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Conformed Copy
AGREEMENT AND PLAN OF MERGER
AMONG
WESTINGHOUSE ELECTRIC CORPORATION,
GROUP W ACQUISITION CORP.
AND
CBS INC.
dated August 1, 1995
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TABLE OF CONTENTS
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<CAPTION>
Section Page
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ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of the Company . . . . . . . . . . . . . . . . . . . 7
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . 7
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Authority; No Violations; Consents and Approvals . . . . . . . . . . . . . . 9
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 11
(f) No Undisclosed Material Liabilities . . . . . . . . . . . . . . . . . . . . . 11
(g) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Compliance with Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . 11
(i) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(l) Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(m) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) Board Recommendation; State Takeover Statutes . . . . . . . . . . . . . . . 15
(o) Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . 15
(p) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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(q) FCC Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.2 Representations and Warranties of Parent and Sub . . . . . . . . . . . . . . . . . . 15
(a) Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . 15
(b) Authority; No Violations; Consents and Approvals . . . . . . . . . . . . . . . 16
(c) Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Interim Operations of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(f) Board Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(g) FCC Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(h) Financial Covenant Compliance . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) Third-party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(j) Sufficient Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Covenants of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Dividends; Changes in Stock . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Governing Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(f) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(g) No Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i) No Dissolution, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(j) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(k) Certain Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(l) Indebtedness; Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(m) Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(n) Tax Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Preparation of the Proxy Statement; Company Shareholders Meeting. . . . . . . . . . 23
5.2 Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 23
5.3 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Indemnification; Directors' and Officers' Insurance . . . . . . . . . . . . . . . . 26
5.7 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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(c) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Conduct of Business of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10 Notification of Certain Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.11 FCC Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.12 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.13 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . 32
(a) Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) No Injunctions or Restraints . . . . . . . . . . . . . . . . . . . . . . . . . 32
(d) FCC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Conditions to Obligations of Parent and Sub . . . . . . . . . . . . . . . . . . . . 33
(a) Representations and Warranties; Performance of Obligations . . . . . . . . . . 33
(b) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . 33
6.4 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Effectiveness of Representations, Warranties and Agreements;
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership. . . . . . . . . 39
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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9.7 No Remedy in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Terms Defined in Section
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Additional Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
BCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(e)
Commitment Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(d)
Communications Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Company Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Company ERISA Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)
Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(i)
Company Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(h)
Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Company Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Company Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Competing Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(e)(i)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7(c)
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
FCC Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(d)
Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7(c)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
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HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(j)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(ii)
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(l)(ii)
Material Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Multiple Employer Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)(i)
Notice of Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)(ii)
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
SAR Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
SERPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Stock Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(e)(ii)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(j)
Time Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(ii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated August 1, 1995 (the "Agreement"), among
Westinghouse Electric Corporation, a Pennsylvania corporation ("Parent"), Group
W Acquisition Corp., a New York corporation and a wholly-owned subsidiary of
Parent ("Sub"), and CBS Inc., a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent, by means of the merger
of Sub with and into the Company, upon the terms and subject to the conditions
set forth in the Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub into the Company as set forth below (the
"Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$2.50 per share, of the Company (the "Shares" or the "Company Common Stock")
(excluding shares owned, directly or indirectly, by the Company or any
Subsidiary of the Company or by Parent, Sub or any other Subsidiary of Parent
and Dissenting Shares (as defined in Section 2.6)), shall be converted into the
right to receive the Merger Consideration (as defined in Section 2.2); and
WHEREAS, Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Business Corporation Law of the
State of New York (the "BCL"), Sub shall be merged with and into the Company at
the Effective Time (as defined in Section 1.3). At the Effective Time, the
separate corporate existence of Sub shall cease, and the Company (i) shall
continue as the surviving corporation and an indirect wholly owned subsidiary
of Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), (ii) shall
succeed to and assume all the rights and obligations of Sub in accordance with
the BCL, and (iii) shall continue under the name CBS Inc.".
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1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., New York time, on the second business day after satisfaction or waiver of
the conditions set forth in Article VI (the "Closing Date"), at the offices of
Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153, unless
another date, time or place is agreed to in writing by the parties hereto.
1.3 Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") with the New York Secretary of State, as
provided in the BCL, as soon as practicable on or after the Closing Date. The
Merger shall become effective upon such filing or at such time thereafter as is
provided in the Certificate of Merger (the "Effective Time").
1.4 Effects of the Merger. (a) The Merger shall have the effects set
forth in the applicable provisions of the BCL, including Section 906 thereof.
(b) The directors of Sub and the officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their successors have
been duly elected or appointed and qualified, or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation, until duly amended in accordance with the terms thereof
and the BCL.
(d) The Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by applicable law or the Surviving Corporation's Certificate of
Incorporation or Bylaws.
(e) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well
as of a private nature, and be subject to all the restrictions, disabilities
and duties of each of the Constituent Corporations; and all and singular
rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as well as for
stock subscriptions and all other things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and every other
interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of the Constituent Corporations; and the title to any
real estate vested by deed or otherwise, in either of the Constituent
Corporations, shall not revert or be in any way impaired; but all rights of
creditors and all liens upon any property
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of either of the Constituent Corporations shall be preserved unimpaired; and
all debts, liabilities and duties of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation, and may be enforced against it
to the same extent as if said debts and liabilities had been incurred by it.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub issued
and outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of Common Stock of the
Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share of
Company Common Stock and all other shares of capital stock of the Company that
are owned by the Company and all shares of Company Common Stock and other
shares of capital stock of the Company owned by Parent, Sub or any other
wholly-owned Subsidiary (as defined below) of Parent or the Company shall be
canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor. As used in this Agreement, the
word "Subsidiary", with respect to any party, means any corporation,
partnership, joint venture or other organization, whether incorporated or
unincorporated, of which (i) such party or any other Subsidiary of such party
is a general partner; (ii) voting power to elect a majority of the Board of
Directors or others performing similar functions with respect to such
corporation, partnership, joint venture or other organization is held by such
party or by any one or more of its Subsidiaries, or by such party and any one
or more of its Subsidiaries; or (iii) at least 50% of the equity, other
securities or other interests is, directly or indirectly, owned or controlled
by such party or by any one or more of its Subsidiaries, or by such party and
any one or more of its Subsidiaries.
2.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
any of the shares thereof:
(a) Subject to the other provisions of this Section 2.2 and Section 2.1,
each share of Company Common Stock issued and outstanding immediately prior to
the Effective Time (excluding shares owned, directly or indirectly, by the
Company or any Subsidiary of the Company or by Parent, Sub or any other
Subsidiary of Parent and Dissenting Shares) shall be converted into the right
to receive the Merger Consideration (as defined below), in cash, payable to the
holder thereof, without any interest thereon, upon surrender and exchange of
the Certificates (as defined in Section 2.3(b)). As used in this Agreement,
the
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term "Merger Consideration" shall mean the sum of $81.00 and the Additional
Amount (as defined below). As used in this Agreement, the term "Additional
Amount" shall mean an amount equal to the product of (a) $81.00, (b) a
fraction, the numerator of which shall be the number of days in the period from
and including August 31, 1995 to but excluding the Closing Date, and the
denominator of which shall be 365, and (c) 6%; provided, however, that if the
Company continues to pay its regular dividend as permitted by Section 4.1(b) of
this Agreement, the Additional Amount shall be reduced by the amount per Share
of dividends declared after the date hereof with a record date prior to the
Effective Time (except that such reduction for the regular dividend immediately
succeeding the date hereof shall only be for the pro rata portion of the period
to which such dividend relates following the date of this Agreement).
(b) All such shares of Company Common Stock, when converted as provided in
Section 2.2(a), no longer shall be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each Certificate previously
evidencing Shares shall thereafter represent only the right to receive the
Merger Consideration. The holders of Certificates previously evidencing Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to the Company Common Stock except as otherwise provided
herein or by law and subject to the Surviving Corporation's obligation to pay
any dividends with a record date prior to the Effective Time declared in
accordance with the terms of this Agreement and which remain unpaid at the
Effective Time and, upon the surrender of Certificates in accordance with the
provisions of Section 2.3, shall only represent the right to receive for their
Shares, the Merger Consideration, without any interest thereon.
2.3 Payment for Shares. (a) Paying Agent. Prior to the Effective Time,
Sub shall appoint Chemical Bank (or if Chemical Bank is unwilling or unable to
act or to act upon commercially reasonable terms, any other United States bank
or trust company mutually acceptable to the Company and Parent) to act as
paying agent (the "Paying Agent") for the payment of the Merger Consideration,
and Parent shall deposit or shall cause to be deposited with the Paying Agent
in a separate fund established for the benefit of the holders of shares of
Company Common Stock, for payment in accordance with this Article II, through
the Paying Agent (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to Section 2.2(a) and this Section 2.3
to holders (other than the Company or any Subsidiary of the Company or Parent,
Sub or any other Subsidiary of Parent, or holders of Dissenting Shares). The
Paying Agent shall, pursuant to irrevocable instructions, pay the Merger
Consideration out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America or of any agency thereof, in commercial paper obligations
rated P-1 or A-1 from Moody's Investors Services, Inc. and Standard & Poor's
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Corporation, respectively, or in time deposits, certificates of deposit or
banker's acceptances of, or repurchase or reverse repurchase agreements with,
commercial banks whose commercial paper (or that of its holding company) is
rated P-1 or A-1 (collectively, "Permitted Investments"); provided, however,
that the maturities of Permitted Investments shall be such as to permit the
Paying Agent to make prompt payment to former holders of Company Common Stock
entitled thereto as contemplated by this Section. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of Permitted Investments. All earnings on Permitted Investments shall
be paid to Parent. If for any reason (including losses) the Payment Fund is
inadequate to pay the amounts to which holders of shares of Company Common
Stock shall be entitled under this Section 2.3, Parent shall in any event be
liable for payment thereof. The Payment Fund shall not be used for any purpose
except as expressly provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Paying Agent to mail to each holder
of record (other than the Company or any Subsidiary of the Company or Parent,
Sub or any other Subsidiary of Parent, or holders of Dissenting Shares) of a
Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i)
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as Parent reasonably may specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment therefor. Upon surrender of a Certificate for cancellation to the
Paying Agent together with such letter of transmittal, duly executed, and such
other customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in respect thereof cash
in an amount equal to the product of (i) the number of shares of Company Common
Stock represented by such Certificate and (ii) the Merger Consideration, and
the Certificate so surrendered shall forthwith be canceled. Absolutely no
interest shall be paid or accrued on the Merger Consideration payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name the surrendered Certificate is registered, it shall be
a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person
requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
surrendered Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.3(b), each
Certificate (other than Certificates representing Shares owned by the Company
or any Subsidiary of the Company or Parent, Sub or any other Subsidiary of
Parent) shall represent for all purposes only the right to receive the Merger
Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the Payment
Fund which remains undistributed to the holders of Company Common Stock for one
year after the Effective Time shall be delivered to Parent, upon demand, and
any holders of Company Common Stock who have not theretofore complied with this
Article II and the
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instructions set forth in the letter of transmittal mailed to such holder after
the Effective Time shall thereafter look only to Parent for payment of the
Merger Consideration to which they are entitled. All interest accrued in
respect of the Payment Fund shall inure to the benefit of and be paid to
Parent.
(d) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(e) Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Parent 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 provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
2.4 Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Paying Agent, Parent or the Company for any reason shall be converted into the
Merger Consideration, subject to the other provisions of this Article II.
2.5 Stock Options. At the Effective Time, each holder of a then
outstanding option to purchase Shares under the 1983 Stock Rights Plan (as
amended from time to time prior to the date hereof, the "Stock Rights Plan"),
whether or not then exercisable (the "Options"), shall, in settlement thereof,
receive from the Company for each Share subject to such Option an amount
(subject to any applicable withholding tax) in cash equal to the excess, if
any, of the Merger Consideration over the per Share exercise price of such
Option (such amount being hereinafter referred to as the "Option
Consideration"); provided, however, that with respect to any person subject to
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), any such amount shall be paid as soon as practicable after the first
date payment can be made without liability to such person under Section 16(b)
of the Exchange Act. Upon receipt of the Option Consideration, the Option and
any coupled SAR Unit (as defined in the Stock Rights Plan) shall be canceled.
The surrender of an Option (and any coupled SAR Unit) to the Company in
exchange for the Option Consideration shall be deemed a release of any and all
rights the holder had or may have had in respect of such Option (and any such
coupled SAR Unit). Prior to the Effective Time, the Company shall use its best
efforts to obtain all necessary consents or releases from holders of Options
under the Stock Rights Plan and take all such other lawful action as may be
necessary to give effect to the transactions contemplated by this Section 2.5
(except for such action that may require the approval of the Company's
shareholders). Except as
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otherwise agreed to by the parties, (i) the Stock Rights Plan shall terminate
as of the Effective Time and the provisions in any other plan, program or
arrangement providing for the issuance or grant of any other interest in
respect of the capital stock of the Company or any Subsidiary thereof, shall be
canceled as of the Effective Time, and (ii) the Company shall take all action
necessary to ensure that following the Effective Time no participant in the
Stock Rights Plan or other plans, programs or arrangements shall have any right
thereunder to acquire equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof and to terminate all such plans.
2.6 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall not have assented to the Merger and who shall have demanded properly in
writing appraisal for such shares in accordance with the applicable provisions
of the BCL (collectively, the "Dissenting Shares") shall not be converted into
or represent the right to receive the Merger Consideration. Such shareholders
instead shall be entitled to receive payment of the appraised value of such
shares of Company Common Stock held by them pursuant to the laws of the State
of New York, except that all Dissenting Shares held by shareholders who shall
have failed to perfect or who effectively shall have withdrawn or lost their
rights to appraisal of such shares of Company Common Stock, in either case
pursuant to the BCL, shall thereupon be deemed to have been converted into and
to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.3, of the Certificate or Certificates that,
immediately prior to the Effective Time, evidenced such shares of Company
Common Stock. The Company shall give Parent (i) prompt notice of any written
demands for appraisal of shares of Company Common Stock received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of Parent, voluntarily make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company represents
and warrants to Parent and Sub as follows (except to the extent set forth on
the Disclosure Schedule previously delivered by the Company to Parent (the
"Company Disclosure Schedule")):
(a) Organization, Standing and Power. Each of the Company and its
Material Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified and in good standing to conduct business in
each jurisdiction in which the business it is conducting, or the operation,
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ownership or leasing of its properties, makes such qualification necessary,
other than in such jurisdictions where the failure so to qualify would not have
a Material Adverse Effect (as defined below) with respect to the Company. The
Company has heretofore made available to Parent complete and correct copies of
its and its Material Subsidiaries' respective Certificates or Articles of
Incorporation and Bylaws (or other governing instruments). As used in this
Agreement, a "Material Adverse Effect" shall mean, with respect to any party,
the result of one or more events, changes or effects which, individually or in
the aggregate, would have a material adverse effect on the business, results of
operations or financial condition of such party and its Subsidiaries, taken as
a whole. As used in this Agreement, "Material Subsidiary", with respect to any
party, means any Subsidiary of such party that constitutes a Significant
Subsidiary of such party within the meaning of Rule 1-02 of the Regulation S-X
of the Securities and Exchange Commission (the "SEC") and, in the case of the
Company, also shall include The CBS/Fox Company and Radford Studio Center Inc.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of the Company consists of 100,000,000 Shares and 6,000,000 shares of
Preference Stock, $1.00 par value ("Preferred Stock"). At the close of
business on July 28, 1995: (i) 63,677,363 Shares and 320,000 shares of Series
B Preferred Stock were issued and outstanding, 1,106,400 Shares were reserved
for issuance pursuant to the conversion of the Series B Preferred Stock and
1,850,526 Shares were reserved for issuance pursuant to the Stock Rights Plan,
and, except for the issuance of Shares pursuant to the exercise of the Options,
there were no employment, executive termination or similar agreements providing
for the issuance of Shares; (ii) 17,485,230 Shares were held by the Company in
its treasury; and (iii) no bonds, debentures, notes or other instruments or
evidence of indebtedness having the right to vote (or convertible into, or
exercisable or exchangeable for, securities having the right to vote) on any
matters on which the Company shareholders may vote ("Company Voting Debt") were
issued or outstanding. All outstanding Shares are validly issued, fully paid
and nonassessable and, other than as provided in the BCL, are not subject to
preemptive or other similar rights. Except as set forth in Section 3.1(b) of
the Company Disclosure Schedule, all outstanding shares of capital stock of the
Material Subsidiaries of the Company are validly issued, fully paid and
nonassessable and are owned by the Company or a direct or indirect Subsidiary
of the Company, free and clear of all liens, charges, encumbrances, claims and
options of any nature. Except as set forth in this Section 3.1(b), there are
not as of the date hereof, and there will not be at the Effective Time, any
outstanding or authorized options, warrants, calls, rights (including
preemptive rights), commitments or agreements to which the Company or any
Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or any
Company Voting Debt or other voting securities of the Company or of any
Subsidiary of the Company, or obligating the Company or any Subsidiary of the
Company to grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. There are not as of the date hereof and there will
not be at the Effective Time any shareholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or by which it is
bound relating to the voting of any shares of the capital stock of the Company.
Except as set forth in Section
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3.1(b) of the Company Disclosure Schedule, there are no restrictions on the
Company's ability or right to vote the stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and authority to enter
into this Agreement and, subject to the Company Shareholder Approval (as
defined in Section 3.1(c)(iii)), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company, subject to the Company Shareholder
Approval. This Agreement has been duly executed and delivered by the Company
and, assuming that this Agreement constitutes the valid and binding agreement
of Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms.
(ii) Except as to which requisite waivers or consents have been obtained
and except as set forth in Section 3.1(c)(ii) of the Company Disclosure
Schedule and assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in paragraph (iii) of this Section 3.1(c)
are duly and timely obtained or made and the Company Shareholder Approval has
been obtained, the execution and delivery of this Agreement do not and the
consummation of the transactions contemplated hereby by the Company will not
(A) conflict with any provision of the Certificate or Articles of Incorporation
or By-laws (or other governing documents) of the Company or any of its Material
Subsidiaries, (B) conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or the creation of a lien, pledge, security
interest or other encumbrance on assets or property, or right of first refusal
with respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss, creation or right of
first refusal, a "Violation"), of any loan or credit agreement, note, mortgage,
indenture, lease, Company Employee Benefit Plan (as defined in Section
3.1(k)(i)) or other agreement, obligation or instrument, or (C) result in any
Violation of any Company Permit (as defined in Section 3.1(h)), concession,
franchise, license, judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or any of its Subsidiaries or their
respective properties or assets (collectively, "Laws"), except, with respect to
clauses (B) and (C), for any such Violations which would not have a Material
Adverse Effect with respect to the Company. The Board of Directors of the
Company has taken all actions necessary under the BCL, including approving the
transactions contemplated by this Agreement, to ensure that Section 912 of the
BCL does not, and will not, apply to the transactions contemplated in this
Agreement.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign (a "Governmental Entity"), is required by or with respect
to the Company or any of its Material
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Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, which if not obtained or made would have a Material Adverse Effect with
respect to the Company, except for: (A) the filing of a pre-merger notification
and report form by the Company under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the expiration or
termination of the applicable waiting period thereunder; (B) the filing with
the SEC of (x) a proxy statement in definitive form relating to a meeting of
the holders of Company Common Stock to approve the Merger ("Company Shareholder
Approval") (such proxy statement as amended or supplemented from time to time
being hereinafter referred to as the "Proxy Statement"), and (y) such reports
under and such other compliance with the Securities Act of 1933, as amended
(the "Securities Act"), or the Exchange Act and the rules and regulations
thereunder, as may be required in connection with this Agreement and the
transactions contemplated hereby; (C) the filing of the Certificate of Merger
with the New York Secretary of State; (D) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover laws; (E)
such filings and approvals as may be required by any foreign pre-merger
notification, securities, corporate or other law, rule or regulation; (F) such
filings in connection with the New York State Real Property Transfer Tax, the
New York Real Property Transfer Gains Tax, the New York City Real Property
Transfer Tax or any other state or local tax which is attributable to the
beneficial ownership of the Company's or its Subsidiaries' real property, if
any (collectively, the "Gains and Transfer Taxes"); (G) such filings with and
approvals of the Federal Communications Commission or any successor entity (the
"FCC") as may be required under the Communications Act of 1934, as amended, and
the rules, regulations and policies of the FCC thereunder (the "Communications
Act"), including, without limitation, in connection with the transfer of
licenses in connection with the operation of the television and radio stations
owned and operated by the Company (the "Stations"); and (H) such other such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval necessitated by the Merger or the transactions contemplated by this
Agreement.
(d) SEC Documents. The Company has made available to Parent a true and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by the Company with the SEC since December 31, 1992 and
prior to the date of this Agreement (the "Company SEC Documents"), which are
all the documents (other than preliminary material) that the Company was
required to file with the SEC since such date. As of their respective dates,
the Company SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such Company SEC
Documents, and none of the Company SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company (including, in each case, the notes thereto) included
in the Company SEC Documents complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a
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consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, none of which were or are
expected, individually or in the aggregate, to be material in amount) the
consolidated financial position of the Company and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of the Company and its consolidated
Subsidiaries for the periods presented therein.
(e) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents, as set forth in Section 3.1(e) of the Company Disclosure
Schedule or as contemplated by this Agreement, since December 31, 1994 and
through the date of this Agreement, the business of the Company and each of its
Subsidiaries has been carried on only in the ordinary and usual course and
there has not been any material adverse change in the business, results of
operations or financial condition of the Company and its Subsidiaries, taken as
a whole.
(f) No Undisclosed Material Liabilities. To the Company's knowledge,
except as set forth in Section 3.1(f) of the Company Disclosure Schedule or the
other Sections of the Company Disclosure Schedules, as of the date of this
Agreement, there are no liabilities of the Company or any Subsidiary of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are reasonably likely to have a Material
Adverse Effect with respect to the Company, other than: (i) liabilities
reflected in any Company SEC Document; and (ii) liabilities under this
Agreement.
(g) Information Supplied. The Proxy Statement, at the time it is filed
with SEC or any other regulatory authority, on the date it is first mailed to
the holders of the Company Common Stock, or at the time of the Company
Shareholders Meeting (as defined in Section 5.1(b)), will not contain 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. If at
any time prior to the Company Shareholders Meeting, any event with respect to
the Company or any of its Subsidiaries, or with respect to other information
supplied by the Company for inclusion in the Proxy Statement, shall occur which
is required to be described in an amendment of, or a supplement to, the Proxy
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the shareholders of the Company. The Proxy Statement will comply as to form,
in all material respects, with the provisions of the Exchange Act and the rules
and regulations thereunder.
(h) Compliance with Applicable Laws. The Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders, franchises and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except where the failure
to possess the same would not have a Material Adverse Effect with respect to
the Company and except as set forth in Section 3.1(h) of the
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Company Disclosure Schedule. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure so
to comply would not have a Material Adverse Effect with respect to the Company
and except as set forth in Section 3.1(h) of the Company Disclosure Schedule.
Except as disclosed in the Company SEC Documents and except as set forth in
Section 3.1(h) of the Company Disclosure Schedule, the businesses of the
Company and its Subsidiaries are not being conducted in violation of any law,
ordinance or regulation of any Governmental Entity, including, without
limitation, laws relating to the environment, or any outstanding administrative
or judicial order which, in any case, is reasonably likely to result in a
Material Adverse Effect with respect to the Company. As of the date of this
Agreement, 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, other than those the outcome of which is not
reasonably likely to have a Material Adverse Effect with respect to the Company
and except as set forth on Section 3.1(h) of the Company Disclosure Schedule.
(i) Litigation. As of the date of this Agreement, except as set forth in
Section 3.1(i) of the Company Disclosure Schedule or disclosed in any Company
SEC Document, there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary of the Company which (in any case) (i) questions the validity of
this Agreement or the Merger or any action taken or to be taken by the Company
or any of its shareholders under this Agreement in connection with the
consummation of the transactions contemplated hereby or (ii) is, individually
or together with any other suit, action or proceeding arising out of or based
upon the same or substantially the same facts or circumstances, reasonably
likely to have a Material Adverse Effect with respect to the Company, nor is
there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any Subsidiary of the
Company which is reasonably likely to have a Material Adverse Effect on the
Company or prevent, hinder or materially delay its ability to consummate the
transactions contemplated by this Agreement.
(j) Taxes. Each of the Company and each of its Subsidiaries has filed all
material tax returns required to be filed by such party and has paid (or the
Company has paid on behalf of any such Subsidiary) all taxes shown due on such
returns, except to the extent that such failures to file or pay are not
reasonably likely to result in a Material Adverse Effect with respect to the
Company. All material deficiencies for any taxes which have been proposed,
asserted or assessed against the Company or any of its Subsidiaries have been
fully paid or are being contested and an adequate reserve therefor has been
established and is fully reflected in the most recent financial statements
contained in the Company SEC Documents, except to the extent that such
deficiencies are not reasonably likely to result in a Material Adverse Effect
with respect to the Company. The Company's federal income tax returns for all
of its taxable years through its taxable year ended December 31, 1990 have been
examined by the Internal Revenue Service (the "IRS"). The Company has
previously delivered or made available to Parent true and complete copies of
its federal income tax returns for each of the fiscal years ended December 31,
1991, December 31, 1992 and December 31, 1993. Except as set forth on Section
3.1(j) of the Company Disclosure
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Schedule, neither the Company nor any of its Subsidiaries is a party to or
bound by any agreement providing for the allocation or sharing of taxes with
any entity which is not, either directly or indirectly, a Subsidiary of the
Company. Neither the Company nor, to its knowledge, any of its Subsidiaries
has filed a consent pursuant to or agreed to the application of Section 341(f)
of the Code. The Company is not a "United States real property holding
corporation" as defined in Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. For the purpose of
this Agreement, the term "tax" (and, with correlative meaning, the terms
"taxes" and "taxable") shall include all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts.
(k) Employee Benefit Plans. With respect to all the employee benefit
plans (as that phrase is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") maintained for the benefit of
any current or former employee, officer or director of the Company or any of
its Subsidiaries) ("Company ERISA Plans") and any other benefit or compensation
plan, program or arrangement maintained for the benefit of any current or
former employee, officer or director of the Company or any of its Subsidiaries
(the Company ERISA Plans and such plans being referred to as the "Company
Plans"), except as set forth in Section 3.1(k) of the Company Disclosure
Schedule, as specifically provided in Section 5.12 or, in the case of clause
(i) below, as otherwise disclosed by the Company to Parent:
(i) none of the Company Plans is a "multiemployer plan" within the meaning
of ERISA;
(ii) none of the Company Plans promises or provides retiree medical or life
insurance benefits to any person;
(iii) none of the Company Plans provides for payment of a benefit, the
increase of a benefit amount, the payment of a contingent benefit, or the
acceleration of the payment or vesting of a benefit by reason of the execution
of this Agreement or the consummation of the transactions contemplated by this
Agreement;
(iv) neither the Company nor any of its Subsidiaries has an obligation to
adopt, or is considering the adoption of, any new Company Plan or, except as
required by law, the amendment of an existing Company Plan;
(v) each Company Plan intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the IRS that it is so
qualified and, to the knowledge of the Company, nothing has occurred since the
date of such letter that could reasonably be expected to affect the qualified
status of such Company Plan;
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<PAGE> 21
(vi) each Company Plan has been operated in all respects in accordance with
its terms and the requirements of all applicable law;
(vii) neither the Company nor any of its Subsidiaries or members of their
"controlled group" has incurred any direct or indirect liability under, arising
out of or by operation of Title IV of ERISA in connection with the termination
of, or withdrawal from, any Company Plan or other retirement plan or
arrangement, and, to the knowledge of the Company, no fact or event exists that
could reasonably be expected to give rise to any such liability;
(viii) the aggregate accumulated benefit obligations of each Company Plan
subject to Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Company Plan) does not exceed the fair market value
of the assets of such Company Plan (as of the date of such valuation); and
(ix) the Company is not aware of any claims relating to the Company Plans;
provided, however, that the failure of the representations set forth in clauses
(vi), (vii) and (ix) to be true and correct shall not be deemed to be a breach
of any such representation unless any such failure, individually or in the
aggregate (for this purpose assuming resolution against the Company of any
claim referred to in clause (ix) above of which the Company was aware when the
representation in such clause was made and which is reasonably likely to be
resolved) is reasonably likely to have a Material Adverse Effect.
(l) Intangible Property.
Except as set forth in Section 3.1(l) of the Company Disclosure Schedule,
each trademark, trade name and service mark listed in such Schedule, as well as
all registrations thereof, and each material license or other material contract
relating thereto (collectively, the "Company Intangible Property") is in good
standing in all material respects and is owned by the Company or its
Subsidiaries free and clear of any and all liens or encumbrances. Except as
set forth in Section 3.1(l) of the Company Disclosure Schedule, to the
knowledge of the Company, the use of the Company Intangible Property by the
Company or its Subsidiaries does not, in any material respect, conflict with,
infringe upon, violate or interfere with or constitute an appropriation of any
right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, service mark, or copyright
or any pending application therefor of any other person and there are no
pending claims and neither the Company nor any of its Subsidiaries has received
any notice of any pending claim or otherwise knows that any of the Company
Intangible Property is invalid or conflicts with the asserted rights of any
other person or has not been used or enforced or has failed to be used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Company Intangible Property.
(m) Contracts. Except as set forth in Section 3.1(m) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to or is bound by any employment agreement, television network affiliation
agreement, any credit
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<PAGE> 22
agreement, mortgage or indenture, or any material talent, programming or joint
venture agreement which (x) provides that the terms thereof or any or all of
the benefits or burdens thereunder will be affected or altered (including,
without limitation, by means of acceleration) by, or are contingent upon, or
(y) will be subject to termination or cancellation as a result of, the
execution of this Agreement or the consummation of the transactions
contemplated hereby.
(n) Board Recommendation; State Takeover Statutes. The Board of Directors
of the Company, at a meeting duly called and held, has by the vote of those
directors present (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, taken together, are fair to and in
the best interests of the Company and the shareholders of the Company and has
approved the same, and such approval is sufficient to render inapplicable to
the Merger, this Agreement and the transactions contemplated by this Agreement
the provisions of Section 912 of the BCL, and (ii) resolved to recommend that
the holders of the shares of Company Common Stock approve this Agreement and
the transactions contemplated herein, including the Merger. To the best of the
Company's knowledge, other than Section 912 of the BCL, no state takeover
statute or similar statute or regulation applies or purports to apply to the
Merger, this Agreement or any of the transactions contemplated hereby.
(o) Opinion of Financial Advisor. The Company has received the opinion of
Salomon Brothers Inc, dated August 1, 1995, to the effect that, as of the date
thereof, the Merger Consideration to be received by the holders of Company
Common Stock in the Merger is fair from a financial point of view to such
holders, a signed, true and complete copy of which opinion has been delivered
to Parent, and such opinion has not been withdrawn or modified.
(p) Vote Required. The affirmative vote of the holders of at least
two-thirds of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary (under applicable law
or otherwise) to approve the Merger and this Agreement and the transactions
contemplated hereby.
(q) FCC Qualifications. After due investigation, except for the matters
described in Section 3.1(q) of the Company Disclosure Schedule, the Company is
not aware of any facts or circumstances that might prevent or delay prompt
consent to the transfer of control applications and issuance of the FCC Order.
3.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows (except to the extent set forth
on the Disclosure Schedule previously delivered by Parent to the Company (the
"Parent Disclosure Schedule")):
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, has all requisite power and authority to
own, lease and operate its
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properties and to carry on its business as now being conducted, and is duly
qualified and in good standing to conduct business in each jurisdiction in
which the business it is conducting, or the operation, ownership or leasing of
its properties, makes such qualification necessary, other than in such
jurisdictions where the failure so to qualify would not have a Material Adverse
Effect with respect to Parent. Parent has heretofore made available to the
Company complete and correct copies of its and Sub's respective Certificates or
Articles of Incorporation and By-laws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been duly
executed and delivered by each of Parent and Sub and assuming this Agreement
constitutes the valid and binding agreement of the Company, constitutes a valid
and binding obligation of Parent and Sub enforceable in accordance with its
terms.
(ii) Except as to which requisite waivers or consents have been obtained
and assuming the consents, approvals, authorizations or permits and filings or
notifications referred to in paragraph (iii) of this Section 3.2(b) are duly
and timely obtained or made and the Company Shareholder Approval has been
obtained, the execution and delivery of this Agreement do not and the
consummation of the transactions contemplated hereby by each of Parent and Sub
will not (A) conflict with any provision of the Certificate or Articles of
Incorporation or By-laws of Parent or Sub, (B) result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, or other agreement,
obligation or instrument or (C) result in any Violation of any Laws applicable
to Parent or Sub or their respective properties or assets, except, with respect
to clauses (B) and (C), for any such Violations which would not have a Material
Adverse Effect with respect to Parent.
(iii) No consent, approval, order or authorization of, or registration,
declaration or filing with, notice to, or permit from any Governmental Entity,
is required by or with respect to Parent or Sub in connection with the
execution and delivery of this Agreement by each of Parent and Sub or the
consummation by each of Parent or Sub of the transactions contemplated hereby,
which the failure to obtain or make would have a Material Adverse Effect with
respect to Parent, except for: (A) filings under the HSR Act; (B) the filing
with the SEC of such reports under and such other compliance with the Exchange
Act and the rules and regulations thereunder, as may be required in connection
with this Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the New York Secretary of State; (D) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover laws; (E) such filings and approvals as may be required
by any foreign pre-merger notification, securities, corporate or other law,
rule or regulation; (F) such filings in connection with any Gains and Transfer
Taxes; (G) such filings with and approvals of the FCC as may be required under
the
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Communications Act, including, without limitation, in connection with the
transfer of licenses in connection with the operation of the Stations; and (H)
such other such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the Merger or the
transactions contemplated by this Agreement. Neither Parent nor any of its
Affiliates or Associates (as each such term is defined in Section 912 of the
BCL) is, at the date hereof, an "interested shareholder" (as such term is
defined in Section 912 of the BCL) of the Company.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in the
Proxy Statement will, at the time it is filed with the SEC or any other
regulatory authority, on the date it is first mailed to the Company's
shareholders, or at the time of the Company Shareholders Meeting, contain 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. If at
any time prior to the Company Shareholders Meeting any event with respect to
Parent or Sub, or with respect to information supplied by Parent or Sub for
inclusion in the Proxy Statement, shall occur which is required to be described
in an amendment of, or a supplement to, such documents, such event shall be so
described to the Company.
(d) Financing. Parent has received executed commitments (including the
term sheet attached thereto, the "Commitment Letter"), copies of which have
been delivered to the Company, from one or more financial institutions to
provide, subject to the conditions specified therein, an aggregate of $2
billion of the funds required to consummate the Merger.
(e) Interim Operations of Sub. Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the transactions contemplated hereby.
(f) Board Approval. The Board of Directors of the Parent, at a meeting
duly called and held, has by the vote of those directors present and voting
determined that the Merger is fair to and in the best interests of Parent and
has approved the same. At such meeting, the Board of Directors of Parent
received the opinion of J.P. Morgan Securities Inc., dated August 1, 1995, to
the effect that, as of the date thereof, the Merger Consideration to be paid by
Parent in the Merger is fair from a financial point of view to Parent, a
signed, true and complete copy of which opinion has been delivered to the
Company, and such opinion has not been withdrawn or modified.
(g) FCC Qualifications. Except as set forth in Section 3.2(g) to the
Parent Disclosure Schedule, (i) to Parent's knowledge, Parent and Sub are, for
purposes of obtaining the FCC Order, legally, financially and otherwise
qualified to acquire control of the Company and (ii) after due investigation,
Parent and Sub are not aware of any other facts
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or circumstances that might prevent or delay prompt consent to the transfer of
control applications and issuance of the FCC Order.
(h) Financial Covenant Compliance. After due investigation and in
reliance upon financial information and projections provided by the Company
with respect to the Company, Parent has no reason to believe that it will not
be able to deliver the pro forma financial statements required by, and satisfy
the condition set forth in, Section V(f) of the Commitment Letter on the basis
contemplated in such Section.
(i) Third-party Consents. Except as described in the exceptions to
Section 3.2(b)(iii), there are no governmental or other third-party approvals
necessary in connection with, or waiting periods applicable to, the Merger and
the Financing (as defined in Section 5.7(c)) contemplated by the Commitment
Letter.
(j) Sufficient Financing. Parent believes, as of the date hereof, that
the funds to be advanced to Parent pursuant to the credit facilities referred
to in the Commitment Letter would be sufficient for the Financing.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to the
Company and its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that Parent shall otherwise
consent in writing):
(a) Ordinary Course. Each of the Company and its Subsidiaries shall carry
on its business in the ordinary course in substantially the same manner as
heretofore conducted.
(b) Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its Subsidiaries to: (i) except for regular quarterly dividends
not in excess of $.10 per Share with customary record and payment dates,
declare or pay any dividends on or make other distributions in respect of any
of its capital stock, other than cash dividends or distributions paid to the
Company or any wholly-owned Subsidiary on or with respect to the capital stock
of a wholly-owned Subsidiary; (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock; or (iii) repurchase or otherwise acquire, or permit any
Subsidiary to purchase or otherwise acquire, any shares of its capital stock,
except as required by the terms of its securities outstanding on the date
hereof, as contemplated by this Agreement or as contemplated by employee
benefit and dividend reinvestment plans as in effect on the date hereof.
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(c) Issuance of Securities. Except as set forth in Section 4.1(c) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any of
its Subsidiaries to, (i) grant any options, warrants or rights, to purchase
shares of Company Common Stock, (ii) amend or reprice any Option or SAR Unit or
amend the Stock Rights Plan, or (iii) issue, deliver or sell, or authorize or
propose to issue, deliver or sell, any shares of its capital stock of any class
or series, any Company Voting Debt or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, Company Voting Debt or
convertible securities, other than (A) the issuance of Shares upon the exercise
of Options granted under the Stock Rights Plan which are outstanding on the
date hereof, or in satisfaction of stock grants or stock based awards made
prior to the date hereof pursuant to the Stock Rights Plan or based upon any
individual agreements such as employment agreements or executive termination
agreements (in each such case, as in effect on the date hereof), (B) the
issuance of Shares upon the conversion of shares of Series B Preferred Stock in
accordance with the terms thereof and (C) issuances by a wholly-owned
Subsidiary of its capital stock to its parent.
(d) Governing Documents. The Company shall not amend or propose to amend
its Certificate of Incorporation or Bylaws.
(e) No Solicitation. (i) The Company, its Subsidiaries and their
respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its Subsidiaries) (collectively,
the "Company's Representatives") shall immediately cease any discussions or
negotiations with any party that may be ongoing with respect to a Competing
Transaction (as defined below). From and after the date hereof until the
termination of this Agreement, neither the Company or any of its Subsidiaries
will, nor will the Company authorize or permit any of its Subsidiaries or any
of the Company Representatives to, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information), or
take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction or agree to or endorse any Competing
Transaction, or authorize or permit any of the Company Representatives to take
any such action, and the Company shall notify Parent orally (within one
business day) and in writing (as promptly as practicable) of all of the
relevant details relating to all inquiries and proposals which it or any of its
Subsidiaries or any such Company Representative may receive relating to any of
such matters and, if such inquiry or proposal is in writing, the Company shall
deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing contained in this Section 4.1(e) shall prohibit the
Company or its Board of Directors from (A) taking and disclosing to its
shareholders a position contemplated by Exchange Act Rule 14e-2 or (B) making
any disclosure to its shareholders that, in the good faith judgment of its
Board of Directors, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), is required under applicable law; provided,
further, however, that nothing contained in this Section 4.1(e) shall prohibit
the
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Company from (1) furnishing information to, or entering into discussions or
negotiations with, any person or entity that makes after the date hereof a
written, bona fide proposal unsolicited after the date hereof to acquire the
Company and/or its Subsidiaries pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or other similar
transaction if (A) the Board of Directors of the Company, after consultation
with and based upon the advice of independent legal counsel (who may be the
Company's regularly engaged independent legal counsel), determines in good
faith that such action is necessary for the Board of Directors of the Company
to comply with its fiduciary duties to shareholders under applicable law and
(B) prior to taking such action, the Company (x) provides reasonable notice to
Parent to the effect that it is taking such action and (y) receives from such
person or entity an executed confidentiality agreement in reasonably customary
form or (2) failing to make or withdrawing or modifying its recommendation
referred to in Section 3.1(n) if there exists a Competing Transaction and the
Board of Directors of the Company, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary
for the Board of Directors of the Company to comply with its fiduciary duties
to shareholders under applicable law. For purposes of this Agreement,
"Competing Transaction" shall mean any of the following (other than the
transactions between the Company, Parent and Sub contemplated hereunder)
involving the Company: (i) any merger, consolidation, share exchange,
recapitalization, business combination, or other similar transaction; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of all
or a substantial portion of the assets of the Company and its Subsidiaries,
taken as a whole, or of more than 25% (in the case of Section 5.4(b)(i) only,
50%) of the equity securities of the Company or any of its Material
Subsidiaries, in any case in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 25% (in the case of Section
5.4(b)(i) only, 50%) or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
(ii) Except as set forth in this Section 4.1(e)(ii), the Board of
Directors of the Company shall not approve or recommend, or cause the Company
to enter into any agreement with respect to, any Competing Transaction.
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel (who
may be the Company's regularly engaged independent legal counsel), determines
in good faith that it is necessary to do so in order to comply with its
fiduciary duties to shareholders under applicable law, the Board of Directors
of the Company may approve or recommend a Superior Proposal (as defined below)
or cause the Company to enter into an agreement with respect to a Superior
Proposal, but in each case only after providing reasonable written notice to
Parent (a "Notice of Superior Proposal") advising Parent that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal. In addition, if the Company proposes to
enter into an agreement with respect to any Competing Transaction, it shall
concurrently with entering
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into such an agreement pay, or cause to be paid, to Parent the full fee and
expense reimbursement required by Section 5.4(b) hereof. For purposes of this
Agreement, a "Superior Proposal" means any bona fide proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
all or substantially all the Shares then outstanding or all or substantially
all the assets of the Company and otherwise on terms which the Board of
Directors of the Company determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation) to be more
favorable to the Company's shareholders than the Merger.
(f) No Acquisitions. Except as set forth in Section 4.1(f) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
Subsidiaries to, acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any material business.
(g) No Dispositions. Other than: (i) dispositions or proposed
dispositions listed in Section 4.1(g) of the Company Disclosure Schedule; or
(ii) dispositions in the ordinary course of business consistent with past
practice which are not material, individually or in the aggregate, to such
party and its Subsidiaries taken as a whole, the Company shall not, nor shall
it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of, any of its assets.
(h) Advice of Changes. The Company shall cause its senior officers to use
reasonable efforts to promptly advise Parent of any change or occurrence
having, or which, insofar as reasonably can be foreseen, could have, a Material
Adverse Effect with respect to the Company and, to the extent permitted by law
(including FCC regulations), to meet on a regular basis with Parent's senior
officers to discuss the Company's business.
(i) No Dissolution, Etc. The Company shall not authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company or any of its Subsidiaries.
(j) Other Actions. Except as contemplated by this Agreement, the Company
will not nor will it permit any of its Subsidiaries to take or agree or commit
to take any action that is reasonably likely to result in any of the Company's
representations or warranties hereunder being untrue such that the condition
set forth in Section 6.2(a) will not be satisfied.
(k) Certain Employee Matters. The Company and its Subsidiaries shall not
(except as contemplated in Section 4.1(k) of the Company Disclosure Schedule
(it being understood that Parent shall not unreasonably withhold its consent to
certain matters set forth therein as specified therein) and except as provided
in Section 3.1(k) of the Company Disclosure Schedule): (i) grant any increases
in the compensation of any of its directors, officers or key employees, except
for increases for officers and employees in the ordinary
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course of business; (ii) pay or agree to pay any pension, retirement allowance
or other employee benefit not required or contemplated by any of the existing
Company Benefit Plans or Company Pension Plans as in effect on the date hereof
to any such director, officer or key employee, whether past or present; (iii)
except as permitted by Section 4.1(1)(ii), enter into any new, or materially
amend any existing, employment or severance or termination agreement with any
such director, officer or key employee; or (iv) except as may be required to
comply with applicable law, become obligated under any new Company Plan, which
was not in existence on the date hereof, or amend any such plan or arrangement
in existence on the date hereof if such amendment would have the effect of
enhancing any benefits thereunder. The Company shall provide Parent with
copies of any amendments to any Company Plan prior to the Effective Time.
(1) Indebtedness; Agreements. (i) Except as set forth in Section
4.1(1)(i) of the Company Disclosure Schedule, the Company shall not, nor shall
the Company permit any of its Subsidiaries to, assume or incur any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any debt
securities or warrants or rights to acquire any debt securities of such party
or any of its Subsidiaries or guarantee any debt securities of others or create
any mortgages, liens, security interests or other encumbrances on the property
of the Company or any of its Subsidiaries in connection with any indebtedness
thereof, or enter into any "keep well" or other agreement or arrangement to
maintain the financial condition of another person.
(ii) Except as set forth in Section 4.1(1)(ii) of the Company Disclosure
Schedule, the Company shall not, nor shall the Company permit any of its
Subsidiaries to (x) enter into, modify, rescind, terminate, waive, release or
otherwise amend in any material respect any of the terms or provisions of any
(A) television network affiliation agreement for a television station in one of
the 50 largest markets (provided, however, that this Section 4.1(1)(ii) shall
be inapplicable to the ordinary course extension of affiliation agreements upon
expiration thereof), (B) intercollegiate, professional or other sports
television network programming agreement having an aggregate value over its
term greater than $100,000,000, (C) new employment or consulting agreement
which provides for compensation in excess of $250,000 per year (in the case of
corporate staff employees and consultants) or $750,000 per year (in the case of
entertainment division employees and consultants), or (D) Material Contract (as
defined below); or (y) modify, rescind, terminate, waive, release or otherwise
amend in any material respect any of the terms or provisions of the contract
referred to in subsection (z) of Section 4.1(1)(ii) of the Company Disclosure
Schedule; provided, however, that Parent shall not unreasonably withhold or
delay its consent to any of the foregoing matters. "Material Contract" means
any contract, agreement, commitment or arrangement to which the Company or any
of its Subsidiaries is a party or by which it or any such Subsidiary is bound
which would be required to be filed by the Company with the SEC as an exhibit
to its Annual Report on Form 10-K.
(m) Accounting. The Company shall not take any action, other than in the
ordinary course of business, consistent with past practice or as required by
the SEC or by law, with respect to accounting policies, procedures and
practices.
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(n) Tax Election. The Company shall not make any material tax election
(unless required by law) or settle or compromise any material income tax
liability except if such action is taken in the ordinary course of business and
Parent shall have been provided reasonable prior notice thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement; Company Shareholders Meeting. (a)
As promptly as practicable following the date of this Agreement, the Company
shall prepare and file with the SEC the Proxy Statement. The Company shall use
its best efforts to respond to all SEC comments with respect to the Proxy
Statement and to cause the Proxy Statement to be mailed to the Company's
shareholders at the earliest practicable date. Parent shall furnish all
information concerning itself to the Company as may be reasonably requested in
connection with such preparation, filing and response.
(b) The Company will, as soon as practicable following delivery to the
Company of the executed Credit Agreement (as defined in Section 5.7(c)), duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Company Shareholders Meeting") for the purpose of approving this Agreement and
the transactions contemplated hereby. At the Company Shareholders Meeting,
Parent shall cause all the shares of Company Common Stock then owned by Parent
and Sub and any of their Subsidiaries or affiliates to be voted in favor of the
Merger.
5.2 Access to Information; Confidentiality. To the extent permitted by
law (including FCC regulations) and subject to confidentiality agreements with
third parties, upon reasonable notice, the Company shall (and shall cause each
of its Subsidiaries to) afford to the officers, employees, accountants, counsel
and other representatives of Parent reasonable access, during normal business
hours during the period prior to the Effective Time, to its properties, books,
contracts, commitments and records and, during such period, (a) the Company
shall (and shall cause each of its Subsidiaries to) furnish promptly to Parent
all other information concerning its business, properties and personnel as
Parent may reasonably request and (b) Parent shall have reasonable access to
members of senior management of the Company and its Subsidiaries, including the
Divisional Presidents or their designees. Parent agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 5.2 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Confidentiality Agreement,
dated as of July 25, 1995, between Parent and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.
5.3 Transfer Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added,
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stock transfer and stamp taxes, any transfer, recording, registration and other
fees (including the Gains and Transfer Taxes) and any similar taxes which
become payable in connection with the transactions contemplated by this
Agreement (together with any related interest, penalties or additions to tax,
"Transfer Taxes"). Parent shall pay or cause to be paid, without withholding
from the amounts payable to any holder of any Shares, all Transfer Taxes.
5.4 Fees and Expenses. (a) Except as otherwise provided in this Section
5.4, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that all costs and expenses, including filing fees,
related to the printing, mailing or filing of the Proxy Statement or to any
other filing with any Governmental Entity in connection with the Merger, this
Agreement or any other transaction contemplated thereby or hereby shall be
borne equally by Parent and the Company.
(b) The Company agrees that if this Agreement shall be terminated pursuant
to:
(i) Section 7.1(f), if at or prior to the time of the Company Shareholders
Meeting a Competing Transaction shall have been commenced, publicly proposed or
publicly disclosed and if within one year after the Company Shareholders
Meeting the Company enters into an agreement with respect to, approves or
recommends such or any other Competing Transaction;
(ii) Section 7.1(g); or
(iii) Section 7.1(h);
then the Company shall (A) pay to Parent an amount equal to $100,000,000 and
(B) assume and pay, or reimburse Parent for, all reasonable documented
out-of-pocket fees and expenses incurred by Parent (including, without
limitation, the fees and expenses of its counsel, commercial banks,
accountants, financial advisors, experts and consultants) which are
specifically related to the Merger, this Agreement and the matters contemplated
by this Agreement; provided, however, that the Company shall not be obligated
to pay or reimburse more than an aggregate of $50,000,000 pursuant to the
foregoing clause (B).
(c) Parent agrees that if this Agreement shall be terminated pursuant to:
(i) Section 7.1(c) if at such time (A) the conditions set forth in
Section 6.1 shall have been satisfied and the other conditions in
Article VI were capable of being satisfied and (B) the condition set
forth in Section 6.2(c) shall not have been satisfied;
(ii) Section 7.1(d)(i);
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(iii) Section 7.1(d)(ii);
(iv) Section 7.1(e)(i);
(v) Section 7.1(e)(ii);
(vi) Section 7.1(d)(iii); or
(vii) Section 7.1(e)(iii);
then Parent shall (A) pay to the Company an amount equal to (x) in the case of
clauses (i), (vi) and (vii), $100,000,000, (y) in the case of clauses (iii) and
(v), $50,000,000 and (z) in the case of clauses (ii) and (iv), $25,000,000, and
(B) in any such case, assume and pay, or reimburse the Company for, all
reasonable documented out-of-pocket fees and expenses incurred by the Company
(including, without limitation, the fees and expenses of its counsel,
accountants, financial advisors, experts and consultants) which are
specifically related to the Merger, this Agreement and the matters contemplated
by this Agreement; provided, however, that Parent shall not be obligated to pay
or reimburse pursuant to the foregoing clause (B) more than, in the case of
clauses (i), (vi) and (vii), $20,000,000, in the case of clauses (iii) and (v),
$10,000,000 and, in the case of clauses (ii) and (iv), $5,000,000.
(d) Any payment required to be made pursuant to Section 5.4(b) or 5.4(c)
shall be made as promptly as practicable but not later than five business days
after the occurrence of the event giving rise to such payment and shall be made
by wire transfer of immediately available funds to an account designated by
Parent or the Company, as the case may be, except that any payment to be made
pursuant to Section 5.4(b)(iii) shall be made not later than the termination of
this Agreement by the Company pursuant to Section 7.1(h) and any payment to be
made pursuant to Section 5.4(c)(ii), (iii) or (vi) shall be made not later than
the termination of this Agreement by Parent pursuant to Section 7.1(d). The
amount of fees and expenses so payable under clause (B) of either Section
5.4(b) or 5.4(c) shall be the amount set forth in a written estimate delivered
by Parent or the Company, as the case may be, subject to upward or downward
adjustment (not to be in excess of the amount set forth in the foregoing
proviso) upon delivery of reasonable documentation therefor.
5.5 Brokers or Finders. (a) The Company represents, as to itself, its
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any
broker's or finders fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Salomon
Brothers Inc and Allen & Company, Incorporated, whose fees and expenses will be
paid by the Company in accordance with the Company's agreements with such firms
(copies of which have been delivered by the Company to Parent prior to the date
of this Agreement), and the Company agrees to indemnify and hold Parent
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on
the basis of any act or statement alleged to have been made by such party or
its affiliate.
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(b) Parent represents, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finders fee or any other
commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc. and another
consultant previously identified to the Company, whose fees and expenses will
be paid by Parent in accordance with Parent's agreements with each of them, and
Parent agrees to indemnify and hold Company harmless from and against any and
all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
5.6 Indemnification; Directors' and Officers' Insurance. (a) The Company
shall, and from and after the Effective Time, Parent and the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its
Subsidiaries (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement of, with the approval of the
indemnifying party (which approval shall not be unreasonably withheld), or
otherwise in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of the fact that such person is or was a director or officer of the
Company or any of its Subsidiaries at or prior to the Effective Time, whether
asserted or claimed prior to, or at or after, the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based in whole or in part
on, or arising in whole or in part out of, or pertaining to this Agreement or
the transactions contemplated hereby, in each case to the full extent a
corporation is permitted under the BCL to indemnify its own directors or
officers as the case may be (and Parent and the Surviving Corporation, as the
case may be, will pay expenses in advance of the final disposition of any such
action or proceeding to each Indemnified Party to the full extent permitted by
law). Without limiting the foregoing, in the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Parties
(whether arising before or after the Effective Time), (i) the Indemnified
Parties may retain counsel reasonably satisfactory to the Company (or to Parent
and the Surviving Corporation after the Effective Time) and the Company (or
after the Effective Time, Parent and the Surviving Corporation) shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; and (ii) the Company (or after
the Effective Time, Parent and the Surviving Corporation) will use all
reasonable efforts to assist in the vigorous defense of any such matter,
provided that neither the Company, Parent nor the Surviving Corporation shall
be liable for any settlement effected without its prior written consent, which
consent shall not unreasonably be withheld. Any Indemnified Party wishing to
claim indemnification under this Section 5.6, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Company (or after
the Effective Time, Parent and the Surviving Corporation) (but the failure so
to notify shall not relieve a party from any liability which it may have under
this Section 5.6 except to the extent such failure prejudices such party). The
Indemnified Parties as a group may retain only one law firm in any jurisdiction
to represent them with respect to each
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such matter unless such counsel determines that there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties, in which event such
additional counsel as may be required may be retained by the Indemnified
Parties.
(b) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company and its Subsidiaries (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous in any
material respect to the Indemnified Parties) with respect to claims arising
from facts or events which occurred before the Effective Time, provided that
Parent shall not be required to pay an annual premium for such insurance in
excess of 200% of the last annual premium paid by the Company prior to the date
hereof (which premium the Company represents and warrants to be $77,500 in the
aggregate), but in such case shall purchase as much coverage as possible for
such amount.
(c) The provisions of this Section 5.6 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of Parent, Sub, the Company and the Surviving Corporation.
5.7 Best Efforts. (a) General. Each of the parties hereto agrees to use
its best efforts to take, or cause to be taken, all action and to do or
satisfy, or cause to be done or satisfied, all things and conditions necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including (i) cooperating fully with the other party, including by
provision of information and making of all necessary filings in connection
with, among other things, approvals under the HSR Act and of the FCC or any
other Governmental Entity, and (ii) obtaining (and cooperating with each other
in obtaining) any consent, authorization, order (including the FCC Order) or
approval of, or any exemption by, or making any filing with, any Governmental
Entity or other public or private third party, including the FCC, required to
be obtained or made by the Company, Parent, Sub or any of their respective
Subsidiaries in connection with this Agreement or the taking of any action
contemplated hereby. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with full title to all properties, assets,
rights, approvals, immunities and franchises of either of the Constituent
Corporations, the proper officers and directors of each party to this Agreement
shall take all such necessary action.
(b) FCC. Each of Parent and Sub shall use its best efforts to take, or
cause to be taken, all action and to do or satisfy, or cause to be done or
satisfied, all things and conditions necessary, proper or advisable to obtain
the FCC Order and to satisfy all conditions and take all actions required
thereby, in each case so as to come into compliance with FCC requirements and
to consummate the Merger as promptly as practicable. The Company shall also
use such best efforts, but shall not be required to take any action that
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would be effective prior to the consummation of the Merger, except as set forth
in the penultimate paragraph of Section 5.11(a) to the Parent Disclosure
Schedule.
(c) Financing. Parent shall use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable (A) to obtain commitment letters to provide all of the financing
required by Parent to consummate the Merger, to refinance Parent's and the
Company's then-existing bank debt and to pay related fees and expenses on terms
not materially less favorable to Parent in the aggregate than the terms set
forth in the Commitment Letter and with conditions that are the same, except in
respects that do not adversely affect Parent's ability to obtain the Financing,
as those in the Commitment Letter (the "Financing") by no later than September
14, 1995 and (B) so that there is in effect, as promptly as practicable but in
no event later than October 4, 1995, one or more definitive credit agreements
(collectively, the "Credit Agreement") from one or more financial institutions
unaffiliated with Parent pursuant to which Parent shall have received
commitments to provide the Financing. Parent shall provide to the Company
copies of any such commitment letters and Credit Agreement and shall keep the
Company reasonably informed of the status of the financing process contemplated
by the Commitment Letter. The Company shall cause its senior management to
cooperate with all reasonable requests by Parent in connection with such
efforts by Parent, including causing such persons to attend meetings with
prospective members of and participants in any syndicate of financial
institutions being assembled to provide such financing.
5.8 Conduct of Business of Sub. During the period of time from the date
of this Agreement to the Effective Time, Sub shall not engage in any activities
of any nature except as provided in or contemplated by this Agreement.
5.9 Publicity. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to the Merger
and shall not issue any such press release or make any such public announcement
prior to such consultation and agreement, except as may be required by
applicable law or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press
release or making any such public announcement.
5.10 Notification of Certain Matters. Parent shall give prompt notice to
the Company, and the Company shall give prompt notice to Parent, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement, including the Disclosure Schedules, to be untrue or inaccurate
such that one or more conditions set forth in Article VI would not be satisfied
or (y) any condition contained in this Agreement not to be satisfied and (ii)
any failure of Parent or the Company, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder such that one or more conditions set forth in Article VI would
not be satisfied;
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provided, however, that the delivery of any notice pursuant to this Section
5.10 shall not in any manner constitute a waiver by any of the parties of any
of the conditions precedent to the Closing hereunder or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Without limiting the foregoing and notwithstanding that the representations and
warranties contained in Section 3.1(i) (i) disclose only matters existing as of
the date hereof, the Company shall promptly deliver to Parent any information
concerning events subsequent to the date hereof which is necessary to
supplement Section 3.1(i) of the Company Disclosure Schedule in order that the
information contained therein be complete and accurate in all material
respects. In addition, the Company will provide Parent with reasonable advance
notice of and consult with Parent with respect to, any material action proposed
to be taken by the Company with respect to the contracts described in Section
5.10 of the Company Disclosure Schedule.
5.11 FCC Matters. (a) As promptly as practicable following the date of |
