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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 1995
GANNETT CO., INC.
(Exact name of registrant as specified in its charter)
Delaware 1-6961 16-0442930
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 Wilson Boulevard, Arlington, Virginia 22234
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 284-6000
__________________________________________________________
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
On July 24, 1995, Gannett Co., Inc. ("Gannett") entered
into an Agreement and Plan of Merger dated as of July 24, 1995
(the "Merger Agreement") among Gannett, a wholly owned subsidiary
of Gannett ("Sub"), and Multimedia, Inc. ("Multimedia"), a South
Carolina corporation. The Merger Agreement provides for the merger
of Sub with and into Multimedia, with Multimedia surviving as a
wholly owned subsidiary of Gannett.
Pursuant to the Merger Agreement each share of issued
and outstanding common stock of Multimedia will be converted into
the right to receive $45.25 in cash, for a total price in excess
of $1.7 billion. As a result of the merger, Gannett will also
assume or incur approximately $540 million of long-term
indebtedness of Multimedia. The purchase price is subject to
adjustment if Multimedia's long-term debt (including the current
portion of long-term debt) at December 31, 1995 exceeds a
specified level.
Prior to its execution, the Merger Agreement was approved
by the respective boards of directors of Gannett and Multimedia.
The consummation of the merger is subject, among other things, to
the approval of the shareholders of Multimedia, certain approvals
by the Federal Communications Commission, and other regulatory
approvals. In addition, the merger is conditioned on Multimedia's
debt not exceeding a specified level on the second business day
prior to consummation of the merger.
A copy of the Merger Agreement is attached to this
report as Exhibit 99.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
See Exhibit Index for list of exhibits.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GANNETT CO., INC.
Dated: July 26, 1995 By: /s/ Thomas L. Chapple
Thomas L. Chapple,
Senior Vice President,
General Counsel and Secretary
EXHIBIT INDEX
Exhibit
Number Title or Description Location
99 Agreement and Plan of Merger dated Attached
July 24, 1995
CONFORMED COPY Exhibit 99
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 24, 1995
AMONG
GANNETT CO., INC.,
MULTIMEDIA TALK CHANNEL, INC.
AND
MULTIMEDIA, INC.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Merger Agree-
ment"), dated as of July 24, 1995, by and among GANNETT CO.,
INC., a Delaware corporation ("Parent"), MULTIMEDIA TALK CHAN-
NEL, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Sub"), and MULTIMEDIA, INC., a South
Carolina corporation (the "Company").
WHEREAS, the respective Boards of Directors of Par-
ent, Sub (the name of which may be changed to "Gannett Multi-
media Acquisition Subsidiary, Inc.") and the Company have
approved the merger with and into the Company (the "Merger"),
upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing
premises and the representations, warranties and agreements
contained herein the parties hereto agree as follows:
ARTICLE I
The Merger
Section 1.1 The Merger. Upon the terms and subject
to the conditions hereof, at the Effective Time (as defined in
Section 1.3), Sub shall be merged with and into the Company
and the separate existence of Sub shall thereupon cease, and
the Company shall continue as the surviving corporation in the
Merger (the "Surviving Corporation") under the laws of the
State of South Carolina under the name "Multimedia, Inc."
Section 1.2 Closing. Unless this Merger Agreement
shall have been terminated and the transactions herein contem-
plated shall have been abandoned pursuant to Section 9.1, and
subject to the satisfaction or waiver of the conditions set
forth in Article VIII, the closing of the Merger will take
place as promptly as practicable (and in any event within two
business days) after satisfaction or waiver of the conditions
set forth in Sections 8.1(a), 8.1(b) and 8.3(b), at the
offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York 10019, unless another date, time or
place is agreed to in writing by the parties hereto (the
"Closing Date").
Section 1.3 Effective Time of the Merger. The
Merger shall become effective upon the filing of articles of
merger with the Secretary of State of the State of South Caro-
lina in accordance with the provisions of the South Carolina
Business Corporation Act (the "South Carolina Act"), and by
making any related filings required under the General Corpora-
tion Law of the State of Delaware ("Delaware Law") to be made
prior to or concurrent with the effectiveness of the Merger,
which filings shall be made as soon as practicable on the
Closing Date. When used in this Merger Agreement, the term
"Effective Time" shall mean the time at which such articles
are accepted for filing by the Secretary of State of South
Carolina and all such other filings required to be made under
Delaware Law have been filed and become effective.
Section 1.4 Effect of the Merger. The Merger
shall, from and after the Effective Time, have all the effects
provided by applicable South Carolina law and Delaware Law.
If at any time after the Effective Time the Surviving
Corporation shall consider or be advised that any further
deeds, conveyances, assignments or assurances in law or any
other acts are necessary, desirable or proper to vest, perfect
or confirm, of record or otherwise, in the Surviving
Corporation, the title to any property or rights of Sub or the
Company (the "Constituent Corporations") to be vested in the
Surviving Corporation, by reason of, or as a result of, the
Merger, or otherwise to carry out the purposes of this Merger
Agreement, the Constituent Corporations agree that the
Surviving Corporation and its proper officers and directors
shall execute and deliver all such deeds, conveyances, assign-
ments and assurances in law and do all things necessary, de-
sirable or proper to vest, perfect or confirm title to such
property or rights in the Surviving Corporation and otherwise
to carry out the purposes of this Merger Agreement, and that
the proper officers and directors of the Surviving Corporation
are fully authorized in the name of each of the Constituent
Corporations or otherwise to take any and all such action.
The Surviving Corporation may be served with process in the
State of Delaware in any proceeding for enforcement of any
obligation of Sub, as well as for enforcement of any
obligation of the Surviving Corporation arising from the
Merger, including any suit or other proceeding to enforce the
right of any stockholders as determined in appraisal
proceedings pursuant to the provisions of Section 262 of Delaware
Law and irrevocably appoints the Secretary of State of the
State of Delaware as its agent to accept service of process in
any such suit or proceedings. The address to which a copy of
such process shall be mailed by such Secretary of State is
1100 Wilson Boulevard, Arlington, Virginia 22234.
ARTICLE II
The Surviving Corporation
Section 2.1 Articles of Incorporation. The Ar-
ticles of Incorporation of the Company as in effect
immediately prior to the Effective Time shall be the Articles
of Incorporation of the Surviving Corporation after the
Effective Time, until thereafter changed or amended as
provided therein or by applicable law.
Section 2.2 By-laws. The By-laws of the Company as
in effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation, until, subject to
Section 7.6(a), thereafter changed or amended as provided
therein or by applicable law.
Section 2.3 Board of Directors; Officers. The di-
rectors of Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation and the officers
of the Company immediately prior to the Effective Time shall
be the officers of the Surviving Corporation, in each case,
until the earlier of their respective resignations or the time
that their respective successors are duly elected or appointed
and qualified.
ARTICLE III
Conversion of Shares
Section 3.1 Merger Consideration. As of the Effec-
tive Time, by virtue of the Merger and without any action on
the part of any shareholder of the Company or Sub:
(a) All shares of common stock, $0.10 par value, of
the Company ("Company Common Stock") and the associated
Common Share Purchase Rights which are held by Parent,
the Company or any wholly-owned subsidiary of Parent (in-
cluding Sub) or the Company shall be cancelled and
retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor. The shares of
Company Common Stock together with, to the extent
applicable, the associated Common Share Purchase Rights
are referred to herein collectively as the "Shares".
(b) Each issued and outstanding Share, other than
those to which the first sentence of Section 3.1(a) ap-
plies and other than any Dissenting Shares (as defined in
Section 3.2), shall be converted into and represent the
right to receive $45.25 in cash (or, if there shall be
Excess Debt, $45.25 minus the Per Share Excess Debt
Amount in cash), without interest thereon (such amount of
cash being referred to herein as the "Merger Consider-
ation"). "Excess Debt" shall equal the amount, if any,
by which the sum of (i) the current installments of long-
term debt and (ii) long-term debt, excluding current
installments, as reflected on the Company's consolidated
balance sheet as of December 31, 1995 (the "Balance
Sheet") exceeds the Target Debt Amount (as hereinafter
defined). The "Per Share Excess Debt Amount" shall equal
the quotient obtained by dividing the Excess Debt by
40,562,808 shares of Company Common Stock. The "Target
Debt Amount" shall equal $552.5 million, increased to the
extent that cash and cash equivalents reflected on the
Balance Sheet exceed $5 million and decreased (increased)
to the extent that the sum of (i) capital improvements
and expenditures by the Company and its subsidiaries
during the year ending December 31, 1995 and (ii)
acquisitions made by or for the Company's Security
division during the year ending December 31, 1995 is less
than (greater than) $101 million.
(c) Each issued and outstanding share of common
stock of Sub shall be converted into and become one fully
paid and nonassessable share of common stock of the Sur-
viving Corporation.
Section 3.2 Dissenting Shares. Each Share (i) as
to which a written notice of an intent to demand payment is
given to the Company (in accordance with Section 33-13-210 of
the South Carolina Act) prior to the vote of the Company's
shareholders on the Merger taken at the meeting of such share-
holders duly held for such purpose (the "Company Special Meet-
ing") and not withdrawn at or prior to the time of such vote,
(ii) which is not voted by the holder thereof in favor of the
Merger at the Company Special Meeting, and (iii) as to which a
written demand for payment of fair value, accompanied by the
certificate for such Share, shall have been timely filed (in
accordance with Section 33-13-230 of the South Carolina Act)
with the Company or the Surviving Corporation, as the case may
be (a "Dissenting Share"), shall not be converted into and
represent the right to receive the Merger Consideration and
such Share shall be subject to the provisions of Chapter 13 of
the South Carolina Act; provided, however, that if any such
shareholder shall withdraw his or her demand for payment or
shall fail to perfect his or her rights to such payment in
accordance with the South Carolina Act, then such holder's
Dissenting Shares shall cease to be Dissenting Shares and each
such Share shall, subject to the terms of this Merger
Agreement and the South Carolina Act, be converted into and
represent the right to receive the Merger Consideration. Each
holder of a Dissenting Share who becomes entitled, pursuant to
the South Carolina Act, to receive payment of the fair value
of his or her Dissenting Share shall receive such payment from
the Surviving Corporation (as required by Chapter 13 of the
South Carolina Act). The Company shall give Parent notice of
its receipt of any written notice of an intent to demand
payment.
Section 3.3 Payment. (a) Pursuant to an agreement
in form and substance acceptable to the Parent and the Company
to be entered into prior to the Effective Time between Parent
and a disbursing agent selected by Parent and acceptable to
the Company (the "Disbursing Agent"), at the Effective Time,
Parent or Sub shall make available to the Disbursing Agent the
aggregate amount of cash to which holders of Shares shall be
entitled pursuant to Section 3.1(b). The agreement with the
Disbursing Agent shall provide for reasonable investment of
the cash as directed by the Parent and all investment income
shall be paid to the Parent.
(b) As soon as practicable after the Effective
Time, Parent shall cause the Disbursing Agent to send a notice
and a letter of transmittal to each holder of certificates
formerly evidencing Shares (other than certificates formerly
representing Shares to be cancelled pursuant to Section 3.1(a)
and certificates representing Dissenting Shares) advising such
holder of the effectiveness of the Merger and the procedure
for surrendering to the Disbursing Agent such certificates for
exchange into the Merger Consideration for each Share so
represented, and that delivery shall be effected, and risk of
loss and title to the Shares shall pass, only upon proper
delivery to the Disbursing Agent of the certificates for the
Shares and a duly executed letter of transmittal and any other
required documents of transfer. Each holder of certificates
theretofore evidencing Shares, upon surrender thereof to the
Disbursing Agent together with such letter of transmittal
(duly executed) and any other required documents of transfer,
shall be entitled to receive in exchange therefor the Merger
Consideration with respect to each such Share. Upon such
surrender, the Disbursing Agent shall promptly deliver the
Merger Consideration (less any amount required to be withheld
under applicable law) in accordance with the instructions set
forth in the related letter of transmittal, and the certifi-
cates so surrendered shall promptly be cancelled. Until
surrendered, certificates formerly evidencing Shares (other
than Dissenting Shares) shall be deemed for all purposes to
evidence only the right to receive the Merger Consideration
per Share or, in the case of Dissenting Shares, the fair value
of such Dissenting Shares. Other than as provided in Section
3.1(b), no interest shall accrue or be paid on any cash
payable upon the surrender of certificates which immediately
prior to the Effective Time represented outstanding Shares
(other than Dissenting Shares in accordance with Chapter 13 of
the South Carolina Act).
(c) If the Merger Consideration is to be delivered
to a person other than the person in whose name the certifi-
cates surrendered in exchange therefor are registered, it
shall be a condition to the payment of such Merger
Consideration that the certificates so surrendered shall be
properly endorsed or accompanied by appropriate stock powers
and otherwise in proper form for transfer, that such transfer
otherwise be proper and that the person requesting such
transfer pay to the Disbursing Agent any transfer or other
taxes payable by reason of the foregoing or establish to the
satisfaction of the Disbursing Agent that such taxes have been
paid or are not required to be paid.
(d) Unless required otherwise by applicable law,
any portion of the aggregate Merger Consideration which
remains undistributed to holders of Shares six months after
the Effective Time shall be delivered to the party who
provided such funds to the Disbursing Agent and any holders of
Shares who have not theretofore complied with the provisions
of this Article III shall thereafter look only to Parent for
payment of any Merger Consideration to which they are entitled
pursuant to this Article III. Neither Parent nor the
Disbursing Agent shall be liable to any holder of Shares for
any cash held by Parent or the Disbursing Agent for payment
pursuant to this Article III delivered to a public official
pursuant to any applicable abandoned property, escheat or
similar law.
Section 3.4 No Further Rights. From and after the
Effective Time, holders of certificates theretofore evidencing
Shares shall cease to have any rights as shareholders of the
Company, except as provided herein or by law.
Section 3.5 Closing of the Company's Transfer
Books. At the Effective Time, the stock transfer books of the
Company shall be closed and no transfer of Shares shall be
made thereafter. In the event that, after the Effective Time,
certificates for Shares are presented to Parent or the
Surviving Corporation, they shall be cancelled and exchanged
for Merger Consideration for each Share represented as
provided in Section 3.3, subject to applicable law in the case
of Dissenting Shares.
ARTICLE IV
Representations and Warranties of Parent and Sub
Parent and Sub jointly and severally represent and
warrant to the Company that, except as disclosed in the Parent
Disclosure Schedule which has been delivered to the Company
prior to the execution of this Merger Agreement (the "Parent
Disclosure Schedule"):
Section 4.1 Organization and Qualification. Parent
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Sub is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of
Parent and each of its significant subsidiaries (within the
meaning of Regulation S-X under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the "Significant Sub-
sidiaries," which in the case of references to the Significant
Subsidiaries of Parent, shall include Sub) has the requisite
corporate power and authority to carry on its business as it
is now being conducted and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where
the character of its properties owned or held under lease or
the nature of its activities makes such qualification neces-
sary, except where the failure to be so qualified will not,
individually or in the aggregate, have a Parent Material
Adverse Effect.
Section 4.2 Ownership of Sub. Sub is a direct or
indirect wholly-owned subsidiary of Parent. With respect to
certain representations with respect to Sub, Parent and Sub
have relied on representations included in an irrevocable
stock power relating to Sub, dated as of July 23, 1995, from
the Company.
Section 4.3 Authority Relative to This Merger
Agreement. Each of Parent and Sub has the necessary corporate
power and authority to execute and deliver this Merger
Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Merger Agreement
and the consummation of the transactions contemplated hereby
by Parent and Sub have been duly and validly authorized and
approved by the respective Boards of Directors of Parent and
Sub and by Parent as the sole shareholder of Sub and no other
corporate proceedings on the part of Parent or Sub are
necessary to authorize and approve this Merger Agreement or to
consummate the transactions contemplated hereby. This Merger
Agreement has been duly executed and delivered by each of
Parent and Sub, and assuming the due authorization, execution
and delivery by the Company, constitutes the valid and
binding obligation of Parent and Sub enforceable against each
of them in accordance with its terms except as such
enforceability may be limited by general principles of equity
or principles applicable to creditors' rights generally.
Section 4.4 No Conflicts; Required Filings and Con-
sents. (a) None of the execution and delivery of this Merger
Agreement by Parent or Sub, the consummation by Parent or Sub
of the transactions contemplated hereby or compliance by
Parent or Sub with any of the provisions hereof will (i) con-
flict with or violate the charter or By-laws of Parent or Sub
or the comparable organizational documents of any of Parent's
Significant Subsidiaries, (ii) subject to receipt or filing of
the required Consents (as defined herein) referred to in
Section 4.4(b), conflict with or violate any statute,
ordinance, rule, regulation, order, judgment or decree
applicable to Parent or Sub or any of Parent's subsidiaries,
or by which any of them or any of their respective properties
or assets may be bound or affected, or (iii) result in a
violation or breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of any lien, charge, security interest, pledge, or
encumbrance of any kind or nature (any of the foregoing being
a "Lien") on any of the property or assets of Parent or Sub or
any of Parent's subsidiaries (any of the foregoing referred to
in clause (ii) or this clause (iii) being a "Violation") pur-
suant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instru-
ment or obligation to which Parent or Sub or any of Parent's
subsidiaries is a party or by which Parent or Sub or any of
Parent's subsidiaries or any of their respective properties
may be bound or affected, except in the case of the foregoing
clause (ii) or (iii) for any such Violations which would not
have a Parent Material Adverse Effect.
(b) None of the execution and delivery of this
Merger Agreement by Parent or Sub, the consummation by Parent
or Sub of the transactions contemplated hereby or compliance
by Parent or Sub with any of the provisions hereof will
require any consent, waiver, license, approval, authorization,
order or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any
government or subdivision thereof, domestic, foreign,
multinational or supranational or any administrative,
governmental or regulatory authority, agency, commission,
court, tribunal or body, domestic, foreign, multinational or
supranational (a "Governmental Entity"), except for (i) com-
pliance with any applicable requirements of the Exchange Act,
(ii) the filing of articles of merger pursuant to the South
Carolina Act and related filings under Delaware Law,
(iii) certain state takeover, securities, "blue sky" and
environmental statutes, (iv) compliance with the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (v) such filings as may be required in connection
with the taxes described in Section 7.9, (vi) such Consents
from the Federal Communications Commission (the "FCC") in
connection with the assignment or transfer of control of the
FCC licenses applicable to the Company's radio and television
broadcast operations and cable operations (such licenses being
referred to herein collectively as the "FCC Licenses," and
such consents being referred to herein collectively as the
"FCC Consents"), (vii) such Consents of state and local
Governmental Entities as may be required in connection with
the assignment or transfer of control (the "Franchise
Transfers") of the franchise agreements and similar or related
documents or other local governmental authorizations to
construct, maintain and operate the Company's cable television
systems within local political jurisdictions (the "Fran-
chises"), and (viii) Consents the failure of which to obtain
or make would not have a Parent Material Adverse Effect.
Section 4.5 Information. None of the information
supplied or to be supplied by Parent or Sub for inclusion or
incorporation by reference in the definitive proxy statement
of the Company (as amended and supplemented from time to time,
the "Proxy Statement") required to be mailed to the
shareholders of the Company in connection with the Merger
will, at the time of filing with the Securities and Exchange
Commission (the "SEC"), at the time of the mailing of the
Proxy Statement or any amendments or supplements thereto to
the Company's shareholders and at the time of the Company
Special Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they are made, not
misleading.
Section 4.6 Litigation. As of the date hereof,
there is no suit, action or proceeding pending or, to the
knowledge of Parent or Sub, threatened against or affecting
Parent, Sub or any of Parent's subsidiaries that, individually
or in the aggregate, is reasonably expected to have a Parent
Material Adverse Effect, nor is there any judgment, decree,
injunction or order of any Governmental Entity or arbitrator
outstanding against Parent, Sub or any of Parent's
subsidiaries having, or which is reasonably expected to have,
individually or in the aggregate, a Parent Material Adverse
Effect.
Section 4.7 Voting Requirements. No vote of the
holders of any class or series of the capital stock of Parent
is necessary to approve this Merger Agreement or the transac-
tions contemplated hereby.
Section 4.8 Brokers. No broker or finder is en-
titled to any broker's or finder's fee in connection with the
transactions contemplated by this Merger Agreement based upon
arrangements made by or on behalf of Parent or Sub.
Section 4.9 Financing. At the Effective Time of
the Merger, Parent and Sub will have available all of the
funds necessary (x) to satisfy their respective obligations
under this Merger Agreement, and (y) to pay all the related
fees and expenses in connection with the foregoing.
Section 4.10 FCC Applications. Parent and Sub will
seek the waivers specified on Schedule 4.10 from applicable
FCC rules that would otherwise disqualify Parent or Sub from
holding or controlling the entities which hold, the FCC
Licenses. Except as set forth in Schedule 4.10, Parent and
Sub are legally and financially qualified, and, to Parent's
knowledge, otherwise qualified to hold, or control the
entities which hold and will hold, the FCC Licenses and are
not aware of any facts or circumstances that might prevent or
delay prompt consent to or waivers for the applications
seeking the FCC Consents (the "FCC Applications"). Except as
set forth in Schedule 4.10, Parent and Sub are legally,
financially and otherwise qualified to hold, or control the
entities which hold, the Franchises and are not aware of any
facts or circumstances that might prevent or unduly delay
consent to or waivers for the Franchise Transfers.
Section 4.11 Parent Does Not Own Control Shares and
Is Not an Interested Shareholder or Acquiring Person. Neither
Parent, Sub nor any of their respective "affiliates" or "as-
sociates" (each as defined in the South Carolina Act for pur-
poses of clauses (i) and (ii) below, and as defined in the
Rights Agreement, dated as of September 6, 1989, between the
Company and South Carolina National Bank (the "Rights Agree-
ment") for purposes of clause (iii) below) (i) directly or in-
directly, alone or as part of a group, owns or may exercise or
direct the exercise of voting power of any "control shares" of
the Company as defined in Section 35-2-101 of the South Caro-
lina Act, (ii) has been or is an "Interested Shareholder" as
defined in Section 35-2-210 of the South Carolina Act or (iii)
directly or indirectly, alone, together or as part of a group,
is the Beneficial Owner (as defined in the Rights Agreement)
of 15% or more of the outstanding Company Common Stock.
ARTICLE V
Representations and Warranties of the Company
The Company represents and warrants to Parent and
Sub that, except as disclosed in the Company Disclosure
Schedule which has been delivered to Parent prior to the
execution of this Merger Agreement (the "Company Disclosure
Schedule"):
Section 5.1 Organization and Qualification. The
Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of South
Carolina. Each of the Company and each of its Significant
Subsidiaries has the requisite corporate power and authority
to carry on its business as it is now being conducted and is
duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its
properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where
the failure to be so qualified will not have a Company
Material Adverse Effect. The Company has heretofore made
available to Parent and Sub a complete and correct copy of the
Articles of Incorporation and By-laws or comparable organiza-
tional documents, each as amended to the date hereof, of the
Company and each of its Significant Subsidiaries.
Section 5.2 Capitalization. (a) The authorized
capital stock of the Company consists of 100,000,000 shares of
Company Common Stock and 600,000 shares of Convertible Cumula-
tive Preferred Stock, $20.00 par value per share (the "Company
Preferred Stock"). As of the date hereof, 37,865,078 shares
of Company Common Stock and no shares of Company Preferred
Stock were validly issued and outstanding, fully paid and non-
assessable. As of the date hereof, there are no bonds, deben-
tures, notes or other indebtedness issued or outstanding
having general voting rights under ordinary circumstances. As
of the date hereof, except for stock options to acquire an ag-
gregate of 2,697,730 shares of Company Common Stock (the "Com-
pany Stock Options"), and except as contemplated by this
Merger Agreement and the Rights Agreement, there were no
options, warrants, calls or other rights, agreements or com-
mitments presently outstanding obligating the Company to
issue, deliver or sell shares of its capital stock, or
obligating the Company to grant, extend or enter into any such
option, warrant, call or other such right, agreement or
commitment.
(b) All the outstanding shares of capital stock of
each Significant Subsidiary of the Company are validly issued,
fully paid and nonassessable and, except as disclosed in the
Company SEC Reports (as defined herein), are owned by the Com-
pany or by a wholly-owned subsidiary of the Company, free and
clear of any Liens. There are no existing options, warrants,
calls or other rights, agreements or commitments of any char-
acter relating to the sale, issuance or voting of any shares
of the issued or unissued capital stock of any of the
Significant Subsidiaries of the Company which have been
issued, granted or entered into by the Company or any of its
Significant Subsidiaries. The Significant Subsidiaries of the
Company are listed in Section 5.2 of the Company Disclosure
Schedule.
Section 5.3 Authority Relative to This Merger
Agreement. The Company has the necessary corporate power and
authority to execute and deliver this Merger Agreement and,
subject to approval of this Merger Agreement and the
transactions contemplated hereby by the holders of the Company
Common Stock, to consummate the transactions contemplated
hereby. The execution and delivery of this Merger Agreement
and the consummation of the transactions contemplated hereby
by the Company have been duly and validly authorized and
approved by the Company's Board of Directors and no other cor-
porate proceedings on the part of the Company are necessary to
authorize or approve this Merger Agreement or to consummate
the transactions contemplated hereby (other than, with respect
to the Merger, the approval of this Merger Agreement by the
necessary vote of the shareholders of the Company). This
Merger Agreement has been duly executed and delivered by the
Company, and assuming the due authorization, execution and
delivery by Parent and Sub, and subject to the shareholder
approval referred to in the preceding sentence, constitutes
the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms except as
such enforceability may be limited by general principles of
equity or principles applicable to creditors' rights
generally.
Section 5.4 No Conflicts, Required Filings and Con-
sents. (a) None of the execution and delivery of this Merger
Agreement by the Company, the consummation by the Company of
the transactions contemplated hereby or compliance by the Com-
pany with any of the provisions hereof will (i) subject to ap-
proval by the Company's shareholders referred to in Section
5.3, conflict with or violate the Articles of Incorporation or
By-laws of the Company or the comparable organizational docu-
ments of any of the Company's Significant Subsidiaries, (ii)
subject to receipt or filing of the required Consents referred
to in Section 5.4(b), result in a Violation of any statute,
ordinance, rule, regulation, order, judgment or decree appli-
cable to the Company or any of the Company's subsidiaries, or
by which any of them or any of their respective properties or
assets may be bound or affected, or (iii) subject to receipt
or filing of the required Consents referred to in Section
5.4(b), result in a Violation pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, per-
mit, franchise or other instrument or obligation to which the
Company or any of the Company's subsidiaries is a party or by
which the Company or any of the Company's subsidiaries or any
of their respective properties may be bound or affected,
except in the case of the foregoing clause (ii) or (iii) for
any such Violations which would not have a Company Material
Adverse Effect.
(b) None of the execution and delivery of this
Merger Agreement by the Company, the consummation by the Com-
pany of the transactions contemplated hereby or compliance by
the Company with any of the provisions hereof will require any
Consent of any Governmental Entity, except for (i) compliance
with any applicable requirements of the Exchange Act, (ii) the
filing of articles of merger pursuant to the South Carolina
Act and related filings under Delaware Law, (iii) certain
state takeover, securities, "blue sky" and environmental
statutes, (iv) compliance with the HSR Act, (v) such filings
as may be required in connection with the taxes described in
Section 7.9, (vi) the FCC Consents, (vii) such Consents of
state and local Governmental Entities as may be required in
connection with the Franchise Transfers and (viii) Consents
the failure of which to obtain or make would not have a
Company Material Adverse Effect.
Section 5.5 Reports and Financial Statements. (a)
The Company has filed with the SEC all forms, reports, sched-
ules, registration statements and definitive proxy statements
(the "Company SEC Reports") required to be filed by it with
the SEC since December 31, 1993. As of their respective
dates, the Company SEC Reports complied as to form in all
material respects with the requirements of the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act"),
as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Company SEC Reports. As of
their respective dates, the Company SEC Reports did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or nec-
essary to make the statements therein, in light of the circum-
stances under which they were made, not misleading.
(b) The consolidated balance sheets as of Decem-
ber 31, 1994 and 1993 and the related consolidated statements
of earnings, stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1994 (includ-
ing the related notes and schedules thereto) of the Company
contained in the Form 10-K for the year ended December 31,
1994 present fairly, in all material respects, the
consolidated financial position and the consolidated results
of operations and cash flows of the Company and its
consolidated subsidiaries as of the dates or for the periods
presented therein in conformity with United States generally
accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved except as other-
wise noted therein, including in the related notes.
(c) The consolidated balance sheets and the related
statements of earnings and cash flows (including, in each
case, the related notes thereto) of the Company contained in
the Form 10-Q for the quarterly period ended March 31, 1995
(the "Quarterly Financial Statements") have been prepared in
accordance with the requirements for interim financial
statements contained in Regulation S-X, which do not require
all the information and footnotes necessary for a fair
presentation of financial position, results of operations and
cash flows in conformity with GAAP. The Quarterly Financial
Statements reflect all adjustments necessary to present fairly
in accordance with GAAP (except as indicated), in all material
respects, the consolidated financial position, results of
operations and cash flows of the Company for all periods
presented therein.
Section 5.6 Information. None of the information
supplied or to be supplied by the Company for inclusion or in-
corporation by reference in the definitive Proxy Statement
will, at the time of filing with the SEC, at the time of the
mailing of the Proxy Statement or any amendments or
supplements thereto to the Company's shareholders or at the
time of the Company Special Meeting, contain any untrue
statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with
the applicable provisions of the Exchange Act and the rules
and regulations thereunder, except that no representation is
made by the Company with respect to statements made or incor-
porated by reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by reference
therein.
Section 5.7 Litigation. Except as disclosed in the
Company SEC Reports, as of the date hereof, there is no suit,
action or proceeding pending or, to the knowledge of the Com-
pany, threatened against or affecting the Company or any of
its subsidiaries that is reasonably expected to have a Company
Material Adverse Effect, nor is there any judgment, decree,
injunction or order of any Governmental Entity or arbitrator
outstanding against the Company or any of its subsidiaries
that is reasonably expected to have a Company Material Adverse
Effect.
Section 5.8 Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Reports or as contem-
plated by this Merger Agreement, since March 31, 1995, the
Company has conducted its business only in the ordinary
course, and there has not been (i) any change that would have
a Company Material Adverse Effect, other than changes relating
to or arising from legislative or regulatory changes or
developments affecting broadcasting or cable operations or
general economic conditions, (ii) any declaration, setting
aside or payment of any dividend or other distribution
(whether in cash, stock or property) with respect to any of
the Company's capital stock, or, except in connection with
Company Stock Options, any redemption, purchase or other
acquisition of any of its capital stock, (iii) any split,
combination or reclassification of any of the Company's
capital stock or, except with respect to Company Stock
Options, any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substi-
tution for shares of the Company's capital stock, (iv) except
as previously disclosed in writing to Parent and Sub, (x) any
granting by the Company or any of its subsidiaries to any
officer of the Company of any increase in compensation, except
in the ordinary course of business consistent with prior
practice or as required under employment agreements in effect
as of June 1, 1995, (y) any granting by the Company or any of
its subsidiaries to any officer of the Company of any increase
in severance or termination pay, except as required under em-
ployment, severance or termination agreements or plans in ef-
fect as of June 1, 1995, or (z) any entry by the Company or
any of its subsidiaries into any employment, severance or
termination agreement with any officer of the Company, or any
increase in benefits available under or establishment of any
Company Benefit Plan (as defined below) except in the ordinary
course of business consistent with past practice, (v) any dam-
age, destruction or loss, whether or not covered by insurance,
that is reasonably expected to have a Company Material Adverse
Effect, or (vi) any material change in accounting methods,
principles or practices by the Company, except insofar as may
have been required by a change in GAAP.
Section 5.9 Employee Benefit Plans. Except as dis-
closed in the Company SEC Reports, there are no (a) employee
benefit or compensation plans, agreements or arrangements, in-
cluding "employee benefit plans," as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and including, but not limited to, plans,
agreements or arrangements relating to former employees, in-
cluding, but not limited to, retiree medical plans or life
insurance, maintained by the Company or any of its subsid-
iaries or (b) collective bargaining agreements to which the
Company or any of its subsidiaries is a party (together, the
"Company Benefit Plans"), other than plans, agreements or
arrangements which, in the aggregate, are not material to the
Company and its subsidiaries as a whole. The Company and its
subsidiaries have complied with the terms of all Company
Benefit Plans, except for such noncompliance which would not
have a Company Material Adverse Effect, and no default exists
with respect to the obligations of the Company or any of its
subsidiaries under such Company Benefit Plans which default
would have a Company Material Adverse Effect. As of the date
hereof, since January 1, 1994, there have been no disputes,
grievances subject to any grievance procedure, unfair labor
practice proceedings, arbitration or litigation (or, to the
knowledge of the Company, threatened proceedings or
grievances) under such Company Benefit Plans, which have not
been finally resolved, settled or otherwise disposed of, nor
is there any default, or any condition which, with notice or
lapse of time or both, would constitute such a default, under
any such Company Benefit Plans, by the Company or its
subsidiaries or, to the best knowledge of the Company, any
other party thereto, other than disputes, grievances,
arbitration, litigation, proceedings, threatened proceedings
or grievances, defaults or conditions which would not have a
Company Material Adverse Effect. As of the date hereof, since
January 1, 1994, there have been no strikes, lockouts or work
stoppages or slowdowns, or to the best knowledge of the Com-
pany, labor jurisdictional disputes or labor organizing activ-
ity occurring or threatened with respect to the business or
operations of the Company or its subsidiaries which have had
or would have a Company Material Adverse Effect.
Section 5.10 ERISA. (a) All Company Benefit Plans
are in compliance with the applicable provisions of ERISA, the
Internal Revenue Code of 1986, all other applicable laws and
all applicable collective bargaining agreements, in each case,
to the extent applicable, except where such failures to admin-
ister or comply would not have a Company Material Adverse
Effect. Each of the Company Benefit Plans which is intended
to meet the requirements of Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), has been
determined by the Internal Revenue Service to be "qualified,"
within the meaning of such Section of the Code and the Company
does not know of any circumstances likely to result in
revocation of such determination. No Company Benefit Plan is
subject to Title IV of ERISA or Section 412 of the Code, other
than defined benefit pension plans disclosed in the Company
Disclosure Schedule. There have not been any non-exempt
"prohibited transactions," as such term is defined in Section
4975 of the Code or Section 406 of ERISA, involving the
Company Benefit Plans which could subject the Company, its
subsidiaries or Parent to the penalty or tax imposed under
Section 502(i) of ERISA or Section 4975 of the Code which
would have a Company Material Adverse Effect. Neither the
Company nor any of its subsidiaries has made a complete or
partial withdrawal, within the meaning of Section 4201 of
ERISA, from any multiemployer plan which has resulted in, or
is reasonably expected to result in, any withdrawal liability
to the Company or any of its subsidiaries except for any such
liability which would not have a Company Material Adverse
Effect. Neither the Company nor any of its subsidiaries has
engaged in any transaction described in Section 4069 of ERISA
within the last five years except for any such transaction
which would not have a Company Material Adverse Effect.
Neither the execution and delivery of this Merger Agreement
nor the consummation of the transactions contemplated hereby
will (i) result in any material payment (including, without
limitation, severance, unemployment compensation or golden
parachute) becoming due to any director or employee of the
Company, (ii) materially increase any benefits otherwise
payable under any Company Benefit Plan or (iii) result in the
acceleration of the time of payment or vesting of any such
benefits to any material extent.
(b) No notice of a "reportable event," within the
meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required
to be filed for any Company Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA and which is intended to meet the requirements of
Section 401(a) of the Code (a "Pension Plan"), or by any
entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"), within the 12-month period ending on the date
hereof except as would not be reasonably likely to have a
Company Material Adverse Effect.
(c) As of the date hereof, neither any Pension Plan
nor any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302
of ERISA except as would not be reasonably likely to have a
Company Material Adverse Effect. Neither the Company nor its
subsidiaries has provided, or is required to provide, security
to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code except as
would not be reasonably likely to have a Company Material
Adverse Effect.
(d) Under each Pension Plan which is a single-
employer plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined
present value of all "benefit liabilities," within the meaning
of Section 4001(a)(16) of ERISA (as determined on the basis of
the actuarial assumptions contained in the Pension Plan's most
recent actuarial valuation), did not exceed the then current
value of the assets of such Pension Plan, and there has been
no material change in the financial condition of such Pension
Plan since the last day of the most recent plan year, except,
in any such case, as would not be reasonably likely to have a
Company Material Adverse Effect. To the knowledge of the
Company, based on information made available to it as of the
date hereof from the administrator or actuary, as the case may
be, of the relevant multiemployer plans, the withdrawal
liability of the Company and the subsidiaries under each
Company Benefit Plan which is a multiemployer plan to which
the Company, the subsidiaries of the Company or an ERISA
Affiliate has contributed during the preceding 12 months,
determined as if a "complete withdrawal," within the meaning
of Section 4203 of ERISA, had occurred as of the date hereof,
does not exceed $1,000,000.
Section 5.11 Taxes. The Company and its subsid-
iaries has duly filed all foreign, federal, state and local
income, franchise, excise, real and personal property and
other tax returns and reports (including, but not limited to,
those filed on a consolidated, combined or unitary basis)
required to have been filed by the Company and its
subsidiaries prior to the date hereof, except for such returns
or reports the failure to file which would not have a Company
Material Adverse Effect. All of the foregoing returns and re-
ports are true and correct in all material respects, and the
Company and its subsidiaries has paid or, prior to the
Effective Time will pay, all taxes, interest and penalties
shown on such returns or reports as being due or (except to
the extent the same are contested in good faith) claimed to be
due to any federal, state, local or other taxing authority.
The Company has paid and will pay all installments of
estimated taxes due on or before the Effective Time, except
for any failure to do so which would not have a Company
Material Adverse Effect. All taxes and state assessments and
levies which the Company and its subsidiaries are required by
law to withhold or collect have been withheld or collected and
have been paid to the proper governmental authorities or are
held by the Company for such payment, except for any failure
to do so which would not have a Company Material Adverse
Effect. The Company and its subsidiaries have paid or made
adequate provision in the financial statements of the Company
for all taxes payable in respect of all periods ending on or
prior to December 31, 1994, except for such taxes which would
not have a Company Material Adverse Effect. As of the date
hereof, all deficiencies proposed as a result of any audits
have been paid or settled.
Section 5.12 Compliance with Applicable Laws. (a)
The Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all
Governmental Entities necessary for them to own, lease or
operate their properties and assets and to carry on their
businesses substantially as now conducted (the "Company Per-
mits"), except for such permits, licenses, variances, exemp-
tions, orders and approvals the failure of which to hold would
not have a Company Material Adverse Effect. The Company and
its subsidiaries are in compliance with applicable laws and
the terms of the Company Permits, except for such failures so
to comply which would not have a Company Material Adverse
Effect. Except as disclosed in the Company SEC Reports filed
prior to the date of this Merger Agreement, the business op-
erations of the Company and its subsidiaries are not being
conducted in violation of any law, ordinance or regulation of
any Governmental Entity, except for possible violations which
would not have a Company Material Adverse Effect.
(b) Except as set forth on Schedule 4.10, the Com-
pany does not know of any facts or circumstances which would
disqualify the Company or its subsidiaries (i) under the Com-
munications Act of 1934, as amended (the "Communications Act")
from assigning or transferring control of the Company's radio
and television broadcast operations or from completing the
Franchise Transfers and (ii) under any state or local laws
from completing the Franchise Transfers, except, in any case,
for disqualifications which would not have a Company Material
Adverse Effect. There are no FCC notices of violations or ad-
verse orders against the Company or its subsidiaries and, as
of the date hereof, there are no actions, suits or proceedings
pending or, to the knowledge of the Company, threatened before
the FCC or before any local Governmental Entities from which
the Company has been issued Company Permits to operate its
Franchises for the cancellation, material involuntary modifi-
cation or non-renewal of any FCC Licenses or Franchises,
except for any such notice of violation, adverse order,
action, suit or proceeding generally affecting the industries
in which the Company operates or which would not have a Com-
pany Material Adverse Effect.
Section 5.13 Voting Requirements. The affirmative
vote of the holders of at least two-thirds of the total number
of votes entitled to be cast by the holders of the Company
Common Stock outstanding as of the record date for the Company
Special Meeting is the only vote of the holders of any class
or series of the Company's capital stock necessary to approve
this Merger Agreement and the transactions contemplated by
this Merger Agreement (including the Merger).
Section 5.14 State Takeover Statutes. Each of (i)
the Board of Directors of the Company and (ii) a majority of
the "disinterested" (as defined in Section 35-2-218 of the
South Carolina Act) members of the Board of Directors of the
Company has approved the Merger and this Merger Agreement,
and, assuming the accuracy of the representations and
warranties of Parent and Sub in Section 4.11, such approval
(together with the Company's execution and delivery of this
Merger Agreement) is sufficient to render inapplicable to the
Merger, this Merger Agreement and the transactions
contemplated by this Agreement, the provisions of Sections
35-2-101 through 35-2-226 of the South Carolina Act.
Section 5.15 Rights Agreement. Assuming the accu-
racy of the representations and warranties of Parent and Sub
in Section 4.11, neither the execution and delivery of this
Merger Agreement nor the consummation of the transactions
contemplated hereby, will trigger the exercisability of the
Rights, the separation of the Rights from the stock
certificates to which they are attached or cause the
occurrence of a "Distribution Date" or in Parent or Sub being
an "Acquiring Person" (each as defined in the Rights
Agreement).
Section 5.16 Brokers. Except for Goldman, Sachs &
Co. and Lloyd & Company, no broker or finder is entitled to
any broker's or finder's fee in connection with the
transactions contemplated by this Merger Agreement based upon
arrangements made by or on behalf of the Company.
Section 5.17 Undisclosed Liabilities. Except as
disclosed in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994 (or in any subsequently
filed Company SEC Reports), as of the date hereof, neither the
Company nor any of its subsidiaries has any liabilities or any
obligations of any nature whether or not accrued, contingent
or otherwise, that would be required by generally accepted ac-
counting principles to be reflected on a consolidated balance
sheet of the Company and its subsidiaries (including the notes
thereto), except for liabilities or obligations incurred in
the ordinary course of business since December 31, 1994, that
would not have a Company Material Adverse Effect. To the best
knowledge of the Company, as of the date of this Merger Agree-
ment, no investigation or review by any Governmental Entity
with respect to the Company or any of its subsidiaries is
pending or threatened, nor has any such Governmental Entity
indicated an intention to conduct any such investigation or
review other than, in any such cases, those the outcome of
which would not be reasonably expected to have a Company Mate-
rial Adverse Effect or prevent or materially delay the consum-
mation of the transactions contemplated in this Merger Agree-
ment.
Section 5.18 Environmental Matters. Except as
would not reasonably be expected to have a Company Material
Adverse Effect: (i) to the best knowledge of the Company no
real property currently or formerly owned or operated by the
Company or any current subsidiary is contaminated with any
Hazardous Substances to an extent or in a manner or condition
now requiring remediation under any Environmental Law; (ii) no
judicial or administrative proceeding is pending or to the
best knowledge of the Company threatened relating to liability
for any off-site disposal or contamination; and (iii) the
Company and its subsidiaries have not received any claims or
notices alleging liability under any Environmental Law, and
the Company has no knowledge of any circumstances that could
result in such claims. "Environmental Law" means any
applicable federal, state or local law, regulation, order,
decree, or judicial opinion or other agency requirement having
the force and effect of law and relating to noise, odor,
Hazardous Substance or the protection of the environment.
"Hazardous Substance" means any toxic or hazardous substance
that is regulated by or under authority of any Environmental
Law, including any petroleum products, asbestos or
polychlorinated biphenyls.
ARTICLE VI
Conduct of Business Pending the Merger
Section 6.1 (a) Conduct of Business by the Company
Pending the Merger. From and after the date hereof, prior to
the Effective Time, except as contemplated by this Merger
Agreement (including Section 6.1(b)) or by the Company's bud-
gets, plans and estimates heretofore made available to Parent
and except for the matters set forth in the Company Disclosure
Schedule or unless Parent shall otherwise agree in writing,
the Company shall, and shall cause its subsidiaries to, carry
on their respective businesses in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted and to use reasonable efforts to conduct their
business in a manner consistent with the budgets and plans
heretofore made available to Parent, and shall, and shall
cause its subsidiaries to, use reasonable efforts to preserve
intact their present business organizations, keep available
the services of their employees and preserve their
relationships with customers, suppliers, licensors, licensees,
distributors and others having business dealings with them to
the end that their goodwill and on-going businesses shall not
be impaired in any material respect at the Effective Time.
Except as contemplated by the Company's budgets, plans and
estimates heretofore made available to Parent (with respect to
clauses (iv) and (vi) and, to the extent applicable, (vii))
and except for the matters set forth in Section 6.1(a) of the
Company Disclosure Schedule or unless Parent shall otherwise
agree in writing, prior to the Effective Time, the Company
shall not and shall not permit its subsidiaries to:
(i) (x) declare, set aside, or pay any divi-
dends on, or make any other distributions in respect of, any
of its capital stock, other than dividends and distributions
by any direct or indirect subsidiary of the Company to its
parent(s), (y) split, combine or reclassify any of its capital
stock or, other than pursuant to the exercise of Company Stock
Options, issue or authorize the issuance of any other securi-
ties in respect of, in lieu of or in substitution for shares
of its capital stock, or (z) except as permitted by clause
(ii) below, purchase, redeem or otherwise acquire, other than
pursuant to the exercise of Company Stock Options, any shares
of capital stock of the Company or any of its subsidiaries or
any other equity securities thereof or any rights, warrants,
or options to acquire any such shares or other securities
other than purchases, redemptions or acquisitions of equity
securities of wholly-owned subsidiaries of the Company or
rights, warrants or options to acquire such securities;
(ii) except for issuances of capital stock
of the Company's subsidiaries to the Company or a wholly-owned
subsidiary of the Company, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock, any other
voting securities of the Company or any securities convertible
into, or any rights, warrants or options to acquire, any such
shares or voting securities (other than the issuance of
Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Merger Agreement);
(iii) amend its Articles of Incorporation,
By-laws or other comparable organizational documents;
(iv) acquire or agree to acquire (x) by
merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business
or any corporation, partnership, joint venture, association or
other business organization or division thereof, or (y) any
assets that are material, individually or in the aggregate, to
the Company and its subsidiaries taken as a whole, except, in
any such case, in the ordinary course of business, and except
transactions between a wholly-owned subsidiary of the Company
and the Company or another wholly-owned subsidiary of the Com-
pany;
(v) subject to a Lien or sell, lease or
otherwise dispose of any of its material properties or assets,
except in the ordinary course of business and except transac-
tions between a wholly-owned subsidiary of the Company and the
Company or another wholly-owned subsidiary of the Company;
(vi) (x) incur any indebtedness for
borrowed money or guarantee any such indebtedness of another
person, issue or sell any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of
another person (other than indebtedness to, guarantees of, or
issuances or sales to the Company or a wholly-owned subsidiary
of the Company), or enter into any "keep well" or other
agreement to maintain any financial condition of another
person, except, in any such case, for borrowings or other
transactions incurred in the ordinary course of business
including to repay existing indebtedness pursuant to the terms
thereof, or (y) except in the ordinary course of business,
make any loans, advances or capital contributions to, or in-
vestments in, any other person, other than to the Company or
any direct or indirect subsidiary of the Company or settle or
compromise any material claims or litigation;
(vii) authorize any of, or commit or agree
to take any of, the foregoing actions.
(b) Control of the Stations and Cable Operations.
Prior to the Effective Time, control of the Company's radio
and television broadcast operations and cable operations,
along with all of the Company's other operations, shall remain
with the Company. The Company, Parent and Sub acknowledge and
agree that neither Parent nor Sub nor any of their respective
employees, agents or representatives, directly or indirectly,
shall, or have any right to, control, direct or otherwise su-
pervise, or attempt to control, direct or otherwise supervise,
such broadcast, cable and other operations, it being under-
stood that supervision of all programs, equipment, operations
and other activities of such broadcast, cable and other
operations shall be the sole responsibility, and at all times
prior to the Effective Time remain with the complete control
and discretion, of the Company, subject to the terms of
Section 6.1(a) above.
(c) Advice of Changes. The Company shall promptly
provide the Parent copies of all filings made by the Company
with any Governmental Entity in connection with this Merger
Agreement and the transactions contemplated hereby. The Com-
pany shall, before settling or compromising any material
income tax liability of the Company or any of its
subsidiaries, consult with Parent and its advisors as to the
positions and elections that will be taken or made with
respect to such matter.
ARTICLE VII
Additional Agreements
Section 7.1 Access to Information. From the date
hereof through the Effective Time, the Company and its subsid-
iaries shall afford to Parent and Parent's accountants,
counsel and other representatives full and reasonable access
(subject, however, to existing confidentiality and similar
non-disclosure obligations and the preservation of attorney
client and work product privileges) during normal business
hours (and at such other times as the parties may mutually
agree) to its properties, books, contracts, commitments,
records and personnel and, during such period, shall furnish
promptly to Parent (i) a copy of each report, schedule and
other document filed or received by it pursuant to the re-
quirements of federal securities laws, and (ii) all other in-
formation concerning its business, properties and personnel as
Parent may reasonably request. Parent shall hold, and shall
cause its employees, agents and representatives to hold, in
strict confidence all such information in accordance with the
terms of the Confidentiality Agreement dated May 1, 1995
between Parent and the Company, which shall remain in full
force and effect in accordance with the terms thereof, includ-
ing, without limitation, in the event of termination of this
Merger Agreement. Parent and its accountants, counsel and
other representatives shall, in the exercise of the rights de-
scribed in this Section 7.1, not unduly interfere with the op-
eration of the business of the Company or its subsidiaries.
Section 7.2 Preparation of the Proxy Statement.
The Company will, as soon as practicable following the date of
this Merger Agreement, prepare and file a preliminary Proxy
Statement with the SEC and will use all reasonable efforts to
respond to any comments of the SEC or its staff and to cause
the Proxy Statement to be mailed to the Company's shareholders
as promptly as practicable after responding to all such com-
ments to the satisfaction of the SEC or its staff. The
Company will provide Parent with a copy of the Preliminary
Proxy Statement and all modifications thereto prior to filing
or delivery to the SEC and will consult with Parent in
connection therewith. The Company will notify Parent promptly
of the receipt of any comments from the SEC or its staff and
of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional in-
formation and will supply Parent with copies of all
correspondence between the Company or any of its representa-
tives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Proxy Statement or the Merger. Par-
ent and Sub will cooperate and furnish promptly all
information requested by the Company or otherwise required for
inclusion in the Proxy Statement. If at any time prior to the
Company Special Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its
shareholders such an amendment or supplement. If at any time
prior to the Effective Time any event or circumstance relating
to Parent or any of its subsidiaries, or their respective
officers or directors, should be discovered by Parent or Sub
which should be set forth in an amendment or a supplement to
the Proxy Statement, Parent shall promptly inform the Company
thereof and take appropriate action in respect thereof.
Section 7.3 Shareholders' Meeting. The Company
shall take all action necessary, in accordance with applicable
law and its Articles of Incorporation and By-laws, to convene
the Company Special Meeting as promptly as reasonably practi-
cable after the date on which the definitive Proxy Statement
has been mailed to the Company's shareholders for the purpose
of considering and taking action upon the Merger and this
Merger Agreement, unless the Board of Directors of the Company
shall have altered its determination to, or shall not, recom-
mend that holders of Company Common Stock vote in favor of the
approval of this Merger Agreement at the Company Special Meet-
ing. Subject to the fiduciary duties of the Board of
Directors of the Company, the Board of Directors of the
Company will recommend that holders of Company Common Stock
vote in favor of the approval of this Merger Agreement at the
Company Special Meeting.
Section 7.4 Employee and Other Arrangements. (a)
From and after the Effective Time, Parent will cause the Sur-
viving Corporation to honor all Company Benefit Plans to which
the Company or any of its subsidiaries is a party.
(b) Parent will cause the Surviving Corporation to
take such actions as are necessary so that, for a period of at
least one year from and after the Effective Time, employees of
the Company and its subsidiaries (excluding employees covered
by collective bargaining agreements) will be provided cash
compensation, employee benefits and incentive compensation and
similar plans and programs as will provide compensation and
benefits which, in the aggregate and in all material respects,
are no less favorable than those provided to such employees as
of the date hereof; provided, however, that Parent may use
reasonable individual merit-based performance criteria in
determining individual bonus compensation and commissions pur-
suant to such plans after the Effective Time; and provided,
however, that it is understood that after the Effective Time
no party hereto will have any obligation to issue shares of
capital stock of any entity pursuant to any such plan or
program and that any substitute plan or program may be based
on criteria other than stock performance. In addition, from
and after the Effective Time, Parent and Sub shall, and shall
cause the Surviving Corporation to, (i) provide all employees
of the Company and its subsidiaries ("Company Employees") with
service credit for all periods of employment with the Company
and its subsidiaries prior to the Effective Time for purposes
of eligibility and vesting under any compensation or benefit
plan applicable to Company Employees, including for purposes
of satisfying any service requirements for early retirement
under any pension plan adopted by Parent, Sub, the Surviving
Corporation or any of their affiliates with respect to Company
Employees, (ii) waive any pre-existing condition of any
Company Employee for purposes of determining eligibility for,
and the terms upon which they participate in, any welfare plan
adopted by Parent, Sub, the Surviving Corporation or any of
their affiliates with respect to Company Employees (other than
conditions that are already in effect with respect to such em-
ployees under the Company's welfare plans that have not been
satisfied as of the Effective Time) and (iii) provide each
Company Employee, upon termination by the Surviving
Corporation of such employee's employment with the Surviving
Corporation and any of its subsidiaries and affiliates, with a
minimum of one week of severance pay for each year prior to
such termination such Company Employee was employed by the
Company and its subsidiaries and the Surviving Corporation and
its subsidiaries and affiliates; provided, however, that
employees who are covered by other existing similar severance
pay arrangements shall receive severance pay pursuant to
either this clause (iii) or such other severance pay
arrangements, whichever is greater.
(c) Prior to the Effective Time, the Company shall
provide holders of Company Stock Options, whether or not then
exercisable or vested, the opportunity to elect to receive, at
the Effective Time, cash in an amount set forth below in ex-
change for each Company Stock Option. Parent and the Company
shall take all actions necessary to provide that, as to those
holders who so agree, at the Effective Time, (i) each Company
Stock Option so surrendered for cash, whether or not then ex-
ercisable or vested, shall become fully exercisable and
vested, (ii) each such Company Stock Option shall be
cancelled, and (iii) in consideration of such cancellation,
and except to the extent that Parent or Sub and the holder of
any such Company Stock Option otherwise agree, the Company
shall pay to each such holder of Company Stock Options an
amount in cash in respect thereof equal to the product of (1)
the excess, if any, of the Merger Consideration over the per
share exercise price thereof and (2) the number of shares of
Company Common Stock subject thereto. Notwithstanding
anything to the contrary herein, if it is determined that
compliance with any of the foregoing may cause any individual
subject to Section 16 of the Exchange Act to become subject to
the profit recovery provisions thereof, any Company Stock
Options held by such individual may, if such individual so
agrees, subject to the proviso to this sentence, be cancelled
or purchased, as the case may be, at the Effective Time or at
such later time as may be necessary to avoid application of
such profit recovery provisions and such individual will be
entitled to receive from the Company or the Surviving
Corporation an amount in cash in respect thereof equal to the
product of (1) the excess, if any, of the Merger Consideration
over the per share exercise price of such Company Stock Option
and (2) the number of shares of Company Common Stock subject
thereto immediately prior to the Effective Time, provided that
the parties hereto will cooperate, including by providing
alternate arrangements, so as to achieve the intent of the
foregoing without giving rise to such profit recovery.
(d) Parent and Sub will cooperate with the Company
to provide for the purchase (to the extent the holders thereof
so require) in accordance with their terms (and the financing
therefor) of the Company's senior notes (in the aggregate
principal amount of $370 million outstanding as of the date of
this Merger Agreement) issued pursuant to those certain Note
Agreements, dated as of June 28, 1990, between the Company,
certain of its subsidiaries and the original holders of such
notes.
Section 7.5 Public Announcements. So long as this
Merger Agreement is in effect, Parent, Sub and the Company
agree to use their respective reasonable efforts to consult
with each other before issuing any press release or otherwise
making any public statement with respect to the transactions
contemplated by this Merger Agreement.
Section 7.6 Indemnification. (a) Parent agrees
that (i) all rights to indemnification existing in favor of
any director, officer, employee or agent of the Company and
its subsidiaries (the "Indemnified Parties") as provided in
their respective Articles of Incorporation, By-laws or
comparable organizational documents or in indemnification
agreements with the Company or any of its subsidiaries, or
otherwise in effect as of the date hereof, shall survive the
Merger and shall continue in full force and effect for a
period of not less than six years from the Effective Time and
(ii) Parent shall guarantee the performance by the Surviving
Corporation of its obligations referred to in clause (i),
provided that, in the event any claim or claims are asserted
or made within such six-year period, all rights to
indemnification in respect of any such claim or claims, and
Parent's guarantee with respect thereto, shall continue until
final disposition of any and all such claims. Parent also
agrees to indemnify all Indemnified Parties to the fullest ex-
tent permitted by applicable law with respect to all acts and
omissions arising out of such individuals' services as offic-
ers, directors, employees or agents of the Company or any of
its subsidiaries or as trustees or fiduciaries of any plan for
the benefit of employees or directors of, or otherwise on
behalf of, the Company or any of its subsidiaries, occurring
prior to the Effective Time including, without limitation, the
transactions contemplated by this Merger Agreement. Without
limiting the generality of the foregoing, in the event any
such Indemnified Party is or becomes involved in any capacity
in any action, proceeding or investigation in connection with
any matter, including, without limitation, the transactions
contemplated by this Merger Agreement, occurring prior to or
at the Effective Time, Parent shall pay as incurred such
Indemnified Party's legal and other expenses (including the
cost of any investigation and preparation) incurred in
connection therewith. From and after the Effective Time,
Parent shall pay all expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section
7.6.
(b) Parent agrees that, from and after the
Effective Time, the Surviving Corporation shall cause to be
maintained in effect for not less than six years from the
Effective Time the current policies of the directors' and of-
ficers' liability insurance maintained by the Company;
provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing
terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps
or lapses in coverage with respect to matters occurring prior
to the Effective Time; provided, further, that the Surviving
Corporation shall not be required to pay an annual premium in
excess of 225% of the last annual premium paid by the Company
prior to the date hereof and if the Surviving Corporation is
unable to obtain the insurance required by this Section 7.6(b)
it shall obtain as much comparable insurance as possible for
an annual premium equal to such maximum amount.
Section 7.7 Efforts; Consents. (a) Subject to the
terms and conditions herein provided and, in the case of the
Company, fiduciary duties under applicable law, each of the
parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions and to do, or cause to be done,
all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions
contemplated by this Merger Agreement and the Merger and to
cooperate with each other in connection with the foregoing.
Without limiting the generality of the foregoing, each of the
Company, Sub and Parent shall make or cause to be made all re-
quired filings with or applications to Governmental Entities
(including under the Exchange Act, the HSR Act and applicable
requirements of the FCC, the Communications Act and, state and
local Governmental Entities with respect to the Franchise
Transfers), and use its best efforts to (i) obtain all neces-
sary waivers of any Violations and other Consents of all Gov-
ernmental Entities and other third parties, necessary for the
parties to consummate the transactions contemplated hereby,
(ii) oppose, lift or rescind any injunction or restraining or-
der or other order adversely affecting the ability of the par-
ties to consummate the transactions contemplated hereby, and
(iii) fulfill all conditions to this Merger Agreement. Parent
and Sub further covenant that from and after the date hereof
until the Effective Time, they shall not acquire any new or
increased attributable interest, as defined in the FCC rules,
in any media property ("Further Media Interest"), which
Further Media Interest could not be held in common control by
Parent or Sub following the Effective Time, without the prior
written consent of the Company.
(b) Without limiting the foregoing, the Company and
Parent shall use their best efforts and cooperate in promptly
preparing and filing as soon as practicable, and in any event
within six business days (except, in the case of those filings
referred to in clause (iii) below and FCC Applications
required solely in connection with transfers related to the
Company's cable properties, each of which shall be made within
10 business days) of executing this Merger Agreement, (i)
notifications under the HSR Act, (ii) the FCC Applications and
(iii) the applications for the Franchise Transfers (the ap-
plications referred to in clauses (ii) and (iii) being
hereinafter referred to as the "Applications") in connection
with the Merger and the other transactions contemplated
hereby, and to respond as promptly as practicable to any
inquiries or requests received from the Federal Trade
Commission (the "FTC"), the Antitrust Division of the United
States Department of Justice (the "Antitrust Division"), the
FCC and local Governmental Entities for additional information
or documentation and to respond as promptly as practicable to
all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with anti-
trust matters or matters relating to the FCC Applications or
the Franchise Transfers. Each of Parent, Sub and the
Company, to the extent applicable, further agrees to file con-
temporaneously with the filing of the Applications any
requests for waivers of applicable FCC rules or rules or
regulations of other Governmental Entities as may be required
to expeditiously prosecute such waiver requests and to
diligently submit any additional information or amendments for
which the FCC or any other relevant Governmental Entity may
ask with respect to such waiver requests. In furtherance of
the foregoing, Parent and Sub covenant to seek a temporary
(not more than 18-month) waiver of the FCC's mass media
ownership rules (or other similar relief acceptable to the
Company in its sole discretion) in order to allow for the
disposition of any broadcast stations, cable properties,
newspapers or other mass media properties, identified in
Schedule 4.10, that, under the FCC's mass media ownership
rules, could not be held in common control by Parent or Sub
following the Effective Time. Parent and Sub further covenant
to prosecute each such waiver request in good faith and to
supply any information requested by the FCC in connection with
such waiver in a timely and complete manner.
(c) In furtherance and not in limitation of the
foregoing, Parent and Sub shall do everything reasonable to
resolve such objections, if any, as may be asserted with
respect to the transactions contemplated by this Merger
Agreement under any antitrust, competition or trade regulatory
laws, rules or regulations of any Governmental Entity
("Antitrust Laws") or any laws, rules or regulations of the
FCC or other Governmental Entities relating to the broadcast,
cable, newspaper, mass media or communications industries
(collectively, "Communications Laws") and will take all
necessary and proper steps (including, without limitation,
agreeing to hold separate, to place in trust and/or to divest
for reasonable consideration in an orderly manner any of the
businesses, product lines or assets of Parent or any of its
subsidiaries or affiliates or of any of the Company, its
subsidiaries or affiliates ("Divestitures")) as may be
required (i) for securing the termination of any applicable
waiting period on or before the Upset Date (as hereinafter
defined) or the grant of the Applications on or before the
Upset Date under the Antitrust Laws or Communications Laws or
(ii) by any domestic or foreign court or similar tribunal, in
any suit brought by a private party or Governmental Entity
challenging the transactions contemplated by this Merger
Agreement as violative of any Antitrust Law or Communications
Law, in order to avoid the entry of, or to effect the dissolu-
tion of, any injunction, temporary restraining order or other
order that has the effect of preventing the consummation of
any of such transactions. The entry by a court, in any suit
brought by a private party or Governmental Entity challenging
the transactions contemplated by this Merger Agreement as vio-
lative of any Antitrust Law or Communications Law, of any
order or decree permitting the transactions contemplated by
this Merger Agreement but requiring Divestitures of the
properties set forth on Schedule 4.10, shall not be deemed a
failure to satisfy the conditions specified in Section 8.1(b)
or (c) or Section 8.3(a).
(d) Each of Parent and the Company shall promptly
provide the other with a copy of any inquiry or request for
information (including notice of any oral request for informa-
tion), pleading, order or other document either party receives
from any Governmental Entities with respect to the matters re-
ferred to in this Section 7.7.
Section 7.8 Notice of Breaches. The Company shall
give prompt notice to Parent, and Parent or Sub shall give
prompt notice to the Company, of (i) any representation or
warranty made by it contained in this Merger Agreement which
has become untrue or inaccurate in any material respect, or
(ii) the failure by it to comply with or satisfy in any mate-
rial respect any covenant, condition, or agreement to be com-
plied with or satisfied by it under this Merger Agreement;
provided, however, that such notification shall not excuse or
otherwise affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations
of the parties under this Merger Agreement.
Section 7.9 Transfer and Gains Taxes and Certain
Other Taxes and Expenses. Parent and Sub agree that the Sur-
viving Corporation will pay all real property transfer, gains
and other similar taxes and all documentary stamps, filing
fees, recording fees and sales and use taxes (including, but
not limited to, the New York State Real Property Transfer Tax,
the New York State Real Property Transfer Gains Tax and the
New York City Real Property Transfer Tax), if any, and any
penalties or interest with respect thereto, payable in
connection with consummation of the Merger without any offset,
deduction, counterclaim or deferment of the payment of the
Merger Consideration.
Section 7.10 Acquisition Proposals. The Company
agrees that the Company shall not nor shall it permit any of
its subsidiaries nor shall it authorize any of the respective
officers, directors, employees, agents or representatives of
the Company or its subsidiaries (including, without
limitation, any investment banker, attorney or accountant
retained by the Company or any of its subsidiaries) to,
initiate, continue, solicit or encourage, directly or
indirectly, any inquiries or the making of any proposal or
offer to shareholders of the Company, with respect to a
merger, consolidation or similar transaction involving, or any
purchase of all or any significant portion of the assets or
any equity securities of, the Company (any such proposal or
offer being hereinafter referred to as an "Acquisition
Proposal") or, except in the discharge by the Board of
Directors of its fiduciary duties as advised by its outside
legal counsel, engage in any negotiations concerning, or
provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition
Proposal, or otherwise knowingly facilitate any effort or
attempt to make or implement an Acquisition Proposal or enter
into any agreement or understanding with any other person or
entity with the intent to effect any Acquisition Proposal.
The Company will notify Parent of any written Acquisition
Proposals or oral Acquisition Proposals made to the Chief
Executive Officer of the Company which in either event
includes the value of the Acquisition Proposal. Following
receipt of an Acquisition Proposal, the Company's Board of
Directors may withdraw or modify its recommendation relating
to the Merger and may approve or recommend or propose to
approve or recommend an Acquisition Proposal to the extent
that such Board of Directors determines in accordance with its
fiduciary duties as advised by its outside legal counsel.
Promptly after the execution hereof, the Company will request
each person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring
the Company or any portion thereof (the "Confidentiality
Agreements") to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the
Company. The Company will be permitted to modify, amend or
waive provisions of the Confidentiality Agreements to the
extent appropriate in compliance with the fiduciary
obligations of the Company's Board of Directors under
applicable law, as advised by its outside legal counsel; pro-
vided, however, that the Company will notify Parent immedi-
ately if any such modification, amendment or waiver is made.
Nothing contained in this Section 7.10 shall prohibit the Com-
pany or its Board of Directors from (i) taking and disclosing
to its shareholders a position contemplated by Rule 14e-2 of
the Exchange Act or (ii) making any disclosure to its share-
holders that in the judgment of its Board of Directors as ad-
vised by its outside legal counsel is appropriate under appli-
cable law.
Section 7.11 Debt. From and after January 1, 1996
and through the Effective Time, without the approval of
Parent, which approval will not be unreasonably withheld, the
Company will not increase the sum of (i) its current
installments of long-term debt and (ii) its long-term debt,
excluding current installments, decreased by the amount by
which its cash and cash equivalents exceed $5 million (such
sum of (i) and (ii), as so decreased being referred to as the
"Company Debt"), to an amount greater than the Target Debt
Amount.
ARTICLE VIII
Conditions Precedent
Section 8.1 Conditions to Each Party's Obligation
to Effect the Merger. The respective obligations of each
party to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the following conditions:
(a) This Merger Agreement and the transactions con-
templated hereby shall have been approved and adopted by
the requisite vote of the holders of the Company Common
Stock;
(b) The waiting period applicable to the consumma-
tion of the Merger under the HSR Act shall have expired
or been terminated and any other Consents from
Governmental Entities and other third parties which in
any case are required to be received prior to the
Effective Time with respect to the transactions contem-
plated hereby shall have been received (provided that
Parent or the Company may, if there shall be a challenge
made to the FCC Consents prior to their becoming a final
order not subject to further review or appeal, delay (but
subject in any event to the terms of Sections 1.2 and
9.1) the closing of the transactions contemplated by this
Merger Agreement if and for so long as its outside FCC
counsel shall provide it with a written opinion (with a
copy to the other parties hereto) to the effect that the
challenge has raised material nonfrivolous issues which
could require substantive review of the merits of the
challenge by the FCC and/or any reviewing court and which
would more probably than not result in reversal or
rescission of the FCC Consents) other than those Con-
sents, the absence of which would not have a Company Ma-
terial Adverse Effect; provided, however, that this con-
dition shall not apply with respect to any Consent neces-
sary for the Franchise Transfers if the condition in Sec-
tion 8.3(b) has been satisfied or waived by Parent; and
(c) The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order,
judgment, decree, injunction or ruling of a court of
competent jurisdiction; provided, however, that the
parties shall comply with the provisions of Section 7.7
and shall further use their best efforts to cause any
such order, judgment, decree, injunction or ruling to be
vacated or lifted.
Section 8.2 Conditions to Obligation of the Company
to Effect the Merger. The obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to
the Effective Time of the additional condition, unless waived
by the Company, that Parent and Sub shall have performed in
all material respects their respective agreements contained in
this Merger Agreement required to be performed at or prior to
the Effective Time and the representations and warranties of
Parent and Sub contained in this Merger Agreement shall be
true when made and (except for representations and warranties
made as of a specified date, which need only be true as of
such date) at and as of the Effective Time as if made at and
as of such time, except as contemplated by this Merger
Agreement and except for inaccuracies that in the aggregate do
not constitute a Parent Material Adverse Effect; and the
Company shall have received a certificate of the Chief
Executive Officer or a Vice President of Parent and Sub to
that effect.
Section 8.3 Conditions to Obligations of Parent and
Sub to Effect the Merger. The obligations of Parent and Sub
to effect the Merger shall be subject to the fulfillment at or
prior to the Effective Time of the additional following condi-
tions, unless waived by Parent:
(a) The Company shall have performed in all
respects its agreements contained in this Merger Agree-
ment required to be performed at or prior to the
Effective Time and the representations and warranties of
the Company contained in this Merger Agreement shall be
true when made and (except for representations and
warranties made as of a specified date, which need only
be true as of such date) at and as of the Effective Time
as if made at and as of such time, except as contemplated
by this Merger Agreement and except for inaccuracies in
representations and warranties and failures to perform
its agreements that in the aggregate do not constitute a
Company Material Adverse Effect; and Parent and Sub shall
have received a certificate of the Chief Executive
Officer or a Vice President of the Company to that
effect.
(b) The aggregate number of cable television sub-
scribers covered by (i) Franchises as to which Consents
for Franchise Transfers have been obtained and (ii) Fran-
chises that do not require such Consent shall equal at
least 80% of the total number of the Company's cable
television subscribers as of June 30, 1995 based on the
Company's month-end billing report as of such date.
(c) The Company Debt measured as of two business
days prior to the Closing Date shall not exceed the
Target Debt Amount.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1 Termination. This Merger Agreement may
be terminated at any time prior to the Effective Time, whether
before or after approval by the shareholders of the Company:
(a) by mutual written consent of Parent and the
Company;
(b) by the Company, upon a material breach of this
Merger Agreement on the part of Parent or Sub which has
not been cured and which would cause the condition set
forth in Section 8.2 to be incapable of being satisfied
by July 31, 1996;
(c) by Parent, upon a material breach of this
Merger Agreement on the part of the Company set forth in
this Merger Agreement which has not been cured and which
would cause the condition set forth in Section 8.3(a) to
be incapable of being satisfied by July 31, 1996;
(d) by Parent or the Company if any court of compe-
tent jurisdiction shall have issued, enacted, entered,
promulgated or enforced any order, judgment, decree, in-
junction or ruling which restrains, enjoins or otherwise
prohibits the Merger and such order, judgment, decree,
injunction or ruling shall have become final and nonap-
pealable;
(e) by either Parent or the Company if the Merger
shall not have been consummated on or before July 31,
1996 (the "Upset Date") (provided the terminating party
is not otherwise in material breach of its
representations, warranties or obligations under this
Merger Agreement);
(f) by either Parent or the Company if the Company
Special Meeting (including as it may be adjourned from
time to time) shall have concluded without the Company
having obtained the required shareholder approval of this
Merger Agreement and the transactions contemplated
hereby; or
(g) by the Company if a third party, including any
group, shall have made a proposal regarding the acquisi-
tion of any of the capital stock of, or any other equity
interest in, the Company or any of its subsidiaries, or a
merger, consolidation or other business combination in-
volving the Company or any of its subsidiaries, or a sale
of all or (other than in the ordinary course of business)
any substantial portion of the assets of the Company or
any of its subsidiaries, or commenced a tender or
exchange offer to acquire any Shares (an "Offer"), which,
in any such case, the Company's Board of Directors
determines, after consultation with the Company's finan-
cial advisor, to be more favorable to the Company's
shareholders than the transactions contemplated hereby
and the Company's Board of Directors determines that it
would be in accordance with their fiduciary duties, based
upon the advice of its outside legal counsel, to accept
the third party proposal; provided, however, that the
Company shall not be permitted to terminate this Merger
Agreement pursuant to this Section 9.1(g) unless it has
provided Parent and Sub with prior written notice of its
intent to so terminate this Merger Agreement together
with a detailed summary of the terms and conditions
(including proposed financing, if any) of such Offer;
provided, further, that the Company shall pay the fees
set forth in Section 9.3(b) by wire transfer in same day
funds prior to any termination pursuant to this Section
9.1(g).
Section 9.2 Effect of Termination. In the event of
termination of this Merger Agreement by either Parent or the
Company, as provided in Section 9.1, this Merger Agreement
shall forthwith become void and there shall be no liability
hereunder on the part of any of the Company, Parent or Sub or
their respective officers or directors; provided that Sec-
tions 9.2, 9.3 and 10.6 and the second to last sentence of
Section 7.1 shall survive the termination.
Section 9.3 Fees and Expenses. (a) Whether or not
the Merger is consummated, all costs and expenses incurred in
connection with this Merger Agreement and the transactions
contemplated by this Merger Agreement shall be paid by the
party incurring such expenses.
(b) In the event the Company shall have terminated
this Merger Agreement pursuant to Section 9.1(g), then the
Company shall pay Parent a termination fee of $65 million pay-
able in same day funds (which fee is inclusive of all of Par-
ent's and Sub's out-of-pocket fees and expenses). If the Com-
pany fails to pay promptly the amount due pursuant to this
Section 9.3(b), and, in order to obtain such payment, Parent
or Sub commences a suit which results in a judgment against
the Company for the fee set forth in this paragraph (b), the
Company shall pay to Parent or Sub its reasonable costs and
expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the
amount of the fee at the prime rate of the Morgan Guaranty
Trust Company of New York from the date such payment was
required to be made.
Section 9.4 Amendment. This Merger Agreement may
be amended by the parties hereto at any time before or after
approval hereof by the shareholders of the Company, but, after
such approval, no amendment shall be made which (i) changes
the form or decreases the amount of the Merger Consideration,
(ii) in any way materially adversely affects the rights of the
Company's shareholders or (iii) under applicable law would re-
quire approval of the Company's shareholders, in any such case
referred to in clauses (i), (ii) and (iii), without the
further approval of such shareholders. This Merger Agreement
may not be amended except by an instrument in writing signed
on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Ef-
fective Time, the parties 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 any other party
hereto, (ii) waive any inaccuracies in the representations and
warranties by any other party contained herein or in any docu-
ments delivered by any other party pursuant hereto and (iii)
waive compliance with any of the agreements of any other party
or with any conditions to its own obligations contained
herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party.
ARTICLE X
General Provisions
Section 10.1 Non-Survival of Representations, War-
ranties and Agreements. No representations, warranties or
agreements in this Merger Agreement shall survive the Merger,
except that the agreements contained in Article III and the
agreements of Parent and Sub referred to in Sections 7.4, 7.6,
7.9, 10.1 and 10.6 shall survive the Merger indefinitely (ex-
cept to the extent a shorter period of time is explicitly
specified therein).
Section 10.2 Notices. All notices or other commu-
nications under this Merger Agreement shall be in writing and
shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by telecopy (with confir-
mation of receipt), or by registered or certified mail,
postage prepaid, return receipt requested, addressed as
follows:
If to the Company:
Multimedia, Inc.
305 S. Main Street
Greenville, South Carolina 29601
Attention: Chief Financial Officer
Telecopy No.: (803) 298-4424
With copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Daniel A. Neff, Esq.
Telecopy: (212) 403-2000
and
Wyche, Burgess, Freeman & Parham, P.A.
44 E. Camperdown Way
Greenville, S.C. 29601
Attention: Eric B. Amstutz, Esq.
Telecopy: (803) 235-8900
If to Parent or Sub:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
Attention: Douglas H. McCorkindale
Telecopy No.: (703) 558-4634
With a copy to:
Gannett Co., Inc.
1100 Wilson Boulevard
Arlington, VA 22234
Attention: Thomas L. Chapple
Telecopy No.: (703) 558-3897
or to such other address as any party may have furnished to
the other parties in writing in accordance with this Section.
Section 10.3 Specific Performance. The parties
hereto agree that irreparable damage would occur in the event
that any of the provisions of this Merger Agreement were not
performed in accordance with their specific terms or were oth-
erwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Merger Agreement and to enforce specifically
the terms and provisions hereof, this being in addition to any
other remedy to which they are entitled at law or in equity.
Section 10.4 Entire Agreement. This Merger Agree-
ment (including the documents and instruments referred to
herein) constitutes the entire agreement and supersedes all
other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the
subject matter hereof (other than as provided in the second to
last sentence of Section 7.1).
Section 10.5 Assignments; Parties in Interest.
Neither this Merger Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the
preceding sentence, this Merger Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and
nothing in this Merger Agreement, express or implied, is in-
tended to or shall confer upon any person not a party hereto
any right, benefit or remedy of any nature whatsoever under or
by reason of this Merger Agreement, including to confer third
party beneficiary rights, except for the provisions of Article
III and Sections 7.4, 7.6 and 7.9.
Section 10.6 Governing Law. This Merger Agreement,
except to the extent that the South Carolina Act and Delaware
Law (with respect to the Merger only) are mandatorily
applicable to the Merger and the rights of the shareholders of
the Company, shall be governed in all respects by the laws of
the State of New York (without giving effect to the provisions
thereof relating to conflicts of law). The exclusive venue
for the adjudication of any dispute or proceeding arising out
of this Merger Agreement or the performance thereof shall be
the courts located in the County of New York, State of New
York and the parties hereto and their affiliates each consents
to and hereby submits to the jurisdiction of any court located
in the County of New York, State of New York or Federal courts
in the Southern District of New York.
Section 10.7 Headings; Disclosure. The descriptive
headings herein are inserted for convenience of reference only
and are not intended to be part of or to affect the meaning or
interpretation of this Merger Agreement. Any disclosure by
the Company or Parent in any portion of its respective
disclosure schedule shall be deemed disclosure in each other
portion of such disclosure schedule.
Section 10.8 Certain Definitions. As used in this
Merger Agreement:
(a) the term "affiliate," as applied to any person,
shall mean any other person directly or indirectly con-
trolling, controlled by, or under common control with,
that person; for purposes of this definition, "control"
(including, with correlative meanings, the terms "con-
trolling," "controlled by" and "under common control
with"), as applied to any person, means the possession,
directly or indirectly, of the power to direct or cause
the direction of the management and policies of that per-
son, whether through the ownership of voting securities,
by contract or otherwise;
(b) the terms "knowledge," "best knowledge" or any
similar formulation of "knowledge" shall mean, the know-
ledge of members of the Company's Management Committee
with respect to the Company, and with respect to Parent
and Sub, the knowledge of Parent's senior executive of-
ficers, general counsel and controller;
(c) the term "person" shall include individuals,
corporations, partnerships, trusts, other entities and
groups (which term shall include a "group" as such term
is defined in Section 13(d)(3) of the Exchange Act);
(d) the term "subsidiary" or "subsidiaries" means,
with respect to Parent, the Company or any other person,
any corporation, partnership, joint venture or other
legal entity of which Parent, the Company or such other
person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or
indirectly, stock or other equity interests the holders
of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other
governing body of such corporation or other legal entity;
(e) the term "Parent Material Adverse Effect" means
consequences which are reasonably likely to prevent or
delay beyond the Upset Date the consummation of the
transactions contemplated by this Merger Agreement; and
(f) a "Company Material Adverse Effect" shall be
deemed to occur if the aggregate consequences of all
breaches and inaccuracies of covenants and
representations of the Company, when read without any
exception or qualification for a Company Material Adverse
Effect, are reasonably likely to have a material adverse
effect on the business, operations or financial condition
of the Company and its subsidiaries taken as a whole.
Section 10.9 Counterparts. This Merger Agreement
may be executed in two or more counterparts which together
shall constitute a single agreement.
Section 10.10 Severability. If any term or other
provision of this Merger Agreement is invalid, illegal or in-
capable of being enforced by any rule of law or public policy,
all other conditions and provisions of this Merger Agreement
shall nevertheless remain in full force and effect so long as
the economics or legal substance of the transactions contem-
plated hereby are not affected in any manner materially
adverse to any party. Upon determination that any term or
other provision hereof is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good
faith to modify this Merger Agreement so as to effect the
original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby
are fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Sub and the Company have
caused this Merger Agreement to be signed by their respective
officers thereunder duly authorized all as of the date first
written above.
GANNETT CO., INC.
By /s/ Douglas H. McCorkindale
Title: Vice Chairman
MULTIMEDIA TALK CHANNEL, INC.
By /s/ Douglas H. McCorkindale
Title: President
MULTIMEDIA, INC.
By /s/ Robert E. Hamby
Title: Senior Vice President