SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 5)*
Capital Cities/ABC, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
139861 10 8
(CUSIP Number)
Warren E. Buffett
Berkshire Hathaway Inc.
1440 Kiewit Plaza, Omaha, Nebraska 68131
(402) 346-1400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 31, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filed out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter dis-
closures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Warren E. Buffett, ###-##-####
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
AF
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
United States citizen
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
20,000,000 shares (See Item 5)
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
20,000,000 shares (See Item 5)
11 Aggregate amount beneficially owned by each Reporting Person:
20,000,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
13.0%
14 Type of Reporting Person*:
IN
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Berkshire Hathaway Inc., 04-2254452
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC, AF
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Delaware corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
20,000,000 shares (See Item 5)
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
20,000,000 shares (See Item 5)
11 Aggregate amount beneficially owned by each Reporting Person:
20,000,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
13.0%
14 Type of Reporting Person*:
HC, CO
<PAGE>
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
National Indemnity Company, 47-0355979
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Nebraska corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
7,000,000 shares
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
7,000,000 shares
11 Aggregate amount beneficially owned by each Reporting Person:
7,000,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
4.5%
14 Type of Reporting Person*:
IC
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
National Fire and Marine Insurance Company, 47-6021331
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Nebraska corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
1,500,000 shares
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
1,500,000 shares
11 Aggregate amount beneficially owned by each Reporting Person:
1,500,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
1.0%
14 Type of Reporting Person*:
IC
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Columbia Insurance Company, 47-0530077
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Nebraska corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
8,500,000 shares
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
8,500,000 shares
11 Aggregate amount beneficially owned by each Reporting Person:
8,500,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
5.5%
14 Type of Reporting Person*:
IC
<PAGE>
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Cornhusker Casualty Company, 47-0529945
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Nebraska corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
2,500,000 shares
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
2,500,000 shares
11 Aggregate amount beneficially owned by each Reporting Person:
2,500,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
1.6%
14 Type of Reporting Person*:
IC
1 Name of Reporting Person:
S.S. or I.R.S. Identification No. of Above Person:
Nebraska Furniture Mart, Inc., 43-0428274
2 Check the appropriate box if a member of a Group*:
(a) [X]
(b) [ ]
______________________________________________________________________________
3 SEC USE ONLY
______________________________________________________________________________
4 Source of Funds*:
WC
5 Check box if disclosure of Legal Proceedings
is required pursuant to Items 2(d) or (e) [ ]
6 Citizen or place of organization:
Nebraska corporation
7 Number of shares beneficially owned by each Reporting Person with
Sole Voting Power:
-0-
8 Number of shares beneficially owned by each Reporting Person with
Shared Voting Power:
500,000 shares
9 Number of shares beneficially owned by each Reporting Person with
Sole Dispositive Power:
-0-
10 Number of shares beneficially owned by each Reporting Person with
Shared Dispositive Power:
500,000 shares
11 Aggregate amount beneficially owned by each Reporting Person:
500,000 shares
12 Check Box if the aggregate amount in
Row (11) excludes certain shares [ ]
13 Percent of class represented by amount in Row (11):
0.3%
14 Type of Reporting Person*:
CO
This Schedule 13D relating to the Common Stock of Capital Cities/ABC, Inc.
("Capital Cities/ABC" or "the Company") is hereby amended as follows:
Item 4 is amended to read in full as follows:
Item 4. Purpose of Transaction.
The subsidiaries of Berkshire Hathaway Inc. ("Berkshire") identified
in Items 2 and 5 purchased an aggregate of 3,000,000 shares (prior to giving
effect to a 10-for-1 stock split) of common stock of the Company on January 2,
1986 pursuant to the terms of a stock purchase agreement (the "Stock Purchase
Agreement") dated January 2, 1986 by and among such subsidiaries, Berkshire and
Capital Cities Communications, Inc. (the corporate predecessor of the Company).
The purpose of such transaction was to acquire shares for investment. The
number of shares of common stock of Capital Cities presently held by the persons
filing this Schedule 13D are set forth in Item 5(a).
On July 31, 1995, Berkshire entered into a Stock Agreement (the
"Stock Agreement") with The Walt Disney Company ("Disney") and Thomas S. Murphy
with respect to the shares of common stock of the Company ("Shares") owned by
subsidiaries of Berkshire. The Stock Agreement was entered into in connection
with the Agreement and Plan of Reorganization dated July 31, 1995 (the "Merger
Agreement") between Disney and the Company.
The Merger Agreement contemplates, among other things, the
organization of a holding company ("Holding Company") and the merger of a
subsidiary of Holding Company with and into the Company (the "Company Merger").
Upon consummation of the Company Merger, each share of the Common Stock of the
Company (other than certain shares described in the Merger Agreement) will be
converted into the merger consideration described in the Merger Agreement.
Consummation of the Company Merger is conditioned upon the approval of the
shareholders of the Company, among other things.
In the Stock Agreement, Berkshire agreed that, until the close of
business on the date of the shareholders meeting called to vote upon the Company
Merger (the "Special Meeting"), and except as otherwise provided in the Stock
Agreement, Berkshire will cause each of its subsidiaries that is a holder of
record of Shares (a "Shareholder") not to (a) sell, pledge or otherwise dispose
of any of its Shares, (b) deposit its Shares into a voting trust or enter into
a voting agreement with respect to such Shares or grant any proxy with respect
thereto, or (c) enter into any contract, option or other arrangement with
respect to the direct or indirect acquisition or sale, transfer or other
disposition of any common stock of the Company.
Berkshire also agreed in the Stock Agreement to cause each
Shareholder to vote its Shares at the Special Meeting (or to execute written
consents with respect to its Shares) (a) in favor of the adoption of the Merger
Agreement and approval of the Company Merger and the other transactions
contemplated by the Merger Agreement, (b) against any Alternative Proposal (as
defined in the Merger Agreement), and (c) in favor of any other matter necessary
to consummation of the transactions contemplated by the Merger Agreement.
Berkshire further agreed that, prior to the effective time of the Company
Merger, it will not permit any Shareholder or any subsidiary or officers,
directors, employees, agents and representatives thereof, to initiate, solicit
or encourage any inquiries or the making or implementation of any proposal or
offer with respect to an Alternative Proposal (as defined in the Merger
Agreement) or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Alternative Proposal, or otherwise facilitate any effort or
attempt to make or implement an Alternative Proposal, and Berkshire will cause
each Shareholder to notify Disney if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations
or discussions are sought to be initiated or continued with, it.
In the Stock Agreement, Mr. Murphy agreed to relinquish all rights
with respect to, and to not exercise any rights or powers pursuant to, proxies
given by each of the Shareholders pursuant to the Stock Purchase Agreement
naming Mr. Murphy as its attorney and proxy for so long as either Mr. Murphy or
Daniel B. Burke is Chief Executive Officer of the Company. Mr. Murphy released
each Shareholder from any further liability or obligation under such proxies to
the extent necessary to comply with the Stock Agreement.
The Stock Agreement will terminate automatically immediately upon
termination of the Merger Agreement.
Berkshire and the Shareholders will have certain registration rights
under a registration rights agreement to be executed by Holding Company in
connection with the Company Merger with respect to shares of Holding Company
common stock issued in the Company Merger (and shares issued or distributed in
connection with such shares or the exercise of any right related to such
shares).
In addition to the provisions of the Stock Agreement, the Stock
Purchase Agreement contains, among other provisions, restrictions on the ability
of Berkshire and its subsidiaries to purchase additional shares of Capital
Cities common stock, or to sell the shares owned by them, prior to January 2,
1997. Specifically, the Stock Purchase Agreement provides that, prior to
January 2, 1997, neither Berkshire nor its subsidiaries may acquire without the
consent of Capital Cities any additional shares of Capital Cities common stock,
if such acquisition would give Berkshire or any of its subsidiaries, directly or
indirectly, more than 30% of all outstanding Capital Cities voting stock. The
Stock Purchase Agreement also provides that until January 2, 1997 neither
Berkshire nor any of its subsidiaries may dispose of any Capital Cities stock
without first offering such stock to Capital Cities, or knowingly sell Capital
Cities stock to any entity or group if such a sale would give the entity or
group more than 5% of all outstanding Capital Cities voting stock. Berkshire
Hathaway and its subsidiaries also have certain registration rights under the
Stock Purchase Agreement.
Other than as discussed above, the persons filing this Schedule have
no plans or proposals that relate to or would result in the acquisition by any
person of additional securities of Capital Cities, or the disposition of
securities of Capital Cities; an extraordinary corporate transaction involving
Capital Cities or any of its subsidiaries; a sale or transfer of a material
amount of assets of Capital Cities or any of its subsidiaries; a change in the
present Board of Directors or management of Capital Cities; a material change in
the present capitalization or dividend policy of Capital Cities; any other
material change in Capital Cities' business or corporate structure; changes in
Capital Cities' charter or bylaws or other actions that might impede the
acquisition of control of Capital Cities by any other person; causing securities
of Capital Cities to be delisted from a national securities exchange or to cease
to be authorized to be quoted in an interdealer quotation system of a registered
national securities association; causing securities of Capital Cities to be
eligible for termination of registration pursuant to the Securities Exchange Act
of 1934; or any other similar action.
Item 5 is amended to read in full as follows:
Item 5. Interest in Securities of the Issuer.
a. The following table sets forth the aggregate number of shares of, and
the percentage of the class of, the common stock of Capital Cities/ABC held of
record by the following corporations named in Item 2:
No. of Percent of
Name Shares Shares*
National Indemnity Company 7,000,000 4.5
National Fire and Marine
Insurance Company 1,500,000 1.0
Columbia Insurance Company 8,500,000 5.5
Cornhusker Casualty Company 2,500,000 1.6
Nebraska Furniture Mart, Inc. 500,000 .3
TOTAL 20,000,000 13.0
* Assumes 154,061,655 shares of common stock of Capital Cities/ABC outstanding,
based upon public disclosures by Capital Cities/ABC as of July 31, 1995.
Warren E. Buffett may be deemed to control Berkshire Hathaway Inc., which
controls each of the corporations with record ownership of the common stock of
Capital Cities/ABC identified in the table above. Both Mr. Buffett and
Berkshire Hathaway Inc. thus may be considered to have beneficial ownership of
the entire 20,000,000 shares of Capital Cities/ABC common stock held of record
by the corporations identified above. All of the corporations identified above
are direct subsidiaries of Berkshire Hathaway Inc., except Cornhusker Casualty
Company, which is a direct subsidiary of National Indemnity Company.
To the best knowledge of the persons filing this Schedule, Charles
T. Munger and Michael A. Goldberg are the only officers or directors of the
corporations identified in Item 2 that have beneficial ownership of common stock
of Capital Cities/ABC. Mr. Munger is a beneficial owner of the 8,000 shares
owned by The Alfred C. Munger Foundation of which he and his wife are two of the
three trustees. Mr. Goldberg owns 2,500 shares.
b. Subject to the provisions of the Stock Agreement described in Item
4, each of the persons named in Item 5(a) has both voting and investment power
with respect to the respective shares indicated. However, Warren E. Buffett,
Chairman of the Board of Berkshire Hathaway Inc., who may be deemed to control
the corporations named in Item 5(a), directs the investments and voting of each
of the corporations named. Thus, Mr. Buffett and Berkshire Hathaway Inc. share
voting power and investment power with respect to the shares of Capital
Cities/ABC owned by each of the corporations named in Item 5(a).
c. Other than entering into the Stock Agreement described in Item 4,
none of the persons named in Item 5(a) has effected any transactions in the
Common Stock of the Company during the past 60 days.
d. Not applicable.
e. Not applicable.
Item 6 is amended by adding thereto the following:
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect To Securities Of the Issuer.
As described in Item 4, the Stock Agreement contains restrictions
upon the acquisition, disposition, and voting of Capital Cities/ABC stock held
by Berkshire and its subsidiaries.
Item 7 is amended by adding thereto the following:
Item 7. Material to be Filed as Exhibits.
Exhibit D: Stock Agreement dated July 31, 1995 among The
Walt Disney Company, Berkshire Hathaway Inc., and
Thomas S. Murphy.
Exhibit E: Agreement and Plan of Reorganization dated July
31, 1995 between The Walt Disney Company and
Capital Cities/ABC, Inc.
After reasonable inquiry and to the best knowledge and belief of each, the
undersigned hereby certify that the information set forth in this statement is
true, complete, and correct.
Dated this 3rd day of August, 1995.
/s/Warren E. Buffett
Warren E. Buffett
BERKSHIRE HATHAWAY INC. NATIONAL INDEMNITY COMPANY
By /s/Warren E. Buffett By /s/ Warren E. Buffett
Warren E. Buffett Warren E. Buffett
Chairman of the Board Chairman of the Board
NATIONAL FIRE AND MARINE COLUMBIA INSURANCE COMPANY
INSURANCE COMPANY
By /s/Warren E. Buffett By /s/ Warren E. Buffett
Warren E. Buffett Warren E. Buffett
Chairman of the Board Chairman of the Board
CORNHUSKER CASUALTY COMPANY and NEBRASKA FURNITURE MART, INC.
By /s/ Warren E. Buffett
Warren E. Buffett
Attorney-in-Fact
=================================================================
AGREEMENT AND PLAN OF REORGANIZATION
between
THE WALT DISNEY COMPANY
and
CAPITAL CITIES/ABC, INC.
Dated as of July 31, 1995
=================================================================
Table of Contents
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
FORMATION OF HOLDING COMPANY AND
SUBSIDIARIES. . . . . . . . . . . . . . . . . . 2
1.1. Organization of Holding Company . . . . . . . . 2
1.2. Directors and Officers of Holding Company . . . 2
1.3. Organization of Merger Subsidiaries . . . . . . 2
1.4. Actions of Directors and Officers . . . . . . . 3
1.5. Actions of Purchaser and Company. . . . . . . . 3
ARTICLE 2
THE MERGERS; CLOSING. . . . . . . . . . . . . . 3
2.1. The Mergers . . . . . . . . . . . . . . . . . . 3
2.2. The Closing . . . . . . . . . . . . . . . . . . 4
ARTICLE 3
DIRECTORS AND OFFICERS OF THE MERGER
SUBSIDIARIES AND SURVIVING CORPORATIONS . . . . 4
3.1. Directors . . . . . . . . . . . . . . . . . . . 4
3.2. Officers. . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4
EFFECT OF THE MERGERS ON SECURITIES OF THE
PURCHASER, THE COMPANY AND THE MERGER
SUBSIDIARIES. . . . . . . . . . . . . . . . . . 5
4.1. Merger Sub Stock. . . . . . . . . . . . . . . . 5
4.2. Cancellation of Holding Company Capital
Stock . . . . . . . . . . . . . . . . . . . . . 5
4.3. Conversion of Purchaser Stock . . . . . . . . . 5
4.4. Conversion of Company Common Stock. . . . . . . 6
4.5. Company Common Stock Elections. . . . . . . . . 8
4.6. Proration . . . . . . . . . . . . . . . . . . . 10
4.7. Dividends, Fractional Shares, Etc.. . . . . . . 12
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
COMPANY . . . . . . . . . . . . . . . . . . . . 13
5.1. Existence; Good Standing; Corporate
Authority . . . . . . . . . . . . . . . . . . . 13
5.2. Authorization, Validity and Effect of
Agreements. . . . . . . . . . . . . . . . . . . 14
5.3. Capitalization. . . . . . . . . . . . . . . . . 14
5.4. Subsidiaries. . . . . . . . . . . . . . . . . . 15
5.5. Other Interests . . . . . . . . . . . . . . . . 16
5.6. No Conflict; Required Filings and Consents. . . 16
5.7. Compliance. . . . . . . . . . . . . . . . . . . 17
5.8. SEC Documents . . . . . . . . . . . . . . . . . 18
5.9. Litigation. . . . . . . . . . . . . . . . . . . 19
5.10. Absence of Certain Changes. . . . . . . . . . . 19
5.11. Taxes . . . . . . . . . . . . . . . . . . . . . 19
5.12. Employee Benefit Plans. . . . . . . . . . . . . 20
5.13. Labor Matters . . . . . . . . . . . . . . . . . 21
5.14. No Brokers. . . . . . . . . . . . . . . . . . . 21
5.15. Opinion of Financial Advisor. . . . . . . . . . 21
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
PURCHASER . . . . . . . . . . . . . . . . . . . 22
6.1. Existence; Good Standing; Corporate
Authority . . . . . . . . . . . . . . . . . . . 22
6.2. Authorization, Validity and Effect of
Agreements. . . . . . . . . . . . . . . . . . . 22
6.3. Capitalization. . . . . . . . . . . . . . . . . 23
6.4. Subsidiaries. . . . . . . . . . . . . . . . . . 23
6.5. Other Interests . . . . . . . . . . . . . . . . 24
6.6. No Conflict; Required Filings and Consents. . . 24
6.7. Compliance. . . . . . . . . . . . . . . . . . . 25
6.8. SEC Documents . . . . . . . . . . . . . . . . . 26
6.9. Litigation. . . . . . . . . . . . . . . . . . . 27
6.10. Absence of Certain Changes. . . . . . . . . . . 27
6.11. Taxes . . . . . . . . . . . . . . . . . . . . . 27
6.12. Employee Benefit Plans. . . . . . . . . . . . . 28
6.13. Labor Matters . . . . . . . . . . . . . . . . . 28
6.14. Opinion of Financial Advisor. . . . . . . . . . 29
6.15. No Brokers. . . . . . . . . . . . . . . . . . . 29
ARTICLE 7
COVENANTS . . . . . . . . . . . . . . . . . . . 29
7.1. Alternative Proposals . . . . . . . . . . . . . 29
7.2. Interim Operations. . . . . . . . . . . . . . . 31
7.3. Meetings of Stockholders. . . . . . . . . . . . 33
7.4. Filings, Other Action . . . . . . . . . . . . . 34
7.5. Inspection of Records . . . . . . . . . . . . . 35
7.6. Publicity . . . . . . . . . . . . . . . . . . . 35
7.7. Registration Statement. . . . . . . . . . . . . 35
7.8. Listing Application . . . . . . . . . . . . . . 37
7.9. Further Action. . . . . . . . . . . . . . . . . 37
7.10. Affiliate Letters . . . . . . . . . . . . . . . 37
7.11. Expenses. . . . . . . . . . . . . . . . . . . . 37
7.12. Insurance; Indemnity. . . . . . . . . . . . . . 37
7.13. Rights Agreements . . . . . . . . . . . . . . . 39
7.14. Takeover Statute. . . . . . . . . . . . . . . . 39
7.15. Conduct of Business by Holding Company and
the Merger Subsidiaries Pending the Mergers . . 39
7.16. Employee Benefits . . . . . . . . . . . . . . . 40
7.17. Conveyance Taxes. . . . . . . . . . . . . . . . 40
7.18. Gains Tax . . . . . . . . . . . . . . . . . . . 41
ARTICLE 8
CONDITIONS. . . . . . . . . . . . . . . . . . . 41
8.1. Conditions to Each Party's Obligation to
Effect the Mergers. . . . . . . . . . . . . . . 41
8.2. Conditions to Obligation of Company to Effect
the Mergers . . . . . . . . . . . . . . . . . . 42
8.3. Conditions to Obligation of Purchaser to
Effect the Mergers. . . . . . . . . . . . . . . 43
ARTICLE 9
TERMINATION . . . . . . . . . . . . . . . . . . 44
9.1. Termination by Mutual Consent . . . . . . . . . 44
9.2. Termination by Either Purchaser or Company. . . 44
9.3. Termination by Company. . . . . . . . . . . . . 45
9.4. Termination by Purchaser. . . . . . . . . . . . 45
9.5. Effect of Termination and Abandonment . . . . . 46
9.6. Extension, Waiver . . . . . . . . . . . . . . . 47
ARTICLE 10
GENERAL PROVISIONS. . . . . . . . . . . . . . . 47
10.1. Nonsurvival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . . 47
10.2. Notices . . . . . . . . . . . . . . . . . . . . 47
10.3. Assignment; Binding Effect. . . . . . . . . . . 48
10.4. Entire Agreement. . . . . . . . . . . . . . . . 48
10.5. Amendment . . . . . . . . . . . . . . . . . . . 48
10.6. Governing Law . . . . . . . . . . . . . . . . . 49
10.7. Counterparts. . . . . . . . . . . . . . . . . . 49
10.8. Headings. . . . . . . . . . . . . . . . . . . . 49
10.9. Interpretation. . . . . . . . . . . . . . . . . 49
10.10. Waivers . . . . . . . . . . . . . . . . . . . . 49
10.11. Incorporation of Exhibits . . . . . . . . . . . 49
10.12. Severability. . . . . . . . . . . . . . . . . . 49
10.13. Enforcement of Agreement. . . . . . . . . . . . 50
10.14. Subsidiaries. . . . . . . . . . . . . . . . . . 50
_____________
Exhibit A Form of Affiliate Letter
Exhibit B Form of Registration Rights Agreement
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement"), dated as of July 31, 1995, between The Walt Disney
Company, a Delaware corporation (the "Purchaser") and Capital
Cities/ABC, Inc., a New York corporation (the "Company").
RECITALS
A. The Boards of Directors of the Purchaser and the
Company have approved, and deem it advisable and in the best
interests of their respective companies and stockholders to
consummate the reorganization (the "Reorganization") provided for
herein, pursuant to which a newly-formed holding company
("Holding Company") will acquire all of the common stock of each
of the Purchaser and the Company through mergers of Subsidiaries
(as defined in Section 10.14) of Holding Company with and into
each of the Purchaser and the Company.
B. For federal income tax purposes, it is intended
that (i) the Purchaser Merger (as hereinafter defined) qualify as
an exchange under the provisions of Section 351 of the United
States Internal Revenue Code of 1986, as amended (the "Code")
and/or as a reorganization under the provisions of Section 368(a)
of the Code and (ii) that the Company Merger (as hereinafter
defined) qualify as an exchange under the provisions of Section
351 of the Code.
C. Concurrently with the execution hereof, in order
to induce the Purchaser to enter into this Agreement, the
Purchaser is entering into a Stock Agreement (the "Stock
Agreement") with Berkshire Hathaway, Inc. and Thomas S. Murphy
providing for certain voting and other restrictions with respect
to the shares of Company Common Stock (as defined in Section 4.4
herein) beneficially owned by Berkshire Hathaway, Inc. upon the
terms and conditions specified therein.
D. The Purchaser and the Company desire to make
certain representations, warranties, covenants and agreements in
connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the foregoing, and
of the representations, warranties, covenants and agreements
contained herein, the parties hereto hereby agree as follows:
ARTICLE 1
FORMATION OF HOLDING COMPANY AND SUBSIDIARIES
1.1. Organization of Holding Company. As promptly as
practicable following the execution of this Agreement and receipt
of any required approvals, the Purchaser and the Company shall
cause Holding Company to be organized under the laws of the State
of Delaware. The Certificate of Incorporation and By-Laws of
Holding Company shall be in such forms as shall be determined by
Purchaser as soon as practicable following the execution of this
Agreement; provided that the Certificate of Incorporation of
Holding Company shall be substantially in the form of the
Certificate of Incorporation of the Purchaser. The authorized
capital stock of Holding Company shall consist initially of
1,200,000,000 shares of common stock, $.01 par value (the
"Holding Company Common Stock"), of which one share shall be
issued to the Purchaser and one share shall be issued to the
Company at a price of $1.00 per share, and 100,000,000 shares of
preferred stock, $.10 par value (the "Holding Company Preferred
Stock"), none of which shall be initially issued.
1.2. Directors and Officers of Holding Company.
(i) Upon formation of Holding Company, the directors and
officers of Holding Company shall be designated by the Purchaser.
Each such officer and director shall remain in office until his
or her successors are elected.
1.3. Organization of Merger Subsidiaries. As promptly
as practicable following the execution of this Agreement, the
Purchaser and the Company shall cause the following companies
(the "Merger Subsidiaries") to be organized for the sole purpose
of effectuating the Purchaser Merger and the Company Merger
contemplated herein:
(i) DCA Merger Corp., a corporation organized under
the laws of the State of Delaware ("Merger Sub A"). The
Certificate of Incorporation and By-laws of Merger Sub A
shall be in such forms as shall be determined by the
Purchaser as soon as practicable following the execution of
this Agreement. The authorized capital stock of Merger Sub
A shall initially consist of 100 shares of common stock, par
value $.01 per share, which shall be issued to Holding
Company at a price of $1.00 per share.
(ii) DCB Merger Corp., a corporation organized under
the laws of the State of New York ("Merger Sub B" and,
together with Merger Sub A, the "Merger Subsidiaries"). The
Certificate of Incorporation and By-laws of Merger Sub B
shall be in such forms as shall be determined by the
Purchaser as soon as practicable following the execution of
this Agreement. The authorized capital stock of Merger Sub
B shall initially consist of 100 shares of common stock, par
value $.01 per share, which shall be issued to Holding
Company at a price of $1.00 per share.
1.4. Actions of Directors and Officers. As promptly as
practicable following the execution of this Agreement, the
Purchaser shall designate the directors and officers of Merger
Sub A and Merger Sub B. The Purchaser and the Company shall
cause (i) Holding Company to elect the directors of the Merger
Subsidiaries, (ii) the directors of Merger Sub A and Merger Sub B
to elect their respective officers, (iii) the directors of
Holding Company to ratify and approve this Agreement and to
approve the forms of the Merger Agreements (as defined in Section
2.1), (iv) the Merger Agreements to be executed on behalf of the
parties thereto, and (v) the directors and officers of the Merger
Subsidiaries to take such steps as may be necessary or
appropriate to complete the organization of the Merger
Subsidiaries and to approve the Merger Agreements.
1.5. Actions of Purchaser and Company. As promptly as
practicable following the execution of this Agreement, as the
holders of all of the outstanding shares of capital stock of
Holding Company, the Purchaser and the Company shall cause
Holding Company to ratify and approve this Agreement, and shall
cause Holding Company, as the sole shareholder of each of the
Merger Subsidiaries, to adopt the Merger Agreements. Each of the
Purchaser and the Company shall cause Holding Company and the
Merger Subsidiaries to perform their respective obligations under
this Agreement and the Merger Agreements.
ARTICLE 2
THE MERGERS; CLOSING
2.1. The Mergers. Pursuant to Plans of Merger, in
forms to be mutually agreed upon by the Purchaser and the Company
(sometimes hereinafter referred to individually as the "Purchaser
Merger Agreement" and the "Company Merger Agreement",
respectively, and collectively as the "Merger Agreements"), upon
the terms and subject to the conditions set forth in this
Agreement and in the Merger Agreements:
(a) Merger Sub A shall be merged with and into the
Purchaser (the "Purchaser Merger") in accordance with the
applicable provisions of the laws of the State of Delaware.
Purchaser shall be the surviving corporation in the
Purchaser Merger and shall continue its corporate existence
under the laws of the State of Delaware. As a result of the
Purchaser Merger, Purchaser shall become a wholly owned
Subsidiary of Holding Company. The effects and consequences
of the Purchaser Merger shall be as set forth in the
Purchaser Merger Agreement.
(b) Merger Sub B will be merged with and into the
Company (the "Company Merger"), in accordance with the
applicable provisions of the laws of the State of New York.
The Company shall be the surviving corporation in the
Company Merger and shall continue its corporate existence
under the laws of the State of New York. As a result of the
Company Merger, the Company shall become a wholly owned
Subsidiary of Holding Company. The effects and consequences
of the Company Merger shall be as set forth in the Company
Merger Agreement. The term "Mergers" shall mean the
Purchaser Merger and the Company Merger.
(c) The term "Effective Time" shall mean the time and
date which is the later of (i) the date and time of the
filing of the certificate of merger relating to the
Purchaser Merger with the Secretary of State of the State of
Delaware (or such other date and time as may be specified in
such certificate as may be permitted by Delaware) and (ii)
the date and time of the filing of a certificate of merger
by the Department of State of the State of New York with
respect to the Company Merger (or such other date and time
as may be specified in such certificate as may be permitted
by law).
2.2. The Closing. Subject to the terms and conditions
of this Agreement, the closing of the transactions contemplated
by this Agreement and the Merger Agreements (the "Closing") shall
take place (a) at the offices of Dewey Ballantine, 1301 Avenue of
the Americas, New York, New York, at 10:00 a.m., local time, on
the first business day following the day on which the last to be
fulfilled or waived of the conditions set forth in Article 8
shall be fulfilled or waived in accordance herewith or (b) at
such other time, date or place as the Purchaser and the Company
may agree. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date."
ARTICLE 3
DIRECTORS AND OFFICERS OF THE MERGER SUBSIDIARIES AND
SURVIVING CORPORATIONS
3.1. Directors. The directors of the Purchaser
immediately prior to the Effective Time shall be the directors of
the surviving corporation of the Purchaser Merger as of the
Effective Time and until their successors are duly appointed or
elected in accordance with applicable law. The directors of
Merger Sub B immediately prior to the Effective Time shall be the
directors of the surviving corporation of the Company Merger as
of the Effective Time and until their successors are duly
appointed or elected in accordance with applicable law.
3.2. Officers. The officers of the Purchaser and the
Company immediately prior to the Effective Time shall be the
officers of the surviving corporations of the Purchaser Merger
and the Company Merger, respectively, as of the Effective Time
and until their successors are duly appointed or elected in
accordance with applicable law.
ARTICLE 4
EFFECT OF THE MERGERS ON SECURITIES OF
THE PURCHASER, THE COMPANY AND THE MERGER SUBSIDIARIES
4.1. Merger Sub Stock. At the Effective Time, each
share of the common stock of Merger Sub A outstanding immediately
prior to the Effective Time shall be converted into and shall
become one share of common stock of the surviving corporation of
the Purchaser Merger. At the Effective Time, each share of the
common stock of Merger Sub B outstanding immediately prior to the
Effective Time shall be converted into and shall become one share
of common stock of the surviving corporation of the Company
Merger.
4.2. Cancellation of Holding Company Capital Stock. At
the Effective Time, each share of the capital stock of Holding
Company issued and outstanding immediately prior to the Effective
Time shall be cancelled and cease to exist.
4.3. Conversion of Purchaser Stock. (a) Subject to
Section 4.3(b), at the Effective Time, each share of common
stock, par value $0.025 per share, of the Purchaser, together
with the associated Purchaser Rights (as hereinafter defined)
("Purchaser Common Stock") issued and outstanding at the
Effective Time shall be converted into one share of Holding
Company Common Stock. Upon such conversion, all such shares of
Purchaser Common Stock shall be cancelled and cease to exist, and
each certificate theretofore representing any such shares shall,
without any action on the part of the holder thereof, be deemed
to represent an equivalent number of shares of Holding Company
Common Stock.
(b) At the Effective Time, each share of Purchaser
Common Stock which is held in the treasury of the Purchaser
immediately prior to the Effective Time shall, by virtue of the
Mergers, cease to be outstanding and shall be cancelled and
retired without payment of any consideration therefor.
4.4. Conversion of Company Common Stock. (a) Except
as otherwise provided in Section 4.6 and subject to Sections
4.4(c) and 4.4(d), at the Effective Time each issued and
outstanding share of Common Stock, $.10 par value of the Company
(the "Company Common Stock"), shall be converted into at the
election of the holder thereof one of the following (as adjusted
pursuant to Section 4.6, the "Merger Consideration"):
(i) for each such share of Company Common Stock with
respect to which an election to receive Holding Company
Common Stock has been effectively made and not revoked or
lost, pursuant to Sections 4.5(c), (d) and (e) (a "Stock
Election"), the right to receive (x) one share of Holding
Company Common Stock plus (y) a number of shares of Holding
Company Common Stock equal to a fraction, the numerator of
which is $65 and the denominator of which is the Purchaser
Common Stock Price (collectively, the "Stock
Consideration"). The "Purchaser Common Stock Price" means
an amount equal to the average of the closing sales prices
of Purchaser Common Stock on the New York Stock Exchange
Composite Tape on each of the ten consecutive trading days
immediately preceding the second trading day prior to the
date of the Effective Time;
(ii) for each such share of Company Common Stock (other
than shares as to which a Stock Election was made), the
right to receive in cash from the Purchaser, without
interest, an amount equal to $65 plus the Purchaser Common
Stock Price (collectively, the "Cash Consideration").
(b) As a result of the Company Merger and without any
action on the part of the holder thereof, at the Effective Time
all shares of Company Common Stock shall cease to be outstanding
and shall be cancelled and retired and shall cease to exist, and
each holder of shares of Company Common Stock shall thereafter
cease to have any rights with respect to such shares of Company
Common Stock, except the right to receive, without interest, the
Merger Consideration and cash for fractional shares of Holding
Company Common Stock in accordance with Sections 4.7(c) upon the
surrender of a certificate representing such shares of Company
Common Stock (a "Company Certificate").
(c) Notwithstanding anything contained in this Section
4.4 to the contrary, each share of Company Common Stock issued
and held in the Company's treasury immediately prior to the
Effective Time shall, by virtue of the Company Merger, cease to
be outstanding and shall be cancelled and retired without payment
of any consideration therefor.
(d) Notwithstanding anything in this Section 4.4 to
the contrary, shares of Company Common Stock which are issued and
outstanding immediately prior to the Effective Time and which are
held by stockholders who have not voted such shares in favor of
the Company Merger and who shall have properly exercised their
rights of appraisal for such shares in the manner provided by the
New York Business Corporation Law (the "NYBCL") (the "Dissenting
Shares") shall not be converted into or be exchangeable for the
right to receive the Merger Consideration, unless and until such
holder shall have failed to perfect or shall have effectively
withdrawn or lost his right to appraisal and payment, as the case
may be. If such holder shall have so failed to perfect or shall
have effectively withdrawn or lost such right, his shares shall
thereupon be deemed to have been converted into and to have
become exchangeable for, at the Effective Time, the right to
receive the Merger Consideration, without any interest thereon.
The Company shall give the Purchaser prompt notice of any
Dissenting Shares (and shall also give the Purchaser prompt
notice of any withdrawals of such demands for appraisal rights)
and the Purchaser shall have the right to direct all negotiations
and proceedings with respect to any such demands. Neither the
Company nor the surviving corporation of the Company Merger
shall, except with the prior written consent of the Purchaser,
voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for appraisal rights.
(e) At the Effective Time, each outstanding option or
right to purchase shares of Company Common Stock (a "Company
Option") shall, if agreed by the holder of any such Company
Option, be assumed by Holding Company in such manner that it is
converted into an option to purchase shares of Holding Company
Common Stock, as provided below. Following the Effective Time,
each such Company Option shall be exercisable upon the same terms
and conditions as then are applicable to such Company Option,
except that (i) each such Company Option shall be exercisable for
that number of shares of Holding Company Common Stock equal to
the product of (x) the number of shares of Company Common Stock
for which such Company Option was exercisable and (y) the Stock
Consideration specified in Section 4.4(a)(i) (before adjustment
pursuant to Section 4.6(c)) and (ii) the exercise price of such
option shall be equal to the exercise price of such option as of
the date hereof divided by the Stock Consideration (before
adjustment pursuant to Section 4.6(c)). It is the intention of
the parties that, to the extent that any such Company Option
constituted an "incentive stock option" (within the meaning of
Section 422 of the Code) immediately prior to the Effective Time,
such option continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and that
the assumption of the Company Stock Options provided by this
Section 4.4(e) satisfy the conditions of Section 424(a) of the
Code. From and after the date of this Agreement, no additional
options to purchase shares of Company Common Stock shall be
granted under the Company stock option plans or otherwise (other
than an aggregate of 75,000 options to acquire Company Common
Stock granted pursuant to the terms existing on the date hereof
of the Company's stock option plan). Notwithstanding the
foregoing provisions of this Section 4.4(e) or any other
provision of this Agreement, the Company and the holder of any
Company Option may amend such Company Option so that the holder
of such Company Option (if it is outstanding at the Effective
Time) may elect to receive, in settlement thereof, for each share
of Company Common Stock subject to a Company Option an amount
(subject to any applicable withholding tax) in cash equal to the
Cash Consideration (before adjustment pursuant to Section 4.6(d))
minus the per share exercise or purchase price of such Company
Option as of the date hereof. Except as otherwise agreed to by
the parties, the Company shall use reasonable efforts to ensure
that no person shall have any right under any stock option plan
(or any option granted thereunder) or other plan, program or
arrangement with respect to, including any right to acquire,
equity securities of the Company following the Effective Time.
4.5 Company Common Stock Elections. (a) Each person
who, at the Effective Time, is a record holder of shares of
Company Common Stock (other than holders of shares of Company
Common Stock to be cancelled as set forth in Section 4.4(c) or
Dissenting Shares) shall have the right to submit an Election
Form (as defined in Section 4.5(c)) specifying the number of
shares of Company Common Stock that such person desires to have
converted into the right to receive Holding Company Common Stock
pursuant to the Stock Election and the number of shares of
Company Common Stock that such person desires to have converted
into the right to receive cash (a "Cash Election")
(b) Promptly after the Allocation Determination (as
defined in Section 4.5(d)), (i) Holding Company shall deposit (or
cause to be deposited) with a bank or trust company to be
designated by Purchaser and reasonably acceptable to the Company
(the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this
Article IV, cash in the amount sufficient to pay the aggregate
cash portion of the Merger Consideration and (ii) Holding Company
shall deposit (or cause to be deposited) with the Exchange Agent,
for the benefit of the holders of shares of Purchaser Common
Stock and for the benefit of holders of shares of Company Common
Stock, certificates representing the shares of Holding Company
Common Stock ("Holding Company Certificates") for exchange in
accordance with this Article IV (the cash and shares deposited
pursuant to clauses (i) and (ii) being hereinafter referred to as
the "Exchange Fund"). Holding Company Common Stock into which
Purchaser Common Stock and Company Common Stock shall be
converted pursuant to the Mergers shall be deemed to have been
issued at the Effective Time.
(c) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of
record of Company Common Stock immediately prior to the Effective
Time (excluding any shares of Company Common Stock which will be
cancelled pursuant to Section 4.4(c) or Dissenting Shares) (A) a
letter of transmittal (the "Company Letter of Transmittal")
(which shall specify that delivery shall be effected, and risk of
loss and title to the Company Certificates shall pass, only upon
delivery of such Company Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Purchaser
shall specify), (B) instructions for use in effecting the
surrender of the Company Certificates in exchange for the Merger
Consideration with respect to the shares of Company Common Stock
formerly represented thereby, and (C) an election form (the
"Election Form") providing for such holders to make the Cash
Election or the Stock Election. As of the Election Deadline (as
hereinafter defined) all holders of Company Common Stock
immediately prior to the Effective Time that shall not have
submitted to the Exchange Agent or shall have properly revoked an
effective, properly completed, Election Form shall be deemed to
have made a Cash Election.
(d) Any Cash Election (other than a deemed Cash
Election) or Stock Election shall have been validly made only if
the Exchange Agent shall have received by 5:00 p.m. New York, New
York time on a date (the "Election Deadline") to be mutually
agreed upon by the Purchaser and the Company (which date shall
not be later than the twentieth business day after the Effective
Time), an Election Form properly completed and executed (with the
signature or signatures thereof guaranteed to the extent required
by the Election Form) by such holder accompanied by such holder's
Company Certificates, or by an appropriate guarantee of delivery
of such Company Certificates from a member of any registered
national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in
the United States as set forth in such Election Form. Any holder
of Company Common Stock who has made an election by submitting an
Election Form to the Exchange Agent may at any time prior to the
Election Deadline change such holder's election by submitting a
revised Election Form, properly completed and signed that is
received by the Exchange Agent prior to the Election Deadline.
Any holder of Company Common Stock may at any time prior to the
Election Deadline revoke his election and withdraw his Company
Certificates deposited with the Exchange Agent by written notice
to the Exchange Agent received by the close of business on the
day prior to the Election Deadline. As soon as practicable after
the Election Deadline, the Exchange Agent shall determine the
allocation of the cash portion of the Merger Consideration and
the stock portion of the Stock Consideration and shall notify
Holding Company of its determination (the "Allocation
Determination").
(e) Upon surrender of a Company Certificate for
cancellation to the Exchange Agent, together with the Company
Letter of Transmittal, duly executed, and such other documents as
Purchaser or the Exchange Agent shall reasonably request, the
holder of such Company Certificate shall be entitled to receive
promptly after the Election Deadline in exchange therefor (A) a
certified or bank cashier's check in the amount equal to the
cash, if any, which such holder has the right to receive pursuant
to the provisions of this Article IV (including any cash in lieu
of fractional shares of Holding Company Common Stock pursuant to
Section 4.8(c)), and (B) a Holding Company Certificate
representing that number of shares of Holding Company Common
Stock, if any, which such holder has the right to receive
pursuant to this Article IV (in each case less the amount of any
required withholding taxes), and the Company Certificate so
surrendered shall forthwith be cancelled. Until surrendered as
contemplated by this Section 4.5, each Company Certificate shall
be deemed at any time after the Effective Time to represent only
the right to receive the Merger Consideration with respect to the
shares of Company Common Stock formerly represented thereby.
(f) Purchaser shall have the right to make rules, not
inconsistent with the terms of this Agreement, governing the
validity of the Election Forms, the manner and extent to which
Cash Elections or Stock Elections are to be taken into account in
making the determinations prescribed by Section 4.6, the issuance
and delivery of certificates for Holding Company Common Stock
into which shares of Company Common Stock or Purchaser Common
Stock are converted in the Mergers, and the payment of cash for
shares of Company Common Stock converted into the right to
receive cash in the Company Merger.
4.6. Proration. (a) As is more fully set forth below,
the maximum number of shares of Holding Company Common Stock to
be issued to holders of Company Common Stock (the "Stock Cap")
shall not exceed the number of Outstanding Company Shares.
"Outstanding Company Shares" shall mean those shares of Company
Common Stock outstanding immediately prior to the Effective Time
minus (x) shares of Company Common Stock which will be cancelled
pursuant to Section 4.4(c) and (y) Dissenting Shares (as long as
such remain Dissenting Shares).
(b) As is more fully set forth below, the aggregate
amount of cash to be paid to holders of Outstanding Company
Shares (the "Cash Cap") shall not exceed the product of (x) $65
and (y) the number of Outstanding Company Shares; provided,
however, that the Purchaser shall have the right, in its sole
discretion, to increase the Cash Cap so long as notice of such
change is given to holders of the Outstanding Company Shares in
the Company Letter of Transmittal or in any other manner
reasonably calculated to so notify holders of Outstanding Company
Shares not later than the day the Letter of Transmittal is
transmitted to holders of Outstanding Company Shares.
(c) In the event that the aggregate number of shares
of Holding Company Common Stock represented by the Stock
Elections received by the Exchange Agent (the "Requested Stock
Amount") exceeds the Stock Cap, each holder making a Stock
Election shall receive, for each share of Company Common Stock
for which a Stock Election has been made, (x) a number of shares
of Holding Company Common Stock equal to the product of the Stock
Consideration and the Stock Proration Factor (as defined below)
(such product, the "Prorated Stock Amount") and (y) cash in an
amount equal to the product of (A) the Stock Consideration minus
the Prorated Stock Amount and (B) the Purchaser Common Stock
Price. The "Stock Proration Factor" shall be a fraction, the
numerator of which is the Stock Cap and the denominator of which
is the Requested Stock Amount.
(d) In the event that the aggregate amount of cash
represented by the Cash Elections received by the Exchange Agent
(the "Requested Cash Amount") exceeds the Cash Cap (as such
amount may have been increased at Purchaser's sole discretion
pursuant to Section 4.6(b)), each holder making a Cash Election
(and each holder who is deemed to have made a Cash Election
pursuant to Section 4.5(c)) shall receive, for each share of
Company Common Stock for which a Cash Election has been made, (x)
cash in an amount equal to the product of the Cash Consideration
and a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount (such product,
the "Prorated Cash Amount") and (y) a number of shares of Holding
Company Common Stock equal to a fraction, the numerator of which
is equal to the Cash Consideration minus the Prorated Cash Amount
and the denominator of which is the Purchaser Common Stock Price.
4.7. Dividends, Fractional Shares, Etc.
(a) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective
Time on Holding Company Common Stock shall be paid with respect
to any shares of Company Common Stock represented by a Company
Certificate, until such Company Certificate is surrendered for
exchange as provided herein. Subject to the effect of applicable
laws, following surrender of any such Company Certificate, there
shall be paid to the holder of the Holding Company Certificates
issued in exchange therefor, without interest, (i) at the time of
such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore payable
with respect to such whole shares of Holding Company Common Stock
and not paid, less the amount of any withholding taxes which may
be required thereon, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole
shares of Holding Company Common Stock, less the amount of any
withholding taxes which may be required thereon.
(b) At or after the Effective Time, there shall be no
transfers on the stock transfer books of the Purchaser or the
Company of the shares of Purchaser Common Stock or Company Common
Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, certificates representing
any such shares are presented to the surviving corporations of
the Purchaser Merger or the Company Merger, they shall be
cancelled and exchanged for certificates for the consideration,
if any, deliverable in respect thereof pursuant to this Agreement
and the Merger Agreements in accordance with the procedures set
forth in this Article 4. Company Certificates surrendered for
exchange by any person constituting an "affiliate" of the Company
for purposes of Rule 145(c) under the Securities Act of 1933, as
amended (the "Securities Act"), shall not be exchanged until the
Purchaser has received a written agreement from such person as
provided in Section 7.10.
(c) No fractional shares of Holding Company Common
Stock shall be issued pursuant to the Company Merger. In lieu of
the issuance of any fractional share of Holding Company Common
Stock pursuant to the Company Merger, cash adjustments will be
paid to holders in respect of any fractional share of Holding
Company Common Stock that would otherwise be issuable, and the
amount of such cash adjustment shall be equal to the product of
such fractional amount and the Purchaser Common Stock Price.
(d) Any portion of the Exchange Fund (including the
proceeds of any investments thereof and any shares of Holding
Company Common Stock) that remains unclaimed by the former
stockholders of the Purchaser and the Company six months after
the Effective Time shall be delivered to the Holding Company.
Any former stockholder of the Purchaser or the Company who have
not theretofore complied with this Article 4 shall thereafter
look only to the applicable surviving corporation for payment of
the applicable merger consideration, cash in lieu of fractional
shares and unpaid dividends and distributions on the Holding
Company Common Stock deliverable in respect of each share of
Purchaser Common Stock or Company Common Stock such stockholder
holds as determined pursuant to this Agreement, in each case
without any interest thereon.
(e) None of the Purchaser, the Company, the Holding
Company, the surviving corporations of the Mergers, the Exchange
Agent or any other person shall be liable to any former holder of
shares of Purchaser Common Stock or Company Common Stock for any
amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event that any Company Certificate shall
have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Company
Certificate to be lost, stolen or destroyed and, if required by
Holding Company, the posting by such person of a bond in such
reasonable amount as Holding Company may direct as indemnity
against any claim that may be made against it with respect to
such Company Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Company Certificate
the applicable merger consideration, cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of
Holding Company Common Stock as provided in Section 4.7,
deliverable in respect thereof pursuant to this Agreement and the
Company Merger Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the disclosure letter delivered
at or prior to the execution hereof to the Purchaser (the
"Company Disclosure Letter") or in the Company Reports (as
defined below), the Company represents and warrants to the
Purchaser as of the date of this Agreement as follows:
5.1. Existence; Good Standing; Corporate Authority.
The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of its jurisdiction of
incorporation. The Company is duly licensed or qualified to do
business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the
character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary,
except where the failure to be so qualified or to be in good
standing would not have a material adverse effect on the
business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole (a "Company
Material Adverse Effect"). The Company has all requisite
corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. Each of
the Company's Significant Subsidiaries (as defined in Section
10.14 hereof) is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate
or partnership power and authority to own its properties and to
carry on its business as it is now being conducted, and is duly
qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the
conduct of its business requires such qualification, except for
jurisdictions in which such failure to be so qualified or to be
in good standing would not have a Company Material Adverse
Effect. The copies of the Company's Certificate of Incorporation
and Bylaws previously made available to the Purchaser are true
and correct.
5.2. Authorization, Validity and Effect of Agreements.
The Company has the requisite corporate power and authority to
execute and deliver this Agreement and all agreements and
documents contemplated hereby. Subject only to the approval of
this Agreement and the transactions contemplated hereby by the
holders of two-thirds of the outstanding shares of Company Common
Stock, the consummation by the Company of the transactions
contemplated hereby has been duly authorized by all requisite
corporate action. This Agreement constitutes, and all agreements
and documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute, the valid
and legally binding obligations of the Company, enforceable in
accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
5.3. Capitalization. The authorized capital stock of
the Company consists of 300,000,000 shares of Company Common
Stock and 4,000,000 shares of preferred stock, no par value (the
"Company Preferred Stock"). As of July 15, 1995, there were
154,061,655 shares of Company Common Stock, and no shares of
Company Preferred Stock, issued and outstanding, plus 29,873,305
shares of Company Common Stock held in the Company's treasury.
Since such date, (i) no additional shares of capital stock of the
Company have been issued, except pursuant to the terms existing
on the date hereof of the Company's stock option and employee
stock purchase plans and other similar employee benefit plans
(the "Company Stock Plans") and (ii) no options or other rights
to acquire shares of the Company's capital stock have been
granted (other than an aggregate of 75,000 options to acquire
Company Common Stock granted pursuant to the terms existing on
the date hereof of the Company's stock option plan). The Company
has no outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right
to vote) with the stockholders of the Company on any matter
(other than the preferred stock purchase rights of the Company
(the "Rights") issued pursuant to the Rights Agreement, dated
December 14, 1989, between the Company and Harris Trust Company
(the "Company Rights Agreement")). All issued and outstanding
shares of Company Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
There are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate the Company or
any of its Subsidiaries to issue, transfer or sell any shares of
capital stock of the Company or any of its Subsidiaries (other
than under the Company Stock Plans and other than the Rights).
5.4. Subsidiaries. The Company owns directly or
indirectly each of the outstanding shares of capital stock (or
other ownership interests having by their terms ordinary voting
power to elect a majority of directors or others performing
similar functions with respect to such Company Significant
Subsidiary) of each of the Company's Significant Subsidiaries.
Each of the outstanding shares of capital stock of each of the
Company's Significant Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or
indirectly, by the Company. Each of the outstanding shares of
capital stock of each Significant Subsidiary of the Company is
owned, directly or indirectly, by the Company free and clear of
all liens, pledges, security interests, claims or other
encumbrances other than liens imposed by local law which are not
material. The following information for each Significant
Subsidiary of the Company has been previously provided to the
Purchaser, if applicable: (i) its name and jurisdiction of
incorporation or organization; (ii) its authorized capital stock
or share capital; and (iii) the number of issued and outstanding
shares of capital stock or share capital. All of the
Subsidiaries of the Company other than the Significant
Subsidiaries, when taken together, do not in the aggregate
constitute a Significant Subsidiary of the Company.
5.5. Other Interests. Except for interests in the
Company Subsidiaries, neither the Company nor any Company
Significant Subsidiary owns directly or indirectly any interest
or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than
(i) non-controlling investments in the ordinary course of
business and corporate partnering, development, cooperative
marketing and similar undertakings, arrangements entered into in
the ordinary course of business and (ii) other investments of
less than $100,000,000).
5.6. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions
contemplated hereby will not, (i) conflict with or violate the
certificate of incorporation or by-laws or equivalent
organizational documents of (x) the Company or (y) any
Significant Subsidiary, (ii) subject to making the filings and
obtaining the approvals identified in Section 5.6(b) hereof,
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or
any Company Subsidiary is bound or affected, or (iii) subject to
making the filings and obtaining the approvals identified in
Section 5.6(b) hereof, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material
benefit under, or give to others any right of purchase or sale,
or any right of termination, amendment, acceleration, increased
payments or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or
any Company Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any
Company Subsidiary is a party or by which the Company or any
Company Subsidiary or any property or asset of the Company or any
Company Subsidiary is bound or affected, except, in the case of
clauses (i)(y), (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would
not prevent or delay consummation of any of the transactions
contemplated hereby in any material respect, or otherwise prevent
the Company from performing its obligations under this Agreement
in any material respect, and would not, individually or in the
aggregate, have a Company Material Adverse Effect. The execution
and delivery of this Agreement by the Company do not, and the
consummation by the Company of the transactions contemplated
hereby will not, result in any material breach of or constitute a
material default (or an event which with notice or lapse of time
or both would become a material default) under, result in the
loss of a material benefit under, or give to others any right of
purchase or sale, or any right of termination, amendment,
acceleration, increased payments or cancellation of, or result in
the creation of a lien or other encumbrance on any property or
asset of the Company or any Company Subsidiary pursuant to, any
Material Contract to which the Company or any Company Subsidiary
is a party or by which the Company or any Company Subsidiary or
any property or asset of the Company or any Company Subsidiary is
bound or affected. For the purposes hereof, "Material Contract"
shall mean any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation that is material to the ownership or operation of
any of ESPN, Lifetime Television and A&E Television Network (each
a "Station"), or any network affiliate agreement.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement and the
consummation by the Company of the transactions contemplated
hereby will not, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, domestic or foreign (each a "Governmental
Entity"), except (i) for (A) applicable requirements, if any, of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Securities Act of 1933, as amended (the "Securities
Act"), state securities or "blue sky" laws ("Blue Sky Laws") and
state takeover laws, (B) the pre-merger notification requirements
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR
Act"), (C) applicable approvals of the Federal Communications
Commission (the "FCC") pursuant to the Communications Act of
1934, as amended, and any regulations promulgated thereunder (the
"Communications Act"), (D) filing and recordation of appropriate
merger and similar documents as required by New York law and
Delaware law and (E) applicable requirements, if any, of the Code
and state, local and foreign tax laws, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay
consummation of any of the transactions contemplated hereby in
any material respect, or otherwise prevent the Company from
performing its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate, have a
Company Material Adverse Effect.
5.7. Compliance. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation or,
(i) any law, rule, regulation, order, judgment or decree
applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is
bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Company
Subsidiary is a party or by which the Company or any Company
Subsidiary or any property or asset of the Company or any Company
Subsidiary is bound or affected, in each case except for any such
conflicts, defaults or violations that would not, individually or
in the aggregate, have a Company Material Adverse Effect. The
Company and its Subsidiaries have obtained all licenses, permits
and other authorizations and have taken all actions required by
applicable law or governmental regulations in connection with
their business as now conducted, where the failure to obtain any
such item or to take any such action would have, individually or
in the aggregate, a Company Material Adverse Effect. The Company
and the Company Subsidiaries that are FCC licensees are
financially qualified, and to the best of the Company's
knowledge, are otherwise qualified to be FCC licensees. The
Company is not aware of any facts or circumstances that might
prevent or delay any necessary FCC approval of the transactions
contemplated hereby.
5.8. SEC Documents. (a) The Company has filed all
forms, reports and documents required to be filed by it with the
Securities and Exchange Commission ("SEC") since December 31,
1992 (collectively, the "Company Reports"). As of their
respective dates, the Company Reports and any such reports, forms
and other documents filed by the Company with the SEC after the
date of this Agreement (i) complied, or will comply, as to form
in all material respects with the applicable requirements of the
Securities Act, the Exchange Act, and the rules and regulations
thereunder and (ii) did not, or will not, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading. The representation in clause (ii) of
the preceding sentence shall not apply to any misstatement or
omission in any Company Report filed prior to the date of this
Agreement which was superseded by a subsequent Company Report
filed prior to the date of this Agreement. No Company Subsidiary
is required to file any report, form or other document with the
SEC.
(b) Each of the consolidated balance sheets of Company
included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents the
consolidated financial position of Company and the Company
Subsidiaries as of its date, and each of the consolidated
statements of income, retained earnings and cash flows of Company
included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents the
results of operations, retained earnings or cash flows, as the
case may be, of Company and the Company Subsidiaries for the
periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would not
be material in amount or effect), in each case in accordance with
generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein.
Neither Company nor any of the Company Subsidiaries has any
liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of Company
or in the notes thereto, prepared in accordance with generally
accepted accounting principles consistently applied, except for
(i) liabilities or obligations that were so reserved on, or
reflected in (including the notes to), the consolidated balance
sheet of the Company as of December 31, 1994 or March 31, 1995;
(ii) liabilities or obligations arising in the ordinary course of
business since March 31, 1995, (iii) liabilities or obligations
which would not, individually or in the aggregate, have a Company
Material Adverse Effect and (iv) payments required as a result of
the Reorganization under the acceleration provisions of the terms
existing on the date hereof of the Company's employee benefit
plans, which acceleration provisions are referred to in the
Company Disclosure Letter.
5.9. Litigation. There are no actions, suits or
proceedings pending against Company or the Company Subsidiaries
or, to the actual knowledge of the executive officers of Company,
threatened against Company or the Company Subsidiaries, at law or
in equity, or before or by any federal or state commission,
board, bureau, agency or instrumentality, that are reasonably
likely to have a Company Material Adverse Effect.
5.10 Absence of Certain Changes. Except as
specifically contemplated by this Agreement, since December 31,
1994, there has not been (i) any Company Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or
other distribution with respect to its capital stock (other than
regular quarterly cash dividends not in excess of $.05 per
share); or (iii) any material change in its accounting
principles, practices or methods.
5.11 Taxes. (a) Each of the Company and the Company
Subsidiaries has filed all material tax returns and reports
required to be filed by it, or requests for extensions to file
such returns or reports have been timely filed and granted and
have not expired, and all tax returns and reports are complete
and accurate in all respects, except to the extent that such
failures to file, have extensions granted that remain in effect
or be complete and accurate in all respects, as applicable,
individually or in the aggregate, would not have a Company
Material Adverse Effect. The Company and each of the Company
Subsidiaries has paid (or the Company has paid on its behalf) all
taxes shown as due on such tax returns and reports. The most
recent financial statements contained in the Company Reports
reflect an adequate reserve for all taxes payable by the Company
and the Company Subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements,
and no deficiencies for any taxes have been proposed, asserted or
assessed against the Company or any Company Subsidiary that are
not adequately reserved for, except for inadequately reserved
taxes and inadequately reserved deficiencies that would not,
individually or in the aggregate, have a Company Material Adverse
Effect. No requests for waivers of the time to assess any taxes
against the Company or any Company Subsidiary have been granted
or are pending, except for requests with respect to such taxes
that have been adequately reserved for in the most recent
financial statements contained in the Company Reports, or, to the
extent not adequately reserved, the assessment of which would
not, individually or in the aggregate, have a Company Material
Adverse Effect.
(b) Neither the Company nor any Company Subsidiary has
taken any action or has any knowledge of any fact or circumstance
that is reasonably likely to prevent the Company Merger from
qualifying as an exchange described in Section 351(a) or Section
351(b) of the Code.
(c) As used in this Section 5.11 and in Section 6.11,
"taxes" shall include all Federal, state, local and foreign
income, franchise, property, sales, use, excise and other taxes,
including obligations for withholding taxes from payments due or
made to any other person and any interest, penalties or additions
to tax.
5.12. Employee Benefit Plans. Except as described
in the Company Reports or as would not have a Company Material
Adverse Effect, (i) all employee benefit plans or programs
maintained for the benefit of the current or former employees or
directors of the Company or any Company Subsidiary that are
sponsored, maintained or contributed to by the Company or any
Company Subsidiary, or with respect to which the Company or any
Company Subsidiary has any liability, including without
limitation any such plan that is an "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), are in compliance with all
applicable requirements of law, including ERISA and the Code, and
(ii) neither the Company nor any Company Subsidiary has any
liabilities or obligations with respect to any such employee
benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the executive officers of the
Company are any such liabilities or obligations expected to be
incurred. The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon
the occurrence of any additional or subsequent events) constitute
an event under any benefit plan, policy, arrangement or agreement
or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any
employee. The only severance agreements or severance policies
applicable to the Company or its Subsidiaries are the agreements
and policies specifically referred to in the Company Disclosure
Letter.
5.13. Labor Matters. There is no labor strike,
labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the executive officers of the
Company, threatened against or affecting the Company or any
Company Subsidiary, except as would not, individually or in the
aggregate, have a Company Material Adverse Effect. There is no
unfair labor practice or labor arbitration proceeding pending or,
to the knowledge of the executive officers of the Company,
threatened against the Company or its Subsidiaries relating to
their business, except for any such proceeding which would not
have a Company Material Adverse Effect.
5.14. No Brokers. The Company has not entered into
any contract, arrangement or understanding with any person or
firm which may result in the obligation of the Company or the
Purchaser to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that the Company has
retained Allen & Company Incorporated as its financial advisor,
the arrangements with which have been disclosed in writing to the
Purchaser prior to the date hereof. Other than the foregoing
arrangements, the Company is not aware of any claim for payment
of any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated
hereby.
5.15. Opinion of Financial Advisor. The Company
has received the opinion of Allen & Company Incorporated to the
effect that, as of the date hereof, the consideration to be
received by the holders of the Company Common Stock in the
Company Merger is fair to such holders from a financial point of
view.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the disclosure letter delivered
at or prior to the execution hereof to the Company (the
"Purchaser Disclosure Letter") or in the Purchaser Reports (as
defined below), the Purchaser represents and warrants to the
Company as of the date of this Agreement as follows:
6.1. Existence; Good Standing; Corporate Authority.
The Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction
of incorporation. The Purchaser is duly licensed or qualified to
do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which
the character of the properties owned or leased by it or in which
the transaction of its business makes such qualification
necessary, except where the failure to be so qualified or to be
in good standing would not have a material adverse effect on the
business, results of operations or financial condition of the
Purchaser and its Subsidiaries taken as a whole (a "Purchaser
Material Adverse Effect"). The Purchaser has all requisite
corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. Each of
the Purchaser's Significant Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and
authority to own its properties and to carry on its business as
it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which the
ownership of its property or the conduct of its business requires
such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not
have a Purchaser Material Adverse Effect. The copies of the
Purchaser's Certificate of Incorporation and Bylaws previously
made available to the Company are true and correct.
6.2. Authorization, Validity and Effect of Agreements.
The Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement and all agreements and
documents contemplated hereby. Subject only to the approval of
this Agreement and the transactions contemplated hereby by the
holders of a majority of the outstanding shares of Purchaser
Common Stock, the consummation by the Purchaser of the
transactions contemplated hereby has been duly authorized by all
requisite corporate action. This Agreement constitutes, and all
agreements and documents contemplated hereby (when executed and
delivered pursuant hereto for value received) will constitute,
the valid and legally binding obligations of the Purchaser,
enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of
equity.
6.3. Capitalization. The authorized capital stock of
the Purchaser consists of 1,200,000,000 shares of Purchaser
Common Stock, and 100,000,000 shares of preferred stock, $.10 par
value (the "Purchaser Preferred Stock"). As of July 15, 1995,
there were 522,526,566 shares of Purchaser Common Stock and no
shares of Purchaser Preferred Stock, issued and outstanding, plus
50,986,941 shares of Purchaser Common Stock held in the
Purchaser's treasury. Since such date, no additional shares of
capital stock of the Purchaser have been issued except pursuant
to the Purchaser's stock option and employee stock purchase
plans, pension plans and other similar employee benefit plans
(the "Purchaser Stock Plans"). The Purchaser has no outstanding
bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the
stockholders of the Purchaser on any matter (other than the
preferred stock purchase rights of the Purchaser (the "Purchaser
Rights") issued pursuant to the Rights Agreement, dated as of
June 21, 1989, between the Purchaser and Bank of America (the
"Purchaser Rights Agreement"). All such issued and outstanding
shares of Purchaser Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights.
Except as contemplated by this Agreement, there are not at the
date of this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Purchaser or any of
its Subsidiaries to issue, transfer or sell any shares of capital
stock of the Purchaser or any of its Subsidiaries (other than
under the Purchaser Stock Plans and other than the Rights).
6.4. Subsidiaries. The Purchaser owns directly or
indirectly each of the outstanding shares of capital stock of
each of the Purchaser's Significant Subsidiaries (or other
ownership interests having by their terms ordinary voting power
to elect a majority of directors or others performing similar
functions with respect to such Purchaser Significant Subsidiary).
Each of the outstanding shares of capital stock of each of the
Purchaser's Significant Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable, and is owned, directly or
indirectly, by the Purchaser. Each of the outstanding shares of
capital stock of each Significant Subsidiary of the Purchaser is
owned, directly or indirectly, by the Purchaser free and clear of
all liens, pledges, security interests, claims or other
encumbrances other than liens imposed by local law which are not
material. The following information for each Significant
Subsidiary of the Purchaser has been previously made available to
the Company, if requested and if applicable: (i) its name and
jurisdiction of incorporation or organization; (ii) its
authorized capital stock or share capital; and (iii) the number
of issued and outstanding shares of capital stock or share
capital.
6.5. Other Interests. Except for interests in the
Purchaser Subsidiaries, neither the Purchaser nor any Purchaser
Significant Subsidiary owns directly or indirectly any interest
or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than
(i) passive investments in securities in the ordinary course of
business and corporate partnering, development, cooperative
marketing and similar undertakings and arrangements entered into
in the ordinary course of business and (ii) other investments of
less than $100,000,000).
6.6. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by the Purchaser
does not, and the consummation by the Purchaser of the
transactions contemplated hereby will not, (i) conflict with or
violate the certificate of incorporation or by-laws or equivalent
organizational documents of (x) the Purchaser or (y) any
Significant Subsidiary, (ii) subject to making the filings and
obtaining the approvals identified in Section 6.6(b) hereof,
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Purchaser or any Purchaser
Subsidiary or by which any property or asset of the Purchaser or
any Purchaser Subsidiary is bound or affected, or (iii) subject
to making the filings and obtaining the approvals identified in
Section 6.6(b) hereof, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss of a material
benefit under, or give to others any right of termination,
amendment, acceleration, increased payments or cancellation of,
or result in the creation of a lien or other encumbrance on any
property or asset of the Purchaser or any Purchaser Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which the Purchaser or any Purchaser Subsidiary
is a party or by which the Purchaser or any Purchaser Subsidiary
or any property or asset of the Purchaser or any Purchaser
Subsidiary is bound or affected, except, in the case of clauses
(i)(y), (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent
or delay consummation of any of the transactions contemplated
hereby in any material respect, or otherwise prevent the
Purchaser from performing its obligations under this Agreement in
any material respect, and would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
(b) The execution and delivery of this Agreement by
the Purchaser does not, and the performance of this Agreement and
the consummation of the transactions contemplated hereby will
not, require any consent, approval, authorization or permit of,
or filing with or notification to, any Governmental Entity,
except (i) for (A) applicable requirements, if any, of the
Exchange Act, the Securities Act, Blue Sky Laws and state
takeover laws, (B) the pre-merger notification requirements of
the HSR Act, (C) applicable approvals of the FCC pursuant to the
Communications Act, (D) filing and recordation of appropriate
merger and similar documents as required by New York law and
Delaware law and (E) applicable requirements, if any, of the Code
and state, local and foreign tax laws, and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or delay
consummation of any of the transactions contemplated hereby in
any material respect, or otherwise prevent the Purchaser or
Merger Sub from performing its obligations under this Agreement
in any material respect, and would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
6.7. Compliance. Neither the Purchaser nor any
Purchaser Subsidiary is in conflict with, or in default or
violation or, (i) any law, rule, regulation, order, judgment or
decree applicable to the Purchaser or any Purchaser Subsidiary or
by which any property or asset of the Purchaser or any Purchaser
Subsidiary is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the
Purchaser or any Purchaser Subsidiary is a party or by which the
Purchaser or any Purchaser Subsidiary or any property or asset of
the Purchaser or any Purchaser Subsidiary is bound or affected,
in each case except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have
a Purchaser Material Adverse Effect. The Purchaser and its
Subsidiaries have obtained all licenses, permits and other
authorizations and have taken all actions required by applicable
law or governmental regulations in connection with their business
as now conducted, where the failure to obtain any such item or to
take any such action would have, individually or in the
aggregate, a Purchaser Material Adverse Effect. The Purchaser
and the Purchaser's Subsidiaries that are FCC licensees are
financially qualified, and to the best of the Purchaser's
knowledge, are otherwise qualified to be FCC licensees. The
Purchaser is not aware of any facts or circumstances that might
prevent or delay any necessary FCC approval of the transactions
contemplated hereby.
6.8. SEC Documents. (a) The Purchaser has filed all
forms, reports and documents required to be filed by it with the
SEC (collectively, the "Purchaser Reports"). As of their
respective dates, the Purchaser Reports, and any such reports,
forms and other documents filed by the Purchaser with the SEC
after the date of this Agreement (i) complied, or will comply, as
to form in all material respects with the applicable requirements
of the Securities Act, the Exchange Act, and the rules and
regulations thereunder and (ii) did not, or will not, contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under
which they were made, not misleading. The representation in
clause (ii) of the preceding sentence shall not apply to any
misstatement or omission in any Purchaser Report filed prior to
the date of this Agreement which was superseded by a subsequent
Purchaser Report filed prior to the date of this Agreement. No
Purchaser Subsidiary is required to file any report, form or
other document with the SEC.
(b) Each of the consolidated balance sheets included
in or incorporated by reference into the Purchaser Reports
(including the related notes and schedules) fairly presents the
consolidated financial position of the Purchaser and the
Purchaser Subsidiaries as of its date, and each of the
consolidated statements of income, retained earnings and cash
flows included in or incorporated by reference into the Purchaser
Reports (including any related notes and schedules) fairly
presents the results of operations, retained earnings or cash
flows, as the case may be, of the Purchaser and the Purchaser
Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in
each case in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except as may be noted therein. Neither the Purchaser nor any of
the Purchaser Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise)
that would be required to be reflected on, or reserved against
in, a balance sheet of the Purchaser or in the notes thereto,
prepared in accordance with generally accepted accounting
principles consistently applied, except for (i) liabilities and
obligations that were reserved on or reflected in (including the
notes to), the consolidated balance sheet of the Purchaser as of
December 31, 1994 or March 31, 1995, (ii) liabilities arising in
the ordinary course of business since March 31, 1995, (iii)
liabilities or obligations which would not, individually or in
the aggregate, have a Purchaser Material Adverse Effect and (iv)
payments required as a result of the Reorganization under the
acceleration provisions of the terms of the Purchaser's employee
benefit plans.
6.9. Litigation. There are no actions, suits or
proceedings pending against the Purchaser or the Purchaser
Subsidiaries or, to the actual knowledge of the executive
officers of the Purchaser, threatened against the Purchaser or
the Purchaser Subsidiaries, at law or in equity, or before or by
any federal or state commission, board, bureau, agency or
instrumentality, that are reasonably likely to have a Purchaser
Material Adverse Effect.
6.10. Absence of Certain Changes. Except as
specifically contemplated by this Agreement, since December 31,
1994, there has not been (i) any Purchaser Material Adverse
Effect; (ii) any declaration, setting aside or payment of any
dividend or other distribution with respect to its capital stock
(other than regular quarterly cash dividends including any
increase thereof consistent with past practice); or (iii) any
material change in its accounting principles, practices or
methods.
6.11. Taxes. (a) Each of the Purchaser and the
Purchaser Subsidiaries has filed all material tax returns and
reports required to be filed by it, or requests for extensions to
file such returns or reports have been timely filed and granted
and have not expired, and all tax returns and reports are
complete and accurate in all respects, except to the extent that
such failures to file, have extensions granted that remain in
effect or be complete and accurate in all respects, as
applicable, individually or in the aggregate, would not have a
Purchaser Material Adverse Effect. The Purchaser and each of the
Purchaser Subsidiaries has paid (or the Purchaser has paid on its
behalf) all taxes shown as due on such tax returns and reports.
The most recent financial statements contained in the Purchaser
Reports reflect an adequate reserve for all taxes payable by the
Purchaser and the Purchaser Subsidiaries for all taxable periods
and portions thereof accrued through the date of such financial
statements, and no deficiencies for any taxes have been proposed,
asserted or assessed against the Purchaser or any Purchaser
Subsidiary that are not adequately reserved for, except for
inadequately reserved taxes and inadequately reserved
deficiencies that would not, individually or in the aggregate,
have a Purchaser Material Adverse Effect. No requests for
waivers of the time to assess any taxes against the Purchaser or
any Purchaser Subsidiary have been granted or are pending, except
for requests with respect to such taxes that have been adequately
reserved for in the most recent financial statements contained in
the Purchaser Reports, or, to the extent not adequately reserved,
the assessment of which would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
(b) Neither the Purchaser nor any Purchaser Subsidiary
has taken any action or has any knowledge of any fact or
circumstance that is reasonably likely to prevent the Purchaser
Merger from qualifying as at least one of (i) an exchange
described in Section 351(a) or Section 351(b) of the Code or (ii)
a reorganization described in Section 368(a) of the Code.
6.12. Employee Benefit Plans. Except as described
in the Purchaser Reports or as would not have a Purchaser
Material Adverse Effect, (i) all employee benefit plans or
programs maintained for the benefit of the current or former
employees or directors of Purchaser or any Purchaser Subsidiary
that are sponsored, maintained or contributed to by Purchaser or
any Purchaser Subsidiary, or with respect to which Purchaser or
any Purchaser Subsidiary has any liability, including without
limitation any such plan that is an "employee benefit plan" as
defined in Section 3(3) of ERISA, are in compliance with all
applicable requirements of law, including ERISA and the Code, and
(ii) neither Purchaser nor any Purchaser Subsidiary has any
liabilities or obligations with respect to any such employee
benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the executive officers of
Purchaser are any such liabilities or obligations expected to be
incurred. Except as disclosed in the Purchaser Reports or
pursuant to the Disney Salaried Savings and Investment Plan, the
execution of, and performance of the transactions contemplated
in, this Agreement will not (either alone or upon the occurrence
of any additional or subsequent events) constitute an event under
any benefit plan, policy, arrangement or agreement or any trust
or loan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
6.13. Labor Matters. There is no labor strike,
labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the executive officers of the
Purchaser, threatened against or affecting the Purchaser or any
Purchaser Subsidiary, except as would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect. There is no
unfair labor practice or labor arbitration proceeding pending or,
to the knowledge of the executive offices of the Purchaser,
threatened against the Purchaser or its Subsidiaries relating to
their business, except for any such proceeding which would not
have a Purchaser Material Adverse Effect.
6.14. Opinion of Financial Advisor. The Purchaser
has received the opinion of Bear, Stearns & Co. Inc. to the
effect that, as of the date hereof, the Reorganization is fair to
the holders of Purchaser Common Stock from a financial point of
view.
6.15. No Brokers. The Purchaser has not entered
into any contract, arrangement or understanding with any person
or firm which may result in the obligation of the Company or the
Purchaser to pay any finder's fee, brokerage or agent's
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby except that the Purchaser has
retained Bear, Stearns & Co. Inc. and James D. Wolfensohn
Incorporated as its financial advisors, the arrangements with
which have been disclosed in writing to the Company prior to the
date hereof. Other than the foregoing arrangements, the Company
is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
ARTICLE 7
COVENANTS
7.1. Alternative Proposals. Prior to the Effective
Time, the Company agrees (a) that neither it nor any of its
Subsidiaries shall, nor shall it or any of its Subsidiaries
permit their respective officers, directors, employees, agents
and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any
of its Subsidiaries) to, initiate, solicit or encourage, directly
or indirectly, any inquiries or the making or implementation of
any proposal or offer (including, without limitation, any
proposal or offer to its stockholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, and
purchase of (i) all or any significant portion of the assets of
the Company and its Subsidiaries taken as a whole, or of any
Subsidiary of the Company which owns or operates any Station,
(ii) 25% or more of the outstanding shares of Company Common
Stock or (iii) 25% of the outstanding shares of the capital stock
of any Subsidiary of the Company which owns or operates any
Station (any such proposal or offer being hereinafter referred to
as an "Alternative Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an
Alternative Proposal (excluding the Mergers contemplated by this
Agreement), or otherwise facilitate any effort or attempt to make
or implement an Alternative Proposal; and (b) that it will notify
the Purchaser immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or
continued with, it; provided, however, that nothing contained in
this Section 7.1 shall prohibit the Board of Directors of the
Company from (i) furnishing information to or entering into
discussions or negotiations with, any person or entity that makes
an unsolicited bona fide Alternative Proposal, if, and only to
the extent that, (A) the Board of Directors of the Company, based
upon the advice of outside counsel, determines in good faith that
such action is required for the Board of Directors to comply with
its fiduciary duties to stockholders imposed by law, (B) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company provides
written notice to the Purchaser to the effect that it is
furnishing information to, or entering into discussions or
negotiations with, such person or entity, and (C) the Company
keeps the Purchaser informed of the status and all material
information with respect to any such discussions or negotiations;
and (ii) to the extent applicable, complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Alternative
Proposal. Nothing in this Section 7.1 shall (x) permit the
Company to terminate this Agreement (except as specifically
provided in Article 9 hereof), (y) permit the Company to enter
into any agreement with respect to an Alternative Proposal for as
long as this Agreement remains in effect (it being agreed that
for as long as this Agreement remains in effect, the Company
shall not enter into any agreement with any person that provides
for, or in any way facilitates, an Alternative Proposal (other
than a confidentiality agreement in customary form)), or (z)
affect any other obligation of the Company under this Agreement.
Nothing contained in this Section 7.1 or any other provision of
this Agreement shall prohibit the Company or any of its
Subsidiaries from engaging in any discussions or providing any
information or data, or entering into any agreement with any
person to the extent the Company or any of its Subsidiaries is
obligated to do so pursuant to the terms of any agreement
relating to a Station as in effect on the date hereof; provided
that nothing in this sentence shall be deemed to limit the
Company's representation set forth in Section 5.6.
7.2. Interim Operations. (a) Prior to the Effective
Time, except as set forth in the Company Disclosure Letter or as
contemplated by any other provision of this Agreement, unless the
Purchaser has consented in writing thereto, the Company:
(i) Shall, and shall cause each of its Significant
Subsidiaries to, conduct its operations according to their
usual, regular and ordinary course in substantially the same
manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall cause
each of its Significant Subsidiaries to use its reasonable
efforts, to preserve intact their business organizations and
goodwill, keep available the services of their respective
officers and employees and maintain satisfactory
relationships with those persons having business
relationships with them;
(iii) Shall not amend its Certificate of Incorporation
or Bylaws or comparable governing instruments (other than
Bylaw amendments which are not material to the Company or to
the consummation of the transactions contemplated by this
Agreement);
(iv) Shall promptly notify the Purchaser of any breach
of any representation or warranty contained herein or any
Company Material Adverse Effect;
(v) Shall promptly deliver to the Purchaser true and
correct copies of any report, statement or schedule filed
with the SEC subsequent to the date of this Agreement;
(vi) Shall not (x) except pursuant to the exercise of
options, warrants, conversion rights and other contractual
rights existing on the date hereof and disclosed pursuant to
this Agreement, issue any shares of its capital stock,
effect any stock split or otherwise change its
capitalization as it existed on the date hereof, (y) grant,
confer or award any option, warrant, conversion right or
other right not existing on the date hereof to acquire any
shares of its capital stock (other than an aggregate of
75,000 options to acquire Company Common Stock pursuant to
the terms existing on the date hereof of the Company's stock
option plan) or grant, confer or award any bonuses or other
forms of cash incentives to any officer, director or key
employee except consistent with past practice or grant or
confer any awards (other than those granted as of the date
hereof) under the Incentive Compensation Plan of the Company
(as amended through December 9, 1993), (z) increase any
compensation under any employment agreement with any of its
present or future officers, directors or employees, except
for normal increases consistent with past practice, grant
any severance or termination pay to, or enter into any
employment or severance agreement with any officer or
director or amend any such agreement in any material respect
other than severance arrangements which are consistent with
past practice with respect to employees terminated by the
Company, or (aa) adopt any new employee benefit plan
(including any stock option, stock benefit or stock purchase
plan) or amend any existing employee benefit plan in any
material respect;
(vii) Shall not (i) declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock or other
ownership interests (other than regular quarterly cash
dividends not in excess of $.05 per share) or (ii) directly
or indirectly redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action;
(viii) Shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of any of
its assets (including capital stock of Subsidiaries) except
in the ordinary course of business, or to acquire any
business or assets, in each case for an amount exceeding
$100,000,000;
(ix) Shall not incur any material amount of
indebtedness for borrowed money or make any loans, advances
or capital contributions to, or investments (other than non-
controlling investments in the ordinary course of business)
in, any other person other than a wholly owned Company
Subsidiary, or issue or sell any debt securities, other than
borrowings under existing lines of credit in the ordinary
course of business, in each case in an amount exceeding
$100,000,000;
(x) Shall not, except as previously approved by the
Board of Directors of the Company and identified to the
Purchaser prior to the date hereof, or except in the
ordinary course of business, authorize or make capital
expenditures in excess of $200,000,000 in the aggregate;
(xi) Shall not mortgage or otherwise encumber or
subject to any lien any properties or assets except as would
not be reasonably likely to have a Company Material Adverse
Effect;
(xii) Shall not make any change to its accounting
(including tax accounting) methods, principles or practices,
except as may be required by generally accepted accounting
principles and except, in the case of tax accounting
methods, principles or practices, in the ordinary course of
business of the Company or any of its Subsidiaries; and
(xiii) shall not, nor shall it permit any of its
Subsidiaries to, enter into any program production or
distribution arrangements, including without limitation
joint venture arrangements, with a term in excess of one
year without consulting with the Purchaser prior thereto.
(b) Prior to the Effective Time, except as set
forth in the Purchaser Disclosure Letter or as contemplated by
this Agreement, unless the Company has consented in writing
thereto, the Purchaser:
(i) shall not issue any shares of its capital stock at
less than fair market value (other than pursuant to any
Purchaser Stock Plans) or effect any stock split of its
capital stock;
(ii) shall not amend its Certificate of Incorporation
(provided that the Purchaser may issue up to $100,000,000 of
its preferred stock);
(iii) shall promptly notify the Company of any breach
of any representation or warranty contained herein or any
Purchaser Material Adverse Effect;
(iv) shall promptly deliver to the Company true and
correct copies of any report, statement or schedule filed
with the SEC subsequent to the date of this Agreement; and
(v) shall not declare, set aside or pay any dividend
or make any other distribution or payment with respect to
any shares of its capital stock or other ownership interests
(other than regular quarterly cash dividends including any
increases thereof consistent with past practice).
7.3. Meetings of Stockholders. Each of the Purchaser
and the Company will take all action necessary in accordance with
applicable law and its Certificate of Incorporation and Bylaws to
convene a meeting of its stockholders as promptly as practicable
to consider and vote upon (i) in the case of the Purchaser, the
approval of this Agreement, the Purchaser Merger Agreement and
the Purchaser Merger and (ii) in the case of the Company, the
approval of this Agreement and the Company Merger Agreement and
the Company Merger. The Board of Directors of each of the
Purchaser and the Company shall recommend such approval and the
Purchaser and the Company shall each take all lawful action to
solicit such approval, including, without limitation, timely
mailing the Proxy Statement/Prospectus (as defined in Section
7.7); provided, however, that such recommendation or solicitation
is subject to any action (including any withdrawal or change of
its recommendation) taken by, or upon authority of, the Board of
Directors of the Purchaser or the Company, as the case may be, in
the exercise of its good faith judgment based upon the advice of
outside counsel as to its fiduciary duties to its stockholder
imposed by law.
7.4. Filings, Other Action. Subject to the terms and
conditions herein provided, the Company and the Purchaser shall:
(a) promptly make their respective filings and thereafter make
any other required submissions under the HSR Act and the
Communications Act; (b) use all reasonable efforts to cooperate
with one another in (i) determining which filings are required to
be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained
prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings and
timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done,
all other things necessary, proper or appropriate to consummate
and make effective the transactions contemplated by this
Agreement. The parties hereto recognize and acknowledge that
under applicable rules and regulations of the FCC, certain assets
currently held by, or attributable to, the Purchaser, the Company
or their officers or directors cannot be held by, or be
attributable to, Holding Company or its officers and directors
after the Effective Time, unless appropriate waivers of such
rules and regulations are obtained. In no event shall the
obtaining of permanent waivers with respect to assets of the
Purchaser or its officers or directors be a condition to
consummation of the Mergers. In no event shall a permanent
waiver be sought without also seeking in the alternative to
obtain a temporary waiver to allow the consummation of the
Mergers including the divestiture of assets or other action
required in order to obtain such waiver. If necessary in order
to obtain the FCC's approval of the transactions contemplated
hereby the Purchaser and the Company will divest any or all of
such assets and take such other actions prior to consummation of
the transactions contemplated hereby. If, at any time after the
Effective Time, any further action is necessary or desirable to
carry out the purpose of this Agreement, the proper officers and
directors of the Purchaser and the Company shall take all such
necessary action.
7.5. Inspection of Records. From the date hereof to
the Effective Time, each of the Company and the Purchaser shall,
subject to any applicable rules and regulations of the FCC, (i)
allow all designated officers, attorneys, accountants and other
representatives of the other reasonable access at all reasonable
times to the offices, records and files, correspondence, audits
and properties, as well as to all information relating to
commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of the Company
and the Purchaser and their respective Subsidiaries, as the case
may be, (ii) furnish to the other, the other's counsel, financial
advisors, auditors and other authorized representatives such
financial and operating data and other information as such
persons may reasonably request and (iii) instruct the employees,
counsel and financial advisors of the Company or the Purchaser,
as the case may be, to cooperate with the other in the other's
investigation of the business of it and its Subsidiaries.
7.6. Publicity. The initial press release relating to
this Agreement shall be a joint press release and thereafter the
Company and the Purchaser shall, subject to their respective
legal obligations (including requirements of stock exchanges and
other similar regulatory bodies), consult with each other, and
use reasonable efforts to agree upon the text of any press
release, before issuing any such press release or otherwise
making public statements with respect to the transactions
contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national
securities exchange with respect thereto.
7.7. Registration Statement. The Purchaser and the
Company shall cooperate and promptly prepare and the Purchaser
shall file with the SEC as soon as practicable a Registration
Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Holding Company Common Stock issuable in the
Mergers, a portion of which Registration Statement shall also
serve as the joint proxy statement with respect to the meetings
of the stockholders of the Company and of the Purchaser in
connection with the Mergers (the "Proxy Statement/Prospectus").
The respective parties will cause the Proxy Statement/Prospectus
and the Form S-4 to comply as to form in all material respects
with the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. The
Purchaser shall use all reasonable efforts, and the Company will
cooperate with the Purchaser, to have the Form S-4 declared
effective by the SEC as promptly as practicable and to keep the
Form S-4 effective as long as is necessary to consummate the
Mergers. The Purchaser shall, as promptly as practicable,
provide copies of any written comments received from the SEC with
respect to the Form S-4 to the Company and advise the Company of
any verbal comments with respect to the Form S-4 received from
the SEC. The Purchaser shall use its best efforts to obtain,
prior to the effective date of the Form S-4, all necessary state
securities law or "Blue Sky" permits or approvals required to
carry out the transactions contemplated by this Agreement and
will pay all expenses incident thereto. The Purchaser agrees
that the Proxy Statement/Prospectus and each amendment or
supplement thereto at the time of mailing thereof and at the time
of the respective meetings of stockholders of the Company and the
Purchaser, or, in the case of the Form S-4 and each amendment or
supplement thereto, at the time it is filed or becomes effective,
will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or
omission to state a material fact was made by the Purchaser in
reliance upon and in conformity with written information
concerning the Company furnished to the Purchaser by the Company
specifically for use in the Proxy Statement/Prospectus. The
Company agrees that the written information concerning the
Company provided by it for inclusion in the Proxy
Statement/Prospectus and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the respective
meetings of stockholders of the Company and the Purchaser, or, in
the case of written information concerning the Company provided
by the Company for inclusion in the Form S-4 or any amendment or
supplement thereto, at the time it is filed or becomes effective,
will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. No
amendment or supplement to the Proxy Statement/Prospectus will be
made by the Purchaser or the Company without the approval of the
other party. The Purchaser will advise the Company, promptly
after it receives notice thereof, of the time when the Form S-4
has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the
qualification of the Purchaser Common Stock issuable in
connection with the Mergers for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the
Proxy Statement/Prospectus or the Form S-4 or comments thereon
and responses thereto or requests by the SEC for additional
information.
7.8. Listing Application. The Purchaser shall promptly
cause Holding Company to prepare and submit to the NYSE and the
Pacific Exchanges listing applications covering the shares of
Holding Company Common Stock issuable in the Mergers, and shall
use reasonable efforts to obtain, prior to the Effective Time,
approval for the listing of such Holding Company Common Stock,
subject to official notice of issuance.
7.9. Further Action. Each party hereto shall, subject
to the fulfillment at or before the Effective Time of each of the
conditions of performance set forth herein or the waiver thereof,
perform such further acts and execute such documents as may be
reasonably required to effect the Mergers.
7.10. Affiliate Letters. At least 30 days prior to
the Closing Date, the Company shall deliver to the Purchaser a
list of names and addresses of those persons who were, in the
Company's reasonable judgment, at the record date for its
stockholders' meeting to approve the Mergers, "affiliates" (each
such person, an "Affiliate") of the Company within the meaning of
Rule 145 of the rules and regulations promulgated under the
Securities Act. The Company shall use all reasonable efforts to
deliver or cause to be delivered to the Purchaser, prior to the
Closing Date, from each of the Affiliates of the Company
identified in the foregoing list, an Affiliate Letter in the form
attached hereto as Exhibit A. Holding Company shall be entitled
to place legends as specified in such Affiliate Letters on the
certificates evidencing any Holding Company Common Stock to be
received by such Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer instructions to
the transfer agent for the Holding Company Common Stock,
consistent with the terms of such Affiliate Letters.
7.11. Expenses. Whether or not the Mergers are
consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses except as expressly
provided herein and except that (a) the filing fee in connection
with the HSR Act filing, (b) the filing fee in connection with
the filing of the Form S-4 or Proxy Statement/Prospectus with the
SEC (c) the filing fees in connection with necessary applications
to the FCC and (d) the expenses incurred in connection with
printing and mailing the Form S-4 and the Proxy
Statement/Prospectus, shall be shared equally by the Company and
the Purchaser.
7.12. Insurance; Indemnity. (a) From and after
the Effective Time, Holding Company shall indemnify, defend and
hold harmless to the fullest extent that the Company would have
been permitted under applicable law each person who is now, or
has been at any time prior to the date hereof, an officer or
director of the Company (individually, an "Indemnified Party" and
collectively, the "Indemnified Parties"), against all losses,
claims, damages, liabilities, costs or expenses (including
attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding
or investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their
capacities as such occurring at or prior to the Effective Time.
In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) any Indemnified Party wishing to
claim indemnification shall promptly notify Holding Company
thereof, (ii) Holding Company shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Party, which
counsel shall be reasonably acceptable to Holding Company, in
advance of the final disposition of any such Action to the full
extent permitted by applicable law, upon receipt of any
undertaking required by applicable law, and (iii) the Holding
Company will cooperate in the defense of any such matter;
provided, however, that Holding Company shall not be liable for
any settlement effected without its written consent and provided,
further, that Holding Company shall not be obligated pursuant to
this Section to pay the fees and disbursements of more than one
counsel for all Indemnified Parties in any single Action except
to the extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have conflicting
interests in the outcome of such action.
(b) Holding Company shall cause the surviving
corporation of the Company Merger to keep in effect provisions in
its Certificate of Incorporation and Bylaws providing for
exculpation of director and officer liability and its
indemnification of the Indemnified Parties to the fullest extent
permitted under the NYBCL, which provisions shall not be amended
except as required by applicable law or except to make changes
permitted by law that would enlarge the Indemnified Parties'
right of indemnification.
(c) For a period of three years after the Effective
Time, Holding Company shall cause to be maintained officers' and
directors' liability insurance covering the Indemnified Parties
who are currently covered, in their capacities as officers and
directors, by the Company's existing officers' and directors'
liability insurance policies on terms substantially no less
advantageous to the Indemnified Parties than such existing
insurance; provided, however, that Holding Company shall not be
required in order to maintain or procure such coverage to pay an
annual premium in excess of one and one-half times the current
annual premium paid by the Company for its existing coverage (the
"Cap") (which current annual premium the Company represents and
warrants to be approximately $300,000); and provided, further,
that if equivalent coverage cannot be obtained, or can be
obtained only by paying an annual premium in excess of the Cap,
Holding Company shall only be required to obtain as much coverage
as can be obtained by paying an annual premium equal to the Cap.
(d) The provisions of this Section shall survive the
consummation of the Mergers and expressly are intended to benefit
each of the Indemnified Parties.
7.13. Rights Agreements. Each of the Purchaser and
the Company shall take all necessary action prior to the
Effective Time to cause the dilution provisions of the Purchaser
Rights Agreement and the Company Rights Agreement, respectively,
to be inapplicable to the transactions contemplated by this
Agreement, without any payment to holders of rights issued
pursuant to such Rights Agreements.
7.14. Takeover Statute. If any "fair price",
"moratorium", "control share acquisition" or other form of
antitakeover statute or regulation shall become applicable to the
transactions contemplated hereby or the transactions contemplated
by the Stock Agreement, the Company and the members of the Board
of Directors of the Company shall grant such approvals and take
such actions as are reasonably necessary so that the transactions
contemplated hereby and the transactions contemplated by the
Stock Agreement may be consummated as promptly as practicable on
the terms contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby and thereby.
7.15. Conduct of Business by Holding Company and
the Merger Subsidiaries Pending the Mergers. Prior to the
Effective Time and subject to any applicable regulatory
approvals, the Purchaser and the Company shall cause Holding
Company and the Merger Subsidiaries to (a) perform their
respective obligations hereunder and under this Agreement and the
Merger Agreements in accordance with the terms hereof and thereof
and take all other actions necessary or appropriate for the
consummation of the transactions contemplated hereby and thereby,
(b) not incur directly or indirectly any liabilities or
obligations except those incurred in connection with the
consummation of this Agreement and the Merger Agreements and the
transactions contemplated hereby and thereby, (c) not engage
directly or indirectly in any business or activities of any type
or kind whatsoever and not enter into any agreements or
arrangements with any person or entity, or be subject to or be
bound by any obligation or undertaking which is not contemplated
by this Agreement or the Merger Agreements and (d) not create,
grant or suffer to exist any lien upon their respective
properties or assets which would attach to any properties or
assets of the Purchaser or the Company after the Effective Time.
7.16. Employee Benefits. Purchaser will cause to
remain in effect for the benefit of the Company's employees for a
period of at least two years after the Effective Time all
employee benefit plans of the Company and its Subsidiaries
(including the Company's existing severance policies and programs
but excluding stock and incentive compensation plans and those
plans that are the subject of collective bargaining) in effect on
the date of this Agreement and, with respect to employees who are
subject to collective bargaining, all benefits shall be provided
in accordance with the applicable collective bargaining agreement
; provided,however, that no severance payments shall be required
to be made to any employee of the Company or any Company
Subsidiary who is not terminated by the Company or any Company
Subsidiary. No amendment shall be made to any such plan that
materially adversely affects the rights or interests of the plan
participants or beneficiaries except to the extent required by
applicable law or to maintain tax qualifications. In the event
that any employee of the Company or its Subsidiaries is at any
time after the Effective Time transferred to the Purchaser or any
affiliate of Purchaser or becomes a participant in an employee
benefit plan, program or arrangement maintained by or contributed
by the Purchaser or its affiliates, Purchaser shall cause such
plan, program or arrangement to treat the prior service of such
employee with the Company or its Subsidiaries, to the extent such
prior service is recognized under the comparable plan, program or
arrangement of the Company, as service rendered to the Purchaser
or its affiliates, as the case may be; provided, however, that in
administering such plans, programs or arrangements of Purchaser
or its affiliates, Purchaser may cause a reduction of benefits
under any such plans, programs or arrangements to the extent
necessary to avoid duplication of benefits with respect to the
same covered matter or years of service.
7.17. Conveyance Taxes. The Company and the
Purchaser 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, stock transfer and stamp taxes, any
transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions
contemplated by this Agreement that are required or permitted to
be filed on or before the Effective Time.
7.18. Gains Tax. The Company shall pay, without
deduction or withholding from any amount payable to the holders
of Company Common Stock, any New York State Tax on Gains Derived
from Certain Real Property Transfers (the "Gains Tax"), New York
State Real Estate Transfer Tax, New York City Real Property
Transfer Tax and New York State Stock Transfer Tax (the "Transfer
Taxes") and any similar taxes imposed by any other State of the
United States (and any penalties and interest with respect to
such taxes), which become payable in connection with the
transactions contemplated by this Agreement, on behalf of the
stockholders of the Company. The Company and the Purchaser shall
cooperate in the preparation, execution and filing of any
required returns with respect to such taxes (including returns on
behalf of the stockholders of the Company) and in the
determination of the portion of the consideration allocable to
the real property of the Company and the Company Subsidiaries in
New York State and City (or in any other jurisdiction, if
applicable). The terms of the Proxy Statement/Prospectus shall
provide that the stockholders of the Company shall be deemed to
have agreed to be bound by the allocation established pursuant to
this Section 7.18 in the preparation of any return with respect
to the Gains Tax and the Transfer Taxes and any similar taxes, if
applicable.
ARTICLE 8
CONDITIONS
8.1. Conditions to Each Party's Obligation to Effect
the Mergers. The respective obligation of each party to effect
the Mergers shall be subject to the fulfillment at or prior to
the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated
hereby shall have been approved in the manner required by
applicable law or by the applicable regulations of any stock
exchange or other regulatory body, as the case may be, by the
holders of the issued and outstanding shares of capital stock of
the Company and the Purchaser, respectively.
(b) The waiting period applicable to the consummation
of the Mergers under the HSR Act shall have expired or been
terminated.
(c) Neither of the parties hereto shall be subject to
any order or injunction of a court of competent jurisdiction
which prohibits the consummation of the transactions contemplated
by this Agreement. In the event any such order or injunction
shall have been issued, each party agrees to use its reasonable
efforts to have any such injunction lifted.
(d) The Form S-4 shall have become effective and shall
be effective at the Effective Time, and no stop order suspending
effectiveness of the Form S-4 shall have been issued, no action,
suit, proceeding or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be
continuing, or, to the knowledge of the Purchaser or the Company,
threatened, and all necessary approvals under state securities
laws relating to the issuance or trading of the Purchaser Common
Stock to be issued to the Company stockholders in connection with
the Mergers shall have been received.
(e) All orders and approvals of the FCC required in
connection with the consummation of the transactions contemplated
hereby shall have been obtained or made, whether or not any
appeal or request for reconsideration of such order is pending,
or whether the time for filing any such appeal or request for
reconsideration or for any sua sponte action by the FCC has
expired.
(f) All consents, authorizations, orders and approvals
of (or filings or registrations with) any governmental
commission, board or other regulatory body (other than the FCC)
required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made,
except for filings in connection with the Mergers and any other
documents required to be filed after the Effective Time and
except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration
would not have a material adverse effect on the business, results
of operations or financial condition of the Purchaser and the
Company (and their respective Subsidiaries), taken as a whole,
following the Effective Time.
(g) The Holding Company Common Stock to be issued to
the Company stockholders in connection with the Mergers shall
have been approved for listing on the NYSE, subject only to
official notice of issuance.
8.2. Conditions to Obligation of Company to Effect the
Mergers. The obligation of the Company to effect the Mergers
shall be subject to the fulfillment at or prior to the Closing
Date of the following conditions:
(a) The Purchaser shall have performed in all material
respects its agreements contained in this Agreement required to
be performed on or prior to the Closing Date, the representations
and warranties of the Purchaser and Merger Sub contained in this
Agreement and in any document delivered in connection herewith
shall be true and correct as of the Closing Date, except (i) for
changes specifically permitted by this Agreement and (ii) that
those representations and warranties which address matters only
as of a particular date shall remain true and correct as of such
date, and the Company shall have received a certificate of the
President or a Vice President of the Purchaser, dated the Closing
Date, certifying to such effect.
(b) The Company shall have received the opinion of
Cravath, Swaine & Moore, special counsel to the Company, based
upon reasonably requested representation letters and dated the
Closing Date, to the effect that (i) the Company Merger will be
treated as a transfer of property to Holding Company by the
holders of Company Common Stock described in Section 351(a) or
Section 351(b) of the Code and (ii) no gain or loss will be
recognized for federal income tax purposes by the Company in
connection with the Company Merger.
(c) From the date of this Agreement through the
Effective Time, there shall not have occurred any change in the
financial condition, business or operations of the Purchaser and
its Subsidiaries, taken as a whole, that would have or would be
reasonably likely to have a Purchaser Material Adverse Effect.
(d) The Holding Company shall have executed a
Registration Rights Agreement substantially in the form attached
hereto as Exhibit B.
8.3. Conditions to Obligation of Purchaser to Effect
the Mergers. The obligation of the Purchaser to effect the
Mergers shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) The Company shall have performed in all material
respects its agreements contained in this Agreement required to
be performed on or prior to the Closing Date, the representations
and warranties of the Company contained in this Agreement and in
any document delivered in connection herewith shall be true and
correct as of the Closing Date, except (i) for changes
specifically permitted by this Agreement and (ii) that those
representations and warranties which address matters only as of a
particular date shall remain true and correct as of such date,
and the Purchaser shall have received a certificate of the
President or a Vice President of the Company, dated the Closing
Date, certifying to such effect.
(b) The Purchaser shall have received the opinion of
Dewey Ballantine, special counsel to the Purchaser, based upon
reasonably requested representation letters and dated the Closing
Date, to the effect that (i) the Purchaser Merger will be treated
as an exchange governed by Section 351 of the Code or as a
reorganization governed by Section 368 of the Code and (ii) no
gain or loss will be recognized for federal income tax purposes
by the Purchaser in connection with the Purchaser Merger.
(c) From the date of this Agreement through the
Effective Time, there shall not have occurred any change in the
financial condition, business or operations of the Company and
its Subsidiaries, taken as a whole, that would have or would be
reasonably likely to have a Company Material Adverse Effect.
(d) The Stock Agreement shall have remained in full
force and effect through the Effective Time.
(e) After the Effective Time, no person shall have any
right under any stock option plan (or any option granted
thereunder) or other plan, program or arrangement to acquire any
equity securities of the Company.
ARTICLE 9
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may
be terminated and the Mergers may be abandoned at any time prior
to the Effective Time, before or after the approval of this
Agreement by the stockholders of the Purchaser or the Company, by
the mutual consent of the Purchaser and the Company.
9.2. Termination by Either Purchaser or Company. This
Agreement may be terminated and the Mergers may be abandoned by
action of the Board of Directors of either the Purchaser or the
Company if (a) the Mergers shall not have been consummated by
October 1, 1996, or (b) the approval of the Company's
stockholders required by Section 8.1(a) shall not have been
obtained at a meeting duly convened therefor or at any
adjournment thereof, or (c) the approval of the Purchaser's
stockholders required by Section 8.1(a) shall not have been
obtained at a meeting duly convened therefor or at any
adjournment thereof, (d) a United States federal or state court
of competent jurisdiction or United States federal or state
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become
final and non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (d) shall have
used all reasonable efforts to remove such injunction, order or
decree; and provided, in the case of a termination pursuant to
clause (a) above, that the terminating party shall not have
breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed
to the failure to consummate the Mergers by October 1, 1996 or
(e) the FCC shall have issued an order or ruling or taken other
action denying approval of the transactions contemplated by this
Agreement, and such order, ruling or other action shall have
become final and non-appealable.
9.3. Termination by Company. This Agreement may be
terminated and the Mergers may be abandoned at any time prior to
the Effective Time, before or after the adoption and approval by
the stockholders of the Company referred to in Section 8.1(a), by
action of the Board of Directors of the Company, if (a) in the
exercise of its good faith judgment as to fiduciary duties to its
stockholders imposed by law, as advised by outside counsel, the
Board of Directors of the Company determines that such
termination is required by reason of an Alternative Proposal
being made; provided that the Company shall notify the Purchaser
promptly of its intention to terminate this Agreement or enter
into a definitive agreement with respect to any Alternative
Proposal, but in no event shall such notice be given less than 48
hours prior to the public announcement of the Company's
termination of this Agreement; or (b) there has been a breach by
the Purchaser of any representation or warranty contained in this
Agreement which would have or would be reasonably likely to have
a Purchaser Material Adverse Effect; or (c) there has been a
material breach of any of the covenants or agreements set forth
in this Agreement on the part of the Purchaser, which breach is
not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by the Company to the
Purchaser; or (d) the Board of Directors of the Purchaser shall
have withdrawn or modified in a manner materially adverse to the
Company its approval or recommendation of this Agreement or the
Mergers. Notwithstanding the foregoing, the Company's ability to
terminate this Agreement pursuant to Section 9.2 or this 9.3 is
conditioned upon the prior payment by the Company of any amounts
owed by it pursuant to Section 9.5(a)(i).
9.4. Termination by Purchaser. This Agreement may be
terminated and the Mergers may be abandoned at any time prior to
the Effective Time, before or after the approval by the
stockholders of the Purchaser referred to in Section 8.1(a), by
action of the Board of Directors of the Purchaser, if (a) the
Board of Directors of the Company shall have withdrawn or
modified in a manner materially adverse to the Purchaser its
approval or recommendation of this Agreement or the Mergers or
shall have recommended an Alternative Proposal to the Company
stockholders, or (b) there has been a breach by the Company of
any representation or warranty contained in this Agreement which
would have or would be reasonably likely to have a Company
Material Adverse Effect, or (c) there has been a material breach
of any of the covenants or agreements set forth in this Agreement
on the part of the Company, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such
breach is given by the Purchaser to the Company.
9.5. Effect of Termination and Abandonment. (a) In
the event that any person shall have made an Alternative Proposal
for the Company and thereafter (i) this Agreement is terminated
pursuant to Section 9.3(a) or Section 9.4 or (ii) this Agreement
is terminated for any other reason (other than the breach of this
Agreement by the Purchaser and other than pursuant to Section
9.2(c)) and, in the case of this clause (ii) only, a definitive
agreement with respect to such Alternative Proposal is executed
within one year after such termination, then the Company shall
pay the Purchaser a fee of $400,000,000, which amount shall be
payable by wire transfer of same day funds either on the date
contemplated in the last sentence of Section 9.3 if applicable
or, otherwise, within two business days after such amount becomes
due. The Company acknowledges that the agreements contained in
this Section 9.5(a) are an integral part of the transactions
contemplated in this Agreement, and that, without these
agreements, the Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 9.5(a), and, in order to obtain such
payment, the Purchaser commences a suit which results in a
judgment against the Company for the fee set forth in this
Section 9.5(a), the Company shall pay to the Purchaser its costs
and expenses (including attorneys' fees) in connection with such
suit, together with interest on the amount of the fee at the rate
of 12% per annum.
(b) In the event of termination of this Agreement and
the abandonment of the Mergers pursuant to this Article 9, all
obligations of the parties hereto shall terminate, except the
obligations of the parties pursuant to this Section 9.5 and
Section 7.11 and except for the provisions of Sections 10.3,
10.4, 10.6, 10.8, 10.9, 10.12, 10.13 and 10.14. Moreover, in the
event of termination of this Agreement pursuant to Section 9.3 or
9.4, nothing herein shall prejudice the ability of the
non-breaching party from seeking damages from any other party for
any willful breach of this Agreement, including without
limitation, attorneys' fees and the right to pursue any remedy at
law or in equity.
9.6. Extension, Waiver. At any time prior to the
Effective Time, any party hereto, by action taken by its Board of
Directors, may, to the extent legally allowed, (a) extend the
time for the performance of any of the obligations or other acts
of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the
benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
10.1. Nonsurvival of Representations, Warranties
and Agreements. All representations, warranties and agreements
in this Agreement or in any instrument delivered pursuant to this
Agreement shall be deemed to the extent expressly provided herein
to be conditions to the Mergers and shall not survive the
Mergers, provided, however, that the agreements contained in
Article 4, Section 7.12, Section 7.16 and this Article 10 shall
survive the Mergers and Section 9.5 shall survive termination.
10.2. Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by
facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
If to the Purchaser: If to the Company:
The Walt Disney Company Capital Cities/ABC, Inc.
500 South Buena Vista Street 77 West 66th Street
Burbank, CA 91521 New York, NY 10023
Attention: Attention:
Sanford M. Litvack Alan N. Braverman
Telecopier No.: Telecopier No.:
(818) 563-4160 (212) 456-6908
With copies to: With copies to:
Dewey Ballantine Cravath, Swaine & Moore
1301 Avenue of the Americas Worldwide Plaza
New York, NY 10019 825 Eighth Avenue
Attention: New York, NY 10019
Morton A. Pierce Attention:
Mark R. Baker Samuel C. Butler
Telecopier No.: Telecopier No.:
(212) 259-6333 (212) 474-3700
or to such other address as any party shall specify by written
notice so given, and such notice shall be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or mailed.
10.3. Assignment; Binding Effect. Neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether
by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and
assigns. Notwithstanding anything contained in this Agreement to
the contrary, except for the provisions of Section 7.12 and
Section 7.16, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
10.4. Entire Agreement. This Agreement, the
Exhibits, the Company Disclosure Letter, the Purchaser Disclosure
Letter, the Confidentiality Agreement dated July 29, 1995,
between the Company and the Purchaser and any documents delivered
by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings
among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all
parties hereto.
10.5. Amendment. This Agreement may be amended by
the parties hereto, by action taken by their respective Boards of
Directors, at any time before or after approval of matters
presented in connection with the Mergers by the stockholders of
the Company and the Purchaser, but after any such stockholder
approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further
approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties
hereto.
10.6. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware without regard to its rules of conflict of
laws, except that the provisions of Article 2 and Article 4 with
respect to the Company Merger shall be governed by and construed
in accordance with the laws of the State of New York.
10.7. Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all
of the parties hereto.
10.8. Headings. Headings of the Articles and
Sections of this Agreement are for the convenience of the parties
only, and shall be given no substantive or interpretive effect
whatsoever.
10.9. Interpretation. In this Agreement, unless
the context otherwise requires, words describing the singular
number shall include the plural and vice versa, and words
denoting any gender shall include all genders and words denoting
natural persons shall include corporations and partnerships and
vice versa.
10.10. Waivers. Except as provided in this
Agreement, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking
such action of compliance with any representations, warranties,
covenants or agreements contained in this Agreement. The waiver
by any party hereto of a breach of any provision hereunder shall
not operate or be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
10.11. Incorporation of Exhibits. The Company
Disclosure Letter, the Purchaser Disclosure Letter and all
Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
10.12. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction
shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of
the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, the provision shall be interpreted to be
only so broad as is enforceable.
10.13. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any
of the provisions of this Agreement was not performed in
accordance with its specific terms or was otherwise breached. It
is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in
any Delaware Court, this being in addition to any other remedy to
which they are entitled at law or in equity.
10.14. Subsidiaries. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or
unincorporated, of which such party directly or indirectly owns
or controls at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar
functions with respect to such corporation or other organization,
or any organization of which such party is a general partner.
When a reference is made in this Agreement to Significant
Subsidiaries, the words "Significant Subsidiaries" shall refer to
Subsidiaries (as defined above) which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under the
Securities Act.
IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their
behalf on the day and year first written above.
ATTEST: THE WALT DISNEY COMPANY
By: /s/ David K. Thompson By: /s/ Michael D. Eisner
David K. Thompson Michael D. Eisner
Senior Vice President Chairman of the Board
Assistant General Counsel and Chief Executive
Officer
ATTEST: CAPITAL CITIES/ABC, INC.
By:__________________________ By: /s/ Thomas S. Murphy
<PAGE>
EXHIBIT A
TO REORGANIZATION
AGREEMENT
FORM OF AFFILIATE LETTER
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Ladies and Gentlemen:
I have been advised that as of the date of this letter
I may be deemed to be an "affiliate" of __________, a New York
corporation (the "Company"), as the term "affiliate" is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), or (ii) used in
and for purposes of Accounting Series, Releases 130 and 135, as
amended, of the Commission. Pursuant to the terms of the
Agreement and Plan of Reorganization dated as of _____________,
1995 (the "Agreement"), between ________________________, a
Delaware corporation (the "Purchaser") and the Company, the
Company will be merged with and into Merger Sub B (as defined in
the Agreement) (the "Merger").
As a result of the Merger, I may receive shares of
Common Stock, par value $.___ per share, of the Holding Company
(as defined in the Agreement) (the "Holding Company Securities")
in exchange for shares owned by me of Common Stock, par value
$.10 per share, of the Company.
I represent, warrant and covenant to the Purchaser that
in the event I receive any Holding Company Securities as a result
of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Holding Company Securities in violation of the
Act or the Rules and Regulations.
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents and
other applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Purchaser Securities to the extent I
felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Holding
Company Securities to me pursuant to the Merger has been
registered with the Commission under the Act on a Registration
Statement on Form S-4. However, I have also been advised that,
since at the time the Merger was submitted for a vote of the
stockholders of the Company, I may be deemed to have been an
affiliate of the Company and the distribution by me of the
Holding Company Securities has not been registered under the Act,
I may not sell, transfer or otherwise dispose of the Holding
Company Securities issued to me in the Merger unless (i) such
sale, transfer or other disposition has been registered under the
Act, (ii) such sale, transfer or other disposition is made in
conformity with Rule 145 promulgated by the Commission under the
Act, or (iii) in the opinion of counsel reasonably acceptable to
the Holding Company, or pursuant to a "no action" letter obtained
by the undersigned from the staff of the Commission, such sale,
transfer or other disposition is otherwise exempt from
registration under the Act.
D. I understand that, except as may be provided in
any registration rights agreement entered into by the Holding
Company and the undersigned, the Holding Company is under no
obligation to register the sale, transfer or other disposition of
the Holding Company Securities by me or on my behalf under the
Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
E. I also understand that stop transfer instructions
will be given to the Holding Company's transfer agents with
respect to the Holding Company Securities and that there will be
placed on the certificates for the Holding Company Securities
issued to me, or any substitutions therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED
IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED
____________, BETWEEN THE REGISTERED HOLDER HEREOF AND
____________________________, A COPY OF WHICH AGREEMENT
IS ON FILE AT THE PRINCIPAL OFFICES OF
________________________."
F. I also understand that unless the transfer by me
of my Holding Company Securities has been registered under the
Act or is a sale made in conformity with the provisions of Rule
145, the Holding Company reserves the right to put the following
legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND
WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR
RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF
WITHIN THE MEANING OF THE SECURITIES ACT OF 1933 AND
MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
OR IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth
in paragraphs E and F above shall be removed by delivery of
substitute certificates without such legend if such legend is not
required for purposes of the Act or this Agreement. It is
understood and agreed that such legends and the stop orders
referred to above will be removed if (i) two years shall have
elapsed from the date the undersigned acquired the Securities
received in the Merger and the provisions of Rule 145(d)(2) are
then available to the undersigned, (ii) three years shall have
elapsed from the date the undersigned acquired the Holding
Company Securities received in the Merger and the provisions of
Rule 145(d)(3) are then available to the undersigned, or (iii)
the Holding Company has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to the
Holding Company, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect that
the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as
described in the first paragraph of this letter or as a waiver of
any rights I may have to object to any claim that I am such an
affiliate on or after the date of this letter.
Very truly yours,
_________________________
Name:
Accepted this_______ day of
____________, 199__ by
THE WALT DISNEY COMPANY
By: _________________________
Name:
Title:
<PAGE>
EXHIBIT B TO
REORGANIZATION AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of
[ ], 1995, between THE WALT DISNEY
COMPANY, a Delaware corporation (the "Holding
Company"), and the persons listed on the signature
pages hereto (each an "Affiliate" and
collectively, the "Affiliates").
This Agreement is made pursuant to Section 8.2(d) of
the Agreement and Plan of Reorganization dated as of July 31,
1995 (as such agreement may be amended from time to time, the
"Merger Agreement"), between the Holding Company and CAPITAL
CITIES/ABC, INC., a New York corporation (the "Company"). In
order to induce each Affiliate to deliver an Affiliate Letter as
contemplated by Section 7.10 of the Merger Agreement, and in
further consideration therefor, the Purchaser has agreed to cause
the Holding Company to execute and deliver this Agreement and
provide the registration rights set forth in this Agreement.
Accordingly, it is hereby agreed as follows:
1. Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to such
terms in the Merger Agreement. For purposes of this Agreement,
the following terms shall have the following meanings:
"Blackout Period" has the meaning specified in
Section 6(a).
"Business Day" means a day, other than a Saturday or
Sunday, on which banking institutions and securities exchanges
in New York, New York are required to be open.
"Counsel to the Holders" means the single law firm from
time to time representing the Holders, as appointed by the
Holders of a majority in number of the Registrable Securities,
which law firm shall be reasonably acceptable to the Holding
Company.
"Effective Period" means, with respect to any Holder, a
period commencing on the date of this Agreement and ending on the
earlier of (i) the first date as of which all Registrable
Securities cease to be Registrable Securities and (ii) the date
on which such Holder may sell Registrable Securities in
accordance with Rule 145(d)(3) under the Securities Act.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Holder" means (i) each Affiliate and each person who
is an affiliate (as defined in Rule 405 of the Securities Act) of
such Affiliate that is a holder of Registrable Securities and
(ii) each Person that is a registered holder of Registrable
Securities who received or will receive certificates for
Registrable Securities bearing a legend pursuant to paragraph E
of an Affiliate Letter; provided, however, that, if such Person
is not an Affiliate, such Person has agreed in writing to become
a Holder hereunder and to be bound by the terms and conditions of
this Agreement.
"NASD" means the National Association of Securities
Dealers, Inc.
"Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by any
Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such
prospectus.
"Registrable Securities" means, collectively,
(i) the shares of Holding Company Common Stock (including any
associated Rights) issued pursuant to the Merger, (ii) any shares
of securities of the Holding Company purchased pursuant to the
exercise of any Right issued together with a share of Holding
Company Common Stock as described in Section 4.2 of the Merger
Agreement (the securities referred to in (i) and (ii) are,
collectively, the "Shares") and (iii) any securities paid, issued
or distributed in respect of any Shares by way of stock dividend
or distribution or stock split or in connection with a
combination of shares, recapitalization, reorganization, merger,
consolidation or otherwise. Securities will cease to be
Registrable Securities in accordance with Section 2 hereof.
"Registration Expenses" means any and all reasonable
expenses incident to performance of or compliance with this
Agreement, including, without limitation, (i) all SEC, NASD and
securities exchange registration and filing fees, (ii) all fees
and expenses of complying with state securities or blue sky laws
(including reasonable fees and disbursements of counsel for any
underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and
delivery expenses, (iv) all fees and expenses incurred in
connection with the listing of the Registrable Securities on any
securities exchange or automated quotation system pursuant to
Section 7(h), (v) the fees and disbursements of counsel for the
Holding Company and of its independent public accountants,
(vi) the reasonable fees and expenses of any special experts
retained by the Holding Company in connection with the requested
registration, (vii) the reasonable fees and expenses of Counsel
to the Holders and (viii) out-of-pocket expenses of underwriters
customarily paid by the issuer to the extent provided for in any
underwriting agreement, but excluding (x) underwriting discounts
and commissions and transfer taxes, if any, and (y) any fees or
disbursements of counsel to the Holders or any Holder (other than
Counsel to the Holders).
"Registration Statement" means any registration
statement of the Holding Company referred to in Section 3 or 4,
including any Prospectus, amendments and supplements to any such
registration statement, including post-effective amendments, and
all exhibits and all material incorporated by reference in any
such registration statement.
"Registration Hold Period" means a Section 7(e) Period
or a Section 7(m) Period.
"Related Securities" means any securities of the
Holding Company similar or identical to any of the Registrable
Securities, including, without limitation, Holding Company Common
Stock and all options, warrants, rights and other securities
convertible into, or exchangeable or exercisable for, Holding
Company Common Stock.
"Section 7(e) Period" has the meaning specified in
Section 7(e).
"Section 7(m) Period" has the meaning specified in
Section 7(m).
"Securities Act" means the Securities Act of 1933, as
amended.
"Shelf Registration" means a "shelf" registration
statement on an appropriate form pursuant to Rule 415 under the
Securities Act (or any successor rule that may be adopted by the
SEC).
"underwritten registration or underwritten offering"
shall mean an underwritten offering in which securities of the
Holding Company are sold to an underwriter for reoffering to the
public.
2. Securities Subject to This Agreement. The
securities entitled to the benefits of this Agreement are the
Registrable Securities. For the purposes of this Agreement,
Registrable Securities will cease to be Registrable Securities
when and to the extent that (i) a Registration Statement covering
Registrable Securities has been declared effective under the
Securities Act and Registerable Securities have been disposed of
pursuant to such effective Registration Statement,
(ii) Registrable Securities are distributed to the public
pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act, (iii) Registrable Securities have been
otherwise transferred to a party that is not an affiliate of an
Affiliate and new certificates for such Registrable Securities
not bearing the legends specified in paragraphs (E) and (F) of
the form of Affiliate Letter shall have been delivered by the
Holding Company or (iv) Registrable Securities have ceased to be
outstanding.
3. Piggy-Back Registration Rights. (a) Whenever
during the Effective Period the Holding Company shall propose to
file a registration statement under the Securities Act relating
to the public offering of Holding Company Common Stock for cash
pursuant to a firm commitment underwritten offering (other than
pursuant to a registration statement on Form S-4 or Form S-8 or
any successor forms, or filed in connection with an exchange
offer or an offering of securities solely to existing
stockholders or employees of the Holding Company), the Holding
Company shall (i) give written notice at least 15 Business Days
prior to the filing thereof to each Holder of Registrable
Securities then outstanding, specifying the approximate date on
which the Holding Company proposes to file such registration
statement and advising such Holder of his right to have any or
all of the Registrable Securities then held by such Holder
included among the securities to be covered thereby and (ii) at
the written request of any such Holder given to the Holding
Company at least two Business Days prior to the proposed filing
date, include among the securities covered by such registration
statement the number of Registrable Securities which such Holder
shall have requested be so included (subject, however, to
reduction in accordance with paragraph (b) of this Section). The
Holding Company shall use commercially reasonable efforts to
cause the managing underwriter of the proposed underwritten
offering to permit the Holders of Registrable Securities
requested to be included in the Registration Statement for such
offering to include such securities in such offering on the same
terms and conditions as any similar securities of the Holding
Company included therein.
(b) Each Holder of Registrable Securities desiring to
participate in an offering pursuant to Section 3(a) may include
shares of Holding Company Common Stock in any Registration
Statement relating to such offering to the extent that the
inclusion of such shares of Holding Company Common Stock shall
not reduce the number of shares of Holding Company Common Stock
to be offered and sold by the Holding Company or any other person
(other than a Holder) pursuant thereto. If the lead managing
underwriter selected by the Holding Company for an underwritten
offering pursuant to Section 3(a) determines that marketing
factors require a limitation on the number of shares of Holding
Company Common Stock to be offered and sold by the stockholders
of the Holding Company in such offering, there shall be included
in the offering only that number of shares of Holding Company
Common Stock, if any, that such lead managing underwriter
reasonably and in good faith believes will not jeopardize the
success of the offering of all the shares of Holding Company
Common Stock that the Holding Company desires to sell for its own
account. In such event and provided the managing underwriter has
so notified the Holding Company in writing, the number of shares
of Holding Company Common Stock to be offered and sold by
stockholders of the Holding Company, including Holders of
Registrable Securities, desiring to participate in such offering
shall be allocated among such stockholders of the Holding Company
on a pro rata basis based on their holdings of Holding Company
Common Stock (subject to any written agreements between two or
more Holders requiring a different priority).
(c) Nothing in this Section 3 shall create any
liability on the part of the Holding Company to the Holders of
Registrable Securities if the Holding Company for any reason
should decide not to file a registration statement proposed to be
filed under Section 3(a) or to withdraw such registration
statement subsequent to its filing, regardless of any action
whatsoever that a Holder may have taken, whether as a result of
the issuance by the Holding Company of any notice hereunder or
otherwise.
(d) A request by Holders to include Registrable
Securities in a proposed underwritten offering pursuant to
Section 3(a) shall not be deemed to be a request for a demand
registration pursuant to Section 4.
4. Demand Registration Rights. (a) Upon the written
request during the Effective Period of Holders of at least 25% of
the Registrable Securities that the Holding Company effect the
registration with the SEC under and in accordance with the
provisions of the Securities Act of all or part of such Holder's
or Holders' Registrable Securities (which written request shall
specify the aggregate number of shares of Registrable Securities
requested to be registered and the means of distribution), the
Holding Company will file a Registration Statement covering such
Holder's or Holders' Registrable Securities requested to be
registered within 20 Business Days after receipt of such request;
provided, however, that the Holding Company shall not be required
to take any action pursuant to this Section 4:
(1) if prior to the date of such request the Holding
Company shall have effected three registrations pursuant to
this Section 4;
(2) if the Holding Company has effected a registration
pursuant to this Section 4 within the 120-day period next
preceding such request which permitted Holders of
Registrable Securities to register Registrable Securities;
(3) if the Holding Company shall at the time have
effective a Shelf Registration pursuant to which the Holder
or Holders that requested registration could effect the
disposition of such Holder's or Holders' Registrable
Securities in the manner requested;
(4) if the Registrable Securities which the Holding
Company shall have been requested to register shall have a
then current market value of less than $50,000,000, unless
such registration request is for all remaining Registrable
Securities; or
(5) during the pendency of any Blackout Period;
provided further, however, that the Holding Company shall be
permitted to satisfy its obligations under this Section 4(a) by
amending (to the extent permitted by applicable law) any
registration statement previously filed by the Holding Company
under the Securities Act so that such registration statement (as
amended) shall permit the disposition (in accordance with the
intended methods of disposition specified as aforesaid) of all of
the Registrable Securities for which a demand for registration
has been made under this Section 4(a). If the Holding Company
shall so amend a previously filed registration statement, it
shall be deemed to have effected a registration for purposes of
this Section 4.
(b) The Holders delivering such request may distribute
the Registrable Securities covered by such request by means of an
underwritten offering or any other means, as determined by the
Holders of a majority of Registrable Securities so requested to
be registered.
(c) A registration requested pursuant to this
Section 4 shall not be deemed to be effected for purposes of this
Section 4 if it has not been declared effective by the SEC or
become effective in accordance with the Securities Act and the
rules and regulations thereunder.
(d) Holders of a majority in number of the Registrable
Securities to be included in a Registration Statement pursuant to
this Section 4 may, at any time prior to the effective date of
the Registration Statement relating to such registration, revoke
such request by providing a written notice to the Holding Company
revoking such request. The Holders of Registrable Securities who
revoke such request shall reimburse the Holding Company for all
its out-of-pocket expenses incurred in the preparation, filing
and processing of the Registration Statement; provided, however,
that, if such revocation was based on (x) the Holding Company's
failure to comply in any material respect with its obligations
hereunder or (y) the occurrence of a Blackout Period, such
reimbursement shall not be required and the remaining provisions
of this Section 4(d) shall not apply.
(e) The Holding Company will not include any
securities which are not Registrable Securities in any
Registration Statement filed pursuant to a demand made under this
Section 4 without the prior written consent of the Holders of a
majority in number of the Registrable Securities covered by such
Registration Statement.
5. Selection of Underwriters. In connection with any
underwritten offering pursuant to a Registration Statement filed
pursuant to a demand made pursuant to Section 4, Holders of a
majority in number of the Registrable Securities to be included
in the Registration Statement shall have the right to select a
managing underwriter or underwriters to administer the offering,
which managing underwriter or underwriters shall be reasonably
satisfactory to the Holding Company.
6. Blackout Period. (a) If (i) during the Effective
Period, the Holding Company shall file or propose to file a
registration statement (other than in connection with the
registration of securities issuable pursuant to a continuous "at
the market offering" pursuant to Rule 415(a)(4) under the
Securities Act, an employee stock option, stock purchase,
dividend reinvestment plan or similar plan or pursuant to a
merger, exchange offer or a transaction of the type specified in
Rule 145(a) under the Securities Act) with respect to any
securities of the Holding Company and (ii) with reasonable prior
notice, (A) the Holding Company (in the case of a non-
underwritten offering pursuant to such registration statement)
advises the Holders in writing that a sale or distribution of
Registrable Securities would adversely affect such offering or
(B) the managing underwriter or underwriters (in the case of an
underwritten offering) advise the Holding Company in writing (in
which case the Holding Company shall notify the Holders), that a
sale or distribution of Registrable Securities would adversely
affect such offering, then the Holding Company shall not be
obligated to effect the initial filing of a Registration
Statement pursuant to Section 4 during the period commencing on
the date that is 30 days prior to the date the Holding Company in
good faith estimates (as certified in writing by an officer of
the Holding Company to the Holder following a request for
registration pursuant to Section 4(a)) will be the date of filing
of, and ending on the date which is 90 days following the
effective date of, such registration statement (a "Section 6(a)
Period").
(b) If the Holding Company determines in good faith
that the registration and distribution of Registrable Securities
(i) would materially impede, delay or interfere with any pending
financing (other than a financing of the type described in
Section 6(a)), acquisition, corporate reorganization or other
significant transaction involving the Holding Company or
(ii) would require disclosure of non-public material information,
the disclosure of which would materially and adversely affect the
Holding Company, and, in the case of (ii), the Holding Company is
concurrently forbidding purchases or sales in the open market by
senior executives of the Holding Company, the Holding Company
shall promptly give the Holders written notice of such
determination and shall be entitled to postpone the filing or
effectiveness of a Registration Statement for a reasonable period
of time not to exceed 90 days (a "Section 6(b) Period" and,
together with a Section 6(a) Period, a "Blackout Period");
provided, however, that the Holding Company shall deliver to
Counsel to the Holders (as identified at such time to the
Company) a general statement, signed by an officer of the Holding
Company, of the reasons for such postponement or restriction on
use and an estimate of the anticipated delay. The Holding
Company shall promptly notify each Holder of the expiration or
earlier termination of a Section 6(b) Period.
(c) Notwithstanding anything in this Section 6 to the
contrary, (i) the beginning of any Blackout Period shall be at
least 120 days after the end of the prior Blackout Period and
(ii) the aggregate number of days included in all Blackout
Periods and all Registration Hold Periods during any consecutive
12 month period during the Effective Period shall not exceed
180 days.
7. Registration Procedures. If and whenever the
Holding Company is required to use commercially reasonable
efforts to effect or cause the registration of any Registrable
Securities under the Securities Act as provided in this
Agreement, the Holding Company will, as expeditiously as
possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities on any
form for which the Holding Company then qualifies or which
counsel for the Holding Company shall deem appropriate, and
which form shall be available for the sale of the
Registrable Securities in accordance with the intended
methods of distribution thereof (including, if so requested
by the Holders, distributions under Rule 415 under the
Securities Act pursuant to a Shelf Registration Statement),
and use commercially reasonable efforts to cause such
Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and post-
effective amendments to such Registration Statement and such
amendments and supplements to the Prospectus used in
connection therewith as may be necessary to maintain the
effectiveness of such registration or as may be required by
the rules, regulations or instructions applicable to the
registration form utilized by the Holding Company or by the
Securities Act or rules and regulations thereunder necessary
to keep such Registration Statement effective for up to 90
days, in the case of an underwritten offering, or 180 days,
in any other case (or longer period in the event of a
Registration Hold Period during such 90 or 180 days, as
provided in this Section 7) and cause the Prospectus as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to otherwise comply with the provisions
of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement until the
earlier of (x) such 90th or 180th day (or longer period) and
(y) such time as all Registrable Securities covered by such
Registration Statement have ceased to be Registrable
Securities; provided that a reasonable time before filing a
Registration Statement or Prospectus, or any amendments or
supplements thereto, the Holding Company will furnish to the
Holders, the managing underwriter and their respective
counsel for review and comment, copies of all documents
proposed to be filed and will not file any such documents
(other than as aforesaid) to which any of them reasonably
object prior to the filing thereof;
(c) furnish to each Holder of such Registrable
Securities such number of copies of such Registration
Statement and of each amendment and post-effective amendment
thereto (in each case including all exhibits), any
Prospectus or Prospectus supplement and such other documents
as such Holder may reasonably request in order to facilitate
the disposition of the Registrable Securities by such Holder
(the Holding Company hereby consenting to the use (subject
to the limitations set forth in the last paragraph of this
Section 7) of the Prospectus or any amendment or supplement
thereto in connection with such disposition);
(d) use commercially reasonable efforts to register or
qualify such Registrable Securities covered by such
Registration Statement under such other securities or blue
sky laws of such jurisdictions as each Holder shall
reasonably request, and do any and all other acts and things
which may be reasonably necessary or advisable to enable
such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such
Holder, except that the Holding Company shall not for any
such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction where, but for
the requirements of this Section 7(d), it would not be
obligated to be so qualified, to subject itself to taxation
in any such jurisdiction, or to consent to general service
of process in any such jurisdiction;
(e) notify each Holder of any such Registrable
Securities covered by such Registration Statement, at any
time when a Prospectus relating thereto is required to be
delivered under the Securities Act within the appropriate
period mentioned in Section 7(b), of the Holding Company's
becoming aware that the Prospectus included in such
Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the
circumstances then existing (the period during which the
Holders are required to refrain from effective public sales
or distributions in such case being referred to as a
"Section 7(e) Period"), and prepare and furnish to such
Holder a reasonable number of copies of an amendment to such
Registration Statement or related Prospectus as may be
necessary so that, as thereafter delivered to the purchasers
of such Registrable Securities, such Prospectus shall not
include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, and the time
during which such Registration Statement shall remain
effective pursuant to Section 7(b) shall be extended by the
number of days in the Section 7(e) Period;
(f) notify each Holder of Registrable Securities
covered by such Registration Statement at any time,
(1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed,
and, with respect to the Registration Statement or any
post-effective amendment, when the same has become
effective;
(2) of any request by the SEC for amendments or
supplements to the Registration Statement or the
Prospectus or for additional information;
(3) of the issuance by the SEC of any stop order
of which the Holding Company or its counsel is aware or
should be aware suspending the effectiveness of the
Registration Statement or any order preventing the use
of a related Prospectus, or the initiation or any
threats of any proceedings for such purposes;
(4) of the receipt by the Holding Company of any
written notification of the suspension of the
qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or any
threats of any proceeding for that purpose; and
(5) if at any time the representations and
warranties of the Holding Company contemplated by
paragraph (i)(1) below cease to be true and correct in
any material respect;
(g) otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the SEC,
and make available to the Holders an earnings statement
which shall satisfy the provisions of Section 11(a) of the
Securities Act, provided that the Holding Company shall be
deemed to have complied with this paragraph if it has
complied with Rule 158 under the Securities Act;
(h) use commercially reasonable efforts to cause all
such Registrable Securities to be listed on any securities
exchange or automated quotation system on which the Holding
Company Common Stock is then listed, if such Registrable
Securities are not already so listed and if such listing is
then permitted under the rules of such exchange or automated
quotation system, and to provide a transfer agent and
registrar for such Registrable Securities covered by such
Registration Statement no later than the effective date of
such Registration Statement;
(i) enter into agreements (including underwriting
agreements) and take all other appropriate and reasonable
actions in order to expedite or facilitate the disposition
of such Registrable Securities and in such connection,
whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten
registration:
(1) make such representations and warranties to
the Holders of such Registrable Securities and the
underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in
comparable underwritten offerings;
(2) obtain opinions of counsel to the Holding
Company thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory
to the managing underwriters, if any, and the Holders
of a majority in number of the Registrable Securities
being sold) addressed to each Holder and the
underwriters, if any, covering the matters customarily
covered in opinions requested in comparable
underwritten offerings and such other matters as may be
reasonably requested by the Holders of a majority in
number of the Registrable Securities being sold and the
managing underwriter, if any;
(3) obtain "cold comfort" letters and bring-downs
thereof from the Holding Company's independent
certified public accountants addressed to the selling
Holders of Registrable Securities and the underwriters,
if any, such letters to be in customary form and
covering matters of the type customarily covered in
"cold comfort" letters by independent accountants in
connection with underwritten offerings;
(4) if requested, provide indemnification in
accordance with the provisions and procedures of
Section 10 hereof to all parties to be indemnified
pursuant to said Section; and
(5) deliver such documents and certificates as may
be reasonably requested by the Holders of a majority in
number of the Registrable Securities being sold and the
managing underwriters, if any, to evidence compliance
with clause (f) above and with any customary conditions
contained in the underwriting agreement or other
agreement entered into by the Holding Company.
(j) cooperate with the Holders of Registrable
Securities covered by such Registration Statement and the
managing underwriter or underwriters or agents, if any, to
facilitate, to the extent commercially reasonable under the
circumstances, the timely preparation and delivery of
certificates (not bearing any restrictive legends)
representing the securities to be sold under such
Registration Statement, and enable such securities to be in
such denominations and registered in such names as the
managing underwriter or underwriters or agents, if any, or
such Holders may request;
(k) if reasonably requested by the managing underwriter
or underwriters or a Holder of Registrable Securities being
sold in connection with an underwritten offering,
incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters and
the Holders of a majority in number of the Registrable
Securities being sold agree should be included therein
relating to the plan of distribution with respect to such
Registrable Securities, including, without limitation,
information with respect to the principal amount of
Registrable Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters and
with respect to any other terms of the underwritten offering
of the Registrable Securities to be sold in such offering
and make all required filings of such Prospectus supplement
or post-effective amendment as promptly as practicable upon
being notified of the matters to be incorporated in such
Prospectus supplement or post-effective amendment;
(l) provide any Holder of Registrable Securities
included in such Registration Statement, any underwriter
participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other
agent retained by any such Holder or underwriter
(collectively, the "Inspectors") with reasonable access to
appropriate officers of the Holding Company and the Holding
Company's subsidiaries to ask questions and to obtain
information reasonably requested by any such Inspector and
make available for inspection all financial and other
records and other information, pertinent corporate documents
and properties of any of the Holding Company and its
subsidiaries and affiliates (collectively, the "Records"),
as shall be reasonably necessary to enable them to exercise
their due diligence responsibility; provided, however, that
the Records that the Holding Company determines, in good
faith, to be confidential and which it notifies the
Inspectors in writing are confidential shall not be
disclosed to any Inspector unless such Inspector signs a
confidentiality agreement reasonably satisfactory to the
Holding Company but in any event permitting disclosure by an
Inspector if (i) the disclosure of such Records is necessary
to avoid or correct a misstatement or omission of a material
fact in such Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction; provided
further, however, that any decision regarding the disclosure
of information pursuant to subclause (i) shall be made only
after consultation with counsel for the applicable
Inspectors. Each Holder of Registrable Securities agrees
that it will, promptly after learning that disclosure of
such Records is sought in a court having jurisdiction, give
notice to the Holding Company and allow the Holding Company,
at the Holding Company's expense, to undertake appropriate
action to prevent disclosure of such Records; and
(m) in the event of the issuance of any stop order of
which the Holding Company or its counsel is aware or should
be aware suspending the effectiveness of the Registration
Statement or of any order suspending or preventing the use
of any related Prospectus or suspending the qualification of
any Registrable Securities included in the Registration
Statement for sale in any jurisdiction, the Holding Company
will use commercially reasonable efforts promptly to obtain
its withdrawal; and the period for which the Registration
Statement shall be kept effective shall be extended by a
number of days equal to the number of days between the
issuance and withdrawal of any stop orders (a "Section 7(m)
Period").
The Holding Company may require each Holder of
Registrable Securities as to which any registration is being
effected to furnish the Holding Company with such information
regarding such Holder and pertinent to the disclosure
requirements relating to the registration and the distribution of
such securities as the Holding Company may from time to time
reasonably request in writing.
Each Holder of Registrable Securities agrees that, upon
receipt of any notice from the Holding Company of the happening
of any event of the kind described in Section 7(e), such Holder
will forthwith discontinue disposition of Registrable Securities
pursuant to the Prospectus or Registration Statement covering
such Registrable Securities until such Holder's receipt of the
copies of the supplemented or amended Prospectus contemplated by
Section 7(e), and, if so directed by the Holding Company, such
Holder will deliver to the Holding Company (at the Holding
Company's expense) all copies, other than permanent file copies
then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
8. Registration Expenses. The Holding Company will
pay all Registration Expenses in connection with all
registrations of Registrable Securities pursuant to Sections 3
and 4 upon the written request of any of the Holders, and each
Holder shall pay (x) any fees or disbursements of counsel to such
Holder (other than Counsel to the Holders) and (y) all
underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of such Holder's
Registrable Securities pursuant to the Registration Statement.
9. Reports Under the Exchange Act. The Holding
Company agrees to:
(a) file with the SEC in a timely manner all reports
and other documents required of the Holding Company under
the Exchange Act; and
(b) furnish to any Holder, during the Effective Period,
forthwith upon request (A) a written statement by the
Holding Company that it has complied with the current public
information and reporting requirements of Rule 144 under the
Securities Act and the Exchange Act and (B) a copy of the
most recent annual or quarterly report of the Holding
Company and such other reports and documents so filed by the
Holding Company.
10. Indemnification; Contribution.
(a) Indemnification by the Holding Company. The Holding Company
agrees to indemnify and hold harmless each Holder of Registrable
Securities, its officers, directors, agents, trustees,
stockholders and each Person who controls such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act), against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees, disbursements
and expenses) incurred by such party pursuant to any actual or
threatened action, suit, proceeding or investigation arising out
of or based upon (i) any violation by the Holding Company (or its
officers, directors or controlling persons) of any Federal or
state law, rule or regulation applicable to the Holding Company
and relating to any action required or inaction by the Holding
Company (or such other person) in connection with any
Registration Statement, (ii) any untrue or alleged untrue
statement of material fact contained in the Registration
Statement, any Prospectus or preliminary Prospectus, or any
amendment or supplement to any of the foregoing or (iii) any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus or a preliminary Prospectus,
in light of the circumstances then existing) not misleading,
except in each case insofar as the same arise out of or are based
upon any such untrue statement or omission made in reliance on
and in conformity with information with respect to such
indemnified party furnished in writing to the Holding Company by
such indemnified party or its counsel expressly for use therein.
In connection with an underwritten offering, the Holding Company
will indemnify the underwriters thereof, their officers,
directors, agents, trustees, stockholders and each Person who
controls such underwriters (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of
the Holders of Registrable Securities. Notwithstanding the
foregoing provisions of this Section 10(a), the Holding Company
will not be liable to any Holder of Registrable Securities (or
any officer, director, agent, trustee, stockholder or controlling
person thereof), any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other
Person, if any, who controls such Holder or underwriter (within
the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act), under the indemnity agreement in this
Section 10(a) for any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense that arises
out of such Holder's or other Person's failure to send or deliver
a copy of the final Prospectus to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of
the Registrable Securities to such Person if such statement or
omission was corrected in such final Prospectus and the Holding
Company has previously furnished copies thereof to such Holder or
other Person in accordance with this Agreement.
(b) Indemnification by Holders of Registrable
Securities. In connection with the Registration Statement, each
Holder will furnish to the Holding Company in writing such
information, including the name, address and the amount of
Registrable Securities held by such Holder, as the Holding
Company reasonably requests for use in such Registration
Statement or the related Prospectus and agrees to indemnify and
hold harmless (in the same manner and to the same extent as set
forth in Section 10(a)) the Holding Company, all other Holders or
any underwriter, as the case may be, and any of their respective
affiliates, directors, officers, agents, trustees, stockholders
and controlling Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), against any
losses, claims, damages, liabilities and expenses resulting from
(i) any violation by such Holder (or its officers, directors,
agents, trustees, stockholders or controlling persons) of any
Federal or state law, rule or regulation relating to action
required of or inaction by such Holder (or other Person) in
connection with its offer and sale of Registrable Securities and
(ii) any untrue or alleged untrue statement of a material fact
contained in, or any omission or alleged omission of a material
fact required to be stated in, such Registration Statement or
Prospectus or any amendment or supplement to either of them or
necessary to make the statements therein (in the case of a
Prospectus, in the light of the circumstances then existing) not
misleading, but only to the extent that any such untrue statement
or omission is made in reliance on and in conformity with
information with respect to such Holder furnished in writing to
the Holding Company by such Holder or its counsel specifically
for inclusion therein.
(c) Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying party after the receipt
by such indemnified party of any written notice of the
commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party
may claim indemnification or contribution pursuant to this
Agreement (provided that failure to give such notification shall
not affect the obligations of the indemnifying party pursuant to
this Section 10 except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure). In
case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party
under these indemnification provisions for any legal expenses of
other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation,
unless in the reasonable judgment of any indemnified party a
conflict of interest is likely to exist, based on the written
opinion of counsel, between such indemnified party and any other
of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the
reasonable fees and expenses of such additional counsel or
counsels. No indemnifying party, in defense of any such action,
suit, proceeding or investigation, shall, except with the consent
of each indemnified party, consent to the entry of any judgment
or entry into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability in respect to such action, suit, proceeding or
investigation to the extent the same is covered by the indemnity
obligation set forth in this Section 10. No indemnified party
shall consent to entry of any judgment or enter into any
settlement without the consent of each indemnifying party.
(d) Contribution. If the indemnification from the
indemnifying party provided for in this Section 10 is unavailable
to an indemnified party hereunder in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then
the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities and expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted
in such losses, claims, damages, liabilities and expenses, as
well as any other relevant equitable considerations. The
relative fault of such indemnifying party and indemnified party
shall be determined by reference to, among other things, whether
any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall
be deemed to include, subject to the limitations set forth in
Section 10(c), any legal and other fees and expenses reasonably
incurred by such indemnified party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 10(d) were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 10(d),
no underwriter shall be required to contribute any amount in
excess of the underwriting discount or commission applicable to
the Registrable Securities underwritten by it. No Person guilty
of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation. Each Holder's obligation to
contribute is several in the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds of
the offering, and not joint.
If indemnification is available under this Section 10,
the indemnifying parties shall indemnify each indemnified party
to the full extent provided in Section 10(a) or (b), as the case
may be, without regard to the relative fault of said indemnifying
parties or indemnified party or any other equitable consideration
provided for in this Section 10(d).
(e) In no event shall any Holder of Registrable
Securities be liable or required to contribute any amount under
this Section 10 or otherwise in respect of any untrue or alleged
untrue statement or omission or alleged omission for amounts in
excess of the amount by which the total price at which the
Registrable Securities of such Holder were offered to the public
exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue statement or
omission.
(f) The provisions of this Section 10 shall be in
addition to any liability which any indemnifying party may have
to any indemnified party and shall survive the termination of
this Agreement.
11. Participation in Underwritten Offerings. No
Holder of Registrable Securities may participate in any
underwritten offering pursuant to Section 3 hereunder unless such
Holder (a) agrees to sell such Holder's securities on the basis
provided in any underwriting arrangements approved by the Holding
Company in its reasonable discretion and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
12. Miscellaneous. (a) Remedies. Each Holder of
Registrable Securities in addition to being entitled to exercise
all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this
Agreement.
(b) Amendments and Waivers. Except as otherwise
provided herein, the provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless
the Holding Company has obtained the written consent of Holders
of at least a majority in number of the Registrable Securities
then outstanding.
(c) Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by
facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
(i) if to a Holder of Registrable Securities, at
the address of such Holder below such Holder's name on
the signature pages hereof or, if not a party hereto or
the date hereof, such other address as such Holder may
designate to the Holding Company in writing; and
(ii) if to the Holding Company to:
with copies to:
or to such other address as any party shall specify by written
notice so given, and such notice shall be deemed to have been
delivered as of the date so telecommunicated, personally
delivered or mailed.
(d) Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto,
any Holder other than the Affiliates and any successors thereof;
provided, however, that (i) any Holder shall have agreed in
writing to become a Holder under this Agreement and to be bound
by the terms and conditions hereof and (ii) subject to
clause (i), this Agreement and the provisions of this Agreement
that are for the benefit of the Holders shall not be assignable
by any Holder to any Person that is not so permitted to be a
Holder, and any such purported assignment shall be null and void.
(e) Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and
delivered to the other parties.
(f) Descriptive Headings. The descriptive headings
used herein are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or
interpretation of this Agreement.
(g) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
(h) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
any circumstances, is held invalid, illegal or unenforceable in
any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and
of the remaining provisions contained herein shall not be in any
way impaired thereby and that all remaining provisions contained
herein shall not be in any way impaired thereby.
(i) Entire Agreement. This Agreement is intended by
the parties as a final expression and a complete and exclusive
statement of the agreement and understanding of the parties
hereto in respect of the subject matter hereof. There are no
restrictions, promises, warranties or undertakings with respect
to the subject matter hereof, other than those set forth or
referred to herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with
respect to such subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
THE WALT DISNEY COMPANY,
by
_________________________
Name:
Title:
[AFFILIATES],
by
_________________________
Name:
Title:
<PAGE>
EXHIBIT D
STOCK AGREEMENT
STOCK AGREEMENT, dated as of July 31, 1995, among The Walt
Disney Company, a Delaware corporation ("Purchaser"), Berkshire
Hathaway, Inc., a Delaware corporation ("BH") and Thomas S.
Murphy (solely for purposes of Section 1.04 hereof).
Whereas, as of the date hereof subsidiaries and affiliates
of BH (the "Shareholders") own (either beneficially or of record)
20,000,000 shares of common stock, par value $0.10 per share
('Company Common Stock"), of Capital Cities/ABC Inc., a New York
corporation (the "Company") (all such shares and any shares
hereafter acquired by the Shareholders prior to the termination
of this Agreement being referred to herein the Shares");
Whereas, concurrently herewith, the Purchaser and the
Company are entering into an Agreement and Plan of Reorganization
(as such Agreement may hereafter be amended from time to time,
the "Merger Agreement"), pursuant to which, upon the terms and
subject to the conditions thereof, Merger Sub B (as defined in
the Merger Agreement) will be merged (the "Company Merger") with
and into the Company; and
Whereas, as a condition to the willingness of the Purchaser
to enter into the Merger Agreement, the Purchaser has requested
that each Shareholder agree, and, in order induce the Purchaser
to enter into the Merger Agreement, each Shareholder has agreed
to to grant the Purchaser proxies to vote such Shareholder's
Shares;
Now, Therefore, in consideration of the premises and of the
mutual representations warranties, covenants and agreements set
forth herein and in the Merger Agreement, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
Section 1.01. Transfer of Shares. Until the close of
business on the date of the special meeting of shareholders
called to consider and vote upon the Company Merger (the "Special
Meeting") and except as otherwise provided herein, BH will cause
each Shareholder not to (a) sell, pledge or otherwise dispose of
any of its Shares, (b) deposit its Shares into a voting trust or
enter into a voting agreement or arrangement with respect to such
Shares or grant any proxy with respect thereto or (c) enter into
any contact, option or other arrangement or undertaking with
respect to the direct or indirect acquisition or sale,
assignment, transfer or other disposition of any Company Common
Stock.
Section 1.02. Voting of Shares; Further Assurances. BH
will cause each Shareholder, by this Agreement, with respect to
those Shares that it owns of record on the record date for voting
at the Special Meeting, to vote such shares (or to execute
written consents with respect to such Shares) (i) in favor of the
adoption of the Merger Agreement and approval of the Company
Merger and the other transactions contemplated by the Merger
Agreement, (ii) against any Alternative Proposal (as defined in
the Merger Agreement) and (iii) in favor of any other matter
necessary to consummation of the transactions contemplated by the
Merger Agreement and considered and voted upon at the Special
Meeting. BH will cause each Shareholder to cause the Shares
owned by it beneficially to be voted in accordance with the
foregoing. BH acknowledges receipt and review of a copy of the
Merger Agreement.
Section 1.03. No Solicitation. Prior to the Effective
Time, (a) BH shall not permit any Shareholder or any subsidiary
of any Shareholder or any of their respective officers,
directors, employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant
retained by it or any of its subsidiaries) to, initiate, solicit,
or encourage, directly or indirectly, any inquiries or the making
or implementation of any proposal or offer (including, without
limitation, any proposal or offer to the Company's shareholders)
with respect to an Alternative Proposal (as defined in the Merger
Agreement) or engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions
with, any person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement
an Alternative Proposal and (b) BH will cause each Shareholder to
notify the Purchaser immediately if any such inquiries or
proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be
initiated or continued with, it
Section 1.04. Prior Proxy, Thomas S. Murphy hereby agrees
to relinquish all rights with respect to, and to not exercise any
rights or powers pursuant to, the proxies given by the
Shareholders pursuant to that certain Agreement dated July 2,
1986 among Capital Cities Communications, Inc., a New York
corporation, and the Shareholders, as amended, and releases each
Shareholder from any further liability or obligation thereunder
to the extent necessary to comply with this Agreement.
ARTICLE II
Section 2.01. Notices. All notices and other
communications given or made pursuant hereto shall be in writing
and shall be deemed to have been duly given or made as of the
date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the
parties at the following addresses (or at such other address for
a party as shall be specified by like changes of address) or sent
by electronic transmission to the telecopier number specified
below:
(a) If to the Purchaser:
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Attention: General Counsel
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce
Telecopier No.: (212) 259-6333
(b) If to a Shareholder, at the address set forth on
Schedule I hereto.
Berkshire Hathaway, Inc.
1440 Kiewit Plaza
Omaha, NE 68131
Attention: Warren E. Buffet
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Samuel C. Butler
Telecopier No.: (212) 474-3700
Section 2.02. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
Section 2.03. Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforce, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the
fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
Section 2.04. Entire Agreement. This Agreement constitutes
the entire agreement of the parties and supersedes all prior
agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter
hereof.
Section 2.05. Certain Events. BH agrees that this
Agreement and the obligations hereunder shall attach to each
Shareholder's Shares and shall be binding upon any person to
which legal or beneficial ownership (as such term is applied
under Rule 13d-3 of the Exchange Act) of such Shares shall pass,
whether by operation of law or otherwise. Notwithstanding any
transfer of Shares, the transferor shall remain liable for the
performance of all obligations under this Agreement of the
transferor.
Section 2.06. Assignment. This Agreement shall, not be
assigned by operation of law or otherwise.
Section 2.07. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied,
intended to or shall confer upon any person any right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement.
Section 2.08. Specific Performance. The parties hereto
agree that irreparable damages would occur in the event any
provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any
other remedy at law or in equity.
Section 2.09. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, without giving effect to principles of
conflicts of laws.
Section 2.10. Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto
in separate counterparts, each of which when executed shall be
deemed to be an original but all of which, taken together, shall
constitute one and the same agreement.
Section 2.11. Termination. This Agreement shall terminate
automatically immediately upon termination of the Merger
Agreement.
In Witness Whereof, the parties have executed this Agreement
as of the date first above written.
THE WALT DISNEY COMPANY
By: _______________________________
Name: Michael D. Eisner
Title: Chairman of the Board
and Chief Executive
Officer
BERKSHIRE HATHAWAY, INC.
By: _______________________________
Name: Warren E. Buffett
Title: Chairman of the Board
and Chief Executive
Officer
__________________________________
Thomas S. Murphy
(Solely for purposes of Section
1.04 hereof)
