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TRIBUNE CO | TMCT II, LLC | FORTIFICATION HOLDINGS CORPORATION | WICK HOLDINGS CORPORATION | EAGLE NEW MEDIA INVESTMENTS, LLC | EAGLE PUBLISHING INVESTMENTS, LLC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 10.3
EXECUTION COPY
DISTRIBUTION AGREEMENT
By and Among
TMCT II, LLC,
TRIBUNE COMPANY,
FORTIFICATION HOLDINGS CORPORATION,
WICK HOLDINGS CORPORATION,
EAGLE NEW MEDIA INVESTMENTS, LLC,
EAGLE PUBLISHING INVESTMENTS, LLC,
CHANDLER TRUST NO. 1,
and
CHANDLER TRUST NO.2
September 21, 2006
DISTRIBUTION
AGREEMENT
This Distribution Agreement (the “Agreement”), dated as of September 21, 2006, is by and among TMCT II, LLC, a Delaware limited liability company (the “Company”), Tribune Company, a Delaware corporation (“Tribune”), Fortification Holdings Corporation, a Delaware corporation (“Fortification”), Wick Holdings Corporation, a Delaware corporation (“Wick”), Eagle New Media Investments, LLC, a Delaware limited liability company (“Eagle 1”), Eagle Publishing Investments, LLC, a Delaware limited liability company (“Eagle 2” and, collectively with Tribune, Fortification, Wick and Eagle 1, the “Tribune Members”), Chandler Trust No. 1 (“Trust 1”) and Chandler Trust No. 2 (“Trust 2” and, collectively with Trust 1, the “Trust Members”). The Tribune Members and the Trust Members are collectively referred to herein as the “Members.” Capitalized terms used herein but not otherwise defined shall have the meanings ascribed to them in the Amended and Restated Limited Liability Company Agreement of the Company, dated as of September 3, 1999 (as further amended on August 14, 2000 and August 28, 2002, the “Operating Agreement”).
R E C I T A L S
WHEREAS, the Company desires to make distributions to Tribune,
Eagle 1 and Eagle 2 (the “Distributions”); and
WHEREAS, concurrently with the Distributions, the Members
desire to amend and restate the Operating Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual promises, covenants
and conditions hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
Distribution
1.1
Distribution.
On the Closing Date (as defined below), the Company shall make distributions to
(a) Tribune in respect of the Interest held by Tribune by delivering to
Tribune (i) certificates representing 11,107,595 shares of the common
stock, $.01 par value per share, of Tribune (the “Common Stock”)
and (ii) certificates representing in the aggregate 488,429 shares of any
combination of the Series D-1 Preferred Stock, no par value, of Tribune (the
“D-1 Preferred Stock”) and the Series D-2 Preferred Stock, no par
value, of Tribune (the “D-2 Preferred Stock” and, collectively with
the D-1 Preferred Stock, the “Preferred Stock”), (b) Eagle 1 in
respect of the Interest held by Eagle 1 by delivering to Eagle 1
(i) certificates representing 6,529,444 shares of Common Stock and (ii)
certificates representing in the aggregate 52,940 shares of any combination of
the D-1 Preferred stock and the D-2 Preferred Stock and (c) Eagle 2 in respect
of the Interest held by Eagle 2 by delivering to Eagle 2 (i) certificates
representing 11,542,423 shares of Common Stock and (ii) certificates representing
in the aggregate 84,703 shares of any combination of the D-1 Preferred Stock
and the D-2 Preferred Stock. All such shares shall be distributed,
transferred and delivered to Tribune, Eagle 1 and Eagle 2 free and clear of any
lien (statutory or other), claim, charge, security interest,
pledge, hypothecation,
assignment, conditional sale or other title retention agreement, preference,
priority or other security agreement or preferential arrangement of any kind or
nature. Concurrently with the Distributions, the Members will enter into
a Second Amended and Restated Limited Liability Company Agreement for the
Company in the form attached hereto as Exhibit A (the “Amended Operating
Agreement”). Each of the Members acknowledges and agrees that the
sole interest of such Member in the Company following the Closing Date shall be
the Interest of such Member as provided in, and governed by, the terms of the
Amended Operating Agreement.
1.2
Consent to Transactions. For all purposes of the Operating Agreement, including, without
limitation, Section 6.5 of the Operating Agreement, each of the Members hereby
agrees and consents to the transactions described in this Agreement, including,
without limitation, the Distributions. Each of the Members further agrees
to execute and deliver the Amended Operating Agreement in order to carry out
the purpose and intent of this Agreement. Each of the Members (other than
Tribune, Eagle 1 and Eagle 2) acknowledges that the Distributions provided for
in this Agreement are being made solely to Tribune, Eagle 1 and Eagle 2 and
hereby waives any right it may have to receive a concurrent distribution in
accordance with the provisions of Article IX of the Operating Agreement
due to or on account of the Distributions.
1.3
Continuation of Company. Each of the Members hereby agrees that at all times relevant
hereto the Company shall continue and shall not be dissolved or deemed
dissolved or terminated due to or on account of the Distributions or any of the
transactions herein or any other reason. Each of the Members agrees that
it will not claim or assert in any forum a position which is contrary to the
purpose and intent of this Section 1.3.
ARTICLE II
Closing
2.1
Closing Date and Location. Subject to the provisions of this Agreement, the
closing of the transactions contemplated hereby (the “Closing”)
shall be held on September 22, 2006 or at such other time on or before
September 22, 2006 as may be mutually agreed upon in writing by the
parties. The date of the Closing is sometimes referred to herein as the
“Closing Date.” The Closing shall take place at the Offices
of Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles,
California 90071.
2.2
Deliveries by the Tribune Members. In addition to, and without limiting any other
provision of this Agreement, the Tribune Members agree to deliver or cause to
be delivered to the Company and the Trust Members at or prior to the Closing
the following:
(a)
Authorizations.
Certified resolutions of the Board of Directors or Managers, as applicable, of
each of the Tribune Members authorizing the execution, delivery and performance
of this Agreement and the transactions contemplated herein; and
(b)
Amended Operating Agreement. A copy of the Amended Operating Agreement duly executed by
each of the Tribune Members.
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2.3
Deliveries by the Company In addition to, and without limiting any other
provision of this Agreement, the Company agrees to deliver or cause to be
delivered at or prior to the Closing the share certificates to Tribune, Eagle 1
and Eagle 2 described in Section 1.1, in the amounts and at the times indicated
in Section 1.1, together with any stock or other applicable powers, duly
executed on behalf of the Company, as may be necessary to register the transfer
of the shares represented by such certificates.
2.4
Deliveries by the Trust Members In addition to, and without limiting any other
provision of this Agreement, the Trust Members agree to deliver or cause to be
delivered to the Company and the Tribune Members at or prior to the Closing a
copy of the Amended Operating Agreement duly executed by each of the Trust
Members.
2.5
Conditions Precedent.
(a)
Conditions to Obligations of the Company. The obligation of the Company to consummate
the transactions provided for hereby are subject to the satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which
may be waived by the Company: (i) the representations and warranties made
by the Members herein shall be true and correct in all material respects as of
the date hereof and (ii) the Members shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by the Members hereunder through and
including the Closing Date, and shall have obtained all approvals, consents and
qualifications necessary to complete the transactions described herein.
(b)
Conditions to Obligations of the Tribune Members. The obligation of the
Tribune Members to consummate the transactions provided for hereby are subject
to the satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the Tribune Members: (i) the
representations and warranties made by the Company and the Trust Members herein
shall be true and correct in all material respects as of the date hereof and
(ii) the Company and the Trust Members shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by the Company and the Trust Members
hereunder through and including the Closing Date, and shall have obtained all
approvals, consents and qualifications necessary to complete the transactions
described herein.
(c)
Conditions to Obligations of the Trust Members. The obligation of the Trust
Members to consummate the transactions provided for hereby are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by the Trust Members: (i) the
representations and warranties made by the Company and the Tribune Members
herein shall be true and correct in all material respects as of the date hereof
and (ii) the Company and the Tribune Members shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by the Company and the
Tribune Members hereunder through and including the Closing Date, and shall
have obtained all approvals, consents and qualifications necessary to complete
the transactions described herein.
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ARTICLE III
Representations
And Warranties
3.1
Representations and Warranties of Tribune Members. Each of the Tribune Members,
jointly and severally, represents and warrants to the Company and the Trust
Members as follows:
(a)
Organization and Good Standing. Each of the Tribune Members is duly organized,
validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own its
properties and assets and to carry on its business as now conducted and as presently
proposed to be conducted.
(b)
Due Authorization.
All action on the part of each of the Tribune Members, its officers, directors,
members, managers and stockholders necessary for the authorization, execution
and delivery of, and the performance of all obligations of such Tribune Member
under, this Agreement has been taken. Each of the Tribune Members has
duly authorized, executed and delivered this Agreement, and this Agreement is a
valid and binding obligation of each of the Tribune Members enforceable in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization and similar laws
affecting creditors’ rights generally and to general equitable
principles.
(c)
No Conflicts.
Neither the execution and delivery of this Agreement or the consummation of any
of the transactions contemplated hereby, nor compliance with or fulfillment of
the terms, conditions and provisions hereof, by any of the Tribune Members will
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under (a) the
certificate of incorporation, by-laws, operating agreement or other
constitutional documents of such Tribune Member (b) any material agreement,
note, instrument, mortgage, lease, license, franchise, permit or other
authorization, right, restriction or obligation to which such Tribune Member is
a party or any of its respective assets or business is subject or by which such
Tribune Member is bound, (c) any order, writ, injunction or decree to which
such Tribune Member is a party or any of its assets or business is subject or
by which such Tribune Member is bound or (d) any applicable laws affecting such
Tribune Member or its respective assets or business.
(d)
Consents. No
consent, approval or authorization of, declaration to, or filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by the Tribune Members or any of
their affiliates in connection with the execution, delivery and performance by
the Tribune Members of this Agreement and the consummation of the transactions
contemplated hereby, other than filings that Tribune may make pursuant to the
requirements of the Securities Exchange Act of 1934, as amended.
(e)
Representations of Tribune as Managing Member.
(i)
Financial Statements. Tribune heretofore has delivered to the Members true and
correct copies of (A) the Company’s audited balance sheet dated as of
December 31, 2004 and unaudited balance sheet dated as of December 31, 2005 and
(B) the
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related statements of
the Member’s capital accounts for each of the years ended December 31,
2004 and December 31, 2005 (collectively, the “Financial
Statements”). The Financial Statements (1) have been prepared in
all respects in accordance with the terms of the Operating Agreement (except
that all Financial Statements have been prepared on a tax basis not in
accordance with generally accepted accounting principles), (2) are in
accordance with the books and records of the Company and (3) fairly
present the financial position of the Company as of the respective dates
thereof. The Company keeps books, records and accounts that, in
reasonable detail, accurately and fairly reflect in all material respects the
transactions and dispositions of assets of the Company.
(ii)
Schedule of Members. Attached hereto as Exhibit B is a true, complete and accurate
copy of the Schedule of Members as of the date hereof as required by the
Operating Agreement.
(iii)
Compliance with Operating Agreement. To the knowledge of Tribune, since January 1, 2005,
the Company has been operated in compliance with the Operating Agreement in all
material respects.
(iv)
Tax Elections.
No election under Section 754 of the Internal Revenue Code of 1986, as amended
(the “Code”), is in effect with respect to the Company.
(f)
Rights Plan. None of the transactions contemplated hereby, or the direct or indirect
acquisition of beneficial ownership of additional securities of Tribune by the
Company or the Trust Members as a result of the consummation of the
transactions contemplated hereby, shall cause either of the Trust Members or
the Company to be an “Acquiring Person” pursuant to that certain
Rights Agreement, between Tribune and First Chicago Trust Company of New York,
dated as of December 12, 1997 and as amended by Amendment No. 1 on June 12,
2000 and Amendment No. 2 on September 21, 2006 (the “Rights Plan”).
3.2
Representations and Warranties of Trust Members. Each of the Trust Members,
jointly and severally, represents and warrants to the Company and the Tribune
Members as follows:
(a)
Due Authorization.
All action on the part of each of the Trust Members and its trustees necessary
for the authorization, execution and delivery of, and the performance of all
obligations of such Trust Members under, this Agreement has been taken.
Each of the Trust Members has duly authorized, executed and delivered this
Agreement, and this Agreement is a valid and binding obligation of each of the
Trust Members enforceable in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, moratorium,
reorganization and similar laws affecting creditors’ rights generally and
to general equitable principles.
(b)
No Conflicts.
Neither the execution and delivery of this Agreement or the consummation of any
of the transactions contemplated hereby, nor compliance with or fulfillment of
the terms, conditions and provisions hereof, by any of the Trust Members will
conflict with, result in a breach of the terms, conditions or provisions of, or
constitute a default, an event of default or an event creating rights of
acceleration, termination or cancellation or a loss of rights under (a) the
constitutional documents of such Trust Member, (b) any material
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agreement, note,
instrument, mortgage, lease, license, franchise, permit or other authorization,
right, restriction or obligation to which such Trust Member is a party or any
of its respective assets or business is subject or by which such Trust Member
is bound, (c) any order, writ, injunction or decree to which such Trust Members
is a party or any of its assets or business is subject or by which such Trust
Members is bound or (d) any applicable laws affecting such Trust Members or its
respective assets or business.
(c)
Consents. No
consent, approval or authorization of, declaration to, or filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by the Trust Members or any of their
affiliates in connection with the execution, delivery and performance by the
Trust Members of this Agreement and the consummation of the transactions
contemplated hereby.
(d)
Lack of Knowledge of Certain Actions. To the knowledge of each Trust Member (i) the
Company, since January 1, 2005, has been operated in compliance with the
Operating Agreement in all material respects and (ii) Tribune has not engaged
at any time prior to the date of this Agreement, and is not currently engaged
as of the date hereof, in any misconduct in its capacity as Managing Member of
the Company.
3.3
Representations and Warranties of the Company. The Company represents and
warrants to the Tribune Members and the Trust Members as follows:
(a)
Organization and Good Standing. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own its
properties and assets and to carry on its business as now conducted and as
presently proposed to be conducted.
(b)
Due Authorization.
All action on the part of the Company, its officers, managers and members
necessary for the authorization, execution and delivery of, and the performance
of all obligations of the Company under, this Agreement has been taken.
The Company has duly authorized, executed and delivered this Agreement, and
this Agreement is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, moratorium, reorganization and similar laws
affecting creditors’ rights generally and to general equitable
principles.
(c)
No Conflicts.
Neither the execution and delivery of this Agreement or the consummation of any
of the transactions contemplated hereby, nor compliance with or fulfillment of
the terms, conditions and provisions hereof, by the Company will conflict with,
result in a breach of the terms, conditions or provisions of, or constitute a
default, an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under (a) the certificate of
formation or other constitutional documents of the Company, (b) any material
agreement, note, instrument, mortgage, lease, license, franchise, permit or
other authorization, right, restriction or obligation to which the Company is a
party or any of its respective assets or business is subject or by which the
Company is bound, (c) any order, writ, injunction or decree to which the
Company is a party or any of its assets or business is subject or by which the
Company is bound or (d) any applicable laws affecting the Company or its
respective assets or business.
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(d)
Consents. No
consent, approval or authorization of, declaration to, or filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by the Company or any of their
affiliates in connection with the execution, delivery and performance by the
Company of this Agreement and the consummation of the transactions contemplated
hereby.
ARTICLE IV
Covenants
of the Parties
4.1
Further Assurances. The parties hereto shall execute and deliver such other
documents, certificates, agreements and other writings and shall take such
other actions as may be reasonably necessary or desirable in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement, including, without limitation, the transfer to the Tribune Members
of ownership of the shares as provided in Section 1.1.
4.2
Confidentiality; Public Announcements. The parties hereto shall use their best
efforts to keep this Agreement and the execution and terms hereof confidential,
and shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the transactions
contemplated hereby. The foregoing obligations of confidentiality do not
pertain to the disclosure of information which is available publicly, is
required to be disclosed by any court or any party discloses, upon advice of
counsel, in order to comply with applicable law or the applicable rules of the
New York Stock Exchange. The parties agree to jointly prepare and to
distribute (singly or jointly) a press release disclosing the execution and
delivery of this Agreement and the substance of the transactions contemplated
hereby.
4.3
Tax Matters.
(a)
Treatment of Distributions. All payments to Tribune, Eagle 1 and Eagle 2
pursuant to this Agreement shall be treated as distributions pursuant to
Section 731(a) and Section 732(a) of the Code and the corresponding provisions
of any applicable state or local tax laws.
(b)
Allocations.
Each of the Tribune Members’ distributive share of the Company’s
income, gain, loss and deduction for the taxable year of the Company that
includes the Closing Date shall be determined on the basis of an interim
closing of the books of the Company as of the close of business on the Closing
Date. Such items shall be allocated to the Members based on the Operating
Agreement in effect prior to the Closing Date. Furthermore, all cash held
back by the Company that is attributable to income earned or accrued prior to
the Closing Date shall be distributed to the Members on or before December 14,
2006 in accordance with Article IX of the Operating Agreement as in effect
prior to the Closing Date. For the month of September 2006, ordinary
income and dividends from the Fixed Income Portfolio, Equity Portfolio and
UPREIT shall be pro-rated based on the number of days before, up to and
including the Closing Date and the number of days after the Closing Date.
The parties have tried to reflect all allocations and distributions from the
operations of the Company from January 1, 2006 until the Closing Date in the
Capital Accounts as described in subsection (d)(ii) below. To the extent
that the ultimate allocations of the Company’s gain, loss, income or
deduction for the
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period January 1, 2006
until and including the Closing result in Capital Account balances immediately
prior to the Distributions (having given effect to all such allocations as well
as the allocations of unrealized gain or loss as described in subsection
(d)(ii) below) that are different than the Capital Account balances agreed to
by the parties pursuant to subsection (d)(ii) below, the relevant Members shall
contribute cash to the Company or the Company shall distribute cash to the
relevant Members to the extent necessary to eliminate such discrepancies.
The parties agree to effect the foregoing promptly once the Company has
obtained the information to enable the necessary computations. The
parties shall cooperate in good faith in obtaining the necessary information
and making the foregoing determinations.
(c)
Tax Returns.
The parties shall each file all required Federal, state and local income tax
returns and related returns and reports in a manner consistent with the
foregoing provisions of this Agreement.
(d)
Capital Accounts.
For purposes of determining the Capital Accounts, as defined in section 4.3 of
the Operating Agreement, before and after the Distributions, the parties hereby
agree as follows:
(i)
The fair market values of the assets
of the Company immediately prior to the Distributions are as follows:
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Fixed Income Portfolio |
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$ |
76,887,630 |
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Equity Portfolio |
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$ |
317,622,502 |
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UPREIT Portfolio |
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$ |
590,746,986 |
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Trust Portfolio |
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$ |
25,648,062 |
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Tribune Common Stock |
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$ |
1,204,055,710 |
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Tribune Preferred Stock |
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$ |
295,654,089 |
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(ii)
The Company shall compute gain and
loss with respect to such assets as if such assets were to be sold for their
agreed fair market values set forth above. Any gain or loss shall be
allocated to the Members in accordance with Article VIII of the Operating
Agreement. Based on such allocations, the parties agree that the resulting
Capital Accounts immediately prior to the Distributions shall be as follows:
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Tribune |
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$ |
606,878,465 |
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Eagle 1 |
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$ |
241,347,473 |
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Eagle 2 |
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$ |
413,884,265 |
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Wick |
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$ |
1,033,700 |
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Fortification |
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$ |
1,033,700 |
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