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:
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1.
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DG SHAREHOLDER
INDEMNITY
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(a)
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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.
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(b)
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“ 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).
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(c)
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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.
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2
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(d)
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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.
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(e)
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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).
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(a)
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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.
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(b)
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For
purposes of this Agreement, “ Gores Contribution
Amount ” shall mean, for each Covered Payment, an amount
equal to:
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(i)
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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
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(ii)
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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%.
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3
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(c)
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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).
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(d)
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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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