EXHIBIT 1.1
GRAY TELEVISION, INC.
(a Georgia corporation)
30,000,000 Shares of Common Stock
Dated October 16, 2002
TABLE OF CONTENTS
PAGE
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SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company.......................................................3
(1) Compliance with Registration Requirements..............................................3
(2) Incorporated Documents.................................................................4
(3) Independent Accountants................................................................4
(4) Financial Statements...................................................................4
(5) No Material Adverse Change in Business.................................................5
(6) Good Standing of the Company...........................................................5
(7) Good Standing of Subsidiaries..........................................................5
(8) Capitalization.........................................................................6
(9) Authorization Agreement................................................................6
(10) Authorization..........................................................................6
(11) Absence of Defaults and Conflicts......................................................6
(12) Absence of Labor Dispute...............................................................7
(13) Absence of Proceedings.................................................................7
(14) Accuracy of Exhibits...................................................................7
(15) Absence of Further Requirements........................................................8
(16) Possession of Intellectual Property....................................................8
(17) Possession of Licenses and Permits.....................................................8
(18) Title to Property......................................................................8
(19) Investment Company Act.................................................................9
(20) Environmental Laws.....................................................................9
(21) Disclosure of Relationships............................................................9
(22) Salable Assets of the Company.........................................................10
(23) Distribution of Offering Materials....................................................10
(24) Material Loss.........................................................................10
(25) Affiliation Agreements................................................................10
(26) ERISA.................................................................................10
(27) Insurance.............................................................................12
(28) Payment of Taxes......................................................................12
(29) Holding Company.......................................................................12
(30) Price Stabilization...................................................................12
(31) Business in Cuba......................................................................13
(b) Officers' Certificates.............................................................................13
SECTION 2. Sale and Delivery to Underwriters; Closing...................................................13
(a) Initial Securities.................................................................................13
(b) Option Securities..................................................................................13
(c) Payment............................................................................................14
(d) Denominations; Registration........................................................................14
SECTION 3. Covenants of the Company.....................................................................14
(a) Compliance with Securities Regulations and Commission Requests.....................................14
(b) Filing of Amendments...............................................................................15
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(c) Delivery of Registration Statements................................................................15
(d) Delivery of Prospectuses...........................................................................15
(e) Continued Compliance with Securities Laws..........................................................15
(f) Blue Sky Qualifications............................................................................16
(g) Earnings Statement.................................................................................16
(h) Use of Proceeds....................................................................................16
(i) Listing............................................................................................16
(j) Restriction on Sale of Securities..................................................................16
(k) Reporting Requirements.............................................................................17
SECTION 4. Payment of Expenses..........................................................................17
(a) Expenses...........................................................................................17
(b) Termination of Agreement...........................................................................17
SECTION 5. Conditions of Underwriters' Obligations......................................................17
(a) Effectiveness of Registration Statement............................................................18
(b) Opinion of Counsel for Company.....................................................................18
(c) Opinion of Counsel for Underwriters................................................................18
(d) Officers' Certificate..............................................................................18
(e) Accountant's Comfort Letter........................................................................19
(f) Bring-down Comfort Letter..........................................................................19
(g) Approval of Listing................................................................................19
(h) Conditions to Purchase of Option Securities........................................................19
(i) Lock-up Agreements.................................................................................19
(j) Additional Documents...............................................................................20
(k) Termination of Agreement...........................................................................20
SECTION 6. Indemnification..............................................................................20
(a) Indemnification of Underwriters....................................................................20
(b) Indemnification of Company, Directors and Officers.................................................21
(c) Actions against Parties; Notification..............................................................22
(d) Settlement without Consent if Failure to Reimburse.................................................22
SECTION 7. Contribution.................................................................................22
SECTION 8. Representations, Warranties and Agreements to Survive Delivery...............................24
SECTION 9. Termination..................................................................................24
(a) Termination; General...............................................................................24
(b) Liabilities........................................................................................24
SECTION 10. Default by One or More of the Underwriters...................................................24
SECTION 11. Notices......................................................................................25
SECTION 12. Parties......................................................................................25
SECTION 13. GOVERNING LAW AND TIME.......................................................................26
SECTION 14. Effect of Headings...........................................................................26
ii
GRAY TELEVISION, INC.
(a Georgia corporation)
30,000,000 Shares of Common Stock
(no par value per share)
UNDERWRITING AGREEMENT
October 16, 2002
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
DEUTSCHE BANK SECURITIES INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Gray Television, Inc., a Georgia corporation (the "Company"), confirms
its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") and Deutsche Bank Securities Inc. ("Deutsche
Bank") and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom Merrill
Lynch and Deutsche Bank acting as representatives (in such capacity, the
"Representative(s)"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, no par value per share, of the
Company ("Common Stock") set forth in said Schedule A, and with respect to the
grant by the Company to the Underwriters, acting severally and not jointly, of
the option described in Section 2(b) hereof to purchase all or any part of
4,500,000 additional shares of Common Stock to cover over-allotments, if any.
The aforesaid 30,000,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 4,500,000 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative(s) deem(s) advisable
after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-88694) and
pre-effective amendment no. 1 thereto for the registration of up to $600,000,000
of its common stock, preferred stock and debt securities under the Securities
Act of 1933, as amended (the "1933 Act"), and the offering thereof from time to
time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
Such registration statement has been declared effective by the Commission, and
the Company has filed such post-effective amendments thereto as may be required
prior to the execution of this Agreement and each such post-effective amendment
has been declared effective by the Commission. Such registration statement (as
so amended, if applicable), including the information, if any, deemed to be a
part thereof pursuant to Rule 430A(b) of the 1933 Act Regulations (the "Rule
430A Information") or Rule 434(d) of the 1933 Act Regulations (the "Rule 434
Information"), is referred to herein as the "Registration Statement"; and the
final prospectus and the final prospectus supplement relating to the offering of
the Securities, in the forms first furnished to the Underwriters by the Company
for use in connection with the offering of the Securities, are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall also be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"), prior to the
execution of this Agreement; provided, further, that if the Company files a
registration statement with the Commission pursuant to Rule 462(b) of the 1933
Act Regulations (the "Rule 462(b) Registration Statement"), then all references
to "Registration Statement" shall also be deemed to include the Rule 462 (b)
Registration Statement; and provided, further, that if the Company elects to
rely upon Rule 434 of the 1933 Act Regulations, then all references to
"Prospectus" shall also be deemed to include the final or preliminary prospectus
and the applicable term sheet or abbreviated term sheet (the "Term Sheet"), as
the case may be, in the forms first furnished to the Underwriters by the Company
in reliance upon Rule 434 of the 1933 Act Regulations, and all references to the
date of the Prospectus shall mean the date of the Term Sheet. A "preliminary
prospectus" shall be deemed to refer to (i) any prospectus used before the
Registration Statement became effective and (ii) any prospectus that omitted, as
applicable, the Rule 430A Information, the Rule 434 Information or other
information to be included upon pricing in a form of prospectus filed with the
Commission pursuant to Rule 424(b) of the 1933 Act Regulations and was used
after such effectiveness and prior to the initial delivery of the Prospectus to
the Underwriters by the Company. For purposes of this Agreement, all references
to the Registration Statement, Prospectus, Term Sheet or preliminary prospectus
or to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" (or other
references of like import) in the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be, prior to the execution of this Agreement; and all references
in this Agreement to amendments or supplements to the Registration Statement,
Prospectus or preliminary prospectus shall be deemed to include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be, after the execution of this Agreement.
The Company and Stations Holding Company, Inc. ("Stations"), a Delaware
corporation and parent company of Benedek Broadcasting Corporation ("Benedek"),
have entered into an Agreement and Plan of Merger, dated as of June 4, 2002 (the
"Merger Agreement"), pursuant to
2
which the Company will acquire Stations by merging Gray MidAmerica Television,
Inc., a newly formed wholly-owned subsidiary of the Company, into Stations for
consideration of approximately $502.5 million in cash (the "Pending Merger"). A
substantial portion of the cash consideration paid to Stations by the Company
will be used to satisfy, in full, certain outstanding indebtedness of Stations.
Prior to completion of the Pending Merger, Benedek is expected to have sold a
total of nine television stations to other parties. Stations and its
subsidiaries that are being acquired by the Company are hereinafter collectively
referred to as the "Acquired Companies". The net proceeds to the Company from
the issuance of the Securities will be used primarily to finance the Pending
Merger. The foregoing transactions, together with the offering of the Securities
and other transactions contemplated by this Agreement, are collectively referred
to herein as the "Transactions". With respect to the representations, warranties
and agreements made by the Company in this Agreement concerning any or all of
the Acquired Companies, such representations, warranties and agreements shall be
limited to the knowledge, after independent investigation, of the Company.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(1) Compliance with Registration Requirements. The
Company meets the requirements for use of Form S-3 under the 1933 Act.
The Registration Statement (including any Rule 462(b) Registration
Statement) has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with.
At the respective times the Registration Statement (including
any Rule 462(b) Registration Statement) and any post-effective
amendments thereto (including the filing of the Company's most recent
Annual Report on Form 10-K with the Commission (the "Annual Report on
Form 10-K")) became effective and at the Closing Time (and, if any
Option Securities are purchased, at the Date of Delivery), the
Registration Statement (including any Rule 462(b) Registration
Statement) and any amendments thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. At
the date of the Prospectus, at the Closing Time and at each Date of
Delivery, if any, neither the Prospectus nor any amendments and
supplements thereto included or will include an untrue statement of a
material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the representations and warranties in
this subsection shall not apply to statements in or omissions from the
Registration Statement or the Prospectus
3
made in reliance upon and in conformity with information furnished to
the Company in writing by any Underwriter through Merrill Lynch and
Deutsche Bank expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and prospectus filed as part of
the Registration Statement as originally filed or as part of any
amendment thereto, or filed pursuant to Rule 424 under the 1933 Act,
complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus
delivered to the Underwriters for use in connection with the offering
of Securities will, at the time of such delivery, be identical to any
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(2) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply in all material respects with
the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations") and, when read
together with the other information in the Prospectus, at the date of
the Prospectus, at the Closing Time and at each Date of Delivery, if
any, did not and will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(3) Independent Accountants. The accountants who
certified the financial statements and any supporting schedules thereto
included in the Registration Statement and the Prospectus are
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(4) Financial Statements. The financial statements of the
Company included in the Registration Statement and the Prospectus,
together with the related schedules and notes, as well as those
financial statements, schedules and notes of any other entity included
therein, present fairly, in all material respects, the financial
position of the Company and its consolidated subsidiaries, or such
other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries, or such other entity, as the
case may be, for the periods specified. Such financial statements have
been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement and the Prospectus present fairly in accordance
with GAAP the information required to be stated therein in all material
respects. The selected financial data and the summary financial
information included in the Prospectus present fairly, in all material
respects, the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements included
in the Registration Statement and the Prospectus. In addition, any pro
forma financial statements of the Company and its subsidiaries and the
related notes thereto included in the Registration Statement and the
Prospectus present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described
4
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(5) No Material Adverse Change in Business. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those arising in the ordinary course of business, which are material
with respect to the Company and its subsidiaries considered as one
enterprise and (C) except for regular dividends on the Company's common
stock or preferred stock, in amounts per share that are consistent with
past practice or the applicable charter document or supplement thereto,
respectively, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(6) Good Standing of the Company. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the state of Georgia and has corporate power
and authority to own, lease and operate its properties and to conduct
its business as described in the Prospectus and to enter into and
perform its obligations under, or as contemplated under, this
Agreement. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect.
(7) Good Standing of Subsidiaries. Each subsidiary of the
Company (each, a "Subsidiary" and, collectively, the "Subsidiaries"),
has been duly organized and is validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and is duly qualified as a foreign corporation to transact business and
is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not result in a Material Adverse Effect. Except
as otherwise stated in the Registration Statement and the Prospectus,
all of the issued and outstanding capital stock of each Subsidiary has
been duly authorized and is validly issued, fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity. None of the outstanding
shares of capital stock of any Subsidiary was issued in violation of
preemptive or other similar rights of any securityholder of such
Subsidiary.
As of the date of this Agreement, the Company has no direct or
indirect Subsidiaries other than those Subsidiaries listed on Schedule
2 hereto. WEAU-TV, Inc., WVLT-TV, Inc., WRDW-TV, Inc., WITN-TV, Inc.,
Gray Kentucky Television, Inc.,
5
Gray Communications of Texas, Inc., Gray Communications of Texas -
Sherman, Inc., KOLN-KGIN, Inc., Gray Florida Holdings, Inc., Gray
Television Management, Inc., Gray MidAmerica Holdings, Inc., Gray
Digital, Inc., KWTX-KBTX LP Corp., KXII L.P. Corp., KXII L.P., KWTX -
KBTX L.P. and Lynqx Communications, Inc. ("Lynqx") are collectively
referred to herein as the "Broadcast Subsidiaries". For purposes of
this Section 2 only, "Subsidiaries" and "Broadcast Subsidiaries" shall
hereinafter mean to include the Acquired Companies, in each case, for
representations, warranties and agreements of the Company made after
giving effect to the acquisition of the Acquired Companies.
(8) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectus in the column entitled "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to
this Agreement, pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise
of convertible securities or options referred to in the Prospectus).
The shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company.
(9) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(10) Authorization and Description of the Securities. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid
and non-assessable; the Common Stock conforms to all statements
relating thereto contained in the Prospectus and such description
conforms to the rights set forth in the instruments defining the same;
no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the issuance of the Securities is
not subject to the preemptive or other similar rights of any
securityholder of the Company.
(11) Absence of Defaults and Conflicts. Neither the
Company nor any of its subsidiaries is in violation of its charter or
by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound,
or to which any of the assets, properties or operations of the Company
or any of its subsidiaries is subject (collectively, "Agreements and
Instruments"), except for such defaults that would not result in a
Material Adverse Effect. The execution, delivery and performance of
this Agreement and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection
with the transactions contemplated hereby or thereby or in the
Registration Statement and the Prospectus and the consummation of the
transactions contemplated herein and in the Registration Statement and
the Prospectus (including the issuance and sale of the Securities and
the use of the proceeds from the
6
sale of the Securities as described under the caption "Use of
Proceeds") and compliance by the Company with its obligations hereunder
and thereunder have been duly authorized by all necessary corporate
action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach
of, or default or Repayment Event (as defined below) under, or result
in the creation or imposition of any lien, charge or encumbrance upon
any assets, properties or operations of the Company or any of its
subsidiaries pursuant to, any Agreements and Instruments, nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any of its subsidiaries or any applicable
law, statute, rule, regulation (including, without limitation, the
Communications Act of 1934, as amended (the "Communications Act"), the
Telecommunications Act of 1996 (the "Telecommunications Act"), the
Cable Television Consumer Protection Act of 1992 (the "1992 Cable Act")
and the rules and regulations of the Federal Communications Commission
(the "FCC")), judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets, properties or operations except for such conflicts,
breaches of default, Repayment Events, liens, charges, encumbrances or
violations that would not result in a Material Adverse Effect. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(12) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its subsidiaries exists or, to the
knowledge of the Company, is imminent, and the Company is not aware of
any existing or imminent labor disturbance by the employees of any of
its or any subsidiary's principal suppliers, manufacturers, customers
or contractors, which, in either case, may reasonably be expected to
result in a Material Adverse Effect.
(13) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or to
the knowledge of the Company threatened, against or affecting the
Company or any of its subsidiaries which is required to be disclosed in
the Registration Statement and the Prospectus (other than as stated
therein), or which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the assets, properties or operations thereof or the
consummation of the transactions contemplated under the Prospectus or
this Agreement, or the performance by the Company of its obligations
hereunder and thereunder. The aggregate of all pending legal or
governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective assets,
properties or operations is the subject which are not described in the
Registration Statement and the Prospectus, including ordinary routine
litigation incidental to the business, should not reasonably be
expected to result in a Material Adverse Effect.
(14) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement, the Prospectus or the documents
7
incorporated by reference therein or to be filed as exhibits thereto
which have not been so described and filed as required.
(15) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign (including, without limitation, the FCC),
is necessary or required for the due authorization, execution and
delivery by the Company of this Agreement or for the performance by the
Company of the transactions contemplated under the Prospectus or this
Agreement, except such as have been already made, obtained or rendered,
as applicable.
(16) Possession of Intellectual Property. The Company and
its subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, except to the extent
that the failure of the Company to own, possess or acquire such
Intellectual Property would not result in a Material Adverse Effect.
Neither the Company nor any of its subsidiaries has received any notice
or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(17) Possession of Licenses and Permits. The Company and
its subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses") issued
by the appropriate federal, state, local or foreign regulatory agencies
or bodies necessary to conduct the business now operated by them,
except to the extent that the failure of the Company to possess such
Governmental Licenses would not result in a Material Adverse Effect.
The Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. All of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
(18) Title to Property. The Company and its subsidiaries
have good and marketable title to all real property owned by the
Company and its subsidiaries and good title to all other properties
owned by them, in each case, free and clear of all mortgages, pledges,
liens, security interests, claims, restrictions or encumbrances of any
kind, except
8
(A) as otherwise stated in the Registration Statement and the Prospectus or (B)
those which do not, singly or in the aggregate, materially affect the value of
all real property owned by the Company and its subsidiaries, taken as a whole,
and do not interfere with the use made and proposed to be made of such property
by the Company or any of its subsidiaries. All of the leases and subleases
material to the business of the Company and its subsidiaries considered as one
enterprise, and under which the Company or any of its subsidiaries holds
properties described in the Prospectus, are in full force and effect, and
neither the Company nor any of its subsidiaries has received any notice of any
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary of the continued possession of the leased or subleased premises under
any such lease or sublease except to the extent that such claims would not
result in a Material Adverse Effect.
(19) Investment Company Act. The Company is not, and upon
the issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(20) Environmental Laws. Except as otherwise stated in the
Registration Statement and the Prospectus and except as would not,
singly or in the aggregate, result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of any
federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof including any judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) neither the Company nor any of its subsidiaries fails to
possess any permit, authorization or approval required under any
applicable Environmental Laws or to be in compliance with their
requirements, (C) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims,
liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or
any of its subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for
clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or
any Environmental Laws.
(21) Disclosure of Relationships. No relationship, direct
or indirect, exists between or among the Company or any of the
Subsidiaries, on the one hand, and the directors, officers,
shareholders, customers or suppliers of the Company or any of the
Subsidiaries on the other hand, that relates to the Transactions and
that would be required
9
by the Securities Act to be described in a prospectus relating to the
Securities, that is not set forth in either (x) the Prospectus or (y)
the Company's filings with the SEC pursuant to the Exchange Act.
(22) Salable Assets of the Company. The fair salable value
of the assets of the Company and its Subsidiaries exceeds the amount
that will be required to be paid on or in respect of its existing debts
and other liabilities (including contingent liabilities) as they
mature; the assets of the Company and its Subsidiaries do not
constitute unreasonably small capital to carry out the Company's
business as conducted or as proposed to be conducted; the Company does
not intend to, and does not believe that it will, incur debts beyond
its respective ability to pay such debts as they mature; upon the
issuance of the Securities, the fair salable value of the assets of the
Company will exceed the amount that will be required to be paid on or
in respect of its existing debts and other liabilities (including
contingent liabilities) as they mature; and upon the issuance of the
Securities, the assets of the Company and the Subsidiaries will not
constitute unreasonably small capital to carry out its business as now
conducted or as proposed to be conducted.
(23) Distribution of Offering Materials. The Company has
not distributed and, prior to the later of (i) the Closing Date and
(ii) the completion of the distribution of the Securities, will not
distribute any offering material in connection with the offering and
sale of the Securities other than the Prospectus, including any
amendment thereto or any supplement thereto.
(24) Material Loss. Except as would not result in a
Material Adverse Effect, subsequent to the date as of which information
shall be given in the Prospectus, neither the Company nor any of the
Subsidiaries shall have sustained any loss or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding and
there shall not have been any change, or any development involving a
prospective change, in the business, operations, properties, assets,
liabilities, net worth, condition (financial or otherwise) or prospects
of the Company and the Subsidiaries, taken as a whole, except in each
case as shall be described in or contemplated by the Prospectus.
(25) Affiliation Agreements. Except as shall be set forth
in the Prospectus and except as would not result in a Material Adverse
Effect, the affiliation agreement between each of the Broadcast
Subsidiaries, on the one hand, and NBC, CBS, ABC and/or UPN, as the
case may be, on the other hand, has been duly authorized, executed and
delivered by each of the Broadcast Subsidiaries and are the valid and
legally binding obligations of the respective parties thereto; the
description of the affiliation agreements in the Prospectus fairly
summarizes in all material respects such agreements.
(26) ERISA:
(i) Definitions:
10
"Code" means the United States Internal Revenue Code of 1986,
as amended, and the regulations promulgated and the rulings issued
thereunder.
"ERISA" means the United States Employee Retirement Income
Security Act of 1974, as amended, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) that would be treated together with the Company as a
single employer under Title IV or Section 302 of ERISA or Section 412
of the Code.
"ERISA Event" means (i) the occurrence of a "reportable event"
described in Section 4043 of ERISA (other than an event with respect to
which the 30 day notice requirement has been waived), or (ii) the
provision or filing of a notice of intent to terminate a Plan (other
than in a standard termination within the meaning of Section 4041 of
ERISA) or the treatment of a Plan amendment as a distress termination
under Section 4041 of ERISA, or (iii) the institution of proceedings to
terminate a Plan by the PBGC, or (iv) the existence of any "accumulated
funding deficiency" or "liquidity shortfall" (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether or not
waived, or the filing of an application pursuant to Section 412(e) of
the Code or Section 304 of ERISA for any extension of an amortization
period, or (v) the receipt of notice by the Company or any ERISA
Affiliate that any Multiemployer Plan to which it is or has been
obligated to contribute may be terminated, partitioned or reorganized
or that any Multiple Employer Plan may be terminated, or (vi) the
occurrence of any transaction or event which might reasonably be
expected to constitute grounds for the imposition of liability under
ERISA.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA.
"Multiple Employer Plan" means an employee benefit plan
described in Section 4063 of ERISA.
"Plan" means an employee benefit plan (within the meaning of
Section 3(3) of ERISA) other than a Multiemployer Plan, sponsored or
maintained by the Company or any of its ERISA Affiliates, or with
respect to which the Company or any of its ERISA Affiliates could be
subject to any liability under Title IV or Section 302 of ERISA or
Section 412 of the Code.
"Underfunding" means, with respect to any Plan subject to
Title IV of ERISA, the excess, if any, of the "projected benefit
obligations" (within the meaning of Statement of Financial Accounting
Standards 87) under such Plan (determined using the actuarial
assumptions used for purposes of calculating funding requirements in
the most recent actuarial report for such plan) over the fair market
value of the assets held under the Plan.
11
(ii) No "prohibited transaction" (as defined in Section
406 of ERISA or Section 4975 of the Code) or ERISA Event has
occurred or is reasonably expected to occur with respect to any
Plan or Multiemployer Plan which could reasonably be expected to
have a Material Adverse Effect; the Company, its ERISA Affiliates
and each Plan is in compliance in all material respects with
applicable law, including ERISA and the Code; the Company and each
of its ERISA Affiliates have not incurred and do not expect to
incur liability under Title IV of ERISA with respect to the
termination, or withdrawal from, any Plan or Multiemployer Plan for
which the Company or any of the Subsidiaries would have any
liability; and each Plan that is intended to be qualified under
Section 401(a) of the Code has filed for or received a favorable
determination letter from the Internal Revenue Service and has not
been amended in any way that could reasonably be expected to cause
the loss of such qualification. No Underfunding exists with respect
to any Plan.
(iii) None of the Company or any of its ERISA Affiliates
contributes to or has any obligation to contribute to any
Multiemployer Plans and Multiple Employer Plans.
(27) Insurance. The Company and each of the Subsidiaries
are insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts and with such deductibles as
are prudent and customary in the businesses in which they are engaged;
neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for; and neither the Company nor
any such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect.
(28) Payment of Taxes. The Company and each of the
Subsidiaries have filed all material foreign, federal, state and local
tax returns that are required to be filed or have requested extensions
thereof and have paid all taxes required to be paid by them and any
other assessment, fine or penalty levied against them, to the extent
that any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith and for which the Company retains adequate reserves.
(29) Holding Company. Neither the Company nor any of the
Subsidiaries is a "holding company" or a "subsidiary company" of a
holding company or its "affiliate" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(30) Price Stabilization. Neither the Company nor any of
its Affiliates has taken, directly or indirectly, any action designed
to cause or result in, or which has constituted or which might
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities; nor has the Company or any
Affiliate of the Company paid or agreed to
12
pay to any person any compensation for soliciting another to purchase
any securities of the Company (except as contemplated by this
Agreement). As used in this Agreement, "Affiliate" means, with respect
to any specified person, any other person that, directly or indirectly,
is in control of, is controlled by, or is under common control with,
such specified person. For purposes of this definition, control of a
person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
(31) Business in Cuba. Neither the Company nor any of the
Subsidiaries conducts business with the government of Cuba or any
person or Affiliate located in Cuba. In the event the Company or any of
the Subsidiaries commences engaging in business with the government of
Cuba or with any person or Affiliate located in Cuba, the Company will
provide the Florida Department of Banking and Finance notice of such
business in a form acceptable to such Department.
(b) Officers' Certificates. Any certificate signed by any officer of
the Company or any of its subsidiaries and delivered to the Representatives to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 4,125,000 shares of Common
Stock at the price per share set forth in Schedule B, less an amount per share
equal to any dividends or distributions declared by the Company and payable on
the Initial Securities but not payable on the Option Securities. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representative(s) to
the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Representative(s),
but shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the
13
number of Initial Securities set forth in Schedule A opposite the name of such
Underwriter bears to the total number of Initial Securities, subject in each
case to such adjustments as the Representatives in their discretion shall make
to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of, the
Initial Securities shall be made at the offices of Cravath, Swaine & Moore, or
at such other place as shall be agreed upon by Merrill Lynch and Deutsche Bank
and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the
pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day
after the date hereof (unless postponed in accordance with the provisions of
Section 10 hereof), or such other time not later than ten business days after
such date as shall be agreed upon by the Representatives and the Company (such
time and date of payment and delivery being herein called "Closing Time").
In addition, in the event that the Underwriters have exercised their
option, if any, to purchase any or all of the Option Securities, payment of the
purchase price for, and delivery of such Option Securities, shall be made at the
above-mentioned offices of Cravath, Swaine & Moore, or at such other place as
shall be agreed upon by the Representatives and the Company, on the relevant
Date of Delivery as specified in the notice from the Representatives to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representatives for the respective accounts of the Underwriters of the
Securities to be purchased by them. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which it has
severally agreed to purchase. Merrill Lynch, individually and not as
representative of the Underwriters, may (but shall not be obligated to) make
payment of the purchase price for the Securities to be purchased by any
Underwriter whose funds have not been received by the Closing Time or the
relevant Date of Delivery, as the case may be, but such payment shall not
relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
Securities and the Option Securities, if any, shall be in such denominations and
registered in such names as the Representative(s) may request in writing at
least one full business day before the Closing Time or the relevant Date of
Delivery, as the case may be. The certificates for the Initial Securities and
the Option Securities, if any, will be made available for examination and
packaging by the Representative(s) in The City of New York not later than 10:00
A.M. (Eastern time) on the business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
of the 1933 Act Regulations and/or Rule 434 of the 1933 Act Regulations, if and
as applicable, and will notify the Representative(s) immediately, and confirm
the notice in writing, of (i) the effectiveness of
14
any post-effective amendment to the Registration Statement or the filing of any
supplement or amendment to the Prospectus, (ii) the receipt of any comments from
the Commission, (iii) any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424 and will take such steps as it deems necessary to ascertain promptly
whether the Prospectus transmitted for filing under Rule 424 was received for
filing by the Commission and, in the event that it was not, it will promptly
file the Prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest time.
(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b) of the 1933 Act Regulations),
any Term Sheet or any amendment, supplement or revision to either the prospectus
included in the Registration Statement at the time it became effective or to the
Prospectus, whether pursuant to the 1933 Act, the 1934 Act or otherwise, will
furnish the Representatives with copies of any such documents a reasonable
amount of time prior to such proposed filing or use, as the case may be, and
will not file or use any such document to which the Representatives or counsel
for the Underwriters shall reasonably object, except as otherwise required by
any applicable rule, law or regulation.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to Merrill Lynch and Deutsche Bank and counsel for the
Underwriters, without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein and documents incorporated or
deemed to be incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, without charge, a conformed copy of the Registration Statement
as originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. The Registration Statement and each amendment thereto
furnished to the Underwriters will be identical to any electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter may reasonably request, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus as such Underwriter may reasonably request.
The Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to any electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to
15
permit the completion of the distribution of the Securities as contemplated in
this Agreement and in the Registration Statement and the Prospectus. If at any
time when the Prospectus is required by the 1933 Act or the 1934 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriters or for the Company, to amend the
Registration Statement in order that the Registration Statement will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or to amend or supplement the Prospectus in order that the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the reasonable opinion of such counsel, at any such time
to amend the Registration Statement or amend or supplement the Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters, without charge, such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its reasonable
efforts, in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Representatives may designate and to
maintain such qualifications in effect for a period of not less than one year
from the date hereof; provided, however, that the Company shall not be obligated
to file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the Securities have been so qualified, the Company will file such
statements and reports as may be required by the laws of such jurisdiction to
continue such qualification in effect for a period of not less than one year
from the hereof.
(g) Earnings Statement. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to its securityholders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last paragraph of
Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the Prospectus
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus, the Company will not, without the prior written
consent of the Representatives, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or
16
exercisable or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any shares of Common Stock issued or options to purchase Common Stock granted
pursuant to existing employee benefit plans of the Company referred to in the
Prospectus or (D) any shares of Common Stock issued pursuant to any non-employee
director stock plan or dividend reinvestment plan.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the preparation, printing and delivery to the Underwriters of this
Agreement, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp or other duties payable upon the sale, issuance or delivery of the
Securities to the Underwriters, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectus and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities and (ix) the fees and expenses
incurred in connection with the listing of the Securities on the New York Stock
Exchange.
(b) Termination of Agreement. If this Agreement is terminated by the
Representative(s) in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters, not to exceed $750,000.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the
17
Company of its covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement shall have been issued under the 1933 Act and no
proceedings for that purpose shall have been instituted or be pending or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters. A prospectus containing information
relating to the description of the Securities, the specific method of
distribution and similar matters shall have been filed with the Commission in
accordance with Rule 424(b)(1), (2), (3), (4) or (5), as applicable (or any
required post-effective amendment providing such information shall have been
filed and declared effective in accordance with the requirements of Rule 430A),
or, if the Company has elected to rely upon Rule 434 of the 1933 Act
Regulations, a Term Sheet including the Rule 434 Information shall have been
filed with the Commission in accordance with Rule 424(b)(7).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received favorable opinions, dated as of the Closing
Date, of (i) Troutman Sanders LLP, Georgia counsel for the Company, to the
effect set forth in Exhibit B-1 hereto, which shall be accompanied by an
opinion, dated the Closing Date, of Sher Garner Cahill Richter Klein McAlister &
Hilbert, L.L.C., special Louisiana counsel for Lynqx, upon which Troutman
Sanders LLP shall rely in rendering its opinion as to Lynqx and as to matters of
Louisiana law, (ii) Proskauer Rose LLP, special counsel for the Company, to the
effect set forth in Exhibit B-2 hereto, and (iii) Robert A. Beizer, Esq., Vice
President - Law and Development of the Company, to the effect set forth in
Exhibit B-3 hereto, and, in each case, otherwise in form and substance
satisfactory to the Underwriters.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representative(s) shall have received the favorable opinion, dated as of Closing
Time, of Cravath, Swaine & Moore, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i), (ii), (v), (vi) (solely as
to preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (viii) through (x), inclusive, (xii), (xiv)
(solely as to the information in the Prospectus under "Description of Capital
Stock--Common Stock") and the penultimate paragraph of Exhibit A hereto. In
giving such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and the
federal law of the United States, upon the opinions of counsel satisfactory to
the Representative(s). Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its subsidiaries and certificates of
public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
18
received a certificate of the President or a Vice President of the Company and
of the chief financial officer or chief accounting officer of the Company, dated
as of Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) are true
and correct with the same force and effect as though expressly made at and as of
the Closing Time, (iii) the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
the Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted, are pending or, to the best of such officer's knowledge, are
threatened by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Ernst & Young LLP and
PricewaterhouseCoopers LLP, each with respect to the Company and the
Subsidiaries, and McGladrey & Pullen, LLP, with respect to Stations and its
subsidiaries, a letter dated such date, in form and substance satisfactory to
the Representatives, together with signed or reproduced copies of such letter
for each of the other Underwriters, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from Ernst & Young LLP and PricewaterhouseCoopers LLP, each
with respect to the Company and the Subsidiaries, and McGladrey & Pullen, LLP,
with respect to Stations and its subsidiaries, a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (e) of this Section 5, except that the
specified date referred to shall be a date not more than three business days
prior to the Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) Lock-up Agreements. On the date of this Agreement, the
Representatives shall have received, in form and substance satisfactory to them,
each lock-up agreement signed by the persons listed on Schedule C hereto.
(i) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Representatives shall have received:
(1) A certificate, dated such Date of Delivery, of the
President or a Vice President of the Company and the chief financial
officer or chief accounting officer of the Company, confirming that the
certificate delivered at the Closing Time pursuant to Section 5(d)
hereof remains true and correct as of such Date of Delivery.
(2) The favorable opinions of (i) Troutman Sanders LLP,
Georgia counsel for the Company, (ii) Proskauer Rose LLP, special
counsel for the Company and (iii) Robert A.
19
Beizer, Esq., Vice President - Law and Development of the Company, each
in form and substance satisfactory to counsel for the Underwriters,
dated such Date of Delivery, relating to the Option Securities and
otherwise to the same effect as the opinion required by Section 5(b)
hereof.
(3) The favorable opinion of Cravath, Swaine & Moore, counsel
for the Underwriters, dated such Date of Delivery, relating to the
Option Securities and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(4) A letter from Ernst & Young LLP and PricewaterhouseCoopers
LLP, each with respect to the Company and the Subsidiaries, and
McGladrey & Pullen, LLP, with respect to Stations and its subsidiaries,
in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Representatives pursuant to Section 5(f)
hereof, except that the "specified date" on the letter furnished
pursuant to this paragraph shall be a date not more than three business
days prior to such Date of Delivery.
(5) Since the date hereof, there shall not have occurred a
downgrading in, or withdrawal of, the rating assigned to any of the
Company's securities by any such rating organization, and no such
rating organization shall have publicly announced that it has under
surveillance any of the Company's securities.
(j) Additional Documents. At Closing Time and at each Date of Delivery,
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Underwriters.
(k) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 8
shall survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact
20
contained in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information deemed
to be a part thereof, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission; provided
that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and
(3) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill
Lynch and Deutsche Bank), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the
extent that any such expense is not paid under (1) or (2) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch and Deutsche Bank expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information deemed to be a part thereof, if
applicable, or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information deemed to be a part thereof, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Merrill Lynch and Deutsche Bank
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
21
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch and
Deutsche Bank, and, in the case of parties indemnified pursuant to Section 6(b)
above, counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of any such
action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel, such indemnifying
party agrees that it shall be liable for any settlement of the nature
contemplated by Section 6(a)(2) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the statements or omissions
which resulted in such losses, liabilities, claims,
22
damages or expenses, as well as any other relevant equitable considerations,
provided, however, that the Company shall only be liable for contribution
pursuant to this Section 7 on claims for which the Company would otherwise have
been required to provide indemnification pursuant to Section 6(a) hereof,
notwithstanding the fact that such indemnification is for any reason unavailable
or insufficient.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of such
Securities (before deducting expenses) received by the Company and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet bear to the aggregate initial public offering price of such
Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
23
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number or aggregate principal amount, as the case may be, of
Initial Securities set forth opposite their respective names in Schedule A
hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of and payment for the Securities.
SECTION 9. Termination.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time, if (i) there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Prospectus
(exclusive of any supplement or amendment pursuant to Section 3(e) of this
Agreement), any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) there has occurred any
material adverse change in the financial markets in the United States, or any
outbreak of hostilities or escalation thereof or other calamity or crisis or any
change or development involving a prospective change in national political,
financial or economic conditions, in each case the effect of which is such as to
make it, in the judgment of Representatives, impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the New York Stock Exchange or the American Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by either of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States or (iv) a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 9, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time or the relevant Date of
Delivery, as the case may be, to purchase the Securities which it or they are
obligated to purchase under this Agreement (the "Defaulted Securities"), then
the Representatives shall have the right, within 24 hours thereafter, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Defaulted
Securities in such amounts as
24
may be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representative(s) or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Merrill Lynch at 4 World Financial Center, New
York, New York 10080, attention of John Chachas; and notices to the Company
shall be directed to it at Gray Television, Inc., 4370 Peachtree Road, NE,
Atlanta, Georgia 30319, attention of James Ryan, Chief Financial Officer.
SECTION 12. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers and directors referred to in Sections 6 and 7 and their
heirs and legal representatives, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
25
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
26
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
GRAY TELEVISION, INC.
By: /s/ James C. Ryan
--------------------------------------
Name:
Title:
27
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: /s/ John G Chachas
-----------------------------------
Authorized Signatory
DEUTSCHE BANK SECURITIES INC.
By: /s/ Dan Graves
-----------------------------------
Authorized Signatory
By: /s/ Elizabeth A Chang
------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named
in Schedule A hereto.
28
SCHEDULE A
Number of
Name of Underwriter Initial Securities
------------------- ------------------
Deutsche Bank Securities Inc.............................. 9,089,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................. 9,089,000
Bear, Stearns & Co. Inc................................... 4,917,000
Allen & Company LLC....................................... 2,980,000
Wachovia Securities, Inc.................................. 2,980,000
SunTrust Capital Markets, Inc............................. 745,000
Gambelli & Company, Inc................................... 100,000
The Shemano Group......................................... 100,000
----------
Total..................................................... 30,000,000
==========
Annex I-1
SCHEDULE B
GRAY TELEVISION, INC.
30,000,000 Shares of Common Stock
(No Par Value Per Share)
1. The initial public offering price per share for the
Securities, determined as provided in said Section 2, shall be $8.25.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $7.755, being an amount equal to the initial
public offering price set forth above less $0.495 per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
Annex I-2
SCHEDULE C
J. Mack Robinson
Hilton H. Howell, Jr.
Robert S. Prather, Jr.
James C. Ryan
Robert A. Beizer
Thomas J. Stultz
Wayne M. Martin
Rich D. Adams
Frank J. Jonas
William E. Mayher, III
Richard L. Boger
Ray M. Deaver
Howell W. Newton
Hugh Norton
Harriett J. Robinson
Vance F. Luke
Jackson S. Cowart, IV
Martha E. Gilbert
Bull Run Corporation
Annex I-3
EXHIBIT B-1
[TROUTMAN SANDERS LLP LETTERHEAD]
October 17, 2002
Deutsche Bank Securities Inc.
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Allen & Company LLC
SunTrust Robinson Humphrey
c/o Merrill Lynch & Co.
World Financial Center
North Tower
New York, NY 10281-1201
Re: Underwriting Agreement (the "Underwriting Agreement"), for up
to 30,000,000 shares of Common Stock of Gray Television, Inc.
(the "Company"), dated as of October 17, 2002, by and among
the Company and Deutsche Bank Securities Inc., Merrill Lynch &
Co., Bear, Stearns & Co. Inc., Wachovia Securities, Inc.,
Allen & Company LLC and SunTrust Robinson Humphrey
(collectively, the "Underwriters").
Ladies and Gentlemen:
We have served as counsel to the Company, and those certain
subsidiaries of the Company that are Georgia corporations and listed on Exhibit
A attached hereto (the "Georgia Subsidiaries") and those certain subsidiaries of
the Company that are Delaware corporations and listed on Exhibit B attached
hereto (the "Delaware Subsidiaries") solely in connection with the execution and
delivery of the Underwriting Agreement. We note that Sher Garner Cahill Richter
Klein McAlister & Hilbert, L.L.C. ("Sher Garner") has acted as special Louisiana
counsel to Gulf Link Communications, Inc. ("Gulf Link", and together with the
Georgia Subsidiaries and the Delaware Subsidiaries, the "Gray Subsidiaries") in
connection with the execution and delivery of the Underwriting Agreement. As a
consequence, in rendering the opinions set forth below as to Gulf Link and as to
matters of Louisiana law, we have relied solely upon the opinion letter
delivered to us by Sher Garner of even date herewith, a copy of which is
attached as Exhibit C to this opinion. This opinion letter is delivered pursuant
to Section 5(b) of the Underwriting Agreement. Capitalized terms used in this
opinion letter and not otherwise defined herein shall have meanings assigned to
such terms in the Underwriting Agreement.
Annex I-4
In rendering the opinions set forth below, we have reviewed the
Underwriting Agreement and we also have examined certain books and records of
the Company, the Georgia Subsidiaries and the Delaware Subsidiaries and have
made such other investigations as we have deemed necessary to enable us to
render such opinions. In such examinations we have assumed the genuineness of
all signatures on all original documents, the authenticity of all documents
submitted to us as originals, the conformity to the original documents of all
copies submitted to us, the authenticity of the originals of documents submitted
to us as copies. We have also assumed that the execution and delivery of, and
the performance of all obligations under, the Underwriting Agreement have been
duly authorized by all requisite action by each party thereto other than the
Company, and that such documents have been duly executed and delivered by, and
are legal, valid and binding obligations of such parties, enforceable against
such parties in accordance with their respective terms.
As to certain questions of fact material to this opinion, we have
relied solely upon the representations and warranties as to factual matters
contained in the Underwriting Agreement (and all other agreements, certificates,
and other documents contemplated thereby) and certificates and statements of
officers of the Company, Gulf Link, the Georgia Subsidiaries, the Delaware
Subsidiaries and certain public officials where we believe it is reasonable to
so rely including, without limitation, the certificates provided to us by
agencies in the states of Kentucky, South Carolina, Tennessee, North Carolina,
Florida, Alabama, Wisconsin, Indiana, Nebraska, Oklahoma and Texas, upon which
the statements set forth in item (5) below are based. We have assumed and relied
upon the accuracy and completeness of such certificates and statements with
respect to the factual matters set forth therein, and nothing has come to our
attention leading us to question the accuracy of the matters set forth therein.
We have made no independent investigation with regard thereto and, accordingly,
we do not express any view or belief as to matters that might have been
disclosed by independent verification.
Whenever an opinion with respect to the existence or absence of facts
is qualified by the phrases "to our knowledge" or "known to us," it is intended
to indicate that during the course of our representation in connection with the
transactions contemplated by the Underwriting Agreement, no information has come
to the attention of the attorneys working directly on such transaction which
would give us actual knowledge that such opinions or other matters are not
accurate. However, except to the extent expressly set forth herein, we have not
undertaken any independent investigation to determine the existence or absence
of such facts.
Based upon and subject to the foregoing, and subject to the further
assumptions, qualifications and limitations set forth herein and below, we are
of the opinion that:
(1) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Georgia.
(2) The Company has the corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under, or as
contemplated under, the Underwriting Agreement.
(3) To the best of our knowledge and based solely upon
certificates delivered to us by the Company and the Company's transfer agent,
the authorized, issued and outstanding shares of capital stock of the Company is
as set forth in the column entitled "Actual" under the caption
Annex I-5
"Capitalization" (except for subsequent issuances thereof, if any, contemplated
under the Underwriting Agreement, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus or pursuant to the exercise
of convertible securities or options referred to in the Prospectus).
(4) Each of the Georgia Subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Georgia, each of the Delaware Subsidiaries has been duly incorporated
or organized (as applicable) and is validly existing as a corporation or limited
partnership (as applicable) in good standing under the laws of the state of
Delaware, and Gulf Link has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Louisiana.
(5) Each Gray Subsidiary has the power and authority to own, lease
and operate its properties and to conduct its business as described in the
Prospectus, and certain Gray Subsidiaries are duly qualified to do business as
foreign corporations and are in good standing under the laws of the states set
forth opposite their names on Exhibit D, attached hereto. To the best of our
knowledge and based solely upon certificates delivered to us by the Company and
the Company's transfer agent, except as otherwise described in the Prospectus,
all of the issued and outstanding capital stock of each Gray Subsidiary is owned
by the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity, and none of the
outstanding shares of capital stock of any Gray Subsidiary was issued in
violation of preemptive or other similar rights of any security holder of such
Gray Subsidiary.
(6) To the best of our knowledge and based solely upon
certificates delivered to us by the Company, neither the Company nor any of the
Gray Subsidiaries is in violation of its charter or by-laws.
(7) The Underwritten Securities being sold pursuant to the
Underwriting Agreement conform in all material respects to the statements
relating thereto contained in the Prospectus and are in substantially the same
form filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement.
(8) The information in the Prospectus under the "Description of
Capital Stock" or any caption purporting to describe any such securities and in
the Annual Report on Form 10-K under "Business - Legal Proceedings" and in the
Registration Statement under Item 15, to the extent that it constitutes matters
of law, summaries of the Company's charter or bylaws, or summaries of legal
matters or proceedings with regard to which we have served as primary counsel,
has been reviewed by us and, to our knowledge, is fairly presented and
summarized in all material respects.
(9) The descriptions of contracts and other documents under the
headings "Merger Agreement and Related Agreements," "Risk Factors," "Selected
Station Market Information Regarding Gray and Stations" and "Description of
Certain Indebtedness" in the Prospectus fairly present and summarize, in all
material respects, the matters referred to therein.
(10) The Underwriting Agreement has been duly authorized and
executed by the Company.
Annex I-6
(11) The Underwritten Securities have been duly authorized by the
Company for issuance and sale pursuant to the Underwriting Agreement. The
Underwritten Securities, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration therefor
specified in the Underwriting Agreement, will be validly issued, fully paid and
non-assessable and will not be subject to preemptive or other similar rights of
any security holder of the Company. No holder of the Underwritten Securities is
or will be subject to personal liability by reason of being such a holder. The
form of certificate used to evidence the Underwritten Securities is in due and
proper form and complies with the applicable statutory requirements, with any
applicable requirements of the charter or by-laws of the Company and with the
requirements of the New York Stock Exchange.
(12) To our knowledge, except as set forth in the Prospectus, there
are no holders of securities of the Company who, by reason of the execution by
the Company of the Underwriting Agreement or the consummation by the Company of
the transactions contemplated thereby, have the right to request or demand that
the Company register under the Securities Act securities held by them.
(13) The documents incorporated by reference in the Prospectus
(other than the financial statements and supporting schedules therein or omitted
therefrom, as to which we express no opinion), when they were filed with the
Commission, complied as to form in all material respects with the requirements
of the 1934 Act and the rules and regulations of the Commission thereunder.
(14) The execution, delivery and performance of the Underwriting
Agreement and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated in the Registration Statement and the Prospectus and the
consummation of the transactions contemplated in the Underwriting Agreement and
in the Registration Statement and the Prospectus (including the issuance and
sale of the Underwritten Securities and the use of the proceeds from the sale of
the Underwritten Securities as described under the caption "Use of Proceeds")
and compliance by the Company with its obligations thereunder do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event under, or
result in the creation or imposition of any lien, charge or encumbrance upon any
assets, properties or operations of the Company or any of the Gray Subsidiaries
pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument filed or
incorporated by reference as an exhibit to the Registration Statement, to which
the Company or any Gray Subsidiary or their respective properties or assets is a
party or may be subject or by which any of them may be bound, nor will such
action result in any violation of the provisions of the charter or by-laws of
the Company or any Gray Subsidiary or any applicable law, statute, rule or
regulation known to us (other than the securities or Blue Sky laws of the
various states of the United States of America, on which we express no opinion)
or any judgment, order, writ or decree, known to us, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any Gray Subsidiary or any of their assets, properties or
operations.
The opinions set forth herein are limited to the laws of the States of
Georgia and Louisiana; the federal laws of the United States of America; the
Delaware General Corporation Law; and the Delaware Revised Limited Partnership
Act, to the extent the same may apply to or govern such transactions, excluding
all federal or state securities laws and antitrust laws, as to
Annex I-7
which we express no opinion. We express no opinion as to the laws of any other
jurisdiction. In addition, we express no opinion herein with respect to the
applicability or effect of any laws, statutes, ordinances or regulations of any
county, town, municipality or other political subdivision of any state.
This opinion letter is limited to the matters expressly opined on
herein, and no such opinion may be implied or inferred beyond those expressly
stated. This opinion letter is rendered as of the date hereof, and we make no
undertaking and expressly disclaim any duty to supplement or update such opinion
letter, if, after the date hereof, facts or circumstances come to our attention
or changes in the law occur which could affect the opinions set forth herein.
This opinion letter is being furnished to you solely for your benefit in
connection with the transactions contemplated by the Underwriting Agreement and
is not to be used, circulated, quoted or otherwise referred to for any other
purpose without our prior express written consent and may not be relied upon by
any other person without our express written consent.
Very truly yours,
TROUTMAN SANDERS LLP
cc: Gray Television, Inc.
Annex I-8
EXHIBIT A
Georgia Subsidiaries
THE ALBANY HERALD PUBLISHING COMPANY, INC.
POST-CITIZEN MEDIA, INC.
GRAY REAL ESTATE AND DEVELOPMENT COMPANY
GRAY KENTUCKY TELEVISION, INC.
WRDW-TV, INC.
GRAY TRANSPORTATION COMPANY, INC.
WVLT-TV, INC.
WITN-TV, INC.
GRAY FLORIDA HOLDINGS, INC.
WEAU-TV, INC. f/k/a WALB-TV, INC.
GRAY COMMUNICATIONS OF INDIANA, INC.
GRAY COMMUNICATIONS OF TEXAS, INC.
GRAY COMMUNICATIONS OF TEXAS-SHERMAN, INC.
Annex I-9
EXHIBIT B
Delaware Subsidiaries
GRAY MIDAMERICA HOLDINGS, INC.
f/k/a BUSSE BROADCASTING CORPORATION
KOLN/KGIN, INC.
GRAY TELEVISION MANAGEMENT, INC.
KOLN/KGIN LICENSE, INC.
WVLT LICENSEE CORP.
WJHG LICENSEE CORP.
WKYT LICENSEE CORP.
WRDW LICENSEE CORP.
WYMT LICENSEE CORP.
PORTA-PHONE PAGING LICENSEE CORP.
WCTV LICENSEE CORP.
WITN LICENSEE CORP.
WEAU LICENSEE CORP. f/k/a WALB LICENSEE CORP.
KWTX-KBTX LICENSEE CORP.
KWTX-KBTX LP CORP.
KXII LICENSEE CORP.
KXII LP CORP.
GRAY DIGITAL, INC.
GRAY PUBLISHING, INC.
KOLO LICENSEE CORP.
GRAY MIDAMERICA TELEVISION, INC.
Annex I-10
EXHIBIT C
Opinion of Sher Garner
[SHER GARNER LETTERHEAD]
October 17, 2002
Troutman Sanders LLP
Bank of America Plaza
600 Peachtree Street, N.E., Suite 5200
Atlanta, Georgia 30308-2216
Re: Gulf Link Communications, Inc., a Louisiana corporation (the
"Louisiana Subsidiary")
Gentlemen:
We have acted as special Louisiana counsel to the Louisiana Subsidiary
(f/k/a Lynqx Communications, Inc.) in connection with that certain Underwriting
Agreement (the "Agreement"), for 30,000,000 Shares of Common Stock (no par value
per share) of Gray Television, Inc., a Georgia corporation (the "Company"),
dated as of October 17, 2002, by and among the Company, Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporate and Deutsche Bank Securities
Inc., as representatives of the underwriters named on Schedule A thereto
(collectively, the "Underwriters"). Unless otherwise defined herein, terms
defined in the Agreement and used herein shall have the meanings given to them
in the Agreement. This opinion is delivered pursuant to Section 5(b) of the
Agreement.
We do not represent the Louisiana Subsidiary on a general or regular
basis and, accordingly, have no detailed information concerning its business or
operations. Therefore, nothing contained herein should be construed as an
opinion regarding the Louisiana Subsidiary or its operations satisfying or
otherwise complying with any local laws or ordinances or laws or ordinances of
general application pertaining to the particular business and operations of the
Louisiana Subsidiary.
In arriving at the opinions expressed below, we have examined:
(a) (i) unexecuted copies of each of (1) the Agreement, (2) the
Registration Statement (excluding any documents incorporated therein by
reference) and (3) the Prospectus (excluding any documents incorporated therein
by reference) (collectively, such items are from time to time referred to herein
as the "Transaction Documents"); and
(b) (i) a copy of the Articles of Incorporation of the Louisiana
Subsidiary, certified by an officer of the Louisiana Subsidiary (the "Articles
of Incorporation"); (ii) a copy of the Bylaws of the Louisiana Subsidiary,
certified by an officer of the Louisiana Subsidiary (the "Bylaws");
Annex I-11
(iii) a Certificate of Good Standing for the Louisiana Subsidiary from the
Louisiana Secretary of State dated October 11, 2002; and (iv) a Certificate of
the Louisiana Subsidiary's Secretary with respect to the Louisiana Subsidiary's
stock dated October 17, 2002 (the "Secretary's Certificate"; collectively, items
(i) through (iii) are the "Corporate Documents").
In arriving at the opinions expressed below, we have made such
investigations of law, in each case as we have deemed appropriate as a basis for
such opinions.
In rendering the opinions expressed below, we have assumed, with your
permission and without independent investigation or inquiry, (a) the
authenticity of all documents submitted to us as originals, (b) the genuineness
of all signatures on all documents that we examined, (c) the conformity to
authentic originals of documents submitted to us as certified, conformed or
photostatic copies, (d) that all documents, instruments, and agreements referred
to herein have been or will be duly authorized, executed, and delivered by all
parties to such documents, instruments, and agreements in the form submitted to
us with all blanks completed and all exhibits attached thereto, (e) the accuracy
of all statements of fact set forth in the Transaction Documents, (f) the
accuracy and completeness of the Corporate Documents, and (g) the description of
the Louisiana Subsidiary and its properties, operations, and activities
contained in the Registration Statement and the Prospectus is accurate and
complete. We have made no investigation or inquiry to determine the accuracy of
the foregoing assumptions and are not responsible for the effect of the
inaccuracy of any of these assumptions on the opinions expressed herein.
Based upon the foregoing and subject to the foregoing exceptions, we
are of the opinion that:
1. The Louisiana Subsidiary has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Louisiana.
2. The Louisiana Subsidiary has the corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus.
3. Based solely on the representations in the Secretary's
Certificate and, with your permission, without any independent investigation or
inquiry whatsoever, (i) except as otherwise described in the Prospectus, all of
the issued and outstanding capital stock of the Louisiana Subsidiary has been
duly authorized and is validly issued, fully paid and non-assessable, and (ii)
none of the outstanding shares of capital stock of the Louisiana Subsidiary was
issued in violation of preemptive or other similar rights of any security holder
of the Louisiana Subsidiary.
4. To our actual knowledge and, with your permission, without any
independent investigation or inquiry whatsoever, the execution, delivery and
performance of the Agreement and any other agreement or instrument entered into
or issued or to be entered into or issued by the Company in connection with the
Prospectus and the consummation of the transactions contemplated in the
Agreement and in the Registration Statement and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds from the sale of
the Securities as described under the caption "Use of Proceeds") and compliance
by the Company with its obligations thereunder (collectively, the "Company
Transaction") do not and will not, whether with or without the giving of notice
or passage of time or both, conflict with or constitute a breach of, or default
or repayment event under, or result in the creation or imposition of any lien,
Annex I-12
charge or encumbrance upon any assets, properties or operations of the Louisiana
Subsidiary pursuant to, any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument, known to
us and identified as material to us in the Louisiana Subsidiary's Officer's
Certificate delivered to us, to which the Louisiana Subsidiary or its properties
or assets is a party or may be subject or by which the Louisiana Subsidiary may
be bound, nor will such action result in any violation of any applicable law,
statute, rule or regulation known to us (other than the securities or Blue Sky
laws of the various states of the United States of America, on which we express
no opinion) or any judgment, order, writ or decree, known to us, of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Louisiana Subsidiary or any of its assets, properties or
operations.
5. The consummation of the Company Transaction will not result in
any violation of the provisions of the Articles of Incorporation or Bylaws of
the Louisiana Subsidiary.
The opinions set forth above are subject to the following
qualifications and exceptions:
a. With your permission, we have undertaken no
investigation or verification of any factual matters related to this opinion.
Further, the words "our actual knowledge" and similar language as used in this
opinion are intended to be limited to the actual knowledge of the attorneys
within our firm who have been directly and substantively involved in
representing the Louisiana Subsidiary in connection with the Agreement and the
transactions contemplated thereby.
b. Please refer to our opinion letter addressed to you
dated September 10, 2002 (the "Prior Opinion"). Our diligence for this opinion
consists of the identical diligence obtained and reviewed in connection with the
Prior Opinion.
c. This opinion is rendered solely as to matters of
Louisiana law, and we do not purport to express any opinion herein concerning
any law other than the laws of the State of Louisiana. We are not opining as to
any securities laws, blue-sky laws, or laws of the United States of America. To
the extent, if any, that the laws of any jurisdiction other than the State of
Louisiana may be applicable to any of the transactions or documents referred to
herein, we express no opinion with respect to any such laws or their effect on
any of the transactions or documents.
d. Our opinions are limited to the specific issues
addressed and are limited in all respects to laws and facts existing on the date
of this opinion. We undertake no responsibility to advise you of any changes in
the law or the facts after the date hereof that would alter the scope or
substance of the opinions expressed herein. This opinion expresses our legal
opinion as to the foregoing matters based on our professional judgment at this
time; it is not, however, to be construed as a guaranty that a court considering
such matters would not rule in a manner contrary to the opinions set forth
above.
e. We express no opinion with respect to the
enforceability against the Louisiana Subsidiary of the Agreement.
Annex I-13
This opinion has been rendered in connection with the
Agreement and the transactions contemplated thereby. The opinions rendered
herein are solely for your benefit and are being furnished to you solely in
connection with such transactions. Accordingly, without our prior written
consent, this opinion may not be quoted in whole or in part or otherwise
referred to in any report or document or otherwise referred to or circulated in
connection with any transaction, other than those contemplated hereby. We
consent to you relying on this opinion to render your opinion to the
Underwriters in connection with the Agreement and the transactions contemplated
thereby.
Sincerely,
Sher Garner Cahill Richter Klein McAlister
& Hilbert, L.L.C.
Annex I-14
EXHIBIT D
GRAY KENTUCKY TELEVISION, INC .............................. Kentucky
WRDW-TV, INC ............................................... South Carolina
GRAY TRANSPORTATION COMPANY, INC ........................... Florida
WVLT-TV, INC ............................................... Tennessee
WITN-TV, INC ............................................... North Carolina
GRAY FLORIDA HOLDINGS, INC ................................. Florida and Alabama
WEAU-TV, INC. f/k/a WALB-TV, INC ........................... Wisconsin
GRAY COMMUNICATIONS OF INDIANA, INC ........................ Indiana
GRAY COMMUNICATIONS OF TEXAS, INC .......................... Texas
GRAY COMMUNICATIONS OF TEXAS-SHERMAN, INC .................. Texas
KWTX-KBTX L.P. ............................................. Texas
KXII L.P. .................................................. Texas and Oklahoma
GRAY MIDAMERICA HOLDINGS, INC.
f/k/a BUSSE BROADCASTING CORPORATION ....................... Nebraska
KOLN/KGIN, INC ............................................. Nebraska
Annex I-15
Exhibit B-2
FORM OF OPINION OF PROSKAUER ROSE LLP,
SPECIAL COUNSEL TO THE COMPANY
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
October 16, 2002
Deutsche Bank Securities, Inc.
Merrill Lynch & Co.
Bear, Stearns & Co. Inc.
Wachovia Securities, Inc.
Allen & Company LLC
SunTrust Robinson Humphrey
Ladies and Gentlemen:
We have acted as special counsel to Gray Television, Inc., a Georgia corporation
(the "Company"), in connection with the Company's issuance and sale pursuant to
the Underwriting Agreement, dated as of October 16, 2002 (the "Underwriting
Agreement"), between the Company, and Deutsche Bank Securities Inc., Merrill
Lynch & Co., Bear, Stearns & Co. Inc., Wachovia Securities, Inc., Allen &
Company LLC and SunTrust Robinson Humphrey (collectively, the "Underwriters") of
up to 34,500,000 shares of Common Stock, no par value, of the Company to the
Underwriters. This opinion is being delivered to you pursuant to Section 5(b) of
the Underwriting Agreement. Unless otherwise defined herein, capitalized terms
defined in the Underwriting Agreement and used herein shall have the meanings
ascribed to them in the Underwriting Agreement.
In connection with the rendering of this opinion, we have examined originals or
copies of such documents, corporate records and other instruments as we have
deemed relevant, including, without limitation: (i) the Registration Statement
on Form S-3 (Registration No. 333-88694), as amended by Amendment No. 1 thereto
filed with the SEC on July 15, 2002 (in the form declared effective on July 19,
2002, the "Registration Statement"), the related prospectus, dated September 5,
2002 (the "Prospectus"), and the prospectus supplement, dated October 16, 2002,
relating to the offering of the Shares (the "Prospectus Supplement"); and (ii)
the Underwriting Agreement dated October 16, 2002 between the Company and the
Underwriters, (the "Underwriting Agreement").
In giving this opinion, we have assumed, with your permission, the genuineness
of all signatures, the legal capacity of natural persons and the authenticity of
all documents we have examined. As to questions of fact relevant to this
opinion, with your permission and without any independent verification, we have
relied upon, and assumed the accuracy of, the representations and warranties of
each party to the Underwriting Agreement and written statements of certain
public officials and certificates of officers of the Company. We also have
assumed, with your
Annex I-16
permission and without any independent verification, compliance by each party
(other than the Company) to the Underwriting Agreement with its agreements
therein, that the Underwriting Agreement has been duly authorized, executed and
delivered by the parties thereto, and that the Underwriting Agreement
constitutes the legal, valid and binding obligation of each party to it and is
enforceable against each party to it in accordance with its terms.
Whenever in this opinion any statement is made "to our knowledge" or any
statement refers to matters "known to us," it means that none of the attorneys
in our firm who has been actively involved in acting as counsel to the Company
in connection with the transactions provided for in the Underwriting Agreement
presently has actual knowledge and conscious awareness of any fact that would
render the statement inaccurate.
Based upon the foregoing, and subject to the qualifications below, it is our
opinion that:
(i) The Registration Statement has become effective under the
Securities Act and the Prospectus (including the Prospectus
Supplement) was filed pursuant to Rule 424(b) under the
Securities Act and, to our knowledge, no stop order suspending
the effectiveness of the Registration Statement has been
issued or proceeding for that purpose has been instituted or
threatened by the SEC;
(ii) The Registration Statement, the Prospectus and the Prospectus
Supplement, as of their dates (except for the financial
statements, including the notes thereto, and supporting
schedules and other financial, statistical (including, without
limitation, any data relating to television station rankings)
and accounting data included therein or omitted therefrom, as
to which no opinion is expressed), comply as to form in all
material respects with the Securities Act and the rules and
regulations thereunder;
(iii) Other than as set forth in the Prospectus or the Prospectus
Supplement, to our knowledge, there are no legal or
governmental actions, suits, proceedings, inquiries, or
investigations pending or threatened to which the Company or
any of its subsidiaries is or may be a party or to which any
assets, properties, or operations of the Company or its
subsidiaries is or may be the subject which, if determined
adversely, could individually or in the aggregate be expected
to have a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the Company and
its subsidiaries considered as one enterprise or the
consummation of the transactions contemplated under the
Underwriting Agreement or the performance by the Company of
its obligations thereunder;
(iv) To the best of our knowledge, there are no statutes or
regulations that are required to be described in the
Prospectus that are not described as required (except that we
express no opinion on to any federal laws administered by the
FCC, including, without limitation, the Communications Act,
the Telecommunications Act or any order, rule or regulation of
the FCC);
(v) To our knowledge, no authorization, approval, consent, order,
registration, qualification or license of, or filing with, any
government, governmental instrumentality, agency, body or
court, domestic or foreign (other than as have
Annex I-17
been obtained under the 1933 Act, the 1933 Act Regulations,
the 1939 Act and the 1939 Act Regulations or otherwise or as
may be required under the securities or Blue Sky laws of the
various states of the United States of America as to which we
express no opinion) is required for the valid authorization,
issuance, sale and delivery of the Underwritten Securities, or
the performance by the Company of its obligations under the
Underwriting Agreement;
(vi) The Company is not, and upon the issuance and sale of the
Underwritten Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the
"1940 Act");
(vii) Assuming the application of the proceeds of the Underwritten
Securities as set forth in the Prospectus Supplement, neither
the consummation of the transactions contemplated by the
Underwriting Agreement, nor the sale, issuance, execution or
delivery of the Underwriting Agreement, will violate
Regulation T, U or X of the Federal Reserve Board; and
(viii) The statements in the Prospectus Supplement under the heading
"Summary of Certain United States Tax Considerations," insofar
as such statements relate to statements of law or regulations
or draw legal conclusions, have been reviewed by us and fairly
summarize the matters described under such heading.
We have participated in conferences with officers and other representatives of
the Company, representatives of the independent auditors for the Company, and
representatives of the Underwriters, at which conferences the contents of the
Prospectus, the Prospectus Supplement and related matters were discussed, and,
although we are not general counsel to the Company or its subsidiaries and have
not independently verified and are not passing upon and assume no responsibility
for the accuracy, completeness or fairness of the statements contained in the
Prospectus or the Prospectus Supplement (except to the extent specified in
clause (vi) hereof), no facts have come to our attention which lead us to
believe that the Prospectus or the Prospectus Supplement, as of their respective
dates and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being understood
that we are not expressing any opinion with respect to the financial statements,
including the notes thereto, and supporting schedules and other financial,
statistical (including, without limitation, any data relating to television
station rankings) and accounting data included in or omitted from the Prospectus
or the Prospectus Supplement).
This opinion is limited in all respects to the federal law of the United States
and the law of the State of New York, and we express no opinion as to the laws,
statutes, rules or regulations of any other jurisdiction.
Annex I-18
This opinion is addressed to you and is solely for your benefit, and only in
connection with the transactions contemplated by the Underwriting Agreement.
This opinion may not be relied upon by you for any other purpose or furnished
to, circulated, quoted or relied upon by any other person, firm or corporation
or other entities for any purpose without our prior written consent.
Very truly yours,
Annex I-19
Exhibit B-3
FORM OF OPINION OF ROBERT BEIZER
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
[Gray Television, Inc. Letterhead]
Robert A. Beizer
VP - Law & Development
Deutsche Bank Securities INC.
MERRILL LYNCH & CO.
Bear, Stearns & Co. Inc.
Wachovia Securities, INC.
Allen & Company LLC
SunTrust Robinson Humphrey
c/o Merrill Lynch, Pierce, Fenner & Smith Incorporated
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
I am Vice President - Law and Development of Gray Television, Inc., a Georgia
corporation (the "Company"), and have represented the Company in connection with
the Company's issuance and sale of 34,500,000 shares of the Company's common
stock, no par value per share (the "Underwritten Securities") to an underwriting
syndicate managed by Deutsche Bank Securities Inc. and Merrill Lynch & Co., and
including Bear, Stearns & Co. Inc., Wachovia Securities, Inc., Allen & Company
LLC and SunTrust Robinson Humphrey (collectively, the "Underwriters") pursuant
to an Underwriting Agreement dated as of October 16, 2002 (the "Underwriting
Agreement") among the Company and the Underwriters. This opinion is being
delivered pursuant to Section 5(b) of the Underwriting Agreement. All
capitalized terms not otherwise defined herein are defined as set forth in the
Underwriting Agreement.
Based upon and subject to the foregoing and the comments and qualifications set
forth below, I am of the opinion that:
(i) The execution and delivery by each of the Company, the
Licensees (as defined below) and its subsidiaries set forth on Schedule 1 hereto
(the "Broadcast Subsidiaries") and the performance by each of the Company and
the Broadcast Subsidiaries of its obligations under the Underwriting Agreement
did not or will not
Annex I-20
result in a violation of the Communications Act, the Telecommunications Act or
any order, rule or regulation of the FCC, and do not and will not cause any
forfeiture or impairment by or before the FCC of any FCC license, permit or
authorization of any of the Broadcast Subsidiaries;
(ii) Each Subsidiary has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction of
its incorporation, has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify or be in good standing would not result
in a Material Adverse Effect. Except as otherwise described in the Prospectus,
all of the issued and outstanding capital stock of each Subsidiary has been duly
authorized and is validly issued, fully paid and non-assessable and, to the best
of our knowledge, is owned by the Company, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity. None of the outstanding shares of capital stock of any
Subsidiary was issued in violation of preemptive or other similar rights of any
security holder of such Subsidiary;
(iii) To the best of my knowledge, neither the Company nor any of
its subsidiaries is in violation of its charter or by-laws and no default by the
Company or any of its subsidiaries exists in the due performance or observance
of any material obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(iv) All descriptions in the Prospectus of contracts and other
documents to which the Company or its subsidiaries are a party are accurate in
all material respects. To the best of my knowledge, there are no franchises,
contracts, indentures, mortgages, loan agreements, notes, leases or other
instruments required to be described or referred to in the Prospectus or to be
filed as exhibits to the Registration Statement other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.
(v) No consent, approval, authorization, order, registration or
qualification of or with any governmental agency or body is required under the
Communications Act, the Telecommunications Act or the rules and regulations of
the FCC for the execution and delivery, and performance by the Company of its
obligations under the Underwriting Agreement and the execution and delivery by
the Company of the Underwritten Securities;
(vi) Other than the Broadcast Subsidiaries listed on Schedule 1 of
this opinion, the Company does not own, directly or indirectly, any capital
stock or other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association;
(vii) WEAU Licensee Corp., KOLN/KGIN License, Inc., WJHG Licensee
Corp., WCTV Licensee Corp., WVLT Licensee Corp., WRDW Licensee Corp., WITN
Licensee Corp., WKYT Licensee Corp., WYMT Licensee Corp., KWTX-KBTX Licensee
Corp., KXII Licensee Corp. and Porta-Phone Paging Licensee Corp. (collectively,
the "Licensees") are the holders of the FCC Licenses listed Schedule 3 of this
opinion, all of which are validly issued by the FCC and in full force and effect
with no material restrictions or qualifications other than as described
Annex I-21
in the Prospectus, and such FCC Licenses constitute all of the FCC Licenses
necessary for the Company and the Licensees to own their properties and to
conduct their businesses as proposed to be owned and conducted in the manner and
to the full extent now operated or proposed to be operated as described in the
Prospectus;
(viii) To the best of my knowledge, the business and operations of
the Company and the Licensees comply in all material respects with the
Communications Act, the Telecommunications Act, the 1992 Cable Act and all
published orders, rules and regulations of the FCC;
(ix) I do not know of (A) any proceedings threatened, pending or
contemplated before the FCC against or involving the properties, businesses or
FCC Licenses of the Company and the Licensees, or (B) any communications laws or
regulations of the United States applicable to such properties, businesses or
FCC Licenses, which in either case could have a Material Adverse Effect;
(x) To the best of my knowledge, no event has occurred which
permits, or with notice or lapse of time or both would permit, the revocation or
non-renewal of any of the FCC Licenses, assuming the filing of timely license
renewal applications and the timely payment of all applicable filing and
regulatory fees to the FCC, or which might result in any other material
impairment of the rights of the Company or the Licensees in the FCC Licenses;
The statements in the "Risk Factors" section of the Prospectus under the
captions "We operate in a highly competitive environment and competition from
other media entities may cause our advertising sales to decrease or our costs to
increase," "The phased introduction of digital television will increase our
capital and operating costs and may expose us to increased competition,"
"Certain regulatory agencies and the bankruptcy court must approve the merger
and could delay or refuse to approve the merger," "Federal regulation of the
broadcasting industry limits our operating flexibility," "The FCC's duopoly
restrictions limit our ability to own and operate multiple television stations
in the same market and our ability to own and operate a television station and
newspaper in the same market" and "Our paging operations are subject to federal
regulation" and the statements in the Company's Annual Report on Form 10-K for
the year ended December 31, 2001, as amended, incorporated by reference into the
Prospectus, under the captions "Competition--Television Industry,"
"Competition--Paging Industry" and "Federal Regulation of the Company's
Business" (together, the "Regulatory Sections"), insofar as such statements
constitute summaries of legal or regulatory matters, documents or proceedings
referred to therein, fairly present the information called for with respect to
such legal or regulatory matters, documents and proceedings and fairly summarize
the matters referred to therein; and
(xi) Each of the agreements set forth on Schedule 2 to this opinion
described in the Prospectus and documents incorporated by reference therein
conform in all material respects to the description thereof contained in the
Prospectus and documents incorporated by reference therein, and, to my
knowledge, do not differ in any material respect from the descriptions thereof
contained in the Prospectus.
I have participated in the preparation of the text included in the Regulatory
Sections in the Prospectus and the Registration Statement and have met with
officers and other representatives of the Company and the Broadcast Subsidiaries
and representatives of counsel to the Company,
Annex I-22
the Underwriters and counsel to the Underwriters, and, although I have not
independently verified and am not passing upon and assume no responsibility for
the accuracy, completeness or fairness of the statements contained in the
Prospectus and the Registration Statement (except to the extent specified in
clauses (x) and (xi) above), no facts have come to my attention which lead me to
believe that the text contained in the Regulatory Sections of the Prospectus and
the Registration Statement, as of their respective dates and as of the Closing
Date, contained or contains any untrue statement of a material fact or omitted
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that I am not expressing an opinion
with respect to the financial statements and the other financial and statistical
data included in or omitted from the Prospectus and the Registration Statement).
This opinion is limited in all respects to the federal law of the United States.
In addition, I have reviewed the applicable provisions of the Delaware General
Corporation Law, the Georgia Business Corporation Code and the Louisiana
Business Corporation Law with respect to the opinions expressed in paragraphs
(i), (ii), (iii), (iv) and (vi) above. I express no opinion as to the laws,
statutes, rules or regulations of any other jurisdiction.
This opinion is addressed to you and is solely for your benefit, and only in
connection with the transactions contemplated by the Underwriting Agreement.
This opinion may not be relied upon by you for any other purpose or furnished
to, circulated, quoted or relied upon by any other person, firm or corporation
for any purpose without my prior written consent.
Very truly yours,
Annex I-23
Schedule 1 to
Robert A. Beizer's
Opinion
Georgia Subsidiaries
THE ALBANY HERALD PUBLISHING COMPANY, INC.
POST-CITIZEN MEDIA, INC.
GRAY REAL ESTATE AND DEVELOPMENT COMPANY
GRAY KENTUCKY TELEVISION, INC.
WRDW-TV, INC.
GRAY TRANSPORTATION COMPANY, INC.
WVLT-TV, INC.
WITN-TV, INC.
GRAY FLORIDA HOLDINGS, INC.
WEAU-TV, INC. f/k/a/ WALB-TV, INC.
GRAY COMMUNICATIONS OF INDIANA, INC.
GRAY COMMUNICATIONS OF TEXAS, INC.
GRAY COMMUNICATIONS OF TEXAS-SHERMAN, INC.
Annex I-24
Schedule 2 to
Robert A. Beizer's Opinion
Reviewed Agreements
- - Merger Agreement among the Company, Stations and Gray MidAmerica
Television, Inc.
- - Each of the Lock Up Agreements entered into by the Company and
Stations, on the one hand, with each of certain stockholders and
creditors of Stations, on the other hand, as follows:
Richard Benedek
Stephen D. Benedek
Chelsey Capital Profit Sharing Plan
Noraland Finances LTD.-BVI
K. James Yager
- - Preferred Stock Purchase Agreement between the Company and certain
investors relating to the Series C Convertible Preferred Stock of the
Company.
- - Ancillary agreements related to the above Preferred Stock Purchase
Agreement.
- - Affiliation agreements between each of the Broadcast Subsidiaries, on
the one hand, and CBS or NBC, as the case may be, on the other hand.
The Broadcast Subsidiaries are as follows:
WEAU-TV, Inc., WVLT-TV, Inc., WRDW-TV, Inc., WITN-TV, Inc., Gray
Kentucky Television, Inc., Gray Communications of Texas, Inc., Gray
Communications of Texas - Sherman, Inc., KOLN-KGIN, Inc., Gray Florida
Holdings, Inc., Gray Television Management, Inc., Gray MidAmerica
Holdings, Inc., Gray Digital, Inc., KWTX-KBTX LP Corp., KXII L.P.
Corp., KXII L.P., KWTX - KBTX L.P. and Lynqx Communications, Inc.
- - Warrant Agreement between the Company and Bull Run Corporation for the
purchase of up to 100,000 shares of the Company's class B common stock.
- - Ancillary agreements related to the above Warrant Agreement.
- - Other agreements subject to continuing due diligence review.
Annex I-25