON STOCK" has the meaning ascribed to it
in the recitals to this Agreement.
"EXISTING SERIES A PREFERRED STOCK" means the Series A Preferred
Stock, par value $.01 per share, of the Company as of the date of this
Agreement.
"EXISTING SERIES B PREFERRED STOCK" has the meaning ascribed to
it in the recitals to this Agreement.
"FCC" means the Federal Communications Commission.
"FCC APPROVAL" has the meaning ascribed to it in Section 5.04(b).
"FCC LICENSES" means, with respect to any person, all licenses,
permits and other authorizations of the FCC that such person is required to
hold in connection with the operation of its business.
"FCC REGULATIONS" has the meaning ascribed to it in Section
5.04(b).
"FINAL ORDER" has the meaning ascribed to it in Section 8.06.
"FLORIDA STATION ASSETS" has the meaning ascribed to it in
Section 2.02(b)(v).
"FORM OF ELECTION" has the meaning ascribed to it in Section
3.02(d).
"FORM S-4" has the meaning ascribed to it in Section 8.04.
"FTC" has the meaning ascribed to it in Section 8.06.
"GAAP" has the meaning ascribed to it in Section 4.01(a).
"GANNETT EXCHANGE TRANSACTIONS" means the transactions set forth
in that certain Asset Exchange Agreement dated November 20, 1996 among
certain Subsidiaries of Gannett Co., Inc. and certain Subsidiaries of the
Company, as such agreement is in effect on the date hereof.
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"GOVERNMENTAL OR REGULATORY AUTHORITY" has the meaning ascribed
to it in Section 5.04(a).
"HAZARDOUS SUBSTANCE" means any substance that is: (A) listed,
classified or regulated in any concentration pursuant to any Environmental
Law; (B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which may be the subject of
regulatory action by any Governmental or Regulatory Authority pursuant to
any Environmental Law.
"HEARST BROADCASTING PRODUCTIONS" means a unit of Parent's WCVB
division engaged in the production of programming for cable networks and
broadcast stations.
"HOLDER REPRESENTATIVES" has the meaning ascribed to it in
Section 3.02(g).
"HSR ACT" has the meaning ascribed to it in Section 5.04(b).
"INDEMNITIES" has the meaning ascribed to it in Section 8.11(a).
"INTANGIBLE PROPERTY" has the meaning ascribed to it in Section
2.02(a)(ix).
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" means, with respect to the Company or Parent (or any
of their respective Subsidiaries), to the knowledge of the executive
officers and directors of the Company or Parent, as the case may be.
"LAWS" has the meaning ascribed to it in Section 5.04(a).
"LIEN" has the meaning ascribed to it in Section 5.02(b).
"LIQUIDATION PLANS" means, collectively, the ATILP Liquidation
Plan, the TIP Liquidation Plan, the ATP Liquidation Plan and the ATIGP
Liquidation Plan.
"LOSSES" has the meaning ascribed to it in Section 8.14.
"MATERIAL PARENT STATION CONTRACTS" has the meaning ascribed to
it in Section 6.10.
"MATERIAL SUBSIDIARY" means any direct or indirect "Significant
Subsidiary" of the Company as that term is defined in Rule 405 of the rules
and regulations promulgated under the Securities Act, or any Subsidiary of
the Company that either owns or operates a Company Station or holds an FCC
License.
"MERGER" has the meaning ascribed to it in the recitals to this
Agreement.
"MERGER SUB COMMON STOCK" has the meaning ascribed to it in
Section 3.01(a).
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"MISSOURI LMA" has the meaning ascribed to it in Section
2.02(b)(vi).
"MIXED CONSIDERATION" has the meaning ascribed to it in Section
3.01(c)(iii).
"MIXED ELECTION" has the meaning ascribed to it in Section
3.02(a)(iii).
"MIXED ELECTION CASH SHARES" has the meaning ascribed to it in
Section 3.03(b).
"MIXED ELECTION SHARES" has the meaning ascribed to it in Section
3.03(b).
"MIXED ELECTION STOCK SHARES" has the meaning ascribed to it in
Section 3.03(c).
"MIXED OPTION CASH SHARES" has the meaning ascribed to it in
Section 3.03(b).
"MIXED OPTION STOCK SHARES" has the meaning ascribed to it in
Section 3.03(c).
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"NON-ELECTING COMPANY COMMON SHARES" has the meaning ascribed to
it in Section 3.03(h).
"NON-PURCHASING PARTY" has the meaning ascribed to it in Section
8.15.
"OPTION CASH" has the meaning ascribed to it in Section
3.01(e)(iii).
"OPTION CASH DIFFERENCE" has the meaning ascribed to it in
Section 3.07.
"OPTION CASH ELECTION" has the meaning ascribed to it in Section
3.02(b)(ii).
"OPTION CASH SHARES" has the meaning ascribed to it in Section
3.03(b).
"OPTION ELECTION" has the meaning ascribed to it in Section
3.02(b).
"OPTION ELECTION FORM" has the meaning ascribed to it in Section
3.02(d).
"OPTION MIXED CONSIDERATION" has the meaning ascribed to it in
Section 3.01(e)(iv).
"OPTION MIXED ELECTION" has the meaning ascribed to it in Section
3.02(b)(iv).
"OPTION ROLLOVER" has the meaning ascribed to it in Section
3.01(e)(i).
"OPTION STOCK" has the meaning ascribed to it in Section
3.01(e)(ii).
"OPTION STOCK SHARES" has the meaning ascribed to it in Section
3.03(c).
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"OPTIONS" has the meaning ascribed to it in Section 5.02(a).
"ORDERS" has the meaning ascribed to it in Section 5.04(a).
"PARENT ADJUSTMENT AMOUNT" has the meaning ascribed to it in
Section 4.01(b).
"PARENT DISCLOSURE LETTER" has the meaning ascribed to it in
Article VI.
"PARENT ERISA AFFILIATE" means an entity required to be
aggregated (at any relevant time) with Parent under Sections 414(b), (c),
(m) or (o) of the Code or Section 4001 of ERISA.
"PARENT MATERIAL ADVERSE EFFECT" has the meaning ascribed to it
in Section 6.01.
"PARENT PERMITS" has the meaning ascribed to it in Section
6.09(a).
"PARENT STATION ASSETS" has the meaning ascribed to it in Section
2.02(a).
"PARENT STATION ASSUMED LIABILITIES" has the meaning ascribed to
it in Section 2.02(c).
"PARENT STATION BALANCE SHEET" has the meaning ascribed to it in
Section 4.01(a).
"PARENT STATION BUSINESS" has the meaning ascribed to it in
Section 2.02(a).
"PARENT STATION CONTRACTS" has the meaning ascribed to it in
Section 2.02(a)(iv).
"PARENT STATION EMPLOYEES" has the meaning ascribed to it in
Section 2.02(f).
"PARENT STATION EMPLOYEE BENEFIT PLAN" means any Plan entered
into, established, maintained, contributed to or required to be contributed
to by Parent or any Parent ERISA Affiliate providing benefits to employees,
former employees, independent contractors, former independent contractors
of the Parent Station Business or their dependents or beneficiaries.
"PARENT STATION EXCLUDED ASSETS" has the meaning ascribed to it
in Section 2.02(b).
"PARENT STATION EXCLUDED LIABILITIES" has the meaning ascribed to
it in Section 2.02(d).
"PARENT STATION FINANCIAL STATEMENTS" has the meaning ascribed to
it in Section 6.05.
"PARENT STATION LEASES" has the meaning ascribed to it in Section
2.02(a)(iii).
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<PAGE>
"PARENT STATION NET ASSETS" means an amount equal to (i) the
total current assets of the Parent Station Business, but only to the extent
included in the Parent Station Assets, less (ii) the total current
liabilities of the Parent Station Business, but only to the extent included
in the Parent Station Assumed Liabilities.
"PARENT STATION PERMITS" has the meaning ascribed to it in
Section 2.02(a)(v).
"PARENT STATION STATEMENT OF NET ASSETS" has the meaning ascribed
to it in Section 4.01(a).
"PARENT STATION TANGIBLE PROPERTY" has the meaning ascribed to it
in Section 2.02(a)(i).
"PER SHARE AMOUNT" has the meaning ascribed to it in Section
3.01(f).
"PERMITTED LIENS" means, with respect to any asset or property,
(i) statutory liens for current taxes or assessments (A) not yet due and
payable or delinquent or (B) being contested in good faith and, in respect
of which adequate reserves have been established in accordance with GAAP;
(ii) mechanics', carriers', workers', repairers' and other similar liens
arising or incurred in the ordinary course of business relating to
obligations not yet due and payable; (iii) exceptions that would be shown
by surveys or personal inspection of such property that do not individually
or in the aggregate materially adversely affect the ability to use the
particular property involved as currently used; (iv) terms and conditions
of any leases with respect to such asset or property; (v) such easements,
restrictions, encumbrances or other matters which are due to zoning and
subdivision laws and regulations that do not individually or in the
aggregate materially adversely affect the ability to use the particular
property as currently used; (vi) such defects in title, easements,
restrictions, encumbrances or other matters which do not have a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the case
may be.
"PLAN" means any employment, bonus, incentive compensation,
collective bargaining, deferred compensation, pension, profit sharing,
retirement, stock purchase, stock option, stock ownership, stock
appreciation rights, phantom stock, leave of absence, layoff, vacation, day
or dependent care, legal services, cafeteria, life, health, medical,
accident, disability, workmen's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan,
agreement, practice, policy or arrangement of any kind, whether written or
oral, including, but not limited to any "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
"PRIVATE PLACEMENT DEBT" means the indebtedness of Parent under
Parent's 7.87% Series A Senior Notes due 2001, 8.01% Series B Senior Notes
due 2002, and Series C Senior Notes due 2003, which indebtedness shall not
exceed in the aggregate Two Hundred Seventy-Five Million Dollars
($275,000,000).
"PRO FORMA FINANCIAL STATEMENTS" has the meaning ascribed to it
in Section 5.05(b).
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<PAGE>
"PROXY STATEMENT/PROSPECTUS" has the meaning ascribed to it in
Section 8.04.
"PURCHASING PARTY" has the meaning ascribed to it in Section
8.15.
"RADIO ASSETS" has the meaning ascribed to it in Section
2.02(b)(iii).
"REFINANCING" has the meaning ascribed to it in Section 9.01(h).
"REGISTRATION RIGHTS AGREEMENT" has the meaning ascribed to it in
the recitals to this Agreement.
"REPRESENTATIVES" has the meaning ascribed to it in Section 8.01.
"RESTATED CHARTER" has the meaning ascribed to it in the recitals
to this Agreement.
"SEC" has the meaning ascribed to it in Section 5.04(b).
"SECRETARY OF STATE" has the meaning ascribed to it in Section
1.02.
"SECURITIES ACT" has the meaning ascribed to it in Section
5.04(b).
"SERIES A COMMON STOCK" has the meaning ascribed to it in the
recitals to this Agreement.
"SERIES A PREFERRED STOCK means the Series A Preferred Stock, par
value $.01 per share, of the Company.
"SERIES B COMMON STOCK" means the Series B Common Stock, par
value $.01 per share, of the Company.
"SERIES B PREFERRED STOCK" means the Series B Preferred Stock,
par value $.01 per share, of the Company.
"SERIES C COMMON STOCK" has the meaning ascribed to it in the
recitals to this Agreement.
"STOCK CONVERSION NUMBER" has the meaning ascribed to it in
Section 3.03(a).
"STOCK CONTRIBUTION" has the meaning ascribed to it in Section
3.01(c)(i).
"STOCK ELECTION" has the meaning ascribed to it in Section
3.02(a)(ii).
"STOCK ELECTION SHARES" has the meaning ascribed to it in Section
3.03(c).
"STOCK PRORATION FACTOR" has the meaning ascribed to it in
Section 3.03(c)(i).
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"SUBSIDIARY" has the meaning ascribed to it in Section 5.01.
"SURVIVING CORPORATION" has the meaning ascribed to it in Section
1.01.
"SURVIVING CORPORATION OPTIONS" has the meaning ascribed to it in
Section 3.01(e)(i).
"SURVIVING CORPORATION SERIES A COMMON STOCK" has the meaning
ascribed to it in Section 3.01(c)(i).
"SURVIVING CORPORATION SERIES A PREFERRED STOCK" has the meaning
ascribed to it in Section 3.01(d).
"SURVIVING CORPORATION SERIES B COMMON STOCK" has the meaning
ascribed to it in Section 3.01(a).
"SURVIVING CORPORATION SERIES B PREFERRED STOCK" has the meaning
ascribed to it in Section 3.01(d).
"TAXES" has the meaning ascribed to it in Section 2.02(b)(iv).
"TAX REFUND" has the meaning ascribed to it in Section
2.02(b)(iv).
"TIP" has the meaning ascribed to it in the recitals to this
Agreement.
"TIP LIQUIDATION PLAN" has the meaning ascribed to it in the
recitals to this Agreement.
"TRANSFER TAXES" means all sales, use, transfer, real property
transfer, recording, gains and other similar taxes and fees arising out of
or in connection with the transactions effected pursuant to this Agreement.
"UNAUDITED 1996 FINANCIAL STATEMENTS" has the meaning ascribed to
it in Section 5.05(a).
"VOTING AGREEMENTS" has the meaning ascribed to it in the
recitals to this Agreement.
11.03 NOTICES. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given
only if delivered personally or by facsimile transmission or mailed (first
class postage prepaid) to the parties at the following addresses or
facsimile numbers:
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If to Parent or Merger Sub, to:
The Hearst Corporation
959 Eighth Avenue
New York, New York 10010
Telephone No.: (212) 649-2000
Facsimile No.: (212) 649-2035
Attn: Victor F. Ganzi
with a copy to:
Rogers & Wells
200 Park Avenue
New York, New York 10166
Telephone No.: (212) 878-8000
Facsimile No.: (212) 878-8375
Attn: Steven A. Hobbs, Esq.
If to the Company, to:
Argyle Television, Inc.
200 Concord Plaza, Suite 700
San Antonio, Texas 78216
Telephone No.: (210) 828-1700
Facsimile No.: (210) 828-7300
Attn: Dean H. Blythe
with a copy to:
Locke Purnell Rain Harrell
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Telephone No.: (214) 740-8000
Facsimile No.: (214) 740-8800
Attn: Guy Kerr, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile
number as provided in this Section, be deemed given upon receipt, and (iii)
if delivered by mail in the manner described above to the address as
provided in this Section, be deemed given upon receipt (in each case
regardless of whether such notice, request or other communication is
received by any other person to whom a copy of such notice is to be
delivered pursuant to this Section). Any party from time to time may
change its address, facsimile number or other information for the purpose
of notices to that party by giving notice specifying such change to the
other parties hereto.
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<PAGE>
11.04 ENTIRE AGREEMENT. This Agreement, including the exhibits,
schedules and any other documents referenced herein, supersedes all prior
discussions and agreements among the parties hereto with respect to the
subject matter hereof and, together with the Parent Disclosure Letter and
the Company Disclosure Letter, contains the sole and entire agreement among
the parties hereto with respect to the subject matter hereof.
11.05 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law
or the rules of any applicable securities exchange or national market
system, so long as this Agreement is in effect, Parent and the Company will
not, and will not permit any of their respective Subsidiaries and their
Representatives to, issue or cause the publication of any press release or
make any other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party,
which consent shall not be unreasonably withheld. Parent and the Company
will cooperate with each other in the development and distribution of all
press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the
other with drafts of any such releases and announcements as far in advance
as practicable.
11.06 NO THIRD PARTY BENEFICIARY. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and except as provided in
Section 8.09, 8.10 and 8.14 (which are intended to be for the benefit of
the persons entitled to therein, and may be enforced by any of such
persons), it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
11.07 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party
hereto without the prior written consent of the other parties hereto and
any attempt to do so will be void.
11.08 HEADINGS. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
11.09 INVALID PROVISIONS. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future
law, and if the rights or obligations of any party hereto under this
Agreement will not be materially and adversely affected thereby, (i) such
provision will be fully severable, (ii) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part hereof, (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the legal, invalid or unenforceable provision or by its severance herefrom
and (iv) in lieu of such illegal, invalid or unenforceable provision, there
will be added automatically as a part of this Agreement a legal, valid and
enforceable provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible.
11.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable
to a contract executed and performed in such State without giving effect to
the conflicts of laws principles thereof.
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11.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
71
<PAGE>
IN WITNESS WHEREOF, each party hereto has caused this Agreement
to be signed by its officer thereunto duly authorized as of the date first
above written.
THE HEARST CORPORATION
By:______________________________
Name:
Title:
HAT MERGER SUB, INC.
By:______________________________
Name:
Title:
HAT CONTRIBUTION SUB, INC.
By:______________________________
Name:
Title:
ARGYLE TELEVISION, INC.
By:______________________________
Name:
Title:
72
<PAGE>
EXHIBIT A
TO MERGER AGREEMENT
FORM OF RESTATED CHARTER
PREVIOUSLY FILED - SEE EXHIBIT 7.8
<PAGE>
EXHIBIT B
TO MERGER AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of , 1997,
among Hearst/Argyle Television, Inc., a Delaware corporation (the
"COMPANY"), and the Holders (as defined below).
WHEREAS, in connection with the Amended and Restated Agreement
and Plan of Merger, dated as of March 26, 1997 (the "MERGER AGREEMENT"),
among The Hearst Corporation, a Delaware corporation, the Company, HAT
Merger Sub, Inc., a Delaware corporation, HAT Contribution Sub, Inc., a
Delaware corporation and Argyle Television, Inc., a Delaware corporation,
each initial Holder may receive shares of Common Stock (as defined below);
and
WHEREAS, the Company has agreed to provide each Holder with the
registration rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the
following terms shall have the following meanings:
"ADVICE" shall have the meaning set forth in Section 5 hereof.
"AFFILIATE" means, with respect to any specified person, any
other person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified person. For the
purposes of this definition, "control" when used with respect to any
specified person means the power to direct the management and policies of
such person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or
a legal holiday on which banking institutions in the State of New York are
not required to be open.
"CAPITAL STOCK" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated)
of corporate stock issued by such person, including each class of common
stock and preferred stock of such person.
"COMMON STOCK" means the Series A Common Stock, par value $.01
per share, of the Company or any other shares of capital stock or other
securities of the Company into which such shares of Common Stock shall be
reclassified or changed, including, by reason of a merger, consolidation,
<PAGE>
reorganization or recapitalization. If the Common Stock has been so
reclassified or changed, or if the Company pays a dividend or makes a
distribution on the Common Stock in shares of capital stock, or subdivides
(or combines) its outstanding shares of Common Stock into a greater (or
smaller) number of shares of Common Stock, a share of Common Stock shall be
deemed to be such number of shares of stock and amount of other securities
to which a holder of a share of Common Stock outstanding immediately prior
to such change, reclassification, exchange, dividend, distribution,
subdivision or combination would be entitled.
"COMPANY" shall have the meaning set forth in the introductory
clauses hereof.
"COMPANY COMMON STOCK" shall have the meaning specified in the
Merger Agreement.
"DELAY PERIOD" shall have the meaning set forth in Section 2(e)
hereof.
"DEMAND NOTICE" shall have the meaning set forth in Section 2(a)
hereof.
"DEMAND REGISTRATION" shall have the meaning set forth in Section
2(b) hereof.
"EFFECTIVENESS PERIOD" shall have the meaning set forth in
Section 2(e) hereof.
"EFFECTIVE TIME" shall have the meaning specified in the Merger
Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"HOLD BACK PERIOD" shall have the meaning set forth in Section 4
hereof.
"HOLDER" means a person who owns Registrable Shares and is named
on the signature pages hereof as a Holder.
"INTERRUPTION PERIOD" shall have the meaning set forth in Section
5 hereof.
"MERGER AGREEMENT" shall have the meaning set forth in the
introductory clauses hereof.
"NASD" means the National Association of Securities Dealers, Inc.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning set forth in
Section 3 hereof.
2
<PAGE>
"PROSPECTUS" means the prospectus included in any Registration
Statement (including a prospectus that discloses information previously
omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Shares covered by such Registration Statement
and all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or
deemed to be incorporated by reference in such prospectus.
"REGISTRABLE SHARES" means the shares of Common Stock issued to
each Holder in the Merger, other than shares of Common Stock issued in
respect of shares of Company Common Stock that prior to the Merger (i) were
registered under Section 5 of the Securities Act and disposed of pursuant
to an effective Registration Statement or (ii) were transferred pursuant to
Rule 144 under the Securities Act .
"REGISTRATION" means registration under the Securities Act of an
offering of Registrable Shares pursuant to a Demand Registration or a
Piggyback Registration.
"REGISTRATION PERIOD" shall have the meaning set forth in Section
2(a) hereof.
"REGISTRATION STATEMENT" means any registration statement under
the Securities Act of the Company that covers any of the Registrable Shares
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-effective amendments, all exhibits thereto and all
material incorporated by reference or deemed to be incorporated by
reference in such registration statement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration under the Securities Act in which securities of the Company
are sold to an underwriter for reoffering to the public.
SECTION 2. DEMAND REGISTRATION. (a) The Holders of at least
330,000 of the Registrable Shares held by all Holders shall have the right,
during the period (the "REGISTRATION PERIOD") commencing on the date which
is one hundred and eighty (180) days after the Effective Time and ending on
the date which is five hundred and forty (540) days after the Effective
Time (except as provided in the last sentence of this Section 2), by
written notice (the "DEMAND NOTICE") given to the Company, to request the
Company to register under and in accordance with the provisions of the
Securities Act for distribution by means of a firm commitment underwritten
public offering all or any portion of the Registrable Shares designated by
such Holders; PROVIDED, HOWEVER, that the right of the Holders hereunder to
request a registration pursuant to this Section 2 shall terminate and be of
no further force and effect in the event that at least 90% of the
3
<PAGE>
Registrable Shares requested by Holders to be included in a Piggyback
Registration pursuant to Section 3 are sold. Upon receipt of any such
Demand Notice, the Company shall promptly notify all other Holders of the
receipt of such Demand Notice and allow them the opportunity to include
Registrable Shares held by them in the proposed registration by submitting
their own Demand Notice. In connection with any Demand Registration in
which more than one Holder participates, in the event that the managing
underwriter or underwriters participating in such offering advise in
writing the Holders of Registrable Shares to be included in such offering
that the total number of Registrable Shares to be included in such offering
exceeds the amount that can be sold in (or during the time of) such
offering without delaying or jeopardizing the success of such offering
(including the price per share of the Registrable Shares to be sold), then
the amount of Registrable Shares to be offered for the account of such
Holders shall be reduced pro rata on the basis of the number of Registrable
Shares to be registered by each such Holder. The Holders as a group shall
be entitled to one Demand Registration pursuant to this Section 2 unless
any Demand Registration does not become effective or is not maintained for
a period (whether or not continuous) of at least one hundred and twenty
(120) days (or such shorter period as shall terminate when all the
Registrable Shares covered by such Demand Registration have been sold
pursuant thereto), in which case the Holders will be entitled within thirty
(30) days thereafter to request an additional Demand Registration pursuant
hereto.
(b) The Company, within ninety (90) days of the date on which
the Company receives a Demand Notice given by Holders in accordance with
Section 2(a) hereof, shall file with the SEC, and the Company shall
thereafter use its best efforts to cause to be declared effective, a
Registration Statement on the appropriate form for the registration and
sale, in accordance with the intended method or methods of distribution, of
the total number of Registrable Shares specified by the Holders in such
Demand Notice (a "DEMAND REGISTRATION").
(c) Notwithstanding the foregoing, the Company shall not have
any obligation to effect a Demand Registration pursuant to this Section 2
unless (i) the gross proceeds from the sale of the Registrable Shares
included in the Demand Registration are expected to be at least $45 million
, and (ii) at the date of the Demand Notice, the average daily trading
volume of the Common Stock for the prior sixty (60) trading days as
reported by the national securities exchange or automated interdealer
quotation system on which the Common Stock is so listed or quoted is less
than 150,000 shares.
(d) The Company shall use commercially reasonable efforts to
keep each Registration Statement filed pursuant to this Section 2
continuously effective and usable for the resale of the Registrable Shares
covered thereby until the earlier of (i) one hundred and twenty (120) days
from the date on which the SEC declares such Registration Statement
effective and (ii) until all the Registrable Shares covered by such
Registration Statement have been sold pursuant to such Registration
Statement.
(e) The Company shall be entitled to postpone the filing of any
Registration Statement otherwise required to be prepared and filed by the
Company pursuant to this Section 2, or suspend the use of any effective
Registration Statement under this Section 2, for a reasonable period of
time, but not in excess of ninety (90) days (a "DELAY PERIOD"), if the
Board of the Company determines that in its reasonable judgment and good
4
<PAGE>
faith the registration and distribution of the Registrable Shares covered
or to be covered by such Registration Statement would materially impede,
delay or interfere with any pending material financing, acquisition or
corporate reorganization or other material corporate development involving
the Company or any of its subsidiaries or would require premature
disclosure thereof and promptly gives the Holders written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the period of the anticipated delay;
PROVIDED, HOWEVER, that (i) the aggregate number of days included in all
Delay Periods during any consecutive 12 months shall not exceed the
aggregate of (x) one hundred and eighty (180) days minus (y) the number of
days occurring during all Hold Back Periods and Interruption Periods during
such consecutive 12 months and (ii) a period of at least sixty (60) days
shall elapse between the termination of any Delay Period, Hold Back Period
or Interruption Period and the commencement of the immediately succeeding
Delay Period. If the Company shall so postpone the filing of a
Registration Statement, the Holders of Registrable Shares to be registered
shall have the right to withdraw the request for registration by giving
written notice from the Holders of a majority of the Registrable Shares
that were to be registered to the Company within forty-five (45) days after
receipt of the notice of postponement or, if earlier, the termination of
such Delay Period (and, in the event of such withdrawal, such request shall
not be counted for purposes of determining the number of requests for
registration to which the Holders of Registrable Shares are entitled
pursuant to this Section 2). The time period for which the Company is
required to maintain the effectiveness of any Registration Statement shall
be extended by the aggregate number of days of all Delay Periods, all Hold
Back Periods and all Interruption Periods occurring during such
Registration and such period and any extension thereof is hereinafter
referred to as the "EFFECTIVENESS PERIOD." The Company shall not be
entitled to initiate a Delay Period unless it shall (A) to the extent
permitted by agreements with other security holders of the Company,
concurrently prohibit sales by such other security holders under
registration statements covering securities held by such other security
holders and (B) in accordance with the Company's policies from time to time
in effect, forbid purchases and sales in the open market by senior
executives of the Company.
(f) The Company shall have the right in its sole discretion to
include any securities that are not Registrable Shares ("NON-REGISTRABLE
SECURITIES") in any Registration Statement filed pursuant to this Section
2; PROVIDED, HOWEVER, that in the event the managing underwriter or
underwriters participating in such offering advises the Company in writing
that the total number of Non-Registrable Securities to be included in such
offering exceeds the amount that can be sold in (or during the time of)
such offering without delaying or jeopardizing the success of such offering
(including the price per share of the Registrable Shares to be sold), then
the amount of Non-Registrable Securities to be offered for the account of
the Company shall be reduced to an amount that the managing underwriter or
underwriters participating in the offering reasonably determine can be sold
in such offering without materially delaying or jeopardizing the success of
such offering.
(g) Holders of a majority in number of the Registrable Shares to
be included in a Registration Statement pursuant to this Section 2 may, at
any time prior to the effective date of the Registration Statement relating
to such Registration, revoke such request by providing a written notice to
the Company revoking such request. The Holders of Registrable Shares who
5
<PAGE>
revoke such request shall reimburse the Company for all of its out-of-
pocket expenses incurred in the preparation, filing and processing of the
Registration Statement; PROVIDED, HOWEVER, that, if such revocation was
based on the Company's failure to comply in any material respect with its
obligations hereunder, such reimbursement shall not be required.
SECTION 3. PIGGYBACK REGISTRATION. (a) RIGHT TO PIGGYBACK. If
at any time during the period commencing on the date of this Agreement and
ending on the date which is five hundred and forty (540) days after the
Effective Time the Company proposes to file a registration statement under
the Securities Act with respect to a public offering of securities of the
same type as the Registrable Shares pursuant to a firm commitment
underwritten public offering solely for cash for its own account (other
than a registration statement (i) on Form S-8 or any successor forms
thereto, or (ii) filed solely in connection with a dividend reinvestment
plan or employee benefit plan covering officers or directors of the Company
or its Affiliates) or for the account of any holder of securities of the
same type as the Registrable Shares (to the extent that the Company has the
right to include Registrable Shares in any registration statement to be
filed by the Company on behalf of such holder but excluding a Demand
Registration), then the Company shall give written notice of such proposed
filing to the Holders at least fifteen (15) days before the anticipated
filing date. Such notice shall offer the Holders the opportunity to
register such amount of Registrable Shares as they may request (a
"PIGGYBACK REGISTRATION"). Subject to Section 3(b) hereof, the Company
shall include in each such Piggyback Registration all Registrable Shares
with respect to which the Company has received written requests for
inclusion therein within ten (10) days after notice has been given to the
Holders. Each Holder shall be permitted to withdraw all or any portion of
the Registrable Shares of such Holder from a Piggyback Registration at any
time prior to the effective date of such Piggyback Registration; PROVIDED,
HOWEVER, that if such withdrawal occurs after the filing of the
Registration Statement with respect to such Piggyback Registration, the
withdrawing Holders shall reimburse the Company for the portion of the
registration expenses payable with respect to the Registrable Shares so
withdrawn.
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. The Company shall use
commercially reasonable efforts to cause the managing underwriter of an
underwritten public offering to permit the Holders to include all such
Registrable Shares on the same terms and conditions as any similar
securities, if any, of the Company included therein. Notwithstanding the
foregoing, if the Company or the managing underwriter or underwriters
participating in such offering advise the Holders in writing that the total
amount of securities requested to be included in such Piggyback
Registration exceeds the amount which can be sold in (or during the time
of) such offering without delaying, jeopardizing or otherwise adversely
affecting the success of the offering (including the price per share of the
securities to be sold), then the amount of securities to be offered for the
account of the Holders and other holders of securities who have piggyback
registration rights with respect thereto shall be reduced (to zero if
necessary) pro rata on the basis of the number of common stock equivalents
requested to be registered by each such Holder or holder participating in
such offering.
(c) RIGHT TO ABANDON. Nothing in this Section 3 shall create
any liability on the part of the Company to the Holders if the Company in
its sole discretion should decide not to file a registration statement
proposed to be filed pursuant to Section 3(a) hereof or to withdraw such
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registration statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of the
issuance by the Company of any notice hereunder or otherwise.
SECTION 4. HOLDBACK AGREEMENT. If (i) the Company shall file a
registration statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock purchase or
similar plan or pursuant to a merger, exchange offer or a transaction of
the type specified in Rule 145(a) under the Securities Act) with respect to
the Common Stock or similar securities or securities convertible into, or
exchangeable or exercisable for, such securities and (ii) with reasonable
prior notice, the Company (in the case of a nonunderwritten public offering
by the Company pursuant to such registration statement) advises the Holders
in writing that a public sale or distribution of such Registrable Shares
would materially adversely affect such offering or the managing underwriter
or underwriters (in the case of an underwritten public offering by the
Company pursuant to such registration statement) advises the Company in
writing (in which case the Company shall notify the Holders) that a public
sale or distribution of Registrable Shares would materially adversely
impact such offering, then each Holder shall, to the extent not
inconsistent with applicable law, refrain from effecting any public sale or
distribution of Registrable Shares during the ten days prior to the
effective date of such registration statement and until the earliest of (A)
the abandonment of such offering, (B) one hundred and twenty (120) days
from the effective date of such registration statement and (C) if such
offering is an underwritten offering, the termination in whole or in part
of any "hold back" period obtained by the underwriter or underwriters in
such offering from the Company in connection therewith (each such period, a
"HOLD BACK PERIOD").
SECTION 5. REGISTRATION PROCEDURES. In connection with the
registration obligations of the Company pursuant to and in accordance with
Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the
Company shall use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Shares in accordance
with the intended method or methods of disposition thereof, and pursuant
thereto the Company shall as expeditiously as practicable (but subject to
Sections 2 and 3 hereof):
(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Shares on any form for which the Company then
qualifies or which counsel for the Company shall deem appropriate in
accordance with such Holders' intended method or methods of distribution
thereof, subject to Section 2(b) hereof, and, subject to the Company's
right to terminate or abandon a registration pursuant to Section 3(c)
hereof, use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to such Registration Statement, and such
supplements to the related Prospectus, as may be required by the rules,
regulations or instructions applicable to the Securities Act during the
applicable period in accordance with the intended methods of disposition
specified by the Holders of the Registrable Shares covered by such
Registration Statement, make generally available earnings statements
satisfying the provisions of Section 11(a) of the Securities Act (provided
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that the Company shall be deemed to have complied with this clause if it
has complied with Rule 158 under the Securities Act), and cause the related
Prospectus as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; PROVIDED, HOWEVER, that before filing a Registration
Statement or Prospectus, or any amendments or supplements thereto (other
than reports required to be filed by it under the Exchange Act), the
Company shall furnish to the Holders of Registrable Shares covered by such
Registration Statement and their counsel for review and comment, copies of
all documents required to be filed;
(c) notify the Holders of any Registrable Shares covered by such
Registration Statement promptly and (if requested) confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to such Registration
Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC for amendments or supplements to
such Registration Statement or the related Prospectus or for additional
information regarding such Holders, (iii) of the issuance by the SEC of any
stop order suspending the effectiveness of such Registration Statement or
the initiation of any proceedings for that purpose, (iv) of the receipt by
the Company of any notifications with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (v) of the happening of any event that
requires the making of any changes in such Registration Statement,
Prospectus or documents incorporated or deemed to be incorporated therein
by reference so that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Registration Statement,
or the lifting of any suspension of the qualification or exemption from
qualification of any Registrable Shares for sale in any jurisdiction in the
United States;
(e) furnish to the Holder of any Registrable Shares covered by
such Registration Statement, each counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of such
Registration Statement, as declared effective by the SEC, and of each post-
effective amendment thereto, in each case including financial statements
and schedules and all exhibits and reports incorporated or deemed to be
incorporated therein by reference; and deliver, without charge, such number
of copies of the preliminary prospectus, any amended preliminary
prospectus, each final Prospectus and any post-effective amendment or
supplement thereto, as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Shares of such Holder covered
by such Registration Statement in conformity with the requirements of the
Securities Act;
(f) prior to any public offering of Registrable Shares covered
by such Registration Statement, use commercially reasonable efforts to
register or qualify such Registrable Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as the Holders of such
Registrable Shares shall reasonably request in writing; PROVIDED, HOWEVER,
that the Company shall in no event be required to qualify generally to do
business as a foreign corporation or as a dealer in any jurisdiction where
it is not at the time so qualified or to execute or file a general consent
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to service of process in any such jurisdiction where it has not theretofore
done so or to take any action that would subject it to general service of
process or taxation in any such jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
5(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file any
other required document so that, as thereafter delivered to the purchasers
of the Registrable Shares being sold thereunder (including upon the
termination of any Delay Period), such Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Shares covered by such Registration Statement to be listed on each
securities exchange or automated interdealer quotation system, if any, on
which similar securities issued by the Company are then listed or quoted;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of the Company for the Registrable
Shares with printed certificates for the Registrable Shares covered by such
Registration Statement, which are in a form eligible for deposit with The
Depository Trust Company;
(j) make available for inspection by any Holder of Registrable
Shares included in such Registration Statement, any underwriter
participating in any offering pursuant to such Registration Statement, and
any attorney, accountant or other agent retained by any such Holder or
underwriter (collectively, the "INSPECTORS"), all financial and other
records and other information, pertinent corporate documents and properties
of any of the Company and its subsidiaries and affiliates (collectively,
the "RECORDS"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibilities; PROVIDED, HOWEVER, that the Records
that the Company determines, in good faith, to be confidential and which it
notifies the Inspectors in writing are confidential shall not be disclosed
to any Inspector unless such Inspector signs a confidentiality agreement
reasonably satisfactory to the Company but in any event permitting
disclosure by an Inspector if either (i) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in such
Registration Statement or (ii) the release of such Records is ordered
pursuant to a subpoena or other order from a court of competent
jurisdiction; PROVIDED FURTHER, HOWEVER, that (A) any decision regarding
the disclosure of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable Inspectors and the
Company and (B) with respect to any release of Records pursuant to
subclause (ii), each Holder of Registrable Shares agrees that it shall,
promptly after learning that disclosure of such Records is sought in a
court having jurisdiction, give notice to the Company so that the Company,
at the Company's expense, may undertake appropriate action to prevent
disclosure of such Records; and
(k) enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in underwritten
offerings) and take all such other appropriate and reasonable actions
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requested by the Holders of a majority of the Registrable Shares being sold
in connection therewith (including those reasonably requested by the
managing underwriters) in order to expedite or facilitate the disposition
of such Registrable Shares, and in such connection (i) use commercially
reasonable efforts to obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance) shall be
reasonably satisfactory to the managing underwriters and counsel to the
Holders of the Registrable Shares being sold), addressed to each selling
Holder of Registrable Shares covered by such Registration Statement and
each of the underwriters as to the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such counsel and underwriters, (ii) use
commercially reasonable efforts to obtain "cold comfort" letters and
updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public
accountants of any subsidiary of the Company or of any business acquired by
the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
selling Holder of Registrable Shares covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession) and each of
the underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings, (iii) if requested and if an underwriting
agreement is entered into, provide indemnification provisions and
procedures substantially to the effect set forth in Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting or similar
agreement, or as and to the extent required thereunder.
The Company may require each Holder of Registrable Shares covered
by a Registration Statement to furnish such information regarding such
Holder and such Holder's intended method of disposition of such Registrable
Shares as it may from time to time reasonably request in writing. If any
such information is not furnished within a reasonable period of time after
receipt of such request, the Company may exclude such Holder's Registrable
Shares from such Registration Statement.
Each Holder of Registrable Shares covered by a Registration
Statement agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii),
5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, that such Holder shall forthwith
discontinue disposition of any Registrable Shares covered by such
Registration Statement or the related Prospectus until receipt of the
copies of the supplemented or amended Prospectus contemplated by Section
5(g) hereof, or until such Holder is advised in writing (the "ADVICE") by
the Company that the use of the applicable Prospectus may be resumed, and
has received copies of any amended or supplemented Prospectus or any
additional or supplemental filings which are incorporated, or deemed to be
incorporated, by reference in such Prospectus (such period during which
disposition is discontinued being an "INTERRUPTION PERIOD") and, if
requested by the Company, the Holder shall deliver to the Company (at the
expense of the Company) all copies then in its possession, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request.
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Each Holder of Registrable Shares covered by a Registration
Statement further agrees not to utilize any material other than the
applicable current preliminary prospectus or Prospectus in connection with
the offering of such Registrable Shares.
SECTION 6. REGISTRATION EXPENSES. Whether or not any
Registration Statement is filed or becomes effective, the Company shall pay
all costs, fees and expenses incident to the Company's performance of or
compliance with this Agreement, including (i) all registration and filing
fees, including NASD filing fees, (ii) all fees and expenses of compliance
with securities or blue sky laws, including reasonable fees and
disbursements of counsel in connection therewith, (iii) printing expenses
(including expenses of printing certificates for Registrable Shares and of
printing prospectuses if the printing of prospectuses is requested by the
Holders or the managing underwriter, if any), (iv) messenger, telephone and
delivery expenses, (v) fees and disbursements of counsel for the Company,
(vi) fees and disbursements of all independent certified public accountants
of the Company (including expenses of any "cold comfort" letters required
in connection with this Agreement) and all other persons retained by the
Company in connection with such Registration Statement, (vii) reasonable
fees and disbursements of one counsel, other than the Company's counsel,
selected by Holders of a majority of the Registrable Shares being
registered, to represent all such Holders, (viii) fees and disbursements of
underwriters customarily paid by the issuers or sellers of securities and
(ix) all other costs, fees and expenses incident to the Company's
performance or compliance with this Agreement. Notwithstanding the
foregoing, the fees and expenses of any persons retained by any Holder,
other than one counsel for all such Holders, and any discounts, commissions
or brokers' fees or fees of similar securities industry professionals and
any transfer taxes relating to the disposition of the Registrable Shares by
a Holder, will be payable by such Holder and the Company will have no
obligation to pay any such amounts.
SECTION 7. UNDERWRITING REQUIREMENTS. In the case of any
underwritten offering pursuant to either a Demand Registration or a
Piggyback Registration, the Company shall select the institution or
institutions that shall manage or lead such offering. No Holder shall be
entitled to participate in an underwritten offering unless and until such
Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as the Company
and such institution or institutions shall determine and has completed and
executed all questionnaires, powers of attorney, indemnities and other
documents reasonably required under the terms of such underwriting
arrangements.
SECTION 8. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY.
The Company shall, without limitation as to time, indemnify and hold
harmless, to the full extent permitted by law, each Holder of Registrable
Shares whose Registrable Shares are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of
them, each Person who controls each such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgment, costs (including, without limitation, costs
of preparation and reasonable attorneys' fees) and expenses (collectively,
"LOSSES"), as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in such Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
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preliminary prospectus, or arising out of or based upon any omission or
alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
the same are based upon information furnished in writing to the Company by
or on behalf of such Holder expressly for use therein; PROVIDED, HOWEVER,
that the Company shall not be liable to any such Holder to the extent that
any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if (i) having previously been furnished by or on
behalf of the Company with copies of the Prospectus, such Holder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale of Registrable Shares by such Holder to
the person asserting the claim from which such Losses arise and (ii) the
Prospectus would have corrected in all material respects such untrue
statement or alleged untrue statement or such omission or alleged omission;
and PROVIDED FURTHER, HOWEVER, that the Company shall not be liable in any
such case to the extent that any such Losses arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged
omission in the Prospectus, if (x) such untrue statement or alleged untrue
statement, omission or alleged omission is corrected in all material
respects in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of the Company with copies of the
Prospectus as so amended or supplemented, such Holder thereafter fails to
deliver such Prospectus as so amended or supplemented, prior to or
concurrently with the sale of Registrable Shares.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SHARES. In
connection with any Registration Statement in which a Holder is
participating, such Holder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with
such Registration Statement or the related Prospectus and agrees to
indemnify, to the full extent permitted by law, the Company, its directors,
officers, agents or employees, each Person who controls the Company (within
the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the directors, officers, agents or employees of such
controlling Persons, from and against all Losses arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in
such Registration Statement or the related Prospectus or any amendment or
supplement thereto, or any preliminary prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or
alleged untrue statement or omission or alleged omission is based upon any
information so furnished in writing by or on behalf of such Holder to the
Company expressly for use in such Registration Statement or Prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Person shall
be entitled to indemnity hereunder (an "INDEMNIFIED PARTY"), such
indemnified party shall give prompt notice to the party from which such
indemnify is sought (the "INDEMNIFYING PARTY") of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; PROVIDED, HOWEVER,
that the delay or failure to so notify the indemnifying party shall not
relieve the indemnifying party from any obligation or liability except to
the extent that the indemnifying party has been prejudiced by such delay or
failure. The indemnifying party shall have the right, exercisable by
giving written notice to an indemnified party promptly after the receipt of
written notice from such indemnified party of such claim or proceeding, to
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assume, at the indemnifying party's expense, the defense of any such claim
or proceeding, with counsel reasonably satisfactory to such indemnified
party; PROVIDED, HOWEVER, that (i) an indemnified party shall have the
right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless: (1) the
indemnifying party agrees to pay such fees and expenses; (2) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (3) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it that are
inconsistent with those available to the indemnifying party or that a
conflict of interest is likely to exist among such indemnified party and
any other indemnified parties (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of such
indemnified party); and (ii) subject to clause (3) above, the indemnifying
party shall not, in connection with any one such claim or proceeding or
separate but substantially similar or related claims or proceedings in the
same jurisdiction, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one firm of
attorneys (together with appropriate local counsel) at any time for all of
the indemnified parties, or for fees and expenses that are not reasonable.
Whether or not such defense is assumed by the indemnifying party, such
indemnified party shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to
entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release, in form and substance reasonably
satisfactory to the indemnified party, from all liability in respect of
such claim or litigation for which such indemnified party would be entitled
to indemnification hereunder.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party in respect of any Losses
(other than in accordance with its terms), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses as well as any other
relevant equitable considerations. The relative fault of such indemnifying
party, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in
question, including any untrue statement of a material fact or omission or
alleged omission to state a material fact, has been taken by, or relates to
information supplied by, such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be
deemed to include any legal or other fees or expenses incurred by such
party in connection with any investigation or proceeding. The parties
hereto agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this Section 8(d), an indemnifying party
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that is a Holder shall not be required to contribute any amount which is in
excess of the amount by which the total proceeds received by such Holder
from the sale of the Registrable Shares sold by such Holder (net of all
underwriting discounts and commissions) exceeds the amount of any damages
that such indemnifying party has otherwise been required by pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
SECTION 9. REPORTS UNDER THE EXCHANGE ACT. The Company agrees
to:
(a) file with the SEC in a timely manner all reports and other
documents required to be filed by the Company under the Exchange Act; and
(b) furnish to any Holder, during the term of this Agreement, as
promptly as practicable upon request (i) a written statement by the Company
that it has complied with the current public information and reporting
requirements of Rule 144 under the Securities Act and the Exchange Act and
(ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company with the SEC.
SECTION 10. MISCELLANEOUS. (a) TERMINATION. This Agreement and
the obligations of the Company and the Holders hereunder (other than
Sections 6 and 8 hereof) shall terminate on the first date on which no
Registrable Shares remain outstanding.
(b) NOTICES. All notices or communications hereunder shall be
in writing (including telecopy or similar writing), addressed as follows:
To the Company:
Hearst/Argyle Television, Inc.
[Address]
Attention: Dean H. Blythe
Telephone:
Telecopier:
With copies to:
The Hearst Corporation
959 Eighth Avenue
New York, New York 10009
Telephone: (212) 649-2000
Telecopier: (212) 649-2035
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Rogers & Wells
200 Park Avenue
New York, New York 10166
Attention: Steven A. Hobbs, Esq.
Telephone: (212) 878-8005
Telecopier: (212) 878-8375
To a Holder of Registrable Shares, at the address of such Holder
below such Holder's name on the signature pages hereof or, if not a party
hereto or on the date hereof, such other address as such Holder may
designate to the Company in writing.
Any such notice or communication shall be deemed given (i) when
made, if made by hand delivery, (ii) upon transmission, if sent by
confirmed telecopier, (iii) one business day after being deposited with a
next-day courier, postage prepaid, or (iv) three business days after being
sent certified or registered mail, return receipt requested, postage
prepaid, in each case addressed as above (or to such other address or to
such other telecopier number as such party may designate in writing from
time to time).
(c) SEPARABILITY. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such
invalidity or unenforceability shall not affect the remaining provisions
hereof which shall remain in full force and effect.
(d) ASSIGNMENT. No Holder may assign its rights or obligations
hereunder without the prior written consent of the Company and any
purported assignment in violation hereof shall be null and void. This
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, devisees, legatees, legal
representatives, successors and permitted assigns.
(e) ENTIRE AGREEMENT. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous
contracts, arrangements or understandings between the parties hereto with
respect to the subject matter hereof.
(f) AMENDMENTS AND WAIVERS. Except as otherwise provided
herein, the provisions of this Agreement may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company has obtained the written
consent of Holders of at least a majority in number of the Registrable
Shares then outstanding.
(g) PUBLICITY. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the
prior consent of the other parties, except to the extent that such party is
advised by counsel that such release or announcement is necessary or
advisable under applicable law or the rules or regulations of any
securities exchange or similar authority, in which case the party required
to make the release or announcement shall to the extent practicable provide
the other party with an opportunity to review and comment on such release
or announcement in advance of its issuance.
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(h) EXPENSES. Whether or not the transactions contemplated
hereby are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with the execution of this Agreement shall
be paid by the party incurring such costs or expenses, except as otherwise
set forth herein.
(i) INTERPRETATION. 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.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be one and the same agreement, and shall
become effective when counterparts have been signed by each of the parties
and delivered to each other party.
(k) GOVERNING LAW. This Agreement shall be construed,
interpreted, and governed in accordance with the internal laws of Delaware.
(l) CALCULATION OF TIME PERIODS. Except as otherwise indicated,
all periods of time referred to herein shall include all Saturdays, Sundays
and holidays; provided, however, that if the date to perform the act or
give any notice with respect to this Agreement shall fall on a day other
than a Business Day, such act or notice may be timely performed or given if
performed or given on the next succeeding Business Day.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
HEARST/ARGYLE TELEVISION, INC.
By______________________________
Name:
Title:
HOLDERS:
ALAWAD LIMITED
By______________________________
Name:
Title:
ATP
By______________________________
Name:
Title:
BMO FINANCIAL
By______________________________
Name:
Title:
BANK ONE CAPITAL
By______________________________
Name:
Title:
________________________________
SAM BARSHOP
17
<PAGE>
BEAR STEARNS
By______________________________
Name:
Title:
CMIHI
By______________________________
Name:
Title:
CORNERSTONE CAPITAL
By______________________________
Name:
Title:
CRESCENT CAPITAL
By______________________________
Name:
Title:
FOUNDATION PARTNERS FUND, G.P.
By______________________________
Name:
Title:
GALP-FOREST ASSOCIATES
By______________________________
Name:
Title:
18
<PAGE>
TEXTRON COLLECTIVE INVESTMENT TRUST B
By______________________________
Name:
Title:
________________________________
PAUL SCHUPF
TAMPSCO PARTNERSHIP VI
By______________________________
Name:
Title:
________________________________
DAVID YARLAN
CS FIRST BOSTON FUND
By______________________________
Name:
Title:
CS FIRST BOSTON MERCHANT BANK
By______________________________
Name:
Title:
19
<PAGE>
EXHIBIT 1.05
TO MERGER AGREEMENT
DIRECTORS AND OFFICERS
OF THE SURVIVING CORPORATION
----------------------------
DIRECTORS
- ---------
<TABLE>
<CAPTION>
ELECTED BY
NAME CLASS HOLDERS OF:
- ---- ----- ---------------------
<S> <C> <C>
David J. Barrett II Series B Common Stock
Frank A. Bennack, Jr. I Series B Common Stock
John G. Conomikes I Series B Common Stock
Victor F. Ganzi II Series B Common Stock
George R. Hearst, Jr. I Series B Common Stock
William R. Hearst III II Series B Common Stock
Bob Marbut I Series B Common Stock
Gilbert C. Maurer I Series B Common Stock
David Pulver II Series A Common Stock
Virginia H. Randt II Series B Common Stock
Caroline Williams I Series A Common Stock
</TABLE>
OFFICERS
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
Bob Marbut Chairman and Co-Chief Executive Officer
John G. Conomikes President and Co-Chief Executive Officer
David Barrett Executive Vice President and Chief Operating Officer
Anthony J. Vinciquerra Executive Vice President
Harry T. Hawks Senior Vice President and Chief Financial Officer
Dean H. Blythe Senior Vice President - Corporate Development,
Secretary and General Counsel
Ibra Morales Senior Vice President - Sales
</TABLE>
<PAGE>
EXHIBIT 8.08
TO MERGER AGREEMENT
FORM OF AFFILIATE LETTER
Argyle Television, Inc.
200 Concord Plaza, Suite 700
San Antonio, Texas 78216
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of Argyle Television, Inc., a Delaware
corporation (the COMPANY"), as the term "affiliate" is (i) defined for
purposes of paragraphs (c) and (d) of Rule 145 of the rules and regulations
(the "RULES AND REGULATIONS") of the Securities and Exchange Commission
(the "COMMISSION") under the Securities Act of 1933, as amended (the
"ACT"), or (ii) used in and for purposes of Accounting Series, Releases 130
and 135, as amended, of the Commission. Pursuant to the terms of the
Amended and Restated Agreement and Plan of Merger dated as of March 26,
1997 (the "AGREEMENT"), by and among the Company, The Hearst Corporation
("PARENT"), HAT Contribution Sub, Inc. and HAT Merger Sub, Inc. ("MERGER
SUB"), Merger Sub will be merged with and into the Company, as a result of
which the Company will be the surviving corporation (the "MERGER").
As a result of the Merger, I may receive shares of Surviving
Corporation Series A Common Stock (as defined in the Agreement) in exchange
for shares owned by me of Company Series A Common Stock (as defined in the
Agreement).
I represent, warrant and covenant to Parent that in the event I
receive any Surviving Corporation Series A Common Stock as a result of the
Merger:
(a) I shall not make any sale, transfer or other disposition of
the Surviving Corporation Series A Common Stock in violation of the Act or
the Rules and Regulations.
(b) I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of the
Surviving Corporation Series A Common Stock to the extent I felt necessary,
with my counsel or counsel for the Company.
(c) I have been advised that the issuance of Surviving
Corporation Series A Common Stock to me pursuant to the Merger has been
registered with the Commission under the Act on a Registration Statement on
Form S-4. However, I have also been advised that, since at the time the
Merger was submitted for a vote of the stockholders of the Company, I may
be deemed to have been an affiliate of the Company and the distribution by
me of the Surviving Corporation Series A Common Stock has not been
registered under the Act, I may not sell, transfer or otherwise dispose of
<PAGE>
the Surviving Corporation Series A Common Stock issued to me in the Merger
unless (i) such sale, transfer or other disposition has been registered
under the Act, (ii) such sale, transfer or other disposition is made in
conformity with Rule 145 promulgated by the Commission under the Act, or
(iii) in the opinion of counsel reasonably acceptable to the Surviving
Corporation (as defined in the Merger Agreement), or pursuant to a "no
action" letter obtained by the undersigned from the staff of the
Commission, such sale, transfer or other disposition is otherwise exempt
from registration under the Act.
(d) I understand that, except as may be provided in any
registration rights agreement entered into by the Surviving Corporation
and the undersigned, the Surviving Corporation is under no obligation to
register the sale, transfer or other disposition of the Surviving
Corporation Series A Common Stock by me or on my behalf under the Act or to
take any other action necessary in order to make compliance with an
exemption from such registration available.
(e) I also understand that stop transfer instructions will be
given to the Surviving Corporation's transfer agents with respect to the
Surviving Corporation Series A Common Stock and that there will be placed
on the certificates for the Surviving Corporation Series A Common Stock
issued to me, or any substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
, BETWEEN THE REGISTERED HOLDER HEREOF AND
, A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF ."
(f) I also understand that unless the transfer by me of my
Surviving Corporation Series A Common Stock has been registered under the
Act or is a sale made in conformity with the provisions of Rule 145, the
Surviving Corporation reserves the right to put the following legend on the
certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
2
<PAGE>
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs E and F above shall be removed by delivery of substitute
certificates without such legend if such legend is not required for
purposes of the Act or this Agreement. It is understood and agreed that
such legends and the stop orders referred to above will be removed if (i)
one year shall have elapsed from the date the undersigned acquired the
Surviving Corporation Series A Common Stock received in the Merger and the
provisions of Rule 145(d)(2) are then available to the undersigned, (ii)
two years shall have elapsed from the date the undersigned acquired the
Surviving Corporation Series A Common Stock received in the Merger and the
provisions of Rule 145(d)(3) are then available to the undersigned, or
(iii) the Surviving Corporation has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the Surviving
Corporation, or a "no action" letter obtained by the undersigned from the
staff of the Commission, to the effect that the restrictions imposed by
Rule 145 under the Act no longer apply to the undersigned.
Execution of this letter should not be considered an admission on
my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter or as a waiver of any rights I may have to object
to any claim that I am such an affiliate on or after the date of this
letter.
Very truly yours,
____________________________
Name:
Accepted this day of
, 1997 by
ARGYLE TELEVISION, INC.
By:_________________________
Name:
Title:
3
<PAGE>
EXHIBIT 9.01(I)
TO MERGER AGREEMENT
TERMS OF MANAGEMENT AGREEMENT
-----------------------------
1. SCOPE: The Management Agreement would cover WWWB-TV 32, Tampa, FL and
Parent's Missouri LMA television stations, Parent's Baltimore AM/FM radio
stations and all other television stations which may be acquired by Parent
or any subsidiary or Affiliate thereof subsequent to the execution and
prior to the Effective Time of the Merger Agreement (including WPBF-TV,
West Palm Beach, if acquired). However, the management agreement would be
subject to any contractual consents which may be required with respect to
the Missouri LMA.
2. TERM: The term of the Management Agreement would commence at the
Effective Time and would continue for each station respectively until the
earlier of: (i) Parent's divestiture of the station to a third party;
(ii) if applicable, the exercise of the option granted to the Surviving
Corporation following the Merger (referred to herein as the "Company") to
acquire the station, or (iii) five (5) years following the closing of the
Merger Agreement, provided that, Parent would have the right to terminate
the Management Agreement at any time upon 90 days prior written notice if
the option period or right of first refusal period, as applicable, has
expired without having been exercised.
3. SERVICES: Subject to applicable laws, rules and regulations
(including those of the FCC), the management services provided would be
substantially similar to those management services Parent's Broadcasting
Division management has provided the Parent Stations, and would include,
without limitation, management services with respect to: sales; news;
programming (subject to the rights of each station's licensee to retain
sole responsibility for and control of the station's programming, including
the right to pre-empt programming provided for under the management
agreement); compliance with FCC and EEO laws, rules and regulations;
preparation of operating and capital budgets and financial statements in
accordance with GAAP; engineering; promotion; and accounting services.
4. MANAGEMENT FEE: The management fee with respect to the managed
stations would be the reimbursement of the Company's costs and expenses
with respect to the managed television stations on an allocated basis to be
determined in the formal Management Agreement, plus an amount equal to the
greater of (i) (x) $50,000 for Parent's radio stations (counted as a single
property) and $50,000 for the Missouri LMA, or (y) for all others, $100,000
per station, and (ii) a percentage of the positive broadcast cash flow from
each such property listed below:
<circle> Year 1 - 20%
<circle> Year 2 - 30%
<circle> Year 3 - 40%
<circle> Year 4 and thereafter - 50%
<PAGE>
5. OTHER TERMS. The Management Agreement also will contain such other
terms and provisions that are customary for such management agreements,
including provisions with respect to the Communications Act and the rules
and regulations of the FCC.
TERMS OF TV OPTION AGREEMENT
----------------------------
1. APPLICABILITY - Acquisition options would be granted to the Company
following the Merger and would apply to WWWB-32, Tampa, FL and the Missouri
LMA. Parent would also grant a right of first refusal to the Company for a
period of 36 months following the closing of the Merger Agreement with
respect to WPBF-TV, West Palm Beach, FL, if such station is acquired by
Parent or a subsidiary or Affiliate of Parent and such station is proposed
to be sold to a third party. Exercise of the right of first refusal would
be by the Company's independent directors.
2. OPTION TERMS - For each applicable property, the option period would
be 18 to 36 months following the Effective Time. The purchase price would
be the fair market value of the respective station based upon an appraised
value (provided that, in the case of the Missouri LMA, in no event would
the purchase price be less than the Accumulated Costs as defined in the
Option Agreement, plus interest thereon). If Parent elects to sell a
station before the commencement of, or during, the option period, the
Company would be granted a right of first refusal to acquire the station.
Exercise of the right of first refusal would be by the Company's
independent directors. Parent would be entitled to elect to receive the
purchase price in either cash or Company stock. With respect to the
Missouri LMA, if the option were exercised Parent would assign to the
Company its rights and obligations under the applicable LMA documents and
agreements (including the Option Agreement and the Programming Services and
Time Brokerage Agreement) and the assignment would be subject to
contractual consents.
The exercise of the option for the applicable property would be
triggered by action of the independent directors of the Company, and may be
withdrawn by the Company after receipt of the appraisal, as described
below. The appraiser shall be independent and selected by mutual agreement
of the Company and Parent. If the Company and Parent cannot agree as to the
selection of the appraiser, then each of them would select an appraiser and
the two appraisers would select a third appraiser. The appraisal would
take into account both the structure of the proposed transaction and the
tax basis of the assets to be acquired by the Company. If three appraisers
are used, the appraised value would be the average of the three appraisals.
If the option is exercised and not withdrawn, the fees for the appraisal
shall be paid as follows: (i) if a single appraiser is used, equally by the
Company and Parent; and (ii) if three appraisers are used, each party pays
the fees of its appraiser and the Company and Parent shall pay the fees of
the third appraiser equally. If the option is exercised and withdrawn, then
the Company shall pay the fees of all appraisers. If the option is not
exercised the first refusal right would terminate.
3. OTHER TERMS. The Option Agreement also will contain such other terms
and provisions that are customary for such option agreements, including
provisions with respect to the Communications Act and the rules and
regulations of the FCC.
2
<PAGE>
TERMS OF RADIO FACILITIES LEASE
-------------------------------
1. TERM: The term of the lease would commence at the Effective Time and
continue for each radio station respectively until the earlier of:
(i) Parent's divestiture of a radio station to a third party, in which case
either party (I.E., the Company or the buyer of the station), would be
entitled to terminate the lease with respect to that station upon 90 days
prior written notice, or (ii) 36 months following the Effective Time.
2. OTHER TERMS AND CONDITIONS: The leased premises would be the premises
occupied by each radio station as of the Effective Time and all other terms
and conditions under which the stations occupy their respective premises
would remain in effect (including allocations and adjustments to
allocations as consistent with past practice on a historical basis). The
lease also will contain such other terms and provisions that are customary
for such leases, including provisions with respect to the Communications
Act and the rules and regulations of the FCC.
3
<PAGE>
EXHIBIT 9.02(F)
TO MERGER AGREEMENT
TAX SHARING AGREEMENT
---------------------
Agreement made this day of , 1997, by The Hearst
Corporation ("Hearst"), and Argyle Te levision, Inc. ("Argyle TV"), both of
which are Delaware corporations, to establish the sharing of the federal,
state and local income and franchise taxes after Argyle TV Group (as
hereinafter defined) becomes a member of Group (as hereinafter defined).
1. DEFINITIONS
(a) GROUP - Parent, Argyle TV Group and all other corporations (whether
now existing or hereinafter formed or acquired) that at the relevant time
would be entitled or required to join with Parent (or any successor common
parent corporation) in filing a consolidated federal income tax return.
(b) PARENT - Hearst, or any successor common parent corporation of the
Group.
(c) ARGYLE TV GROUP - Argyle TV and any other corporation which would be
included in the affiliated group of corporations as defined in Section
1504(a) of the Internal Revenue Code of 1986, as amended (the "Code"), of
which Argyle TV would be the common parent, but for the inclusion of Argyle
TV in another affiliated group.
(d) ARGYLE TV GROUP TAX LIABILITY -
(1) The hypothetical consolidated federal income tax liability for
the Argyle TV Group for a taxable year determined as if the Argyle TV Group
had filed its own consolidated federal income tax return for such taxable
year and all prior taxable years ending after the date hereof. Such
hypothetical consolidated federal income tax liability shall be determined
at the end of the taxable year and shall reflect any tax elections,
conventions, treatments, or methods which (i) are actually utilized by the
Group in filing its federal consolidated tax return, and (ii) are applied
on a consistent basis from year to year (as so far is consistent with
clause (i)). The hypothetical tax liability of the Argyle TV Group shall
be computed by taking into account net operating loss, capital loss and
investment tax credit carryforwards of the Argyle TV Group generated in
taxable years during which Argyle TV Group was a member of the Group, and
carryforwards from prior separate return years to the extent they are
actually utilized by the Argyle Group.
(2) For the years in which Argyle TV Group joins or leaves the Group,
an election under Treasury Regulation Section 1.1502-76(b)(2)(ii) to
ratably allocate Argyle TV Group's items of income, gain, deductions,
losses and credits will be made by the required parties.
<PAGE>
(3) The Argyle TV Group Tax Liability shall be determined each year
by Parent and shall be reviewed by Deloitte and Touche or such other
nationally recognized firm of independent public accountants as may be
regularly employed by the Group at the time of the determination.
(e) ARGYLE TV GROUP ESTIMATED TAX LIABILITY - The hypothetical estimated
consolidated federal income tax liability for the Argyle TV Group
determined in accordance with the definition in Section 1, paragraph (d) as
of the end of each quarter of the taxable year.
2. ALLOCATIONS OF CONSOLIDATED FEDERAL INCOME TAX LIABILITY
(a) FILING OF CONSOLIDATED RETURNS
So long as Parent and the Argyle TV Group are members of the Group,
Parent shall file consolidated federal income tax returns for each taxable
year ending after the date hereof, which shall include Argyle TV Group as a
member of the Group.
(b) PAYMENT OF TAX LIABILITY
For each taxable year (or portion thereof) during which the Argyle TV
Group is included in a consolidated Federal income tax return with Parent,
Argyle TV shall pay to Parent an amount equal to the Argyle TV Group Tax
Liability. To the extent that the obligation to pay such amount has not
been fully satisfied pursuant to paragraph 2(c), Argyle TV shall pay any
such remaining amount to Parent by the date on which Parent is required to
make its final payment of federal income taxes for the taxable year without
the occurrence of penalties or additions to tax.
(c) ESTIMATED QUARTERLY PAYMENTS
At the end of each quarter of each taxable year (or portion thereof)
during which the Argyle TV Group is included in a consolidated Federal
income tax return with Parent, Argyle TV shall make estimated payments to
Parent, within five (5) days of receiving a request therefore, in an amount
equal to the Argyle TV Group Estimated Tax Liability for the quarter. If
the total of such estimated quarterly payments made by Argyle TV to Parent
with respect to a given taxable year are in excess of the liability of
Argyle TV to Parent pursuant to paragraph 2(b) for such taxable year,
Parent shall pay the amount of such excess to Argyle TV no later than the
date on which Parent files the consolidated federal income tax return for
the Group.
(d) CHANGES IN TAX LIABILITY
(i) If the Argyle TV Group Tax Liability is changed as the result of
any administrative settlement or final determination which is not litigated
by Group or in a final judicial determination, then the amount of payment
required from Argyle TV to Parent pursuant to paragraph 2(a) shall be
recomputed by substituting the amount of the Argyle TV Group Tax Liability
after the adjustments described above in place of the Argyle TV Group Tax
Liability as previously computed. Not later than ten days after such final
determination, Argyle TV shall pay to Parent or Parent shall pay to Argyle
2
<PAGE>
TV, as the case may be, the difference between the new Argyle TV Group Tax
Liability, including any interest or penalties imposed in respect of the
new Argyle TV Group tax liabilities and the amounts previously paid. The
parties recognize that such new liability is not necessarily Argyle TV's
final liability for that year and may be recomputed more than once.
(f) INDEMNITY
Parent agrees to indemnify, defend, and hold harmless Argyle TV and
each member of the Argyle TV Group from and against any and all liabilities
to the Internal Revenue Service for Federal income tax (including interest
and penalties thereon) with respect to any taxable year to which this
Agreement applies, including, without limitation, any such liabilities of
Argyle TV and each member of the Argyle TV Group pursuant to Treasury
Regulation Section 1.1502-6.
(g) STATE AND LOCAL TAXES
In the event Parent actually files consolidated, combined or unitary
income or franchise tax returns or reports in any state or local
jurisdiction on behalf of and pays such taxes owed by all or part of the
Group, the principles and procedures stated in this Agreement shall apply
for purposes of allocating such state or local tax liability, including
interest or penalties thereon, among the Parent and the Argyle TV Group.
(h) EFFECTS OF AGREEMENT
As between Parent and the Argyle TV Group, the provisions of this
Agreement shall fix the liability of each to the other as to the matters
covered hereunder, even if such provisions are not controlling for tax or
other purposes (including, but not limited to, the computation of
deductions or earnings and profits for federal tax purposes), and even if
Hearst and other corporations which now are, or which from time to time may
become, members of the Group enter into other arrangements for the
allocation of the portion of the total tax liability of the Group which is
allocable to them.
3. MISCELLANEOUS PROVISIONS
(a) SCOPE OF THE AGREEMENT
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter contained herein. No alteration,
amendment or modification of any of the terms of this Agreement shall be
valid unless made by an instrument signed in writing by an authorized
officer of each party.
(b) CHOICE OF LAW
This Agreement has been made in and shall be construed and enforced in
accordance with the laws of the State of New York.
3
<PAGE>
(c) SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of each
party hereto and its respective successors and assigns.
(d) TERMINATION
This Agreement shall terminate if (i) the parties agree in writing to
such a termination, (ii) the Argyle TV Group ceases to be a member of the
Group, including, without limitation, upon the effective date, if ever, of
Parent's S election, or (iii) Parent fails to file a consolidated return in
any taxable year. The terms of the Agreement will remain in effect for any
taxable year or part of a taxable year for which the income of Argyle TV or
any member of Argyle TV Group must be included in Parent's consolidated
return.
(e) INFORMATION
Parent, Argyle TV and all members of the Argyle TV Group agree to
cooperate in supplying information reasonably requested by the other party
in order to make any computations required under this Agreement and for the
purpose of defending tax examinations, including appeals and litigation.
(f) EFFECTIVE DATE
This Agreement shall be effective the date upon which Argyle TV Group
becomes a member of the Group.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
THE HEARST CORPORATION
By:______________________________
ARGYLE TELEVISION, INC.
By:______________________________
4
<PAGE>
EXHIBIT 9.02(G)
TO MERGER AGREEMENT
LICENSE AGREEMENT (the "AGREEMENT") dated as of ______ ___, 1997,
is by and between The Hearst Corporation, a Delaware corporation ("THC"),
and Hearst/Argyle Television, Inc., a Delaware corporation (the "COMPANY").
WHEREAS, Hearst is the sole and exclusive owner of all right, title
and interest in and to and has the right to grant the license pursuant to
the terms set forth herein with respect to the company and trade name
"Hearst";
WHEREAS, this Agreement is being executed and delivered simultaneously
with the closing of the transactions contemplated by the Amended and
Restated Agreement and Plan of Merger dated as of March 26, 1997 among THC,
the Company, Hearst Merger Sub, Inc. and Hearst Contribution Sub, Inc.
pursuant to which THC will become a controlling shareholder of the Company;
WHEREAS, the Company desires to enter into this Agreement for the
right and license to use the Hearst name in connection with the operation
of its business; and
WHEREAS, THC is willing to formally grant a license to the Company to
use the Hearst Name in connection with the operation of the Company's
business;
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein, the parties hereto agree as follows:
1. DEFINITIONS.
The following terms, as used herein, shall have the following
meanings:
1.1 "HEARST NAME" shall mean that portion of any company and
trade name consisting of "Hearst." Expressly excluded from the Hearst Name
are the words "Hearst Corporation" or any company name substantially
identical thereto and any corporate logos used by THC.
1.2 "LICENSE TERM" shall mean the term commencing as of the date
hereof and continuing until the License granted pursuant to Section 2.1
shall be terminated by THC as provided in Section 6.
1.3 "PERMITTED MANNER OF USE" shall mean use of the Hearst Name
in accordance with all legal requirements and also with THC's policy and
style standards as currently existing and as may be reasonably amended from
time to time by THC (including such other requirements or conditions with
regard to the use of the Hearst Name as may be established by THC in
accordance with good trademark practice.)
<PAGE>
2. GRANT OF LICENSE TO USE THE HEARST NAME.
2.1 LICENSE. THC hereby grants to the Company, during the
License Term, a personal, royalty-free, non-exclusive, non-transferrable,
non-assignable, license to use in the United States only, without the right
to grant sublicenses, the Hearst Name solely in the Company's name as
follows: "Hearst/Argyle Television, Inc."; provided that such use shall be
in accordance with the Permitted Manner of Use.
2.2 INSPECTIONS. The form of using the Hearst Name in the name
of the Company shall be subject to THC's approval, which approval shall not
be unreasonably withheld. In the event that THC objects to any such form
of using the Hearst Name, it shall give written notice of its objections to
and consult with the Company in a good faith effort to resolve any such
objections.
2.3 ABSENCE OF INTEREST IN HEARST NAME. Nothing herein shall
give the Company any right, title or interest in the Hearst Name apart from
the rights to use specified in Section 2.1, all such right, title and
interest, including but not limited to rights of registration, maintenance
and enforcement, being solely with THC. The Hearst Name is the sole
property of THC and any and all uses by the Company shall inure to the sole
benefit of THC, including goodwill in respect thereof. To the extent that
any jurisdiction shall find for any reason as a matter of law or otherwise
that such use has vested in the Company any right, title or interest in or
to the Hearst Name, the Company, upon the request of THC, shall execute and
deliver to THC, without charge, appropriate assignments to vest such
rights, title and interest in THC. At THC's request and expense, the
Company agrees to assist THC in the procurement or maintenance of any
filings or registrations for the Hearst Name in any jurisdiction by
providing any information available from the Company and executing any
documents necessary therefor.
2.4 FILING, REGISTRATION OR USE OF HEARST NAME. The Company and
its subsidiaries will not:
(i) raise or cause to be raised any questions concerning or
objections to the validity of the Hearst Name in any jurisdiction, or
to any registrations thereof or applications therefor, or to the sole
proprietary rights of THC thereto, on any grounds whatsoever;
(ii) alter or amend in any way the Hearst Name and will not,
during the term of this Agreement or thereafter adopt or use any name
that is confusingly similar thereto;
(iii) file, apply to register or register the Hearst Name,
alone or in combination with any other word or device or symbol or any
name, mark, term, script or device colorably similar thereto, except
if, as, when, and to the extent as may be expressly consented to in
writing in advance by THC in specific instances; or
2
<PAGE>
(iv) use the Hearst Name in conjunction or in
combination with any other name, mark, term, script or device
whatsoever, except as provided in Section 2.1 or to the extent
approved otherwise in writing in advance by THC.
3. INDEMNIFICATION BY THE COMPANY. The Company hereby agrees to
indemnify, defend and hold harmless, THC, its subsidiaries (other than the
Company and its subsidiaries) and their affiliates and their respective
employees, officers, directors, and agents and shall hold each of them
harmless from and against any and all claims, demands, suits, actions,
damages, and judgments brought or obtained by a third party ("Claims"), of
whatever type or kind arising out of (i) any use of the Hearst Name by the
Company, including, without limitation, product liability or personal
injury Claims; or (ii) any breach by the Company of any of the terms and
conditions of this Agreement.
4. DEFENSE OF INFRINGEMENT CLAIMS. THC agrees to indemnify and
defend the Company, its Affiliates and their employees, officers, directors
and agents and shall hold each of them harmless to the extent that any
Claims arise out of an assertion or claim that the use of the Hearst Name
by the Company pursuant to the terms of this Agreement infringes the trade
names, trademarks or service marks of a third party.
5. INFRINGEMENT BY THIRD PARTIES. Upon discovery by the Company, it
shall notify THC of any adverse uses confusingly similar or otherwise
damaging to the Hearst Name, but shall take no other action of any kind
with respect thereto except by the express prior written authorization of
THC. The determination of whether or not legal action shall be taken in
any case shall lie exclusively with and at the sole discretion of THC. In
the event that THC institutes legal action pursuant to this section, the
costs of any such legal action shall be borne by THC. THC may bring suit
in its own name with choice of counsel and control of the legal action by
THC. The Company shall cooperate with and assist THC in any such suit by
promptly providing any reasonably requested documents in the Company's
possession, custody or control, and by making its personnel familiar with
the facts available to THC and otherwise, without charge. In the event
that threatened or actual legal action by THC results in a settlement or
resolution that provides damages or other monies to THC, such monies shall
be retained by THC.
6. TERMINATION. THC may terminate the license granted pursuant to
Section 2.1, at any time, for any reason, on written notice given to the
Company at least six (6) months prior to the proposed termination date.
Upon the termination of such license, the Company shall terminate forthwith
all uses of the Hearst Name and, to the extent necessary, shall take all
steps necessary to amend the Company's certificate of incorporation to
eliminate the Hearst Name from the Company's name as soon as practicable.
7. REPRESENTATIONS AND WARRANTIES. THC makes no representations or
warranties with respect to the validity, status, enforceability or coverage
of the Hearst Name.
8. ASSIGNABILITY. This Agreement shall not be assignable, in whole
or part, directly or indirectly, by the Company without notice to and the
prior written consent of THC, and any attempt to assign any rights or
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obligations arising under this Agreement without such consent in violation
hereof shall be null and void.
9. GENERAL PROVISIONS.
9.1 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing (including telefax or similar
writing) and shall be given:
(i) If to THC, to:
The Hearst Corporation
959 Eighth Avenue
New York, New York 10019
Attention: Victor F. Ganzi
Telefax No.: (212) 649-2035
(ii) If to the Company to:
Hearst/Argyle Television, Inc.
[ADDRESS]
Attention:
Telefax:
or (iii) in either case, to such other person or to such other address or
telefax number as the party to whom notice is to be given may have
furnished the other parties in writing by like notice. If mailed, any such
communication shall be deemed to have been given on the third business day
following the day on which the communication is posted by registered or
certified mail (return receipt requested). If given by any other means it
shall be deemed to have been given when delivered to the address specified
in this Section 9.1.
9.2 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
9.3 MISCELLANEOUS. This Agreement constitutes the entire
agreement and supersedes all other prior agreements and understandings,
both written and oral, between the parties with respect to the subject
matter hereof and shall be governed in all respects by the laws of the
State of New York without regard to its laws or regulations relating to
choice of law.
9.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 SPECIFIC PERFORMANCE. The Company agrees that money damages
would not be a sufficient remedy for any breach of any provision of this
Agreement by the Company, and that in addition to all other remedies which
THC may have, THC will be entitled to specific performance and injunctive
or other equitable relief as a remedy for any such breach. No failure or
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delay by THC in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of
any right, power or privilege hereunder.
9.6 SURVIVAL. The following provision shall survive any
termination of the license granted pursuant to this Agreement: Sections
2.3, 2.4, 3, 4, 5 and 9.5.
IN WITNESS WHEREOF the parties hereto have caused this Agreement
to be executed by their duly authorized officers.
THE HEARST CORPORATION
By:______________________________
Name:
Title:
HEARST/ARGYLE TELEVISION, INC.
By:______________________________
Name:
Title:
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EXHIBIT 9.02(H)(A)
TO MERGER AGREEMENT
LIST OF PERSONS DELIVERING
MANAGEMENT TRANSFER RESTRICTION AGREEMENTS
------------------------------------------
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
Bob Marbut Chairman and Chief Executive Officer
</TABLE>
<PAGE>
EXHIBIT 9.02(H)(B)
TO MERGER AGREEMENT
FORM OF MANAGEMENT
TRANSFER RESTRICTION AGREEMENT
Argyle Television, Inc.
200 Concord Plaza, Suite 700
San Antonio, Texas 78216
Ladies and Gentlemen:
Reference is made to the Amended and Restated Agreement and Plan
of Merger dated as of March 26, 1997 (the "AGREEMENT"), by and among Argyle
Television, Inc., a Delaware corporation (the "COMPANY"), The Hearst
Corporation ("PARENT"), Hearst Contribution Sub, Inc. and Hearst Merger
Sub, Inc. ("MERGER SUB"), pursuant to which Merger Sub will be merged with
and into the Company, as a result of which the Company will be the
surviving corporation (the "MERGER"). As a result of the Merger, the
undersigned may receive shares of Surviving Corporation Series A Common
Stock (as defined in the Agreement) in exchange for shares owned by the
undersigned of Existing Series A Common Stock (as defined in the
Agreement). The execution and delivery by the undersigned of this
agreement is a condition precedent to your obligations to effect the
Merger.
For and in consideration of your entering into the Merger
Agreement and the performance of your obligations thereunder, the
undersigned agrees that, until the earlier of the third anniversary of the
date the undersigned acquired the Surviving Corporation Series A Common
Stock received in the Merger or, the date the undersigned is no longer
employed by the Company, the undersigned will not, without the prior
written consent of the Surviving Corporation (as defined in the Agreement),
directly or indirectly, sell, offer, contract to sell, grant any option for
the sale of, or otherwise dispose of any amount of the Surviving
Corporation Series A Common Stock or any securities convertible into,
exchangeable for, or exercisable for Surviving Corporation Series A Common
Stock, or any rights to purchase or acquire Surviving Corporation Series A
Common Stock, owned either of record or beneficially by the undersigned
such that, after such transfer, the undersigned and the undersigned's
permitted transferees would own less than 574,870 shares of the Surviving
Corporation Series A Common Stock; PROVIDED, HOWEVER, that gifts or
transfers for estate planning purposes shall not be prohibited by this
agreement if the donee or transferee agrees to be bound by the foregoing in
the same manner as it applies to the undersigned.
<PAGE>
This agreement shall become effective as of the time the Merger
Agreement is executed, and shall be governed by and construed in accordance
with the laws of the State of Delaware.
Very truly yours,
______________________________
Name: Bob Marbut
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EXHIBIT 7.12
AGREEMENT
This AGREEMENT dated as of August 28, 1997, is made and entered into
by and among The Hearst Corporation, a Delaware corporation ("Parent"), and
Argyle Television, Inc., a Delaware corporation (the "Company").
WHEREAS, Parent and the Company are parties to a certain Amended and
Restated Agreement and Plan of Merger dated as of March 26, 1997 (the "Merger
Agreement") (capitalized terms used but not defined below shall have the
respective meanings assigned thereto by the Merger Agreement);
WHEREAS, upon the consummation of the Merger, Parent and the Company
will be in a controlled group for purposes of Section 414(b) and (c) of the
Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Pension Plan of WCVB-TV and Local Union No. 1228 of the
International Brotherhood of Electrical Workers and the KMBC Pension Plan for
Union Employees (collectively, the "Collectively Bargained Plans") have
historically been maintained separately by the particular employers of the
participants therein, and, consistently therewith, Parent and the Company agree
that, after the consummation of the Merger, the Company should assume sole
sponsorship of the Collectively Bargained Plans (including the assets and
liabilities thereof);
WHEREAS, in connection with the Merger, certain active employees of
Parent and its affiliates who are now participants in The Hearst Corporation
Retirement Plan (the "Parent Plan") will be transferring to the employ of the
Company (the "Transferring Employees");
WHEREAS, the Company presently anticipates it will maintain a
defined benefit pension plan intended to be qualified under Section 401(a) of
the Code for such Transferring Employees as well as certain other employees of
the Company;
WHEREAS, Parent and the Company agree that shortly after the
consummation of the Merger, assets and liabilities with respect to the
Transferring Employees will be transferred from the Parent Plan to a defined
benefit pension plan established or to be established by the Company (the
"Company Plan");
WHEREAS, the parties hereto agree that, in connection with the
foregoing, a portion of the overfunding in the Parent Plan should be
transferred to the Company Plan in connection with the transfer of liabilities
thereto;
WHEREAS, the Company will benefit from the overfunding being
transferred, because, among other things, the aggregate overfunding would
result in an approximately $3.8 million per year reduction in future expense
associated with the Company's post-Merger pension expenses; and
WHEREAS, in connection with the transactions contemplated under the
Merger Agreement, as an integral part of such transactions, taking into account
the assumption by the Company of the Collectively Bargained Plans and the
transfer of assets and liabilities related to the Transferring Employees from
the Parent Plan to the Company Plan as contemplated hereby, and for other good
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and valid business reasons, Parent and the Company have agreed that the Company
will issue to Parent additional shares of Series B Common Stock, $.01 par
value, of the Company, as the surviving corporation in the Merger ("Series B
Common Stock");
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. On the "Transfer Date" (as defined below), the Company
shall assume sponsorship of each of the Collectively Bargained Plans (including
the assets and liabilities thereof).
Section 2. As soon as practicable after the Closing, the Company
shall establish (if it has not already done so) the Company Plan, which shall
cover the Transferring Employees. The Company shall provide Parent with an
opinion of counsel reasonably acceptable to Parent to the effect that the
Company Plan and its related trust are qualified under Section 401(a) of the
Code and tax-exempt under Section 501(a) of the Code, respectively, taking into
account any amendments thereto that are made by the Company during the
applicable remedial amendment period. The Company hereby agrees to submit
promptly (and, in the case of the adoption of the Company Plan after the date
hereof, in no event later than 60 days after such adoption) the Company Plan
and its related trust to the Internal Revenue Service for a determination
letter with respect to such qualification and tax-exemption, and to make any
amendments and take such other actions as the Internal Revenue Service may
require as a condition of issuing such letter.
Section 3. On a date (the "Transfer Date") as soon as practicable
after the consummation of the Merger, and the establishment of the Company
Plan, the Parent Plan shall transfer to the Company Plan, and the Company Plan
shall accept, (i) liability for the accrued benefits under the Parent Plan of
the Transferring Employees up to the Transfer Date, (ii) assets with a value
equal to the present value of the accumulated benefit obligation accrued under
the Parent Plan with respect to the Transferring Employees as of the Transfer
Date, and (iii) assets such that the aggregate overfunding transferred or
assumed, as applicable, by virtue of this Agreement is $35.8 million. The
actuarial assumptions and other criteria to be used for purposes of the
calculations required by the foregoing provisions of this Section 3 shall be
consistent with the past practices, policies and procedures used by Parent and
in compliance with Section 414(l) of the Code. Notwithstanding the foregoing
provisions of this Section 3, the transfer from the Parent Plan to the Company
Plan shall comply with Section 414(l) of the Code.
Section 4. On the Transfer Date, the Company shall issue to Parent
one million shares of Series B Common Stock, and shall deliver to Parent a
stock certificate evidencing such shares. Notwithstanding the foregoing, the
parties agree to negotiate an adjustment to such number of shares in the event
that an adjustment to the amount to be transferred under clause (iii) of the
first sentence of Section 3 is required under the last sentence of Section 3.
Section 5. The Company represents and warrants to Parent that:
(a) The Company is a corporation duly organized, validly existing
and in good standing, under the laws of the State of Delaware and has the
corporate power and authority to carry on its business as now being conducted
and to own and lease its properties.
(b) The Company has full corporate power and authority to (i) enter
into this Agreement, (ii) issue and deliver the shares of Series B Common Stock
to be issued to Parent pursuant to Section 4 and (iii) incur and perform fully
its obligations provided for herein, all of which have been duly authorized by
all necessary corporate action. This Agreement has been duly executed and
delivered by the Company and is the legal, valid and binding obligation of the
2
<PAGE>
Company enforceable 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 and by principles of equity regarding the availability of remedies.
The execution and delivery of this Agreement, and the performance by the
Company of this Agreement will not: (x) require any material approval or
consent of any governmental or regulatory body or any material approval or
consent of any other Person except as described in Section 2; or (y) conflict
with or result in any breach or violation of any of the terms and conditions
of, or constitute (or with notice or lapse of time or both constitute) a
default under, its certificate of incorporation or by-laws (or similar
governing documents), or any material statute, law, regulation, order, judgment
or decree of or applicable to the Company or any of its subsidiaries, or any
material instrument, contract or other agreement to which the Company or any of
its subsidiaries is a party or by or to which it or any of its subsidiaries is
bound or subject.
(c) The shares of Series B Common Stock to be issued to Parent
pursuant to Section 4, when issued and delivered pursuant to this Agreement,
will be duly authorized, validly issued, fully paid and nonassessable.
Section 6. Parent represents and warrants to the Company that:
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority to carry on its business as now being conducted and to own
and lease its properties.
(b) Subject to receipt of the ratification referred to in Section
7(k), Parent has full corporate power and authority to (i) enter into this
Agreement and (ii) incur and perform fully its obligations provided for herein,
all of which have been duly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by Parent and is the legal,
valid and binding obligation of Parent enforceable in accordance with its
terms, except to the extent that such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and by principles of equity
regarding the availability of remedies. The execution and delivery of this
Agreement and the performance by Parent of this Agreement will not:
(x) require any material approval or consent of any governmental or regulatory
body or, subject to receipt of the ratification referred to in Section 7(k),
any material approval or consent of any other Person or (y) conflict with or
result in any breach or violation of any of the terms and conditions of, or
constitute (or with notice or lapse of time or both constitute) a default
under, its certificate of incorporation or by-laws, or any material statute,
law, regulation, order, judgment or decree of or applicable to Parent or any of
its subsidiaries, or any material instrument, contract or other agreement to
which Parent or any of its subsidiaries is a party or by or to which it or any
of its subsidiaries is bound or subject.
(c) Parent is aware that the Series B Common Stock to be issued to
Parent hereunder have not been registered under applicable securities laws and
that such Series B Common Stock is being issued in reliance on the exemptions
from registration under such laws. Parent is acquiring the Series B Common
Stock for its own account as principal and not with a view to resale or
distribution or with any present intention of distributing or selling the same
in violation of such laws. Parent is an "accredited investor" as such term is
defined in Rule 501(a) under the Securities Act of 1933, as amended. Parent
acknowledges and agrees that the certificates representing the Series B Common
Stock will contain legends referring to the restrictions on transfer imposed by
applicable securities laws.
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Section 7.
(a) This Agreement may not be assigned by Parent or the Company
without the prior written consent of the other party, and any attempt to assign
any rights or obligations arising under this Agreement without such prior
consent in violation hereof shall be null and void.
(b) Nothing in this Agreement is intended to or shall confer upon
the Company any rights to control or otherwise affect the administration or
investment of the Master Trust.
(c) The construction, validity and enforceability of this Agreement
shall be governed by the laws of the State of New York, without regard to its
conflicts of laws principles.
(d) All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
(i) If to Parent:
The Hearst Corporation
959 Eighth Avenue
New York, New York 10010
Attn: Victor F. Ganzi
Telephone: (212) 649-2000
Telecopier: (212) 649-2035
(ii) If to the Company:
Hearst-Argyle Television, Inc.
888 Seventh Avenue
New York, New York 10106
Attn: Dean H. Blythe
Telephone: (212) 649-2307
Telecopier: (212) 489-2314
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number
as provided in this Section, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to
whom a copy of such notice is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
(e) The failure of either party at any time to require performance
by the other party of any provision of this Agreement shall in no way affect
the right of such party to require performance of that provision. Any waiver
by either party of any breach of any provision of this Agreement shall not be
construed as a waiver of any continuing or succeeding breach of such provision,
a waiver of the provision itself or a waiver of any right under this Agreement.
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(f) All provisions of this Agreement are severable and any
provision which may be prohibited by law shall be ineffective to the extent of
such prohibition without invalidating the remaining provisions of this
Agreement.
(g) This Agreement (including the Schedules hereto) and any other
agreements executed and delivered by the parties contemporaneously herewith
constitute the entire agreement between the parties concerning the subject
matter thereof and supersedes all prior agreements and understandings, both
oral or written, between the parties with respect to the subject matter hereof.
(h) This Agreement will be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. Nothing contained in
this Agreement, express or implied, is intended to confer upon any person other
than the parties to it and their respective successors and permitted assigns
any rights or remedies under or by reason of this Agreement.
(i) The section headings contained in this Agreement are for
reference purposes only and shall not in any way control the meaning or
interpretation of this Agreement.
(j) This Agreement may be executed in separate counterparts, each
of which so executed and delivered shall constitute an original, but all such
counterparts shall together constitute one and the same instrument.
(k) Anything contained in this Agreement to the contrary
notwithstanding, this Agreement shall not become effective unless and until the
Merger shall have been consummated and the Board of Directors of Parent shall
have ratified the transactions contemplated hereby. This Agreement shall
terminate and become null and void on December 31, 1997 unless such
ratification shall have been obtained prior to such date.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE HEARST CORPORATION
By: /S/ JON O. SMITH, JR.
------------------------------
Name: Jon O. Smith, Jr.
Title: Assistant Treasurer
ARGYLE TELEVISION, INC.
By: /S/ DEAN H. BLYTHE
------------------------------
Name: Dean H. Blythe
Title: Vice President
5
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EXHIBIT 7.13
DEMAND PROMISSORY NOTE
$200,000,000.00 New York, New York
August 29, 1997
For value received, the undersigned HAT CONTRIBUTION SUB, INC., a
Delaware corporation ("HAT"), unconditionally promises to pay to the order
of THE CHASE MANHATTAN BANK, a New York state banking corporation (the
"BANK"), at its principal office located at 270 Park Avenue, New York, New
York 10017, the principal sum of TWO HUNDRED MILLION DOLLARS
($200,000,000.00), ON DEMAND.
HAT promises to pay interest on the unpaid amount of this Note
from time to time at a rate per annum equal to the Base Rate (as defined
below), as in effect from time to time, computed on the basis of a year of
365 days and actual days elapsed (including the first day but excluding the
last day) occurring in the period for which payable, provided that HAT
promises to pay interest at a rate per annum equal to the Base Rate PLUS 2%
on any principal of this Note that shall not be paid in full upon demand,
for the period from and including the is paid in full. Accrued interest on
this Note shall be payable on demand, but in any event monthly on the last
day of each month.
No interest shall be paid on this Note if the principal amount
hereof is repaid in full to the Bank, in immediately available funds, by
5:00 p.m. New York time on the date hereof.
For purposes hereof, the "BASE RATE" shall mean, for any day, a
rate per annum equal to the higher of (a) the Federal Funds Rate (as
defined below) for such day plus 1/2 of 1% and (b) the Prime Rate (as
defined below) for such day. Each change in any interest rate provided for
herein based upon the Base Rate resulting from a change in the Base Rate
shall take effect at the time of such change in the Base Rate. The
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the business
day next succeeding such day, PROVIDED that (a) if the day for which such
rate is to be determined is not a business day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
business day as so published on the next succeeding business day and (b) if
such rate is not so published for any business day, the Federal Funds Rate
for such business day shall be the average rate charged to the Bank on such
business day on such transactions as determined by the Bank. The "PRIME
RATE" shall mean the rate of interest from time to time announced by the
Bank at its principal office in New York City as its prime commercial
lending rate.
The principal of and interest on this Note shall automatically
become immediately due and payable without presentment, demand, protest or
other formalities of any kind, all of which are hereby expressly waived by
<PAGE>
HAT, upon the occurrence and continuance of any of the following:
(a) HAT shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, examiner
or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Federal
Bankruptcy Code, (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement or winding-up, or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code or
(vi) take any corporate action for the purpose of effecting any of the
foregoing; or
(b) A proceeding or case shall be commenced, without the
application or consent of HAT, in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement
or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner,
liquidator or the like of HAT or of all or any substantial part of its
property or (iii) similar relief in respect of HAT under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed
and in effect, for a period of 60 or more days; or an order for relief
against HAT shall be entered in an involuntary case under the Federal
Bankruptcy Code.
The proceeds of this Note shall be deposited into account no.
323514812 (the "COLLATERAL ACCOUNT") established by HAT at the Bank and HAT
hereby grants to the Bank a security interest in the Collateral Account and
the proceeds deposited therein as security for the obligations of HAT in
respect of this Note.
The provisions of this Note shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and
assigns, except that HAT may not assign any of its obligations hereunder
without the prior written consent of the Bank, PROVIDED that HAT may assign
its obligations under this Note to Argyle Television, Inc., a Delaware
corporation ("ARGYLE"), so long as concurrently with such assignment (i)
ownership of the Collateral Account is transferred to Argyle and (ii)
Argyle shall have assumed the obligations of HAT under this Note by
executing the Assumption beneath the signature of HAT below (whereupon,
Argyle shall become obligated in respect of this Note, as if it were the
original maker hereof). Nothing in this Note, express or implied, shall be
construed to confer upon any person (other than the parties hereto and
their respective successors and assigns permitted hereby) any legal or
equitable right, remedy or claim under or by reason of this Note.
All payments under this Note shall be made in lawful money of the
United States of America and in immediately available funds at the Bank's
principal office specified above.
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HAT waives presentment, notice of dishonor, protest and any other
formality with respect to this Note.
HAT shall reimburse the Bank on demand for all costs, expenses
and charges (including, without limitation, reasonable fees and charges of
legal counsel for the Bank) in connection with the preparation, performance
or enforcement of this Note.
This Note shall be governed by, and construed in accordance with,
the law of the State of New York.
HAT CONTRIBUTION SUB, INC.
By /S/ JONATHAN E. THACKERAY
-----------------------------------------
Title: President
ASSUMPTION
By its signature below, Argyle Television, Inc. hereby (i)
assumes all obligations of HAT Contribution Sub, Inc. in respect of the
above Note (and agrees that it shall be obligated in respect of said Note
as if it were the original maker thereof) and (ii) confirms that the
Collateral Account is being transferred to it subject to the security
interest therein and in the proceeds deposited therein created by HAT
Contribution Sub, Inc. pursuant to said Note (and, in that connection,
Argyle Television, Inc. hereby grants to the Bank a security interest in
the Collateral Account and the proceeds deposited therein as security for
the obligations of Argyle Television, Inc. in respect of said Note).
ARGYLE TELEVISION, INC.
By /S/ HARRY T. HAWKS
-----------------------------------------
Title: Chief Financial Officer,
Assistant Secretary & Treasurer
3
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