Exhibit 10.2

VOTING AGREEMENT

This VOTING AGREEMENT, is made and entered into as of July 30, 2017 (this
“Agreement”), by and among the stockholder appearing on the signature page
hereto (the “Stockholder”), Discovery Communications, Inc., a Delaware
corporation (“Parent”), and Scripps Networks Interactive, Inc., an Ohio
corporation (the “Company”).

RECITALS

WHEREAS, as of the date hereof, the Stockholder is the Beneficial Owner of the
number of shares of Series A Preferred Stock set forth opposite the
Stockholder’s name on Schedule A hereto (such shares, the “Old Preferred
Shares”);

WHEREAS, pursuant to the Exchange Transaction, the Stockholder will exchange all
of the Series A Preferred Stock and Series C Preferred Stock Beneficially Owned
by it immediately before the closing of the Exchange Transaction for a number of
shares of Parent’s Series A-1 Convertible Participating Preferred Stock, par
value $0.01 per share (“Series A-1 Preferred Stock”) and Series C-1 Convertible
Participating Preferred Stock, par value $0.01 per share (“Series C-1 Preferred
Stock”) (the shares of Series A-1 Preferred Stock so received by the
Stockholder, together with such additional shares of capital stock of Parent
(other than shares of Series C Preferred Stock, Series C-1 Preferred Stock or
Series C Common Stock) that become Beneficially Owned by the Stockholder,
whether upon the closing of the Exchange Transaction, the exercise of options,
conversion of convertible securities or otherwise, after the date hereof until
the Expiration Date, the “Subject Shares”; for the avoidance of doubt, Subject
Shares shall not include the Old Preferred Shares except for in the event that
the Exchange Agreement is terminated prior to the Parent Stockholders Meeting,
the Subject Shares shall be deemed to include the Old Preferred Shares);

WHEREAS, concurrently with the execution of this Agreement, Parent, Skylight
Merger Sub, Inc., an Ohio corporation and a direct wholly owned subsidiary of
Parent (“Merger Sub”), and the Company, are entering into an Agreement and Plan
of Merger, dated as of the date hereof in the form attached hereto in Annex A
(the “Merger Agreement”), pursuant to which, upon the terms and subject to the
conditions thereof, Merger Sub will be merged with and into the Company (the
“Merger”), with the Company surviving the Merger as a wholly owned subsidiary of
Parent;

WHEREAS, the board of directors of Parent has unanimously by those voting
(i) determined that the terms of the Merger Agreement, the Merger and the other
transactions contemplated by the Merger Agreement are fair to, and in the best
interests of, Parent and its stockholders, (ii) determined and declared
advisable the Merger Agreement and the transactions contemplated thereby and
(iii) resolved to recommend that Parent stockholders vote in favor of the
issuance of shares of Series C Common Stock in connection with the Merger and
directed that such matter be submitted for consideration of the stockholders of
Parent at the Parent Stockholders Meeting; and

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WHEREAS, as a condition and inducement to the willingness of the Company and
Parent to enter into the Merger Agreement, the Company and Parent have required
that the Stockholder enter into this Agreement, and the Stockholder desires to
enter into this Agreement to induce the Company and Parent to enter into the
Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements contained herein, and intending to be legally bound hereby, the
parties hereby agree as follows:

1. Voting of Shares. From the period commencing with the execution and delivery
of this Agreement and continuing until the Expiration Date, at every meeting of
holders of capital stock of Parent called with respect to any of the following,
and at every adjournment or postponement thereof, and on every action or
approval by written consent of the holders of shares of capital stock of Parent
with respect to any of the following, the Stockholder shall vote or cause to be
voted the Subject Shares that the Stockholder is entitled to vote:

(a) in favor of the issuance of shares of Series C Common Stock in connection
with the Merger;

(b) against any Parent Acquisition Proposal or any Parent Superior Proposal; and

(c) against any amendment of the Parent Certificate of Incorporation, Parent
Bylaws or other action or agreement of Parent, in each case for which the vote
of the applicable class of capital stock of Parent is required to authorize such
action or agreement, that would reasonably be expected to (i) result in a breach
of any covenant, representation or warranty or any other obligation or agreement
of Parent under the Merger Agreement (it being understood that the consummation
of the Exchange Transaction is expressly contemplated and permitted under the
Merger Agreement), (ii) result in any of the conditions to the consummation of
the Merger under the Merger Agreement not being fulfilled, or (iii) impede,
frustrate, interfere with, delay, postpone or adversely affect the Merger and
the other transactions contemplated by the Merger Agreement; provided that the
Company has advised the Stockholder of such asserted effect set forth in clause
(i), (ii) or (iii) in writing at least ten (10) Business Days prior to the
applicable vote.

2. Transfer of Shares. The Stockholder agrees that from and after the date of
this Agreement until the receipt of the Parent Requisite Vote, the Stockholder
will not, directly or indirectly, (i) sell, transfer, distribute, pledge,
hypothecate, donate, assign, appoint or otherwise dispose of or encumber
(“Transfer”), any of the Subject Shares; provided, that nothing in this clause
(i) shall prohibit any of the transactions contemplated by the Exchange
Transaction or the Exchange Agreement (including the distribution or release of
certain series A Preferred Stock to Parent in accordance with the Escrow
Agreement (as defined under the Exchange Agreement)) or any Transfer by the
Stockholder of any shares of Series C Preferred Stock or Series C Common Stock,
(ii) deposit any of the Subject Shares into a voting trust or enter into a
voting agreement

 

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or arrangement with respect to the Subject Shares or grant any proxy or power of
attorney with respect thereto, (iii) enter into any contract, option or other
arrangement or undertaking with respect to the Transfer of any Subject Shares,
(iv) enter into any agreement, arrangement or understanding with any Person
(other than the Company), or take any other action, that would conflict with,
restrict, limit, violate or interfere with the performance of the Stockholder’s
representations, warranties, covenants and obligations hereunder or (v) take any
action that would reasonably be expected to restrict or otherwise adversely
affect the Stockholder’s legal power, authority and right to comply with and
perform its covenants and obligations under this Agreement. Any Transfer in
violation of this provision shall be void ab initio. The foregoing restrictions
on Transfers of Subject Shares shall not prohibit any such Transfers by the
Stockholder in connection with the Merger or the transactions contemplated by
the Merger Agreement.

3. Acquisition Proposals. The Stockholder shall not and shall not direct any of
its Representatives to, directly or indirectly, (i) solicit, initiate or
knowingly facilitate (including by way of furnishing information), induce or
encourage any inquiries or the making of any proposal or offer (including any
proposal or offer to the stockholders of Parent) that constitutes, or could
reasonably be expected to lead to, a Parent Acquisition Proposal, (ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, or furnish to any Person any information with respect to, or
cooperate in any way that could otherwise reasonably be expected to lead to, any
Parent Acquisition Proposal or (iii) approve or recommend, or make any public
statement approving or recommending, any inquiry, proposal or offer which
constitutes, or could reasonably be expected to lead to, a Parent Acquisition
Proposal, and Stockholder shall not, alone or together with any other Person,
make a Parent Acquisition Proposal. If the Stockholder receives any inquiry or
proposal regarding any Parent Acquisition Proposal, the Stockholder shall
promptly inform the Company of such inquiry or proposal and the details thereof.

4. Additional Covenants of the Stockholder.

(a) Further Assurances. From time to time and without additional consideration,
the Stockholder shall execute and deliver, or cause to be executed and
delivered, such additional instruments, and shall take such further actions, as
are reasonably necessary in order to perform its obligations under this
Agreement.

(b) Stock Dividends, etc. In the event of a stock split, stock dividend or
distribution, or any change in the shares of capital stock of Parent by reason
of any split-up, reverse stock split, recapitalization, combination,
reclassification, reincorporation, exchange of shares or the like, the terms
“shares of capital stock of Parent” and “Subject Shares” shall be deemed to
refer to and include such shares as well as all such stock dividends and
distributions and any securities into which or for which any or all of such
shares may be changed or exchanged or which are received in such transaction.

(c) Notice of Acquisitions. The Stockholder hereby agrees to notify the Company
and Parent in writing as promptly as practicable of the number of any additional
shares of Series A Common Stock, Series A Preferred Stock or voting securities
of Parent of which the Stockholder acquires Beneficial Ownership on or after the
date hereof; provided that any timely filing with the SEC by the Stockholder
pursuant to Section 13 or Section 16 of the Exchange Act reporting any such
acquisition shall constitute notice with respect to this Section 4(c).

 

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(d) Disclosure. Subject to reasonable prior notice (including reasonable
opportunity to review and comment) and approval (not to be unreasonably
withheld, conditioned or delayed) of the Stockholder, the Stockholder hereby
authorizes the Company and Parent to publish and disclose in any announcement or
disclosure required by the SEC, including in the Joint Proxy
Statement/Prospectus, the Stockholder’s identity and ownership of the
Stockholder’s Subject Shares and the nature of the Stockholder’s obligations
under this Agreement.

5. Representations and Warranties of the Stockholder. The Stockholder on its own
behalf hereby represents and warrants as of the date hereof to the Company and
Parent with respect to the Stockholder and the Stockholder’s ownership of the
Subject Shares as follows:

(a) Authority. The Stockholder has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Stockholder
and constitutes a valid and binding obligation of the Stockholder enforceable in
accordance with its terms, subject to the Bankruptcy and Equity Exception. Other
than as provided in the Merger Agreement and any filings by the Stockholder with
the SEC, the execution, delivery and performance by the Stockholder of this
Agreement does not require any consent, approval, authorization or permit of,
action by, filing with or notification to any Governmental Entity, other than
any consent, approval, authorization, permit, action, filing or notification the
failure of which to make or obtain would not, individually or in the aggregate,
be reasonably expected to prevent or materially delay the consummation of the
Merger.

(b) No Conflicts. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor compliance with the
terms hereof, will violate, conflict with or result in a material breach of, or
constitute a default (with or without notice or lapse of time or both) under any
provision of, any trust agreement, other agreement, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Stockholder.

(c) The Subject Shares. The Stockholder is the Beneficial Owner of and has good
and marketable title to the Old Preferred Shares, and will be the Beneficial
Owner of and have good and marketable title to the number of shares of Series
A-1 Preferred Stock equal to the Series A-1 Share Amount (as defined under the
Exchange Agreement), upon consummation of the Exchange Transaction, free and
clear of any and all security interests, liens, encumbrances, equities, claims,
options or limitations of whatever nature (including any restriction on the
right to vote, sell or otherwise dispose of such Subject Shares). The
Stockholder does not Beneficially Own any shares of Series A Common Stock,
Series B Common Stock or Series A Preferred Stock other than the Old Preferred

 

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Shares. After the consummation of the Exchange Transaction, the Stockholder will
not Beneficially Own any shares of Series A Common Stock, Series B Common Stock,
Series A Preferred Stock or Series A-1 Preferred Stock other than the Subject
Shares. The Stockholder has, or will have at the time of the applicable meeting
of holders of shares of capital stock of Parent, the sole right to vote or
direct the vote of, or to dispose of or direct the disposition of, such Subject
Shares. None of the Subject Shares is subject to any agreement, arrangement or
restriction with respect to the voting of such Subject Shares that would prevent
or delay the Stockholder’s ability to perform its obligations hereunder. Except
for the Exchange Agreement, there are no agreements or arrangements of any kind,
contingent or otherwise, obligating the Stockholder to Transfer, or cause to be
Transferred, any of the Subject Shares and no Person has any contractual or
other right or obligation to purchase or otherwise acquire any of such Subject
Shares other than the Stockholder in the Exchange Transaction.

(d) Reliance by the Company and Parent. The Stockholder understands and
acknowledges that the Company and Parent are entering into the Merger Agreement
in reliance upon the Stockholder’s execution and delivery of this Agreement.

(e) Litigation. As of the date hereof, to the knowledge of the Stockholder,
there is no action, proceeding or investigation pending or threatened in writing
against the Stockholder that questions the validity of this Agreement or any
action taken or to be taken by the Stockholder in connection with this
Agreement.

6. Exchange Transaction. Parent and the Stockholder shall consummate the
Exchange Transaction on the seventh (7th) Business Day (as defined in the
Exchange Agreement) following the date hereof or as promptly as practicable
thereafter.

7. Representations and Warranties of the Company. The Company represents and
warrants to the Stockholder and Parent as follows: the Company is a corporation
duly incorporated, validly existing and in good standing under the Laws of the
State of Ohio and has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the Merger Agreement by the Company
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by the board of directors of the Company, and
no other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement, the Merger
Agreement by the Company and, subject to receipt of the Company Requisite Vote,
the consummation of the transactions contemplated hereby and thereby. The
Company has duly and validly executed this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the Bankruptcy and
Equity Exception.

8. Representations and Warranties of Parent. Parent represents and warrants to
the Stockholder and the Company as follows: Parent is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Delaware and has full corporate power and authority to execute and deliver
this

 

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Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement and the Merger Agreement by Parent and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by the board of directors of Parent, and no other
corporate proceedings on the part of Parent are necessary to authorize the
execution, delivery and performance of this Agreement, the Merger Agreement by
Parent and, subject to receipt of the Parent Requisite Vote, the consummation of
the transactions contemplated hereby and thereby. Parent has duly and validly
executed this Agreement, and this Agreement constitutes a legal, valid and
binding obligation of Parent enforceable against Parent in accordance with its
terms, subject to the Bankruptcy and Equity Exception.

9. Stockholder Capacity. No Stockholder executing this Agreement who is or
becomes during the term hereof a director or officer of Parent shall be deemed
to make any agreement or understanding in this Agreement in such Person’s
capacity as a director or officer. The Stockholder is entering into this
Agreement solely in the Stockholder’s capacity as the Beneficial Owner of
Subject Shares and nothing herein shall limit or affect any actions taken (or
any failures to act) by the Stockholder in the Stockholder’s capacity as a
director or officer of Parent. The taking of any actions (or any failures to
act) by the Stockholder (including voting on matters put to the board of
directors of Parent or any committee thereof, influencing officers, employees,
agents, management or the other directors of Parent and taking any action or
making any statement at any meeting of such board or any committee thereof) in
the Stockholder’s capacity as a director or officer of Parent shall not be
deemed to constitute a breach of this Agreement, regardless of the circumstances
related thereto.

10. Certain Definitions. Capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to them in the Merger Agreement.

(a) “Beneficial Ownership” and related terms such as “Beneficially Owned” or
“Beneficial Owner” have the meaning given such terms in Rule 13d-3 under the
Exchange Act, and the rules and regulations promulgated thereunder, as in effect
from time to time.

(b) “Exchange Agreement” means that Exchange Agreement , dated as of the date
hereof, between Parent and the Stockholder in the form attached hereto as Annex
B.

(c) “Exchange Transaction” means the exchange of all of the outstanding shares
of Series A Preferred Stock and Series C Preferred Stock Beneficially Owned or
owned of record by the Stockholder immediately prior to the Closing (as defined
under the Exchange Agreement) for a number of shares of Series A-1 Preferred
Stock equal to the Series A-1 Share Amount (as defined under the Exchange
Agreement) and a number of shares of Series C-1 Preferred Stock equal to the
Series C-1 Share Amount (as defined under the Exchange Agreement) in accordance
with the Exchange Agreement.

 

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11. Termination. This Agreement shall automatically terminate without further
action upon the earliest to occur (the “Expiration Date”) of (i) the Effective
Time, (ii) the termination of the Merger Agreement in accordance with its terms,
(iii) the effectiveness of any amendment to the Merger Agreement that is not
expressly contemplated by the stockholder written consent delivered by the
Stockholder to Parent concurrently with the execution of the Merger Agreement,
and (iv) the written agreement of the Stockholder, Parent and the Company to
terminate this Agreement.

12. Specific Performance. The Stockholder acknowledges and agrees that (i) the
covenants, obligations and agreements contained in this Agreement relate to
special, unique and extraordinary matters, (ii) the Company and Parent are
relying on such covenants in connection with entering into the Merger Agreement
and (iii) a violation of any of the terms of such covenants, obligations or
agreements will cause the Company and Parent irreparable injury for which
adequate remedies are not available at law and for which monetary damages are
not readily ascertainable. Therefore, each of the Stockholder, the Company and
Parent agree that the parties hereunder shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to
post bond), in addition to remedies at law or in damages, as a court of
competent jurisdiction may deem necessary or appropriate to restrain the
Stockholder from committing any violation of such covenants, obligations or
agreements, and shall not oppose the granting of such relief on the basis that
the Company or Parent has an adequate remedy at law or in damages.

13. Governing Law and Venue; Waiver of Jury Trial.

(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

(b) Each of the parties hereby irrevocably submits exclusively to the
jurisdiction of the Chancery Courts of the State of Delaware and the federal
courts of the United States of America, in each case, located in New Castle
County in the State of Delaware and hereby waives, and agrees not to assert, as
a defense in any action, suit or proceeding for the interpretation or
enforcement hereof, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that the
venue thereof may not be appropriate or that this Agreement may not be enforced
in or by such courts, and each of the parties hereto irrevocably agrees that all
claims relating to such action, suit or proceeding shall be heard and determined
in such a state or federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in
Section 18 or in such other manner as may be permitted by Law, shall be valid
and sufficient service thereof.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF

 

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ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH
SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER,
(iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.

14. Modification or Amendment. This Agreement may be amended, modified or
supplemented only in writing by the parties hereto.

15. Waivers. Any provision of this Agreement may be waived if, and only if, such
waiver is in writing and signed by the party against whom the waiver is to be
effective. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Except as otherwise herein
provided, the rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Law.

16. Assignment. This Agreement shall not be assignable by operation of Law or
otherwise. Any assignment in contravention of the preceding sentence shall be
null and void.

17. No Third-Party Beneficiaries. This Agreement is not intended to confer upon
any Person other than the parties any rights or remedies.

18. Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally or sent via facsimile or e-mail or
(ii) on the first Business Day following the date of dispatch if sent by a
nationally recognized overnight courier (providing proof of delivery), in each
case to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice); provided that should any such
delivery be made by facsimile or e-mail, the sender shall also send a copy of
the information so delivered on or before the next Business Day by a nationally
recognized overnight courier:

(A) if to the Company to:

Scripps Network Interactive, Inc.

9721 Sherrill Blvd

Knoxville, TN 37919

 

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Attention:   Cynthia L Gibson

Email:         cynthia.gibson@scrippsnetworks.com

with a copy (which shall not constitute notice) to:

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Facsimile:   (212) 310-8007

Attention:   Michael J. Aiello

Email:         michael.aiello@weil.com

(B) if to the Stockholder to:

Advance/Newhouse Programming Partnership

5000 Campuswood Drive

East Syracuse, New York 13057

Facsimile:  (315) 463-4127

Attention:   Steven A. Miron

Email:         sam@advancenewhouse.com

with a copy (which shall not constitute notice) to:

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile:  (212) 558-3588

Attention:   Brian E. Hamilton, Esq.

Email:         hamiltonb@sullcrom.com

Sabin, Bermant & Gould LLP

One World Trade Center, 44th Floor

New York, New York 10007

Facsimile: (212) 381-7201

Attention:   Andrew Kransdorf

Email:         akransdorf@sabinfirm.com

(C) if to Parent to:

Discovery Communications, Inc.

850 Third Avenue

New York, NY 10022

Attention:   Bruce Campbell

Fax:            (212) 548-5848

Email:         bruce_campbell@discovery.com

 

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with copies (which shall not constitute notice) to:

Discovery Communications, Inc.

1 Discovery Place

Silver Spring, MD 20910

Attention:   Savalle Sims, Executive Vice President and General Counsel

Email:         savalle_sims@discovery.com

and

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Facsimile:   (212) 909-6836

Attention:   Jonathan E. Levitsky

Email:         jelevitsky@debevoise.com

19. Severability. The provisions of this Agreement shall be deemed severable and
the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) the parties shall negotiate in good faith to
modify this Agreement to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
Persons or circumstances shall not, subject to clause (a) above, be affected by
such invalidity or unenforceability, except as a result of such modification,
nor shall such invalidity or unenforceability affect the validity or
enforceability of such provision, or the application thereof, in any other
jurisdiction.

20. Entire Agreement. This Agreement and the Exchange Agreement constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings between the parties with
respect thereto.

21. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

22. Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by facsimile or by attachment to electronic mail in
portable document format (PDF) or by other electronic means), each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement, and shall become effective when
one or more counterparts have been signed by each of the parties hereto and
delivered to the other parties hereto.

 

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23. No Ownership Interests. Nothing contained in this Agreement shall be deemed
to vest in Parent or the Company any direct or indirect ownership or incidence
of ownership of or with respect to any Subject Shares. All rights, ownership and
economic benefits of and relating to the Subject Shares shall remain vested in
and belong to the Stockholder. Nothing in this Agreement shall be interpreted as
creating or forming a “group” with any other Person, including Parent and the
Company, for the purposes of Rule 13d-5(b)(1) of the Exchange Act or for any
other similar provision of applicable Law.

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

SCRIPPS NETWORKS INTERACTIVE, INC. By:  

/s/ Kenneth W. Lowe

  Name: Kenneth W. Lowe   Title:   President and Chief Executive Officer
DISCOVERY COMMUNICATIONS, INC. By:  

/s/ David Zaslav

  Name: Davis Zaslav   Title:   President and Chief Executive Officer

[Signature Page to Voting Agreement]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

ADVANCE/NEWHOUSE PROGRAMMING PARTNERSHIP By:   Newhouse Programming Holdings
Corp.,   its Managing Partner By:  

/s/ Steven A. Miron

  Name: Steven W. Miron   Title:   Chief Executive Officer

[Signature Page to Voting Agreement]

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SCHEDULE A

 

Name of Stockholder

  

Number of shares of Series A
Common Stock

  

Number of shares of Series B
Common Stock

  

Number of shares of Series A
Preferred Stock

Advance/Newhouse Programming Partnership    None    None    71,107,312

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ANNEX A

MERGER AGREEMENT

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AGREEMENT AND PLAN OF MERGER

among

SCRIPPS NETWORKS INTERACTIVE, INC.,

DISCOVERY COMMUNICATIONS, INC.

and

SKYLIGHT MERGER SUB, INC.

Dated as of July 30, 2017

 

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TABLE OF CONTENTS

 

     Page  

ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME

     2  

1.1 The Merger

     2  

1.2 Closing

     2  

1.3 Effective Time

     2  

ARTICLE II ORGANIZATIONAL DOCUMENTS OF THE SURVIVING COMPANIES

     3  

2.1 The Articles of Incorporation

     3  

2.2 The Code of Regulations

     3  

ARTICLE III DIRECTORS AND OFFICERS OF THE SURVIVING COMPANY

     3  

3.1 Directors of the Surviving Company

     3  

3.2 Officers of the Surviving Company

     3  

ARTICLE IV EFFECT OF THE MERGER ON SECURITIES; EXCHANGE

     3  

4.1 Effect on Capital Stock

     3  

4.2 Exchange of Certificates

     7  

4.3 Election Procedure

     10  

4.4 Dissenters’ Rights

     12  

4.5 Adjustments to Prevent Dilution

     12  

4.6 Treatment of Equity Awards

     12  

ARTICLE V REPRESENTATIONS AND WARRANTIES

     16  

5.1 Representations and Warranties of the Company

     16  

5.2 Representations and Warranties of Parent and Merger Sub

     36  

ARTICLE VI COVENANTS

     46  

6.1 Interim Operations

     46  

6.2 Company Acquisition Proposal

     52  

6.3 Parent Acquisition Proposal

     57  

6.4 Information Supplied

     62  

6.5 Shareholder and Stockholder Meetings

     63  

6.6 Filings; Other Actions; Notification

     65  

6.7 Access; Consultation

     67  

6.8 Stock Exchange Listing, De-listing and De-registration

     69  

6.9 Publicity

     69  

6.10 Employee Benefits

     69  

6.11 Expenses

     71  

6.12 Indemnification; Directors’ and Officers’ Insurance

     72  

6.13 Takeover Statute

     73  

6.14 Control of the Company’s or Parent’s Operations

     73  

6.15 Section 16(b)

     74  

6.16 Financing by Parent

     74  

6.17 Approval by Sole Stockholder of Merger Sub

     79  

6.18 Stockholder Litigation

     79  

6.19 Directorship

     79  

ARTICLE VII CONDITIONS

     79  

7.1 Conditions to Each Party’s Obligation to Effect the Merger

     79  

7.2 Conditions to Obligations of Parent and Merger Sub

     80  

7.3 Conditions to Obligation of the Company

     81  

7.4 Frustration of Conditions

     82  

 

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ARTICLE VIII TERMINATION

   82

8.1 Termination by Mutual Consent

   82

8.2 Termination by Either Parent or the Company

   82

8.3 Termination by the Company

   83

8.4 Termination by Parent

   84

8.5 Company Termination Fee

   84

8.6 Parent Termination Fee

   85

8.7 Effect of Termination and Abandonment

   85

ARTICLE IX MISCELLANEOUS AND GENERAL

   86

9.1 Survival

   86

9.2 Modification or Amendment

   86

9.3 Waiver

   86

9.4 Counterparts; Effectiveness

   87

9.5 Governing Law and Venue; Waiver of Jury Trial

   87

9.6 Notices

   89

9.7 Entire Agreement

   90

9.8 No Third Party Beneficiaries

   90

9.9 Obligations of Parent and of the Company

   90

9.10 Severability

   90

9.11 Interpretation

   91

9.12 Assignment

   91

9.13 Specific Performance

   92

 

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INDEX OF DEFINED TERMS

 

Defined Term

   Section

Additional Contract

   5.1(k)

Adjusted Stock Option

   4.6(a)(ii)

Adjusted Unit Award

   4.6(b)(ii)

Affiliate

   5.1(a)

Affiliation Contract

   5.1(k)

Aggregate Cash Election Amount

   4.1(a)(i)(B)

Agreement

   Preamble

Amendment Effective Date

   6.16(a)

Antitrust Laws

   6.6(b)

Applicable Date

   5.1(e)(i)

Articles of Incorporation

   2.1

Available Cash Election Amount

   4.1(a)(iv)(A)

Average Parent Stock Price

   4.1(a)(iv)(C)

Bankruptcy and Equity Exception

   5.1(c)

Base Exchange Ratio

   4.1(a)(iv)(B)

Base Exchange Ratio Reduction

   4.1(a)(iv)(B)

Business Day

   1.2

Cash Award Consideration

   4.6(a)(i)

Cash Electing Share

   4.1(a)(i)(B)

Cash Election

   4.1(a)(i)(B)

Cash Election Consideration

   4.1(a)(i)(B)

Cash Fraction

   4.1(a)(i)(B)

Cash-Out Options

   4.6(a)

Cash-Out Units

   4.6(b)

Cash Top-Up Amount

   4.1(a)(iv)(B)

Cash Top-Up Election

   4.1(a)(iv)(B)

CBAs

   5.1(i)(i)

Certificate

   4.1(a)(ii)

Certificate of Merger

   1.3

Class A Requisite Vote

   5.1(c)

Class A Shares

   4.1(a)(i)

Closing

   1.2

Closing Date

   1.2

Code

   4.2(h)

Code of Regulations

   2.2

Commitment Letter

   5.2(l)

Common Shares

   5.1(c)

Common Voting Shares

   4.1(a)(i)

Company

   Preamble

Company Acquisition Proposal

   6.2(d)

Company Alternative Acquisition Agreement

   6.2(e)

Company Articles of Incorporation

   5.1(d)(ii)

Company Balance Sheet

   5.1(g)

 

iii

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Defined Term

   Section

Company Change in Recommendation

   6.2(e)

Company Code of Regulations

   5.1(d)(ii)

Company Disclosure Letter

   5.1

Company Employees

   5.1(h)(i)

Company ERISA Affiliate

   5.1(h)(iv)

Company Expenses

   8.6(b)

Company Family Meeting

   6.5(a)

Company Intervening Event

   6.2(d)

Company IP

   5.1(o)(ii)

Company Material Adverse Effect

   5.1(a)

Company Option

   4.6(a)

Company Pension Plan

   5.1(h)(iii)

Company Performance Stock Unit

   4.6(c)

Company Plan

   5.1(h)(i)

Company Recommendation

   5.1(c)

Company Reports

   5.1(e)(i)

Company Requisite Vote

   5.1(c)

Company Restricted Stock Unit

   4.6(b)

Company Shareholders Meeting

   6.5(b)(i)

Company Stock Plans

   5.1(b)(i)

Company Superior Proposal

   6.2(d)

Company Termination Fee

   8.5

Confidentiality Agreement

   9.7

Continuation Period

   6.10(a)

Continuing Awards

   4.6(b)

Continuing Employee

   6.10(a)

Contracts

   5.1(d)(ii)

Converted Units

   4.6(b)

Current Purchase Period

   6.10(g)

D&O Insurance

   6.12(b)

Debt Letter

   5.2(l)

Debt Payoff

   6.16(b)

Dissenting Shareholders

   4.1(a)(i)

Effective Time

   1.3

Election Date

   4.3(c)

Environmental Law

   5.1(m)

ERISA

   5.1(h)(i)

Exchange Act

   5.1(d)(i)

Exchange Agent

   4.2(a)

Exchange Fund

   4.2(a)

Excluded Shares

   4.1(a)(i)

Existing Notes

   6.16(a)

FCPA

   5.1(j)(ii)

Financing

   5.2(l)

Financing Parties

   6.16(a)

 

iv

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Defined Term

   Section

Foreign Competition Laws

   5.1(d)(i)

Foreign Regulators

   5.1(d)(i)

Foreign Regulatory Laws

   5.1(d)(i)

Form S-4

   6.4(a)

Form of Election

   4.3(b)

GAAP

   5.1(a)

Government Official

   5.1(j)(ii)

Governmental Consents

   7.1(b)

Governmental Entity

   5.1(d)(i)

Hazardous Substance

   5.1(m)

HSR Act

   5.1(d)(i)

Indebtedness

   5.1(e)(vi)

Indemnified Parties

   6.12(a)

Information Technology

   5.1(o)(vii)

Intellectual Property

   5.1(o)(vii)

IRS

   5.1(h)(iii)

Joint Proxy Statement/Prospectus

   6.4(a)

Knowledge of the Company

   5.1(a)

Knowledge of Parent

   5.2(a)

Law

   5.1(j)(i)

Leased Real Property

   5.1(q)(ii)

Licenses

   5.1(j)(i)

Lien

   5.1(b)(ii)

Material Contracts

   5.1(k)

Merger

   Recitals

Merger Consideration

   4.1(a)(i)

Merger Sub

   Preamble

Mixed Consideration Electing Share

   4.1(a)(i)(A)

Mixed Election

   4.1(a)(i)(A)

Mixed Election Cash Consideration

   4.1(a)(i)(A)

Mixed Election Consideration

   4.1(a)(i)(A)

Mixed Election Stock Consideration

   4.1(a)(i)(A)

Moody’s

   4.2(a)

Multiemployer Plan

   5.1(h)(iv)

NASDAQ

   4.1(a)(iv)(C)

Non-Electing Share

   4.3(b)

Notes Exchange Offer

   6.16(b)

Notes Tender Offer

   6.16(b)

OFAC

   5.1(j)(ii)

OGCL

   1.1

Option Payment

   4.6(a)

Order

   5.1(j)(i)

Owned Real Property

   5.1(q)(i)

Parent

   Preamble

Parent Acquisition Proposal

   6.3(d)

 

v

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Defined Term

   Section

Parent Alternative Acquisition Agreement

   6.3(e)

Parent Award

   4.6(d)

Parent Balance Sheet

   5.2(g)

Parent Bylaws

   5.2(d)(ii)

Parent Certificate of Incorporation

   5.2(d)(ii)

Parent Change in Recommendation

   6.3(e)

Parent Common Stock

   5.2(b)(i)

Parent Disclosure Letter

   5.2

Parent Expenses

   8.5(c)

Parent Intervening Event

   6.3(d)

Parent Material Adverse Effect

   5.2(a)

Parent Preferred Stock

   5.2(b)(i)

Parent Recommendation

   5.2(c)

Parent Reports

   5.2(e)(i)

Parent Requisite Vote

   5.2(c)

Parent Stock Plans

   5.2(b)(i)

Parent Stockholders Meeting

   6.5(c)(i)

Parent Superior Proposal

   6.3(d)

Parent Termination Fee

   8.6

Payment

   8.7(b)

Payor

   8.7(b)

PBGC

   5.1(h)(v)

Permanent Financing

   6.16(c)

Person

   4.2(b)

Personal Data

   5.1(o)(vii)

Phantom Unit

   4.6(d)

Preferred Shares

   5.1(b)(i)

Proceedings

   5.1(g)

Real Property Leases

   5.1(q)(ii)

Recipient

   8.7(b)

Redacted Fee Letter

   5.2(l)

Registered IP

   5.1(o)(i)

Regulatory Actions

   6.6(d)

Representatives

   6.2(a)

Required Governmental Consents

   7.1(b)

Required Information

   6.16(c)

Revolver Cap

   6.1(b)(iv)

Revolving Credit Facility

   6.16(a)

Rollover Options

   4.6(a)

S&P

   4.2(a)

Sarbanes-Oxley Act

   5.1(e)(i)

Scripps Family Agreement

   6.5(a)

SEC

   5.1(e)(i)

Second Request

   6.6(b)

Section 409A

   4.6(b)

 

vi

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Defined Term

   Section

Securities Act

   5.1(d)(i)

Senior Executives

   6.1(a)(iii)

Series A Common Stock

   5.2(b)(i)

Series B Common Stock

   5.2(b)(i)

Series C Common Stock

   5.2(b)(i)

Series A Preferred Stock

   5.2(b)(i)

Series C Preferred Stock

   5.2(b)(i)

Shares

   4.1(a)(i)

Significant Subsidiary

   5.1(a)

Statutory Plan

   5.1(h)(i)

Stock Award Consideration

   4.6(b)(ii)

Stock Electing Share

   4.1(a)(i)(C)

Stock Election

   4.1(a)(i)(C)

Stock Election Consideration

   4.1(a)(i)(C)

Subsidiary

   5.1(a)

Substitute Financing

   6.16(a)

Surviving Company

   1.1

Takeover Statute

   5.1(l)

Tax

   5.1(n)

Tax Return

   5.1(n)

Taxable

   5.1(n)

Taxes

   5.1(n)

Termination Date

   8.2(a)

Trading Day

   4.1(a)(iv)(D)

Uncertificated Shares

   4.1(a)(ii)

Willful Breach

   8.7(a)

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (hereinafter referred to as this “Agreement”),
dated as of July 30, 2017, among SCRIPPS NETWORKS INTERACTIVE, INC., an Ohio
corporation (the “Company”), DISCOVERY COMMUNICATIONS, INC., a Delaware
corporation (“Parent”), and SKYLIGHT MERGER SUB, INC., an Ohio corporation and a
direct wholly owned Subsidiary of Parent (“Merger Sub”).

RECITALS

WHEREAS, the board of directors of the Company, by resolutions duly adopted, has
unanimously approved the merger of the Merger Sub with and into the Company with
the Company as the surviving corporation in the merger (the “Merger”) upon the
terms and subject to the conditions set forth in this Agreement and approved and
declared advisable this Agreement, and has resolved to recommend to its
shareholders the adoption of this Agreement;

WHEREAS, the board of directors of Parent, by resolutions duly adopted, has
unanimously by those voting (i) approved this Agreement and the transactions
contemplated hereby upon the terms and subject to the conditions set forth in
this Agreement, (ii) adopted and approved this Agreement and (iii) resolved to
recommend to its stockholders the approval of the issuance of shares of Series C
Common Stock in connection with the Merger as contemplated by this Agreement;

WHEREAS, the board of directors of Merger Sub, by resolutions duly adopted, has
unanimously approved the Merger upon the terms and subject to the conditions set
forth in this Agreement, has approved and declared advisable this Agreement, and
has resolved to recommend to its shareholder the adoption of this Agreement;

WHEREAS, concurrently with the execution and delivery of this Agreement, as a
condition and inducement to the Company’s willingness to enter into this
Agreement, John C. Malone is entering into an agreement with the Company to vote
shares of Series B Common Stock held by such stockholder in favor of the
approval of the issuance of shares of Series C Common Stock in connection with
the Merger as contemplated by this Agreement;

WHEREAS, as a condition and inducement to the Company’s willingness to enter
into this Agreement, Advance/Newhouse Programming Partnership is (i) submitting
to the Company contemporaneously with the execution of this Agreement, in
respect of all shares of Series A Preferred Stock held by such stockholder, a
written consent in accordance with Section 228 of the DGCL and Article IV,
Section C.5(d) of the Parent Certificate of Incorporation consenting to Parent’s
entry into the Merger Agreement, consummation of the Merger and the other
transactions contemplated hereby for purposes of any Special Class Vote Matter
to which such actions relate and (ii) entering into an agreement with the
Company to vote shares of Series A-1 Preferred Stock that will be held by such
stockholder in favor of the approval of the issuance of shares of Series C
Common Stock in connection with the Merger as contemplated by this Agreement;

--------------------------------------------------------------------------------

WHEREAS, concurrently with the execution and delivery of this Agreement, as a
condition and inducement to Parent’s willingness to enter into this Agreement,
certain members of the Scripps family who are holders of Shares are entering
into an agreement with Parent to vote the Common Voting Shares held by such
stockholders in favor of the Merger; and

WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.

NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:

ARTICLE I

THE MERGER; CLOSING; EFFECTIVE TIME

1.1 The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, at the Effective Time, Merger Sub shall be merged with and into the
Company and the separate corporate existence of Merger Sub shall thereupon
cease. The Company shall be the surviving company in the Merger (sometimes
hereinafter referred to as the “Surviving Company”), and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises shall continue unaffected by the Merger, except as set forth in
Article II. The Merger shall have the effects specified in the Ohio General
Corporation Law (the “OGCL”).

1.2 Closing. The closing of the Merger (the “Closing”) shall take place (a) at
the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York
10153, as soon as reasonably practicable, and in no event later than three
(3) Business Days, following the day on which the last to be satisfied or waived
of each of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions) shall have been satisfied or waived
in accordance with this Agreement or (b) at such other place and time and/or on
such other date as the Company and Parent may otherwise agree in writing (the
date on which the Closing occurs, the “Closing Date”). For purposes of this
Agreement, the term “Business Day” shall mean any day of the year other than a
Saturday, Sunday or day on which banks are not required or authorized by Law to
close in New York City.

1.3 Effective Time. Immediately following the Closing, the Company and Parent
will cause a Certificate of Merger with respect to the Merger (the “Certificate
of Merger”) to be executed, acknowledged and filed with the Secretary of State
of the State of Ohio as provided in the OGCL. The Merger shall become effective
at the time when

 

2

--------------------------------------------------------------------------------

the Certificate of Merger has been duly filed with the Secretary of State of the
State of Ohio, or at such later time as may be agreed upon by the parties hereto
in writing and set forth in the Certificate of Merger in accordance with the
OGCL (the “Effective Time”).

ARTICLE II

ORGANIZATIONAL DOCUMENTS OF THE SURVIVING COMPANIES

2.1 The Articles of Incorporation. At the Effective Time, the articles of
incorporation of the Merger Sub in effect immediately prior to the Effective
Time shall be the articles of incorporation (the “Articles of Incorporation”) of
the Surviving Company, until thereafter amended as provided therein or by
applicable Law, except that references to the name of Merger Sub shall be
replaced by the name of the Company and references to the incorporator shall be
removed.

2.2 The Code of Regulations. At the Effective Time, the code of regulations of
Merger Sub in effect immediately prior to the Effective Time shall be the code
of regulations of the Surviving Company (the “Code of Regulations”), until
thereafter amended as provided therein or by applicable Law, except that
references to the name of Merger Sub shall be replaced by the name of the
Company.

ARTICLE III

DIRECTORS AND OFFICERS OF THE SURVIVING COMPANY

3.1 Directors of the Surviving Company. The parties hereto shall take all
actions necessary so that the directors of Merger Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the directors of the
Surviving Company until their successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and the Code of Regulations.

3.2 Officers of the Surviving Company. The parties hereto shall take all actions
necessary so that the officers of the Company immediately prior to the Effective
Time shall, from and after the Effective Time, be the officers of the Surviving
Company until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Articles of Incorporation and the Code of Regulations.

ARTICLE IV

EFFECT OF THE MERGER ON SECURITIES; EXCHANGE

4.1 Effect on Capital Stock.

(a) At the Effective Time, as a result of the Merger and without any action on
the part of the holder of any capital stock of the Company, Parent or Merger
Sub:

 

3

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(i) Merger Consideration. Each common voting share, $0.01 par value per share,
of the Company (the “Common Voting Shares”) and each Class A Common Share, $0.01
par value per share, of the Company (the “Class A Shares” and, collectively with
the Common Voting Shares, the “Shares” and each a “Share”) issued and
outstanding immediately prior to the Effective Time (other than (A) Shares owned
by Parent or Merger Sub and (B) Shares that are owned by shareholders
(“Dissenting Shareholders”) who have perfected and not withdrawn a demand for
appraisal rights pursuant to Section 1701.84 of the OGCL (each such Share
referred to in clauses (A) and (B) above, an “Excluded Share” and, collectively,
“Excluded Shares”)) shall be converted into the right to receive the following
consideration (the “Merger Consideration”):

(A) Each Share with respect to which an election to receive a combination of
stock and cash (a “Mixed Election”) has been properly made and not revoked
pursuant to Section 4.3 (each, a “Mixed Consideration Electing Share”) and each
Non-Electing Share shall be converted into the right to receive (1) a number of
validly issued, fully paid and nonassessable shares of Series C Common Stock
(the “Mixed Election Stock Consideration”) equal to the product of (w) the
applicable Base Exchange Ratio and (x) 0.30 and (2) an amount in cash, without
interest, equal to the sum (the “Mixed Election Cash Consideration” and,
together with the Mixed Election Stock Consideration, the “Mixed Election
Consideration”) of (y) $63.00 plus (z) the Cash Top-Up Amount, if any;

(B) Each Share with respect to which an election to receive cash (a “Cash
Election”) has been properly made and not revoked pursuant to Section 4.3 (each,
a “Cash Electing Share”) shall be converted into the right to receive an amount
in cash, without interest (the “Cash Election Consideration”), equal to the
dollar value of the Mixed Election Consideration (which, for the avoidance of
doubt, shall be calculated with the Mixed Election Stock Consideration being
valued based on the Average Parent Stock Price), except that if the product of
the number of Cash Electing Shares and the Cash Election Consideration (such
product, the “Aggregate Cash Election Amount”) exceeds the Available Cash
Election Amount, then each Cash Electing Share shall be converted into the right
to receive (1) an amount in cash, without interest, equal to the product of
(w) the Cash Election Consideration and (x) a fraction, the numerator of which
shall be the Available Cash Election Amount and the denominator of which shall
be the Aggregate Cash Election Amount (such fraction, the “Cash Fraction”) and
(2) a number of validly issued, fully paid and nonassessable shares of Series C
Common Stock equal to the product of (y) a fraction, the numerator of which
shall be an amount equal to the dollar value of the Mixed Election Consideration
(which, for the avoidance of doubt, shall be calculated with the Mixed Election
Stock Consideration being valued based on the Average Parent Stock Price) and
the denominator of which shall be the Average Parent Stock Price and (z) one
minus the Cash Fraction; and

(C) Each Share with respect to which an election to receive stock consideration
(a “Stock Election”) has been properly made and not revoked pursuant to
Section 4.3 (each, a “Stock Electing Share”) shall be converted into the right
to receive a number of validly issued, fully paid and nonassessable shares of
Series C Common Stock (the “Stock Election Consideration”) equal to the quotient
obtained by dividing (1) an amount equal to the dollar value of the Mixed
Election Consideration (which, for the avoidance of doubt, shall be calculated
with the Mixed Election Stock Consideration being valued based on the Average

 

4

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Parent Stock Price) by (2) the Average Parent Stock Price; provided that if the
Available Cash Election Amount exceeds the Aggregate Cash Election Amount, then
each Stock Electing Share shall be converted into the right to receive (3) an
amount in cash, without interest, equal to (w) the amount by which the Available
Cash Election Amount exceeds the Aggregate Cash Election Amount, divided by
(x) the number of Stock Electing Shares and (4) a number of validly issued,
fully paid and nonassessable shares of Series C Common Stock equal to the
product of (y) the quotient obtained by dividing (I) an amount equal to the
dollar value of the Mixed Election Consideration (which, for the avoidance of
doubt, shall be calculated with the Mixed Election Stock Consideration being
valued based on the Average Parent Stock Price) by (II) the Average Parent Stock
Price and (z) a fraction, the numerator of which shall be the Cash Election
Consideration minus the amount calculated in clause (3) of this paragraph and
the denominator of which shall be the Cash Election Consideration.

(ii) At the Effective Time, all of the Shares (other than Excluded Shares) shall
cease to be outstanding, shall be cancelled and shall cease to exist, and
(A) each certificate (a “Certificate”) formerly representing any of the Shares
(other than Excluded Shares) and (B) each book-entry account formerly
representing any uncertificated Shares (“Uncertificated Shares”) (other than
Excluded Shares) shall thereafter represent only the right to receive the Merger
Consideration, any distributions or dividends payable pursuant to Section 4.2(c)
and cash in lieu of any fractional shares of Series C Common Stock payable
pursuant to Section 4.2(e), without interest, in each case to be issued or paid
in consideration therefor upon surrender of such Certificate in accordance with
Section 4.2, in the case of certificated Shares, and automatically in the case
of Uncertificated Shares, and each Certificate and Uncertificated Share formerly
representing Shares owned by Dissenting Shareholders shall thereafter represent
only the rights granted to Dissenting Shareholders by the OGCL.

(iii) Maximum Merger Consideration. For the avoidance of doubt:

(A) Subject to Section 4.5, the Mixed Election Cash Consideration shall not
exceed (1) in the event that Parent shall not have made the Cash Top-Up
Election, $63.00 or (2) in the event that Parent shall have made the Cash Top-Up
Election, $66.38; and

(B) The aggregate amount of cash paid (not including cash paid pursuant to
Section 4.2(e)), and the aggregate number of shares of Series C Common Stock
issued, to all of the holders of Shares pursuant to this Section 4.1(a) shall
not exceed the aggregate amount of cash that would have been paid, and the
aggregate number of shares of Series C Common Stock that would have been issued,
to all of the holders of Shares had the Mixed Election been made with respect to
each Share.

(iv) Certain Definitions with Respect to the Merger Consideration.

(A) The term “Available Cash Election Amount” means the difference between
(1) the product of the Mixed Election Cash Consideration and the total number of
Shares issued and outstanding immediately prior to the Effective Time (other
than Excluded Shares) minus (2) the product of the number of Mixed Consideration
Electing Shares (including any Non-Electing Shares) and the Mixed Election Cash
Consideration.

 

5

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(B) The term “Base Exchange Ratio” means the following (in each case rounded to
four decimal places):

 

  I. if the Average Parent Stock Price is greater than $28.70, then the Base
Exchange Ratio shall be 3.1360;

 

  II. if the Average Parent Stock Price is greater than or equal to $22.32 but
less than or equal to $28.70, then the Base Exchange Ratio shall equal the
quotient obtained by dividing (y) $90.00 by (z) the Average Parent Stock Price;
or

 

  III. if the Average Parent Stock Price is less than $22.32, then the Base
Exchange Ratio shall be 4.0320.

Notwithstanding the foregoing, if the Base Exchange Ratio would be greater than
3.5280 but for this paragraph, then Parent shall have the right, in its sole
discretion, to reduce the Base Exchange Ratio to no less than 3.5280 (such
election, the “Cash Top-Up Election” and, the amount by which Parent has decided
to reduce the Base Exchange Ratio (rounded to four decimal places), the “Base
Exchange Ratio Reduction”) and, in such case, the Base Exchange Ratio shall be
the amount determined by Parent pursuant to this paragraph. Parent shall make a
public announcement of its determination to make a Cash Top-Up Election, and the
Base Exchange Ratio Reduction, to the extent applicable, at least two
(2) Trading Days prior to the Closing Date.

The term “Cash Top-Up Amount” means:

 

  I. in the event that Parent shall have made the Cash Top-Up Election, an
amount in cash, without interest, equal to the product of (x) the Base Exchange
Ratio Reduction, (y) 0.30 and (z) the Average Parent Stock Price (such product,
for the avoidance of doubt, not to exceed $3.38);

 

  II. in the event that Parent shall not have made the Cash Top-Up Election,
zero.

(C) The term “Average Parent Stock Price” means the volume weighted average
price of Series C Common Stock on NASDAQ Global Select Market (“NASDAQ”) (as
reported by Bloomberg L.P. or, if not reported therein, in another authoritative
source mutually selected by the parties) measured on a cumulative basis over the
fifteen (15) consecutive Trading Days ending on (and including) the Trading Day
that is three (3) Trading Days prior to the date of the Effective Time.

(D) The term “Trading Day” means a day on which shares of Series C Common Stock
are traded on the NASDAQ.

(v) Cancellation of Excluded Shares. Subject to Section 4.4, each Excluded Share
shall, by virtue of the Merger and without any action on the part of the
Company, Parent, Merger Sub or the holder thereof, cease to be outstanding,
shall be cancelled without payment of any consideration therefor and shall cease
to exist.

 

6

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(b) Merger Sub. Each common share, $0.01 par value per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable share
of common stock, $0.01 par value per share, of the Surviving Company, and such
converted shares shall constitute the only outstanding shares of capital stock
of the Surviving Company.

4.2 Exchange of Certificates.

(a) Exchange Agent. At the Effective Time, Parent shall deposit, or cause to be
deposited, with an exchange agent selected by Parent with the Company’s prior
approval, which shall not be unreasonably withheld, conditioned or delayed (the
“Exchange Agent”), for the benefit of the holders of Shares, (i) an aggregate
number of shares of Series C Common Stock to be issued in uncertificated form or
book-entry form and (ii) an aggregate amount of cash, in each case, comprising
approximately the amounts required to be delivered pursuant to Section 4.1(a) in
respect of Shares. In addition, Parent shall deposit, or cause to be deposited,
with the Exchange Agent, as necessary from time to time after the Effective
Time, any dividends or other distributions payable pursuant to Section 4.2(c)
with respect to the Series C Common Stock issued pursuant to the Merger with
respect to Shares with a record and payment date after the Effective Time and
prior to the surrender of such Shares and cash in lieu of any fractional shares
payable pursuant to Section 4.2(e). All shares of Series C Common Stock and
cash, together with the amount of any dividends and distributions deposited with
the Exchange Agent pursuant to this Section 4.2(a), shall hereinafter be
referred to as the “Exchange Fund”. The Exchange Agent shall invest the cash
portion of the Exchange Fund as directed by Parent; provided that (i) such
investments shall be an obligation of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s
Investors Service, Inc. (“Moody’s”) or Standard & Poor’s Corporation (“S&P”),
respectively, or in certificates of deposit, bank repurchase agreements or
bankers’ acceptances of commercial banks and (ii) no such investment (or losses
thereon) shall affect the amount of the aggregate cash portion of the Merger
Consideration payable to the holders of Shares pursuant to Section 4.1(a). To
the extent that there are losses with respect to such investments, or the
Exchange Fund diminishes for other reasons below the level required to make
prompt cash payment of the Merger Consideration as contemplated hereby, Parent
shall promptly replace or restore the cash in the Exchange Fund lost through
such investments or other events so as to ensure that the Exchange Fund is at
all times maintained at a level sufficient to make such cash payments. No later
than five (5) Business Days prior to the Closing, Parent shall enter into an
agreement with the Exchange Agent, in form and substance reasonably satisfactory
to the Company (which confirmation of satisfaction shall not be unreasonably
withheld, conditioned or delayed), to effect the applicable terms of this
Agreement.

(b) Exchange Procedures. Promptly after the Effective Time (and in any event
within five (5) Business Days thereafter), Parent shall cause the Exchange Agent
to mail to each holder of record of Certificates (other than Excluded Shares or
any holder of a Certificate who properly made and did not revoke a Mixed
Election, a Cash Election or a Stock Election pursuant to Section 4.3) a letter
of transmittal in customary form advising such holder of the

 

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effectiveness of the Merger and the conversion of its Shares into the right to
receive the Merger Consideration, and specifying that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates (or affidavits of loss in lieu of the Certificates
as provided in Section 4.2(g)) and instructions for use in effecting the
surrender of the Certificates (or affidavits of loss in lieu of the Certificates
as provided in Section 4.2(g)). Each holder of a Certificate who properly made
and did not revoke a Mixed Election, a Cash Election or a Stock Election
pursuant to Section 4.3 shall be entitled to receive in exchange therefor the
Mixed Election Consideration, the Cash Election Consideration or the Stock
Election Consideration, as applicable, for each Share formerly represented by
such Certificate, any dividends or other distributions payable pursuant to
Section 4.2(c) and cash in lieu of any fractional shares of Series C Common
Stock payable pursuant to Section 4.2(e), and the Certificate so surrendered
shall forthwith be cancelled. Each holder of a Certificate representing
Non-Electing Shares, upon the surrender of such Certificate (or affidavit of
loss in lieu thereof as provided in Section 4.2(g)) to the Exchange Agent in
accordance with the terms of such transmittal materials, shall be entitled to
receive in exchange therefor the Mixed Election Consideration for each
Non-Electing Share formerly represented by such Certificate, any dividends or
other distributions payable pursuant to Section 4.2(c) and cash in lieu of
fractional shares of Series C Common Stock payable pursuant to 4.2(e), and the
Certificate so surrendered shall forthwith be cancelled. No interest will be
paid or accrued on any amount payable upon due surrender of the Certificates. In
the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, the proper number of shares of Series C Common
Stock in uncertificated form, together with a check for any cash to be paid upon
due surrender of the Certificate and any other dividends or distributions in
respect thereof, may be issued and/or paid to such a transferee if the
Certificate formerly representing such Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been paid
or are not applicable. If any shares (or evidence of shares in book-entry form)
of Series C Common Stock are to be issued to a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the Person requesting such exchange shall pay
any stock transfer or other Taxes required by reason of the issuance of shares
(or evidence of shares in book-entry form) of Series C Common Stock in a name
other than that of the registered holder of the Certificate surrendered, or
shall establish to the satisfaction of Parent or the Exchange Agent that such
Taxes have been paid or are not applicable.

For the purposes of this Agreement, the term “Person” shall mean any individual,
corporation (including not-for-profit), general or limited partnership, limited
liability company, joint venture, estate, trust, association, organization,
Governmental Entity or other entity of any kind or nature.

(c) Distributions with Respect to Unexchanged Shares. All shares of Series C
Common Stock to be issued pursuant to the Merger shall be deemed issued and
outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by Parent in respect of the Series C Common Stock, the
record date for which is after the Effective Time, that declaration shall
include dividends or other distributions in respect of all shares of Series C
Common Stock issuable in the Merger. No dividends or other distributions in
respect of the Series C Common Stock issued pursuant to the Merger shall be paid
to any holder of any unsurrendered Certificate until such Certificate (or
affidavit of loss in lieu thereof as provided in

 

8

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Section 4.2(g)) is surrendered for exchange in accordance with this Article IV.
Subject to the effect of applicable Laws, following surrender of any such
Certificate (or affidavit of loss in lieu thereof as provided in
Section 4.2(g)), there shall be issued and/or paid to the holder of the whole
shares of Series C Common Stock issued in exchange therefor, without interest
thereon, (A) at the time of such surrender, the dividends or other distributions
with a record date after the Effective Time theretofore payable with respect to
such whole shares of Series C Common Stock and not paid and (B) at the
appropriate payment date, the dividends or other distributions payable with
respect to such whole shares of Series C Common Stock with a record date after
the Effective Time, but with a payment date subsequent to surrender.

(d) Transfers. From and after the Effective Time, there shall be no transfers on
the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.

(e) Fractional Shares. Notwithstanding any other provision of this Agreement, no
fractional shares of Series C Common Stock will be issued and any holder of
Shares entitled to receive a fractional share of Series C Common Stock but for
this Section 4.2(e) shall be entitled to receive a cash payment in lieu thereof,
which payment shall be calculated by the Exchange Agent (after aggregating all
fractional Shares otherwise due to such holder) and shall represent such
holder’s proportionate interest in a share of Series C Common Stock based on the
Average Parent Stock Price.

(f) Termination of Exchange Fund. Any portion of the Exchange Fund (including
the proceeds of any investments of the Exchange Fund) that remains unclaimed by
the shareholders of the Company for one-hundred and eighty (180) days after the
Effective Time shall be delivered, at Parent’s option, to Parent. Any holder of
Shares (other than Excluded Shares) who has not theretofore complied with this
Article IV shall thereafter look only to Parent for delivery of any shares of
Series C Common Stock and payment of cash and any dividends and other
distributions in respect of the Series C Common Stock to be issued or paid
pursuant to the provisions of this Article IV (after giving effect to any
required Tax withholdings as provided in Section 4.2(h)) upon due surrender of
its Certificates (or affidavits of loss in lieu of the Certificates as provided
in Section 4.2(g)), without any interest thereon. Notwithstanding the foregoing,
none of the Surviving Company, Parent, the Exchange Agent or any other Person
shall be liable to any former holder of Shares for any amount properly delivered
to a public official pursuant to applicable abandoned property, escheat or
similar Laws. To the fullest extent permitted by Law, immediately prior to the
date any Merger Consideration would otherwise escheat to or become the property
of any Governmental Entity, such Merger Consideration shall become the property
of the Surviving Company, free and clear of all claims or interest of any Person
previously entitled thereto.

(g) Lost, Stolen or Destroyed Certificates. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by Parent, the posting by such Person of a bond in customary
amount and upon such terms as may be required by Parent as indemnity against any
claim that may be made against it, the Exchange Agent or the Surviving Company
with respect to such Certificate, the Exchange Agent will issue in exchange for
such lost, stolen or destroyed Certificate, the cash, shares of Series C Common
Stock and any

 

9

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dividends and other distributions in respect of the Series C Common Stock that
would have been issuable or payable pursuant to the provisions of this Article
IV (after giving effect to any required Tax withholdings as provided in
Section 4.2(h)) had such lost, stolen or destroyed Certificate been surrendered.

(h) Withholding Rights. Each of Parent, Merger Sub and the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the “Code”), or any other applicable state, local or foreign
Tax Law. To the extent that amounts are so withheld by Parent, Merger Sub or the
Exchange Agent, as the case may be, such withheld amounts (i) shall be remitted
by Parent, Merger Sub or the Exchange Agent, as applicable, to the applicable
Governmental Entity and (ii) shall be treated for all purposes of this Agreement
as having been paid to the Person in respect of which such deduction and
withholding was made by Parent, Merger Sub or the Exchange Agent, as the case
may be.

(i) Uncertificated Shares. Any holder of Uncertificated Shares that are
Non-Electing Shares shall not be required to deliver a Certificate or an
executed letter of transmittal to the Exchange Agent to receive the Mixed
Election Consideration, any dividends or other distributions payable pursuant to
Section 4.2(c) and cash in lieu of any fractional shares of Series C Common
Stock payable pursuant to Section 4.2(e) that such holder is entitled to
receive. In lieu thereof, each registered holder of one or more Uncertificated
Shares (other than any holder of an Uncertificated Share who properly made and
did not revoke a Mixed Election, a Cash Election or a Stock Election pursuant
Section 4.3) shall automatically upon the Effective Time be entitled to receive,
and the Surviving Company shall cause the Exchange Agent to pay and deliver as
soon as reasonably practicable after the Effective Time (but in no event more
than five (5) Business Days thereafter), the Mixed Election Consideration, any
dividends or other distributions payable pursuant to Section 4.2(c) and cash in
lieu of any fractional shares of Series C Common Stock payable pursuant to
Section 4.2(e) for each Uncertificated Share.

4.3 Election Procedure.

(a) Each person who, on or prior to the Election Date, is a registered holder of
Shares, other than Excluded Shares, shall be entitled to specify the number of
such holder’s Shares with respect to which such holder makes a Mixed Election, a
Cash Election or a Stock Election by complying with the procedures set forth in
this Section 4.3.

(b) Parent shall prepare and file as an exhibit to the Form S-4 a form of
election (the “Form of Election”) (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Form of Election and such Certificates to the Exchange Agent,
and which shall be in such form and shall have such other customary provisions
as Parent and the Company may reasonably agree) and the Company shall mail to
each registered holder of Shares as of the record date for the Company
Shareholders Meeting the Form of Election with the Company’s proxy statement.
The Form of Election shall be used by each registered holder of Shares (or, in
the case of nominee holders, the beneficial owner through proper instructions
and documentation) to make a Mixed Election, a Cash Election or a Stock
Election. In the event that a holder fails to make a Mixed Election, a Cash

 

10

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Election or a Stock Election with respect to any Shares held or beneficially
owned by such holder, then such holder shall be deemed to have made a Mixed
Election with respect to those Shares (each such Share, a “Non-Electing Share”).
The Company shall use its commercially reasonable efforts to make the Form of
Election available to all persons who become registered holders of Shares during
the period between the record date for the Company Shareholders Meeting and the
Election Date.

(c) Any holder’s election will be deemed properly made only if the Exchange
Agent has received at its designated office, by 5:00 p.m. (New York City time)
on (i) the date of the Company Shareholders Meeting or (ii) if the Closing Date
is more than four (4) Business Days after the date of the Company Shareholders
Meeting, the date that is two (2) Business Days preceding the Closing Date (the
“Election Date”), a Form of Election duly completed and validly executed and
accompanied by (A) Certificates representing the Shares to which such Form of
Election relates (or customary affidavits and, if required by the procedures set
forth in the Form of Election, the posting by such person of a bond in such
reasonable amount as the Form of Election may direct, as indemnity against any
claim that may be made against the Surviving Company with respect to such
Certificate) or (B) in the case of Uncertificated Shares, any additional
documents required by the procedures set forth in the Form of Election. Parent
and the Company shall publicly announce the anticipated Election Date at least
five (5) Business Days prior to the anticipated Closing Date. If the Closing
Date is delayed to a subsequent date, the Election Date shall be similarly
delayed to a subsequent date, and Parent and the Company shall promptly announce
any such delay and, when determined, the rescheduled Election Date.

(d) After a Mixed Election, a Cash Election or a Stock Election is validly made
with respect to any Shares, no further registration of transfers of such shares
shall be made on the stock transfer books of the Company, unless and until such
Mixed Election, Cash Election or Stock Election is properly revoked in
accordance with this Section 4.3. Any Mixed Election, Cash Election or Stock
Election may be revoked with respect to all or a portion of the Shares subject
thereto by the holder who submitted the applicable Form of Election by written
notice received by the Exchange Agent prior to 5:00 p.m. (New York City time) on
the Election Date. In addition, all Mixed Elections, Cash Elections and Stock
Elections shall automatically be revoked if this Agreement is terminated in
accordance with Article VIII. If a Mixed Election, a Cash Election or a Stock
Election is revoked, the Shares to which such election previously applied shall
be treated as Non-Electing Shares unless and until a Mixed Election, a Cash
Election or a Stock Election in respect of such Shares is subsequently submitted
to the Exchange Agent on or prior to the Election Date in accordance with this
Section 4.3. Certificates will not be returned to holders unless the holder so
requests.

(e) The determination of the Exchange Agent (or the joint determination of
Parent and the Company, in the event that the Exchange Agent declines to make
any such determination) shall be conclusive and binding as to whether or not a
Mixed Election, a Cash Election or a Stock Election has been properly made or
revoked pursuant to this Section 4.3 and as to when Mixed Elections, Cash
Elections and Stock Elections and revocations were received by the Exchange
Agent. The Exchange Agent (or Parent and the Company jointly, in the event that
the Exchange Agent declines to make the following computation) shall also make
all computations contemplated by Section 4.1, and absent manifest error this
computation shall be conclusive and binding. The Exchange Agent may, with the
written agreement of Parent and the Company, make any rules as are consistent
with this Section 4.3 for the implementation of Mixed Elections, Cash Elections
and Stock Elections as shall be necessary or desirable to effect such elections
in accordance with the terms of this Agreement.

 

11

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4.4 Dissenters’ Rights. No Dissenting Shareholder shall be entitled to receive
shares of Series C Common Stock or cash or any dividends or other distributions
pursuant to the provisions of this Article IV unless and until the holder
thereof shall have effectively withdrawn or lost such holder’s right to dissent
(through failure to perfect or otherwise) from the Merger under the OGCL, and
any Dissenting Shareholder shall be entitled to only such rights as are provided
by Section 1701.84 of the OGCL with respect to Shares owned by such Dissenting
Shareholder. If any Person who otherwise would be deemed a Dissenting
Shareholder shall have effectively withdrawn or lost the right to dissent
(through failure to perfect or otherwise) under Section 1701.84 of the OGCL or
if a court of competent jurisdiction shall finally determine that the Dissenting
Shareholder is not entitled to relief provided by Section 1701.84 of the OGCL
with respect to any Shares, such Shares shall thereupon be treated as though
such Shares had been converted, as of the Effective Time, into the right to
receive the Mixed Election Consideration without interest and less any required
Tax withholding. The Company shall give Parent (i) prompt written notice of any
written demands for appraisal, attempted withdrawals of such demands, and any
other instruments served pursuant to applicable Law received by the Company
relating to shareholders’ rights of appraisal and (ii) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal. The
Company shall not, except with the prior written consent of Parent, voluntarily
make any payment with respect to any demands for appraisal, offer to settle or
settle any such demands or approve any withdrawal of any such demands.

4.5 Adjustments to Prevent Dilution. In the event that the Company changes the
number of Shares or securities convertible or exchangeable into or exercisable
for any such Shares, or Parent changes the number of shares of Series C Common
Stock or securities convertible or exchangeable into or exercisable for any such
Series C Common Stock, in each case issued and outstanding prior to the
Effective Time as a result of a reclassification, stock split (including a
reverse stock split), stock dividend or distribution, recapitalization,
subdivision, or other similar transaction, the Merger Consideration shall be
equitably adjusted to eliminate the effects of such event on the Merger
Consideration.

4.6 Treatment of Equity Awards.

(a) Treatment of Stock Options. At the Effective Time, with respect to each
outstanding option to purchase Shares (a “Company Option”) under the Company
Stock Plans, whether vested or unvested, (x) if the exercise price of such
Company Option is equal to or greater than the Cash Election Consideration, such
Company Option shall terminate and be cancelled as of immediately prior to the
Effective Time, without any consideration being payable in respect thereof, and
have no further force or effect, and (y) if the exercise price of such Company
Option is less than the Cash Election Consideration, thirty percent (30%) of
such Company Options held by each holder thereof (rounded to the nearest whole
share), other than any Company Option that is not held by a Company Employee and
any Company Option held by

 

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a non-employee Director, shall be deemed to be “Rollover Options” and the
remaining Company Options (other than Company Options cancelled pursuant to
clause (x) above) shall be deemed to be “Cash-Out Options”. At the Effective
Time, automatically and without any required action on the part of the holder
thereof:

(i) each such Cash-Out Option shall terminate and be cancelled as of immediately
prior to the Effective Time in exchange for the right to receive, in accordance
with this Section 4.6(a), a lump sum cash payment in the amount equal to (i) the
number of Shares subject to the Company Option immediately prior to the
Effective Time, multiplied by (ii) the excess, if any, of the dollar value of
the Cash Election Consideration (the “Cash Award Consideration”), over the
applicable exercise price (the “Option Payment”). The Option Payment (if any)
payable under this Section 4.6(a) to each former holder of a Company Option that
was outstanding immediately prior to the Effective Time shall be paid through
the Surviving Company’s payroll to such former holder as soon as practicable
following the Effective Time (but in any event not later than ten (10) Business
Days thereafter), net of any Taxes withheld pursuant to Section 4.2(h); and

(ii) each Rollover Option shall be assumed and converted automatically into a
fully-vested option (an “Adjusted Stock Option”) to purchase, on substantially
the same terms and conditions (other than vesting) as were applicable under such
Rollover Option immediately prior to the Effective Time, the number of shares of
Series C Common Stock (rounded down to the nearest whole number of shares) equal
to the product of (A) the number of Shares subject to such Rollover Option
immediately prior to the Effective Time, multiplied by (B) the Option Exchange
Ratio, which Adjusted Stock Option shall have an exercise price per share of
Series C Common Stock equal to the quotient (rounded up to the nearest whole
cent) obtained by dividing (x) the exercise price per Share subject to such
Rollover Option immediately prior to the Effective Time, by (y) the Option
Exchange Ratio. The “Option Exchange Ratio” shall equal the quotient (rounded to
four decimal places) obtained by dividing (i) the weighted average price of the
Class A Shares on the NASDAQ on the Trading Day immediately prior to the date of
the Effective Time by (ii) the Average Parent Stock Price.

(b) Treatment of Restricted Stock Units. At the Effective Time, thirty percent
(30%) of each outstanding award of restricted stock units that is subject solely
to time-based vesting (a “Company Restricted Stock Unit”) that was granted under
the Company Stock Plans that is outstanding or payable as of immediately prior
to the Effective Time, whether vested or unvested (other than the Company
Restricted Stock Units listed on Section 4.6(b) of the Company Disclosure
Letter, which, together with the Company Performance Stock Units listed on
Section 4.6(b) of the Company Disclosure Letter, constitute all Company
Restricted Stock Units and Company Performance Stock Units that do not, by their
terms, vest upon a change of control (the “Continuing Awards”)), shall be deemed
to be “Converted Units” and the remaining seventy percent (70%) of each award of
Company Restricted Stock Units (excluding Continuing Awards) shall be deemed to
be “Cash-Out Units”. At the Effective Time, automatically and without any
required action on the part of the holder thereof:

 

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(i) each Company Restricted Stock Unit that is a Cash-Out Unit shall terminate
and be cancelled as of immediately prior to the Effective Time in exchange for
the right to receive a lump sum cash payment equal to (i) the number of Shares
subject to such Cash-Out Unit, multiplied by (ii) Cash Award Consideration; and

(ii) each Company Restricted Stock Unit that is a Converted Unit (other than
Continuing Awards) shall be assumed and converted automatically into a fully
vested restricted stock unit relating to shares of Series C Common Stock (an
“Adjusted Unit Award”) entitling the holder to receive, on substantially the
same terms and conditions (other than vesting) as were applicable under such
Converted Unit immediately prior to the Effective Time (and after giving
effective to any acceleration of vesting resulting from the consummation of the
Merger), a number of shares of Series C Common Stock (rounded down to the
nearest whole number of shares of Parent Series C Common Stock) equal to the
product of (x) the total number of Shares subject to such Converted Unit
immediately prior to the Effective Time multiplied by (y) the Stock Award
Consideration, with any fractional shares being rounded down to the nearest
whole share of Series C Common Stock. The “Stock Award Consideration” shall
equal the Stock Election Consideration determined without giving effect to the
proviso in Section 4.1(a)(i)(C).

(iii) Following the Effective Time, no such Company Restricted Stock Unit that
was outstanding immediately prior to the Effective Time shall remain outstanding
and each former holder of any such Company Restricted Stock Unit shall cease to
have any rights with respect thereto, except the right to receive the
consideration set forth in this Section 4.6(b) in exchange for such Company
Restricted Stock Unit in accordance with this Section 4.6(b) (or, with respect
to Continuing Awards, as set forth in Section 4.6(d)). The consideration payable
under this Section 4.6(b) to each former holder of a Company Restricted Stock
Unit that was outstanding immediately prior to the Effective Time shall be paid
through the Surviving Company’s payroll to, or, with respect to Converted Units,
through the grant of an Adjusted Unit Award and settlement through the issuance
of shares of Series C Common Stock in the name of, such former holder as soon as
practicable following the Effective Time (but in any event not later than ten
(10) Business Days thereafter), net of any Taxes withheld pursuant to
Section 4.2(h); provided, however, that that to the extent any such payment
would cause an impermissible acceleration event under Section 409A of the Code
(“Section 409A”), such amounts shall become vested at the Effective Time and
will be paid at the earliest time such payment would not cause an impermissible
acceleration event under Section 409A.

(c) Treatment of Performance Restricted Stock Units. At the Effective Time,
thirty percent (30%) of each outstanding award of restricted stock units that is
subject to performance-based vesting (a “Company Performance Stock Unit”) that
was granted under the Company Stock Plans that is outstanding or payable as of
immediately prior to the Effective Time, whether vested or unvested (other than
any that are Continuing Awards, shall be deemed to be Converted Units and the
remaining 70% percent of each award of Company Performance Stock Units
(excluding any that are Continuing Awards) shall be deemed to be Cash-Out Units.
At the Effective Time, automatically and without any required action on the part
of the holder thereof:

(i) each Company Performance Stock Unit that is a Cash-Out Unit shall terminate
and be cancelled as of immediately prior to the Effective Time in exchange for
the right to receive a lump sum cash payment equal to (x) the number of Shares
subject to such Cash-Out Unit that would vest assuming target levels of
achievement were met, multiplied by (y) the Cash Award Consideration; and

 

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(ii) each Company Performance Stock Unit that is a Converted Unit (other than
Continuing Awards) shall be assumed and converted automatically into a fully
vested Adjusted Unit Award entitling the holder to receive, on substantially the
same terms and conditions (other than vesting) as were applicable under such
Converted Unit immediately prior to the Effective Time (and after giving
effective to any acceleration of vesting resulting from the consummation of the
Merger), a number of shares of Series C Common Stock (rounded down to the
nearest whole number of shares of Series C Common Stock) equal to the product of
(x) the number of Shares subject to such Company Performance Stock Unit that
would vest assuming target levels of achievement were met, multiplied by (y) the
Stock Award Consideration, with any fractional shares being rounded down to the
nearest whole share of Series C Common Stock.

(iii) Following the Effective Time, no such Company Performance Stock Unit that
was outstanding immediately prior to the Effective Time shall remain outstanding
and each former holder of any such Company Performance Stock Unit shall cease to
have any rights with respect thereto, except the right to receive the
consideration set forth in this Section 4.6(c) in exchange for such Company
Performance Stock Unit in accordance with this Section 4.6(c) (or, with respect
to Continuing Awards, as set forth in Section 4.6(d)). The consideration payable
under this Section 4.6(c) to each former holder of a Company Performance Stock
Unit that was outstanding immediately prior to the Effective Time (other than
Continuing Awards) shall be paid, with respect to Cash-Out Units, through the
Surviving Company’s payroll to, or, with respect to Converted Units, through the
grant of an Adjusted Unit Award and settlement through the issuance of shares of
Series C Common Stock in the name of, such former holder as soon as practicable
following the Effective Time (but in any event not later than ten (10) Business
Days thereafter), net of any Taxes withheld pursuant to Section 4.2(h);
provided, however, that to the extent any such payment or settlement would cause
an impermissible acceleration event under Section 409A, such amounts shall
become vested at target levels of achievement at the Effective Time and will be
paid or settled at the earliest time such payment would not cause an
impermissible acceleration event under Section 409A.

(d) Continuing Awards. Each Continuing Award shall be assumed and converted
automatically into a restricted stock unit relating to shares of Series C Common
Stock (a “Parent Award”) entitling the holder to receive, on substantially the
same terms and conditions (including, for the avoidance of doubt, vesting) as
were applicable under such Continuing Award immediately prior to the Effective
Time, a number of shares of Series C Common Stock (rounded down to the nearest
whole number of shares of Series C Common Stock) equal to the product of (x) the
total number of Shares subject to such Continuing Award immediately prior to the
Effective Time multiplied by (y) the Stock Award Consideration.

(e) Phantom Stock Units. Each phantom stock unit (each, a “Phantom Unit”)
subject to the Company 2008 Deferred Compensation and Stock Plan for Directors
and outstanding immediately prior to the Effective Time shall be deemed
converted into an amount in cash equal to (i) the number of Phantom Units in the
Director’s account, multiplied by (ii) the Cash Award Consideration. The
consideration payable under this Section 4.6(e) to each former holder of a
Phantom Unit that was outstanding immediately prior to the Effective Time shall
be

 

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paid to such former holder as soon as practicable following the Effective Time
(but in any event not later than ten (10) Business Days thereafter), net of any
Taxes withheld pursuant to Section 4.2(h); provided, however, that to the extent
any such payment would cause an impermissible acceleration event under
Section 409A, such amounts will be paid at the earliest time such payment would
not cause an impermissible acceleration event under Section 409A.

(f) Further Action. At or prior to the Effective Time, the Company, the board of
directors of the Company and the Compensation Committee, as applicable, shall
adopt any resolutions and take any actions which are necessary to effectuate the
provisions of this Section 4.6 and to ensure that, notwithstanding anything to
the contrary, following the Effective Time, no Person shall have any right to
acquire any securities of the Company or to receive any payment, right or
benefit with respect to any award previously granted under any Company Stock
Plan, except the right to receive a payment, right or benefit with respect
thereto as provided in this Section 4.6.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties of the Company. Except as set forth in the
corresponding sections or subsections of the disclosure letter delivered to
Parent by the Company at the time of entering into this Agreement (the “Company
Disclosure Letter”) (it being understood that any disclosure set forth in one
section or subsection of the Company Disclosure Letter shall be deemed
disclosure with respect to, and shall be deemed to apply to and qualify, the
section or subsection of this Agreement to which it corresponds in number and
each other section or subsection of this Agreement to the extent the qualifying
nature of such disclosure with respect to such other section or subsection is
reasonably apparent on the face of such disclosure) or, as disclosed in any
Company Reports filed on or after January 1, 2017 and not less than five
(5) Business Days prior to the date of this Agreement (excluding all disclosures
(other than statements of historical fact) in any “Risk Factors” section and any
disclosures included in any such Company Reports that are cautionary, predictive
or forward looking in nature, it being agreed that this parenthetical shall not
apply to Sections 5.1(b) or (d)), the Company hereby represents and warrants to
Parent and Merger Sub as follows:

(a) Organization, Good Standing and Qualification. Each of the Company and its
Subsidiaries is a legal entity duly organized, validly existing and in good
standing under the Laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to own, lease and operate
its properties and assets and to carry on its business as presently conducted
and is qualified to do business and is in good standing as a foreign legal
entity in each jurisdiction where the ownership, leasing or operation of its
assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in good standing, or
to have such power or authority, would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. Prior to the
date of this Agreement, the Company has made available to Parent complete and
correct copies of the respective articles of incorporation and code of
regulations (or comparable organizational documents) of the Company and each of
its Significant Subsidiaries as amended to and as in effect on the date of this
Agreement.

 

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As used in this Agreement, (i) the term “Subsidiary” means, with respect to any
Person, any other Person of which at least a majority of the securities or
ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
is directly or indirectly owned or controlled by such Person and/or by one or
more of its Subsidiaries, (ii) the term “Significant Subsidiary” means any
Subsidiary of the Company or Parent, as applicable, that constitutes a
“significant subsidiary” of the Company or Parent, as applicable, within the
meaning of Rule 1-02 of Regulation S-X, (iii) the term “Affiliate” means, when
used with respect to any party, any Person who is an “affiliate” of that party
within the meaning of Rule 405 promulgated under the Securities Act,
(iv) “Company Material Adverse Effect” means any event, occurrence, fact,
condition, change, development or effect that, individually or in the aggregate,
is materially adverse to the financial condition, properties, assets, business
or results of operations of the Company and its Subsidiaries, taken as a whole,
excluding any such event, occurrence, fact, condition, change, development or
effect resulting from or arising out of: (1) changes in, or events generally
affecting, the financial, securities or capital markets, (2) general economic or
political conditions in the United States or any foreign jurisdiction in which
the Company or any of its Subsidiaries operate, including any changes in
currency exchange rates, interest rates, monetary policy or inflation,
(3) changes in, or events generally affecting, the industries in which the
Company or any of its Subsidiaries operate, (4) any acts of war, sabotage, civil
disobedience or terrorism or natural disasters (including hurricanes, tornadoes,
floods or earthquakes), (5) any failure by the Company or any of its
Subsidiaries to meet any internal or published projections, forecasts or
predictions in respect of financial performance for any period, (6) a decline in
the price of the Shares, or a change in the trading volume of the Shares, on the
NASDAQ, provided that the exceptions in clauses (5) and (6) shall not prevent or
otherwise affect a determination that any event, occurrence, fact, condition,
change, development or effect underlying such failure or decline or change (if
not otherwise falling within any of the exclusions pursuant to the other clauses
of this definition) has resulted in, or contributed to, a Company Material
Adverse Effect, (7) changes in Law, (8) changes in U.S. generally accepted
accounting principles (“GAAP”) (or authoritative interpretation thereof), (9)
the taking of any specific action expressly required by this Agreement or taken
with Parent’s written consent to the extent the effects thereof are reasonably
explained in writing by the Company prior to the time of such consent, or the
failure to take any specific action expressly prohibited by this Agreement and
as for which Parent declined to consent pursuant to Section 6.1(a), (10) the
announcement or pendency (but, for the avoidance of doubt, not the consummation)
of this Agreement and the Merger, including the impact thereof on the
relationships with customers, suppliers (including production companies),
talent, distributors, partners or employees or (11) any litigation brought by
stockholders of the Company or Parent alleging breach of fiduciary duty or
inadequate disclosure in connection with this Agreement or any of the
transactions contemplated hereby; provided, however that the events, facts,
conditions, changes, developments or effects set forth in the foregoing clauses
(1), (2), (3), (4), (7) and (8) shall be taken into account in determining
whether a “Company Material Adverse Effect” has occurred to the extent such
events, facts, conditions, changes, developments or effects have a
disproportionate adverse effect on the Company and its Subsidiaries, taken as a
whole, relative to other participants in the industries in which the Company and
its Subsidiaries operate and (v) the term “Knowledge of the Company” means the
actual knowledge of the individuals identified on Section 5.1(a)(v) of the
Company Disclosure Letter.

 

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(b) Capital Structure.

(i) The authorized capital stock of the Company consists of (A) 240,000,000
Class A Shares, (B) 60,000,000 Common Voting Shares and (C) 25,000,000 preferred
shares, par value $0.01 per share (the “Preferred Shares”). As of the close of
business on July 27, 2017, 95,956,398 Class A Shares and 33,850,481 Common
Voting Shares were issued and outstanding and no Preferred Shares were issued
and outstanding on such date. All of the outstanding Shares have been duly
authorized and validly issued and are fully paid and nonassessable, and have
been issued in compliance with all applicable securities Laws.
Section 5.1(b)(i)(A) of the Company Disclosure Letter identifies each Company
Plan pursuant to which Shares may be issued (the “Company Stock Plans”), which,
for avoidance of doubt, are the only Company Plans pursuant to which Shares may
be issued, together with the aggregate number of Class A Shares reserved for
issuance under each such Company Stock Plan and the aggregate number of such
Class A Shares that are subject to outstanding awards granted under each such
Company Stock Plan. Except as provided in the preceding sentence and except for
Shares that after the date hereof become reserved for issuance or subject to
issuance as permitted under this Agreement, the Company has no Shares reserved
for, or subject to, issuance. The Company has no Preferred Shares or other
shares of capital stock reserved for or subject to issuance (it being understood
that “other shares of capital stock” shall not include Shares).
Section 5.1(b)(i)(B) of the Company Disclosure Letter contains a correct and
complete list as of July 27, 2017 of (x) the aggregate number and kind of Shares
reserved for issuance pursuant to outstanding unexercised Company Options under
the Company Stock Plans, including the applicable grant dates, exercise prices
and expiration dates for such Company Stock Options, the number of Shares
subject to outstanding Company Restricted Stock Units under the Company Stock
Plans, including the applicable grant and vesting schedule for such Company
Restricted Stock Units, and the aggregate number and kind of Shares subject to
issuance pursuant to outstanding Company Performance Stock Units (assuming the
achievement of performance criteria at both target and maximum levels) under the
Company Stock Plans, including the applicable grant dates and performance
criteria for such Company Performance Stock Units. The Company has delivered or
made available to Parent or Parent’s Representatives copies of all Company Stock
Plans, the forms of all stock option agreements evidencing Company Options, the
forms of all agreements evidencing the Company Restricted Stock Units, Company
Performance Stock Units and Phantom Units. No Subsidiary of the Company holds
shares of capital stock of the Company. The Class A Shares constitute the only
outstanding class of securities of the Company or its Subsidiaries registered
under the Securities Act.

(ii) From the close of business on July 27, 2017 to the execution of this
Agreement, the Company has not issued any Shares except pursuant to the exercise
of Company Options or the settlement of Company Restricted Stock Units or
Company Performance Stock Units outstanding as of July 27, 2017, in accordance
with their terms and, since the close of business on July 27, 2017, except as
expressly permitted by this Agreement for the period following the date of this
Agreement, the Company has not issued any Company Options, Phantom Units,
Company Restricted Stock Units or Company Performance Stock Units. Upon any
issuance of any Shares in accordance with the terms of the Company Stock Plans,
such

 

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Shares will be duly authorized, validly issued and fully paid and nonassessable
and free and clear of any lien, charge, pledge, security interest, claim or
other encumbrance (each, a “Lien”). Each of the outstanding shares of capital
stock or other securities of each of the Company’s Subsidiaries has been duly
authorized and validly issued and is fully paid and nonassessable, and has been
issued in compliance with all applicable securities Laws, and owned by the
Company or by a direct or indirect wholly owned Subsidiary of the Company, free
and clear of any Lien (other than any Liens, except for Permitted Liens, for
Taxes not yet due and payable or that are being contested in good faith by
appropriate proceedings and as to which appropriate reserves have been recorded
in the Company’s financial statements). Except as set forth in
Section 5.1(b)(i), as of the date of this Agreement, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate the Company
or any of its Subsidiaries to issue or sell any shares of capital stock or other
equity or voting securities of the Company or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire from the Company or any
of its Subsidiaries any equity or voting securities of the Company or any of its
Subsidiaries, or giving any Person the right to receive any economic benefit or
right similar to or derived from the economic benefits and rights accruing to
holders of capital stock of the Company or any of its Subsidiaries, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Company does not, and its Subsidiaries do not, have outstanding
any bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company or its Subsidiaries on any
matter. As of the date of this Agreement, there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of the
Subsidiaries of the Company. There are no proxies, voting trusts or other
agreements or understandings to which the Company or any of the Subsidiaries of
the Company is a party or is bound with respect to the voting or registration of
the capital stock of, or other equity interests in, the Company or any of its
Subsidiaries.

(iii) Section 5.1(b)(iii) of the Company Disclosure Letter sets forth, as of the
date of this Agreement, (A) each of the Company’s Subsidiaries, its jurisdiction
of incorporation or organization and the ownership interest of the Company in
each such Subsidiary and (B) any other Person in which the Company or any of its
Subsidiaries may hold capital stock or other equity interest that has a book
value in excess of $10,000,000 (other than securities held by any employee
benefit plan of the Company or any of its Subsidiaries or any trustee, agent or
other fiduciary in such capacity under any such employee benefit plan). No
Subsidiary of the Company owns any Shares.

(c) Corporate Authority and Approval. The Company has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the Merger, subject only to (i) adoption of this Agreement by the
holders of a majority of the outstanding Class A Shares entitled to vote on such
matter at a meeting duly called and held for such purpose (the “Class A
Requisite Vote”), (ii) the adoption of this Agreement by the holders of a
majority of the outstanding Common Voting Shares entitled to vote on such matter
at a meeting duly called and held for such purposes (the “Common Shares
Requisite Vote”) and (iii) the adoption of this

 

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Agreement by the holders of a majority of the voting power of the Company
entitled to vote thereon (together with the Class A Requisite Vote and the
Common Shares Requisite Vote, the “Company Requisite Vote”). This Agreement has
been duly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating to
or affecting creditors’ rights and to general equity principles (the “Bankruptcy
and Equity Exception”). As of the date of this Agreement, the board of directors
of the Company has (i) (A) unanimously determined that the Merger is fair to,
and in the best interests of, the Company and its shareholders, (B) approved the
Merger and the other transactions contemplated hereby, (C) approved and declared
advisable this Agreement, and (D) subject to Section 6.2, resolved to recommend
the adoption of this Agreement to the holders of Class A Shares and to the
holders of Common Voting Shares (the “Company Recommendation”), and
(ii) directed that this Agreement be submitted to the holders of Shares for
their adoption. The board of directors of the Company has taken all action so
that Parent will not be an “interested shareholder” or prohibited from entering
into or consummating a “business combination” with the Company (in each case, as
such term is used in Chapter 1704 of the OGCL) as a result of the execution of
this Agreement or the consummation of the transactions in the manner
contemplated hereby. The Company Requisite Vote is the only vote of holders of
any class or series of capital stock of the Company necessary to adopt this
Agreement and to consummate the Merger and the other transactions contemplated
hereby under applicable Law or the Company Articles of Incorporation or Company
Code of Regulations.

(d) Governmental Filings; No Violations.

(i) Other than the necessary filings, notices, reports, consents, registrations,
approvals, permits, expirations of waiting periods or authorizations
(A) pursuant to Section 1.3, (B) required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”) or any applicable foreign
competition Laws (the “Foreign Competition Laws”) in connection with the Merger,
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Securities Act of 1933, as amended (the “Securities Act”), (C) to comply with
state securities or “blue-sky” Laws and (D) as may be required with or to
foreign and transnational Governmental Entities pursuant to applicable foreign
and transnational Laws regarding the provision of broadcasting or audio-visual
media services (such Governmental Entities, “Foreign Regulators”, and such Laws,
“Foreign Regulatory Laws”), no filings, notices and/or reports are required to
be made by the Company or its Subsidiaries with, nor are any consents,
registrations, approvals, permits, expirations of waiting periods or
authorizations required to be obtained by the Company or its Subsidiaries from,
any domestic, foreign, multinational or transnational governmental, competition
or regulatory authority, court, arbitral tribunal, commission, body or other
legislative, executive or judicial governmental entity or self-regulatory agency
(including any political subdivision thereof or any state-owned or
state-controlled enterprise) (each, a “Governmental Entity”) in connection with
the execution, delivery and performance of this Agreement by the Company and/or
the consummation by the Company of the Merger and the other transactions
contemplated hereby, except, in each case, those that the failure to make or
obtain would not, individually or in the aggregate, reasonably be likely to have
a Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate the Merger.

 

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(ii) The execution, delivery and performance of this Agreement by the Company do
not, and the consummation by the Company of the Merger and the other
transactions contemplated hereby will not, constitute or result in (A) a
conflict with, a breach or violation of, or a default under, the Amended and
Restated Articles of Incorporation of the Company, dated March 5, 2009 (the
“Company Articles of Incorporation”) or the Amended and Restated Code of
Regulations, dated March 5, 2009 (the “Company Code of Regulations”) or the
comparable governing instruments of any of its Significant Subsidiaries,
(B) with or without the lapse of time or the giving of notice or both, a
conflict with, a breach or violation of, a default or termination or
modification (or right of termination or modification) under, payment of
additional fees under, the loss of any benefit under, the creation or
acceleration of any obligations under, or the creation of a Lien on any of the
assets of the Company or any of its Subsidiaries pursuant to (1) any agreement,
lease, license, contract, consent, settlement, note, mortgage, indenture,
arrangement, understanding or other obligation (“Contracts”) binding upon the
Company or any of its Subsidiaries, or, (2) assuming (solely with respect to
performance of this Agreement and consummation of the Merger and the other
transactions contemplated hereby) the filings, notices, reports, consents,
registrations, approvals, permits, expirations of waiting periods and
authorizations referred to in Section 5.1(d)(i) are made or obtained and receipt
of the Company Requisite Vote, under any Law, Order or License to which the
Company or any of its Subsidiaries is subject or (C) any change in the rights or
obligations under any Contract to which the Company or any of its Subsidiaries
is a party, except, in the case of clauses (B) and (C) above, for any such
breach, violation, default, termination, modification, payment, acceleration,
creation or change that would not, individually or in the aggregate, reasonably
be likely to have a Company Material Adverse Effect.

(e) Company Reports; Financial Statements. (i) The Company has filed or
furnished, as applicable, on a timely basis, all forms, statements,
certifications, reports and documents required to be filed or furnished by it
with or to the U.S. Securities and Exchange Commission (the “SEC”) pursuant to
the Exchange Act or the Securities Act since January 1, 2015 (the “Applicable
Date”) (the forms, statements, reports and documents filed with or furnished to
the SEC since the Applicable Date and those filed with or furnished to the SEC
subsequent to the date of this Agreement, in each case as amended, the “Company
Reports”). Each of the Company Reports, at the time of its filing or being
furnished complied or, if not yet filed or furnished, will comply in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and
any rules and regulations promulgated thereunder applicable to the Company
Reports. As of their respective dates (or, if amended prior to the date of this
Agreement, as of the date of such amendment), the Company Reports did not, and
any Company Reports filed with or furnished to the SEC subsequent to the date of
this Agreement will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading.

(ii) The Company has timely responded to all comment letters from the Staff of
the SEC relating to the Company Reports, and the SEC has not asserted that any
of such responses are inadequate, insufficient or otherwise non-responsive. None
of the Company Reports filed on or prior to the date hereof is, to the Knowledge
of the Company, subject to ongoing SEC review or investigation, and there are no
inquiries or investigations by the SEC or any internal investigations pending or
threatened, in each case regarding any accounting practices of the Company.

 

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(iii) The Company is in compliance in all material respects with the applicable
listing and corporate governance rules and regulations of the NASDAQ.

(iv) The Company has established and maintains disclosure controls and
procedures required by Rule 13a-15 or 15d-15 under the Exchange Act. Such
disclosure controls and procedures are reasonably designed to ensure that
information required to be disclosed by the Company in its filings with the SEC
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms of the SEC, and that all such
information is accumulated and communicated to the Company’s management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications required pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act. The Company has established and maintains internal control
over financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable,
under the Exchange Act). Such internal control over financial reporting provides
reasonable assurance (A) regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
GAAP, (B) that receipts and expenditures of the Company and its Subsidiaries are
being made only in accordance with authorizations of management and the
directors of the Company and (C) regarding prevention or timely detection of the
unauthorized acquisition, use or disposition of the Company’s and its
Subsidiaries’ assets that could have a material effect on the Company’s
financial statements. The Company has disclosed, based on the most recent
evaluation of its Chief Executive Officer and its Chief Financial Officer prior
to the date of this Agreement, to the Company’s auditors and the audit committee
of the Company’s board of directors (x) any significant deficiencies and
material weaknesses in the design or operation of its internal control over
financial reporting that are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and
(y) any fraud, whether or not material, that involves management or other
employees who have a significant role in the Company’s internal control over
financial reporting. The Company has made available prior to the date of this
Agreement to Parent (I) either materials relating to or a summary of any
disclosure of matters described in clauses (x) or (y) in the preceding sentence
made by management of the Company to its auditors and audit committee on or
after the Applicable Date and prior to the date of this Agreement and (II) any
material communication on or after the Applicable Date and prior to the date of
this Agreement made by management of the Company or its auditors to the audit
committee as required by the listing standards of the NASDAQ, the audit
committee’s charter or professional standards of the Public Company Accounting
Oversight Board. Since the Applicable Date, no complaints from any source
regarding a material violation of accounting procedures, internal accounting
controls or auditing matters or compliance with Law, including from Company
Employees regarding questionable accounting, auditing or legal compliance
matters have, to the Knowledge of the Company, been received by the Company.

(v) Each of the consolidated balance sheets included in or incorporated by
reference into the Company Reports (including the related notes and schedules)
fairly presents or, in the case of Company Reports filed after the date of this
Agreement, will fairly present, in each case, in all material respects, the
consolidated financial position of the Company

 

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and its Subsidiaries, as of the date of such balance sheet, and each of the
consolidated statements of income, cash flows and changes in stockholders’
equity (deficit) included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents, or, in the
case of Company Reports filed after the date of this Agreement, will fairly
present, in each case, in all material respects, the results of operations,
retained earnings (loss) and changes in financial position, as the case may be,
of the Company and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to notes and normal year-end audit
adjustments that are not or will not be material in amount or effect), in each
case in accordance with GAAP consistently applied during the periods involved,
except as may be noted therein or in the notes thereto. Each of the consolidated
financial statements (including the related notes and schedules) included in or
incorporated by reference into the Company Reports complied, as of their
respective dates of filing with the SEC, in all material respects with the
published rules and regulations of the SEC with respect thereto, and were
prepared in accordance with GAAP applied on a consistent basis during the
periods indicated (except as may be indicated in the notes thereto or, in the
case of unaudited interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act).

(vi) Neither the Company nor any of its Subsidiaries has incurred any
Indebtedness, or issued or sold any debt securities or rights to acquire any
debt security of the Company or any of its Subsidiaries, the terms of which, or
the terms of any instrument under which such Indebtedness, debt securities or
rights were issued, requires the public listing of such Indebtedness, debt
securities or rights or the maintenance by the Company or any of its
Subsidiaries of registration under the Exchange Act. As used in this Agreement,
the term “Indebtedness” means, with respect to any Person, without duplication,
all obligations or undertakings by such Person (i) (A) for borrowed money
(including deposits or advances of any kind to such Person) and (B) evidenced by
bonds, debentures, notes or similar instruments, in each case with respect to
the foregoing clauses (A) and (B) including the principal, accreted value,
accrued and unpaid interest, prepayment and redemption premiums or penalties (if
any), unpaid fees and expenses and other monetary obligations with respect
thereto; (ii) for capitalized leases or to pay the deferred and unpaid purchase
price of property or equipment; (iii) pursuant to securitization or factoring
programs or arrangements; (iv) pursuant to guarantees and arrangements having
the economic effect of a guarantee of any Indebtedness of any other Person
(other than between or among any of Parent and its wholly owned Subsidiaries or
between or among the Company and its wholly owned Subsidiaries); (v) to maintain
or cause to be maintained the financing or financial position of others;
(vi) net cash payment obligations of such Person under swaps, options,
derivatives and other hedging Contracts or arrangements that will be payable
upon termination thereof (assuming termination on the date of determination) or
(vii) letters of credit, bank guarantees, and other similar Contracts or
arrangements entered into by or on behalf of such Person to the extent they have
been drawn upon.

(vii) None of the Company or its consolidated Subsidiaries is a party to or has
any obligation or other commitment to become a party to any securitization
transaction, off-balance sheet partnership or any similar Contract (including
any structured finance, special purpose or limited purpose entity, on the other
hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of
Regulation S-K under the Exchange Act)) where the result, purpose or intended
effect of such Contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company in any of the Company’s
published financial statements or other Company Reports.

 

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(f) Absence of Certain Changes. Since December 31, 2016 through the date hereof,
there has not been any event, occurrence, fact, condition, change, development
or effect which has had or would, individually or in the aggregate, reasonably
be likely to have a Company Material Adverse Effect. Since March 31, 2017 and
through the date of this Agreement, the Company and its Subsidiaries have
conducted their respective businesses in the ordinary course of such businesses
consistent with past practice in all material respects, and there has not been
any action taken by the Company or any of its Subsidiaries that, if taken during
the period from the date of this Agreement through the Effective Time without
Parent’s consent, would constitute a breach of, or would require consent of
Parent under, clauses (i), (ii), (iv), (v), (ix) or (x) of Section 6.1(a).

(g) Litigation and Liabilities. There are no civil, criminal or administrative
actions, suits, claims, hearings, arbitrations, investigations or other
proceedings (“Proceedings”), pending or, to the Knowledge of the Company,
threatened in writing against the Company or any of its Subsidiaries, or against
any present or former officer or director of the Company or any of its
Subsidiaries in such individual’s capacity as such, except for those that would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. There are no obligations or liabilities of the Company
or any of its Subsidiaries, whether or not accrued, contingent or otherwise
other than (i) liabilities or obligations disclosed, reflected, reserved against
or otherwise provided for in the consolidated balance sheet of the Company as of
March 31, 2017 and the notes thereto set forth in the Company’s quarterly report
on Form 10-Q for the fiscal quarter ended March 31, 2017 (the “Company Balance
Sheet”); (ii) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since March 31, 2017; (iii) liabilities
or obligations arising out of this Agreement or the transactions contemplated
hereby; or (iv) liabilities or obligations that would not, individually or in
the aggregate, reasonably be likely to have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries is a party to or subject to the
provisions of any Order, stipulation or settlement of or with any Governmental
Entity that would, individually or in the aggregate, reasonably be likely to
have a Company Material Adverse Effect (except to the extent expressly consented
to by Parent pursuant to Section 6.6) or that would prevent, materially delay or
materially impair the ability of the Company to consummate the Merger.

(h) Employee Benefits.

(i) For the purposes of this Agreement, the term “Company Plan” shall mean any
benefit and compensation plan, policy, program or arrangement maintained,
sponsored or contributed to (or required to be contributed to) by the Company or
any of its Subsidiaries or under which the Company or any of its Subsidiaries
has any liability covering or for the benefit of any current or former employees
of the Company or any of its Subsidiaries (“Company Employees”) or any current
or former directors of the Company or any of its Subsidiaries, including
“employee benefit plans” within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), and any incentive
and bonus, deferred compensation, retention, stock purchase, employment,
retirement, profit sharing, pension, severance, change-in-control, termination,
restricted stock, stock option, stock

 

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appreciation rights or stock based plans, programs, agreements or arrangements,
excluding any statutory plans (a “Statutory Plan”). Each material Company Plan
as of the date of this Agreement is listed in Section 5.1(h)(i) of the Company
Disclosure Letter. True and complete copies of each of the material Company
Plans (or, if unwritten, a written summary thereof), and all amendments thereto,
and to the extent applicable, any related trust or other funding vehicle, and
the most recent determination letter received from the IRS with respect to each
Company Plan intended to qualify under Section 401 of the Code, have been
provided or made available to Parent on or prior to the date of this Agreement.

(ii) All Company Plans have been maintained, operated and administered in
compliance with their terms, applicable Laws (including, if applicable, ERISA
and the Code) and any applicable CBA and the Company and its Subsidiaries have
complied with all Statutory Plans in accordance with their terms and applicable
Law, except as would not, individually or in the aggregate, reasonably be likely
to have a Company Material Adverse Effect.

(iii) Each Company Plan that is subject to ERISA that is an “employee pension
benefit plan” within the meaning of Section 3(2) of ERISA (a “Company Pension
Plan”) intended to be qualified under Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service (the “IRS”)
and, to the Knowledge of the Company, circumstances do not exist that are likely
to result in the loss of the qualification of such plan under Section 401(a) of
the Code. Except as would not, individually or in the aggregate, reasonably be
likely to have a Company Material Adverse Effect, each non-U.S. Company Plan to
the extent required to be registered or approved by any Governmental Entity, has
been registered with, or approved by, such Governmental Entity and, to the
Knowledge of the Company, nothing has occurred that would adversely affect such
registration or approval.

(iv) No liability under Title IV of ERISA has been or is expected to be incurred
by the Company or any of its Subsidiaries with respect to any ongoing, frozen or
terminated “single-employer plan”, within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code (a “Company ERISA Affiliate”),
except as would not, individually or in the aggregate, reasonably be likely to
have a Company Material Adverse Effect. Neither the Company, nor any of its
Subsidiaries nor any of the Company ERISA Affiliates has maintained,
established, participated in or contributed to, or is or has been obligated to
contribute to, or has otherwise incurred any obligation or liability (including
any contingent liability) under, a “multiemployer plans” within the meaning of
Section 3(37) of ERISA (a “Multiemployer Plan”) in the last six (6) years.

(v) No notice of a “reportable event”, within the meaning of Section 4043 of
ERISA for which the reporting requirement has not been waived or extended, other
than pursuant to Pension Benefit Guaranty Corporation (“PBGC”) Reg.
Section 4043.33 or 4043.66, has been required to be filed for any Company
Pension Plan or by any Company ERISA Affiliate within the twelve (12) month
period ending on the date of this Agreement. No notices have been required to be
sent to participants and beneficiaries or the PBGC under Section 302 or 4011 of
ERISA or Section 412 of the Code.

 

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(vi) All contributions required to be made by the Company or its Subsidiaries
under each Company Plan and each Statutory Plan have been timely made and all
obligations in respect of each Company Plan have been properly accrued and
reflected in the most recent consolidated balance sheet filed or incorporated by
reference in the Company Reports prior to the date of this Agreement, except as
would not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect.

(vii) Neither any Company Pension Plan nor any single-employer plan of a Company
ERISA Affiliate has an “accumulated funding deficiency” (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA and no
Company ERISA Affiliate has an outstanding funding waiver. Neither any Company
Pension Plan nor any single-employer plan of a Company ERISA Affiliate has been
required to file information pursuant to Section 4010 of ERISA for the current
or most recently completed plan year. It is not reasonably anticipated that
required minimum contributions to any Company Pension Plan under Section 412 of
the Code will be materially increased by application of Section 412(l) of the
Code. Neither the Company nor any of its Subsidiaries has provided, or is
required to provide, security to any Company Pension Plan or to any
single-employer plan of a Company ERISA Affiliate pursuant to Section 401(a)(29)
of the Code. With respect to any Company Pension Plan subject to the minimum
funding requirements of Section 412 of the Code or Title IV of ERISA, (1) no
such plan is, or is expected to be, in “at-risk” status (within the meaning of
Section 303(i)(4)(A) of ERISA or Section 430(i)(4)(A) of the Code), (2) no
unsatisfied liability (other than for premiums to the PBGC) under Title IV of
ERISA has been, or is expected to be, incurred by the Company or any of its
Subsidiaries and (3) the PBGC has not instituted proceedings to terminate any
such Company Pension Plan.

(viii) As of the date of this Agreement, there are no material pending or, to
the Knowledge of the Company, threatened Proceedings relating to the Company
Plans, other than routine claims for benefits.

(ix) Neither the Company nor any of its Subsidiaries has any material liability
in respect of post-retirement health, medical or life insurance benefits to any
employee, officer, director or individual consultant of the Company or its
Subsidiaries (whether current, former or retired) or their beneficiaries, other
than pursuant to Part 6 of Title I of ERISA or Section 4980B of the Code, any
foreign Law or any individual employment agreement or any severance plan, policy
or practice listed in Section 5.1(h)(i) of the Company Disclosure Letter.

(x) Except as expressly contemplated by this Agreement or as set forth on
Section 5.1(h)(x) of the Company Disclosure Letter, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby would reasonably be expected to, either alone or in combination with any
other event, (i) result in any material payment becoming due to any Company
Employee, officer or director, or satisfy any prerequisite to any payment or
benefit to any Company Employee, officer or director, (ii) materially increase
the amount or value of any compensation or benefits under any Company Plan or
otherwise payable to any Company Employee, officer or director, or (iii) result
in the acceleration of the time of payment, vesting or funding of any such
compensation or benefits and (iv) no such amount or benefit will constitute an
“excess parachute payment” within the meaning of Section 280G of the Code.
Except as set forth on Section 5.1(h)(x) of the Company Disclosure

 

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Letter, neither the Company nor any of its Subsidiaries has any obligation to
gross-up, indemnify or otherwise reimburse any current or former employee,
director or other independent contractor of the Company or any of its
Subsidiaries for any excise or additional tax, interest or penalties incurred by
such individual under Section 409A of the Code. The Company has made available
to Parent copies of Section 280G calculations prepared in good faith (whether or
not final) with respect to payments to disqualified individuals that may be made
in connection with the transactions contemplated by this Agreement.

(i) Labor Matters.

(i) Except as would not, individually or in the aggregate, reasonably be likely
to result in a Company Material Adverse Effect, (A) neither the Company nor any
of its Subsidiaries is the subject of any Proceeding asserting that the Company
or any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel the Company to bargain with any labor union or labor organization,
(B) nor is there pending or, to the Knowledge of the Company, threatened, any
labor strike, walkout, work stoppage, slow-down or lockout affecting Company
Employees. On and after the date of this Agreement, there has been no labor
strike, walkout, work stoppage, slow-down or lockout affecting Company
Employees. None of the employees of the Company or any of its Subsidiaries is
represented by a works council, labor union, and, to the Knowledge of the
Company, there are no organizational efforts with respect to the formation of a
collective bargaining unit being made or threatened involving employees of the
Company or any of its Subsidiaries and neither the Company nor any of its
Subsidiaries is a party to or otherwise bound by work rules or a collective
bargaining agreement or other similar Contract with a works council, labor union
or labor organization (collectively, “CBAs”).

(ii) The Company is in compliance with all applicable Laws governing employment
or labor, including all contractual commitments and all such Laws relating to
wages, hours, terms and conditions of employment, the Workers’ Adjustment and
Retraining Notification Act (and any similar foreign, provincial, state or local
statute or regulation), worker classification, contractors, immigration,
collective bargaining, discrimination, civil rights, safety and health and
workers’ compensation except as would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. The Company does
not have any material requirement under Contract or Law to provide notice to, or
to enter into any consultation procedure with, any labor union or other
organization in connection with the execution of this Agreement or the
transactions contemplated by this Agreement.

(j) Compliance with Laws, Licenses.

(i) The businesses of each of the Company and its Subsidiaries since the
Applicable Date have not been, and are not being, conducted in violation of any
applicable federal, state, local, foreign or transnational law, statute or
ordinance, common law, or any rule or regulation (collectively, “Laws”) or any
order, judgment, injunction, ruling, writ, award or decree of any Governmental
Entity (collectively, “Order”), except for such violations that would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. No investigation or review by any Governmental Entity
with respect to the Company or any of its Subsidiaries is pending or, to the
Knowledge of the Company, threatened, nor has any Governmental Entity indicated
an intention to conduct the same, except for such investigations

 

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or reviews the outcome of which would not, individually or in the aggregate,
reasonably be likely to have a Company Material Adverse Effect. Except as would
not, individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect, the Company and its Subsidiaries possess each permit,
license, certification, approval, registration, consent, authorization,
franchise, concession, variance, exemption and order issued or granted by a
Governmental Entity (collectively, “Licenses”) necessary to conduct their
respective businesses, since the Applicable Date have been in compliance with
all terms and conditions of such Licenses, no such Licenses are subject to any
actual or possible revocation, withdrawal, suspension, cancellation, termination
or modification, and since the Applicable Date have not received written notice
from any Governmental Entity alleging a conflict with or breach of any License.
Notwithstanding the foregoing, this Section 5.1(j) shall not apply with respect
to Taxes, which shall be covered exclusively by Section 5.1(n) or Environmental
Laws, which shall be covered exclusively by Section 5.1(m).

(ii) (A) The Company, its Subsidiaries and, to the Knowledge of the Company,
their respective officers, directors, employees and agents are in compliance
with and since July 1, 2012 have complied in all material respects with: (I) the
provisions of the U.S. Foreign Corrupt Practices Act of 1977, as amended (15
U.S.C. § 78dd-1, et seq.) (“FCPA”) applicable to the Company, its Subsidiaries
and such officers, directors, employees and agents, and (II) the provisions of
all applicable anti-bribery, anti-corruption, anti-money laundering and
sanctions Laws of each jurisdiction in which the Company and its Subsidiaries
operate or have operated and in which any agent thereof is conducting or has
conducted business involving the Company or any of its Subsidiaries. Since
July 1, 2012, the Company, its Subsidiaries and, to the Knowledge of the
Company, their respective officers, directors, employees and agents have not
paid, offered or promised to pay, or authorized or ratified the payment,
directly or indirectly, of any monies or anything of value to any national,
provincial, municipal or other Government Official or any political party or
candidate for political office for the purpose of corruptly influencing any act
or decision of such official or of the government to obtain or retain business,
or direct business to any person or to secure any other improper benefit or
advantage, in each case in violation of the FCPA or any Laws described in clause
(II). Since July 1, 2012, the Company, its Subsidiaries, and, to the Knowledge
of the Company, their respective officers, directors, employees and agents have
not engaged directly or indirectly in transactions connected with any
government, country, or other individual or entity that is the target of U.S.
economic sanctions administered by the U.S. Treasury Department Office of
Foreign Assets Control (“OFAC”) or the target of any other applicable sanctions
Laws, including any transactions with specially designated nationals or blocked
persons designated by OFAC. For purposes of this provision, “Government
Official” means any official, officer, employee, or representative of, or any
Person acting in an official capacity for or on behalf of, any Governmental
Entity, and includes any official or employee of any directly or indirectly
government-owned or -controlled entity, and any officer or employee of a public
international organization, as well as any person acting in an official capacity
for or on behalf of any such government or department, agency, or
instrumentality, or for or on behalf of any such public international
organization.

(B) The Company and its Subsidiaries have instituted and maintain policies and
procedures designed to ensure compliance with the FCPA and other applicable
anti-bribery, anti-corruption, anti-money laundering and sanctions Laws in each
jurisdiction in which the Company and its Subsidiaries operate.

 

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(C) Neither the Company nor any of its Subsidiaries, nor, to the Knowledge of
the Company, any director, manager or employee of the Company or any of its
Subsidiaries (in his or her capacity as a director, manager or employee of the
Company or any of its Subsidiaries), are, and since July 1, 2012, have been,
subject to any actual, pending, or, to the Knowledge of the Company, threatened
civil, criminal, or administrative actions, suits, demands, claims, hearings,
notices of violation, investigations, proceedings, demand letters, settlements,
or enforcement actions, or made any voluntary disclosures to any Governmental
Entity, involving the Company or any of its Subsidiaries relating to the FCPA or
any other applicable anti-bribery, anti-corruption, anti-money laundering or
sanctions Laws.

(k) Certain Contracts. Section 5.1(k) of the Company Disclosure Letter sets
forth a list as of the date of this Agreement of each Contract to which either
the Company or any of its Subsidiaries is a party or bound, other than Contracts
solely among the Company and its wholly owned Subsidiaries, which (A) provides
that any of them will not compete with any other Person, or which grants “most
favored nation” protections to the counterparty to such Contract, in each case
that is either of the type required to be listed pursuant to clause (K) below,
or from and after the Effective Time would be or would purport to be binding
upon Parent or any of its Subsidiaries (other than the Company and its
Subsidiaries) in a manner that would be material, (B) purports to limit in any
material respect either the type of business in which the Company or its
Subsidiaries may engage or the manner or locations in which any of them may so
engage in any business, which Contract either involves payments or receipts in
excess of $20,000,000 in any year, or from and after the Effective Time would be
or would purport to be binding upon Parent or any of its Subsidiaries (other
than the Company and its Subsidiaries) in a manner that would be material,
(C) requires the Company or its Affiliates to deal exclusively with any Person
or group of related Persons, which Contract either involves payments or receipts
in excess of $20,000,000 in any year, or from and after the Effective Time,
would be or would purport to be binding on Parent or its Affiliates (other than
any licenses or other Contracts entered into in the ordinary course), (D) is
material to the formation, creation, operation, management or control of any
partnership or joint venture, the book value of the Company’s investment in
which exceeds $10,000,000, (E) is a Contract for the lease of real or personal
property providing for annual payments of $5,000,000 or more, (F) is required to
be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of
Regulation S-K under the Securities Act, (G) contains a put, call or similar
right pursuant to which the Company or any of its Subsidiaries would be required
to purchase or sell, as applicable, any equity interests of any Person or assets
at a purchase price which would reasonably be likely to exceed, or the fair
market value of the equity interests or assets of which would be reasonably
likely to exceed, $10,000,000, (H) was entered into with Affiliates of the
Company or any of its Subsidiaries (other than the Company and its Subsidiaries)
that is not a Company Plan, (I) is a CBA or other Contract to or with any labor
union or other employee representative of a group of employees, (J) relates to
Indebtedness in excess of $10,000,000 (other than arrangements entered into by
and among the Company and any of its Subsidiaries), (K) is an Affiliation
Contract generating annual license fees in excess of $20,000,000, (L) was
entered into after the Applicable Date involving the acquisition or disposition,
directly or indirectly (by merger or otherwise), of assets (other than licenses
of Intellectual Property in the ordinary course of business) or capital stock or
other equity interests for aggregate consideration (in one or a series of
transactions) under such Contract of $10,000,000 or more and which includes
ongoing, as of the date of this Agreement, indemnity obligations, purchase price
adjustments, earn-out or similar provisions, (M) is with any

 

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Governmental Entity and is material to the Company and its Subsidiaries, taken
as a whole, (N) is an Affiliation Contract for linear distribution in the United
States of Company’s HGTV, Food Network, Travel Channel, Cooking Channel, DIY
Network, and Great American Country linear programming services by virtual-MVPDs
(as that term is understood in the industry) or is an Affiliation Contract for
subscription video on demand distribution in the United States of the Company’s
Programming in any of the top three subscription video on demand services in the
United States, which top three subscription video on demand services are set
forth on Section 5.1(N) of the Company Disclosure Letter, (O) is for the
acquisition, lease or servicing of satellite transponders and other uplink and
downlink and terrestrial transmission (including fiber optic) arrangements
relating to the distribution of the Company’s and its Subsidiaries’ programming
and is material to the Company and its Subsidiaries, taken as a whole,
(P) pursuant to which rights have been transferred by the Company to a third
party with respect to the distribution or exploitation of any Company program in
a territory outside of the United States (including its commonwealths,
territories and possessions) (x) that generates annual license fees in excess of
$1,000,000 or (y) in connection with a non-U.S. output or any similar non-U.S.
portfolio deal in which five or more programs have been licensed for
distribution in a territory outside of the United States (including its
commonwealths, territories and possessions) to a single third party and that
generates annual license fees in excess of $1,000,000, (Q) is a Contract not of
a type described in the foregoing clauses (A) through (P) that has or would
reasonably be likely to, either pursuant to its own terms or the terms of any
related Contracts, involve payments or receipts in excess of $20,000,000 in any
year (such Contracts required to be listed pursuant to clauses (A)-(Q) above,
the “Material Contracts”). A true and complete copy of each Material Contract,
as amended as of the date of this Agreement, including all attachments,
schedules and exhibits thereto, has been made available to Parent prior to the
date of this Agreement. Each of the Material Contracts, and each Contract
entered into after the date hereof that would have been a Material Contract if
entered into prior to the date hereof (each, an “Additional Contract”) is (or if
entered into after the date hereof, will be) valid and binding on the Company or
its Subsidiaries, as the case may be and, to the Knowledge of the Company, each
other party thereto, and is in full force and effect, except for such failures
to be valid and binding or to be in full force and effect as would not,
individually or in the aggregate, reasonably be likely to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any other party is in breach of or in default
under any Material Contract or Additional Contract, and no event has occurred
that, with the lapse of time or the giving of notice or both, would constitute a
default thereunder by the Company or any of its Subsidiaries, in each case,
except for such breaches and defaults as would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. As
used in this Agreement, the term “Affiliation Contract” means any affiliation,
licensing, carriage distribution or similar Contract for the reproduction,
performance, display, broadcast, telecast, exhibition and/or distribution of the
(i) programming service(s) of the Company and/or its Subsidiaries, (ii) any
programming included in and/or branded as such service(s) and/or (iii) any
programming related to or derived from such programming (in each case,
regardless of format (e.g., linear, video-on-demand) and regardless of business
model (e.g., free-to-end-user, subscription, transactional)) by any MVPD or any
other distributor of video content and the term “MVPD” means any multichannel
video programming distributor (as defined by the U.S. Federal Communications
Commission).

 

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(l) Takeover Statutes. Except for Chapter 1704 of the OGCL, in respect of which
the board of directors of the Company has taken all necessary action so that
such provisions are not applicable to the Merger or the other transactions
contemplated by this Agreement, no “fair price”, “moratorium”, “control share
acquisition” or other similar anti-takeover statute or regulation (each, a
“Takeover Statute”) or any anti-takeover provision in the Company Articles of
Incorporation or Company Code of Regulations is applicable to the Company, the
Shares, the Merger or the other transactions contemplated by this Agreement. The
Company is not party to a rights agreement, poison pill or similar agreement or
plan that would have the effect of preventing the transactions contemplated by
this Agreement.

(m) Environmental Matters. Except for such matters that would not, individually
or in the aggregate, reasonably be likely to have a Company Material Adverse
Effect (i) each of the Company and its Subsidiaries is and has been since the
Applicable Date in compliance with all applicable Environmental Laws, which
compliance includes obtaining, maintaining and complying with all permits,
licenses or authorizations required by applicable Environmental Laws,
(ii) neither the Company nor any of its Subsidiaries is subject to any pending,
or to the Knowledge of the Company, threatened Proceeding alleging
non-compliance with or liability under any applicable Environmental Law,
(iii) neither the Company nor any of its Subsidiaries is subject to any
outstanding obligations under any orders, decrees or injunctions concerning
liability or obligations relating to any Environmental Law and (iv) there are no
environmental conditions involving the Company or any of its Subsidiaries or any
real property currently or, to the Knowledge of the Company, formerly owned by
the Company or any of its Subsidiaries that would reasonably be expected to
result in the Company or any Subsidiary incurring liability pursuant to any
Environmental Law.

As used in this Agreement, (A) the term “Environmental Law” means any
Law relating to the protection of the environment or natural resources, and
(B) the term “Hazardous Substance” means any substance, material or waste that
is regulated, characterized or otherwise classified as “hazardous,” “toxic,” a
“pollutant,” a “contaminant,” or words of similar meaning and regulatory effect
pursuant to any Environmental Law. The representations and warranties made in
this Section 5.1(m) are the only representations and warranties of the Company
with respect to environmental matters.

(n) Taxes. Except as would not reasonably be likely to have, individually or in
the aggregate, a Company Material Adverse Effect:

(i) The Company and each of its Subsidiaries (A) have prepared in good faith and
duly and timely filed all income and franchise Tax Returns and all other
material Tax Returns required to be filed by any of them and all such filed Tax
Returns are complete and accurate in all respects; (B) have paid all Taxes that
are required to be paid (whether or not shown on such Tax Returns) or that the
Company or any of its Subsidiaries are obligated to withhold from amounts owing
to any employee, creditor or third party, except with respect to matters
contested in good faith and for which adequate reserves have been established in
accordance with GAAP on the books of the Company; and (C) as of the date of this
Agreement have not waived any statute of limitations with respect to U.S.
federal income or material U.S. state income or franchise Taxes or agreed to any
extension of time with respect to a U.S. federal income or material U.S. state
income or franchise Tax assessment or deficiency.

 

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(ii) As of the date of this Agreement, there are no pending or, to the Knowledge
of the Company, threatened audits, examinations, investigations or other
proceedings in respect of Taxes. There are not, to the Knowledge of the Company,
any claims or assessments (whether or not asserted in writing) by any Tax
authority concerning the Company’s or any of its Subsidiaries’ liability for
Tax.

(iii) The Company has made available to Parent prior to the date of this
Agreement copies of the U.S. federal income Tax Returns filed by the Company and
its Subsidiaries for each of the Taxable years ended December 31, 2015, 2014 and
2013.

(iv) Neither the Company nor any of its Subsidiaries has participated in a
“listed transaction” or “a transaction of interest” within the meaning of
Treasury Regulation Section 1.6011-4(b).

(v) Within the past two years, neither the Company nor any of its Subsidiaries
has been a “distributing corporation” or a “controlled corporation” within the
meaning of Section 355 of the Code in a distribution intended to qualify under
Section 355(a) of the Code.

(vi) Neither the Company nor any of its Subsidiaries has any liability under any
Tax matters, Tax allocation, Tax sharing or similar contract or arrangement that
obligates the Company or any of its Subsidiaries to make any payment computed by
reference to the Taxes, Taxable income or Taxable losses of any other Person
(other than any such contract or arrangement that is a commercial or employment
agreement, the principal purpose of which does not relate to Taxes, or any such
contract or arrangement exclusively between or among the Company and/or its
Subsidiaries).

(vii) Since January 1, 2009, neither the Company nor any of its Subsidiaries has
(A) been a member of an affiliated, combined, consolidated, unitary or similar
group filing a consolidated, combined, unitary or similar income Tax Return
(other than a group the common parent of which is the Company or a Subsidiary,
or (B) any liability for the Taxes of any Person (other than the Company or any
of its current or former Subsidiaries) under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local or foreign Law), as a
transferee or successor or by contract (other than any contract entered into in
the ordinary course of business that is a commercial or employment agreement the
principal purpose of which does not relate to Taxes).

As used in this Agreement, (A) the term “Tax” (including, with correlative
meanings, the terms “Taxes” and “Taxable”) means all federal, state, local and
foreign income, profits, franchise, gross receipts, environmental, customs duty,
capital stock, severance, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments in the nature of a tax, in each
case that is imposed by a Tax authority, together with all interest, penalties
and additions imposed with respect to such amounts and any interest in respect
of such penalties and additions and (B) the term “Tax Return” means all returns
and reports (including elections, declarations, disclosures, schedules,
estimates and information returns) required to be supplied to a Tax authority
relating to Taxes.

 

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(o) Intellectual Property.

(i) Except as would not reasonably be likely to have a Company Material Adverse
Effect, all registered Intellectual Property (“Registered IP”) owned by and
material to the Company or any of its Subsidiaries is subsisting in all material
respects, and, to the Knowledge of the Company, in the jurisdiction(s) where
such Registered IP is issued or registered is valid and enforceable.

(ii) Except as would not reasonably be likely to have a Company Material Adverse
Effect, each of the Company and its Subsidiaries owns, or has sufficient rights
to use, all Intellectual Property used in or necessary for its business (the
“Company IP”), free and clear of all Liens, except for Permitted Liens.
“Permitted Liens” means (A) Liens for Taxes not yet due and payable or that are
being contested in good faith by appropriate proceedings and as to which
appropriate reserves have been recorded in the Company’s financial statements,
(B) Liens arising in the ordinary course of business in favor of vendors,
carriers, warehousemen, repairmen, mechanics, workmen, materialmen, construction
or similar Liens, (C) Liens affecting the interest of the grantor of any
easements benefiting owned real property and Liens of record attaching to real
property, fixtures or leasehold improvements that would not, individually or in
the aggregate, reasonably be expected to materially impair the continued use and
operation of the assets to which they relate in the business of such entity and
its Subsidiaries as presently conducted, (D) Liens specifically reflected in the
Company Balance Sheet, (E) Liens, exceptions, defects or irregularities in
title, easements, imperfections of title, claims, charges, security interests,
rights-of-way, covenants, restrictions, and other similar matters that would
not, individually or in the aggregate, reasonably be expected to materially
impair the continued use and operation of the assets to which they relate in the
business of such entity and its Subsidiaries as presently conducted and (F) any
license, covenant or other right to or under Intellectual Property.

(iii) Except as would not reasonably be likely to have a Company Material
Adverse Effect, the Company and each of its Subsidiaries have not since the
Applicable Date, and do not infringe, misappropriate or otherwise violate the
Intellectual Property rights of any third party and, to the Knowledge of the
Company, no third party is infringing, misappropriating or otherwise violating
any Company IP owned or licensed by the Company or any of its Subsidiaries.
Except as would not reasonably be likely to have a Company Material Adverse
Effect, there are no pending or, to the Knowledge of the Company, threatened in
writing, proceedings, administrative claims, litigation, suits, actions or
investigations alleging that the operation of the business of the Company or any
of its Subsidiaries, infringes, misappropriates or otherwise violates the
Intellectual Property rights of any Person.

(iv) Except as would not reasonably be likely to have a Company Material Adverse
Effect, the Company and its Subsidiaries take and have taken commercially
reasonable measures designed to protect their respective interests in the
Intellectual Property material to the respective businesses of the Company and
its Subsidiaries. Except as would not reasonably be likely to have a Company
Material Adverse Effect, there has not been any disclosure or other compromise
of any confidential or proprietary information or trade secrets of the Company
or any of its Subsidiaries, that is material to such entity, to any third party.

 

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(v) Except as would not reasonably be likely to have a Company Material Adverse
Effect, to the Knowledge of the Company, (A) the Information Technology used in
and material to the Company’s and any of its Subsidiaries’ businesses is in good
working condition, operates and performs in all material respects as required to
permit the Company and its Subsidiaries to conduct their respective businesses
as currently conducted, (B) such Information Technology has not suffered a
material malfunction or failure since the Applicable Date, (C) such Information
Technology does not contain any viruses, Trojan horses, malicious code or other
malware that would reasonably be expected to materially disrupt the ability of
the Company or its Subsidiaries to conduct the business and (D) no Person has
gained unauthorized access to the Information Technology of the Company or any
of its Subsidiaries, or any of their vendors, in a manner that has resulted in
liability to the Company or any of its Subsidiaries or otherwise had a material
adverse effect on their businesses.

(vi) Except as would not reasonably be likely to have a Company Material Adverse
Effect, (A) the Company and its Subsidiaries have implemented commercially
reasonable backup, security and disaster recovery technology and procedures,
(B) the Company and its Subsidiaries are in compliance with applicable Laws,
Orders, contractual requirements and terms of use regarding the privacy and
security of customer, employee and other Personal Data and are, and have been
since the Applicable Date, compliant in all material respects with their
respective privacy policies, (C) to the Knowledge of the Company, there have not
been any incidents of, or third party claims related to, any unauthorized access
to, or unauthorized disclosure or use of, any Personal Data in the Company’s,
any of its Subsidiaries’ or any of their vendors’ possession to the extent
related to the business of the Company and its Subsidiaries and (D) neither the
Company nor any of its Subsidiaries has received since the Applicable Date any
written notice of any claims, investigations (including investigations by any
Governmental Entity), or alleged violations of any Laws and Orders with respect
to Personal Data possessed by the Company, any of its Subsidiaries or any of
their vendors to the extent related to the business of the Company and its
Subsidiaries.

(vii) As used in this Agreement, (A) the term “Information Technology” means
information technology and computer systems relating to the transmission,
storage, maintenance, organization, presentation, generation, processing or
analysis of data and information, (B) the term “Intellectual Property” means,
collectively, all U.S. and foreign intellectual property rights, including
(I) trademarks, service marks, brand names, certification marks, collective
marks, d/b/a’s, Internet domain names, logos, designs, symbols, trade dress,
trade names, and other indicia of origin, all applications and registrations for
the foregoing, and all goodwill associated therewith and symbolized thereby,
including all renewals of same; (II) patents, patent applications, and invention
disclosures, including divisions, continuations, continuations-in-part,
extensions, reissues, reexaminations, and any other governmental grant for the
protection of inventions or industrial designs; (III) trade secrets;
(IV) copyrights, and registrations and applications therefor, and all renewals,
extensions, restorations and reversions thereof, and (V) moral rights, rights of
attribution, rights of privacy, publicity and all other intellectual property,
proprietary and intangible rights, (C) the term “Personal Data” means any
information in any media that identifies a particular individual and any other
data or information that constitutes personal data or personal information under
any applicable Law or the Company’s or any of its Subsidiaries’ privacy policies
or terms of use.

 

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(p) Insurance. The Company has made available to Parent prior to the date of
this Agreement true, correct and complete copies of the Company’s director and
officer insurance policies. The insurance policies held by the Company provide
adequate coverage for all normal risks incident to the business of the Company
and its Subsidiaries and their respective properties and assets, except for any
such failures to maintain such policies that would not, individually or in the
aggregate, reasonably be likely to have a Company Material Adverse Effect. Each
such policy is in full force and effect and all premiums due with respect to all
such policies have been paid, with such exceptions that would not, individually
or in the aggregate, reasonably be likely to have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries have received notice of
cancellation of any such insurance policy or is in breach of, or default under,
any such insurance policy. To the Knowledge of the Company, there is no claim by
the Company or any of its Subsidiaries pending under any such insurance policy
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies that would be material to the Company and its Subsidiaries,
taken as a whole.

(q) Properties.

(i) Section 5.1(q)(i) of the Company Disclosure Letter sets forth a true,
correct and complete list by name and location of all material real property
owned by the Company or any of its Subsidiaries (the “Owned Real Property”).
Except as has not had, and would not reasonably be expected to have, a Company
Material Adverse Effect, (x) each of the Company and its Subsidiaries has good
and marketable title in fee simple to all Owned Real Property, free and clear of
all Liens, except for Permitted Liens and (y) there are no existing, pending or,
to the Knowledge of the Company, threatened condemnation, eminent domain or
similar proceedings affecting the Owned Real Property.

(ii) Section 5.1(q)(ii) of the Company Disclosure Letter sets forth a true,
correct and complete list of all real property leases, subleases and other
occupancy arrangements providing for annual payments of $5,000,000 or more to
which the Company or any of its Subsidiaries is a party and each amendment
thereto (the “Real Property Leases”). Each premise subject to a Real Property
Lease is hereinafter referred to as a “Leased Real Property”. Except as set
forth on Section 5.1(q)(ii) of the Company Disclosure Letter or as would not be
material to the Company and its Subsidiaries, taken as a whole, neither the
Company nor any of its Subsidiaries has transferred, mortgaged or assigned any
interest in any such Real Property Lease, nor has the Company nor any of its
Subsidiaries subleased or otherwise granted rights of use or occupancy of any of
the premises described therein to any other Person.

(iii) Except as is not, or would not reasonably be expected be, material to the
Company and its Subsidiaries, taken as a whole, the Company or one of its
Subsidiaries has good and valid title to, or in the case of leased tangible
assets, a valid leasehold interest in, all of its material tangible assets, free
and clear of all Liens, other than Permitted Liens.

(r) Related Party Transactions. As of the date hereof, except as disclosed in
the Company’s definitive proxy statements included in the Company Reports,
within the last twelve (12) months no event has occurred and no relationship
exists that would be required to be reported by the Company pursuant to Item 404
of Regulation S-K.

 

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(s) Joint Proxy Statement/Prospectus. The Joint Proxy Statement/Prospectus will
not, at the date it is first mailed to the holders of Shares or at the time of
the Company Shareholders Meeting or at the time of any amendment or supplement
thereof, contain (by incorporation or otherwise) any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
Notwithstanding the foregoing, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by or on behalf of Parent or Merger Sub
specifically for inclusion or incorporation by reference in the Joint Proxy
Statement/Prospectus.

(t) Brokers and Finders. The Company has not employed any broker or finder or
incurred any liability for any brokerage fees, commissions, finders’, financial
advisors’ or similar fees in connection with the Merger or the other
transactions contemplated in this Agreement, except that the Company has engaged
Allen & Company LLC and J.P. Morgan Securities LLC as the Company’s financial
advisors, the financial arrangements with which have been disclosed in writing
to Parent prior to the date of this Agreement.

(u) Opinions of Financial Advisors. As of the date of this Agreement, the board
of directors of the Company has received the separate opinions of Allen &
Company LLC and J.P. Morgan Securities LLC, each to the effect that, as of the
date of such opinion and based upon and subject to the various qualifications,
assumptions, limitations and other matters set forth therein, the Merger
Consideration to be paid to holders of Class A Shares is fair, from a financial
point of view, to such holders. The Company shall, promptly following the
execution of this Agreement by all parties, furnish a copy of each such written
opinion to Parent solely for informational purposes (it being agreed that none
of the Parent or Merger Sub, nor any of their respective affiliates or
Representatives, shall have the right to rely on such opinions).

(v) No Other Representations and Warranties. Except for the representations and
warranties of the Company contained in this Section 5.1, the Company is not
making and has not made, and no other Person is making or has made on behalf of
the Company, any express or implied representation or warranty in connection
with this Agreement or the transactions contemplated hereby.

5.2 Representations and Warranties of Parent and Merger Sub. Except as set forth
in the corresponding sections or subsections of the disclosure letter delivered
to the Company by Parent at the time of entering into this Agreement (the
“Parent Disclosure Letter”) (it being understood that any disclosure set forth
in one section or subsection of the Parent Disclosure Letter shall be deemed
disclosure with respect to, and shall be deemed to apply to and qualify, the
section or subsection of this Agreement to which it corresponds in number and
each other section or subsection of this Agreement to the extent the qualifying
nature of such disclosure with respect to such other section or subsection is
reasonably apparent on the face of such disclosure) or, as disclosed in any
Parent Reports filed on or after January 1, 2017 and not less than five
(5) Business Days prior to the date of this Agreement (excluding all disclosures
(other than statements of

 

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historical fact) in any “Risk Factors” section and any disclosures included in
any such Parent Reports that are cautionary, predictive or forward looking in
nature, it being agreed that this parenthetical shall not apply to
Sections 5.2(b) or (d)), Parent and Merger Sub hereby represent and warrant to
the Company as follows:

(a) Organization, Good Standing and Qualification. Each of Parent, Merger Sub
and their Subsidiaries is a legal entity duly organized, validly existing and in
good standing under the Laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
legal entity in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, qualified or in good standing, or
to have such power or authority, would not, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect. Prior to the date
of this Agreement, Parent has made available to the Company complete and correct
copies of the certificate of incorporation and bylaws (or comparable
organizational documents) of Parent and articles of incorporation and code of
regulations of Merger Sub, in each case, as amended to and as in effect on the
date of this Agreement.

As used in this Agreement, (i) the term “Parent Material Adverse Effect” means
any event, occurrence, fact, condition, change, development or effect that,
individually or in the aggregate, is materially adverse to the financial
condition, properties, assets, business or results of operations of Parent and
its Subsidiaries, taken as a whole, excluding any such event, occurrence, facts,
condition, change, development or effect resulting from or arising out of:
(1) changes in, or events generally affecting, the financial, securities or
capital markets, (2) general economic or political conditions in the United
States or any foreign jurisdiction in which Parent or any of its Subsidiaries
operate, including any changes in currency exchange rates, interest rates,
monetary policy or inflation, (3) changes in, or events generally affecting, the
industries in which Parent or any of its Subsidiaries operate, (4) any acts of
war, sabotage, civil disobedience or terrorism or natural disasters (including
hurricanes, tornadoes, floods or earthquakes), (5) any failure by Parent or any
of its Subsidiaries to meet any internal or published projections, forecasts or
predictions in respect of financial performance for any period, (6) a decline in
the price of the Series C Common Stock, or a change in the trading volume of the
Series C Common Stock, on the NASDAQ, provided that the exceptions in clauses
(5) and (6) shall not prevent or otherwise affect a determination that any
event, occurrence, fact, condition, change, development or effect underlying
such failure or decline or change (if not otherwise falling within any of the
exclusions pursuant to the other clauses of this definition) has resulted in, or
contributed to, a Parent Material Adverse Effect, (7) changes in Law,
(8) changes in GAAP (or authoritative interpretation thereof), (9) the taking of
any specific action expressly required by this Agreement or taken with the
Company’s written consent to the extent the effects thereof are reasonably
explained in writing by Parent prior to the time of such consent or the failure
to take any specific action expressly prohibited by this Agreement and as for
which the Company declined to consent pursuant to Section 6.1(b), (10) the
announcement or pendency (but, for the avoidance of doubt, not the consummation)
of this Agreement and the Merger, including the impact thereof on the
relationships with customers, suppliers (including

 

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production companies), talent, distributors, partners or employees or (11) any
litigation brought by stockholders of the Company or Parent alleging breach of
fiduciary duty or inadequate disclosure in connection with this Agreement or any
of the transactions contemplated hereby; provided, however that the events,
facts, conditions, changes, developments or effects set forth in the foregoing
clauses (1), (2), (3), (4), (7) and (8) shall be taken into account in
determining whether a “Parent Material Adverse Effect” has occurred to the
extent such events, facts, conditions, changes, developments or effects have a
disproportionate adverse effect on Parent and its Subsidiaries, taken as a
whole, relative to other participants in the industries in which Parent and its
Subsidiaries operate, and (ii) the term “Knowledge of Parent” means the actual
knowledge of the individuals identified on Section 5.2(a) of the Parent
Disclosure Letter.

(b) Capital Structure.

(i) The authorized capital stock of Parent consists of (A) 1,700,000,000 shares
of Series A Common Stock (the “Series A Common Stock”), 100,000,000 shares of
Series B Common Stock (the “Series B Common Stock”) and 2,000,000,000 shares of
Series C Common Stock (the “Series C Common Stock,” together with the Series A
Common Stock and Series B Common Stock, the “Parent Common Stock”) and
(B) 75,000,000 shares of Series A Convertible Participating Preferred Stock (the
“Series A Preferred Stock”), 75,000,000 shares of Series C Convertible
Participating Preferred Stock (the “Series C Preferred Stock”) and 50,000,000
shares of preferred stock which are undesignated (together with the Series A
Preferred Stock and Series C Preferred Stock, the “Parent Preferred Stock”). As
of the close of business on July 27, 2017, 153,933,105 shares of Series A Common
Stock, 6,512,379 shares of Series B Common Stock, 218,521,945 shares of Series C
Common Stock, 71,107,312 shares of Series A Preferred Stock and 25,320,532
shares of Series C Preferred Stock were issued and outstanding. All of the
outstanding shares of Parent Common Stock and Parent Preferred Stock have been
duly authorized and validly issued and are fully paid and nonassessable, and
have been issued in compliance with all applicable securities Laws. As of the
close of business on July 27, 2017, there were an aggregate of 20,374,955 shares
of Series A Common Stock, no shares of Series B Common Stock and 7,198,311
shares of Series C Common Stock subject to issuance pursuant to the Parent plans
identified in Section 5.2(b)(i)(A) of the Parent Disclosure Letter as being the
only Parent plans pursuant to which Parent Common Stock may be issued (the
“Parent Stock Plans”). Except as provided in the preceding sentence and except
for shares of Parent Common Stock that after the date hereof become reserved for
issuance or subject to issuance as permitted under this Agreement, Parent has no
Parent Common Stock reserved for, or subject to, issuance. Parent has no Parent
Preferred Stock or other shares of capital stock reserved for or subject to
issuance (it being understood that “other shares of capital stock” shall not
include Parent Common Stock). The Parent Common Stock constitute the only
outstanding class of securities of Parent or its Subsidiaries registered under
the Securities Act.

(ii) From the close of business on July 27, 2017 to the execution of this
Agreement, Parent has not issued any Parent Common Stock except pursuant to the
exercise or settlement of Parent equity awards under the Parent Stock Plans
outstanding as of July 27, 2017, in accordance with their terms and, since the
close of business on July 27, 2017, except as permitted by this Agreement for
the period following the date of this Agreement, Parent has not

 

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issued any Parent equity awards under the Parent Stock Plans. Upon any issuance
of any Parent Common Stock in accordance with the terms of the Parent Stock
Plans, such Parent Common Stock will be duly authorized, validly issued and
fully paid and nonassessable and free and clear of any Liens. Each of the
outstanding shares of capital stock or other securities of each of Parent’s
Subsidiaries has been duly authorized and validly issued and is fully paid and
nonassessable, and has been issued in compliance with all applicable securities
Laws, and owned by Parent or by a direct or indirect wholly owned Subsidiary of
Parent, free and clear of any Lien (other than any Liens, except for Permitted
Liens, for Taxes not yet due and payable or that are being contested in good
faith by appropriate proceedings and as to which appropriate reserves have been
recorded in Parent’s financial statements). Except as set forth in
Section 5.2(b)(i), as of the date of this Agreement, there are no preemptive or
other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements, calls, commitments or rights of any kind that obligate Parent or
any of its Subsidiaries to issue or sell any shares of capital stock or other
equity or voting securities of Parent or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire from Parent or any of
its Subsidiaries any equity or voting securities of Parent or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Parent does not have outstanding any bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or convertible into or exercisable for securities having the right to
vote) with the stockholders of Parent on any matter.

(c) Corporate Authority and Approval. Each of Parent and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate the Merger, subject to, in the case of the
consummation of the Merger and the other transactions contemplated hereby
(i) the approval of this Agreement and the transactions contemplated hereby by
the holders of a majority of all the votes entitled to be cast thereon by
holders of shares of Series A Preferred Stock, and (ii) the approval of the
issuance of shares of Series C Common Stock in connection with the Merger as
contemplated by this Agreement by the affirmative vote of the holders of
outstanding Parent Common Stock and Series A Preferred Stock representing a
majority of the votes cast with respect to such approval (collectively, the
“Parent Requisite Vote”). This Agreement has been duly executed and delivered by
Parent and Merger Sub and constitutes a valid and binding agreement of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with its
terms, subject to the Bankruptcy and Equity Exception. As of the date of this
Agreement, the board of directors of Parent has unanimously by those voting
(i) (A) determined that the terms of this Agreement, the Merger and the other
transactions contemplated hereby are fair to, and in the best interests of,
Parent and its stockholders, (B) approved and declared advisable this Agreement
and the transactions contemplated hereby and (C) subject to Section 6.3,
resolved to recommend that Parent stockholders vote in favor of the issuance of
shares of Series C Common Stock in connection with the Merger (the “Parent
Recommendation”) and directed that such matter be submitted for consideration of
the stockholders of Parent at the Parent Stockholders Meeting.

 

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(d) Governmental Filings; No Violations. (i) Other than the necessary filings,
notices, reports, consents, registrations, approvals, permits, expirations of
waiting periods or authorizations (A) pursuant to Section 1.3, (B) required
under the HSR Act or any Foreign Competition Laws in connection with the Merger,
the Exchange Act and the Securities Act, (C) to comply with state securities or
“blue-sky” Laws and (D) as may be required with or to foreign and transnational
Governmental Entities pursuant to applicable Foreign Regulatory Laws and Foreign
Regulators, no filings, notices and/or reports are required to be made by Parent
or Merger Sub or their Subsidiaries with, nor are any consents, registrations,
approvals, permits, expirations of waiting periods or authorizations required to
be obtained by Parent or Merger Sub or their Subsidiaries from any Governmental
Entity in connection with the execution, delivery and performance of this
Agreement by Parent and Merger Sub and/or the consummation by Parent and Merger
Sub of the Merger and the other transactions contemplated hereby, except, in
each case, those that the failure to make or obtain would not, individually or
in the aggregate, reasonably be likely to have a Parent Material Adverse Effect
or prevent, materially delay or materially impair the ability of Parent or
Merger Sub to consummate the Merger.

(ii) The execution, delivery and performance of this Agreement by Parent and
Merger Sub does not, and the consummation by Parent and Merger Sub of the Merger
and the other transactions contemplated hereby will not, constitute or result in
(A) a conflict with, a breach or violation of, or a default under, the Restated
Certificate of Incorporation of Parent as currently in effect (the “Parent
Certificate of Incorporation”) or the Bylaws of Parent as currently in effect
(the “Parent Bylaws”) or the comparable governing instruments of Merger Sub or
of any of Parent’s Significant Subsidiaries, (B) with or without the lapse of
time or the giving of notice or both, conflict with, a breach or violation of, a
default or termination or modification (or right of termination or modification)
under, payment of additional fees under, the loss of any benefit under, the
creation or acceleration of any obligations under, or the creation of a Lien on
any of the assets of Parent or any of its Subsidiaries pursuant to (1) any
Contract binding upon Parent or any of its Subsidiaries, or, (2) assuming
(solely with respect to performance of this Agreement and consummation of the
Merger and the other transactions contemplated hereby) the filings, notices,
reports, consents, registrations, approvals, permits, expirations of waiting
periods and authorizations referred to in Section 5.2(d)(i) are made or obtained
and assuming the Parent Requisite Vote is received, under any Law, Order or
License to which Parent or any of its Subsidiaries is subject or (C) any change
in the rights or obligations under any Contract to which Parent or any of its
Subsidiaries is a party, except, in the case of clauses (B) and (C) above, for
any such breach, violation, default, termination, modification, payment,
acceleration, creation or change that would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect.

(e) Parent Reports; Financial Statements. (i) Parent has filed or furnished, as
applicable, on a timely basis, all forms, statements, certifications, reports
and documents required to be filed or furnished by it with or to the SEC
pursuant to the Exchange Act or the Securities Act since the Applicable Date
(the forms, statements, reports and documents filed with or furnished to the SEC
since the Applicable Date and those filed with or furnished to the SEC
subsequent to the date of this Agreement, in each case as amended, the “Parent
Reports”). Each of the Parent Reports, at the time of its filing or being
furnished complied or, if not yet filed or furnished, will comply in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act and the Sarbanes-Oxley Act, and any rules and regulations
promulgated thereunder applicable to the Parent Reports. As of their respective
dates (or, if amended prior to the date of this Agreement, as of the date of
such amendment), the Parent Reports did not, and any Parent Reports filed with
or furnished to the SEC subsequent to the date of this Agreement will not,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading.

 

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(ii) Parent has timely responded to all comment letters from the Staff of the
SEC relating to the Parent Reports, and the SEC has not asserted that any of
such responses are inadequate, insufficient or otherwise non-responsive. None of
the Parent Reports filed on or prior to the date hereof is, to the Knowledge of
Parent, subject to ongoing SEC review or investigation, and there are no
inquiries or investigations by the SEC or any internal investigations pending or
threatened, in each case regarding any accounting practices of Parent.

(iii) Parent is in compliance in all material respects with the applicable
listing and corporate governance rules and regulations of the NASDAQ.

(iv) Parent has established and maintains disclosure controls and procedures
required by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure
controls and procedures are reasonably designed to ensure that information
required to be disclosed by Parent in its filings with the SEC under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that all such
information is accumulated and communicated to Parent’s management as
appropriate to allow timely decisions regarding required disclosure and to make
the certifications required pursuant to Sections 302 and 906 of the
Sarbanes-Oxley Act. Parent has established and maintains internal control over
financial reporting (as defined in Rule 13a-15 or 15d-15, as applicable, under
the Exchange Act). Such internal control over financial reporting provides
reasonable assurance (A) regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
GAAP, (B) that receipts and expenditures of Parent and its Subsidiaries are
being made only in accordance with authorizations of management and the
directors of Parent and (C) regarding prevention or timely detection of the
unauthorized acquisition, use or disposition of Parent’s and its Subsidiaries’
assets that could have a material effect on Parent’s financial statements.
Parent has disclosed, based on the most recent evaluation of its Chief Executive
Officer and its Chief Financial Officer prior to the date of this Agreement, to
Parent’s auditors and the audit committee of Parent’s board of directors (x) any
significant deficiencies and material weaknesses in the design or operation of
its internal control over financial reporting that are reasonably likely to
adversely affect Parent’s ability to record, process, summarize and report
financial information and (y) any fraud, whether or not material, that involves
management or other employees who have a significant role in Parent’s internal
control over financial reporting. Parent has made available prior to the date of
this Agreement to the Company (I) either materials relating to or a summary of
any disclosure of matters described in clauses (x) or (y) in the preceding
sentence made by management of Parent to its auditors and audit committee on or
after the Applicable Date and prior to the date of this Agreement and (II) any
material communication on or after the Applicable Date and prior to the date of
this Agreement made by management of Parent or its auditors to the audit
committee as required by the listing standards of the NASDAQ, the audit
committee’s charter or professional standards of the Public Company Accounting
Oversight Board. Since the Applicable Date, no complaints from any source
regarding a material violation of accounting procedures, internal accounting
controls or auditing matters or compliance with Law, including from employees of
Parent and its Subsidiaries regarding questionable accounting, auditing or legal
compliance matters have, to the Knowledge of Parent, been received by Parent.

 

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(v) Each of the consolidated balance sheets included in or incorporated by
reference into the Parent Reports (including the related notes and schedules)
fairly presents or, in the case of Parent Reports filed after the date of this
Agreement, will fairly present, in each case, in all material respects, the
consolidated financial position of Parent and its Subsidiaries, as of the date
of such balance sheet, and each of the consolidated statements of income, cash
flows and changes in stockholders’ equity (deficit) included in or incorporated
by reference into the Parent Reports (including any related notes and schedules)
fairly presents, or, in the case of Parent Reports filed after the date of this
Agreement, will fairly present, in each case, in all material respects, the
results of operations, retained earnings (loss) and changes in financial
position, as the case may be, of Parent and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to notes and normal
year-end audit adjustments that are not or will not be material in amount or
effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein or in the notes thereto. Each
of the consolidated financial statements (including the related notes and
schedules) included in or incorporated by reference into the Parent Reports
complied, as of their respective dates of filing with the SEC, in all material
respects with the published rules and regulations of the SEC with respect
thereto, and were prepared in accordance with GAAP applied on a consistent basis
during the periods indicated (except as may be indicated in the notes thereto
or, in the case of unaudited interim financial statements, as may be permitted
by the SEC on Form 10-Q under the Exchange Act).

(vi) Neither Parent nor any of its Subsidiaries has incurred any Indebtedness,
or issued or sold any debt securities or rights to acquire any debt security of
Parent or any of its Subsidiaries, the terms of which, or the terms of any
instrument under which such Indebtedness, debt securities or rights were issued,
requires the public listing of such Indebtedness, debt securities or rights or
the maintenance by Parent or any of its Subsidiaries of registration under the
Exchange Act.

(vii) None of Parent or its consolidated Subsidiaries is a party to or has any
obligation or other commitment to become a party to any securitization
transaction, off-balance sheet partnership or any similar Contract (including
any structured finance, special purpose or limited purpose entity, on the other
hand, or any “off-balance sheet arrangements” (as defined in Item 303(a) of
Regulation S-K under the Exchange Act)) where the result, purpose or intended
effect of such Contract is to avoid disclosure of any material transaction
involving, or material liabilities of, Parent in any of Parent’s published
financial statements or other Parent Reports.

(f) Absence of Certain Changes. Since December 31, 2016 through the date of this
Agreement, there has not been any effect, occurrence, fact, condition, change,
development or effect which has had or would, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect. Since March 31,
2017 and through the date of this Agreement, Parent and its Subsidiaries have
conducted their respective businesses in the ordinary course of such businesses
consistent with past practice in all material respects, and there has not been
any action taken by Parent or any of its Subsidiaries that, if taken during the
period from the date of this Agreement through the Effective Time without the
Company’s consent, would constitute a breach of, or require consent of the
Company under, Section 6.1(b).

 

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(g) Litigation and Liabilities. There are no Proceedings pending or, to the
Knowledge of Parent, threatened in writing against Parent or any of its
Subsidiaries, or against any present or former officer or director of Parent or
any of its Subsidiaries in such individual’s capacity as such, except for those
that would not, individually or in the aggregate, reasonably be likely to have a
Parent Material Adverse Effect. There are no obligations or liabilities of
Parent or any of its Subsidiaries, whether or not accrued, contingent or
otherwise other than (i) liabilities or obligations disclosed, reflected,
reserved against or otherwise provided for in the consolidated balance sheet of
Parent as of March 31, 2017 and the notes thereto set forth in Parent’s
quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2017 (the
“Parent Balance Sheet”); (ii) liabilities or obligations incurred in the
ordinary course of business consistent with past practice since March 31, 2017;
(iii) liabilities or obligations arising out of this Agreement or the
transactions contemplated hereby; or (iv) liabilities or obligations that would
not, individually or in the aggregate, reasonably be likely to have a Parent
Material Adverse Effect. Neither Parent nor any of its Subsidiaries is a party
to or subject to the provisions of any Order, stipulation or settlement of or
with any Governmental Entity that would, individually or in the aggregate,
reasonably be likely to have a Parent Material Adverse Effect (except to the
extent expressly consented to by Parent pursuant to Section 6.6) or that would
prevent, materially delay or materially impair the ability of Parent to
consummate the Merger.

(h) Compliance with Laws, Licenses. The businesses of each of Parent and its
Subsidiaries since the Applicable Date have not been, and are not being,
conducted in violation of any applicable Law or Order, except for such
violations that would not, individually or in the aggregate, reasonably be
likely to have a Parent Material Adverse Effect. No investigation or review by
any Governmental Entity with respect to Parent or any of its Subsidiaries is
pending or, to the Knowledge of Parent, threatened, nor has any Governmental
Entity indicated an intention to conduct the same, except for such
investigations or reviews the outcome of which would not, individually or in the
aggregate, reasonably be likely to have a Parent Material Adverse Effect. Except
as would not, individually or in the aggregate, reasonably be likely to have a
Parent Material Adverse Effect, Parent and its Subsidiaries possess each License
necessary to conduct their respective businesses, since the Applicable Date have
been in compliance with all terms and conditions of such Licenses, no such
Licenses are subject to any actual or possible revocation, withdrawal,
suspension, cancellation, termination or modification, and since the Applicable
Date have not received written notice from any Governmental Entity alleging a
conflict with or breach of any License.

(i) Taxes. Except as would not reasonably be likely to have, individually or in
the aggregate, a Parent Material Adverse Effect:

(i) Parent and each of its Subsidiaries (A) have prepared in good faith and duly
and timely filed all income and franchise Tax Returns and all other material Tax
Returns required to be filed by any of them and all such filed Tax Returns are
complete and accurate in all respects; (B) have paid all Taxes that are required
to be paid (whether or not shown on such Tax Returns) or that Parent or any of
its Subsidiaries are obligated to withhold from amounts owing to any employee,
creditor or third party, except with respect to matters

 

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contested in good faith and for which adequate reserves have been established in
accordance with GAAP on the books of Parent; and (C) as of the date of this
Agreement have not waived any statute of limitations with respect to U.S.
federal income or material U.S. state income or franchise Taxes or agreed to any
extension of time with respect to a U.S. federal income or material U.S. state
income or franchise Tax assessment or deficiency.

(ii) As of the date of this Agreement, there are no pending or, to the Knowledge
of Parent, threatened audits, examinations, investigations or other proceedings
in respect of Taxes. There are not, to the Knowledge of Parent, any claims or
assessments (whether or not asserted in writing) by any Tax authority concerning
Parent’s or any of its Subsidiaries’ liability for Tax.

(j) Ownership of Shares. Neither Parent nor Merger Sub is, nor at any time
during the last three years has been, an “interested stockholder” of the Company
as defined in section 1704.01 of the OGCL.

(k) Brokers and Finders. Parent has not employed any broker or finder or
incurred any liability for any brokerage fees, commissions, finders’, financial
advisors’ or similar fees in connection with the Merger or the other
transactions contemplated in this Agreement, except that Parent has engaged
Guggenheim Securities, LLC and Goldman Sachs & Co. LLC as Parent’s financial
advisors.

(l) Financing. Parent has delivered to the Company true and complete fully
executed copies of (i) the commitment letter, dated as of the date hereof, among
Parent, Discovery Communications, LLC, Goldman Sachs Bank, USA and Goldman Sachs
Lending Partners LLC (the “Commitment Letter”), and (ii) the fee letter, dated
as of the date hereof, among Parent, Discovery Communications, LLC, Goldman
Sachs Bank, USA and Goldman Sachs Lending Partners LLC (as redacted to remove
the fee amounts, alternate transaction fee provisions, pricing caps, the rates
and amounts included in the “market flex” and other economic terms that could
not adversely affect the conditionality, enforceability or termination of the
Financing, the “Redacted Fee Letter”), in each case, including all exhibits,
schedules, annexes and amendments to such letters in effect as of the date of
this Agreement (collectively, the “Debt Letters”), pursuant to which and subject
to the terms and conditions thereof each of the parties thereto (other than
Parent) have severally committed to lend the amounts set forth therein to Parent
(the provision of such funds as set forth therein, the “Financing”) for the
purposes set forth in such Debt Letters. The Debt Letters have not been amended,
restated or otherwise modified or waived prior to the execution and delivery of
this Agreement (provided that the existence or exercise of “market flex”
provisions contained in the Redacted Fee Letter shall not be deemed to
constitute a modification or amendment of the Commitment Letter), and the
respective commitments contained in the Debt Letters, to the Knowledge of
Parent, have not been withdrawn, rescinded, amended, restated or otherwise
modified in any respect prior to the execution and delivery of this Agreement.
As of the date of this Agreement, the Debt Letters are in full force and effect
and constitute the legal, valid and binding obligation of each of Parent,
Discovery Communications, LLC and, to the Knowledge of Parent, the other parties
thereto, subject in each case to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting generally the enforcement of
creditors’ rights and subject to general principles of equity. As of the date of
this Agreement, there are no conditions precedent or contingencies

 

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related to the funding of the full amount of the Financing pursuant to the Debt
Letters, other than as expressly set forth in the Debt Letters and, after the
date of this Agreement, such other conditions and contingencies with respect to
the Financing permitted pursuant to Section 6.16. Subject to the terms and
conditions of the Debt Letters and assuming that each of the conditions set
forth in Section 7.1 and Section 7.2 of this Agreement is satisfied at Closing,
the net proceeds contemplated from the Financing, together with other financial
resources of Parent, including contemplated cash on hand of Parent, will, in the
aggregate, be sufficient for the satisfaction of all of Parent’s obligations
under this Agreement, including the payment of the Merger Consideration and all
fees and expenses reasonably expected to be incurred in connection therewith. As
of the date of this Agreement, no event has occurred which, with or without
notice, lapse of time or both, would reasonably constitute a breach or default
on the part of Parent under the Debt Letters or, to the Knowledge of Parent, any
other party to the Debt Letters (assuming the accuracy of the Company’s
representations and warranties and undertakings under this Agreement for such
purpose). As of the date of this Agreement there are no side letters or other
agreements, Contracts or arrangements related to the funding of the full amount
of the Financing other than as expressly set forth in the Debt Letters. Parent
has fully paid all commitment fees or other fees required to be paid on or prior
to the date of this Agreement in connection with the Financing. As of the date
of this Agreement, assuming (x) the representations and warranties of the
Company contained in this Agreement are true and correct in all material
respects, (y) the performance of all obligations and compliance with all
covenants and agreements required by this Agreement to be performed or complied
with at or prior to the Closing by the Company in all material respects and
(z) that each of the conditions set forth in Section 7.1 and Section 7.2 of this
Agreement is satisfied at Closing, Parent has no reason to believe that any of
the conditions to the Financing will not be satisfied, or to the Knowledge of
Parent, as of the date of this Agreement, that the Financing will not be made
available to Parent on the Closing Date in accordance with the terms of the Debt
Letters.

(m) Form S-4 and Joint Proxy Statement/Prospectus. The Form S-4 and the Joint
Proxy Statement/Prospectus will not, at the date it is filed with the SEC or
declared effective by the SEC or at the time of any amendment or supplement
thereof, contain (by incorporation or otherwise) any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Form S-4 and Joint
Proxy Statement/Prospectus will comply as to form in all material respects with
the requirements of the Securities Act and the Exchange Act (as applicable) and
the rules and regulations thereunder. Notwithstanding the foregoing, no
representation or warranty is made by Parent or Merger Sub with respect to
statements made or incorporated by reference therein based on information
supplied by or on behalf of the Company specifically for inclusion or
incorporation by reference in the Form S-4 or Joint Proxy Statement/Prospectus.

(n) No Other Representations and Warranties. Except for the representations and
warranties of Parent and Merger Sub contained in this Section 5.2, Parent and
Merger Sub are not making and have not made, and no other Person is making or
has made on behalf of Parent or Merger Sub, any express or implied
representation or warranty in connection with this Agreement or the transactions
contemplated hereby.

 

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ARTICLE VI

COVENANTS

6.1 Interim Operations.

(a) The Company covenants and agrees as to itself and its Subsidiaries that,
from and after the execution of this Agreement and prior to the Effective Time
(unless Parent shall otherwise approve in writing, which approval shall not be
unreasonably withheld, conditioned or delayed, and except as (1) required by
applicable Law, (2) expressly required by this Agreement or (3) otherwise
expressly disclosed in Section 6.1(a) of the Company Disclosure Letter), the
Company shall use its reasonable best efforts to conduct its business and the
business of its Subsidiaries in the ordinary course of business consistent with
past practice and each of the Company and its Subsidiaries shall, subject to
compliance with the specific matters set forth below, use reasonable best
efforts to preserve its business organization intact and maintain the existing
relations and goodwill with Governmental Entities, customers, suppliers,
distributors, licensors, creditors, lessors, employees and business associates
and others having material business dealings with it and keep available the
services of the Company and its Subsidiaries’ present employees and agents.
Without limiting the generality of, and in furtherance of, the foregoing, the
Company covenants and agrees as to itself and its Subsidiaries that, from and
after the date of this Agreement and prior to the Effective Time, except (A) as
required by applicable Law, (B) as Parent may approve in writing (such approval
not to be unreasonably withheld, conditioned or delayed), (C) as expressly
disclosed in Section 6.1(a) of the Company Disclosure Letter or (D) as expressly
provided for in this Agreement, the Company shall not and will not permit any of
its Subsidiaries to:

(i) (A) amend its articles of incorporation or code of regulations (or
comparable governing documents) (other than immaterial amendments to the
governing documents of any wholly owned Subsidiary of the Company that would not
prevent, materially delay or materially impair the Merger or the other
transactions contemplated by this Agreement), (B) split, combine, subdivide or
reclassify its outstanding shares of capital stock (except for any such
transaction by a wholly owned Subsidiary of the Company which remains a wholly
owned Subsidiary after consummation of such transaction), (C) declare, set aside
or pay any dividend or distribution payable in cash, stock or property (or any
combination thereof) in respect of any shares of its capital stock (except for
(1) any dividends or distributions paid by a direct or indirect wholly owned
Subsidiary of the Company to another direct or indirect wholly owned Subsidiary
of the Company or to the Company or (2) other than normal quarterly cash
dividends on the Company’s Shares as described in Section 6.1(a)(i)(C) of the
Company Disclosure Letter), (D) enter into any agreement with respect to the
voting of its capital stock or (E) purchase, repurchase, redeem or otherwise
acquire any shares of its capital stock or any securities convertible or
exchangeable into or exercisable for any shares of its capital stock (other than
(1) pursuant to the cashless exercise of Company Options or the forfeiture of,
or withholding of Taxes with respect to, Company Options, Company Restricted
Stock Units or Company Performance Stock Units in connection with any Taxable
event related to such awards, in each case in accordance with past practice and
with the terms of the applicable Company Stock Plan as in effect on the date of
this Agreement (or as modified after the date of this Agreement in accordance
with the terms of this Agreement) or (2) purchases, repurchases, redemptions or
other acquisitions of securities of any wholly owned Subsidiary of the Company
by the Company or any other wholly owned Subsidiary of the Company);

 

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(ii) merge or consolidate with any other Person, or restructure, reorganize or
completely or partially liquidate (other than mergers among, or the
restructuring, reorganization or liquidation of any wholly owned Subsidiaries of
the Company that would not (x) prevent, materially delay or materially impair
the Merger or the other transactions contemplated by this Agreement or
(y) reasonably be expected to result in any significant Tax liability);

(iii) except as expressly contemplated by the terms of this Agreement, as
expressly disclosed in Section 6.1(a)(iii) of the Company Disclosure Letter or
as required by applicable Law or by the terms of any Company Plan listed on
Section 5.1(h)(i) of the Company Disclosure Letter or any CBA, in either case as
in effect on the date hereof (or as modified after the date of this Agreement in
accordance with the terms of this Agreement):

(A) increase the compensation or benefits payable to any director or named
executive officers as identified in the Company’s proxy statement for the 2017
annual meeting of stockholders (collectively, the “Senior Executives”) of the
Company, increase the compensation or benefits payable to any employee or
individual consultant of the Company or any of its Subsidiaries, or make any
loans to, any director, officer, employee or individual consultant of the
Company or any of its Subsidiaries;

(B) grant any new equity-based awards, or amend or modify the terms or
accelerate the vesting of any such outstanding awards (except for any
acceleration of any Company Option, Company Performance Stock Unit and Company
Restricted Stock Unit in connection with the cessation of any Person’s
employment with the Company or any of its Subsidiaries (other than any Senior
Executive) to the extent that such acceleration is consistent with past
practice), under any Company Plan;

(C) amend any severance plan or agreement as in effect on the date hereof or
waive or release any restrictive covenants thereunder;

(D) make any change to any Company Pension Plan or any Company Plan that is an
“employee welfare benefit plan” (within the meaning of Section 3(1) of ERISA)
that would materially increase the costs to the Company or any of its
Subsidiaries in respect of such Company Plan;

(E) establish, adopt, or enter into any new arrangement that would be a Company
Plan if in effect on the date hereof, other than individual separation and
release agreements entered into in connection with ordinary-course terminations
on terms consistent with the severance arrangements listed on Section 5.1(h)(i)
of the Company Disclosure Schedule;

(F) accelerate the payment of non-equity related compensation or benefits to any
director, officer, employee, consultant or individual service provider, except
as required (without discretion) pursuant to the terms of the Company Plans;

 

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(G) hire any new officer, employee, consultant or individual service provider
(provided that the Company shall be permitted to (x) hire employees, consultants
or other individual service providers with an aggregate annual base compensation
and target incentive opportunity below $350,000 in the ordinary course of
business consistent with past practice, or (y) engage individual or entity
service providers with an aggregate annual base compensation and target
incentive opportunity below $350,000 in the ordinary course of business
consistent with past practice to fill positions that are open as of the date
hereof or that become open following the date hereof to the extent reasonably
necessary as determined by the Company in its sole discretion to maintain the
Company’s core business); or

(H) terminate any employee or officer of the Company or any of its Subsidiaries
at level B7 or higher other than for cause (as determined in the ordinary course
of business consistent with past practice);

(iv) incur or guarantee any Indebtedness or issue any warrants or other rights
to acquire any Indebtedness, except (A) in the ordinary course of business
consistent with past practice, borrowings under the Company’s revolving credit
facility as in effect as of the date hereof, (B) inter-company Indebtedness
among the Company and its wholly owned Subsidiaries, (C) commercial paper issued
in the ordinary course of business and (D) (i) to the extent not drawn upon and
payments are not triggered thereby, letters of credit, bank guarantees, security
or performance bonds or similar credit support instruments and (ii) overdraft
facilities or cash management programs, in the case of each of clauses (i) and
(ii), issued, made or entered into in the ordinary course of business;

(v) make or commit to any capital expenditures other than (A) in connection with
the repair or replacement of facilities, properties or assets destroyed or
damaged due to casualty or accident or (B) in the ordinary course of business
consistent with past practice and which do not exceed during either the 2017
fiscal year or the 2018 fiscal year one hundred and five percent (105%) of the
amounts reflected in the Company’s capital expenditure budget for 2017, a copy
of which was previously provided to Parent;

(vi) transfer, lease, license, sell, assign, let lapse, abandon, cancel,
mortgage, pledge, place a Lien (other than a Permitted Lien) upon or otherwise
dispose of any Intellectual Property; provided that this clause (vi) shall not
restrict (A) any of the foregoing that occur in the ordinary course of business
or, to the extent applicable, among the Company and its Subsidiaries, (B) the
granting of any licenses of Intellectual Property in the ordinary course
consistent with past practice or (C) transfers, leases, sales, assignments,
lapses, abandonments, cancellations, mortgages, pledges, Liens, or other
dispositions of Intellectual Property (other than licenses) with a fair market
value less than $10,000,000 in the aggregate for all such actions;

(vii) other than in the ordinary course of business consistent with past
practice, transfer, lease, license, sell, assign, let lapse, abandon, cancel,
mortgage, pledge, place a Lien upon or otherwise dispose of any properties or
assets (including capital stock of any of its Subsidiaries but not including any
Intellectual Property, which is governed by Section 6.1(a)(vi) with a fair
market value in excess of $5,000,000 individually or $12,500,000 in the
aggregate (other than transactions among the Company and its wholly owned
Subsidiaries);

 

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(viii) issue, deliver, sell, grant, transfer, or encumber, or authorize the
issuance, delivery, sale, grant, transfer or encumbrance of, any shares of its
capital stock or any securities convertible or exchangeable into or exercisable
for, or any options, warrants or other rights to acquire, any such shares,
except (A) for any Shares issued pursuant to Company Options, Company Restricted
Stock Units and Company Performance Stock Units outstanding on the date of this
Agreement in accordance with the existing terms of such awards and the Company
Stock Plans, or (B) by wholly owned Subsidiaries to the Company or to any other
wholly owned Subsidiary of the Company;

(ix) spend or commit to spend in excess of $5,000,000 individually or
$12,500,000 in the aggregate to acquire any business or businesses or to acquire
assets or other property, whether by merger, consolidation, purchase of property
or assets or otherwise (valuing any non-cash consideration at its fair market
value as of the date of the agreement for such acquisition); provided that
neither the Company nor any of its Subsidiaries shall make any acquisition that
would, or would reasonably be likely to, prevent, delay or impair the Company’s
ability to consummate the transactions contemplated by this Agreement; provided,
further that nothing in this Section 6.1(a)(ix) shall restrict the ability of
the Company to invest additional funds in any existing asset of the Company to
offset any dilution in the Company’s existing interest in such asset;

(x) make any material change with respect to its financial accounting policies
or procedures, except as required by changes in GAAP (or any interpretation
thereof) or by applicable Law;

(xi) except as required by applicable Law, (A) make, change or revoke any
material Tax election or take any material position on any material Tax Return
filed on or after the date of this Agreement, in each case that is inconsistent
with elections made or positions taken in preparing or filing similar Tax
Returns in prior periods, except in each case as a result of, or in response to,
any change in U.S. federal Tax Laws or regulations or administrative guidance
promulgated or issued thereunder, (B) change any Tax accounting period or any
material method of Tax accounting, (C) amend any material Tax Return, (D) settle
or resolve any material Tax liability or any Tax audit or controversy with
respect to a material amount of Taxes, (E) surrender any right to claim a
material refund of Taxes, (F) consent to any extension or waiver of the
limitation period applicable to any material Tax claim or assessment relating to
the Company or any of its Subsidiaries, other than any extension pursuant to an
extension of time to file any Tax Return or (G) enter into any closing agreement
or similar agreement with any Tax authority in respect of Taxes;

(xii) (A) enter into any new line of business other than any line of business
that is reasonably ancillary to and a reasonably foreseeable extension of any
line of business as of the date of this Agreement or (B) conduct a line of
business of the Company or any of its Subsidiaries in any geographic area where
it has never previously conducted business prior to the date of this Agreement;

(xiii) make any loans, advances or capital contributions to, or investments in,
any Person (other than loans, advances or capital contributions to the Company
or any direct or indirect wholly owned Subsidiary of the Company);

 

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(xiv) (A) amend or modify in any material respect or terminate (excluding
terminations upon expiration of the term thereof in accordance with the terms
thereof) any Material Contract or waive, release or assign any material rights,
claims or benefits under any Material Contract, other than any amendment,
modification, termination, waiver, release or assignment (x) as required by Law,
(y) pursuant to “most favored nation” offers made prior to the date of this
Agreement or (z) in the ordinary course of business; provided that in no event
shall the Company or its Subsidiaries amend or modify a Contract in which the
packaging or rate terms would materially impact meeting the Company’s business
plan, (B) enter into any Contract that would have been a Material Contract had
it been entered into prior to the date of this Agreement unless it is on terms
substantially consistent with, or on terms more favorable to the Company and/or
its Subsidiaries (and to Parent and its Subsidiaries following the Closing) than
a contract it is replacing; provided that in no event shall the Company or its
Subsidiaries enter into a Contract in which the packaging or rate terms would
materially impact meeting the Company’s business plan or (C) without restricting
any action that is permissible in accordance with clauses (A) or (B) hereof,
make any concession, or offer to make any concession, under any Material
Contract except for (x) annual “most favored nation” offers made in the ordinary
course of business consistent with past practice in connection with new issues
arising after March 2017 or (y) mutual “clean slate” releases with distributors;
provided that the foregoing shall not prohibit or restrict the ability of the
Company or its Subsidiaries to take any action described in this
Section 6.1(a)(xiv) in the ordinary course of business with respect to Material
Contracts between the Company and/or one or more of its wholly owned
Subsidiaries; provided, further that for the avoidance of doubt, this
Section 6.1(a)(xiv) shall not prohibit or restrict any Company Plans;

(xv) settle any action, suit, case, litigation, claim, hearing, arbitration,
investigation or other proceedings before or threatened to be brought before a
Governmental Entity, or pay, discharge, settle or waive any material liability,
other than settlements (A) if the amount of any such settlement is not in excess
of $500,000 individually or $2,000,000 in the aggregate; provided that such
settlements are solely for money damages (and confidentiality and other similar
customary provisions that would not reasonably be expected to place any material
restrictions on the business activities of the Company and its Subsidiaries or
Parent and its Subsidiaries), (B) for amounts not in excess of the Company’s
available insurance coverage as of the date hereof or (C) relating to Taxes
(which shall be governed by Section 6.1(a)(xi)); provided, further that for the
avoidance of doubt, this Section 6.1(a)(xv) shall not restrict the Company’s
ability to enter into mutual releases under “clean slate provisions” (as that
term is understood in the industry of the Company) under its Affiliation
Contracts;

(xvi) enter into any collective bargaining agreement, other than renewals of any
collective bargaining agreements in the ordinary course of business;

(xvii) enter into any agreement or arrangement with an Affiliate, other than any
Contracts solely between or among the Company and/or its wholly owned
Subsidiaries;

(xviii) permit any insurance policy or arrangement naming or providing for it as
a beneficiary or a loss payable payee (other than ordinary course production
policies that expire in accordance with their terms and the liability for which
is covered by other insurance policies or arrangements of the Company without
any impairment to the terms of coverage) to be cancelled or terminated (unless
such policy or arrangement is cancelled or terminated in the ordinary course of
business consistent with past practice and concurrently replaced with a policy
or arrangement with substantially similar coverage) or materially impaired; or

 

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(xix) agree, resolve or commit to do any of the foregoing.

(b) Parent covenants and agrees as to itself and its Subsidiaries that, from and
after the execution of this Agreement and prior to the Effective Time (unless
the Company shall otherwise approve in writing, which approval shall not be
unreasonably withheld, conditioned or delayed, and except as (1) required by
applicable Law, (2) expressly required by this Agreement or (3) otherwise
expressly disclosed in Section 6.1(b) of the Parent Disclosure Letter), Parent
shall use its reasonable best efforts to conduct its business and the business
of its Subsidiaries in the ordinary course of business consistent with past
practice and each of Parent and its Subsidiaries shall, subject to compliance
with the specific matters set forth below, use reasonable best efforts to
preserve its business organization intact and maintain the existing relations
and goodwill with Governmental Entities, customers, suppliers, distributors,
licensors, creditors, lessors, employees and business associates and others
having material business dealings with it and keep available the services of
Parent and its Subsidiaries’ present employees and agents. Without limiting the
generality of, and in furtherance of, the foregoing, Parent covenants and agrees
as to itself and its Subsidiaries that, from and after the date of this
Agreement and prior to the Effective Time, except (A) as required by applicable
Law, (B) as the Company may approve in writing (such approval not to be
unreasonably withheld, conditioned or delayed), (C) as expressly disclosed in
Section 6.1(b) of the Parent Disclosure Letter or (D) as expressly provided for
in this Agreement, Parent shall not and will not permit any of its Subsidiaries
to:

(i) (A) amend the Parent Certificate of Incorporation or the Parent Bylaws (or
comparable governing documents of any wholly owned Subsidiary of Parent, other
than immaterial amendments that would not prevent, materially delay or
materially impair the Merger or the other transactions contemplated by this
Agreement), (B) split, combine, subdivide or reclassify its outstanding shares
of capital stock (except for any such transaction by a wholly owned Subsidiary
of Parent which remains a wholly owned Subsidiary after consummation of such
transaction), (C) declare, set aside or pay any dividend or distribution payable
in cash, stock or property (or any combination thereof) in respect of any shares
of its capital stock (except for any dividends or distributions paid by a direct
or indirect wholly owned Subsidiary of Parent to another direct or indirect
wholly owned Subsidiary of Parent or to Parent, or (D) purchase, repurchase,
redeem or otherwise acquire any shares of its capital stock or any securities
convertible or exchangeable into or exercisable for any shares of its capital
stock (other than (1) pursuant to the cashless exercise of Parent stock options
or stock appreciation rights or the forfeiture of, or withholding of Taxes with
respect to, Parent stock options, restricted stock units, performance stock
units, deferred share units, stock appreciation rights or other equity awards in
connection with any Taxable event related to such awards, in each case in
accordance with past practice and with the terms of the applicable Parent Stock
Plan as in effect on the date of this Agreement (or as modified after the date
of this Agreement in accordance with the terms of this Agreement) or
(2) purchases, repurchases, redemptions or other acquisitions of securities of
any wholly owned Subsidiary of Parent by Parent or any other wholly owned
Subsidiary of Parent);

(ii) merge or consolidate with any other Person, or restructure, reorganize or
completely or partially liquidate (other than mergers among, or the
restructuring, reorganization or liquidation of any wholly owned Subsidiaries of
Parent that would not prevent, materially delay or materially impair the Merger
or the other transactions contemplated by this Agreement);

 

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(iii) issue, deliver, sell, grant, transfer, or encumber, or authorize the
issuance, delivery, sale, grant, transfer or encumbrance of, any shares of its
capital stock or any securities convertible or exchangeable into or exercisable
for, or any options, warrants or other rights to acquire, any such shares,
except (A) for any Parent Common Stock issued pursuant to Parent stock options,
restricted stock units, performance stock units, deferred share units, stock
appreciation rights or other equity awards outstanding on the date of this
Agreement in accordance with the existing terms of such awards and the Parent
Stock Plans or granted after the date of this Agreement in the ordinary course
of business consistent with past practice or (B) by wholly owned Subsidiaries to
Parent or to any other wholly owned Subsidiary of Parent;

(iv) incur borrowings under the Revolving Credit Facility, except to the extent
that the outstanding amount thereunder does not exceed $874,000,000 (the
“Revolver Cap”) as a result of such borrowing; provided that (x) the Revolver
Cap shall be reduced to $800,000,000 from and after September 30, 2017 and
(y) the limitation set forth in this clause (iv) shall cease to apply on the
Amendment Effective Date; or

(v) agree, resolve or commit to do any of the foregoing.

(c) All notices, requests, instructions, communications or other documents to be
given in connection with any consultation or approval required pursuant to this
Section 6.1 shall be in writing and shall be deemed given as provided for in
Section 9.6, and, in each case, shall be addressed to such individuals as the
parties shall designate in writing from time to time.

6.2 Company Acquisition Proposal.

(a) No Solicitation or Negotiation. From and after the date of this Agreement
until the earlier to occur of the Effective Time and the termination of this
Agreement in accordance with Article VIII, except as expressly permitted by this
Section 6.2, the Company shall not, and shall cause its and its Subsidiaries’
directors, officers and employees not to, and shall instruct its and their
respective investment bankers, attorneys, accountants and other advisors or
representatives (collectively, along with such directors, officers and
employees, “Representatives”) not to, directly or indirectly:

(i) solicit, initiate, knowingly induce, knowingly encourage or knowingly
facilitate any inquiries or the making of any proposal or offer that
constitutes, or would reasonably be expected to lead to, a Company Acquisition
Proposal;

(ii) participate in any discussions or negotiations with any Person regarding
any Company Acquisition Proposal;

(iii) provide any non-public information or data concerning the Company or any
of its Subsidiaries to any Person in connection with any Company Acquisition
Proposal; or

 

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(iv) approve or recommend, make any public statement approving or recommending,
or enter into any agreement relating to, any inquiry, proposal or offer that
constitutes, or would reasonably be expected to lead to, a Company Acquisition
Proposal.

The Company shall, and the Company shall cause its Subsidiaries and
Representatives to, immediately cease and cause to be terminated any discussions
and negotiations with any Person conducted heretofore with respect to any
Company Acquisition Proposal, or proposal that would reasonably be expected to
lead to a Company Acquisition Proposal, and shall promptly terminate access by
any such Person to any physical or electronic data rooms relating to any such
Company Acquisition Proposal. The Company shall take all actions necessary to
enforce its rights under the provisions of any “standstill” agreement between
the Company and any Person (other than Parent), and shall not grant any waiver
of, or agree to any amendment or modification to, any such agreement, to permit
such person to submit a Company Acquisition Proposal; provided that the
foregoing shall not restrict the Company from permitting a Person to orally
request the waiver of a “standstill” or similar obligation or from granting such
a waiver, in each case, to the extent the Company’s board of directors
determines in good faith, after consultation with outside legal counsel, that
the failure to take such action would reasonably be expected to constitute a
breach of the directors’ fiduciary duties under applicable Law.

(b) Fiduciary Exception to No Solicitation Provision. Notwithstanding anything
to the contrary in Section 6.2(a), prior to the time, but not after, the Company
Requisite Vote is obtained, the Company may, in response to an unsolicited, bona
fide written Company Acquisition Proposal which did not result from a breach, in
any material respect, of this Section 6.2 and so long as it has provided prior
written notice to Parent, (i) provide access to non-public information regarding
the Company or any of its Subsidiaries to the Person who made such Company
Acquisition Proposal; provided that such information has previously been made
available to Parent or is provided to Parent substantially concurrently with the
making of such information available to such Person and that, prior to
furnishing any such material non-public information, the Company receives from
the Person making such Company Acquisition Proposal an executed confidentiality
agreement with terms at least as restrictive in all material respects on such
Person as the Confidentiality Agreement’s terms are on Parent (it being
understood that such confidentiality agreement need not prohibit the making or
amending of a Company Acquisition Proposal), and (ii) engage or participate in
any discussions or negotiations with any such Person regarding such Company
Acquisition Proposal if, and only if, prior to taking any action described in
clause (i) or (ii) above, the Company’s board of directors determines in good
faith after consultation with outside legal counsel that (A) based on the
information then available and after consultation with a financial advisor of
nationally recognized reputation that such Company Acquisition Proposal either
constitutes a Company Superior Proposal or would reasonably be expected to
result in a Company Superior Proposal and (B) the failure to take such action
would be inconsistent with the directors’ fiduciary duties under applicable Law.
In no event may the Company or any of its Subsidiaries or any of their
Representatives directly or indirectly reimburse or pay, or agree to reimburse
or pay, the fees, costs or expenses of, or provide or agree to provide any
compensation to, any Person or group (or any of its or their Representatives or
potential financing sources) who makes a Company Acquisition Proposal.

 

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(c) Notice. The Company shall promptly (and, in any event, within twenty-four
(24) hours) notify Parent if (i) any written or other bona fide inquiries,
proposals or offers with respect to a Company Acquisition Proposal are received
by the Company, (ii) any non-public information is requested in connection with
any Company Acquisition Proposal from the Company or (iii) any discussions or
negotiation with respect to a Company Acquisition Proposal are sought to be
initiated or continued with the Company, indicating, in connection with such
notice, the name of such Person and the material terms and conditions of any
proposals or offers (including, if applicable, copies of any written requests,
proposals or offers, including proposed agreements) and thereafter shall keep
Parent informed, on a current basis, of the status and terms of any such
proposals or offers (including any amendments thereto) and the status of any
such discussions or negotiations.

(d) Definitions. For purposes of this Agreement:

“Company Acquisition Proposal” means any proposal, offer, inquiry or indication
of interest from any Person or group (as defined in or under Section 13 of the
Exchange Act) relating to a merger, consolidation, dissolution, liquidation,
tender offer, recapitalization, reorganization, share exchange, share purchase,
asset purchase, business combination, joint venture, partnership, dissolution,
liquidation, spin-off, extraordinary dividend or similar transaction or series
of transactions involving the Company or any of its Subsidiaries which is
structured to permit such Person or group to, directly or indirectly, acquire
beneficial ownership of (i) twenty percent (20%) or more of the outstanding
Shares or other equity securities of the Company, or twenty percent (20%) or
more of the consolidated net revenues, net income or total assets of the Company
or (ii) twenty percent (20%) or more of the outstanding class or classes of
equity securities that collectively have the right to elect a majority of the
board of directors of the Company or any successor thereto, in each case, other
than the transactions contemplated by this Agreement.

“Company Intervening Event” means any event, occurrence, fact, condition,
change, development or effect occurring or arising after the date of this
Agreement that (i) was not known to, or reasonably foreseeable by, the board of
directors of the Company prior to the execution of this Agreement (or if known
or reasonably foreseeable, the material consequences of which were not known or
reasonably foreseeable), which event, occurrence, fact, condition, change,
development or effect, or any material consequence thereof, becomes known to, or
reasonably foreseeable by, the board of directors of the Company prior to the
receipt of the Company Requisite Vote and (ii) does not relate to (A) a Company
Acquisition Proposal or (B) any (1) changes in the market price or trading
volume of the Company or Parent or (2) the Company or Parent meeting, failing to
meet or exceeding published or unpublished revenue or earnings projections, in
each case in and of itself (it being understood that with respect to each of
clause (1) and clause (2) the facts or occurrences giving rise or contributing
to such change or event may be taken into account when determining a Company
Intervening Event to the extent otherwise satisfying this definition).

 

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“Company Superior Proposal” means any bona fide binding written offer (not
solicited by or on behalf of the Company or any of its Subsidiaries or any of
their respective Representatives or otherwise resulting in violation of
Section 6.2(a)) made by a third party after the date of this Agreement that, if
consummated, would result in such third party (or its shareholders) (x) owning,
directly or indirectly, a majority of the outstanding Shares (or of the stock of
the surviving entity in a merger or the direct or indirect parent of the
surviving entity in a merger) or a majority of the assets (measured on a fair
market value basis) of the Company and its Subsidiaries, taken as a whole, and
(y) having the right to elect a majority of the board of directors of the
Company or any successor thereto, which the Company’s board of directors
determines in good faith (after consultation with outside legal counsel and
financial advisors of nationally recognized reputation) to be (i) more favorable
to the holders of Shares from a financial point of view than the Merger (taking
into account all of the terms and conditions of, and the likelihood of
completion of, such proposal and this Agreement (including any changes to the
financial terms of this Agreement proposed by Parent in response to such offer
or otherwise)) and (ii) reasonably capable of being completed, taking into
account all financial, legal, regulatory and other aspects of such proposal.

(e) No Company Change in Recommendation or Company Alternative Acquisition
Agreement. Except as provided in Section 6.2(f) and Section 6.2(g), the
Company’s board of directors and each committee of the Company’s board of
directors shall not (i) withhold, withdraw, qualify or modify (or publicly
propose or resolve to withhold, withdraw, qualify or modify), in a manner
adverse to Parent, the Company Recommendation or approve, recommend or otherwise
declare advisable (or publicly propose or resolve to approve, recommend or
otherwise declare advisable) any Company Acquisition Proposal or make or
authorize the making of any public statement (oral or written) that has the
substantive effect of such a withdrawal, qualification or modification (each, a
“Company Change in Recommendation”), (ii) cause or permit the Company or any of
its Subsidiaries to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement,
option agreement, joint venture agreement, partnership agreement, lease
agreement or other agreement (other than a confidentiality agreement referred to
in Section 6.2(b) entered into in compliance with Section 6.2(a)) relating to
any Company Acquisition Proposal or requiring the Company (or that would require
the Company) to abandon, terminate, or fail to consummate the Merger or any
other transaction contemplated by this Agreement (a “Company Alternative
Acquisition Agreement”); or (iii) approve or recommend, or publicly propose to
enter into a Company Alternative Acquisition Agreement.

(f) Fiduciary Exception to Company Change in Recommendation Provision.
Notwithstanding anything to the contrary set forth in Section 6.2(e), following
receipt of a written Company Acquisition Proposal by the Company after the date
of this Agreement that did not result from a material breach of this Section 6.2
and the Company’s board of directors determining in good faith, after
consultation with financial advisors of nationally recognized reputation and
outside legal counsel, constitutes a Company Superior Proposal, the Company’s
board of directors may, at any time prior to the time the Company Requisite Vote
is obtained, make a Company Change in Recommendation or terminate this Agreement
to enter into a Company Alternative Acquisition Agreement with respect to such
Company Superior Proposal in accordance with Section 6.2(f)(ii), or authorize,
resolve, agree or propose publicly to take any such action, if all of the
following conditions are met:

 

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(i) the Company shall have (A) provided to Parent four (4) Business Days’ prior
written notice, which shall state expressly (1) that it has received a written
Company Acquisition Proposal that constitutes a Company Superior Proposal,
(2) the material terms and conditions of the Company Acquisition Proposal
(including the consideration offered therein and the identity of the Person or
group making the Company Acquisition Proposal), and shall have contemporaneously
provided an unredacted copy of the Company Alternative Acquisition Agreement and
all other documents (other than immaterial documents) related to the Company
Superior Proposal (it being understood and agreed that any amendment to the
financial terms or any other material term or condition of such Company Superior
Proposal shall require a new notice and an additional three (3) Business Day
period) and (3) that, subject to clause (ii) below, the Company’s board of
directors has determined to effect a Company Change in Recommendation or to
terminate this Agreement in accordance with Section 8.3(c) in order to enter
into the Company Alternative Acquisition Agreement, as applicable, and (B) prior
to making such a Company Change in Recommendation or terminating this Agreement
in accordance with Section 8.3(c), as applicable, (x) used commercially
reasonable efforts to engage in good faith with Parent (to the extent Parent
wishes to engage) during such notice period to consider adjustments to the terms
and conditions of this Agreement such that the Company Alternative Acquisition
Agreement ceases to constitute a Company Superior Proposal, and (y) in
determining whether to make a Company Change in Recommendation and/or to effect
such a termination in accordance with Section 8.3(c), the board of directors of
the Company shall take into account any changes to the terms of this Agreement
proposed by Parent and any other information provided by Parent in response to
such notice; and

(ii) the Company’s board of directors shall have determined, in good faith,
after consultation with financial advisors of nationally recognized reputation
and outside legal counsel, that, in light of such Company Superior Proposal and
taking into account any revised terms proposed by Parent, such Company Superior
Proposal continues to constitute a Company Superior Proposal and, after
consultation with outside legal counsel, that the failure to make such Company
Change in Recommendation or to so terminate this Agreement in accordance with
Section 8.3(c), as applicable, would be inconsistent with the directors’
fiduciary duties under applicable Law.

(g) Company Change in Recommendation. Notwithstanding anything to the contrary
set forth in Section 6.2(e), upon the occurrence of any Company Intervening
Event, the Company’s board of directors may, at any time prior to the time the
Company Requisite Vote is obtained, make a Company Change in Recommendation, if
all of the following conditions are met:

(i) the Company shall have (A) provided to Parent four (4) Business Days’ prior
written notice, which shall (1) set forth in reasonable detail information
describing the Company Intervening Event and the rationale for the Company
Change in Recommendation, and (2) state expressly that, subject to clause
(ii) below, the Company’s board of directors has determined to effect a Company
Change in Recommendation and (B) prior to making such a Company Change in
Recommendation, used commercially reasonable efforts to engage in good faith
with Parent (to the extent Parent wishes to engage) during such four
(4) Business Day period to consider adjustments to the terms and conditions of
this Agreement in such a manner that the failure of the Company’s board of
directors to make a Company Change in Recommendation in response to the Company
Intervening Event in accordance with clause (ii) below would no longer be
inconsistent with the directors’ fiduciary duties under applicable Law; and

 

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(ii) the Company’s board of directors shall have determined in good faith, after
consultation with financial advisors of nationally recognized reputation and
outside legal counsel, that in light of such Company Intervening Event and
taking into account any revised terms proposed by Parent, the failure to make a
Company Change in Recommendation, would be inconsistent with the directors’
fiduciary duties under applicable Law.

(h) Certain Permitted Disclosure. Nothing contained in this Section 6.2 shall be
deemed to prohibit the Company from complying with its disclosure obligations
under applicable U.S. federal or state Law with regard to a Company Acquisition
Proposal; provided that any “stop look and listen” communication to its
stockholders of the nature contemplated by Rule 14d-9 under the Exchange Act
shall include an affirmative statement to the effect that the recommendation of
the Company’s board of directors is affirmed or remains unchanged; provided,
further, that this paragraph (h) shall not be deemed to permit the Company or
the Company’s board of directors to effect a Company Change in Recommendation
except in accordance with Section 6.2(f). The Company shall not submit to the
vote of its stockholders any Company Acquisition Proposal or Company Superior
Proposal prior to the termination of this Agreement.

6.3 Parent Acquisition Proposal.

(a) No Solicitation or Negotiation. From and after the date of this Agreement
until the earlier to occur of the Effective Time and the termination of this
Agreement in accordance with Article VIII, except as expressly permitted by this
Section 6.3, Parent shall not, and shall cause its and its Subsidiaries’
directors, officers and employees not to, and shall instruct its Representatives
not to, directly or indirectly:

(i) solicit, initiate, knowingly induce, knowingly encourage or knowingly
facilitate any inquiries or the making of any proposal or offer that
constitutes, or would reasonably be expected to lead to, a Parent Acquisition
Proposal;

(ii) participate in any discussions or negotiations with any Person regarding
any Parent Acquisition Proposal;

(iii) provide any non-public information or data concerning Parent or any of its
Subsidiaries to any Person in connection with any Parent Acquisition Proposal;

(iv) approve or recommend, make any public statement approving or recommending,
or enter into any agreement relating to, any inquiry, proposal or offer that
constitutes, or would reasonably be expected to lead to, a Parent Acquisition
Proposal.

Parent shall, and Parent shall cause its Subsidiaries and Representatives to,
immediately cease and cause to be terminated any discussions and negotiations
with any Person conducted heretofore with respect to any Parent Acquisition
Proposal, or proposal that would reasonably be expected to lead to a Parent
Acquisition Proposal; provided that the foregoing shall not restrict

 

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Parent from permitting a Person to orally request the waiver of a “standstill”
or similar obligation or from granting such a waiver, in each case, to the
extent Parent’s board of directors determines in good faith, after consultation
with outside legal counsel, that the failure to take such action would be
inconsistent with the directors’ fiduciary duties under applicable Law.

(b) Fiduciary Exception to No Solicitation Provision. Notwithstanding anything
to the contrary in Section 6.3(a), prior to the time, but not after, the Parent
Requisite Vote is obtained, Parent may, in response to an unsolicited, bona fide
written Parent Acquisition Proposal which did not result from a breach, in any
material respect, of this Section 6.3 and so long as it has provided prior
written notice to the Company, (i) provide access to non-public information
regarding Parent or any of its Subsidiaries to the Person who made such Parent
Acquisition Proposal; provided that such information has previously been made
available to the Company or is provided to the Company substantially
concurrently with the making of such information available to such Person and
that, prior to furnishing any such material non-public information, Parent
receives from the Person making such Parent Acquisition Proposal an executed
confidentiality agreement with terms at least as restrictive in all material
respects on such Person as the Confidentiality Agreement’s terms are on the
Company (it being understood that such confidentiality agreement need not
prohibit the making or amending of a Parent Acquisition Proposal); and
(ii) engage or participate in any discussions or negotiations with any such
Person regarding such Parent Acquisition Proposal if, and only if, prior to
taking any action described in clause (i) or (ii) above, Parent’s board of
directors determines in good faith after consultation with outside legal counsel
that (A) based on the information then available and after consultation with a
financial advisor of nationally recognized reputation that such Parent
Acquisition Proposal either constitutes a Parent Superior Proposal or would
reasonably be expected to result in a Parent Superior Proposal and (B) the
failure to take such action would be inconsistent with the directors’ fiduciary
duties under applicable Law. In no event may Parent or any of its Subsidiaries
or any of their Representatives directly or indirectly reimburse or pay, or
agree to reimburse or pay, the fees, costs or expenses of, or provide or agree
to provide any compensation to, any Person or group (or any of its or their
Representatives or potential financing sources) who makes a Parent Acquisition
Proposal.

(c) Notice. Parent shall promptly (and, in any event, within twenty-four
(24) hours) notify the Company if (i) any written or other bona fide inquiries,
proposals or offers with respect to a Parent Acquisition Proposal are received
by Parent, (ii) any non-public information is requested in connection with any
Parent Acquisition Proposal from Parent, or (iii) any discussions or negotiation
with respect to a Parent Acquisition Proposal are sought to be initiated or
continued with Parent, indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any proposals or offers
(including, if applicable, copies of any written requests, proposals or offers,
including proposed agreements) and thereafter shall keep the Company informed,
on a current basis, of the status and terms of any such proposals or offers
(including any amendments thereto) and the status of any such discussions or
negotiations.

(d) Definitions. For purposes of Section this Agreement:

“Parent Acquisition Proposal” means any proposal, offer, inquiry or indication
of interest from any Person or group (as defined in or under Section 13 of the
Exchange Act) relating to a merger, consolidation, dissolution, liquidation,
tender offer,

 

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recapitalization, reorganization, share exchange, share purchase, asset
purchase, business combination, joint venture, partnership, dissolution,
liquidation, spin-off, extraordinary dividend or similar transaction or series
of transactions involving Parent or any of its Subsidiaries which is structured
to permit such Person or group to, directly or indirectly, acquire beneficial
ownership of (i) twenty percent (20%) or more of the outstanding capital stock
of Parent (treating the Parent Preferred Stock on an as-converted basis), or
twenty percent (20%) or more of the consolidated net revenues, net income or
total assets of Parent or (ii) twenty percent (20%) or more of the outstanding
class or classes of capital stock that collectively have the right to elect a
majority of the board of directors of Parent or any successor thereto, in each
case, other than the transactions contemplated by this Agreement; provided that
any sale of capital stock of Parent by its Specified Affiliates shall not be a
Parent Acquisition Proposal. For purposes of this Agreement, the term “Specified
Affiliates” shall mean the Persons set forth on Section 6.3(d) of the Parent
Disclosure Letter.

“Parent Intervening Event” means any event, occurrence, fact, condition, change,
development or effect occurring or arising after the date of this Agreement that
(i) was not known to, or reasonably foreseeable by, the board of directors of
Parent prior to the execution of this Agreement (or if known or reasonably
foreseeable, the material consequences of which were not known or reasonably
foreseeable), which event, occurrence, fact, condition, change, development or
effect, or any material consequence thereof, becomes known to, or reasonably
foreseeable by, the board of directors of Parent prior to the receipt of the
Parent Requisite Vote and (ii) does not relate to (A) a Parent Acquisition
Proposal or (B) any (1) changes in the market price or trading volume of Parent
or the Company or (2) the Company or Parent meeting, failing to meet or
exceeding published or unpublished revenue or earnings projections, in each case
in and of itself (it being understood that with respect to each of clause
(1) and clause (2) the facts or occurrences giving rise or contributing to such
change or event may be taken into account when determining a Parent Intervening
Event to the extent otherwise satisfying this definition).

“Parent Superior Proposal” means any bona fide binding written offer (not
solicited by or on behalf of Parent or any of its Subsidiaries or any of their
respective Representatives or otherwise resulting in violation of
Section 6.3(a)) made by a third party after the date of this Agreement that, if
consummated, would result in such third party (or its shareholders) (x) owning,
directly or indirectly, a majority of the outstanding shares of capital stock of
Parent (or of the stock of the surviving entity in a merger or the direct or
indirect parent of the surviving entity in a merger) or a majority of the assets
(measured on a fair market value basis) of Parent and its Subsidiaries, taken as
a whole, and (y) having the right to elect a majority of the board of directors
of Parent or any successor thereto, which Parent’s board of directors determines
in good faith (after consultation with outside legal counsel and financial
advisors of nationally recognized reputation) to be (i) more favorable to the
holders of shares of capital stock of Parent from a financial point of view than
the Merger (taking into account all of the terms and conditions of, and the
likelihood of completion of, such proposal and this Agreement (including any
changes to the financial terms of this Agreement proposed by the Company in
response to such offer or otherwise)) and (ii) reasonably capable of being
completed, taking into account all financial, legal, regulatory and other
aspects of such proposal.

 

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(e) No Parent Change in Recommendation or Parent Alternative Acquisition
Agreement. Except as provided in Section 6.3(f) and Section 6.3(g), Parent’s
board of directors and each committee of Parent’s board of directors shall not
(i) withhold, withdraw, qualify or modify (or publicly propose or resolve to
withhold, withdraw, qualify or modify), in a manner adverse to the Company, the
Parent Recommendation or approve, recommend or otherwise declare advisable (or
publicly propose or resolve to approve, recommend or otherwise declare
advisable) any Parent Acquisition Proposal or make or authorize the making of
any public statement (oral or written) that has the substantive effect of such a
withdrawal, qualification or modification (each, a “Parent Change in
Recommendation”), (ii) cause or permit Parent or any of its Subsidiaries to
enter into any letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement, option agreement, joint
venture agreement, partnership agreement, lease agreement or other agreement
(other than a confidentiality agreement referred to in Section 6.3(b) entered
into in compliance with Section 6.3(a)) (a “Parent Alternative Acquisition
Agreement”) relating to any Parent Acquisition Proposal or requiring Parent (or
that would require Parent) to abandon, terminate, or fail to consummate the
Merger or any other transaction contemplated by this Agreement; or (iii) approve
or recommend, or publicly propose to enter into a Parent Alternative Acquisition
Agreement.

(f) Fiduciary Exception to Parent Change in Recommendation Provision.
Notwithstanding anything to the contrary set forth in Section 6.3(e), following
receipt of a written Parent Acquisition Proposal by Parent after the date of
this Agreement that did not result from a material breach of this Section 6.3
and Parent’s board of directors determining in good faith, after consultation
with financial advisors of nationally recognized reputation and outside legal
counsel, constitutes a Parent Superior Proposal, Parent’s board of directors
may, at any time prior to the time the Parent Requisite Vote is obtained, make a
Parent Change in Recommendation with respect to such Parent Superior Proposal in
accordance with Section 6.3(f)(ii), or authorize, resolve, agree or propose
publicly to take any such action, if all of the following conditions are met:

(i) Parent shall have (A) provided to the Company four (4) Business Days’ prior
written notice, which shall state expressly (1) that it has received a written
Parent Acquisition Proposal that constitutes a Parent Superior Proposal, (2) the
material terms and conditions of the Parent Acquisition Proposal (including the
consideration offered therein and the identity of the Person or group making the
Parent Acquisition Proposal), and shall have contemporaneously provided an
unredacted copy of the Parent Alternative Acquisition Agreement and all other
documents (other than immaterial documents) related to the Parent Superior
Proposal (it being understood and agreed that any amendment to the financial
terms or any other material term or condition of such Parent Superior Proposal
shall require a new notice and an additional three (3) Business Day period) and
(3) that, subject to clause (ii) below, Parent’s board of directors has
determined to effect a Parent Change in Recommendation and (B) prior to making
such a Parent Change in Recommendation (x) used commercially reasonable efforts
to engage in good faith with the Company (to the extent the Company wishes to
engage) during such notice period to consider adjustments to the terms and
conditions of this Agreement such that the Parent Alternative Acquisition
Agreement ceases to constitute a Parent Superior

 

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Proposal, and (y) in determining whether to make a Parent Change in
Recommendation, the board of directors of Parent shall take into account any
changes to the terms of this Agreement proposed by the Company and any other
information provided by the Company in response to such notice; and

(ii) Parent’s board of directors shall have determined, in good faith, after
consultation with financial advisors of nationally recognized reputation, that,
in light of such Parent Superior Proposal and taking into account any revised
terms proposed by the Company, such Parent Superior Proposal continues to
constitute a Parent Superior Proposal and, after consultation with outside legal
counsel, that the failure to make such Parent Change in Recommendation would be
inconsistent with the directors’ fiduciary duties under applicable Law.

(g) Parent Change in Recommendation. Notwithstanding anything to the contrary
set forth in Section 6.3(e), upon the occurrence of any Parent Intervening
Event, Parent’s board of directors may, at any time prior to the time the Parent
Requisite Vote is obtained, make a Parent Change in Recommendation, if all of
the following conditions are met:

(i) Parent shall have (A) provided to the Company four (4) Business Days’ prior
written notice, which shall (1) set forth in reasonable detail information
describing the Parent Intervening Event and the rationale for the Parent Change
in Recommendation, as the case may be, and (2) state expressly that, subject to
clause (ii) below, Parent’s board of directors has determined to effect a Parent
Change in Recommendation and (B) prior to making such a Parent Change in
Recommendation, used commercially reasonable efforts to engage in good faith
with the Company (to the extent the Company wishes to engage) during such five
(5) Business Day period to consider adjustments to the terms and conditions of
this Agreement in such a manner that the failure of Parent’s board of directors
to make a Parent Change in Recommendation in response to the Parent Intervening
Event in accordance with clause (ii) below would no longer be inconsistent with
the directors’ fiduciary duties under applicable Law; and

(ii) Parent’s board of directors shall have determined in good faith, after
consultation with outside legal counsel and financial advisors of nationally
recognized reputation, that in light of such Parent Intervening Event and taking
into account any revised terms proposed by the Company, the failure to make a
Parent Change in Recommendation would be inconsistent with the directors’
fiduciary duties under applicable Law.

(h) Certain Permitted Disclosure. Nothing contained in this Section 6.3 shall be
deemed to prohibit Parent from complying with its disclosure obligations under
applicable U.S. federal or state Law with regard to a Parent Acquisition
Proposal; provided that any “stop look and listen” communication to its
stockholders of the nature contemplated by Rule 14d-9 under the Exchange Act
shall include an affirmative statement to the effect that the recommendation of
Parent’s board of directors is affirmed or remains unchanged; provided, further,
that this paragraph (h) shall not be deemed to permit Parent or Parent’s board
of directors to effect a Parent Change in Recommendation except in accordance
with Section 6.3(f).

 

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6.4 Information Supplied. (a) The Company and Parent shall jointly prepare and
cause to be filed with the SEC a proxy statement (as amended or supplemented
from time to time, the “Joint Proxy Statement/Prospectus”) with respect to the
Company Shareholders Meeting and the Parent Stockholders Meeting. As promptly as
practicable following the date of this Agreement, Parent shall prepare (with the
Company’s reasonable cooperation) and file with the SEC a registration statement
on Form S-4 (as amended or supplemented from time to time, the “Form S-4”), in
which the Joint Proxy Statement/Prospectus will be included as a prospectus, in
connection with the registration under the Securities Act of the shares of
Series C Common Stock to be issued in the Merger. Parent shall use its
reasonable best efforts to have the Form S-4 declared effective under the
Securities Act as promptly as practicable after such filing and to keep the Form
S-4 effective as long as is necessary to consummate the Merger and the other
transactions contemplated hereby. Parent shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or filing a general consent to service of process) required to be
taken under any applicable state securities or “blue sky” laws in connection
with the issuance of shares of Series C Common Stock in the Merger. Each of the
Company and Parent shall furnish all information concerning the Company and the
holders of Shares and Parent and the holders of the capital stock of Parent, as
applicable, as may be reasonably requested in connection with any such action.
Each of the Company and Parent shall use reasonable best efforts to cause the
Joint Proxy Statement/Prospectus to be mailed to the Company’s shareholders and
Parent’s stockholders, as applicable, as promptly as practicable after the Form
S-4 is declared effective under the Securities Act and in connection with the
mailing of the Form of Election.

(b) No filing of, or amendment or supplement to, the Form S-4 will be made by
Parent, and no filing of, or amendment or supplement to, the Joint Proxy
Statement/ Prospectus will be made by the Company or Parent, in each case
without providing the other party a reasonable opportunity to review and comment
thereon (other than, in each case, any filing, amendment or supplement in
connection with a Change in Recommendation), and each party shall consider in
good faith all comments reasonably proposed by the other party. Each of the
Company and Parent shall promptly provide the other with copies of all such
filings, amendments or supplements to the extent not readily publicly available.
Each of the Company and Parent shall furnish all information concerning such
Person and its Affiliates to the other and provide such other assistance as may
be reasonably requested by such other party to be included therein and shall
otherwise reasonably assist and cooperate with the other in the preparation of
the Form S-4 or Joint Proxy Statement/ Prospectus, as applicable, and the
resolution of any comments to either received from the SEC. If at any time prior
to the receipt of the Company Requisite Vote or the Parent Requisite Vote, any
information relating to the Company or Parent, or any of their respective
Affiliates, directors or officers, should be discovered by the Company or Parent
which is required to be set forth in an amendment or supplement to either the
Form S-4 or the Joint Proxy Statement/ Prospectus, so that either such document
would not include any misstatement of a material fact or omit to state any
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, the party which discovers such information shall promptly notify the
other party and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
applicable Law, disseminated to the

 

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shareholders of the Company or the stockholders of Parent, as applicable. The
parties shall notify each other promptly of the receipt of any comments from the
SEC or the staff of the SEC and of any request by the SEC or the staff of the
SEC for amendments or supplements to the Form S-4 or for additional information
and shall supply each other with copies of (i) all correspondence between it or
any of its Representatives, on the one hand, and the SEC or the staff of the
SEC, on the other hand, with respect to the Form S-4, Joint Proxy Statement/
Prospectus or the Merger and (ii) all orders of the SEC relating to the Form
S-4. No response to any comments from the SEC or the staff of the SEC relating
to the Joint Proxy Statement/ Prospectus will be made by either party without
providing the other a reasonable opportunity to review and comment thereon
unless pursuant to a telephone call initiated by the SEC, and each party shall
consider in good faith all comments reasonably proposed by the other party. The
parties will cause the Form S-4 and Joint Proxy Statement/ Prospectus to comply
as to form in all material respects with the applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations thereunder.

6.5 Shareholder and Stockholder Meetings.

(a) Company Family Meeting. The Company shall, in accordance with the Amended
and Restated Scripps Family Agreement, dated May 19, 2015, as amended (the
“Scripps Family Agreement”), duly call and give notice of, and convene as
promptly as practicable, a meeting of the holders of Common Voting Shares who
are signatories to the Scripps Family Agreement (the “Company Family Meeting”)
for the purpose of seeking the proxies required for the Common Shares Requisite
Vote and the Company Requisite Vote. Subject to the provisions of Section 6.2,
the Company’s board of directors shall recommend at the Company Family Meeting
that the holders of Common Voting Shares adopt this Agreement at the Company
Shareholders Meeting and shall use its reasonable best efforts to obtain and
solicit such adoption. A copy of this Agreement or a summary thereof shall be
sent to the holders of Common Voting Shares who are signatories to the Scripps
Family Agreement with the notice of the Company Family Meeting.

(b) Company Shareholders Meeting.

(i) The Company will, as promptly as practicable in accordance with applicable
Law and the Company Articles of Incorporation and Company Code of Regulations,
establish a record date for, duly call and give notice of, and use its
reasonable best efforts to convene a meeting of holders of Shares to consider
and vote upon the adoption of this Agreement (the “Company Shareholders Meeting)
following the conclusion of the Company Family Meeting. Subject to the
provisions of Section 6.2, the Company’s board of directors shall include the
Company Recommendation in the Joint Proxy Statement/ Prospectus and recommend at
the Company Shareholders Meeting that the holders of Shares adopt this Agreement
and shall use its reasonable best efforts to obtain and solicit such adoption.
Notwithstanding the foregoing, if on or before the date on which the Company
Shareholders Meeting is scheduled, the Company reasonably believes that (i) it
will not receive proxies representing the Company Requisite Vote, whether or not
a quorum is present or (ii) it will not have enough Shares represented to
constitute a quorum necessary to conduct the business of the Company
Shareholders Meeting, the Company may postpone or adjourn, or make one or more
successive postponements or adjournments of, the Company Shareholders Meeting as
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Company Shareholders Meeting is not postponed or adjourned more than an
aggregate of fifteen (15) calendar days in connection with any postponements or
adjournments in reliance on the preceding sentence. In addition, notwithstanding
the first sentence of this Section 6.5(b), the Company may postpone or adjourn
the Company Shareholders Meeting to allow reasonable additional time for the
filing or mailing of any supplemental or amended disclosure that the Company has
determined, after consultation with outside legal counsel, is reasonably likely
to be required under applicable Law and for such supplemental or amended
disclosure to be disseminated and reviewed by shareholders of the Company prior
to the Company Shareholders Meeting.

(ii) Notwithstanding any Company Change in Recommendation, the Company shall
nonetheless submit this Agreement to (i) the holders of Shares for adoption at
the Company Shareholders Meeting and (ii) the holders of Common Voting Shares at
the Company Family Meeting (in accordance with Section 6.5(a)) unless this
Agreement is terminated in accordance with Article VIII prior to the Company
Shareholders Meeting. Without the prior written consent of Parent, the adoption
of this Agreement shall be the only matter (other than matters of procedure and
matters required by Law to be voted on by the Company’s shareholders in
connection with the adoption of this Agreement and the transactions contemplated
hereby) that the Company shall propose to be acted on by the shareholders of the
Company at the Company Shareholders Meeting.

(c) Parent Stockholders Meeting.

(i) Parent will, in accordance with applicable Law and its certificate of
incorporation and bylaws, establish a record date for, duly call and give notice
of, and use its reasonable best efforts to convene and hold a meeting of holders
of capital stock of Parent to consider and vote upon the issuance of Series C
Common Stock in connection with the Merger (the “Parent Stockholders Meeting”)
as promptly as practicable. Subject to the provisions of Section 6.3, the Parent
board of directors shall include the Parent Recommendation in the Joint Proxy
Statement/ Prospectus and recommend at the Parent Stockholders Meeting that the
holders of capital stock of Parent approve the issuance of the Series C Common
Stock in connection with the Merger and shall use its reasonable best efforts to
obtain and solicit such approval. Notwithstanding the foregoing, if on a date
preceding the date on which or the date on which the Parent Stockholders Meeting
is scheduled, Parent reasonably believes that (i) it will not receive proxies
representing the Parent Requisite Vote, whether or not a quorum is present, or
(ii) it will not have enough shares of Parent Common Stock and Parent Preferred
Stock represented to constitute a quorum necessary to conduct the business of
the Parent Stockholders Meeting, Parent may postpone or adjourn, or make one or
more successive postponements or adjournments of, the Parent Stockholders
Meeting as long as the date of the Parent Stockholders Meeting is not postponed
or adjourned more than an aggregate of fifteen (15) calendar days in connection
with any postponements or adjournments in reliance on the preceding sentence. In
addition, notwithstanding the first sentence of this Section 6.5(c), Parent may
postpone or adjourn the Parent Stockholders Meeting to allow reasonable
additional time for the filing or mailing of any supplemental or amended
disclosure that Parent has determined, after consultation with outside legal
counsel, is reasonably likely to be required under applicable Law and for such
supplemental or amended disclosure to be disseminated and reviewed by
stockholders of Parent prior to the Parent Stockholders Meeting.

 

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(ii) Notwithstanding any Parent Change in Recommendation, Parent shall
nonetheless seek the Parent Requisite Vote at the Parent Stockholders Meeting
unless this Agreement is terminated in accordance with Article VIII prior to the
Parent Stockholders Meeting. Without the prior written consent of the Company,
the adoption of this Agreement shall be the only matter (other than matters of
procedure and matters required by Law to be voted on by Parent’s stockholders in
connection with the transactions contemplated hereby) that Parent shall propose
to be acted on by the stockholders of Parent at the Parent Stockholders Meeting.

6.6 Filings; Other Actions; Notification.

(a) The Company and Parent shall, subject to Sections 6.2 and 6.3, cooperate
with each other and use, and shall cause their respective Subsidiaries to use,
their respective reasonable best efforts to take or cause to be taken all
actions, and do or cause to be done all things, necessary, proper or advisable
under this Agreement and applicable Laws and Orders to consummate and make
effective the Merger and the other transactions contemplated by this Agreement
as expeditiously as possible, including (i) preparing and filing all
documentation to effect all necessary notices, reports and other filings (and in
any event, by filing within ten (10) Business Days after the date of this
Agreement the notifications, filings and other information required to be filed
under the HSR Act and as promptly as practicable in the case of all other
filings required under any Foreign Competition Laws with respect to the
transactions contemplated hereby, which are set forth Section 7.1(b)(ii) of the
Company Disclosure Letter) and to obtain as expeditiously as possible all
consents, registrations, approvals, permits, expirations of waiting periods and
authorizations necessary or advisable to be obtained from any third party and/or
any Governmental Entity in order to consummate the Merger or any of the other
transactions contemplated by this Agreement, (ii) satisfying the conditions to
consummating the Merger, (iii) defending any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the Merger, (iv) obtaining (and cooperating with each other
in obtaining) any consent, approval of, waiver or any exemption by, any
non-governmental third party, in each case, to the extent necessary, proper or
advisable in connection with the Merger and (v) executing and delivering any
reasonable additional instruments necessary to consummate the transactions
contemplated hereby and to fully carry out the purposes of this Agreement.

(b) Subject to Section 6.6(c), in the event that the parties receive a request
for information or documentary material pursuant to the HSR Act or any other
Antitrust Laws (a “Second Request”), unless otherwise agreed to by the Company,
the Parties will use their reasonable best efforts to submit an appropriate
response to, and to certify compliance with, such Second Request as promptly as
practicable, and counsel for both parties will closely cooperate during the
entirety of any such Second Request review process. Neither Party shall agree to
extend any waiting period under the HSR Act or any other Antitrust Laws or enter
into any agreement with any Governmental Entity to delay the transactions
contemplated hereby except with prior written consent of the other Party. None
of the Parties shall knowingly take, cause or permit to be taken or omit to take
any action which such party reasonably expects is likely to materially delay or
prevent consummation of the contemplated transactions, unless otherwise agreed
to by the Parties. As used in this Agreement, the term “Antitrust Laws” means
the Sherman Antitrust Act, the Clayton Antitrust Act of 1914, the HSR Act and
all other federal, state and foreign statutes, rules, regulations, orders,
decrees and other Laws and Orders that are designed or intended to prohibit,
restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade or competition.

 

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(c) Parent and the Company shall cooperate with respect to the Antitrust Laws
and shall have joint decision making authority with respect to obtaining the
required consents under the Antitrust Laws and otherwise hereunder, including
pursuant to this Section 6.6; provided that in the event of any good faith
disagreement, the determination of Parent shall be final and conclusive. No
Party or its counsel shall independently participate in any substantive call or
meeting relating to the Antitrust Laws with any Governmental Entity in respect
of such filings, investigation, or other inquiry without giving the other Party
or its counsel prior notice of such call or meeting and, to the extent permitted
by such Governmental Entity, the opportunity to attend and/or participate. In
furtherance of the foregoing and to the extent permitted by applicable Law,
(i) each party shall notify the other, as far in advance as practicable, of any
filing or material or substantive communication or inquiry it or any of its
Subsidiaries intends to make with any Governmental Entity relating to the
matters that are the subject of this Section 6.6, (ii) prior to submitting any
such filing or making any such communication or inquiry, such party shall
provide the other party and its counsel a reasonable opportunity to review, and
shall consider in good faith the comments of the other party in connection with,
any such filing, communication or inquiry, (iii) promptly following the
submission of such filing or making such communication or inquiry, provide the
other party with a copy of any such filing or, if in written form, communication
or inquiry and (iv) consult with the other party in connection with any inquiry,
hearing, investigation or litigation by, or negotiations with, any Governmental
Entity relating to the Merger, including the scheduling of, and strategic
planning for, any meetings with any Governmental Entity relating thereto. In
exercising the foregoing cooperation rights, the Company and Parent each shall
act reasonably and as promptly as reasonably practicable. Notwithstanding the
foregoing, materials provided pursuant to this Section 6.6 may be reasonably
redacted (A) to remove references concerning the valuation of the Company and
the Merger, (B) as necessary to comply with contractual arrangements, (C) as
necessary to address reasonable privilege concerns or (D) as otherwise required
by Law.

(d) In furtherance and not in limitation of the covenants of the parties
contained in this Section 6.6, each of the parties hereto shall use its
reasonable best efforts to resolve such objections, if any, as may be asserted
by any Governmental Entity in connection with the HSR Act, any other applicable
Antitrust Laws with respect to the transactions contemplated hereby and to avoid
the entry of, or effect the dissolution of, any decree, order, judgment,
injunction, temporary restraining order or other order in any suit or
proceeding, that would otherwise have the effect of preventing the consummation
of the transactions contemplated hereby. For the purposes of this Section 6.6,
“reasonable best efforts” shall include taking any and all actions necessary to
obtain the consents, approvals, permits, waiting period expirations or
authorizations of any Governmental Entity required to consummate the Merger
prior to the Termination Date, including (i) proposing, negotiating, committing
to, effecting and agreeing to, by consent decree, hold separate order, or
otherwise, the sale, divestiture, license, hold separate, and other disposition
of the businesses, assets, products or equity interests of the Company or its
Subsidiaries or any of Parent’s or its Subsidiaries’ other businesses, assets,
products or equity interests now owned or hereafter acquired by Parent,
(ii) creating, terminating, or amending any existing relationships, ventures,
contractual rights or obligations of Parent, the Company or their respective
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committing to any action that would limit Parent’s freedom of action with
respect to, or its ability to retain or hold, directly or indirectly, any
businesses, assets, products or equity interests of Parent or the Company
(including any of their respective Subsidiaries) and (iv) making, or causing any
Subsidiaries to make, any commitment, or committing to (or causing any
Subsidiaries to commit to) make any commitment (to any Governmental Entity or
otherwise) regarding the future operations of Parent or the Company (including
any of their respective Subsidiaries) (the “Regulatory Actions”); provided that
(x) the Company shall not accept or agree to any Regulatory Action without
Parent’s express written consent and (y) Parent shall not be required to accept
or agree to any Regulatory Action that would result in, or would be reasonably
likely to result in, either individually or in the aggregate, a material adverse
effect on Parent, the Company, and their respective Subsidiaries, taken as a
whole, after giving effect to the Merger. Nothing in this Section 6.6 shall
require Parent, the Company or their respective Subsidiaries to take or agree to
take any action with respect to its business or operations unless the
effectiveness of such agreement or action is conditioned upon the Closing. The
parties shall jointly control the process and strategy for pursuing any such
Regulatory Actions; provided that in the event of any good faith disagreement,
the determination of Parent shall be final and conclusive.

(e) In furtherance and not in limitation of the covenants of the parties
contained in this Section 6.6, if any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging the Merger or any other transaction
contemplated by this Agreement as violative of any Antitrust Law, each of the
Company and Parent shall use reasonable best efforts to contest and resist any
such action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary, preliminary
or permanent, that is in effect and that prohibits, prevents or restricts
consummation of the Merger.

(f) Information. The Company and Parent each shall, upon request by the other,
promptly furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Form S-4, Joint
Proxy Statement/ Prospectus and any other statement, filing, notice or
application made by or on behalf of Parent, the Company or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement.

(g) Status. The Company and Parent each shall keep the other reasonably apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by the Company or Parent, as the case may be, or any of
their respective Subsidiaries from any third party and/or any Governmental
Entity with respect to the Merger and the other transactions contemplated by
this Agreement, other than immaterial communications.

6.7 Access; Consultation. (a) Upon reasonable notice, and except as may
otherwise be required by applicable Law, each of the Company and Parent shall,
and shall cause each of its Subsidiaries to, afford the other party’s
Representatives reasonable access, during normal business hours during the
period prior to the Effective Time, to the other party’s, and each of its
Subsidiaries’ employees, properties, assets, books, records

 

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and contracts and, during such period, each of the Company and Parent shall, and
shall cause each of its Subsidiaries to, furnish promptly to the other all
information concerning its or any of its Subsidiaries’ capital stock, business
and personnel as may reasonably be requested by the other; provided that no
investigation pursuant to this Section 6.7 shall affect or be deemed to modify
any representation or warranty made by the Company or Parent; and provided,
further that the foregoing shall require neither the Company nor Parent to
permit any invasive environmental sampling or any inspection or to disclose any
information pursuant to this Section 6.7 to the extent that (i) in the
reasonable good faith judgment of such party, any applicable Law requires such
party or its Subsidiaries to restrict or prohibit access to any such properties
or information, (ii) in the reasonable good faith judgment of such party, the
information is subject to confidentiality obligations to a third party or
(iii) disclosure of any such information or document would result in the loss of
attorney-client privilege; provided, further that with respect to clauses
(i) through (iii) of this Section 6.7(a), Parent or the Company, as applicable,
shall use its commercially reasonable efforts to (1) obtain the required consent
of any such third party to provide such inspection or disclosure, (2) develop an
alternative to providing such information so as to address such matters that is
reasonably acceptable to Parent and the Company and (3) in the case of clauses
(i) and (iii), implement appropriate and mutually agreeable measures to permit
the disclosure of such information in a manner to remove the basis for the
objection, including by arrangement of appropriate clean room procedures,
redaction or entry into a customary joint defense agreement with respect to any
information to be so provided, if the parties determine that doing so would
reasonably permit the disclosure of such information without violating
applicable Law or jeopardizing such privilege. Any investigation pursuant to
this Section 6.7 shall be conducted in such a manner as not to interfere
unreasonably with the conduct of the business of the other party. All requests
for information made pursuant to this Section 6.7 shall be directed to an
executive officer of the Company or Parent, as applicable, or such Person as may
be designated by any such executive officer.

(b) Each of Parent and the Company, as it deems advisable and necessary, may
reasonably designate competitively sensitive material provided to the other as
“Outside Counsel Only Material” or with similar restrictions. Such material and
the information contained therein shall be given only to the outside counsel of
the recipient, or otherwise as the restriction indicates, and be subject to any
additional confidentiality or joint defense agreement between the parties. All
information exchanged pursuant to this Section 6.7 shall be subject to the
Confidentiality Agreement. To the extent that any of the information or material
furnished pursuant to this Section 6.7 or otherwise in accordance with the terms
of this Agreement may include material subject to the attorney-client privilege,
work product doctrine or any other applicable privilege concerning pending or
threatened legal proceedings or governmental investigations, the parties
understand and agree that they have a commonality of interest with respect to
such matters and it is their desire, intention and mutual understanding that the
sharing of such material is not intended to, and shall not, waive or diminish in
any way the confidentiality of such material or its continued protection under
the attorney-client privilege, work product doctrine or other applicable
privilege. All such information that is entitled to protection under the
attorney-client privilege, work product doctrine or other applicable privilege
shall remain entitled to such protection under these privileges, this Agreement,
and under the joint defense doctrine. Prior to the Effective Time, the Company
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cooperate in identifying any actions or practices of the Company or any of its
Subsidiaries that could require remediation under applicable Law and, to the
extent identified, shall cooperate in taking commercially reasonable actions or
practices and other customary actions to reduce the risks related to such
actions where the failure to remediate would reasonably be likely to result in
substantial fines or penalties.

(c) Each of the Company and Parent shall give prompt notice to one another of
event, occurrence, fact, condition, change, development or effect that would
reasonably be likely to result in a Company Material Adverse Effect or Parent
Material Adverse Effect (as applicable), or of any reasonably likely failure of
any condition to Parent’s or the Company’s obligations to effect the Merger (as
applicable).

6.8 Stock Exchange Listing, De-listing and De-registration. Parent shall use its
reasonable best efforts to cause the shares of Series C Common Stock to be
issued in the Merger to be approved for listing on the NASDAQ, subject to
official notice of issuance, prior to the Effective Time. The Company shall take
all actions necessary to permit the Shares and any other security issued by the
Company or one of its Subsidiaries and listed on the NASDAQ to be de-listed from
the NASDAQ and de-registered under the Exchange Act as soon as possible
following the Effective Time.

6.9 Publicity. The initial press release with respect to the Merger and the
other transactions contemplated hereby shall be a joint press release and
thereafter the Company and Parent shall consult with each other prior to issuing
or making, and provide each other the reasonable opportunity to review and
comment on, any press releases or other public announcements with respect to the
Merger and the other transactions contemplated by this Agreement and any filings
with any third party and/or any Governmental Entity (including any national
securities exchange) with respect thereto, except (i) as may be required by
applicable Law or by obligations pursuant to any listing agreement with or rules
of any national securities exchange or the NASDAQ, (ii) any consultation that
would not be reasonably practicable as a result of requirements of applicable
Law, (iii) any press release or public statement that in the good faith judgment
of the applicable party is consistent with prior press releases issued or public
statements made in compliance with this Section 6.9 or (iv) with respect to any
Company Change in Recommendation or Parent Change in Recommendation made in
accordance with this Agreement or the other party’s response thereto.

6.10 Employee Benefits.

(a) Parent agrees that each Company Employee who continues to remain employed
with the Company or its Subsidiaries following the Effective Time (a “Continuing
Employee”) shall, during the period commencing at the Effective Time and ending
on December 31, 2018 (the “Continuation Period”), be provided with (i) an annual
rate of base salary or base wage that is no less favorable than the base salary
or base wages provided to such Continuing Employee by the Company and its
Subsidiaries immediately prior to the Effective Time and (ii) target annual cash
bonus opportunities that are no less favorable in the aggregate than the target
annual cash bonus opportunities (excluding one-time incentives,
transaction-based incentive opportunities, other similar extraordinary
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avoidance of doubt, equity-based compensation) provided to such Continuing
Employee by the Company and its Subsidiaries immediately prior to the Effective
Time. During the period commencing at the Effective Time and ending on
December 31, 2019, Parent will consider Continuing Employees for participation
in Parent’s long-term equity incentive program, as appropriate. Participation,
including eligibility, level and terms and conditions of awards, will be
determined in Parent’s sole discretion. Parent agrees that Continuing Employees
shall, during the Continuation Period, be provided with pension, welfare and
other employee benefits that are substantially comparable in the aggregate to
those provided by the Company and its Subsidiaries to such Continuing Employees
as of immediately prior to the Effective Time (excluding, for the avoidance of
doubt, annual and long-term incentive opportunities and equity-based
compensation). Additionally, Parent agrees that each Continuing Employee shall,
during the period commencing at the Effective Time and ending on the second
anniversary of the Effective Time, be provided with severance benefits that are
no less favorable than the severance benefits provided by the Company and its
Subsidiaries to such Continuing Employee under the Company Plans set forth on
Section 6.10(a) of the Company Disclosure Letter (or such greater benefits as
are required after giving effect to the acknowledgment in Section 6.10(d)).
Notwithstanding the foregoing, no provision of this Agreement shall limit the
ability of Parent and its Subsidiaries (including the Surviving Company and its
Subsidiaries) to provide compensation and benefits to Continuing Employees
(other than compensation and benefits provided under employment agreements and
severance plans as in effect immediately prior to the Effective Time) in
accordance with this Agreement through plans of Parent or its Subsidiaries after
the Effective Time.

(b) Parent shall or shall cause the Surviving Company to use commercially
reasonable efforts to waive, or cause its insurance carriers to waive, all
pre-existing conditions, exclusions or waiting periods that could otherwise
apply to any Company Employee under the benefit plans provided for such Company
Employee following the Closing, except to the extent such conditions, exclusions
or waiting periods were applicable to the Company Employee prior to the
Effective Time. With respect to the plan year during which the Effective Time
occurs, Parent shall provide each Company Employee with credit for deductibles
and out-of-pocket requirements paid prior to the Closing Date in satisfying any
applicable deductible or out-of-pocket requirements under any Parent plan in
which such Company Employee is eligible to participate following the Closing
Date.

(c) From and after the Closing Date, Parent shall or shall cause the Surviving
Company to, provide credit to Company Employees for their service recognized by
the Company and its Subsidiaries as of the Effective Time for purposes of
eligibility, vesting, continuous service, determination of service awards,
vacation, paid time off, and severance entitlements (but excluding benefit
accruals under any (i) defined benefit plan (other than with respect to current
Company Employee participants under the Scripps Networks Interactive Pension
Plan or Scripps Networks Interactive, Inc. Supplemental Executive Retirement
Plan, with respect to their accruals thereunder) or (ii) post-employment health
and welfare plan) to the same extent and for the same purposes as such service
was credited under the Company Plans, provided that such service shall not be
recognized to the extent that such recognition would result in a duplication of
benefits.

 

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(d) Parent hereby acknowledges that the consummation of the Merger or the other
transactions contemplated hereby will constitute a “change in control” or
“change of control” (or other similar phrase) for purposes of any Company Plan
that contains a definition of “change in control” or “change of control” (or
similar phrase), as applicable.

(e) Notwithstanding the foregoing, with respect to any Continuing Employee who
becomes, subject to a CBA, all compensation and benefits treatment and terms and
conditions of employment afforded to such Company Employee shall be provided in
accordance with such collective bargaining agreement or other agreement with a
labor union or like organization and the terms of this Section 6.10 shall not
apply.

(f) Following the Effective Time, Parent shall or shall cause the Surviving
Company to honor all obligations under the employment agreements, severance
plans and retention arrangements listed on Section 5.1(h)(i) of the Company
Disclosure Letter in accordance with their terms as in effect on the date hereof
or, to the extent modified in compliance with Section 6.1(a)(iii), as in effect
immediately prior to the Effective Time.

(g) (i) Prior to the Effective Time, if the Effective Time would otherwise occur
before the end of the then-current purchase period under the ESPP (the “Current
Purchase Period”), the Company will shorten such Current Purchase Period as of a
specified trading day occurring at least ten (10) days prior to the date on
which the Effective Time occurs; and (ii) in all events, the Company shall
terminate the ESPP prior to the Effective Time.

(h) The provisions of this Section 6.10 are solely for the benefit of the
parties to this Agreement, and no other Person, including any union, current or
former employee, participant in any Company Plan or other dependent, beneficiary
or other individual associated therewith, is or shall be regarded for any
purpose as a third party beneficiary to this Agreement. Notwithstanding anything
to the contrary in this Agreement (except to the extent provided in
Section 9.8), no provision of this Agreement is intended to, or does,
(i) constitute the establishment of, or an amendment to, any Company Plan or any
employee benefit plan of Parent, the Surviving Company or any of their
Affiliates, (ii) alter or limit the ability of Parent or any of its Affiliates
to amend, modify or terminate any Company Plan, any other benefit plan, program,
agreement or arrangement, (iii) give any third party any right to enforce the
provisions of this Section 6.10, (iv) prevent Parent, the Surviving Company or
any of their Affiliates, after the Effective Time, from terminating the
employment of any Company Employee or (v) be deemed to confer upon any such
individual or legal representative any right to continued employment or any
rights under or with respect to any plan, program or arrangement described in or
contemplated by this Agreement, and each such individual or legal representative
shall be entitled to look only to the express terms of any such plan, program or
arrangement for his or her rights thereunder.

6.11 Expenses. Except as otherwise provided in Sections 6.16, 8.5 and 8.6,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
expense.

 

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6.12 Indemnification; Directors’ and Officers’ Insurance. (a) From and after the
Effective Time, Parent shall, and shall cause the Surviving Company to,
indemnify and hold harmless each present and former director and officer of the
Company determined as of the Effective Time (the “Indemnified Parties”), against
any costs or expenses (including reasonable and documented attorneys’ fees),
judgments, fines, losses, claims, damages or liabilities incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative (including with respect to matters
existing or occurring at or prior to the Effective Time (including this
Agreement and the transactions and actions contemplated hereby)), arising out of
the fact that such Indemnified Party is or was a director, officer, employee or
agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another Person prior to the Effective
Time, in each case, whether asserted or claimed prior to, at or after the
Effective Time, to the fullest extent that the Company would have been permitted
under Ohio Law, any applicable indemnification agreement to which such Person is
a party, the Company Articles of Incorporation or Company Code of Regulations in
effect on the date of this Agreement to indemnify such Person (and Parent and
the Surviving Company shall also advance expenses as incurred to the fullest
extent permitted under applicable Law; provided that the Person to whom expenses
are advanced shall provide an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to indemnification).
Parent shall ensure that the organizational documents of the Surviving Company
shall, for a period of six (6) years from and after the Effective Time, contain
provisions no less favorable with respect to indemnification, advancement of
expenses and exculpation of present and former directors, officers, employees
and agents of the Company and its Subsidiaries than are presently set forth in
the Company Articles of Incorporation and Company Code of Regulations. Any right
of indemnification of an Indemnified Party pursuant to this Section 6.12 shall
not be amended, repealed or otherwise modified at any time in a manner that
would adversely affect the rights of such Indemnified Party as provided herein.

(b) Prior to the Effective Time, the Company shall and, if the Company is unable
to, Parent shall cause the Surviving Company as of the Effective Time to, obtain
and fully pay for “tail” insurance policies with a claims period of at least six
(6) years from and after the Effective Time from an insurance carrier with the
same or better credit rating as the Company’s current insurance carrier with
respect to directors’ and officers’ liability insurance and fiduciary liability
insurance (collectively, “D&O Insurance”) with benefits and levels of coverage
at least as favorable as the Company’s existing policies with respect to matters
existing or occurring at or prior to the Effective Time (including in connection
with this Agreement or the transactions or actions contemplated hereby);
provided, however that in no event shall the Company expend for such policies an
annual premium amount in excess of three hundred percent (300%) of the annual
premiums currently paid by the Company for such insurance. If the Company for
any reason fails to obtain such “tail” insurance policies as of the Effective
Time, the Surviving Company shall, and Parent shall cause the Surviving Company
to, continue to maintain in effect for a period of at least six (6) years from
and after the Effective Time the D&O Insurance in place as of the date of this
Agreement with benefits and levels of coverage at least as favorable as provided
in the Company’s existing policies as of the date of this Agreement, or the
Surviving Company shall, and Parent shall cause the Surviving Company to,
purchase comparable D&O

 

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Insurance for such six-year period with benefits and levels of coverage at least
as favorable as provided in the Company’s existing policies as of the date of
this Agreement; provided, however that in no event shall the Company expend, or
Parent or the Surviving Company be required to expend for such policies, an
annual amount in excess of three hundred percent (300%) of the annual premiums
currently paid by the Company for such insurance; and, provided, further that if
the premium for such insurance coverage exceeds such amount, the Surviving
Company shall obtain a policy with the greatest coverage available for a cost
not exceeding such amount.

(c) If Parent or any of its successors or assigns (i) shall consolidate with or
merge into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case proper
provisions shall be made so that the successors and assigns of Parent shall
assume all of the obligations of Parent set forth in this Section 6.12.

(d) The provisions of this Section 6.12 are intended to be for the benefit of,
and shall be enforceable by, each of the Indemnified Parties, their heirs and
their representatives. The rights of each Indemnified Party under this
Section 6.12 shall be in addition to any rights such individual may have under
Ohio Law, any applicable indemnification agreement to which such Person is a
party, the Company Articles of Incorporation or the Company Code of Regulations.

(e) Neither of Parent or the Surviving Company shall settle, compromise or
consent to the entry of any judgment in any threatened or actual Proceeding for
which indemnification could be sought by an Indemnified Party hereunder, unless
such settlement, compromise or consent includes an unconditional release of such
Indemnified Party from all liability arising out of such Proceeding or such
Indemnified Party otherwise consents in writing (such consent not to be
unreasonably withheld or delayed) to such settlement, compromise or consent.

(f) Nothing in this Agreement is intended to, shall be construed to or shall
release, waive or impair any rights to directors’ and officers’ insurance claims
under any policy that is or has been in existence with respect to the Company or
any of its Subsidiaries for any of their respective directors, officers or other
employees, it being understood and agreed that the indemnification provided for
in this Section 6.12 is not prior to or in substitution for any such claims
under such policies.

6.13 Takeover Statute. If any Takeover Statute is or may become applicable to
the Merger or the other transactions contemplated by this Agreement, the Company
and its board of directors shall grant such approvals and take such actions as
are necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise use
reasonable best efforts to act to eliminate or minimize the effects of such
statute or regulation on such transactions.

6.14 Control of the Company’s or Parent’s Operations. Nothing contained in this
Agreement shall give Parent or the Company, directly or indirectly, rights to
control or direct the operations of the other prior to the Effective Time. Prior
to the Effective Time, each of Parent and the Company shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision of its operations.

 

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6.15 Section 16(b). The board of directors of each of the Company and Parent
(or, in each case, a duly authorized committee thereof) shall, prior to the
Effective Time, take all such actions as may be necessary or appropriate to
cause the transactions contemplated by this Agreement and any other dispositions
of equity securities of the Company and acquisitions of equity securities of
Parent (including derivative securities) in connection with the transactions
contemplated by this Agreement by each individual who is a director or executive
officer of the Company or is or may become a director or executive officer of
Parent in connection with the transactions contemplated hereby to be exempt
under Rule 16b-3 promulgated under the Exchange Act.

6.16 Financing by Parent.

(a) Parent shall, and shall cause its Affiliates to, use reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary to consummate the Financing or any Substitute Financing no
later than the Closing Date, including using reasonable best efforts to (i) (A)
maintain in effect the Debt Letters and in all material respects comply with all
of their respective obligations thereunder and (B) negotiate, enter into and
deliver definitive agreements with respect to the Financing reflecting the terms
contained in the Debt Letters (including any “flex” provisions in the Redacted
Fee Letter) (or with other terms agreed by Parent and the Financing Parties,
subject to the restrictions on amendments of the Debt Letters set forth below),
so that such agreements are in effect no later than the Closing, and
(ii) satisfying on a timely basis all the conditions to the Financing and the
definitive agreements related thereto that are in Parent’s control. Parent
shall, and shall cause its Affiliates to, use reasonable best efforts to
(i) take, or cause to be taken, all actions, do, or cause to be done, and assist
and cooperate with the other parties in doing, in each case, all things
necessary, proper or advisable to maintain a credit rating for the
non-credit-enhanced, senior unsecured long-term debt of Discovery
Communications, LLC of BBB- or higher by S&P or Baa3 or higher by Moody’s during
the period commencing on the date of this Agreement through and including the
Closing Date, including supplying as promptly as practicable any additional
information and documentary material that may be formally or informally
requested by either S&P or Moody’s; provided, that if notwithstanding Parent’s
use of reasonable best efforts to maintain such rating, a change of control
offer would be required to be made pursuant to the existing senior unsecured
notes of the Company issued pursuant to the Indenture, dated as of December 1,
2011, with U.S. Bank, National Association as trustee, as supplemented prior to
the date hereof (such notes, the “Existing Notes”), Parent may commence prior to
the Closing Date a consent solicitation to waive such change of control offer, a
Notes Tender Offer and/or a Notes Exchange Offer, and to the extent such consent
solicitation, Notes Tender Offer, and/or Notes Exchange Offer with respect to
the outstanding principal amount of the Existing Notes cannot reasonably be
expected to be effectuated on or prior to the Closing Date, Parent shall use its
reasonable best efforts to obtain backstop commitments from the Financing
Sources or other lenders in an aggregate principal amount sufficient to commence
such required change of control offer with respect to the Company’s Existing
Notes, and (ii) (A) obtain, on or prior to the Closing Date, an amendment to the
Revolving Credit Facility in order to permit the Merger, the incurrence of
indebtedness in connection therewith and the other transactions contemplated
hereby (the date

 

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such amendment becomes effective, the “Amendment Effective Date”) and (B) if
notwithstanding Parent’s use of reasonable best efforts to obtain such amendment
pursuant to clause (A) of this clause (ii), such amendment is not reasonably
expected to be effective on or prior to the Closing Date, repay all outstanding
amounts, and terminate all unused commitments under the Revolving Credit
Facility on or prior to the Closing Date. In the event that all conditions set
forth in Sections 7.1 and 7.2 have been satisfied or waived or, upon funding of
the Financing shall be satisfied or waived, Parent and its Affiliates shall use
their reasonable best efforts to cause the Persons providing the Financing (the
“Financing Parties”) to fund on the Closing Date the Financing, to the extent
the proceeds thereof are required to consummate the Merger and the other
transactions contemplated hereby. Parent shall, promptly after it comes to the
Knowledge of Parent, give the Company written notice of any (A) material breach
or default by a Financing Party or any party to any definitive document related
to the Financing of the Debt Letters or any definitive document related to the
Financing, (B) actual or threatened withdrawal, repudiation or termination in
writing of the Debt Letters or the Financing by the Financing Parties or
(C) material dispute or disagreement between or among any parties to the Debt
Letters or any definitive document related to the Financing with respect to the
obligations to fund the Financing or the amount of the Financing to be funded at
Closing; provided, that neither Parent nor any of its Affiliates shall be under
any obligation to disclose any information that is subject to attorney client or
similar privilege to the extent such privilege is asserted in good faith or
otherwise would violate or contravene any Law or any obligation of
confidentiality. Parent may amend, modify, replace, terminate, assign or agree
to any waiver under the Debt Letters without the prior written approval of the
Company, provided, that Parent shall not, without Company’s prior written
consent, permit any such amendment, replacement, modification, assignment,
termination or waiver to be made to, or consent to any waiver of, any provision
of or remedy under the Debt Letters which would (A) reduce the aggregate amount
of the Financing (including by increasing the amount of fees to be paid or
original issue discount) such that the aggregate funds that would be available
to Parent on the Closing Date, together with other financial resources of
Parent, would not be sufficient to provide the funds required to be funded on
the Closing Date to consummate the Merger and to pay all fees and expenses
reasonably expected to be incurred in connection therewith and payable on the
Closing Date, or (B) impose new or additional conditions to the Financing or
otherwise expand any of the conditions to the Financing or otherwise expand,
amend, modify or waive any provision of the Debt Letters in a manner that in any
such case would reasonably be expected to (1) materially delay or make
materially less likely the funding of the Financing (or satisfaction of the
conditions to the Financing) on the Closing Date, (2) materially adversely
impact the ability of Parent to enforce its rights against the Financing Parties
or any other parties to the Debt Letters or the definitive agreements with
respect thereto or (3) materially adversely affect the ability of Parent to
timely consummate the Merger and the other transactions contemplated hereby;
provided, that notwithstanding the foregoing, Parent may modify, supplement or
amend the Debt Letters to add lenders, lead arrangers, bookrunners, syndication
agents or similar entities that have not executed the Debt Letters as of the
date of this Agreement. In the event that new commitment letters and/or fee
letters are entered into in accordance with any amendment, replacement,
supplement or other modification of the Debt Letters permitted pursuant to this
Section 6.16(a), such new commitment letters and/or fee letters shall be deemed
to be the “Debt Letters” for all purposes of this Agreement and references to
“Financing” herein shall include and mean the financing contemplated by the Debt
Letters as so amended, replaced, supplemented or otherwise modified,

 

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as applicable. To the extent that after giving effect to any reduction in the
Financing permitted by this Section 6.16(a), no commitments remain outstanding
under the Debt Letters, Parent may terminate the Debt Letters. Parent shall
promptly deliver to the Company copies of any termination, amendment,
modification, waiver or replacement of the Debt Letters. If funds in the amounts
set forth in the Debt Letters, or any portion thereof, become unavailable,
Parent shall, and shall cause its Affiliates, as promptly as practicable
following the occurrence of such event to (x) notify the Company in writing
thereof, (y) use reasonable best efforts to obtain substitute financing (on
terms and conditions that are not materially less favorable to Parent, taken as
a whole, than the terms and conditions as set forth in the Debt Letters, taking
into account any “market flex” provisions thereof) sufficient to enable Parent
to consummate the Merger and the other transactions contemplated hereby on the
Closing Date in accordance with its terms (the “Substitute Financing”) and
(z) use reasonable best efforts to obtain a new financing commitment letter that
provides for such Substitute Financing and, promptly after execution thereof,
deliver to the Company true, complete and correct copies of the new commitment
letter and the related fee letters (in redacted form reasonably satisfactory to
the Persons providing such Substitute Financing removing the fee amounts,
pricing caps, the rates and amounts included in the “market flex” and other
economic terms that could not adversely affect the conditionality,
enforceability or termination of the Financing) and related definitive financing
documents with respect to such Substitute Financing. Upon obtaining any
commitment for any such Substitute Financing, such financing shall be deemed to
be a part of the “Financing” and any commitment letter for such Substitute
Financing shall be deemed the “Debt Letters” for all purposes of this Agreement.
Parent shall pay, or cause to be paid, as the same shall become due and payable,
all fees and other amounts that become due and payable under the Debt Letters.
The term “Revolving Credit Facility” shall mean the Amended and Restated Credit
Agreement, dated as of February 4, 2016 (as amended though the date hereof),
among Parent, certain subsidiaries of Parent, the lenders from time to time
parties thereto and Bank of America, N.A. as administrative agent.

(b) If requested by Parent in writing, the Company and its Subsidiaries shall
use its reasonable best efforts to take any actions reasonably requested by
Parent that are necessary to facilitate the payoff, satisfaction, discharge
and/or defeasance by Parent of the Company’s Indebtedness (the “Debt Payoff”),
including sending one or more notices of payment required by the terms of such
Indebtedness and obtaining a payoff letter in connection therewith; it being
understood that at Closing, Parent shall provide all funds required to actually
effect the Debt Payoff. In addition, and solely at the expense of Parent, if
requested by Parent in writing with reasonable notice, the Company shall use its
reasonable best efforts to commence, assist in and effectuate, subject to the
satisfaction or waiver of any conditions thereto, any consent solicitation in
connection with any amendment, waiver and/or consent or, if such amendment,
waiver or consent is not obtained, to assist Parent with an exchange offer by
Parent of the Company’s outstanding debt securities for new debt of Parent (the
“Notes Exchange Offer”) or tender offer by Parent for the Company’s outstanding
debt securities (the “Notes Tender Offer”), in each case with respect to the
Company’s outstanding debt securities, including the preparation of customary
consent solicitation statements, the execution of customary solicitation agent
agreements and any other customary agreements, the engagement of such agents and
other service providers as are customary, and the prompt execution and delivery
of any amendment or supplement to the relevant indentures to effectuate such
amendment, waiver and/or consent and it being further understood that no Notes
Exchange Offer or Notes Tender Offer shall be effectuated prior to the Closing
Date.

 

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(c) From and after the date of this Agreement, and through the earlier of the
Closing and the date on which this Agreement is terminated in accordance with
Article VIII, the Company shall, and the Company shall cause each of its
Subsidiaries and use its reasonable best efforts to cause its Representatives
to, use its or their respective reasonable best efforts to provide to Parent all
customary cooperation reasonably requested by Parent in connection with the
Financing or consummation of an offering of debt, equity or equity-linked
securities in replacement of all or any portion of the Financing (the “Permanent
Financing”), including: (i) delivering to Parent financial and other pertinent
information regarding the Company and the Company Subsidiaries as may be
reasonably requested by Parent and that is customarily required for financings
of the type contemplated by the Commitment Letter or the Permanent Financing
(collectively, the “Required Information”), including (A) the audited and
unaudited financial statements referred to in paragraphs (5)(a) and (5)(b) of
Exhibit B to the Commitment Letter (it being understood that the Company’s
public filing with the SEC of any such financial statements will satisfy such
requirements) and (B) such information reasonably requested by Parent to prepare
the pro forma financial statements referred to in paragraph (5) of Exhibit B to
the Commitment Letter including fourth quarter financial information, if
necessary, and providing an opportunity to discuss such information with the
Company; (ii) informing Parent if the Company or any of its Subsidiaries shall
have knowledge of any facts that would likely require the restatement of any
financial statements included in the Required Information in order for such
financial statements to comply with GAAP; (iii) using reasonable best efforts,
to the extent customarily required for financings of the type contemplated by
the Commitment Letter or the Permanent Financing, to make appropriate officers
available to participate in a reasonable number of due diligence sessions,
marketing efforts and sessions with rating agencies; (iv) cooperating with any
customary due diligence requests by Parent, the Financing Parties and their
respective legal counsel; (v) using reasonable best efforts to provide
reasonable and customary representations and authorization letters to Parent or
the Financing Parties in connection with the preparation of customary offering
documents, including confidential information memoranda, prospectuses, private
placement memoranda, offering memoranda and bank confidential information
memoranda and road show materials, rating agency materials and other similar
documents necessary in connection with the Financing or the Permanent Financing;
(vi) if reasonably requested in writing by the Financing Parties, furnish to
such Financing Parties at least three Business Days prior to the Closing Date
all information regarding the Company and the Company Subsidiaries that is
required in connection with the Financing or the Permanent Financing by U.S.
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including the Patriot Act; (vii) assisting
Parent in obtaining corporate, corporate family, credit, facility and securities
ratings from rating agencies to the extent necessary or advisable for Parent to
obtain such ratings; (viii) obtaining (A) customary auditor consents (including
consents with respect to inclusion of the Company’s financial statements and any
audit opinions in respect thereof in any Current Report on Form 8-K,
registration statement, prospectus or offering memorandum or similar documents
for any portion of the Financing or the Permanent Financing) and (B) customary
comfort letters of the Company’s independent accountants (including “negative
assurance” comfort), including by executing and delivering any customary
representation letters to the accountants in connection therewith, in each case,
to the extent financial statements of the Company are included in such

 

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registration statement, prospectus or offering memorandum); (ix) cooperating
with Parent’s and Merger Sub’s legal counsel and causing the Company’s legal
counsel to cooperate in connection with, and as reasonably requested providing,
any legal opinions that may be required in connection with any consent
solicitation, Notes Exchange Offer or Notes Tender Offer; and (x) executing
customary certificates as may be reasonably requested by Parent in connection
with the Financing, the Permanent Financing and any consent solicitation, Notes
Exchange Offer or Notes Tender Offer.

(d) Notwithstanding anything to the contrary contained in this Section 6.16,
neither the Company nor any of its Subsidiaries shall be required to take or
permit the taking of any action that would (i) unreasonably interfere with the
ongoing operations of the Company or its Subsidiaries, (ii) cause any
representation or warranty in this Agreement to be breached by the Company or
any of its Subsidiaries, (iii) require the Company or any of its Subsidiaries to
pay any commitment or other similar fee or incur any other expense, liability or
obligation in connection with the Financing of Parent, or consummation of an
offering of debt, equity or equity-linked securities in replacement of all or
any portion of the Financing, or the cooperation of the Company and its
Subsidiaries contemplated by this Section 6.16 prior to the Closing (other than
costs subject to reimbursement pursuant to this Section 6.16 and any liability
relating to the authorization letters referred to in Section 6.16(c)(iii)
above), (iv) cause any director, officer or employee of the Company or any of
its Subsidiaries to incur any personal liability, (v) conflict with the
organizational documents of the Company or any of its Subsidiaries or any Laws,
(vi) result in the material contravention of, or that could reasonably be
expected to result in a material violation or breach of, or a default (with or
without notice, lapse of time, or both) under, any Material Contract,
(vii) provide access to or disclose information that the Company or any of its
Subsidiaries reasonably determines would jeopardize any attorney–client
privilege or other similar privilege of the Company or any of its Subsidiaries
or (viii) authorize any corporate action of the Company or any of its
Subsidiaries that would become effective and operative prior to the Closing.

(e) Parent shall indemnify and hold harmless the Company and each of its
Subsidiaries and their respective Representatives from and against any and all
liabilities, losses, damages, claims, costs, expenses (including reasonable
attorney’s fees) interest, awards, judgments and penalties suffered or incurred
in connection with its and their cooperation contemplated by this Section 6.16
(other than (i) with respect to any information provided by the Company or any
of its Subsidiaries expressly for use in connection therewith or (ii) to the
extent arising from fraud, gross negligence, bad faith, willful misconduct or
material breach of this Agreement on the part of the Company or its Subsidiaries
or its or their respective Representatives), whether or not the Merger is
consummated or this Agreement is terminated. Parent shall, promptly upon request
by the Company, reimburse the Company for all reasonable out-of-pocket costs
(including reasonable attorneys’ fees) incurred by the Company or its
Subsidiaries in connection with this Section 6.16, whether or not the Merger is
consummated or this Agreement is terminated.

(f) The Company hereby consents to the reasonable use of its and its
Subsidiaries’ trademarks, service marks and logos in connection with syndication
and underwriting of the Financing or consummation of an offering of debt, equity
or equity-linked securities in replacement of all or any portion of the
Financing; provided that such trademarks, service marks and logos are used
solely in a manner that is not intended to or reasonably likely to harm or
disparage the Company or any of its Subsidiaries or the reputation or goodwill
of the Company or any of its Subsidiaries.

 

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(g) Parent and Merger Sub expressly acknowledge and agree that (i) the
provisions of this Section 6.16 shall not create any independent conditions to
Closing and (ii) notwithstanding anything contained in this Agreement to the
contrary, neither Parent’s nor Merger Sub’s obligation hereunder are conditioned
in any manner upon Parent or Merger Sub obtaining Financing, Substitute
Financing or any other financing whatsoever.

6.17 Approval by Sole Stockholder of Merger Sub. Immediately following the
execution and delivery of this Agreement by the parties hereto, Parent, as sole
stockholder of Merger Sub, shall adopt this Agreement and approve the Merger, in
accordance with Ohio Law, by written consent.

6.18 Stockholder Litigation. Each party shall notify the other party, in writing
and promptly after acquiring knowledge thereof, of any litigation related to
this Agreement, the Merger or the other transactions contemplated hereby that is
brought against such party, its Subsidiaries and/or any of their respective
directors or officers and shall keep the other party informed on a reasonably
current basis with respect to the status thereof. The parties agree to cooperate
in the defense and settlement of any such litigation, and the Company shall not
settle any such litigation without the prior written consent of Parent (not to
be unreasonably withheld, conditioned or delayed). Without limiting in any way
the parties’ obligations under Section 6.6, each of the Company and Parent
shall, and shall cause their respective Subsidiaries to, cooperate in the
defense or settlement of any litigation contemplated by this Section 6.18.

6.19 Directorship. Effective as of the Effective Time, Parent shall cause the
board of directors of Parent to be expanded by one member and shall appoint an
individual identified by the Company and who is currently a member of the board
of directors of the Company to fill such vacancy. No later than ten (10) days
prior to the Closing Date, the Company shall identify to Parent such individual
to be appointed to the board of directors of Parent.

ARTICLE VII

CONDITIONS

7.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver at or prior to the Closing of each of the following conditions:

(a) Shareholder Approvals. (i) The Company Requisite Vote shall have been
obtained in accordance with applicable Law and the articles of incorporation and
code of regulations of the Company and (ii) the Parent Requisite Vote shall have
been obtained in accordance with applicable Law and the certificate of
incorporation and bylaws of Parent.

 

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(b) Governmental Consents. (i) The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been earlier terminated,
and (ii) all other Governmental Consents to be obtained from any Governmental
Entity set forth on Section 7.1(b)(ii) of the Company Disclosure Letter shall
have been obtained (clauses (i) and (ii), collectively, the “Required
Governmental Consents”). For purposes of this Agreement, the term “Governmental
Consents” shall mean all consents, approvals, permits, expirations of waiting
periods and authorizations required to be obtained prior to the Effective Time
by the Company or Parent or any of their respective Subsidiaries from any
Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby.

(c) Law; Order. No Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any Law or Order (whether
temporary, preliminary or permanent) that is in effect and restrains, enjoins or
otherwise prohibits consummation of the Merger.

(d) NASDAQ Listing. The shares of Series C Common Stock issuable in connection
with the Merger shall have been approved for listing on NASDAQ, subject to
official notice of issuance.

(e) Form S-4. The Form S-4 shall have been declared effective by the SEC under
the Securities Act and no stop order suspending the effectiveness of the Form
S-4 shall have been issued and no proceedings for that purpose shall have been
initiated or threatened.

7.2 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent at or prior to the Closing of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of
the Company set forth in the first six sentences of Section 5.1(b)(i), the first
sentence of Section 5.1(b)(ii) and the fourth sentence of Section 5.1(b)(ii)
(Capital Structure) (in the case of the fourth sentence, only as it relates to
the Company) shall be true and correct, subject only to de minimis inaccuracies
(A) on the date of this Agreement and (B) at the Closing (in each case except to
the extent that any such representation and warranty speaks as of a particular
date, in which case such representation and warranty shall be true and correct
as of such earlier date), (ii) the representations and warranties of the Company
set forth in (x) the first sentence of Section 5.1(f) (Absence of Certain
Changes) shall be true and correct in all respects and (y) Section 5.1(c)
(Corporate Authority and Approval), Section 5.1(l) (Takeover Statutes) and
Section 5.1(t) (Brokers and Finders) shall be true and correct in all material
respects (in the case of this clause (y), without regard to any materiality
qualifiers specified therein), in each case, (A) on the date of this Agreement
and (B) at the Closing (in each case except to the extent that such
representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of such earlier date);
and (iii) the other representations and warranties of the Company set forth in
Section 5.1 shall be true and correct (A) on the date of this Agreement and
(B) at the Closing (in each case except to the extent that any such
representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of such earlier date);
provided that notwithstanding anything

 

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herein to the contrary, the condition set forth in this Section 7.2(a)(iii)
shall be deemed to have been satisfied even if any representations and
warranties of the Company are not so true and correct unless the failure of such
representations and warranties of the Company to be so true and correct (read
for purposes of this Section 7.2(a)(iii) without any materiality, Company
Material Adverse Effect or similar qualification), individually or in the
aggregate, has had or would reasonably be likely to have a Company Material
Adverse Effect.

(b) Performance of Obligations of the Company. The Company shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing.

(c) No Company Material Adverse Effect. After the date of this Agreement, there
shall not have occurred any event, occurrence, fact, condition, change,
development or effect that, individually or in the aggregate, has resulted, or
would reasonably be likely to result, in a Company Material Adverse Effect.

(d) Company Certificate. Parent shall have received at the Closing a certificate
signed on behalf of the Company by a senior executive officer of the Company to
the effect that the conditions set forth in Sections 7.2(a), (b) and (c) have
been satisfied.

(e) FIRPTA Certificate. Parent shall have received, on or prior to the Closing,
a certificate meeting the requirements of Treasury Regulation
Section 1.1445-2(c)(3) to the effect that the Shares are not a “U.S. real
property interest” within the meaning of Section 897 of the Code.

7.3 Conditions to Obligation of the Company. The obligation of the Company to
effect the Merger is also subject to the satisfaction or waiver by the Company
at or prior to the Closing of the following conditions:

(a) Representations and Warranties. (i) The representations and warranties of
Parent and Merger Sub set forth in the first six sentences of Section 5.2(b)(i),
the first sentence of Section 5.2(b)(ii) and the fourth sentence of
Section 5.2(b)(ii) (Capital Structure) (in the case of the fourth sentence, only
as it relates to Parent) shall be true and correct, subject only to de minimis
inaccuracies (A) on the date of this Agreement and (B) at the Closing (in each
case except to the extent that any such representation and warranty speaks as of
a particular date, in which case such representation and warranty shall be true
and correct as of such earlier date), (ii) the representations and warranties of
Parent set forth in (x) the first sentence of Section 5.2(f) (Absence of Certain
Changes) shall be true and correct in all respects and (y) Section 5.2(c)
(Corporate Authority and Approval), Section 5.2(i) (Ownership of Shares) and
Section 5.2(j) (Brokers and Finders) shall be true and correct in all material
respects (in the case of this clause (y), without regard to any materiality
qualifiers specified therein), in each case, (A) on the date of this Agreement
and (B) at the Closing (in each case except to the extent that such
representation and warranty speaks as of a particular date, in which case such
representation and warranty shall be true and correct as of such earlier date);
and (iii) the other representations and warranties of Parent set forth in
Section 5.2 shall be true and correct (A) on the date of this Agreement and
(B) at the Closing (in each case except to the extent that any such
representation and warranty speaks as of a particular date, in which case such
representation and warranty shall

 

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be true and correct as of such earlier date); provided that notwithstanding
anything herein to the contrary, the condition set forth in this
Section 7.3(a)(iii) shall be deemed to have been satisfied even if any
representations and warranties of Parent are not so true and correct unless the
failure of such representations and warranties of Parent to be so true and
correct (read for purposes of this Section 7.3(a)(iii) without any materiality,
Parent Material Adverse Effect or similar qualification), individually or in the
aggregate, has had or would reasonably be likely to have a Parent Material
Adverse Effect.

(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and
Merger Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Closing.

(c) No Parent Material Adverse Effect. After the date of this Agreement, there
shall not have occurred any event, occurrence, fact, condition, change,
development or effect that, individually or in the aggregate, has resulted, or
would reasonably be likely to result, in a Parent Material Adverse Effect.

(d) Parent Certificate. The Company shall have received at the Closing a
certificate signed on behalf of Parent by a senior executive officer of Parent
to the effect that the conditions set forth in Sections 7.3(a), (b) and (c) have
been satisfied

7.4 Frustration of Conditions. None of the Company, Parent or Merger Sub may
rely, either as a basis for not consummating the Merger or the other
transactions or terminating this Agreement and abandoning the Merger, on the
failure of any condition set forth in Section 7.1, Section 7.2 or Section 7.3,
as the case may be, to be satisfied if such failure was caused by such party’s
material breach of any provision of this Agreement.

ARTICLE VIII

TERMINATION

8.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after the adoption of this Agreement by the shareholders of the Company and
stockholders of Parent referred to in Section 7.1(a), by mutual written consent
of the Company and Parent.

8.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company if:

(a) the Merger shall not have been consummated by July 30, 2018 (the
“Termination Date”), whether such date is before or after the date of adoption
of this Agreement by the shareholders of the Company and the stockholders of
Parent referred to in Section 7.1(a);

 

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(b) the Company Requisite Vote shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof at which a vote
upon the adoption of this Agreement was taken;

(c) the Parent Requisite Vote shall not have been obtained at a meeting duly
convened therefor or at any adjournment or postponement thereof at which a vote
upon the issuance of the Series C Common Stock was taken; or

(d) any Law or Order permanently restraining, enjoining or otherwise prohibiting
consummation of the Merger shall become final and non-appealable, whether before
or after the adoption of this Agreement by the shareholders of the Company or
the stockholders of Parent referred to in Section 7.1(a);

provided that the right to terminate this Agreement pursuant to Section 8.2(a)
shall not be available to any party that has breached in any material respect
its obligations under this Agreement in any manner that shall have been the
primary cause of the failure of the Merger to be consummated.

8.3 Termination by the Company. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time by the Company if:

(a) at any time prior to the Parent Requisite Vote having been obtained, (i) the
board of directors of Parent shall have made a Parent Change in Recommendation,
(ii) Parent shall have failed to include the Parent Recommendation in the Joint
Proxy Statement/Prospectus or (iii) Parent shall have materially breached or
shall have failed to perform in any material respect its obligations set forth
in Section 6.3;

(b) at any time prior to the Effective Time, whether before or after the
adoption of this Agreement by the shareholders of the Company referred to in
Section 7.1(a), by action of the board of directors of the Company if there has
been a breach of any representation, warranty, covenant or agreement made by
Parent or Merger Sub in this Agreement, or any such representation and warranty
shall have become untrue after the date of this Agreement, such that any
condition set forth Sections 7.3(a) or 7.3(b) would not be satisfied and such
breach or failure to be true is not curable or, if curable, is not cured prior
to the earlier of (i) thirty (30) days following notice to Parent from the
Company of such breach or failure and (ii) the date that is three (3) Business
Days prior to the Termination Date; provided that the Company shall not have the
right to terminate this Agreement pursuant to this Section 8.3(b) if the Company
is then in material breach of any of its representations, warranties, covenants
or agreements under this Agreement; or

(c) at any time prior to the Company Requisite Vote being obtained, (i) if the
board of directors of the Company authorizes the Company, to the extent
permitted by and subject to complying with the terms of Section 6.2, to enter
into a Company Alternative Acquisition Agreement with respect to a Company
Superior Proposal that did not result from a material breach of this Agreement,
(ii) concurrently with the termination of this Agreement, the Company, subject
to complying with the terms of Section 6.2, enters into a Company Alternative
Acquisition Agreement providing for a Company Superior Proposal that did not
result from a material breach of this Agreement and (iii) prior to or
concurrently with such termination, the Company pays to Parent in immediately
available funds the fees required to be paid pursuant to Section 8.5.

 

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8.4 Termination by Parent. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time by Parent if:

(a) at any time prior to the Company Requisite Vote having been obtained,
(i) the board of directors of the Company shall have made a Company Change in
Recommendation, (ii) the Company shall have failed to include the Company
Recommendation in the Joint Proxy Statement/Prospectus or (iii) the Company
shall have materially breached or shall have failed to perform in any material
respect its obligations set forth in Section 6.2; or

(b) at any time prior to the Effective Time, whether before or after the
adoption of this Agreement by the stockholders of Parent referred to in
Section 7.1(a), by action of the board of directors of Parent, if there has been
a breach of any representation, warranty, covenant or agreement made by the
Company in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that any condition set
forth in Sections 7.2(a) or 7.2(b) would not be satisfied and such breach or
failure to be true is not curable or, if curable, is not cured prior to the
earlier of (i) thirty (30) days following notice to the Company from Parent of
such breach or failure and (ii) the date that is three (3) Business Days prior
to the Termination Date; provided that Parent shall not have the right to
terminate this Agreement pursuant to this Section 8.4(b) if Parent is then in
material breach of any of its representations, warranties, covenants or
agreements under this Agreement.

8.5 Company Termination Fee.

(a) If this Agreement is terminated (i) by Parent pursuant to Section 8.4(a)
(Company Change in Recommendation) or (ii) by the Company pursuant to
Section 8.3(c) (Termination for Superior Proposal), then the Company shall,
within two (2) Business Days after such termination in the case of clause (i) or
concurrently with such termination in the case of clause (ii), pay Parent a fee
equal to $356,000,000 (the “Company Termination Fee”) less any amount of Parent
Expenses previously paid by the Company.

(b) If (i) this Agreement is terminated by Parent or the Company pursuant to
Section 8.2(a) (Termination Date) or 8.2(b) (Shareholder Vote), (ii) prior to
such termination referred to in clause (i) of this sentence, but after the date
of this Agreement, a Company Acquisition Proposal shall have been publicly made
to the Company or any of its Subsidiaries or shall have been made directly to
the Company’s shareholders (whether or not conditional) (or any Person shall
have publicly announced a bona fide written intention, whether or not
conditional, to make a Company Acquisition Proposal) and, in each case, not
withdrawn, and (iii) within twelve (12) months after the date of a termination
in either of the cases referred to in clause (i) of this Section 8.5(b), the
Company consummates a Company Acquisition Proposal or enters into an agreement
contemplating a Company Acquisition Proposal, then the Company shall pay the
Company Termination Fee, less any amount of Parent Expenses previously paid by
the Company, concurrently with the earlier of such entry or consummation;
provided that solely for purposes of this Section 8.5(b), the term “Company
Acquisition Proposal” shall have the

 

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meaning assigned to such term in Section 6.2(d), except that the references to
“twenty (20%) or more” shall be deemed to be references to “fifty percent (50%)
or more”. In no event shall the Company be required to pay the Company
Termination Fee or the Parent Expenses on more than one occasion.

(c) If this Agreement is terminated by Parent or the Company pursuant to
Section 8.2(b), then the Company shall pay to Parent, by wire transfer of
immediately available funds, a fee equal to $25,000,000 (the “Parent Expenses”)
as promptly as practicable (and, in any event, within two Business Days
following such termination).

8.6 Parent Termination Fee.

(a) If this Agreement is terminated by the Company pursuant to Section 8.3(a)
(Parent Change in Recommendation) then Parent shall, within two (2) Business
Days after such termination pay the Company a fee equal to $356,000,000 (the
“Parent Termination Fee”) less any amount of Company Expenses previously paid by
Parent. In no event shall Parent be required to pay the Parent Termination Fee
or the Company Expenses on more than one occasion.

(b) If this Agreement is terminated by Parent or the Company pursuant to
Section 8.2(c), then Parent shall pay to the Company, by wire transfer of
immediately available funds, a fee equal to $25,000,000 (the “Company Expenses”)
as promptly as practicable (and, in any event, within two Business Days
following such termination).

8.7 Effect of Termination and Abandonment. (a) In the event of termination of
this Agreement and the abandonment of the Merger pursuant to this Article VIII,
this Agreement (other than as set forth in this Section 8.7 and in Section 9.1)
shall become void and of no effect with no liability on the part of any party
hereto (or of any of its respective Representatives); provided that no such
termination shall relieve any party hereto (1) from any liability for fraud or
Willful Breach of this Agreement prior to such termination or (2) from any
obligation to pay, if applicable, the Company Termination Fee or the Parent
Expenses pursuant to Section 8.5 or Parent Termination Fee or the Company
Expenses pursuant to Section 8.6. For purposes of this Agreement, the term
“Willful Breach” means a deliberate act or a deliberate failure to act, taken or
not taken with the actual knowledge that such act or failure to act would, or
would reasonably be expected to, result in or constitute a material breach of
this Agreement, regardless of whether breaching was the object of the act or
failure to act.

(b) Each party acknowledges that the agreements contained in this Section 8.7
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, no party would have entered into this Agreement;
accordingly, if the Company fails to pay promptly the amount due pursuant to
Section 8.5 or Parent fails to pay promptly the amount due pursuant to
Section 8.6 (any such amount due, a “Payment”), and, in order to obtain such
Payment, the party entitled to receive such Payment (the “Recipient”) commences
a suit which results in a judgment against the party obligated to make such
Payment (the “Payor”) for the applicable Payment, or any portion thereof, the
Payor shall pay to the Recipient its costs and expenses (including attorneys’
fees) in connection with such suit, together with interest on the amount of the
Payment at the prime rate of Citibank N.A. in effect on the date such Payment
was required to be paid from such date through the date of full payment thereof.

 

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(c) Notwithstanding anything to the contrary in this Agreement, none of the
Financing Parties (nor any of their respective Affiliates or their or their
respective Affiliates’ officers, directors, employees, agents and
representatives) shall have any liability to the Company relating to or arising
out of this Agreement, the Financing or otherwise, whether at Law, or equity, in
contract, in tort or otherwise, and the Company shall not have any rights or
claims against any Financing Parties (or any of their respective Affiliates or
their or their respective Affiliates’ officers, directors, employees, agents and
representatives) hereunder or thereunder.

ARTICLE IX

MISCELLANEOUS AND GENERAL

9.1 Survival. This Article IX and the agreements of the Company, Parent and
Merger Sub contained in Article IV and Section 6.12 (Indemnification; Directors’
and Officers’ Insurance) shall survive the consummation of the Merger. This
Article IX (other than Section 9.2 (Modification or Amendment), Section 9.3
(Waiver) and Section 9.12 (Assignment)) and the agreements of the Company,
Parent and Merger Sub contained in Section 6.7(b) (Access, Consultation),
Section 6.11 (Expenses), Section 6.16(h) (Financing Indemnification),
Section 8.7 (Effect of Termination and Abandonment) and the Confidentiality
Agreement (as defined in Section 9.7) shall survive the termination of this
Agreement. All other representations, warranties, covenants and agreements in
this Agreement and in any certificate or other writing delivered pursuant hereto
shall not survive the consummation of the Merger or the termination of this
Agreement. This Section 9.1 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective Time.

9.2 Modification or Amendment. Subject to the provisions of applicable Law
(including Section 1701.78 of the OGCL), at any time prior to the Effective
Time, this Agreement (including any Schedule hereto) may be amended, modified or
supplemented in writing by the parties hereto, by action of the boards of
directors of the respective parties. Notwithstanding the foregoing, no
amendments or modifications to the provisions which the Financing Parties are
expressly made third-party beneficiaries pursuant to Section 9.8 shall be
permitted in a manner adverse to any Financing Party without the prior written
consent of such Financing Party.

9.3 Waiver. (a) Any provision of this Agreement may be waived prior to the
Effective Time if, and only if, such waiver is in writing and signed by the
party against whom the waiver is to be effective.

(b) No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. Except as otherwise herein provided, the
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by Law.

 

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9.4 Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts (including by facsimile or by attachment to electronic mail in
portable document format (PDF)), each such counterpart being deemed to be an
original instrument, and all such counterparts shall together constitute the
same agreement, and shall become effective when one or more counterparts have
been signed by each of the parties hereto and delivered to the other parties
hereto.

9.5 Governing Law and Venue; Waiver of Jury Trial.

(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
Notwithstanding the foregoing, the matters contained in ARTICLE I, ARTICLE II,
ARTICLE III and ARTICLE IV shall be governed by the OGCL, including matters
relating to the filing of the Certificate of Merger and the effects of the
Merger, including any dissenters’ rights, and all matters relating to the
fiduciary duties of the Company Board of Directors shall be governed by and
construed in accordance with the laws of the State of Ohio without regard to the
conflicts of law principles thereof to the extent that such principles would
direct a matter to another jurisdiction. Each of the parties hereby irrevocably
submits exclusively to the jurisdiction of the Chancery Courts of the State of
Delaware and the federal courts of the United States of America, in each case,
located in New Castle County in the State of Delaware and hereby waives, and
agrees not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof, that it is not subject thereto or that
such action, suit or proceeding may not be brought or is not maintainable in
said courts or that the venue thereof may not be appropriate or that this
Agreement may not be enforced in or by such courts, and each of the parties
hereto irrevocably agrees that all claims relating to such action, suit or
proceeding shall be heard and determined in such a state or federal court. The
parties hereby consent to and grant any such court jurisdiction over the person
of such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.6 or in such other manner as may
be permitted by Law, shall be valid and sufficient service thereof.

(b) Notwithstanding anything herein to the contrary, each of the parties
irrevocably agrees that any legal action or proceeding involving any Financing
Parties (or any of their respective Affiliates or their or their respective
Affiliates’ officers, directors, employees, agents and representatives) arising
out of or relating to this Agreement, the Commitment Letter or the Financing
shall be brought and determined in the Supreme Court of the State of New York,
County of New York and that any such legal action or proceeding shall be
governed by, and construed in accordance with, the laws of the State of New York
without regard to the conflicts of law rules of such State that would result in
the application of the laws of any other state; provided, that if jurisdiction
is not then available in the Supreme Court of the State of New York, County of
New York, then any such legal action or proceeding may be brought in any federal
court located in the State of New York (and, in each case, any appellate courts
thereof).

 

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Each of the parties hereby irrevocably submits to the jurisdiction of the
aforesaid courts for itself and with respect to its property, generally and
unconditionally, with regard to any such action or proceeding involving any
Financing Parties (or any of their respective Affiliates or their or their
respective Affiliates’ officers, directors, employees, agents and
representatives) arising out of or relating to this Agreement, the Commitment
Letter or the Financing and the transactions contemplated hereby or thereby.
Each of the parties agrees not to commence any action, suit or proceeding
involving any Financing Party (or any of their respective Affiliates or their or
their respective Affiliates’ officers, directors, employees, agents and
representatives) relating thereto except in the courts described above in New
York, other than actions in any court of competent jurisdiction to enforce any
judgment, decree or award rendered by any such court in New York as described
herein. Each of the parties further agrees that notice as provided herein shall
constitute sufficient service of process and the parties further waive any
argument that such service is insufficient. Each of the parties hereby
irrevocably and unconditionally waives, and agrees not to assert, by way of
motion or as a defense, counterclaim or otherwise, in any action or proceeding
involving any Financing Party (or any of their respective Affiliates or their or
their respective Affiliates’ officers, directors, employees, agents and
representatives) arising out of or relating to this Agreement, the Commitment
Letter or the Financing or the transactions contemplated hereby or thereby,
(a) any claim that it is not personally subject to the jurisdiction of the
courts in New York as described herein for any reason, (b) that it or its
property is exempt or immune from jurisdiction of any such court or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) and (c) that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper or (iii) this Agreement, the
Commitment Letter, the Financing, or the subject matter hereof or thereof, may
not be enforced in or by such courts.

(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. NOTWITHSTANDING ANYTHING HEREIN TO
THE CONTRARY, THE COMPANY (ON BEHALF ITSELF AND ITS SUBSIDIARIES) AND EACH OF
THE OTHER PARTIES HERETO WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
ACTION RELATED TO ANY FINANCING OBTAINED BY PARENT OR ANY OF ITS SUBSIDIARIES IN
CONNECTION WITH THE MERGER OR THE PERFORMANCE THEREOF OR THE TRANSACTIONS
CONTEMPLATED THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 9.5.

 

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9.6 Notices. Notices, requests, instructions or other documents to be given
under this Agreement shall be in writing and shall be deemed given, (a) on the
date sent by facsimile (with confirmation of transmission) or e-mail of a PDF
document if sent during normal business hours of the recipient, and on the next
Business Day if sent after normal business hours of the recipient, (b) when
delivered, if delivered personally to the intended recipient, and (c) one
Business Days later, if sent by overnight delivery via a national courier
service (providing proof of delivery), and in each case, addressed to a party at
the following address for such party:

if to Parent or Merger Sub

Discovery Communications, Inc.

850 Third Avenue

New York, NY 10022

Attention: Bruce Campbell

Fax:           (212) 548-5848

Email:        bruce_campbell@discovery.com

with copies to (which shall not constitute notice):

Discovery Communications, Inc.

1 Discovery Place

Silver Spring, MD 20910

Attention: Savalle Sims

Email:       savalle_sims@discovery.com

and

Debevoise & Plimpton LLP

919 Third Avenue

New York, NY 10022

Attention: Jonathan E. Levitsky

Fax:         (212) 521-7823

Email:      jelevitsky@debevoise.com

if to the Company

Scripps Networks Interactive, Inc.

9721 Sherrill Blvd

Knoxville, TN 37919

Attention: Cynthia L Gibson

Email: cynthia.gibson@scrippsnetworks.com

 

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with copies to (which shall not constitute notice):

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention: Michael J. Aiello

Fax:            (212) 310-8007

Email:         michael.aiello@weil.com

or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.

9.7 Entire Agreement. This Agreement (including any exhibits hereto, the Company
Disclosure Letter and the Parent Disclosure Letter) and the Confidentiality
Agreement, dated June 27, 2017, between the Company and Parent (the
“Confidentiality Agreement”) constitute the entire agreement, and supersede all
other prior agreements, understandings, representations and warranties both
written and oral, among the parties, with respect to the subject matter hereof.

9.8 No Third Party Beneficiaries. This Agreement is not intended to, and does
not, confer upon any Person other than the parties hereto any rights or remedies
hereunder, other than (a) as provided in Section 6.12 (Indemnification;
Directors’ and Officers’ Insurance), (b) the right of the Company’s shareholders
to receive the Merger Consideration after the Closing, (c) the right of the
holders of awards under the Company Stock Plans to receive such consideration as
provided for in Section 4.5 after the Closing, (d) Sections 8.5 and 8.6, and
(e) Sections 8.7(c), 9.2 and 9.5 which, to the extent applicable to the
Financing Parties (or any of their respective Affiliates or their or their
respective Affiliates’ officers, directors, employees, agents and
representatives), are intended to benefit, and be enforceable by, the Financing
Parties (or any of their respective Affiliates or their or their respective
Affiliates’ officers, directors, employees, agents and representatives).

9.9 Obligations of Parent and of the Company. Whenever this Agreement requires a
Subsidiary of Parent to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause such Subsidiary to take
such action. Whenever this Agreement requires a Subsidiary of the Company to
take any action, such requirement shall be deemed to include an undertaking on
the part of the Company to cause such Subsidiary to take such action and, after
the Effective Time, on the part of the Surviving Company to cause such
Subsidiary to take such action.

9.10 Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof. If any provision of
this Agreement, or the application thereof to any Person or any circumstance, is
invalid or unenforceable, (a) a suitable and equitable provision negotiated in
good faith by the parties hereto shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of

 

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this Agreement and the application of such provision to other Persons or
circumstances shall not, subject to clause (a) above, be affected by such
invalidity or unenforceability, except as a result of such substitution, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.

9.11 Interpretation. (a) The table of contents and the Article, Section and
paragraph headings or captions herein are for convenience of reference only, do
not constitute part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section or Exhibit, such reference shall be to a Section
of or Exhibit to this Agreement unless otherwise indicated. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”. The words “hereof”,
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The word “or” when used in this Agreement is not exclusive. The
word “extent” in the phrase “to the extent” shall mean the degree to which a
subject or other thing extends, and such phrase shall not mean simply “if”. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise
defined therein. The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case of
statutes) by succession of comparable successor statutes and references to all
attachments thereto and instruments incorporated therein.

(b) The parties have participated jointly in negotiating and drafting this
Agreement. In the event that an ambiguity or a question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.

9.12 Assignment. This Agreement shall not be assignable by operation of Law or
otherwise; provided that Parent may designate, prior to the Effective Time, by
written notice to the Company, another Subsidiary to be a party to the Merger in
lieu of Merger Sub, in which event all references herein to Merger Sub shall be
deemed references to such other Subsidiary (except with respect to
representations and warranties made herein with respect to Merger Sub as of the
date of this Agreement) and all representations and warranties made herein with
respect to Merger Sub (other than the representations and warranties set forth
in Section 5.2(b)(ii)) as of the date of this Agreement shall also be made with
respect to such other Subsidiary as of the date of such designation; provided
that such assignment shall not relieve Parent of its obligations hereunder or
otherwise enlarge, alter or change any obligation of any other party hereto or
due to Parent or such other Subsidiary. Any assignment in contravention of the
preceding sentence shall be null and void.

 

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9.13 Specific Performance. The parties hereto acknowledge and agree that
irreparable damage would occur and that the parties would not have any adequate
remedy at Law if any provision of this Agreement were not performed in
accordance with its specific terms or were otherwise breached, and that monetary
damages, even if available, would not be an adequate remedy therefor. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the performance of the terms and provisions hereof in accordance with
Section 9.5 of this Agreement, without proof of actual damages (and each party
hereby waives any requirement for the security or posting of any bond in
connection with such remedy), this being in addition to any other remedy to
which they are entitled at Law or in equity. The parties further agree not to
assert that a remedy of specific enforcement is unenforceable, invalid, contrary
to applicable Law or inequitable for any reason, and not to assert that a remedy
of monetary damages would provide an adequate remedy for any such breach or that
the Company or Parent otherwise have an adequate remedy at law.

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first written
above.

 

SCRIPPS NETWORKS INTERACTIVE, INC. By:  

/s/ Kenneth W. Lowe

Name:   Kenneth W. Lowe Title:   President and Chief Executive Officer DISCOVERY
COMMUNICATIONS, INC. By:  

/s/ David M. Zaslav

Name:   David M. Zaslav Title:   President and Chief Executive Officer SKYLIGHT
MERGER SUB, INC. By:  

/s/ David M. Zaslav

Name:   David M. Zaslav Title:   President

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ANNEX B

PREFERRED SHARE EXCHANGE AGREEMENT

 

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PREFERRED SHARE EXCHANGE AGREEMENT

This PREFERRED SHARE EXCHANGE AGREEMENT, dated as of July 30, 2017 (this
“Agreement”), is made by and between Discovery Communications, Inc., a Delaware
corporation (the “Company”), and Advance/Newhouse Programming Partnership, a New
York general partnership (the “Shareholder”). Certain capitalized terms used
herein are defined in Article 3 of this Agreement.

R E C I T A L S:

WHEREAS, as of the date of this Agreement, the Shareholder owns 70,612,031
shares of the Company’s Series A Convertible Participating Preferred Stock, par
value $0.01 per share (the “Series A Preferred Stock”) (excluding shares of
Series A Preferred Stock that are subject to transfer restrictions pursuant to
that certain Escrow Agreement, dated as of September 17, 2008, by and among the
Company, the Shareholder and JPMorgan Chase Bank, N.A. (the “Escrow
Agreement”)), and at all times prior to the Closing will own such shares of
Series A Preferred Stock;

WHEREAS, as of the date of this Agreement, the Shareholder owns 24,798,816
shares of the Company’s Series C Convertible Participating Preferred Stock, par
value $0.01 per share (the “Series C Preferred Stock,” and together with the
Series A Preferred Stock, the “Old Preferred Stock”) (excluding shares of Series
C Preferred Stock that are subject to transfer restrictions pursuant to the
Escrow Agreement), and at all times prior to the Closing will own such shares of
Series C Preferred Stock;

WHEREAS, the Shareholder is presently entitled to receive certain additional
shares of Series A Preferred Stock (the “Additional Series A Shares”) and Series
C Preferred Stock (the “Additional Series C Shares,” and together with the
Additional Series A Shares, the “Additional Old Preferred Shares”), in each
case, to be released in accordance with Section 1.1 of this Agreement from the
escrow account governed by the Escrow Agreement;

WHEREAS, immediately prior to the Closing, the Shareholder will own a total
number of shares of Series A Preferred Stock equal to the sum of (x) 70,612,031
and (y) the number of Additional Series A Shares, which together will represent
all of the Series A Preferred Stock issued and outstanding immediately prior to
the Closing, and a total number of shares of Series C Preferred Stock equal to
the sum of (x) 24,798,816 and (y) the number of Additional Series C Shares,
which together will represent all of the shares of Series C Preferred Stock
issued and outstanding immediately prior to the Closing;

WHEREAS, the Company and Scripps Networks Interactive, Inc., an Ohio corporation
(“Scripps”), propose to enter into an Agreement and Plan of Merger, pursuant to
which a wholly owned subsidiary of the Company will merge with and into Scripps
(the “Merger”), with Scripps as the surviving entity in the Merger;

WHEREAS, the Shareholder desires to transfer all of the shares of Old Preferred
Stock it owns to the Company in exchange for the issuance of (i) a number of
shares of the Company’s Series A-1 Convertible Participating Preferred Stock,
par value $0.01 per share, having the designations, relative rights, preferences
and limitations set forth in a Certificate of Designation

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in the form attached hereto as Exhibit A (the “Series A-1 Preferred Stock”)
equal to the sum of (x) 7,845,781 and (2/9th) and (y) the quotient of (A) the
number of Additional Series A Shares divided by (B) nine (9) (such sum, the
“Series A-1 Share Amount”), and (ii) a number of shares of the Company’s Series
C-1 Convertible Participating Preferred Stock, par value $0.01 per share, having
the designations, relative rights, preferences and limitations set forth in the
Certificate of Designation in the form attached hereto as Exhibit B (the “Series
C-1 Preferred Stock” and, together with the Series A-1 Preferred Stock, the “New
Preferred Stock”) equal to the sum of (x) 6,199,704 and (y) the quotient of
(A) the number of Additional Series C Shares divided by (B) four (4) (such sum,
the “Series C-1 Share Amount”), to the Shareholder on the terms and conditions
set forth in this Agreement (the “Exchange”);

WHEREAS, the Company and the Shareholder have each considered the terms and
conditions of the Exchange and determined that the Exchange serves to advance
their respective business purposes;

WHEREAS, it is intended that, for United States federal income tax purposes, the
Exchange will qualify as a reorganization within the meaning of
Section 368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the
“Code”), and as an exchange described in Section 1036 of the Code;

WHEREAS, as a condition to the willingness of the Company to enter into this
Agreement, the Shareholder has provided certain consents, approvals and waivers
(the “Written Consent”) in accordance with the Company’s Restated Certificate of
Incorporation (the “Charter”), and has entered into a voting agreement by and
among the Company, Scripps and the Shareholder, dated as of the date hereof (the
“Voting Agreement”), in each case in connection with the Company’s entry into
the Merger Agreement and the consummation of the Merger and the other
transactions contemplated by the Merger Agreement; and

WHEREAS, in connection with the entry into this Agreement, the Company and
Computershare Trust Company, N.A., a national banking association, as Rights
Agent (“Computershare”) desire to amend the Company’s Rights Agreement (the
“Rights Agreement”), dated as of September 17, 2008, by and between the Company
and Computershare Trust Company, N.A., as rights agent, as amended from time to
time, such that the Rights Agreement will apply with respect to shares of New
Preferred Stock in lieu of Old Preferred Stock.

NOW, THEREFORE, the Parties agree as follows:

ARTICLE 1

Release of Additional Shares; Exchange of Shares; Transfer Restrictions

Section 1.1 Release of Additional Shares.

(a) Promptly following the execution and delivery of this Agreement, the Company
and the Shareholder shall cooperate in good faith to determine the number of
Additional Old Preferred Shares to be released to the Shareholder under the
terms of the Escrow Agreement as promptly as practicable and in any event prior
to the Closing Date.

 

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(b) Promptly following the determination of the number of Additional Old
Preferred Shares in accordance to Section 1.1(a) and in any event prior to the
Closing Date, the Company and the Shareholder shall execute and deliver, or
cause to be executed and delivered, such instructions and other documentation
and do all things as may be necessary and proper under the Escrow Agreement to
release the Additional Old Preferred Shares to the Shareholder pursuant to the
terms of the Escrow Agreement, including the delivery of one (1) or more
original share certificate(s) representing such Additional Old Preferred Shares
to the Shareholder, and immediately thereafter terminate the Escrow Agreement.
Any shares of Old Preferred Stock distributed or released to the Company, which
shall not include the Additional Old Preferred Shares to be distributed to the
Shareholder in accordance with this Section 1.1, shall be cancelled and shall
cease to exist.

Section 1.2 Exchange. Subject to the terms and conditions hereof, at the Closing
(as defined below):

(a) The Shareholder shall convey, transfer and deliver to the Company, free and
clear of any liens, encumbrances, pledges, charges, claims, options and security
interests and similar encumbrances (“Liens”), the (i) number of shares of Series
A Preferred Stock equal to the sum of (x) 70,612,031 and (y) the number of
Additional Series A Shares, and (ii) the number of shares of Series C Preferred
Stock equal to the sum of (x) 24,798,816 and (y) the number of Additional Series
C Shares (collectively, the “Old Exchange Shares”). In exchange for the Old
Exchange Shares, the Company shall issue to the Shareholder (i) the number of
shares of Series A-1 Preferred Stock equal to the Series A-1 Share Amount and
(ii) the number of shares of Series C-1 Preferred Stock equal to the Series C-1
Share Amount, free and clear of any Liens (collectively, the “New Exchange
Shares”) (other than transfer restrictions imposed by applicable securities laws
or as set forth in this Agreement, the Company’s Charter or in the Certificates
of Designation for the New Preferred Stock).

(b) Upon the conveyance, transfer and delivery to the Company of the Old
Exchange Shares, the Old Exchange Shares shall no longer be outstanding and
shall be cancelled and shall cease to exist, and the Shareholder shall cease to
have any rights with respect thereto, except the right to receive the New
Exchange Shares pursuant to Section 1.2(a).

Section 1.3 Closing.

(a) The closing of the Exchange (the “Closing”) shall take place at the offices
of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019
at 10:00 a.m. (Eastern time) on the seventh (7th) Business Day following the
date hereof or as promptly as practicable thereafter (including to permit the
final determination of the number of Additional Old Preferred Shares and the
release of Additional Old Preferred Shares pursuant to Section 1.1). The date on
which the Closing occurs is referred to in this Agreement as the “Closing Date.”

(b) At the Closing:

 

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(i) The Shareholder shall deliver, or cause to be delivered, to the Company
(1) the original share certificate(s), duly endorsed or with stock powers duly
executed in favor of the Company, and with any required stock transfer stamps
affixed thereto, representing all the Old Exchange Shares; (2) a duly executed
certificate of non-foreign status, dated as of the Closing Date, substantially
in the form of the sample certification set forth in U.S. Treasury Regulations
Section 1.1445-2(b)(2)(iv)(B); (3) counterparts to the Ancillary Agreements duly
executed by the Shareholder; and (4) all other certificates, instruments and
documents executed and delivered by the Shareholder as are either necessary or
as the Company may reasonably request in order to effectively transfer ownership
and control of the Shareholder’s Old Exchange Shares to the Company.

(ii) The Company shall deliver, or cause to be delivered, to the Shareholder
(1) one or more original share certificates issued to and registered in the name
of the Shareholder and with any required stock transfer stamps affixed thereto
or evidence of book entry delivery evidencing the issuance of, the number of New
Exchange Shares to be conveyed to the Shareholder pursuant to Section 1.2(a);
and (2) counterparts to the Ancillary Agreements duly executed by the Company.

(c) The Parties agree that a “Series A Mandatory Conversion” of the Series A
Preferred Stock, as such term is defined in the Charter, is deemed to occur upon
the effectiveness of the Exchange at the Closing, and the Series A Preferred
Stock will be retired by the Company following the Closing.

Section 1.4 Further Assurances. If, at any time before or after the Closing, one
of the Parties reasonably believes or is advised that any further instruments,
deeds, assignments or assurances are reasonably necessary or desirable to
consummate the Exchange or to carry out the purposes and intent of this
Agreement, then the Company and the Shareholder and their respective officers
and directors shall execute and deliver all such proper instruments, deeds,
assignments or assurances and do all other things reasonably necessary or
desirable to consummate the Exchange and to carry out the purposes and intent of
this Agreement.

Section 1.5 Restrictions on Transfer.

(a) The Shareholder shall, and shall cause the other members of the ANPP
Stockholder Group (as defined in the Charter) to, not Transfer and in the
aggregate retain record and Beneficial Ownership of, the following minimum
amounts of shares of the Company’s Series C Common Stock, par value $0.01 per
share (the “Series C Common Stock”):

(i) Until the first anniversary of the Closing, the number of shares of Series C
Common Stock equal to 80% of the sum of (x) 70,612,031 and (y) the number of
Additional Series A Shares (rounded up to the nearest whole share) (such amount
calculated pursuant to this clause (i), the “Initial Restricted C Amount,” and
the sum of clauses (x) and (y), the “Released C Share Amount”);

 

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(ii) After the first anniversary of the Closing until the second anniversary of
the Closing Date, the number of shares of Series C Common Stock equal to (x) the
Initial Restricted C Amount minus (y) 26.67% of the Released C Share Amount
(rounded up to the nearest whole share);

(iii) After the second anniversary of the Closing until the third anniversary of
the Closing Date, the number of shares of Series C Common Stock equal to (x) the
Initial Restricted C Amount minus (y) 53.34% of the Released C Share Amount
(rounded up to the nearest whole share); and

(iv) After the third anniversary of the Closing, zero shares of Series C Common
Stock;

provided, however, that in calculating the foregoing minimum ownership amounts,
(i) the number of shares of Series C Common Stock that are both owned of record
and Beneficially Owned by members of the ANPP Stockholder Group shall include
the number of shares of Series C Common Stock into which the shares of Series
C-1 Preferred Stock that are both owned of record and Beneficially Owned by
members of the ANPP Stockholder Group are then convertible, and (ii) in the
event that any member of the ANPP Stockholder Group makes a Permitted Pledge of
shares of Series C Common Stock, such Permitted Pledge shall not constitute a
Transfer or cause such shares to cease to be deemed Beneficially Owned by such
member for purposes of this Section 1.5.

(b) Any purported Transfer which is not in accordance with the terms and
conditions of this Section 1.5 shall be null and void ab initio, and shall not
be recorded in the stock transfer books of the Company.

(c) The Shareholder hereby consents, on behalf of itself and the other members
of the ANPP Stockholder Group, to an appropriate restrictive legend referencing
these transfer restrictions being included in any stock certificate or other
evidence of ownership of the shares of Series C-1 Preferred Stock or Series C
Common Stock to which this Section 1.5 applies.

ARTICLE 2

Representations and Warranties

Section 2.1 Representations and Warranties of Each Party. Except as otherwise
specified below, each Party represents and warrants to the other Party, as of
the date hereof and as of the Closing Date, severally and not jointly and solely
with respect to itself, as follows:

(a) Due Organization and Good Standing. It is duly incorporated or organized,
validly existing and in good standing (to the extent that its jurisdiction of
organization recognizes the concept of good standing) under the laws of its
jurisdiction of incorporation or organization.

 

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(b) Authority. It has all necessary power and authority to execute and deliver
this Agreement and the Ancillary Agreements (and, in the case of the
Shareholder, the Written Consent) and to perform its obligations hereunder and,
as applicable, thereunder. The execution and delivery of this Agreement and the
Ancillary Agreements (and, in the case of the Shareholder, the Written Consent)
by it has been duly and validly authorized by all requisite action, and no other
proceedings on its part are necessary to authorize this Agreement and the
Ancillary Agreements (and, in the case of the Shareholder, the Written Consent).
This Agreement (and, in the case of the Shareholder, the Written Consent) has
been, and at the Closing the Ancillary Agreements will be, duly and validly
executed and delivered by it and, assuming the due authorization, execution and
delivery by the other parties to this Agreement and the Ancillary Agreements
(and, in the case of the Shareholder, the Written Consent), constitutes a legal,
valid and binding obligation of it, enforceable against such Party in accordance
with its terms, subject, as to enforceability, to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles. Neither Party has granted nor is it a party to any proxy, voting
trust or other agreement that is inconsistent with, conflicts with or violates
any provision of this Agreement or the Ancillary Agreements (or, in the case of
the Shareholder, the Written Consent).

(c) Regulatory Approvals. The execution and delivery by it of this Agreement and
the Ancillary Agreements (and, in the case of the Shareholder, the Written
Consent) and the performance of its obligations hereunder and thereunder require
no action by or in respect of, or filing with, any Governmental Authority, other
than (i) any clearances, consents, approvals, Orders, licenses, authorizations,
registrations, declarations, permits, filings and notifications as may be
required under applicable securities Laws and (ii) any actions or filings under
Laws the absence of which would not reasonably be expected, individually or in
the aggregate, to materially and adversely affect its ability to timely perform
its obligations and consummate the transactions contemplated hereunder or
thereunder.

(d) Non-Contravention. The execution, delivery and performance by it of this
Agreement and the Ancillary Agreements (and, in the case of the Shareholder, the
Written Consent) do not (i) violate any applicable Law; (ii) conflict with or
constitute a default, breach or violation of (with or without notice or lapse of
time, or both) the terms, conditions or provisions of, or result in the
acceleration of (or the creation in any person of any right to cause the
acceleration of) any performance of any obligation or any increase in any
payment required by, or the termination, suspension, modification, impairment or
forfeiture (or the creation in any person of any right to cause the termination,
suspension, modification, impairment or forfeiture) of any contract, agreement
or instrument to which it is subject, which would prevent it from performing any
of its obligations hereunder or thereunder; or (iii) require any consent by or
approval of or notice to any other person or entity (other than a Governmental
Authority) except where the failure to obtain such consent or approval or make
such notice would not have a material adverse effect on such Party’s ability to
consummate the transactions contemplated hereby or thereby.

 

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(e) Shareholder Consent. The parties hereby acknowledge and agree that the
Written Consent is irrevocable and fully complies with the terms and conditions
of the Charter with respect to the waiver of the requirements of the Charter,
including Article IV, Section C.6 of the Charter. The Shareholder represents and
warrants that such Written Consent remains in effect as of the date hereof and
as of the Closing.

(f) No Other Representations and Warranties. It acknowledges and agrees that
neither the other Party nor the other Party’s agents or representatives makes or
has made (i) any express or implied representation or warranty on behalf of such
other Party, other than those expressly set forth in this Article 2 or (ii) any
representations or warranties with respect to any financial projections,
financial forecasts or forward-looking information provided to it.

Section 2.2 Additional Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to the Company, as of the date hereof and as
of the Closing Date, as follows:

(a) Title to Old Exchange Shares. As of the date hereof, the Shareholder is the
sole and exclusive record owner of 70,612,031 shares of Series A Preferred Stock
and 24,798,816 shares of the Series C Preferred Stock. After the release of the
Additional Old Preferred Shares in accordance with Section 1.1 and immediately
prior to the Closing, the Shareholder will be the sole and exclusive record
owner of all of the Old Exchange Shares, free and clear of any Liens (other than
transfer restrictions imposed by applicable securities laws or as set forth in
the Company’s Charter). The Exchange provided for herein will vest in the
Company absolute title to all of the Old Exchange Shares, free and clear of any
and all Liens.

(b) Investment Intent. The Shareholder acknowledges that the New Exchange Shares
acquired hereby have not been registered under the Securities Act or under any
state or foreign securities Laws, and is aware that the sale of such shares to
it is being made in reliance on a private placement exemption from registration
under the Securities Act. The Shareholder (i) is acquiring the New Exchange
Shares for its own account pursuant to an exemption from registration under the
Securities Act for investment only and with no present intention of distributing
any of such shares to any person or any arrangement or understanding with any
other persons regarding the distribution of such shares; (ii) will not sell or
otherwise dispose of any New Exchange Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and any
other applicable securities laws; (iii) has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its prospective investment in such New Exchange Shares and to form an
investment decision with respect thereto; (iv) has the ability to bear the
economic risks of its prospective investment in such New Exchange Shares and can
afford the complete loss of such investment; and (v) is an “accredited investor”
(as that term is defined by Rule 501 of the Securities Act). The Shareholder
understands that the Company will rely upon the truth and accuracy of the
foregoing representations, acknowledgements and agreements.

 

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Section 2.3 Additional Representations and Warranties of the Company. The
Company represents and warrants to the Shareholder, as of the date hereof and as
of the Closing Date, as follows:

(a) New Exchange Shares. The New Exchange Shares to be issued to the Shareholder
at the Closing will be duly authorized and validly issued in accordance with the
terms of the Company’s organizational documents as they are in effect as of the
Closing Date.

(b) Title. Upon the delivery to the Shareholder by the Company at the Closing of
the New Exchange Shares in the manner provided in Section 1.3, the Shareholder
will hold good and valid title to such New Exchange Shares, free and clear of
all Liens (other than transfer restrictions imposed by applicable securities
laws or as set forth in this Agreement, the Company’s Charter or in the
Certificates of Designation for the New Preferred Stock).

ARTICLE 3

Definitions

Section 3.1 Certain Terms. The following terms have the meanings given to them
below:

“Ancillary Agreements” means, collectively, the Registration Rights Amendment
and the Share Repurchase Amendment.

“Beneficial Ownership” or “Beneficially Own” has the meaning given to such term
in Rule 13d-3 under the Exchange Act, as amended; provided, however, that for
purposes of determining Beneficial Ownership, (i) a Person shall be deemed to be
the Beneficial Owner of any securities which such person has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time or occurrence of conditions) pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of securities)
or upon the exercise of conversion rights, exchange rights, warrants, options,
rights or otherwise, and (ii) a Person shall not be deemed the Beneficial Owner
of, or to Beneficially Own, securities that such Person has a right to acquire
upon the exercise of Rights (as such term is defined in the Charter).

“Business Day” means any day that is not (i) a Saturday, (ii) a Sunday or
(iii) any other day on which commercial banks are authorized or required by law
to be closed in the City of New York.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations promulgated thereunder.

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any entity, authority or body exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, any court, tribunal or arbitrator and any
self-regulatory organization.

“Laws” means any statute, law, ordinance, rule or regulation (domestic or
foreign) issued, promulgated or entered into by or with any Governmental
Authority.

 

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“Order” means any judgment, order, writ, award, preliminary or permanent
injunction or decree of any Governmental Authority.

“Person” means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.

“Permitted Pledge” means a bona fide pledge to, or similar arrangement in
connection with a bona fide borrowing from, a financial institution; provided,
however, that a Permitted Pledge shall not include any pledge in connection with
a hedging or similar transaction or a financing transaction that has
substantially the same effect as a hedging or sale transaction (and for purposes
of this definition, a hedging or sale transaction shall include, without
limitation, a transaction in which the pledged shares (i) constitute all or
substantially all of the collateral or security for a financing, (ii) are
pledged in connection with a financing in which the lender does not have full
recourse to the borrower and the Beneficial Owner of such pledged shares or
(iii) represent substantially all the assets of the borrower or the Beneficial
Owner of such pledged shares; it being understood that in each of the foregoing
clauses (i)–(iii), such shares would not be considered “pledged shares” if
pledged in a bona fide margin loan arrangement in which (x) there are no
possible events of default or other circumstances that could result in a
lender’s exercise of its rights to such shares under the terms of the
arrangement while such shares are subject to the transfer restrictions under
Section 1.5 and (y) such transaction does not have substantially the same effect
as a hedging or sale transaction at any time).

“Registration Rights Amendment” means an amendment to the Registration Rights
Agreement, dated as of September 17, 2008, by and between the Company and the
Shareholder, as amended from time to time, in the form attached hereto as
Exhibit C.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations promulgated thereunder.

“Share Repurchase Amendment” means an amendment to the Share Repurchase
Agreement, dated as of May 22, 2014, by and between the Company and the
Shareholder, as amended from time to time, in the form attached hereto as
Exhibit D.

“Transfer” means, directly or indirectly, to sell, transfer, make a short sale
of, assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, short sale,
assignment, pledge, encumbrance, hypothecation or similar disposition of, any
“capital stock” (as defined in the Charter) Beneficially Owned by a stockholder
or any interest in any capital stock Beneficially Owned by a stockholder.

Section 3.2 Construction. The words “hereof,” “herein” and “hereunder” and words
of like import used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement. The words “Party” or
“Parties” shall refer to parties to this Agreement. The headings of Articles and
Sections in this Agreement and the captions herein are included for convenience
of reference only and shall be ignored in the construction or

 

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interpretation hereof. References to Articles, Sections and Exhibits are to
Articles, Sections and Exhibits of this Agreement unless otherwise specified.
All Exhibits annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any capitalized
term used in any Exhibit but not otherwise defined therein shall have the
meaning given to such term in this Agreement. Any singular term in this
Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be deemed to be followed by the words “without
limitation,” whether or not they are in fact followed by those words or words of
like import. Unless the context otherwise requires (i) “or” is disjunctive but
not necessarily exclusive and (ii) the use in this Agreement of a pronoun in
reference to a party hereto includes the masculine, feminine or neuter, as the
context may require. “Writing,” “written” and comparable terms refer to
printing, typing and other means of reproducing words (including electronic
media) in a visible form. References to any agreement or contract are to that
agreement or contract as amended, modified or supplemented from time to time in
accordance with the terms hereof and thereof. References to any Person include
the successors and permitted assigns of that Person. References from or through
any date mean, unless otherwise specified, from and including or through and
including, respectively. Any reference in this Agreement to Dollars or $ shall
mean U.S. dollars. Any reference to “days” means calendar days unless Business
Days are expressly specified. If any action under this Agreement is required to
be done or taken on a day that is not a Business Day, then such action shall be
required to be done or taken not on such day but on the first succeeding
Business Day thereafter. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.

ARTICLE 4

Miscellaneous

Section 4.1 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (a) on the date of delivery if delivered personally or sent via facsimile
or e-mail or (b) on the first Business Day following the date of dispatch if
sent by a nationally recognized overnight courier (providing proof of delivery),
in each case to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

if to the Shareholder:

Advance/Newhouse Programming Partnership

5000 Campuswood Drive

East Syracuse, New York 13057

Facsimile:    (315) 463-4127

Attention:    Steven A. Miron

Email:         sam@advancenewhouse.com

with a copy to (which shall not constitute notice):

 

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Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Facsimile:       (212) 558-3588

Attention:    Brian E. Hamilton, Esq.

Email:          hamiltonb@sullcrom.com

and

Sabin, Bermant & Gould LLP

One World Trade Center, 44th Floor

New York, New York 10007

Facsimile:    (212) 381-7201

Attention:    Andrew Kransdorf

Email:          akransdorf@sabinfirm.com

if to the Company:

Discovery Communications, Inc.

One Discovery Place

Silver Spring, Maryland 20910

Facsimile:    (240) 662-1485

Attention:    General Counsel

Email:         Savalle_Sims@discovery.com

with a copy to (which shall not constitute notice):

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street New York, NY 10019

Facsimile: (212) 403-2000

Attention: Andrew J. Nussbaum, Esq.

                Karessa L. Cain, Esq.

Email:     AJNussbaum@wlrk.com

                KLCain@wlrk.com

Section 4.2 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. The exchange of copies of this
Agreement and of signature pages by facsimile or e-mail shall constitute
effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile or e-mail shall be deemed to be their original
signatures for all purposes.

 

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Section 4.3 Amendment. This Agreement may be modified, amended or supplemented
at any time by additional written agreements signed by or on behalf of the
Parties, as may mutually be determined by the Parties to be necessary, desirable
or expedient to further the purpose of this Agreement or to clarify the
intention of the Parties; provided, however, that the Company may not modify,
amend or supplement this Agreement without the prior written consent of a
committee comprised solely of one or more disinterested members of the Board of
Directors of the Company (such approval, a “Company Independent Approval”). The
Company may not modify, amend, supplement or waive any provision of the Voting
Agreement or, prior to their filing with the Secretary of State of the State of
Delaware, either the Series A-1 Certificate of Designation or the Series C-1
Certificate of Designation, without a Company Independent Approval.

Section 4.4 Waiver. No provision of this Agreement may be waived except by a
written instrument signed by the Party against whom the waiver is to be
effective; provided, that any such waiver by the Company shall require a Company
Independent Approval. Any agreement on the part of a Party to any such waiver
shall be valid only if set forth in a written instrument executed and delivered
by a duly authorized officer on behalf of such Party. No failure or delay by any
Party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided herein shall be cumulative and not
exclusive of any rights or remedies provided by Law. The Company may not waive
any provision of the Voting Agreement or, prior to their filing with the
Secretary of State of the State of Delaware, either the Series A-1 Certificate
of Designation and the Series C-1 Certificate of Designation, without a Company
Independent Approval.

Section 4.5 Expenses. All costs, fees and expenses incurred in connection with
this Agreement, the Ancillary Agreements and the transactions contemplated
hereby and thereby, whether or not consummated, shall be paid by the Party
incurring such cost or expense.

Section 4.6 Governing Law. All disputes, claims or controversies arising out of
or relating to this Agreement, or the negotiation, validity or performance of
this Agreement, or the transactions contemplated hereby shall be governed by and
construed in accordance with the Laws of the State of Delaware without regard to
its rules of conflict of laws.

Section 4.7 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective heirs, successors and
permitted assigns; provided, that this Agreement shall not be assignable or
otherwise transferable, in whole or in part, by any Party without the prior
written consent of the other Party. Any assignment in violation of the preceding
sentence shall be void.

Section 4.8 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement, and supersedes
all prior agreements and understandings, both written and oral, among the
Parties with respect to the subject matter hereof and neither Party is relying
on any other oral or written representation, agreement or understanding and no
Party makes any express or implied representation or warranty in connection with
the transactions contemplated by this Agreement other than as set forth in this
Agreement.

 

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Section 4.9 Specific Performance. The Parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or to enforce specifically the
performance of the terms and provisions hereof in any court specified in
Section 4.12, in addition to any other remedy to which they are entitled at law
or in equity.

Section 4.10 Failure or Delay Not Waiver; Remedies Cumulative. No failure or
delay on the part of any Party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

Section 4.11 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HERBY OR THE ACTIONS OF THE PARTIES
IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT.

Section 4.12 Consent to Jurisdiction. Each Party hereto irrevocably submits to
the exclusive jurisdiction of the Delaware Chancery Court or, if the Delaware
Chancery Court does not have subject matter jurisdiction, in the state courts of
the State of Delaware located in Wilmington, Delaware or in the United States
District Court for any district within such state, for the purpose of any suit,
action or other proceeding arising out of this Agreement. Each Party hereto
agrees that service of any process, summons, notice or document by U.S.
registered mail to such Party’s respective address in accordance with
Section 4.1 will be effective service of process for any such action, suit or
proceeding. Each Party hereto hereby irrevocably and unconditionally waives and
agrees not to plead or claim any objection to the laying of venue of any such
suit, action or proceeding brought in such courts and irrevocably and
unconditionally waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first above written.

 

DISCOVERY COMMUNICATIONS, INC. By:  

/s/ Gunnar Wiedenfels

  Name: Gunnar Wiedenfels   Title: Chief Financial Officer ADVANCE/NEWHOUSE
PROGRAMMING PARTNERSHIP By:   A/NPP Holdings LLC, as Managing Partner By:  

/Steven A. Miron

  Name: Steven A. Miron   Title: Chief Executive Officer

 

[Signature Page of the Preferred Stock Exchange Agreement]

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Exhibit A

Form of Certificate of Designation of the Series A-1 Preferred Stock

--------------------------------------------------------------------------------

FORM OF

CERTIFICATE OF DESIGNATION

OF

SERIES A-1 CONVERTIBLE PARTICIPATING PREFERRED STOCK

OF

DISCOVERY COMMUNICATIONS, INC.

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

Discovery Communications, Inc. (the “Corporation”), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
“DGCL”), in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:

That, pursuant to the authority vested in the Board of Directors of the
Corporation (the “Board of Directors”) in accordance with the provisions of the
Restated Certificate of Incorporation of the Corporation (the “Charter”), the
Board of Directors adopted the following resolution of the Board of Directors
creating a series of [            ] shares of Preferred Stock designated as
“Series A-1 Convertible Participating Preferred Stock”:

RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of the Restated Certificate
of Incorporation of the Corporation, a series of Preferred Stock, par value
$0.01 per share, of the Corporation be and hereby is created, and that the
designation and number of shares thereof and the voting and other powers,
preferences and relative, participating, optional or other rights of the shares
of such series and the qualifications, limitations and restrictions thereof are
as follows:

SERIES A-1 CONVERTIBLE PARTICIPATING PREFERRED STOCK

ARTICLE 1 Designation and Amount. There shall be a series of Preferred Stock
that shall be designated as “Series A-1 Convertible Participating Preferred
Stock” (the “Series A-1 Preferred Stock”), and the number of shares constituting
such series shall be [            ]. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series A-1 Preferred Stock to less
than the number of shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation. The Series A-1
Preferred Stock, together with the series of Preferred Stock, par value $0.01
per share, of the Corporation designated as “Series C-1 Convertible
Participating Preferred Stock” (the “Series C-1 Preferred Stock”), are referred
to collectively as the “New Convertible Preferred Stock.”

 

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ARTICLE 2 Dividends.

Section 2.1 Dividend Rights. Subject to the prior preferences and other rights
of any Senior Stock and the provisions of Section 4 hereof, the holders of
shares of Series A-1 Preferred Stock shall be entitled to receive (i) cash
dividends per share in an amount equal to the product of (x) the amount of the
cash dividend declared and to be paid on a single share of Common Stock and
(y) the number of shares of Common Stock into which a share of Series A-1
Preferred Stock may be converted as of the record date for the determination of
holders of Common Stock entitled to receive such dividend; and (ii) dividends or
distributions on the Common Stock which are paid or made in Common Stock per
share based on the number of shares of Common Stock into which a share of Series
A-1 Preferred Stock may be converted as of the record date for the determination
of holders of Common Stock entitled to receive such dividend or distribution
(any such dividend or distribution contemplated by (i) or (ii), a “Participating
Dividend”). Except for a dividend of the Rights pursuant to the Company Rights
Plan (a “Rights Dividend”), Participating Dividends shall be the only dividends
payable to holders of Series A-1 Preferred Stock, and such Participating
Dividends shall be declared and paid only when, as and if such dividend or
distribution is declared and paid upon the outstanding shares of Common Stock.
Dividends or distributions on the Common Stock which are paid or made in
securities (other than Common Stock), properties or other assets of the
Corporation or any other Person other than cash shall not constitute
Participating Dividends and holders of Series A-1 Preferred Stock shall have no
rights with respect thereto, other than as may be provided in Section 5.
Participating Dividends shall be payable to holders of record of shares of
Series A-1 Preferred Stock as of the record date for the determination of
holders of Common Stock entitled to receive such dividend and shall be payable
on the payment date established by the Corporation for the payment of such
dividend to holders of Common Stock. To the extent that the Series A-1 Preferred
Stock is, at the time of the declaration of any such Participating Dividend,
convertible into any other securities of the Corporation in addition to or in
lieu of being convertible into Common Stock, then the Corporation shall pay to
the holders of Series A-1 Preferred Stock, in addition to the amount of the
dividend calculated above in respect of the number of shares of Common Stock
into which such share of Series A-1 Preferred Stock is then convertible, if any,
an amount equal to the amount of the dividend payable per share or other unit of
securities into which the Series A-1 Preferred Stock is then convertible
multiplied by the number of shares or other units issuable to such holder upon
conversion of a share of Series A-1 Preferred Stock.

Section 2.2 Method of Payment. All dividends paid with respect to the shares of
Series A-1 Preferred Stock pursuant to Section 2(a) hereof shall be paid pro
rata to all the holders of shares of Series A-1 Preferred Stock outstanding on
the applicable record date, on an as converted basis.

ARTICLE 3 Distribution Upon Liquidation, Dissolution or Winding Up. Subject to
the prior payment in full of the preferential amounts to which any Senior Stock
is entitled, in the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Series A-1
Preferred Stock shall be entitled to receive from the assets

 

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of the Corporation available for distribution to stockholders, before any
payment or distribution shall be made to the holders of any Junior Stock, an
amount in cash or property at its fair market value, as determined by the Board
of Directors in good faith, or a combination thereof, per share, equal to the
Liquidation Preference of a share of Series A-1 Preferred Stock as of the date
of payment or distribution, which payment or distribution shall be made pari
passu with any such payment or distribution made to the holders of any Parity
Stock ranking on a parity basis with the Series A-1 Preferred Stock with respect
to distributions upon liquidation, dissolution or winding up of the Corporation.
Following the payment of all amounts owing to holders of each class or series of
capital stock of the Corporation having a preference or priority over the Common
Stock as to distributions upon the liquidation, dissolution or winding up of the
Corporation, then the holders of the Series A-1 Preferred Stock shall be
entitled to participate, with the holders of the Common Stock and with the
holders of any other securities of the Corporation entitled to participate, pro
rata, based upon the number of shares of Common Stock into which the shares of
Series A-1 Preferred Stock are then convertible, as to any amounts remaining for
distribution to the holders of Common Stock upon the liquidation, dissolution or
winding up of the Corporation. If, upon distribution of the Corporation’s assets
in liquidation, dissolution or winding up, the assets of the Corporation to be
distributed among the holders of the Series A-1 Preferred Stock and to all
holders of any Parity Stock ranking on a parity basis with the Series A-1
Preferred Stock with respect to distributions upon liquidation, dissolution or
winding up shall be insufficient to permit payment in full to such holders of
the respective preferential amounts to which they are entitled, then the entire
assets of the Corporation to be distributed to holders of the Series A-1
Preferred Stock and such Parity Stock shall be distributed to such holders based
upon and in proportion to the full preferential amounts to which the shares of
Series A-1 Preferred Stock and such Parity Stock would otherwise be entitled.
Neither the consolidation or merger of the Corporation with or into any other
corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 3. Notice of the liquidation, dissolution or winding up of the
Corporation shall be given, not less than 20 days prior to the date on which
such liquidation, dissolution or winding up is expected to take place or become
effective, to the holders of record of the shares of Series A-1 Preferred Stock.

ARTICLE 4 Limitations on Dividends. If at any time the Corporation shall have
declared a dividend on the Series A-1 Preferred Stock and failed to pay or set
aside consideration sufficient to pay such dividend, or if the Corporation
declares a cash dividend on the shares of Common Stock and fails to pay or set
aside the Participating Dividend required to be paid to the holders of the
Series A-1 Preferred Stock, then (i) the Corporation shall not declare or pay
any dividend on or make any distribution with respect to any Parity Stock or
Junior Stock or set aside any money or assets for any such purpose until such
dividend payable to the holders of Series A-1 Preferred Stock has been paid or
consideration sufficient to pay such dividend has been set aside for such
purpose, and (ii) neither the Corporation nor any Subsidiary thereof shall
redeem, exchange, purchase or otherwise acquire any shares of Series A-1
Preferred Stock, Parity Stock or Junior Stock, or set aside any money or assets
for any such purpose, a sinking fund or otherwise, unless all then outstanding
shares of any class or series of Parity Stock that by the terms of the
instrument creating or evidencing such Parity Stock is required to be redeemed
under such circumstances are redeemed or exchanged pursuant to the terms hereof
and thereof.

 

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Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for distribution to the
holders of the Series A-1 Preferred Stock upon liquidation, dissolution or
winding up of the Corporation if such liquidation, dissolution or winding up
were to occur on the date fixed for such redemption, exchange, purchase or other
acquisition of such Parity Stock or Junior Stock would be less than the
aggregate Liquidation Preference as of such date of all shares of Series A-1
Preferred Stock then outstanding.

Nothing contained in this Section 4 shall prevent (i) except with respect to the
requirement to pay Participating Dividends to the holders of shares of Series
A-1 Preferred Stock as set forth in the first paragraph of this Section 4, the
payment of dividends on any Junior Stock solely in shares of Junior Stock or the
redemption, purchase or other acquisition of Junior Stock solely in exchange for
(together with a cash adjustment for fractional shares, if any) shares of Junior
Stock, or (ii) the payment of dividends on any Parity Stock solely in shares of
Parity Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Parity Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Parity Stock and/or Junior Stock.

All provisions of this Section 4 are for the sole benefit of the holders of
Series A-1 Preferred Stock and accordingly, if the holders of shares of Series
A-1 Preferred Stock shall have waived in whole or in part the benefit of the
applicable provisions, either generally or in the specific instance, such
provision shall not (to the extent of such waiver, in the case of a partial
waiver) restrict the redemption, exchange, purchase or other acquisition of, or
declaration, payment or making of any dividends or distributions on the New
Convertible Preferred Stock, any Parity Stock or any Junior Stock.

ARTICLE 5 Conversion.

Section 5.1 Series A-1 Preferred Stock Optional and Mandatory Conversion. Each
outstanding share of Series A-1 Preferred Stock is convertible at the option of
the holder at any time into fully paid and non-assessable full share(s) of
Series A Common Stock at the then effective Series A-1 Conversion Rate (as
defined below). In addition, (i) the holder of each outstanding share of Series
A-1 Preferred Stock shall be deemed to have automatically converted such share
into fully paid and non-assessable share(s) of Series A Common Stock at the then
effective Series A-1 Conversion Rate immediately upon the Transfer (other than a
Transfer that is a Permitted Transfer or a Transfer from one member of the ANPP
Stockholder Group to another member of the ANPP Stockholder Group) of such share
to any Person, and (ii) the holders of all outstanding shares of Series A-1
Preferred Stock shall be deemed to have automatically converted all such shares
of Series A-1 Preferred Stock into fully paid and non-assessable share(s) of
Series A Common Stock at such time as the number of issued and outstanding
shares of Series A-1 Preferred Stock is less than 80% of the Base Amount. Such
conversion pursuant to clauses (i) or (ii) above is referred to herein as the
“Series A-1 Mandatory Conversion.” In the event of a Series A-1 Mandatory
Conversion, the share(s) of Series A-1 Preferred Stock subject to such Series
A-1 Mandatory Conversion shall be automatically converted into fully paid and
non-assessable share(s) of Series A Common Stock at the then

 

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effective Series A-1 Conversion Rate without any further action by the
Corporation or holders of Series A-1 Preferred Stock and whether or not the
certificate(s) representing such share(s) of Series A-1 Preferred Stock are
surrendered to the Corporation; and the Corporation shall not be obligated to
issue certificate(s) evidencing the share(s) of Series A Common Stock issuable
upon such Series A-1 Mandatory Conversion unless the certificate(s) evidencing
such share(s) of Series A-1 Preferred Stock are delivered to the Corporation, or
the holder thereof notifies the Corporation that such certificate(s) have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificate(s). In case cash, securities or property other
than Series A Common Stock shall be payable, deliverable or issuable upon
conversion as provided herein, then all references to Series A Common Stock in
this Section 5 shall be deemed to apply, so far as appropriate and as nearly as
may be, to such cash, property or other securities. Subject to the provisions
for adjustment hereinafter set forth in this Section 5, the Series A-1 Preferred
Stock may be converted into Series A Common Stock at the initial conversion rate
of nine (9) fully paid and non-assessable share of Series A Common Stock for
each share of Series A-1 Preferred Stock so converted (this conversion rate as
from time to time adjusted cumulatively pursuant to the provisions of this
Section is hereinafter referred to as the “Series A-1 Conversion Rate”).

Section 5.2 Adjustments for Stock Splits, Etc.

(a) In case after the New Issue Date the Corporation shall (1) subdivide the
then outstanding shares of Series A Common Stock into a greater number of shares
of Series A Common Stock, (2) combine the then outstanding shares of Series A
Common Stock into a smaller number of shares of Series A Common Stock, or
(3) issue by reclassification of its shares of Series A Common Stock any shares
of any other class of capital stock of the Corporation (including any such
reclassification in connection with a merger in which the Corporation is the
continuing corporation), then the Series A-1 Conversion Rate in effect
immediately prior to the opening of business on the effective date of such
subdivision, combination or reclassification shall be adjusted so that the
holder of each share of the Series A-1 Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number and kind of shares of
capital stock of the Corporation that such holder would have owned or been
entitled to receive immediately following such action had such shares of Series
A-1 Preferred Stock been converted immediately prior to such time.

(b) An adjustment made pursuant to this Section 5(b) for a subdivision,
combination or reclassification shall become effective immediately after the
effective date of the subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any action listed above shall be
taken.

Section 5.3 Adjustments for Rights, Warrants, Etc. In case the Corporation shall
after the New Issue Date issue any rights or warrants to all holders of shares
of Series A Common Stock entitling them (for a period of not more than 45 days
after the record date for the determination of stockholders entitled to receive
such rights or warrants) to subscribe for or purchase shares of Series A Common
Stock (or Series A Convertible Securities) at a price per share of the Series A
Common Stock (or having an initial exercise price or conversion price per share
of Series A Common Stock) less than the then current market price per share of
such Series A Common Stock on such record date, the number of shares of Series A
Common Stock into

 

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which each share of Series A-1 Preferred Stock shall thereafter be convertible
shall be determined by multiplying the number of shares of Series A Common Stock
into which such share of Series A-1 Preferred Stock was theretofore convertible
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Series A Common Stock outstanding on such
record date plus the number of additional shares of Series A Common Stock
offered for subscription or purchase (or into which the Series A Convertible
Securities so offered are initially convertible) and the denominator of which
shall be the number of shares of Series A Common Stock outstanding on such
record date plus the number of shares of Series A Common Stock, which the
aggregate offering price of the total number of shares of Series A Common Stock
so offered (or the aggregate initial conversion or exercise price of the Series
A Convertible Securities so offered) would purchase at the then current market
price per share of Series A Common Stock on such record date. Such adjustment
shall be made successively whenever any such rights or warrants are issued and
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such rights or warrants. In the event that
all of the shares of Series A Common Stock (or all of the Series A Convertible
Securities) subject to such rights or warrants have not been issued when such
rights or warrants expire (or, in the case of rights or warrants to purchase
Series A Convertible Securities which have been exercised, all of the shares of
Series A Common Stock issuable upon conversion of such Series A Convertible
Securities have not been issued prior to the expiration of the conversion right
thereof), then the Series A-1 Conversion Rate shall be readjusted retroactively
to be the Series A-1 Conversion Rate which would then be in effect had the
adjustment upon the issuance of such rights or warrants been made on the basis
of the actual number of shares of Series A Common Stock (or Series A Convertible
Securities) issued upon the exercise of such rights or warrants (or the
conversion of such Series A Convertible Securities); but such subsequent
adjustment shall not affect the number of shares of Series A Common Stock issued
upon the conversion of any share of Series A-1 Preferred Stock prior to the date
such subsequent adjustment is made. Any determination of the current market
price per share of Series A Common Stock under this Section shall be in
accordance with Section 5(m).

Section 5.4 Adjustments for Other Distributions and Dividends. In case the
Corporation shall distribute after the New Issue Date to all holders of shares
of Series A Common Stock (including any such distribution made in connection
with a merger in which the Corporation is the continuing corporation, other than
a merger to which Section 5(e) is applicable) any securities, evidences of its
indebtedness or assets (other than Participating Dividends or with respect to
subdivisions, combinations or reclassifications on the Series A Common Stock in
respect of which an adjustment is made pursuant to Section 5(b)(i) hereof) or
rights or warrants to purchase shares of Series A Common Stock or securities
convertible into shares of Series A Common Stock (excluding a Rights Dividend
and those referred to in Section 5(c) above), then in each such case the number
of shares of Series A Common Stock into which each share of Series A-1 Preferred
Stock shall thereafter be convertible shall be determined by multiplying the
number of shares of Series A Common Stock into which such share was theretofore
convertible immediately prior to the record date for the determination of
stockholders entitled to receive the distribution by a fraction, the numerator
of which shall be the then current market price per share of Series A Common
Stock on such record date and the denominator of which shall be such current
market price per share of Series A Common Stock less the fair market value on
such record date (as determined in good faith by the Board of Directors of the
Corporation, whose good faith determination shall be conclusive) of the portion
of the securities,

 

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assets or evidences of indebtedness or rights or warrants so to be distributed
applicable to one share of Series A Common Stock. Such adjustment shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such distribution is made. Any determination of the current market
price per share of Series A Common Stock under this Section shall be in
accordance with Section 5(m).

Section 5.5 Adjustments for Reclassification, Merger, Etc. In case of any
reclassification or change in the Series A Common Stock, Series B Common Stock
or Series C Common Stock (other than any reclassification or change referred to
in Section 5(b) and other than a change in par value) or in case of any
consolidation of the Corporation with any other corporation or any merger of the
Corporation into another corporation or of another corporation into the
Corporation (other than a merger in which the Corporation is the continuing
corporation and which does not result in any reclassification or change (other
than a change in par value or any reclassification or change to which
Section 5(b) is applicable) in the outstanding Series A Common Stock, Series B
Common Stock or Series C Common Stock), or in case of any sale or transfer to
another corporation or entity (other than by mortgage or pledge) of all or
substantially all of the properties and assets of the Corporation, in any such
case after the New Issue Date, the Corporation (or its successor in such
consolidation or merger) or the purchaser of such properties and assets shall
make appropriate provision so that the holder of a share of the Series A-1
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property that such
holder would have owned immediately after such reclassification, change,
consolidation, merger, sale or transfer if such holder had converted such share
immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share the kind and amount of shares of stock and other
securities and property received per share by a plurality of the non-electing
shares), and the holders of the Series A-1 Preferred Stock shall have no other
conversion rights under these provisions; provided that effective provision
shall be made, in the articles or certificate of incorporation of the resulting
or surviving corporation or otherwise or in any contracts of sale or transfer,
so that the provisions set forth herein for the protection of the conversion
rights of the Series A-1 Preferred Stock shall thereafter be made applicable, as
nearly as reasonably may be to any such other shares of stock and other
securities and property deliverable upon conversion of the Series A-1 Preferred
Stock remaining outstanding or other Series A-1 Preferred Stock or other
Convertible Securities received by the holders of Series A-1 Preferred Stock in
place thereof; and provided, further, that any such resulting or surviving
corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or property as
the holders of the Series A-1 Preferred Stock remaining outstanding, or other
Series A-1 Preferred Stock or other Convertible Securities received by the
holders in place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provisions for the protection of the conversion
rights as above provided.

Section 5.6 Notice of Adjustments in Conversion Rates. Whenever the Series A-1
Conversion Rate or the conversion privilege shall be adjusted as provided in
Sections 5(b), (c), (d) or (e), the Corporation shall promptly cause a notice to
be mailed to the holders of record of the Series A-1 Preferred Stock describing
the nature of the event requiring such adjustment

 

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and the Series A-1 Conversion Rate in effect immediately thereafter, the kind
and amount of stock or other securities or property into which the Series A-1
Preferred Stock shall be convertible after such event. In case of an adjustment
pursuant to Section 5(d), such notice shall enclose the resolution of the Board
of Directors of the Corporation making the fair market value determination of
the Series A Common Stock for the purpose of calculating the Series A-1
Conversion Rate. Where appropriate, such notice may be given in advance and
included as a part of a notice required to be mailed under the provisions of
Section 5(h).

Section 5.7 Calculation and Timing of Adjustments. The Corporation may, but
shall not be required to, make any adjustment of the Series A-1 Conversion Rate
if such adjustment would require an increase or decrease of less than 1% in the
Series A-1 Conversion Rate; provided, however, that, in each case, any
adjustments which by reason of this Section 5(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5(g) shall be made to the nearest 1/100th of
a share. In any case in which this Section 5(g) shall require that an adjustment
shall become effective immediately after a record date for such event, the
Corporation may defer until the occurrence of such event (x) issuing to the
holder of any shares of Series A-1 Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of Series A
Common Stock or other capital stock issuable upon such conversion by reason of
the adjustment required by such event over and above the shares of Series A
Common Stock or other capital stock issuable upon, such conversion before giving
effect to such adjustment and (y) paying to such holder cash in lieu of any
fractional interest to which such holder is entitled pursuant to Section 5(m);
provided, however, that, if requested by such holder, the Corporation shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares of Series A Common Stock
or other capital stock, and such cash, upon the occurrence of the event
requiring such adjustment. For the avoidance of doubt, no adjustments shall be
made under this Section 5 with respect to any Participating Dividends paid to
the holders of Series A-1 Preferred Stock.

Section 5.8 Notice of Certain Events. In case at any time:

(a) the Corporation shall take any action which would require an adjustment in
the Series A-1 Conversion Rate pursuant to Section 5;

(b) there shall be any capital reorganization or reclassification of the Common
Stock (other than a change in par value), or any consolidation or merger to
which the Corporation is a party and for which approval of any stockholders of
the Corporation is required, or any sale, transfer or lease of all or
substantially all of the properties and assets of the Corporation, or a tender
offer for shares of Common Stock representing at least a majority of the total
voting power represented by the outstanding shares of Common Stock which has
been recommended by the Board of Directors as being in the best interests of the
holders of Common Stock; or

(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;

 

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then, in any such event, the Corporation shall give written notice to the
holders of the Series A-1 Preferred Stock at their respective addresses as the
same appear on the books of the Corporation, at least twenty days (or ten days
in the case of a recommended tender offer as specified in clause (ii) above)
prior to any record date for such action, dividend or distribution or the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, lease, tender offer, dissolution,
liquidation or winding up, during which period such holders may exercise their
conversion rights; provided, however, that any notice required by any event
described in clause (ii) of this Section 5(h) shall be given in the manner and
at the time that such notice is given to the holders of Common Stock. Without
limiting the obligations of the Corporation to provide notice of corporate
actions hereunder, the failure to give the notice required by this Section 5(h)
or any defect therein shall not affect the legality or validity of any such
corporate action of the Corporation or the vote upon such action.

Section 5.9 Procedures for Conversion. Before any holder of Series A-1 Preferred
Stock shall be entitled to convert the same into Series A Common Stock (or, in
the case of the Series A-1 Mandatory Conversion, before any holder of Series A-1
Preferred Stock so converted shall be entitled to receive certificate(s)
evidencing the shares of Series A Common Stock or other securities or property,
as applicable, issuable upon such conversion), such holder shall surrender the
certificate(s) for such Series A-1 Preferred Stock at the office of the
Corporation or at the office of the transfer agent for the Series A-1 Preferred
Stock, which certificate(s), if the Corporation shall so request, shall be duly
endorsed to the Corporation or in blank or accompanied by proper instruments of
transfer to the Corporation or in blank (such endorsements or instruments of
transfer to be in form satisfactory to the Corporation), and shall give written
notice to the Corporation at said office that such holder elects to convert all
or a part of the shares represented by said certificate(s) (or, in the case of
the Series A-1 Mandatory Conversion, that such holder is surrendering the same)
in accordance with the terms of this Section 5(i), and shall state in writing
therein the name or names in which such holder wishes the certificate(s) for
Series A Common Stock or other securities or property, as applicable, to be
issued. Every such notice of election to convert shall constitute a contract
between the holder of such Series A-1 Preferred Stock and the Corporation,
whereby the holder of such Series A-1 Preferred Stock shall be deemed to
subscribe for the amount of Series A Common Stock or other securities or
property, as applicable, which such holder shall be entitled to receive upon
conversion of the number of share(s) of Series A-1 Preferred Stock to be
converted, and, in satisfaction of such subscription, to deposit the share(s) of
Series A-1 Preferred Stock to be converted, and thereby the Corporation shall be
deemed to agree that the surrender of the shares of Series A-1 Preferred Stock
to be converted shall constitute full payment of such subscription for Series A
Common Stock to be issued upon such conversion. The Corporation will as soon as
practicable after such deposit of the certificate(s) for Series A-1 Preferred
Stock, accompanied by the written notice and the statement above prescribed,
issue and deliver at the office of the Corporation or of said transfer agent to
the Person for whose account such Series A-1 Preferred Stock was so surrendered,
or to his nominee(s) or, subject to compliance with applicable law,
transferee(s), certificate(s) for the number of full share(s) of Series A Common
Stock to which such holder shall be entitled, together with cash in lieu of any
fraction of a share as hereinafter provided together with an amount in cash
equal to the full amount of any cash dividend declared (or required to be
declared) on the Series A-1 Preferred Stock which, as of the date of such
conversion, remains unpaid (provided, that the Corporation will use commercially
reasonable efforts to make such delivery within two Business Days after such
deposit and such notice and

 

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statement). If surrendered certificate(s) for Series A-1 Preferred Stock are
converted only in part, the Corporation will issue and deliver to the holder, or
to his nominee(s), without charge therefor, new certificate(s) representing the
aggregate of the unconverted shares. Such conversion shall be deemed to have
been made as of the date of such surrender of the Series A-1 Preferred Stock to
be converted or date of the event that gives rise to the Series A-1 Mandatory
Conversion; and the Person(s) entitled to receive the Series A Common Stock
issuable upon conversion of such Series A-1 Preferred Stock shall be treated for
all purposes as the record holder or holders of such Series A Common Stock on
such date.

Section 5.10 Transfer Taxes. The issuance of certificate(s) for share(s) of
Series A Common Stock upon conversion of share(s) of Series A-1 Preferred Stock
shall be made without charge for any issue, stamp or other similar tax in
respect of such issuance; provided, however, if any such certificate is to be
issued in a name other than that of the registered holder of the share(s) of
Series A-1 Preferred Stock converted, the Person(s) requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid.

Section 5.11 Reservation of Shares. The Corporation shall reserve and keep
available at all times thereafter, solely for the purpose of issuance upon
conversion of the outstanding shares of Series A-1 Preferred Stock, such number
of shares of Series A Common Stock as shall be issuable upon the conversion of
all outstanding shares of Series A-1 Preferred Stock; provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion of the outstanding shares of Series
A-1 Preferred Stock by delivery of shares of Series A Common Stock which are
held in the treasury of the Corporation. The Corporation shall take all such
corporate and other actions as from time to time may be necessary to insure that
all shares of Series A Common Stock issuable upon conversion of shares of Series
A-1 Preferred Stock at the Series A-1 Conversion Rate in effect from time to
time will, upon issue, be duly and validly authorized and issued, fully paid and
nonassessable and free of any preemptive or similar rights.

Section 5.12 Retirement of Series A-1 Preferred Stock. All shares of Series A-1
Preferred Stock received by the Corporation upon conversion thereof shall be
retired and shall not be reissued.

Section 5.13 Payment in Lieu of Fractional Shares. The Corporation shall not be
required to issue fractional shares of Series A Common Stock or scrip upon
conversion of the Series A-1 Preferred Stock. As to any final fraction of a
share of Series A Common Stock which a holder of one or more shares of Series
A-1 Preferred Stock would otherwise be entitled to receive upon conversion of
such shares in the same transaction, the Corporation shall make a cash payment
in respect of such final fraction in an amount equal to the same fraction of the
current market price of a full share of Series A Common Stock as determined in
good faith by the Board of Directors. For the purpose of any computation of
current market price under this Certificate of Designation, current market price
of any security on any date shall be deemed to be the average of the daily
closing prices per share of such security for the 20 consecutive Trading Days
immediately prior to such date or, with respect to any adjustment in conversion
rights as set forth herein, the earlier of the date in question and the date
immediately prior to the Ex Date;

 

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provided, however, that if any other transaction occurs requiring an adjustment
in the conversion rights as set forth herein, and the Ex Date for such other
transaction falls during such 20 consecutive Trading Day period, then, and in
each such case, the current per share market price shall be appropriately
adjusted. The closing price for each day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported on the
principal national securities exchange on which the security is listed or
admitted to trading or, if the security is not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by NASDAQ or such other system then in use, or, if on any such date
the security is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the security selected by the Board of Directors of the Corporation.

Section 5.14 Regulatory Matters. If any shares of Series A Common Stock which
would be issuable upon conversion of shares of Series A-1 Preferred Stock
require the approval of any governmental authority before such shares may be
issued upon conversion, the Corporation, at the request and expense of the
holder(s) of such Series A-1 Preferred Stock, will use its reasonable best
efforts to cooperate with the holder(s) of such Series A-1 Preferred Stock to
obtain such approvals.

ARTICLE 6 Voting Rights.

Section 6.1 General Voting Rights. In connection with any matter as to which the
holders of Series A Common Stock and Series B Common Stock are entitled to vote
other than the election of Common Stock Directors, each share of Series A-1
Preferred Stock issued and outstanding as of the record date for such meeting
shall have (and the holder of record thereof shall be entitled to cast) the
number of votes equal to the number of votes such holder would have been
entitled to cast had it converted its shares of Series A-1 Preferred Stock into
shares of Series A Common Stock immediately prior to the record date for the
determination of stockholders entitled to vote upon such matter. Except as
provided in this Section 6 and Article IV, Section C.5 and Article IV, Section
B.1 of the Charter, and except as otherwise may be required by law or Series
Preferred Stock Designation of any other series of Series Preferred Stock, the
holders of Common Stock, the holders of Convertible Preferred Stock, the holders
of New Convertible Preferred Stock and the holders of any other series of Series
Preferred Stock entitled to vote thereon, if any, shall be entitled to notice of
and to attend any, meeting of stockholders and to vote together as one class
with respect to all matters to be voted on by stockholders of the Corporation
(including for purposes of Article VII of the Charter, but excluding, with
respect to the Series A-1 Preferred Stock, the election of directors and any
matter provided by Section 242 of the DGCL, but including, without limitation,
and irrespective of the provisions of Section 242(b)(2) of the DGCL, any
proposed amendment to the Charter that would (x) increase (i) the number of
authorized shares of Common Stock or any series thereof, (ii) the number of
authorized shares of Preferred Stock or any series thereof or (iii) the number
of authorized shares of any other class or series of capital stock of the
Corporation hereafter established or (y) decrease (i) the number of authorized
shares of Common Stock or any series thereof, (ii) the number of authorized
shares of Preferred Stock or any series thereof or (iii) the number of
authorized shares of any other class or series of capital stock of the
Corporation

 

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hereafter established (but not below the number of shares of such class or
series of capital stock, as the case may be, then outstanding)), and no separate
class or series vote or consent of the holders of shares of any class or series
of capital stock of the Corporation shall be required for the approval of any
such matter.

Section 6.2 Election of Series A-1 Preferred Stock Directors.

(a) Until such time as a Series A-1 Mandatory Conversion shall be deemed to have
occurred pursuant to Section 5(a)(ii), the holders of the Series A-1 Preferred
Stock shall have the exclusive right to elect three members of the Board of
Directors (each such director elected by the holders of the Series A-1 Preferred
Stock is hereinafter referred to as a “Series A-1 Preferred Stock Director”),
and the holders of the Series A Common Stock, Series B Common Stock or Series A
Preferred Stock shall have no right to vote or participate in the election of
the Series A-1 Preferred Stock Directors. Notwithstanding the foregoing
provisions of this Section, so long as the applicable rules and regulations of
the NASDAQ or the Commission (in each case, as may be amended from time to time)
require that the Board of Directors or any committee thereof, include as members
thereof, directors who qualify as Independent Directors, then two of the persons
proposed, designated or nominated in writing or otherwise by the holders of the
Series A-1 Preferred Stock to serve as a Series A-1 Preferred Stock Director
will, in addition to any other qualifications as a director imposed by the DGCL,
qualify as Independent Directors, as determined by the then current Board,
acting in good faith. The provisions relating to classification and appointment
of directors set forth in Article V, Sections B and D of the Charter shall not
apply to the Series A-1 Preferred Stock Directors.

(b) Each Series A-1 Preferred Stock Director will be that person elected, by the
written consent of the holders of a majority of the outstanding shares of Series
A-1 Preferred Stock given in accordance with Section 6(d) below or by the
affirmative vote of the holders of a majority of the outstanding shares of
Series A-1 Preferred Stock at a meeting called for that purpose.

(c) A Series A-1 Preferred Stock Director may be removed from office (x) without
Cause upon the affirmative vote of the holders of at least a majority of the
outstanding shares of the Series A-1 Preferred Stock, voting together as a
separate class and (y) may be removed for Cause as provided in Article V,
Section C of the Charter as if he or she is a Series A Preferred Stock Director
for purposes of this Section 6(b)(iii)(y) only. Any vacancy in the office of a
Series A-1 Preferred Stock Director occurring during the effectiveness of the
applicable provisions of Section 6(b)(i) shall be filled solely by the written
consent of the holders of a majority of the outstanding shares of the Series A-1
Preferred Stock given in accordance with Section 6(d) below or by the
affirmative vote of the holders of a majority of the outstanding shares of
Series A-1 Preferred Stock at a meeting called for that purpose. Any director
elected to fill a vacancy shall and serve the same remaining term as that of his
or her predecessor and until his or her successor has been chosen and has
qualified.

(d) The holders of Series A-1 Preferred Stock shall have no right to vote or
participate in the election of the Common Stock Directors.

 

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Section 6.3 Special A-1 Class Vote Matters. Notwithstanding any other provision
in Article VI, Section C.5(c) of the Charter, until such time as a Series A-1
Mandatory Conversion shall be deemed to have occurred pursuant to
Section 5(a)(ii), neither the Corporation nor any of its Subsidiaries will take
any of the following actions (any such action, a “Special A-1 Class Vote
Matter”) following the New Issue Date without having obtained the affirmative
vote or written consent of the holders of a majority of the outstanding shares
of the Series A-1 Preferred Stock given in accordance with Section 6(d) below or
by the affirmative vote of the holders of a majority of the outstanding shares
of the Series A-1 Preferred Stock at a meeting called for that purpose:

(a) any increase in the number of members of the Board of Directors to a number
of directors in excess of 12;

(b) any fundamental change in the business of the Corporation and its
Subsidiaries from the business of the Corporation and its Subsidiaries as
conducted as of the New Issue Date or the making of any investment,
establishment of joint venture, or any acquisition, in each case, constituting a
material departure from the current lines of business of the Corporation and its
Subsidiaries (other than any such change, investment, joint venture or
acquisition that has been approved in accordance with Section 6(c)(vi) below);

(c) the material amendment, alteration or repeal of any provision of this
Certificate of Designation, the Charter or the Bylaws (as defined in Article V,
Section F of the Charter) (or the organizational documents of any Subsidiary of
the Corporation) or the addition or insertion of other provisions therein, other
than (i) any amendments to the articles or certificate of incorporation, bylaws
or organizational documents of any Wholly-Owned Subsidiary or (ii) an amendment
to or modification of the Charter that is necessary in order to implement any
action that has been otherwise approved (x) by the holders of a majority of the
outstanding shares of the Series A-1 Preferred Stock or (y) prior to the New
Issue Date by the holders of a majority of the outstanding shares of Series A
Preferred Stock;

(d) any transaction (a “Related Party Transaction”) between (x) the Corporation
or any of its Subsidiaries, on the one hand, and (y) any Related Party of the
Corporation, on the other hand, including the amendment of any agreement between
the Corporation or any of its Subsidiaries and any Related Party of the
Corporation as in effect on the New Issue Date; provided, however, that any
transaction between the Corporation or any of its Subsidiaries and a Related
Party of the Corporation will not constitute a Related Party Transaction if the
terms and conditions of such transaction, taken as a whole, are no more
favorable to such Related Party than the terms and conditions made available to
similarly situated third parties, or, if there are no such similarly situated
third parties, such transaction is otherwise on arm’s length terms;

(e) the merger, consolidation or other business combination by the Corporation
into or with any other entity, other than any transaction involving only the
Corporation and/or one or more direct or indirect Wholly-Owned Subsidiaries of
the Corporation; provided, however, that the provisions of this Section will not
apply to the Merger or apply to transactions that have been approved in
accordance with Section 6(c)(vi) and (vii) below;

 

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(f) the acquisition by the Corporation or any of its Subsidiaries of any assets
or properties (including stock or other equity interests of a third party) in
one transaction or a series of related transactions, which assets or properties
have an aggregate value or funding commitment by the Corporation in excess of
$250 million;

(g) the disposition (by way of sale, distribution to stockholders of the
Corporation of any securities or assets, or any other means) by the Corporation
or any of its Subsidiaries of any assets or properties (including stock or other
equity interests of a third party) in one transaction or a series of related
transactions, which assets or properties have an aggregate value in excess of
$250 million;

(h) the authorization, issuance, reclassification, redemption, exchange,
subdivision or recombination of any equity securities of the Corporation or its
material Subsidiaries, other than: (1) any issuance of equity securities to the
Corporation or its Subsidiaries of any entity if subsequent to such issuance,
such entity would be a direct or indirect Wholly-Owned Subsidiary of the
Corporation, provided, that such Wholly-Owned Subsidiary may not Transfer such
equity securities to any Person other than the Corporation or another
Wholly-Owned Subsidiary; (2) any issuance of equity securities in connection
with a transaction that has been approved (x) in accordance with Section 6(c)(v)
or (vi) above or (y) in connection with an acquisition (or series of related
acquisitions) with respect to which the approval of the holders of the Series
A-1 Preferred Stock is not otherwise required, provided, that none of the
Corporation or any of its Subsidiaries pays consideration consisting of or
including capital stock of the Corporation or any of its material Subsidiaries
in any such transaction that provides (other than as required by the DGCL) the
holders of such security with voting rights superior in any respect to the
voting rights of the holders of the Series A Common Stock, on a per share basis;
(3) pursuant to the terms of the Company Rights Plan or the Rights distributed
pursuant thereto; (4) in connection with the exercise of any stock options or
stock appreciation rights of the Corporation or any of its Subsidiaries
outstanding immediately following the effectiveness of the Merger; or
(5) pursuant to any equity compensation plan of the Corporation approved (x) by
the holders of the Series A-1 Preferred Stock or (y) prior to the New Issue Date
by the holders of a majority of the outstanding shares of Series A Preferred
Stock;

(i) any action resulting in the voluntary liquidation, dissolution or winding up
of the Corporation or any material Subsidiary of the Corporation;

(j) any substantial change in Discovery Communication Holding, LLC’s service
distribution policy and practices from the service distribution policy and
practices of Discovery Communication Holding, LLC and its Subsidiaries as of the
New Issue Date;

(k) the declaration or payment of any dividend on, or the making of any
distribution to holders of equity securities of the Corporation or any
Subsidiary of the Corporation, other than (1) cash dividends payable out of
current year earnings; (2) dividends or distributions payable or made in shares
of Common Stock or other securities of the Corporation, subject to the
limitations otherwise provided for herein; (3) dividends or distributions to the
Corporation or any Wholly-Owned Subsidiary of the Corporation that are declared
and paid by a Wholly-Owned Subsidiary of the Corporation; and (4) the Rights
Dividend;

 

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(l) the incurrence of Indebtedness after the New Issue Date, by or on behalf of
the Corporation or any of its Subsidiaries, if (1) such Indebtedness, together
with all other Indebtedness of the Corporation and its Consolidated Group, would
exceed four (4) times the Cash Flow of the Corporation and its Consolidated
Group for the last four (4) consecutive calendar quarters (the “Annualized Cash
Flow”) or (2) the Debt Service for the next twelve (12) calendar months related
to such Indebtedness, together with the Debt Service for the next twelve
(12) calendar months for all other Indebtedness of the Corporation and its
Consolidated Group, would exceed sixty-six percent (66%) of the Annualized Cash
Flow of the Corporation and its Consolidated Group;

(m) the appointment or removal of the Chairman of the Board of Directors of the
Corporation and the appointment or removal of the Chief Executive Officer of the
Corporation;

(n) any offering of any security of the Corporation or any of its Subsidiaries
that would constitute a “public offering” within the meaning of the Securities
Act of 1933, other than, (1) in connection with an acquisition (or series of
related acquisitions) with respect to which the approval of the holders of the
Series A-1 Preferred Stock is not otherwise required; (2) an offering of
securities pursuant to the Company Rights Plan; or (3) in connection with any
equity compensation plan of the Corporation or any of its Subsidiaries in effect
as of the New Issue Date or approved (x) by the holders of the Series A-1
Preferred Stock or (y) prior to the New Issue Date by the holders of a majority
of the outstanding shares of Series A Preferred Stock; provided that, in the
case of (1) of this subsection, none of the Corporation or any of its
Subsidiaries pays consideration consisting of capital stock of the Corporation
or any of its Subsidiaries in any such transaction that provides (other than as
required by the DGCL) the holders of such security with voting rights superior
in any respect to the voting rights of the holders of the Series A Common Stock,
on a per share basis; and

(o) the adoption of the Annual Business Plan of the Corporation and any material
deviation therefrom,

provided, however, that any actions authorized or approved prior to the New
Issue Date by the holders of a majority of the outstanding shares of Series A
Preferred Stock pursuant to Article IV, Section C.5 of the Charter shall not be
a Special A-1 Class Vote Matter requiring the affirmative vote or written
consent of the holders of a majority of the outstanding shares of Series A-1
Preferred Stock pursuant to this Section 6(c).

Section 6.4 Action By Written Consent. With respect to actions by the holders of
the Series A-1 Preferred Stock upon those matters on which such holders are
entitled to vote as a separate class (including but not limited to the Special
A-1 Class Vote Matters), such actions may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by at least a majority of the
outstanding shares of Series A-1 Preferred Stock, and shall be delivered to the
Corporation as provided in the DGCL. Notice shall be given in accordance with
the applicable provisions of the DGCL of the taking of corporate action without
a meeting by less than unanimous written consent.

 

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ARTICLE 7 ANPP Right of First Offer.

Section 7.1 If at any time prior to the date that is seven years plus six months
after the New Issue Date (the “Restricted Period”), and subject to the terms and
conditions of this Section 7, any member of the ANPP Stockholder Group proposes
to initiate a Permitted Transfer to a Third Party of shares of Series A-1
Preferred Stock (in such capacity, the “Proposed ANPP Transferor,” and such
shares, for purposes of this Section 7, the “Offered Shares”), the Proposed ANPP
Transferor shall first provide written notice of such proposal to the
Corporation in accordance with the provisions of this Section 7 prior to
Transferring such Offered Shares to a Third Party. Such written notice (a “ROFO
Notice”) shall state that the Proposed ANPP Transferor proposes to initiate a
Transfer to a Third Party, and shall indicate the amount of Offered Shares
proposed to be included in the Permitted Transfer.

Section 7.2 Upon receipt of a ROFO Notice by the Corporation, the Corporation
shall have forty-five (45) calendar days (the “ROFO Notice Period”) to make an
offer to purchase all of the Offered Shares by delivering a written notice (a
“ROFO Offer Notice”) to the Proposed ANPP Transferor stating that it irrevocably
offers to purchase such Offered Shares at a purchase price per share specified
by the Corporation (the “ROFO Price”). Any such offer by the Corporation may not
be conditioned on the receipt of financing. The Proposed ANPP Transferor shall
have until the end of the ROFO Response Period (as defined below) to accept or
reject the offer set forth in the ROFO Offer Notice. If such offer is accepted,
the parties shall promptly (within five (5) calendar days of acceptance) enter
into a customary transfer agreement for the Offered Shares, and such transaction
shall close not later than five (5) calendar days thereafter (subject to
regulatory approvals, if any).

Section 7.3 Within the period (the “ROFO Response Period”) ending forty-five
(45) calendar days after (x) the Corporation’s delivery of a ROFO Offer Notice
or (y) if no ROFO Offer Notice is delivered, the end of the ROFO Notice Period,
the Proposed ANPP Transferor may enter into a binding agreement to Transfer the
Offered Shares to a Third Party (such agreement, for purposes of this Section 7,
a “Third Party Agreement”); provided, however, that if the Corporation has
delivered a ROFO Offer Notice to the Proposed ANPP Transferor, the purchase
price to be paid by a Third Party for the Offered Shares must be greater than
the ROFO Price (and any non-cash consideration offered by the Third Party shall
be valued at fair market value for purposes of determining the proposed purchase
price).

Section 7.4 During the ROFO Response Period, the Proposed ANPP Transferor shall
keep the Corporation reasonably informed regarding the material terms and status
of discussions with any Third Parties regarding a potential Third Party
Agreement. If the Proposed ANPP Transferor does not enter into a Third Party
Agreement to Transfer the Offered Shares within the ROFO Response Period as
contemplated by this Section 7, the rights of the Corporation and the
obligations of the members of the ANPP Stockholder Group under this Section 7
shall be deemed to be reinstated and any shares of Series A-1 Preferred Stock
may not be Transferred to a Third Party in a Permitted Transfer unless the
Proposed ANPP Transferor sends a new ROFO Offer Notice in accordance with, and
otherwise complies with, this Section 7. The members of the ANPP Stockholder
Group may deliver a ROFO Offer Notice no more frequently than once in any six
(6) month period.

 

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Section 7.5 Any notice required to be given to the Corporation pursuant to this
Section 7, including a ROFO Notice, shall be deemed duly given if sent by
courier or overnight delivery service, or mailed by certified or registered
mail, and addressed to the office of the Corporation. Any notice required to be
given to a Proposed ANPP Transferor pursuant to this Section 7, including a ROFO
Offer Notice, shall be deemed duly given if sent by courier or overnight
delivery service, or mailed by certified or registered mail, at the Proposed
ANPP Transferor’s address appearing on the books of the Corporation. Such notice
shall be deemed duly received on the date when duly delivered at the address of
the recipient.

ARTICLE 8 Waiver. Unless otherwise provided in this Certificate of Designation
or the Charter, any provision which, for the benefit of the holders of the New
Convertible Preferred Stock or any series thereof, prohibits, limits or
restricts actions by the Corporation, or imposes obligations on the Corporation,
may be waived in whole or in part, or the application of all or any part of such
provision in any particular circumstance or generally may be waived, in each
case only pursuant to the consent of the holders of a majority (or such greater
percentage thereof as may be required by applicable law or any applicable rules
of any national securities exchange) of the outstanding shares of New
Convertible Preferred Stock, or the series thereof so affected, consenting
together as a single class. Any such waiver shall be binding on all holders,
including any subsequent holders, of the New Convertible Preferred Stock.

ARTICLE 9 Method of Giving Notices. Except as provided in Section 7(e), any
notice required or permitted hereby to be given to the holders of shares of
Series A-1 Preferred Stock shall be deemed duly given if deposited in the United
States mail, first class mail, postage prepaid, and addressed to each holder of
record at the holder’s address appearing on the books of the Corporation or
supplied by the holder in writing to the Corporation for the purpose of such
notice.

ARTICLE 10 Exclusion of Other Rights. Except as provided in the Charter or the
Bylaws of the Corporation or as may otherwise be required by law and except for
the equitable rights and remedies which may otherwise be available to holders of
Series A-1 Preferred Stock, the shares of Series A-1 Preferred Stock shall not
have any designations, preferences, limitations or relative rights other than
those specifically set forth herein.

ARTICLE 11 Heading of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.

ARTICLE 12 Defined Terms.

Section 12.1 As used in this Certificate of Designation, the following terms
shall have the following meanings:

(a) “Base Amount” means the number of shares of Series A-1 Preferred Stock
issued to the members of the ANPP Stockholder Group as of the New Issue Date.

(b) “Liquidation Preference” measured per share of Series A-1 Preferred Stock as
of the date in question (the “Determination Date”), means an amount equal to
$0.09 (as appropriately adjusted to take into account any stock splits, reverse
splits and the like affecting the Series A-1 Preferred Stock occurring after the
New Issue Date). In connection with

 

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the determination of the Liquidation Preference of a share of Series A-1
Preferred Stock upon any liquidation, dissolution or winding up of the
Corporation, the Determination Date shall be the record date for the
distribution of amounts payable to stockholders in connection with any such
liquidation, dissolution or winding up.

(c) “New Conversion Shares” means the Series A-1 Conversion Shares and shares of
Common Stock or other securities of the Corporation issued or issuable upon
conversion of the shares of Series C-1 Preferred Stock.

(d) “New Issue Date” means the date on which shares of Series A-1 Preferred
Stock are first issued.

(e) “Maximum Amount” means a number of shares of Common Stock equal to (i) 7.5%
of the sum of (A) 421,889,705, (B) the number of New Conversion Shares issued or
issuable in respect of (x) [            ]1 shares of Series A-1 Preferred Stock
and (y) [            ]2 shares of Series C-1 Preferred Stock as of the date of
determination, and (C) the number of shares of Common Stock issuable upon
exercise of the Converted Options (as defined in the Merger Agreement); plus
(ii) the number of New Conversion Shares issuable upon conversion of shares of
New Convertible Preferred Stock issued to the members of the ANPP Stockholder
Group upon the New Issue Date; provided, that, in the event any member of the
ANPP Stockholder Group or any ANPP Permitted Transferee Transfers shares of New
Convertible Preferred Stock or New Conversion Shares following the New Issue
Date (other than in a Transfer that constitutes a Permitted Transfer) then the
amount of shares calculated above will be reduced by such number of shares of
New Conversion Shares issuable upon conversion of shares of New Convertible
Preferred Stock or New Conversion Shares so Transferred. Notwithstanding the
foregoing, in the event any member of the ANPP Stockholder Group or any of its
Affiliates, or any ANPP Permitted Transferee or any of its Affiliates
(x) acquires, or enters into any agreement, arrangement or understanding to
acquire, Beneficial Ownership of shares of Common Stock following the
effectiveness of the Merger, or (y) Transfers or enters into any agreement,
arrangement or understanding to Transfer, Beneficial Ownership of shares of New
Convertible Preferred Stock to any third party, then such acquisition or
Transfer, as the case may be, will be deemed, upon the execution or entry of any
such agreement, arrangement or understanding or the consummation of any such
acquisition or Transfer, to result in the Maximum Amount being exceeded to the
extent that after giving effect to such acquisition of Beneficial Ownership of
shares of Common Stock or such Transfer of Beneficial Ownership of shares of New
Convertible Preferred Stock, the aggregate voting power (stated as a percentage)
of all shares of Common Stock Beneficially Owned by the members of the ANPP
Stockholder Group and its Affiliates, the ANPP Permitted Transferee and its
Affiliates, or such third-party Transferee and its Affiliates (including for
these purposes New Conversion Shares), as applicable, would exceed by more than
one percentage point the aggregate voting power of the ANPP Stockholder Group to
vote with the holders of the Common Stock, voting together as a single class, on
matters that may be submitted to a vote of stockholders of the Corporation
(other

 

 

1  Represents the number of shares of Series A Preferred Stock to be released
from escrow, as converted to Series A-1 Preferred Stock.

2 

Represents the number of shares of Series C Preferred Stock to be released from
escrow, as converted to Series C-1 Preferred Stock.

 

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than the election of directors) immediately following the effectiveness of the
Merger; provided, that 792,361 shares will be excluded for purposes of
calculating whether the one percentage point voting power threshold has been
exceeded, and (x) [            ]3 shares of Series A-1 Preferred Stock and
(y) any shares of Common Stock issuable upon exercise of the Converted Options,
will, in each case, be deemed to have been outstanding immediately following the
effectiveness of the Merger for purposes of calculating whether the one
percentage point voting power threshold has been exceeded.

(f) “Parity Stock” means, as the context requires, any class or series of
capital stock, whether now existing or hereafter created, of the Corporation
ranking on a parity basis with the Series A-1 Preferred Stock as to dividend
rights, rights of redemption and/or rights on liquidation, as the case may be.
Capital stock of any class or series shall rank on a parity basis as to dividend
rights, rights of redemption or rights on liquidation with the Series A-1
Preferred Stock, whether or not the dividend rates, dividend payment dates,
redemption or liquidation prices per share or sinking fluid or mandatory
redemption provisions, if any, are different from those of the Series A-1
Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accrued and unpaid dividends,
redemption prices or liquidation prices, respectively, without preference or
priority, one over the other, as between the holders of shares of such class or
series and the holders of Series A-1 Preferred Stock. No class or series of
capital stock that ranks junior to the Series A-1 Preferred Stock as to rights
on liquidation shall rank or be deemed to rank on a parity basis with the Series
A-1 Preferred Stock as to dividend rights or rights of redemption, unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides. The Series A-1 Preferred Stock, the Series C-1
Preferred Stock, the Series A Preferred Stock and the Series C Preferred Stock
shall each be deemed to be Parity Stock as to each of the other such series.

(g) “Permitted Transfer” means the Transfer of (i) all shares of Series A-1
Preferred Stock then outstanding and (ii) all shares of Series A-1 Conversion
Shares held by such Person Transferring shares of Series A-1 Preferred Stock and
its Affiliates to any Transferee so long as after giving effect to such Transfer
to it, the shares of New Convertible Preferred Stock and Common Stock
Beneficially Owned by such Transferee and its Affiliates (including any New
Conversion Shares) immediately following such Transfer do not result in such
Transferee and its Affiliates collectively Beneficially Owning a number of
shares that is in excess of the Maximum Amount.

(h) “Rights Plan Junior Preferred Stock” means (i) the Corporation’s Series A
Junior Preferred Stock, par value $0.01 per share, having the designations,
relative rights, preferences and limitations set forth in the Certificate of
Designations of the Series A Junior Preferred Stock, (ii) the Corporation’s
Series B Junior Preferred Stock, par value $0.01 per share, having the
designations, relative rights, preferences and limitations set forth in the
Certificate of Designations of the Series B Junior Preferred Stock, and
(iii) the Corporation’s Series C Junior Preferred Stock, par value $0.01 per
share, having the designations, relative rights, preferences and limitations set
forth in the Certificate of Designations of the Series C Junior Preferred Stock.

 

3  Represents the number of shares of Series A Preferred Stock to be released
from escrow, as converted to Series A-1 Preferred Stock.

 

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(i) “Senior Stock” means, as the context requires, (i) the Rights Plan Junior
Preferred Stock, (ii) any class or series of Series Preferred Stock hereafter
created, or (iii) any class or series of capital stock, whether now existing or
hereafter created, of the Corporation, in each case, ranking prior to the Series
A-1 Preferred Stock as to dividend rights, rights of redemption and/or rights on
liquidation, as the case may be. Capital stock of any class or series shall rank
prior to the Series A-1 Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation if the holders of shares of such class or
series shall be entitled to dividend payments, payments on redemption or
payments of amounts distributable upon dissolution, liquidation or winding up of
the Corporation, as the case may be, in preference or priority to the holders of
shares of Series A-1 Preferred Stock. No class or series of capital stock that
ranks on a parity basis with or junior to the Series A-1 Preferred Stock as to
rights on liquidation shall rank or be deemed to rank prior to the Series A-1
Preferred Stock as to dividend rights or rights of redemption, notwithstanding
that the dividend rate, dividend payment dates, sinking fund provisions, if any,
or redemption provisions thereof are different from those of the Series A-1
Preferred Stock, unless the instrument creating or evidencing such class or
series of capital stock otherwise expressly provides. Notwithstanding the
foregoing, any class or series of capital stock which requires the Corporation
to cumulate or accrue dividends on such shares, or to pay such dividends in
shares of capital stock in the event such dividends are not declared and paid
during any dividend period applicable to such class or series, or to add any
such unpaid dividends to the liquidation or redemption price of any such class
or series of capital stock, shall constitute Senior Stock.

(j) “Series A-1 Conversion Shares” means shares of Common Stock or other
securities of the Corporation issued or issuable upon conversion of the shares
of Series A-1 Preferred Stock.

(k) “Third Party” means, with respect to a holder of the Series A-1 Preferred
Stock, any person who is not an Affiliate of such holder.

(l) “Transfer” means, directly or indirectly, to sell, transfer, assign, pledge,
encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any capital stock
Beneficially Owned by a stockholder or any interest in any capital stock
Beneficially Owned by a stockholder; provided, however, that a “Transfer” shall
not include a customary agreement to vote shares of capital stock (including the
granting of a proxy) in favor of a transaction or other matter as recommended by
the Corporation’s board of directors, which agreement may also include customary
transfer restrictions, so long as the Corporation’s board of directors approves
the entering into of such agreement.

(m) “Transferee” means any Person to whom a Transfer is made.

 

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Section 12.2 As used in this Certificate of Designation, the term “Junior Stock”
shall have the same meaning as such same term in the Charter, except that:

(a) References to the “Convertible Preferred Stock” in such definitions shall be
replaced with references to the “New Convertible Preferred Stock”;

(b) References to the “Conversion Shares” in such definitions shall be replaced
with references to the “New Conversion Shares”;

(c) References to the “Series A Preferred Stock” in such definitions shall be
replaced with references to the “Series A-1 Preferred Stock”; and

(d) References to the “Series C Preferred Stock” in such definitions shall be
replaced with references to the “Series C-1 Preferred Stock.”

Section 12.3 All other capitalized terms used and not defined in this
Certificate of Designation shall have the meanings assigned to them in the
Charter.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this day of             , 2017.

 

DISCOVERY COMMUNICATIONS, INC.

 

By:                                                                   
                              

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Exhibit B

Form of Certificate of Designation of the Series C-1 Preferred Stock

 

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FORM OF

CERTIFICATE OF DESIGNATION

OF

SERIES C-1 CONVERTIBLE PARTICIPATING PREFERRED STOCK

OF

DISCOVERY COMMUNICATIONS, INC.

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

Discovery Communications, Inc. (the “Corporation”), a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
“DGCL”), in accordance with the provisions of Section 103 thereof, DOES HEREBY
CERTIFY:

That, pursuant to the authority vested in the Board of Directors of the
Corporation (the “Board of Directors”) in accordance with the provisions of the
Restated Certificate of Incorporation of the Corporation (the “Charter”), the
Board of Directors adopted the following resolution of the Board of Directors
creating a series of [            ] shares of Preferred Stock designated as
“Series C-1 Convertible Participating Preferred Stock”:

RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of the Restated Certificate
of Incorporation, a series of Preferred Stock, par value $0.01 per share, of the
Corporation be and hereby is created, and that the designation and number of
shares thereof and the voting and other powers, preferences and relative,
participating, optional or other rights of the shares of such series and the
qualifications, limitations and restrictions thereof are as follows:

Series C-1 Convertible Participating Preferred Stock

ARTICLE 1 Designation and Amount. There shall be a series of Preferred Stock
that shall be designated as “Series C-1 Convertible Participating Preferred
Stock” (the “Series C-1 Preferred Stock”), and the number of shares constituting
such series shall be [            ]. Such number of shares may be increased or
decreased by resolution of the Board of Directors; provided, however, that no
decrease shall reduce the number of shares of Series C-1 Preferred Stock to less
than the number of shares then issued and outstanding plus the number of shares
issuable upon exercise of outstanding rights, options or warrants or upon
conversion of outstanding securities issued by the Corporation. The Series C-1
Preferred Stock, together with the series of Preferred Stock, par value $0.01
per share, of the Corporation designated as “Series A-1 Convertible
Participating Preferred Stock” (the “Series A-1 Preferred Stock”), are referred
to collectively as the “New Convertible Preferred Stock.”

 

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ARTICLE 2 Dividends.

Section 2.1 Cash Dividend Rights. Subject to the prior preferences and other
rights of any Senior Stock and the provisions of Section 4 hereof, the holders
of shares of Series C-1 Preferred Stock shall be entitled to receive cash
dividends per share in an amount (the “Participating Dividend”) equal to the
product of (x) the amount of the cash dividend declared and to be paid on a
single share of Common Stock and (y) the number of shares of Common Stock into
which a share of Series C-1 Preferred Stock may be converted as of the record
date for the determination of holders of Common Stock entitled to receive such
dividend. Except for a dividend of the Rights pursuant to the Company Rights
Plan (a “Rights Dividend”), the Participating Dividends shall be the only
dividends payable to holders of Series C-1 Preferred Stock, and such
Participating Dividends shall be declared and paid only when, as and if a cash
dividend is declared and paid upon the outstanding shares of Common Stock.
Dividends or distributions on the Common Stock which are paid or made in Common
Stock or other securities, properties or other assets of the Corporation or any
other Person other than cash shall not constitute Participating Dividends and
holders of Series C-1 Preferred Stock shall have no rights with respect thereto,
other than as may be provided in Section 5. Participating Dividends shall be
payable to holders of record of shares of Series C-1 Preferred Stock as of the
record date for the determination of holders of Common Stock entitled to receive
such dividend and shall be payable on the payment date established by the
Corporation for the payment of such cash dividend to holders of Common Stock. To
the extent that the Series C-1 Preferred Stock is, at the time of the
declaration of any such cash dividend, convertible into any other securities of
the Corporation in addition to or in lieu of being convertible into Common
Stock, then the Corporation shall pay to the holders of Series C-1 Preferred
Stock, in addition to the amount of the dividend calculated above in respect of
the number of shares of Common Stock into which such share of Series C-1
Preferred Stock is then convertible, if any, an amount equal to the amount of
the dividend payable per share or other unit of securities into which the Series
C-1 Preferred Stock is then convertible multiplied by the number of shares or
other units issuable to such holder upon conversion of a share of Series C-1
Preferred Stock.

Section 2.2 Method of Payment. All dividends (other than a Rights Dividend)
payable with respect to the shares of Series C-1 Preferred Stock pursuant to
Section 2(a) hereof shall be declared and paid in cash. All cash dividends paid
with respect to the shares of Series C-1 Preferred Stock pursuant to
Section 2(a) hereof shall be paid pro rata to all the holders of shares of
Series C-1 Preferred Stock outstanding on the applicable record date, on an as
converted basis.

ARTICLE 3 Distribution Upon Liquidation, Dissolution or Winding Up. Subject to
the prior payment in full of the preferential amounts to which any Senior Stock
is entitled, in the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the holders of Series C-1
Preferred Stock shall be entitled to receive from the assets of the Corporation
available for distribution to stockholders, before any payment or distribution
shall be made to the holders of any Junior Stock, an amount in cash or property
at its fair market value, as determined by the Board of Directors in good faith,
or a combination thereof, per share,

 

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equal to the Liquidation Preference of a share of Series C-1 Preferred Stock as
of the date of payment or distribution, which payment or distribution shall be
made pari passu with any such payment or distribution made to the holders of any
Parity Stock ranking on a parity basis with the Series C-1 Preferred Stock with
respect to distributions upon liquidation, dissolution or winding up of the
Corporation. Following the payment of all amounts owing to holders of each class
or series of capital stock of the Corporation having a preference or priority
over the Common Stock as to distributions upon the liquidation, dissolution or
winding up of the Corporation, then the holders of Series C-1 Preferred Stock
shall be entitled to participate, with the holders of the Common Stock and with
the holders of any other securities of the Corporation entitled to participate,
pro rata, based upon the number of shares of Common Stock into which the shares
of Series C-1 Preferred Stock are then convertible, as to any amounts remaining
for distribution to the holders of Common Stock upon the liquidation,
dissolution or winding up of the Corporation. If, upon distribution of the
Corporation’s assets in liquidation, dissolution or winding up, the assets of
the Corporation to be distributed among the holders of the Series C-1 Preferred
Stock and to all holders of any Parity Stock ranking on a parity basis with the
Series C-1 Preferred Stock with respect to distributions upon liquidation,
dissolution or winding up shall be insufficient to permit payment in full to
such holders of the respective preferential amounts to which they are entitled,
then the entire assets of the Corporation to be distributed to holders of the
Series C-1 Preferred Stock and such Parity Stock shall be distributed to such
holders based upon and in proportion to the full preferential amounts to which
the shares of Series C-1 Preferred Stock and such Parity Stock would otherwise
be entitled. Neither the consolidation or merger of the Corporation with or into
any other corporation or corporations nor the sale, transfer or lease of all or
substantially all of the assets of the Corporation shall itself be deemed to be
a liquidation, dissolution or winding up of the Corporation within the meaning
of this Section 3. Notice of the liquidation, dissolution or winding up of the
Corporation shall be given, not less than 20 days prior to the date on which
such liquidation, dissolution or winding up is expected to take place or become
effective, to the holders of record of the shares of Series C-1 Preferred Stock.

ARTICLE 4 Limitations on Dividends. If at any time the Corporation shall have
declared a dividend on the Series C-1 Preferred Stock and failed to pay or set
aside consideration sufficient to pay such dividend, or if the Corporation
declares a cash dividend on the shares of Common Stock and fails to pay or set
aside the Participating Dividend required to be paid to the holders of the
Series C-1 Preferred Stock, then (i) the Corporation shall not declare or pay
any dividend on or make any distribution with respect to any Parity Stock or
Junior Stock or set aside any money or assets for any such purpose until such
dividend payable to the holders of Series C-1 Preferred Stock has been paid or
consideration sufficient to pay such dividend has been set aside for such
purpose, and (ii) neither the Corporation nor any Subsidiary thereof shall
redeem, exchange, purchase or otherwise acquire any shares of Series C-1
Preferred Stock, Parity Stock or Junior Stock, or set aside any money or assets
for any such purpose, a sinking fund or otherwise, unless all then outstanding
shares of any class or series of Parity Stock that by the terms of the
instrument creating or evidencing such Parity Stock is required to be redeemed
under such circumstances are redeemed or exchanged pursuant to the terms hereof
and thereof.

Neither the Corporation nor any Subsidiary thereof shall redeem, exchange,
purchase or otherwise acquire any Parity Stock or Junior Stock, or set aside any
money or assets for any such purpose, if after giving effect to such redemption,
exchange, purchase or other acquisition, the amount (as determined by the Board
of Directors in good faith) that would be available for

 

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distribution to the holders of the Series C-1 Preferred Stock upon liquidation,
dissolution or winding up of the Corporation if such liquidation, dissolution or
winding up were to occur on the date fixed for such redemption, exchange,
purchase or other acquisition of such Parity Stock or Junior Stock would be less
than the aggregate Liquidation Preference as of such date of all shares of
Series C-1 Preferred Stock then outstanding.

Nothing contained in this Section 4 shall prevent (i) the payment of dividends
on any Junior Stock solely in shares of Junior Stock or the redemption, purchase
or other acquisition of Junior Stock solely in exchange for (together with a
cash adjustment for fractional shares, if any) shares of Junior Stock, or
(ii) the payment of dividends on any Parity Stock solely in shares of Parity
Stock and/or Junior Stock or the redemption, exchange, purchase or other
acquisition of Parity Stock solely in exchange for (together with a cash
adjustment for fractional shares, if any), or through the application of the
proceeds from the sale of, shares of Parity Stock and/or Junior Stock.

All provisions of this Section 4 are for the sole benefit of the holders of
Series C-1 Preferred Stock and accordingly, if the holders of shares of Series
C-1 Preferred Stock shall have waived in whole or in part the benefit of the
applicable provisions, either generally or in the specific instance, such
provision shall not (to the extent of such waiver, in the case of a partial
waiver) restrict the redemption, exchange, purchase or other acquisition of, or
declaration, payment or making of any dividends or distributions on the Series
C-1 Preferred Stock, any Parity Stock or any Junior Stock.

ARTICLE 5 Conversion.

Section 5.1 Series C-1 Preferred Stock Optional and Mandatory Conversion. Each
outstanding share of Series C-1 Preferred Stock is convertible at the option of
the holder at any time into fully paid and non-assessable full share(s) of
Series C Common Stock at the then effective Series C-1 Conversion Rate. In
addition, (i) the holder of each outstanding share of Series C-1 Preferred Stock
shall be deemed to have automatically converted such share into fully paid and
non-assessable share(s) of Series C Common Stock at the then effective Series
C-1 Conversion Rate immediately upon the Transfer of such share to any Person
that is not a member of the ANPP Stockholder Group, and (ii) the holders of all
outstanding shares of Series C-1 Preferred Stock shall be deemed to have
automatically converted all such shares of Series C-1 Preferred Stock into fully
paid and non-assessable share(s) of Series C Common Stock at such time as a
Series A-1 Mandatory Conversion shall be deemed to have occurred pursuant to
Section 5(a)(ii) of the Series A-1 Certificate of Designation. Such conversion
pursuant to (i) or (ii) referred to above is referred to herein as the “Series
C-1 Mandatory Conversion.” In the event of a Series C-1 Mandatory Conversion,
the share(s) of Series C-1 Preferred Stock subject to such Series C-1 Mandatory
Conversion shall be automatically converted into fully paid and non-assessable
share(s) of Series C Common Stock at the then effective Series C-1 Conversion
Rate without any further action by the Corporation or holders of Series C-1
Preferred Stock and whether or not the certificate(s) representing such share(s)
of Series C-1 Preferred Stock are surrendered to the Corporation; and the
Corporation shall not be obligated to issue certificate(s) evidencing the
share(s) of Series C Common Stock issuable upon such Series C-1 Mandatory
Conversion unless the certificate(s) evidencing such share(s) of Series C-1
Preferred Stock are delivered to the Corporation, or the holder thereof notifies
the Corporation that such certificate(s)

 

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have been lost, stolen or destroyed and executes an agreement satisfactory to
the Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificate(s). In case cash, securities or property other
than Series C Common Stock shall be payable, deliverable or issuable upon
conversion as provided herein, then all references to Series C Common Stock in
this Section 5 shall be deemed to apply, so far as appropriate and as nearly as
may be, to such cash, property or other securities. Subject to the provisions
for adjustment hereinafter set forth in this Section 5, the Series C-1 Preferred
Stock may be converted into Series C Common Stock at the initial conversion rate
of [            ]4 fully paid and non-assessable shares of Series C Common Stock
for each share of Series C-1 Preferred Stock so converted (this conversion rate
as from time to time adjusted cumulatively pursuant to the provisions of this
Section is hereinafter referred to as the “Series C-1 Conversion Rate”).

Section 5.2 Adjustments for Stock Splits, Stock Dividends, Etc.

(a) In case after the New Issue Date the Corporation shall (1) pay a dividend or
make a distribution on its outstanding shares of Series C Common Stock in shares
of its Common Stock, (2) subdivide the then outstanding shares of Series C
Common Stock into a greater number of shares of Series C Common Stock,
(3) combine the then outstanding shares of Series C Common Stock into a smaller
number of shares of Series C Common Stock, or (4) issue by reclassification of
its shares of Series C Common Stock any shares of any other class of capital
stock of the Corporation (including any such reclassification in connection with
a merger in which the Corporation is the continuing corporation), then the
Series C-1 Conversion Rate in effect immediately prior to the opening of
business on the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be adjusted so
that the holder of each share of the Series C-1 Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number and kind of
shares of capital stock of the Corporation that such holder would have owned or
been entitled to receive immediately following such action had such shares of
Series C-1 Preferred Stock been converted immediately prior to such time.

(b) An adjustment made pursuant to this Section 5(b) for a dividend or
distribution shall become effective immediately after the record date for the
dividend or distribution and an adjustment made pursuant to this Section 5(b)
for a subdivision, combination or reclassification shall become effective
immediately after the effective date of the subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any action
listed above shall be taken.

Section 5.3 Adjustments for Rights, Warrants, Etc. In case the Corporation shall
after the New Issue Date issue any rights or warrants to all holders of shares
of Series C Common Stock entitling them (for a period expiring not more than 45
days after the record date for the determination of stockholders entitled to
receive such rights or warrants) to subscribe for or purchase shares of Series C
Common Stock (or Series C Convertible Securities) at a price per

 

4 

Based on the number of shares of Series C Common Stock that would be issuable to
members of the ANPP Stockholder Group in the event they had converted all of
their shares of Series A Preferred Stock and Series C Preferred Stock (including
the shares of Series A Preferred Stock and Series C Preferred Stock to be
released from escrow) immediately prior to the closing of the Exchange (as
defined in the Preferred Share Exchange Agreement, dated as of July 30, 2017, by
and between the Corporation and Advance/Newhouse Programming Partnership).

 

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share of Series C Common Stock (or having an initial exercise price or
conversion price per share of Series C Common Stock) less than the then current
market price per share of Series C Common Stock on such record date, the number
of shares of Series C Common Stock into which each share of Series C-1 Preferred
Stock shall thereafter be convertible shall be determined by multiplying the
number of shares of Series C Common Stock into which such share of Series C-1
Preferred Stock was theretofore convertible immediately prior to such record
date by a fraction, the numerator of which shall be the number of shares of
Series C Common Stock outstanding on such record date plus the number of
additional shares of Series C Common Stock offered for subscription or purchase
(or into which the Series C Convertible Securities so offered are initially
convertible) and of which the denominator shall be the number of shares of
Series C Common Stock outstanding on such record date plus the number of shares
of Series C Common Stock, which the aggregate offering price of the total number
of shares of Series C Common Stock so offered (or the aggregate initial
conversion or exercise price of the Series C Convertible Securities so offered)
would purchase at the then current market price per share of Series C Common
Stock on such record date. Such adjustment shall be made successively whenever
any such rights or warrants are issued and shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such rights or warrants. In the event that all of the shares of Series C Common
Stock (or all of the Series C Convertible Securities) subject to such rights or
warrants have not been issued when such rights or warrants expire (or, in the
case of rights or warrants to purchase Series C Convertible Securities which
have been exercised, all of the shares of Series C Common Stock issuable upon
conversion of such Series C Convertible Securities have not been issued prior to
the expiration of the conversion right thereof), then the Series C-1 Conversion
Rate shall be readjusted retroactively to be the Series C-1 Conversion Rate
which would then be in effect had the adjustment upon the issuance of such
rights or warrants been made on the basis of the actual number of shares of
Series C Common Stock (or Series C Convertible Securities) issued upon the
exercise of such rights or warrants (or the conversion of such Series C
Convertible Securities); but such subsequent adjustment shall not affect the
number of shares of Series C Common Stock issued upon the conversion of any
share of Series C Preferred Stock prior to the date such subsequent adjustment
is made. Any determination of the current market price per share of Series C
Common Stock under this Section shall be in accordance with Section 5(m).

Section 5.4 Adjustments for Other Distributions and Dividends. In case the
Corporation shall distribute after the New Issue Date to all holders of shares
of Series C Common Stock (including any such distribution made in connection
with a merger in which the Corporation is the continuing corporation, other than
a merger to which Section 5(e) is applicable) any securities, evidences of its
indebtedness or assets (other than cash dividends or with respect to stock
dividends, subdivisions, combinations or reclassifications on the Series C
Common Stock in respect of which an adjustment is made pursuant to
Section 5(b)(i) hereof) or rights or warrants to purchase shares of Series C
Common Stock or securities convertible into shares of Series C Common Stock
(excluding a Rights Dividend and those referred to in Section 5(c) above), then
in each such case the number of shares of Series C Common Stock into which each
share of Series C-1 Preferred Stock shall thereafter be convertible shall be
determined by multiplying the number of shares of Series C Common Stock into
which such share was theretofore convertible immediately prior to the record
date for the determination of stockholders entitled to receive the distribution
by a fraction, the numerator of which shall be the then current market price per
share of Series C Common Stock on such record date and the denominator of

 

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which shall be such current market price per share of Series C Common Stock less
the fair market value on such record date (as determined in good faith by the
Board of Directors of the Corporation, whose good faith determination shall be
conclusive) of the portion of the securities, assets or evidences of
indebtedness or rights or warrants so to be distributed applicable to one share
of Series C Common Stock. Such adjustment shall be made successively whenever
any such distribution is made and shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
distribution is made. Any determination of the current market price per share of
Series C Common Stock under this Section shall be in accordance with
Section 5(m).

Section 5.5 Adjustments for Reclassification, Merger, Etc. In case of any
reclassification or change in the Series A Common Stock, Series B Common Stock
or Series C Common Stock (other than any reclassification or change referred to
in Section 5(b) and other than a change in par value) or in case of any
consolidation of the Corporation with any other corporation or any merger of the
Corporation into another corporation or of another corporation into the
Corporation (other than a merger in which the Corporation is the continuing
corporation and which does not result in any reclassification or change (other
than a change in par value or any reclassification or change to which
Section 5(b) is applicable) in the outstanding Series A Common Stock, Series B
Common Stock or Series C Common Stock), or in case of any sale or transfer to
another corporation or entity (other than by mortgage or pledge) of all or
substantially all of the properties and assets of the Corporation, in any such
case after the New Issue Date, the Corporation (or its successor in such
consolidation or merger) or the purchaser of such properties and assets shall
make appropriate provision so that the holder of a share of the Series C-1
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property that such
holder would have owned immediately after such reclassification, change,
consolidation, merger, sale or transfer if such holder had converted such share
immediately prior to the effective date of such reclassification, change,
consolidation, merger, sale or transfer (assuming for this purpose (to the
extent applicable) that such holder failed to exercise any rights of election
and received per share the kind and amount of shares of stock and other
securities and property received per share by a plurality of the non-electing
shares), and the holders of the Series C-1 Preferred Stock shall have no other
conversion rights under these provisions; provided that effective provision
shall be made, in the articles or certificate of incorporation of the resulting
or surviving corporation or otherwise or in any contracts of sale or transfer,
so that the provisions set forth herein for the protection of the conversion
rights of the Series C-1 Preferred Stock shall thereafter be made applicable, as
nearly as reasonably may be to any such other shares of stock and other
securities and property deliverable upon conversion of the Series C-1 Preferred
Stock remaining outstanding or other Series C-1 Preferred Stock or other
Convertible Securities received by the holders of Series C-1 Preferred Stock in
place thereof; and provided, further, that any such resulting or surviving
corporation or purchaser shall expressly assume the obligation to deliver, upon
the exercise of the conversion privilege, such shares, securities or property as
the holders of the Series C-1 Preferred Stock remaining outstanding, or other
Series C-1 Preferred Stock or other Convertible Securities received by the
holders in place thereof, shall be entitled to receive pursuant to the
provisions hereof, and to make provisions for the protection of the conversion
rights as above provided.

 

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Section 5.6 Notice of Adjustments in Conversion Rates. Whenever the Series C-1
Conversion Rate or the conversion privilege shall be adjusted as provided in
Sections 5(b), (c), (d) or (e), the Corporation shall promptly cause a notice to
be mailed to the holders of record of the Series C-1 Preferred Stock describing
the nature of the event requiring such adjustment and the Series C-1 Conversion
Rate in effect immediately thereafter, the kind and amount of stock or other
securities or property into which the Series C-1 Preferred Stock shall be
convertible after such event. In case of an adjustment pursuant to Section 5(d),
such notice shall enclose the resolution of the Board of Directors of the
Corporation making the fair market value determination of the Series C Common
Stock for the purpose of calculating the Series C-1 Conversion Rate. Where
appropriate, such notice may be given in advance and included as a part of a
notice required to be mailed under the provisions of Section 5(h).

Section 5.7 Calculation and Timing of Adjustments. The Corporation may, but
shall not be required to, make any adjustment of the Series C-1 Conversion Rate
if such adjustment would require an increase or decrease of less than 1% in the
Series C-1 Conversion Rate; provided, however, that, in each case, any
adjustments which by reason of this Section 5(g) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 5(g) shall be made to the nearest 1/100th of
a share. In any case in which this Section 5(g) shall require that an adjustment
shall become effective immediately after a record date for such event, the
Corporation may defer until the occurrence of such event (x) issuing to the
holder of any shares of Series C-1 Preferred Stock converted after such record
date and before the occurrence of such event the additional shares of Series C
Common Stock or other capital stock issuable upon such conversion by reason of
the adjustment required by such event over and above the shares of Series C
Common Stock or other capital stock issuable upon, such conversion before giving
effect to such adjustment and (y) paying to such holder cash in lieu of any
fractional interest to which such holder is entitled pursuant to Section 5(m);
provided, however, that, if requested by such holder, the Corporation shall
deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares of Series C Common Stock
or other capital stock, and such cash, upon the occurrence of the event
requiring such adjustment.

 

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Section 5.8 Notice of Certain Events. In case at any time:

(a) the Corporation shall take any action which would require an adjustment in
the Series C-1 Conversion Rate pursuant to Section 5;

(b) there shall be any capital reorganization or reclassification of the Common
Stock (other than a change in par value), or any consolidation or merger to
which the Corporation is a party and for which approval of any stockholders of
the Corporation is required, or any sale, transfer or lease of all or
substantially all of the properties and assets of the Corporation, or a tender
offer for shares of Common Stock representing at least a majority of the total
voting power represented by the outstanding shares of Common Stock which has
been recommended by the Board of Directors as being in the best interests of the
holders of Common Stock; or

(c) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Corporation;

then, in any such event, the Corporation shall give written notice to the
holders of the Series C-1 Preferred Stock at their respective addresses as the
same appear on the books of the Corporation, at least twenty days (or ten days
in the case of a recommended tender offer as specified in clause (ii) above)
prior to any record date for such action, dividend or distribution or the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities or other
property, if any, deliverable upon such reorganization, reclassification,
consolidation, merger, sale, transfer, lease, tender offer, dissolution,
liquidation or winding up, during which period such holders may exercise their
conversion rights; provided, however, that any notice required by any event
described in clause (ii) of this Section 5(h) shall be given in the manner and
at the time that such notice is given to the holders of Common Stock. Without
limiting the obligations of the Corporation to provide notice of corporate
actions hereunder, the failure to give the notice required by this Section 5(h)
or any defect therein shall not affect the legality or validity of any such
corporate action of the Corporation or the vote upon such action.

Section 5.9 Procedures for Conversion. Before any holder of Series C-1 Preferred
Stock shall be entitled to convert the same into Series C Common Stock (or, in
the case of the Series C-1 Mandatory Conversion, before any holder of Series C-1
Preferred Stock so converted shall be entitled to receive certificate(s)
evidencing the shares of Series C Common Stock or other securities or property,
as applicable, issuable upon such conversion), such holder shall surrender the
certificate(s) for such Series C-1 Preferred Stock at the office of the
Corporation or at the office of the transfer agent for the Series C-1 Preferred
Stock, which certificate(s), if the Corporation shall so request, shall be duly
endorsed to the Corporation or in blank or accompanied by proper instruments of
transfer to the Corporation or in blank (such endorsements or instruments of
transfer to be in form satisfactory to the Corporation), and shall give written
notice to the Corporation at said office that such holder elects to convert all
or a part of the shares represented by said certificate(s) (or, in the case of
the Series C-1 Mandatory Conversion, that such holder is surrendering the same)
in accordance with the terms of this Section 5(i), and shall state in writing
therein the name or names in which such holder wishes the certificate(s) for
Series C Common Stock or other securities or property, as applicable, to be
issued. Every such notice of election to convert shall constitute a contract
between the holder of such Series C-1 Preferred Stock and the Corporation,
whereby the holder of such Series C-1 Preferred Stock shall be deemed to
subscribe for the amount of Series C Common Stock or other

 

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securities or property, as applicable, which such holder shall be entitled to
receive upon conversion of the number of share(s) of Series C-1 Preferred Stock
to be converted, and, in satisfaction of such subscription, to deposit the
share(s) of Series C-1 Preferred Stock to be converted, and thereby the
Corporation shall be deemed to agree that the surrender of the shares of Series
C-1 Preferred Stock to be converted shall constitute full payment of such
subscription for Series C Common Stock to be issued upon such conversion. The
Corporation will as soon as practicable after such deposit of the certificate(s)
for Series C-1 Preferred Stock, accompanied by the written notice and the
statement above prescribed, issue and deliver at the office of the Corporation
or of said transfer agent to the Person for whose account such Series C-1
Preferred Stock was so surrendered, or to his nominee(s) or, subject to
compliance with applicable law, transferee(s), certificate(s) for the number of
full share(s) of Series C Common Stock to which such holder shall be entitled,
together with cash in lieu of any fraction of a share as hereinafter provided
together with an amount in cash equal to the full amount of any cash dividend
declared (or required to be declared) on the Series C-1 Preferred Stock which,
as of the date of such conversion, remains unpaid (provided, that the
Corporation will use commercially reasonable efforts to make such delivery
within two Business Days after such deposit and such notice and statement). If
surrendered certificate(s) for Series C-1 Preferred Stock are converted only in
part, the Corporation will issue and deliver to the holder, or to his
nominee(s), without charge therefor, new certificate(s) representing the
aggregate of the unconverted shares. Such conversion shall be deemed to have
been made as of the date of such surrender of the Series C-1 Preferred Stock to
be converted or date of the event that gives rise to the Series C-1 Mandatory
Conversion; and the Person(s) entitled to receive the Series C Common Stock
issuable upon conversion of such Series C-1 Preferred Stock shall be treated for
all purposes as the record holder or holders of such Series C Common Stock on
such date.

Section 5.10 Transfer Taxes. The issuance of certificate(s) for share(s) of
Series C Common Stock upon conversion of share(s) of Series C-1 Preferred Stock
shall be made without charge for any issue, stamp or other similar tax in
respect of such issuance; provided, however, if any such certificate is to be
issued in a name other than that of the registered holder of the share(s) of
Series C-1 Preferred Stock converted, the Person(s) requesting the issuance
thereof shall pay to the Corporation the amount of any tax which may be payable
in respect of any transfer involved in such issuance or shall establish to the
satisfaction of the Corporation that such tax has been paid.

Section 5.11 Reservation of Shares. The Corporation shall reserve and keep
available at all times thereafter, solely for the purpose of issuance upon
conversion of the outstanding shares of Series C-1 Preferred Stock, such number
of shares of Series C Common Stock as shall be issuable upon the conversion of
all outstanding shares of Series C-1 Preferred Stock; provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
its obligations in respect of the conversion of the outstanding shares of Series
C-1 Preferred Stock by delivery of shares of Series C Common Stock which are
held in the treasury of the Corporation. The Corporation shall take all such
corporate and other actions as from time to time may be necessary to insure that
all shares of Series C Common Stock issuable upon conversion of shares of Series
C-1 Preferred Stock at the Series C-1 Conversion Rate in effect from time to
time will, upon issue, be duly and validly authorized and issued, fully paid and
nonassessable and free of any preemptive or similar rights.

 

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Section 5.12 Retirement of Series C-1 Preferred Stock. All shares of Series C-1
Preferred Stock received by the Corporation upon conversion thereof shall be
retired and shall not be reissued.

Section 5.13 Payment in Lieu of Fractional Shares. The Corporation shall not be
required to issue fractional shares of Series C Common Stock or scrip upon
conversion of the Series C-1 Preferred Stock. As to any final fraction of a
share of Series C Common Stock which a holder of one or more shares of Series
C-1 Preferred Stock would otherwise be entitled to receive upon conversion of
such shares in the same transaction, the Corporation shall make a cash payment
in respect of such final fraction in an amount equal to the same fraction of the
current market price of a full share of Series C Common Stock as determined in
good faith by the Board of Directors. For the purpose of any computation of
current market price under this Certificate of Designation, current market price
of any security on any date shall be deemed to be the average of the daily
closing prices per share of such security for the 20 consecutive Trading Days
immediately prior to such date or, with respect to any adjustment in conversion
rights as set forth herein, the earlier of the date in question and the date
immediately prior to the Ex Date; provided, however, that if any other
transaction occurs requiring an adjustment in the conversion rights as set forth
herein, and the Ex Date for such other transaction falls during such 20
consecutive Trading Day period, then, and in each such case, the current per
share market price shall be appropriately adjusted. The closing price for each
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported on the principal national securities exchange on
which the security is listed or admitted to trading or, if the security is not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use, or, if on any such date the security is not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the security selected by the
Board of Directors of the Corporation.

Section 5.14 Regulatory Matters. If any shares of Series C Common Stock which
would be issuable upon conversion of shares of Series C-1 Preferred Stock
require the approval of any governmental authority before such shares may be
issued upon conversion, the Corporation, at the request and expense of the
holder(s) of such Series C-1 Preferred Stock, will use its reasonable best
efforts to cooperate with the holder(s) of such Series C-1 Preferred Stock to
obtain such approvals.

ARTICLE 6 Voting Rights. In connection with any matter as to which the holders
of Series C Common Stock are entitled to vote pursuant to the Charter, each
share of Series C-1 Preferred Stock issued and outstanding as of the record date
for such meeting shall have (and the holder of record thereof shall be entitled
to cast) the number of votes equal to the number of votes such holder would have
been entitled to cast had it converted its shares of Series C-1 Preferred Stock
into shares of Series C Common Stock immediately prior to the record date for
the determination of stockholders entitled to vote upon such matter. Except as
provided in this Section 6 and Article IV, Section C.5 and Article IV, Section
B.1 of the Charter, and except as otherwise may be required by law or Series
Preferred Stock Designation of any other series of Series Preferred Stock, the
holders of Common Stock, the holders of Convertible Preferred Stock, the holders
of New Convertible Preferred Stock and the holders of any other series of Series
Preferred Stock shall be entitled to notice of and to attend any, meeting of
stockholders and to vote together as one class.

 

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ARTICLE 7 Waiver. Unless otherwise provided in this Certificate of Designation
or the Charter, any provision which, for the benefit of the holders of the New
Convertible Preferred Stock or any series thereof, prohibits, limits or
restricts actions by the Corporation, or imposes obligations on the Corporation,
may be waived in whole or in part, or the application of all or any part of such
provision in any particular circumstance or generally may be waived, in each
case only pursuant to the consent of the holders of a majority (or such greater
percentage thereof as may be required by applicable law or any applicable rules
of any national securities exchange) of the outstanding shares of New
Convertible Preferred Stock, or the series thereof so affected, consenting
together as a single class. Any such waiver shall be binding on all holders,
including any subsequent holders, of the New Convertible Preferred Stock.

ARTICLE 8 Method of Giving Notices. Any notice required or permitted hereby to
be given to the holders of shares of Series C-1 Preferred Stock shall be deemed
duly given if deposited in the United States mail, first class mail, postage
prepaid, and addressed to each holder of record at the holder’s address
appearing on the books of the Corporation or supplied by the holder in writing
to the Corporation for the purpose of such notice.

ARTICLE 9 Exclusion of Other Rights. Except as provided in the Charter or the
Bylaws of the Corporation or as may otherwise be required by law and except for
the equitable rights and remedies which may otherwise be available to holders of
Series C-1 Preferred Stock, the shares of Series C-1 Preferred Stock shall not
have any designations, preferences, limitations or relative rights other than
those specifically set forth herein.

ARTICLE 10 Heading of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.

 

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ARTICLE 11 Defined Terms.

Section 11.1 As used in this Certificate of Designation, the following terms
shall have the following meanings:

(a) “Liquidation Preference” measured per share of Series C-1 Preferred Stock as
of the date in question (the “Determination Date”), means an amount equal to
$0.04 (as appropriately adjusted to take into account any stock splits, reverse
splits and the like affecting the Series C-1 Preferred Stock occurring after the
New Issue Date). In connection with the determination of the Liquidation
Preference of a share of Series C-1 Preferred Stock upon any liquidation,
dissolution or winding up of the Corporation, the Determination Date shall be
the record date for the distribution of amounts payable to stockholders in
connection with any such liquidation, dissolution or winding up.

(b) “New Conversion Shares” means the Series C-1 Conversion Shares and shares of
Common Stock or other securities of the Corporation issued or issuable upon
conversion of the shares of Series A-1 Preferred Stock.

(c) “New Issue Date” means the date on which shares of Series C-1 Preferred
Stock are first issued.

(d) “Parity Stock” means, as the context requires, any class or series of
capital stock, whether now existing or hereafter created, of the Corporation
ranking on a parity basis with the Series C-1 Preferred Stock as to dividend
rights, rights of redemption and/or rights on liquidation, as the case may be.
Capital stock of any class or series shall rank on a parity basis as to dividend
rights, rights of redemption or rights on liquidation with the Series C-1
Preferred Stock, whether or not the dividend rates, dividend payment dates,
redemption or liquidation prices per share or sinking fluid or mandatory
redemption provisions, if any, are different from those of the Series C-1
Preferred Stock, if the holders of shares of such class or series shall be
entitled to dividend payments, payments on redemption or payments of amounts
distributable upon dissolution, liquidation or winding up of the Corporation, as
the case may be, in proportion to their respective accrued and unpaid dividends,
redemption prices or liquidation prices, respectively, without preference or
priority, one over the other, as between the holders of shares of such class or
series and the holders of Series C-1 Preferred Stock. No class or series of
capital stock that ranks junior to the Series C-1 Preferred Stock as to rights
on liquidation shall rank or be deemed to rank on a parity basis with the Series
C-1 Preferred Stock as to dividend rights or rights of redemption, unless the
instrument creating or evidencing such class or series of capital stock
otherwise expressly provides. The Series A-1 Preferred Stock, the Series C-1
Preferred Stock, the Series A Preferred Stock and the Series C Preferred Stock
shall each be deemed to be Parity Stock as to each of the other such series.

(e) “Rights Plan Junior Preferred Stock” means (i) the Corporation’s Series A
Junior Preferred Stock, par value $0.01 per share, having the designations,
relative rights, preferences and limitations set forth in the Certificate of
Designations of the Series A Junior Preferred Stock, (ii) the Corporation’s
Series B Junior Preferred Stock, par value $0.01 per share, having the
designations, relative rights, preferences and limitations set forth in the
Certificate of Designations of the Series B Junior Preferred Stock, and
(iii) the Corporation’s Series C Junior Preferred Stock, par value $0.01 per
share, having the designations, relative rights, preferences and limitations set
forth in the Certificate of Designations of the Series C Junior Preferred Stock.

 

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(f) “Senior Stock” means, as the context requires, (i) the Rights Plan Junior
Preferred Stock, (ii) any class or series of Series Preferred Stock hereafter
created, or (iii) any class or series of capital stock, whether now existing or
hereafter created, of the Corporation, in each case, ranking prior to the Series
C-1 Preferred Stock as to dividend rights, rights of redemption and/or rights on
liquidation, as the case may be. Capital stock of any class or series shall rank
prior to the Series C-1 Preferred Stock as to dividend rights, rights of
redemption or rights on liquidation if the holders of shares of such class or
series shall be entitled to dividend payments, payments on redemption or
payments of amounts distributable upon dissolution, liquidation or winding up of
the Corporation, as the case may be, in preference or priority to the holders of
shares of Series C-1 Preferred Stock. No class or series of capital stock that
ranks on a parity basis with or junior to the Series C-1 Preferred Stock as to
rights on liquidation shall rank or be deemed to rank prior to the Series C-1
Preferred Stock as to dividend rights or rights of redemption, notwithstanding
that the dividend rate, dividend payment dates, sinking fund provisions, if any,
or redemption provisions thereof are different from those of the Series C-1
Preferred Stock, unless the instrument creating or evidencing such class or
series of capital stock otherwise expressly provides. Notwithstanding the
foregoing, any class or series of capital stock which requires the Corporation
to cumulate or accrue dividends on such shares, or to pay such dividends in
shares of capital stock in the event such dividends are not declared and paid
during any dividend period applicable to such class or series, or to add any
such unpaid dividends to the liquidation or redemption price of any such class
or series of capital stock, shall constitute Senior Stock.

(g) “Series A-1 Certificate of Designation” means the Certificate of Designation
of Series A-1 Convertible Participating Preferred Stock of the Corporation filed
with the Secretary of State of the State of Delaware on the New Issue Date.

(h) “Series C-1 Conversion Shares” means shares of Common Stock or other
securities of the Corporation issued or issuable upon conversion of the shares
of Series C-1 Preferred Stock.

Section 11.2 As used in this Certificate of Designation, the term “Junior Stock”
shall have the same meaning as such same term in the Charter, except that:

(a) References to the “Convertible Preferred Stock” in such definitions shall be
replaced with references to the “New Convertible Preferred Stock”;

(b) References to the “Conversion Shares” in such definitions shall be replaced
with references to the “New Conversion Shares”;

(c) References to the “Series A Preferred Stock” in such definitions shall be
replaced with references to the “Series A-1 Preferred Stock”; and

(d) References to the “Series C Preferred Stock” in such definitions shall be
replaced with references to the “Series C-1 Preferred Stock.”

Section 11.3 All other capitalized terms used and not defined in this
Certificate of Designation shall have the meanings assigned to them in the
Charter.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate of Designation
this day of             , 2017.

 

DISCOVERY COMMUNICATIONS, INC.

By:  

 

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Exhibit C

Form of Registration Rights Amendment

 

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FORM OF

AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT

This AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT (this “Amendment”), dated
as of [•], 2017 (the “Effective Date”), is made by and between Discovery
Communications, Inc., a Delaware corporation (the “Company”), and
Advance/Newhouse Programming Partnership, a New York general partnership
(“ANPP”), to amend the terms and conditions of that certain Registration Rights
Agreement, dated as of September 17, 2008, between the Company and ANPP (as
previously modified or supplemented, the “Original Agreement”).

R E C I T A L S:

WHEREAS, immediately prior to the Effective Date, ANPP owned shares of the
Company’s Series A Convertible Participating Preferred Stock, par value $0.01
per share (the “Series A Preferred Stock”), which represented all of the issued
and outstanding shares of Series A Preferred Stock;

WHEREAS, immediately prior to the Effective Date, ANPP owned shares of the
Company’s Series C Convertible Participating Preferred Stock, par value $0.01
per share (the “Series C Preferred Stock,” and together with the Series A
Preferred Stock, the “Old Preferred Stock”), which represented all of the issued
and outstanding shares of Series C Preferred Stock;

WHEREAS, the Company and ANPP have entered into a Preferred Share Exchange
Agreement, dated as of July 30, 2017 (the “Exchange Agreement”), pursuant to
which ANPP has agreed to transfer all of the shares of Old Preferred Stock to
the Company in exchange for the issuance to ANPP of (i) shares of the Company’s
Series A-1 Convertible Preferred Stock, par value $0.01 per share (the “Series
A-1 Preferred Stock”) and (ii) shares of the Company’s Series C-1 Convertible
Preferred Stock (the “Series C-1 Preferred Stock,” and together with the Series
A-1 Preferred Stock, the “New Preferred Stock”), on the terms and conditions set
forth in the Exchange Agreement (the “Exchange”);

WHEREAS, (i) shares of Series A Preferred Stock and Series A-1 Preferred Stock
are convertible into shares of the Company’s Series A common stock, par value
$0.01 per share (the “Series A Common Stock”), and (ii) shares of Series C
Preferred Stock and Series C-1 Preferred Stock are convertible into shares of
the Company’s Series C common stock, par value $0.01 per share (the “Series C
Common Stock”);

WHEREAS, on the terms and conditions set forth in the Original Agreement, the
Company agreed to grant registration rights with respect to the shares of Series
A Common Stock and Series C Common Stock into which the Series A Preferred Stock
and the Series C Preferred Stock, respectively, are convertible; and

WHEREAS, the parties desire to amend the Original Agreement pursuant to
Section 5.08 thereof so that such registration rights will apply with respect to
shares of Series A Common Stock and Series C Common Stock issued or issuable
upon conversion of the New Preferred Stock in lieu of the Old Preferred Stock.

 

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NOW, THEREFORE, the undersigned, in consideration of the premises, covenants and
of the mutual agreements set forth herein and in the Original Agreement, and
other good, sufficient and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and do hereby agree as follows:

Section 1. Amendments. The Original Agreement shall hereby be amended as
follows:

(a) The following recital shall be added to the end of the recitals in the
Original Agreement:

(b) “WHEREAS, New DHC and ANPP have subsequently entered into a Preferred Share
Exchange Agreement, dated as of July 30, 2017 (the “Exchange Agreement”),
pursuant to which ANPP has agreed to transfer all of the shares of Series A
Preferred Stock to New DHC in exchange for the issuance to ANPP of (i) shares of
New DHC’s Series A-1 Convertible Preferred Stock, par value $0.01 per share (the
“Series A-1 Preferred Stock”) and (ii) shares of New DHC’s Series C-1
Convertible Preferred Stock (the “Series C-1 Preferred Stock,” and together with
the Series A-1 Preferred Stock, the “New Preferred Stock”) to ANPP, on the terms
and conditions set forth in the Exchange Agreement.”

(c) All references in the Original Agreement to “Series A Preferred Stock” shall
be amended to refer instead to “Series A-1 Preferred Stock.”

(d) All references in the Original Agreement to “Series C Preferred Stock” shall
be amended to refer instead to “Series C-1 Preferred Stock.”

(e) All references in the Original Agreement to “Series A Preferred Stock
Director” shall be amended to refer instead to “Series A-1 Preferred Stock
Director.”

(f) The definition of “Original Amount of Registrable Shares” in Section 1.01 of
the Original Agreement is amended and restated as follows:

(g) “Original Amount of Registrable Shares” means, at the date of determination,
the sum of the number of Conversion Shares issued or issuable in respect of the
New DHC Preferred Stock, without regard to any subsequent transfers of such
shares by ANPP or any Permitted Transferee, including without limitation any
transfer that causes such shares to cease to be Registrable Shares.

(h) The definition of “Series A Preferred Stock Director” in Section 1.01 of the
Original Agreement is amended and restated as follows:

(i) “Series A-1 Preferred Stock Director” has the meaning set forth in the
Certificate of Designation of the Series A-1 Preferred Stock, as amended from
time to time.

 

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Section 11.5 Effect of this Amendment. It is the intent of the parties that this
Amendment constitutes an amendment of the Original Agreement as contemplated by
Section 5.08 thereof. This Amendment shall be deemed effective as of the date
hereof as if executed by both parties hereto on such date. Except as expressly
provided in this Amendment, the terms of the Original Agreement remain in full
force and effect.

Section 11.6 Counterparts. This Amendment may be executed in any number of
counterparts, and each of such counterparts shall be for all purposes to be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.

Section 11.7 Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.

Section 11.8 Descriptive Headings. The captions herein are included for
convenience of reference only, do not constitute a part of this Amendment and
shall be ignored in the construction and interpretation hereof.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first above written.

 

DISCOVERY COMMUNICATIONS, INC. By:  

 

  Name: Gunnar Wiedenfels   Title:   Chief Financial Officer ADVANCE/NEWHOUSE
PROGRAMMING PARTNERSHIP By: A/NPP Holdings LLC, as Managing Partner By:  

 

  Name: Steven A. Miron   Title:   Chief Executive Officer

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Exhibit D

Form of Share Repurchase Amendment

 

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FORM OF

AMENDMENT NO. 2 TO SHARE REPURCHASE AGREEMENT

This AMENDMENT NO. 2 TO SHARE REPURCHASE AGREEMENT (this “Amendment”), dated as
of [•], 2017 (the “Effective Date”), is made by and between Discovery
Communications, Inc., a Delaware corporation (the “Company”), and
Advance/Newhouse Programming Partnership, a New York general partnership
(“ANPP”), to amend the terms and conditions of that certain Share Repurchase
Agreement, dated as of May 22, 2014, between the Company and ANPP, as amended
August 25, 2014 (as previously modified or supplemented, the “Original
Agreement”).

R E C I T A L S:

WHEREAS, immediately prior to the Effective Date, ANPP, a stockholder of the
Company, owned shares of the Company’s Series A Convertible Participating
Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”),
which represented all of the issued and outstanding shares of Series A Preferred
Stock;

WHEREAS, immediately prior to the Effective Date, ANPP owned shares of the
Company’s Series C Convertible Participating Preferred Stock, par value $0.01
per share (the “Series C Preferred Stock,” and together with the Series A
Preferred Stock, the “Old Preferred Stock”), which represented all of the issued
and outstanding shares of Series C Preferred Stock;

WHEREAS, pursuant to the terms of the Preferred Share Exchange Agreement, dated
as of July 30, 2017 (the “Exchange Agreement”), ANPP has agreed to transfer all
of the shares of Old Preferred Stock to the Company in exchange for the issuance
to ANPP of (i) shares of the Company’s Series A-1 Convertible Preferred Stock,
par value $0.01 per share (the “Series A-1 Preferred Stock”) and (ii) shares of
the Company’s Series C-1 Convertible Preferred Stock (the “Series C-1 Preferred
Stock,” and together with the Series A-1 Preferred Stock, the “New Preferred
Stock”), on the terms and conditions set forth in the Exchange Agreement (the
“Exchange”);

WHEREAS, pursuant to the terms and conditions of the Original Agreement, ANPP
agreed to sell to the Company, and the Company agreed to purchase from ANPP, a
portion of ANPP’s shares of Series C Preferred Stock from time to time;

WHEREAS, the Company desire to amend the Original Agreement pursuant to
Section 6.5 thereof so that such agreement will apply to shares of Series C-1
Preferred Stock in lieu of Series C Preferred Stock.

NOW, THEREFORE, the undersigned, in consideration of the premises, covenants and
of the mutual agreements set forth herein and in the Original Agreement, and
other good, sufficient and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and do hereby agree as follows:

 

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Section 1. Amendments. The Original Agreement is hereby amended as follows:

(a) The first recital of the Original Agreement shall be amended and restated as
follows:

        (b) WHEREAS, Seller owns all shares of Series C-1 convertible
participating preferred stock, par value $0.01 per share, of Buyer (the “Series
C-1 Preferred Shares”).

(c) All references in the Original Agreement to “Series C Preferred Shares”
shall be amended to refer instead to “Series C-1 Preferred Shares.”

(d) The reference in Section 6.12(c) of the Original Agreement to the “Series C
Conversion Rate (as defined in the Restated Certificate of Incorporation of
Buyer)” shall be amended to refer instead to the “Series C-1 Conversion Rate (as
defined in the Certificate of Designation of the Series C-1 Preferred Stock, as
amended from time to time).”

Section 2. Effect of this Amendment. It is the intent of the parties that this
Amendment constitutes an amendment of the Original Agreement as contemplated by
Section 6.5 thereof. This Amendment shall be deemed effective as of the date
hereof as if executed by both parties hereto on such date. Except as expressly
provided in this Amendment, the terms of the Original Agreement remain in full
force and effect.

Section 3. Counterparts. This Amendment may be executed in any number of
counterparts, and each of such counterparts shall be for all purposes to be
deemed to be an original, and all such counterparts shall together constitute
one and the same instrument.

Section 4. Governing Law. This Amendment shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such state applicable to
contracts to be made and performed entirely within such state.

Section 5. Descriptive Headings. The captions herein are included for
convenience of reference only, do not constitute a part of this Amendment and
shall be ignored in the construction and interpretation hereof.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first above written.

 

DISCOVERY COMMUNICATIONS, INC. By:  

 

  Name: Gunnar Wiedenfels   Title:   Chief Financial Officer ADVANCE/NEWHOUSE
PROGRAMMING PARTNERSHIP By: A/NPP Holdings LLC, as Managing Partner By:  

 

  Name: Steven A. Miron   Title:   Chief Executive Officer