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INDEMNITY AND CONTRIBUTION AGREEMENT

Contribution Agreement

INDEMNITY AND CONTRIBUTION AGREEMENT | Document Parties: DIAL GLOBAL, INC | Clear Channel Acquisition LLC | GORES CAPITAL ADVISORS II, LLC | GORES GROUP, LLC | Gores Radio Holdings, LLC | Metro Networks, Inc, Smart Route Systems, Inc | TLAC, Inc | Triton Digital Inc | Triton Media Group, LLC | Verge Media Companies, Inc | Verge Media, Inc | Westwood One, Inc | WWON, Radio Network Holdings, LLC You are currently viewing:
This Contribution Agreement involves

DIAL GLOBAL, INC | Clear Channel Acquisition LLC | GORES CAPITAL ADVISORS II, LLC | GORES GROUP, LLC | Gores Radio Holdings, LLC | Metro Networks, Inc, Smart Route Systems, Inc | TLAC, Inc | Triton Digital Inc | Triton Media Group, LLC | Verge Media Companies, Inc | Verge Media, Inc | Westwood One, Inc | WWON, Radio Network Holdings, LLC

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Title: INDEMNITY AND CONTRIBUTION AGREEMENT
Governing Law: Delaware     Date: 8/4/2011
Industry: Broadcasting and Cable TV     Law Firm: Skadden Arps;Kirkland Ellis     Sector: Services

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Exhibit 10.1

EXECUTION VERSION

INDEMNITY AND CONTRIBUTION AGREEMENT

THIS INDEMNITY AND CONTRIBUTION AGREEMENT (this “ Agreement ”) is made as of this 30th day of July, 2011, by and among Westwood One, Inc., a Delaware corporation (“ WWON ”), Gores Radio Holdings, LLC, a Delaware limited liability company (“ Gores ”), Verge Media Companies, Inc., a Delaware corporation (“ Verge ”), and Triton Media Group, LLC, a Delaware limited liability company (the “ DG Shareholder ”), and shall become effective automatically and without any further action by any party hereto immediately upon consummation of the WWON Merger (as defined below). Capitalized terms used herein, but not otherwise defined, shall have the meanings ascribed to them in the Merger Agreement, dated as of July 30, 2011, by and between WWON, Radio Network Holdings, LLC and Verge (the “ Merger Agreement ”).

WHEREAS, in connection with its sale of Metro Networks, Inc., Smart Route Systems, Inc. and TLAC, Inc. (collectively, the “ Metro Business ”) to Clear Channel Acquisition LLC (“ Clear Channel ”), Clear Channel and WWON agreed to certain mutual indemnification and other potential payment obligations pursuant to that certain Stock Purchase Agreement, dated as of April 29, 2011, between Clear Channel and WWON (the “ Metro Agreement ”);

WHEREAS, in connection with its sale of Triton Media Group, LLC (the “ Digital Business ”) to Triton Digital Inc., a Delaware corporation (“ TDI ”), Verge Media, Inc., a Delaware corporation and indirect wholly owned subsidiary of Verge (“ VMI ”), agreed to certain indemnification obligations in favor of TDI and its direct and indirect subsidiaries, as more fully described in Section 6 of the Unit Purchase Agreement, dated as of July 29, 2011, between TDI and VMI (the “ Digital Agreement ”);

WHEREAS, in connection with and in furtherance of the merger of Verge with and into a subsidiary of WWON (the “ WWON Merger ”), and the substantial benefits that the DG Shareholder will derive from the WWON Merger, the DG Shareholder desires to provide, subject to the terms and conditions contained in this Agreement, certain indemnification rights in favor of WWON with respect to the Digital Business; and

WHEREAS, in connection with and in furtherance of the WWON Merger, and the substantial benefits that Gores shall derive from the WWON Merger, Gores desires to provide, subject to the terms and conditions contained in this Agreement, certain contribution rights in favor of the DG Shareholder.

 

 


 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the parties hereby agree as follows:

1.

 

DG SHAREHOLDER INDEMNITY

 

(a)

 

Subject to the limitations contained in this Agreement, the DG Shareholder shall indemnify and hold harmless WWON and each subsidiary of WWON (each an “ Indemnified Party ”) against any Losses (as defined below) suffered by such Indemnified Party to the extent arising from or directly related to the Digital Business; provided that , for the avoidance of doubt, the DG Shareholder shall have no obligation hereunder with respect to up to $166,667 of U.S. federal, state, local and foreign tax liabilities imposed on any Indemnified Party with respect to the sale of the Digital Business pursuant to the Digital Agreement, or with respect to the distribution of the consideration received thereunder to DG Shareholder through one or more Indemnified Parties.

 

 

(b)

 

Losses ” means any and all losses, costs, obligations, liabilities, settlement payments, awards, judgments, fines, penalties, damages, expenses, deficiencies or other charges, in each case paid to a third party (which, for the avoidance of doubt, shall (a) include, in the case of Section 2(a) below, any payments made by WWON or any of its subsidiaries to Gores or any of its members or any of its or their respective Affiliates pursuant to that certain Reimbursement Agreement, dated as of July 22, 2011, made by WWON in favor of Gores Capital Partners II, L.P. and Gores Co-Invest Partnership II, L.P., or otherwise as a result of Gores or any of its members or any of its or their respective Affiliates making a payment pursuant to the Guaranty, dated as of April 29, 2011, between Gores Capital Partners II, L.P. and Gores Co-Invest Partnership II, L.P. in favor of Clear Channel, and (b) exclude the allocable time of personnel of any party hereto or their affiliates, or the internal overhead ( e.g., rent, office supplies, etc.) incurred in connection with handling a claim that is subject to indemnification hereunder).

 

(c)

 

All payments owed under this Section 1 by the DG Shareholder shall be payable by the DG Shareholder solely from 53.161% of the net cash proceeds received from time to time by the DG Shareholder in respect of the shares of Class B Common Stock of WWON issued to the DG Shareholder upon consummation of the WWON Merger (and/or received by the DG Shareholder in respect of any security, asset or other property received in respect of such shares) (collectively, the “ Class B WWON Stock ”), whether received as a result of a sale or other disposition of such Class B WWON Stock or as a dividend or other distribution in respect of such Class B WWON Stock (the “ DG Shareholder Limit ”), and shall be due within 10 business days after the later of (y) the DG Shareholder’s receipt of any such net cash proceeds (to the extent not used to satisfy other amounts owed hereunder) and (z) the DG Shareholder becoming obligated to make such payment hereunder. No interest shall accrue with respect to amounts owed hereunder pending the date on which any payments hereunder shall have become due and payable.

 

2


 

 

(d)

 

Notwithstanding the foregoing, (i) the DG Shareholder’s obligations under this Section 1 shall not apply with respect to any claim made against an Indemnified Party after (or any claim made against an Indemnified Party before but not communicated to the DG Shareholder in writing until after (or in the case of claims received within five business days of such date, not communicated within 10 days following)) the earlier to occur of (y) April 30, 2013, and (z) the date on which the record stockholders of WWON immediately prior to the Effective Time (excluding any nominees) cease to own at least 30% of the WWON Stock held by such Persons immediately after the Effective Time (the earlier to occur of (y) and (z), the “ DG Shareholder Expiration Date ”), and (ii) the DG Shareholder shall not be obligated to make any payment, individually or in the aggregate, in excess of the DG Shareholder Limit.

 

(e)

 

For purposes of this Agreement, “net cash proceeds” shall mean, cash proceeds actually received, less actual out-of-pocket costs to non-affiliates related to the sale or transfer of WWON Stock ( e.g., brokerage commissions, underwriter commissions or discounts, legal fees, etc., but specifically excluding any taxes associated with such sale or transfer other than stamp taxes, sales tax, ad valorem tax or other non-income taxes incurred by the seller of such WWON stock).

 

2.

 

GORES CONTRIBUTION

 

(a)

 

Subject to the limitations contained in this Agreement, if WWON or any of its subsidiaries makes any payment(s) from time to time pursuant to the Metro Agreement (whether pursuant to an indemnification obligation, a purchase price adjustment mechanism or otherwise) or otherwise suffers any Losses (as defined in Section 1(b) above) to the extent arising from or directly related to to the Metro Business (each a “ Covered Payment ”), then, for each such Covered Payment, Gores shall pay an amount to the DG Shareholder equal to the Gores Contribution Amount (as defined below) for such Covered Payment.

 

 

(b)

 

For purposes of this Agreement, “ Gores Contribution Amount ” shall mean, for each Covered Payment, an amount equal to:

 

(i)

 

For the first $5,000,000 of Covered Payments, the product of (y) the excess, if any, of (A) the amount of such Covered Payment (or portion thereof as applicable), over (B) the aggregate of all amounts received by WWON from Clear Channel under the Metro Agreement following the consummation of the WWON Merger (“ Clear Channel Payments ”) but only to the extent such Clear Channel Payments are not then being applied, and have not been previously applied, against any other Covered Payment pursuant to this clause (B) or clause (c) below, and (z) 45.135%; and

 

 

(ii)

 

For Covered Payments in excess of $5,000,000, the product of (y) the excess, if any, of (A) the amount of such Covered Payment (or portion thereof as applicable), over (B) all Clear Channel Payments received by WWON in excess of $5,000,000 but only to the extent such Clear Channel Payments in excess of $5,000,000 are not then being applied, and have not been previously applied, against any other Covered Payment under this clause (B) or clause (c) below, and (z) 50.820%.

 

3


 

 

(c)

 

If, subsequent to any payment(s) made by Gores pursuant to Section 2(a) above, WWON receives a Clear Channel Payment that is not then being applied, and had not otherwise been previously applied, to any other Covered Payment under clause (i)(B) or (ii)(B) above and that would have reduced the amount Gores would have been required to pay pursuant to the formula(s) set forth in Section 1(b) above had such Clear Channel Payment been received prior to such payment(s), the DG Shareholder shall promptly return to Gores the amount necessary to reduce Gores’ total payment(s) to the amount which would have been required to be paid by Gores had such Clear Channel Payment (or portion thereof as applicable) been received prior to such payment(s).

 

 

(d)

 

All payments owed under this Section 2 by Gores shall be payable by Gores solely from the net cash proceeds received by Gores from time to time after the date hereof in respect of shares of common stock of WWON (and/or received by Gores in respect of any security, asset or other property received directly or indirectly in respect of such shares of common stock, including but not limited to the shares of Class A Common Stock to be issued to Gores upon consummation of the Reclassification) (collectively, the “ Class A WWON Stock ” and, tog


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