<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 17, 1995
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CBS INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, $2.50 par value
(2) Aggregate number of securities to which transaction applies:
64,806,388 shares of Common Stock
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$82.153, representing (i) the sum of the purchase price of $81 per
share plus an additional amount equal to $1.22 per share (representing
the product of (x)$81, (y) 6% and (z) the number of days in the period
beginning on and including August 31, 1995, and ending on but
excluding December 1, 1995 (the date the registrant has assumed the
transaction to be acted upon will be consummated for purposes of
calculating the per unit price), divided by 365) minus (ii) $.067 per
share, representing a pro rata portion of the regular quarterly
dividend the registrant expects to declare and pay during
the quarter ending December 31, 1995
(4) Proposed maximum aggregate value of transaction:
$5,324,039,193.36
(5) Total fee paid:
$1,064,807.84, equaling 1/50th of one percent of the proposed maximum
aggregate value of transaction.
/X/ Fee paid previously with preliminary materials (in connection with the
initial filing on August 25, 1995).
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LETTERHEAD OF CBS INC.]
October 17, 1995
To the Shareholders of CBS Inc.:
You are cordially invited to attend a Special Meeting of Shareholders of
CBS Inc. to be held at 10:00 a.m. on Thursday, November 16, 1995, at the Titus 1
Theater, The Museum of Modern Art, 11 West 53rd Street, New York, New York.
As described in the enclosed Proxy Statement, at the Special Meeting you
will be asked to consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger dated August 1, 1995 (the "Merger Agreement"),
among Westinghouse Electric Corporation ("Westinghouse"), Group W Acquisition
Corp., an indirect wholly owned subsidiary of Westinghouse, and CBS Inc.
("CBS"), and the Merger (as defined below) contemplated thereby. Under the
Merger Agreement, Westinghouse would acquire CBS and each outstanding share of
CBS Common Stock would be converted into the right to receive $81 in cash, plus
an additional amount equal to the product of (x) $81, (y) 6% and (z) the number
of days in the period from and including August 31, 1995, to but excluding the
closing date for the Merger, divided by 365, minus any dividends declared and
payable for the period following August 1, 1995 (all such transactions
collectively the "Merger"). Assuming, for purposes of the following calculation,
the Merger is consummated on December 1, 1995, and giving effect to the $0.10
per share regular quarterly dividend declared by the Company on October 11,
1995, such additional amount would equal approximately $1.15 per share. This
additional amount is intended to compensate CBS shareholders for any delay in
consummating the Merger after August 30, 1995.
Your Board of Directors has determined that the Merger is in the best
interests of CBS and its Shareholders and has unanimously approved the Merger
Agreement and the Merger. THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER. L.T. Holding
Corp., a wholly owned subsidiary of Loews Corporation, has agreed, subject to
certain conditions, to vote its shares of CBS Common Stock (representing, as of
August 4, 1995, approximately 16.95% of the outstanding shares of CBS Common
Stock) in favor of the Merger Agreement and the Merger.
Consummation of the Merger is subject to certain conditions, including
approval and adoption of the Merger Agreement and the Merger by the affirmative
vote of the holders of 66 2/3% of the outstanding shares of CBS Common Stock
entitled to vote thereon and the receipt of certain approvals from regulatory
authorities. Only holders of CBS Common Stock of record at the close of business
on October 6, 1995, are entitled to notice of and to vote at the Special Meeting
or any adjournments or postponements thereof.
If the Merger is consummated, holders of CBS Common Stock who do not vote
in favor of approval of the Merger Agreement and the Merger and who otherwise
comply with the requirements of Section 623 of the New York Business Corporation
Law will be entitled to statutory appraisal rights.
You are urged to read the accompanying Proxy Statement, which provides you
with a description of the terms of the proposed Merger. A copy of the Merger
Agreement is included as Appendix A to the enclosed Proxy Statement.
<PAGE> 3
It is very important that your shares be represented at the Special
Meeting. Whether or not you plan to attend the Special Meeting, you are
requested to complete, date, sign and return the proxy card in the enclosed
postage-paid envelope. Failure to return a properly executed proxy card or vote
at the Special Meeting would have the same effect as a vote against the Merger
Agreement and the Merger. Executed proxies with no instructions indicated
thereon will be voted for approval and adoption of the Merger Agreement and the
Merger. Please do not send in your stock certificates at this time. In the event
the Merger is consummated, you will be sent a letter of transmittal for that
purpose as soon as reasonably practicable thereafter.
Sincerely,
/s/ LAURENCE A. TISCH
--------------------------------------
Laurence A. Tisch
Chairman, President and
Chief Executive Officer
<PAGE> 4
[LETTERHEAD OF CBS INC.]
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of CBS Inc.
(the "Special Meeting") will be held on Thursday, November 16, 1995, at 10:00
a.m., at the Titus 1 Theater, The Museum of Modern Art, 11 West 53rd Street, New
York, New York, for the following purposes :
(i) To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger dated August 1, 1995 (the "Merger Agreement"),
among Westinghouse Electric Corporation, a Pennsylvania corporation
("Westinghouse"), Group W Acquisition Corp., a New York corporation and
indirect wholly owned subsidiary of Westinghouse ("Sub"), and CBS Inc., a
New York corporation (the "Company"), and the Merger (as defined below)
contemplated thereby. A copy of the Merger Agreement is attached to the
accompanying Proxy Statement as Appendix A. As more fully described in the
Proxy Statement, the Merger Agreement provides that: (A) Sub would be
merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation; (B) the Company would thereupon
become a wholly owned subsidiary of Westinghouse; and (C) each outstanding
share of Common Stock, par value $2.50 per share (the "Common Stock"), of
the Company (other than certain shares owned by the Company, Westinghouse
or their respective subsidiaries, which would be cancelled, and other than
shares properly dissenting from the Merger) would be converted, upon the
consummation of the Merger, into the right to receive $81 in cash plus an
additional amount equal to the product of (x) $81, (y) 6% and (z) the
number of days in the period from and including August 31, 1995, to but
excluding the Closing Date (as defined herein), divided by 365, minus any
dividends declared and payable by the Company for the period following
August 1, 1995 (such amount the "Additional Amount" and, together with the
$81, the "Merger Consideration"). Assuming, for purposes of the following
calculation, the Merger is consummated on December 1, 1995, and giving
effect to the $0.10 per share regular quarterly dividend declared by the
Company on October 11, 1995, the Additional Amount would equal
approximately $1.15 per share of Common Stock. (If the Merger is
consummated on any other date or another such dividend is paid, the
Additional Amount will be greater or less than such amount, as the case may
be, according to the foregoing formula.) The Additional Amount is intended
to compensate the Shareholders for any delay in consummating the Merger
after August 30, 1995.
(ii) To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on October 6, 1995,
as the record date for the determination of Shareholders entitled to notice of
and to vote at the Special Meeting. Only holders of Common Stock of record at
the close of business on that date will be entitled to notice of and to vote at
the Special Meeting or any adjournments or postponements thereof.
The accompanying Proxy Statement describes the Merger Agreement, the
proposed Merger and the actions to be taken in connection with the Merger. To
ensure that your vote will be counted, please complete, date and sign the
enclosed proxy card and return it promptly in the enclosed postage-paid
envelope, whether or not you plan to attend the Special Meeting. Executed
proxies with no instructions indicated thereon will be voted for approval and
adoption of the Merger Agreement and the Merger. You may revoke your proxy in
the manner described in the accompanying Proxy Statement at any time before it
is voted at the Special Meeting.
<PAGE> 5
In the event that there are not sufficient votes to approve and adopt the
Merger Agreement and the Merger, it is expected that the Special Meeting will be
postponed or adjourned in order to permit further solicitation of proxies by the
Company.
If the Merger is consummated, holders of Common Stock who do not vote in
favor of approval of the Merger Agreement and the Merger and who otherwise
comply with the requirements of Section 623 of the New York Business Corporation
Law will be entitled to statutory appraisal rights.
By Order of the Board of Directors,
ELLEN ORAN KADEN
Secretary
New York, New York
October 17, 1995
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
THE AFFIRMATIVE VOTE OF HOLDERS OF 66 2/3% OF THE OUTSTANDING SHARES OF
COMMON STOCK ENTITLED TO VOTE THEREON IS REQUIRED TO APPROVE AND ADOPT THE
MERGER AGREEMENT AND THE MERGER. WE URGE YOU TO SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE IN THE MANNER
DESCRIBED IN THE ATTACHED PROXY STATEMENT. ANY SHAREHOLDER PRESENT AT THE
SPECIAL MEETING, INCLUDING ANY ADJOURNMENT OR POSTPONEMENT THEREOF, MAY REVOKE
SUCH HOLDER'S PROXY AND VOTE PERSONALLY ON THE MERGER AGREEMENT AND THE MERGER
AT THE SPECIAL MEETING.
PLEASE DO NOT SEND YOUR COMMON STOCK CERTIFICATES AT THIS TIME.
<PAGE> 6
[LETTERHEAD OF CBS INC.]
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 16, 1995
------------------------
This Proxy Statement is being furnished to the holders of Common Stock, par
value $2.50 per share (the "Common Stock"), of CBS Inc., a New York corporation
(the "Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board of Directors" or the "Board") for use at
the Special Meeting of Shareholders to be held on Thursday, November 16, 1995,
at 10:00 a.m., at the Titus 1 Theater, The Museum of Modern Art, 11 West 53rd
Street, New York, New York, and at any adjournments or postponements thereof
(the "Special Meeting"). The Board of Directors has fixed the close of business
on October 6, 1995, as the record date (the "Record Date") for the Special
Meeting with respect to this solicitation.
At the Special Meeting, the holders of Common Stock (the "Shareholders")
will consider and vote upon a proposal to approve and adopt an Agreement and
Plan of Merger dated August 1, 1995 (the "Merger Agreement"), among Westinghouse
Electric Corporation, a Pennsylvania corporation ("Westinghouse"), Group W
Acquisition Corp., a New York corporation and indirect wholly owned subsidiary
of Westinghouse ("Sub"), and the Company, and the Merger (as defined below)
contemplated thereby. A copy of the Merger Agreement is attached to this Proxy
Statement as Appendix A. Pursuant to the Merger Agreement and subject to
satisfaction of the conditions set forth therein, (i) Sub would be merged with
and into the Company (the "Merger"), with the Company continuing as the
surviving corporation (the "Surviving Corporation"), (ii) the Company would
thereupon become a wholly owned subsidiary of Westinghouse and (iii) each
outstanding share of Common Stock (other than certain shares owned by the
Company, Westinghouse or their respective subsidiaries, which would be
cancelled, and other than shares dissenting from the Merger ("Dissenting
Shares") pursuant to Section 623 of the Business Corporation Law of the State of
New York (the "BCL")) would be converted, upon the consummation of the Merger,
into the right to receive $81 in cash plus an additional amount equal to the
product of (x) $81, (y) 6% and (z) the number of days in the period from and
including August 31, 1995, to but excluding the Closing Date, divided by 365,
minus any dividends declared and payable by the Company for the period following
August 1, 1995 (such amount the "Additional Amount" and, together with the $81,
the "Merger Consideration"), from the Surviving Corporation. Assuming, for
purposes of the following calculation, the Merger is consummated on December 1,
1995, and giving effect to the $0.10 per share regular quarterly dividend
declared by the Company on October 11, 1995, the Additional Amount would equal
approximately $1.15 per share of Common Stock. (If the Merger is consummated on
any other date or another such dividend is paid, the Additional Amount will be
greater or less than such amount, as the case may be, according to the foregoing
formula.) The Additional Amount is intended to compensate the Shareholders for
any delay in consummating the Merger after August 30, 1995.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER. L.T. Holding
Corp., a wholly owned subsidiary of Loews Corporation, has agreed, subject to
certain conditions, to vote its shares of Common Stock (representing, as of
August 4, 1995, approximately 16.95% of the outstanding shares of Common Stock)
in favor of the Merger Agreement and the Merger.
Shareholders are urged to read and consider carefully the information
contained in this Proxy Statement and to consult with their personal financial
and tax advisors.
This Proxy Statement, the accompanying Notice of Special Meeting and the
accompanying proxy are first being mailed to Shareholders on or about October
17, 1995.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
------------------------
The date of this Proxy Statement is October 17, 1995.
------------------------
<PAGE> 7
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROXY STATEMENT AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL NOT IMPLY THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE
COMPANY OR WESTINGHOUSE SINCE THE DATE HEREOF.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and the rules and regulations
thereunder, and in accordance therewith files reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). Such
reports, proxy statements and other information filed by the Company may be
inspected and copied at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices located at Suite 1400, Citicorp Center, 500 West Madison
Street, Chicago, Illinois 60661, and Suite 1300, Seven World Trade Center, New
York, New York 10048. Copies of such material can be obtained at prescribed
rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Common Stock is listed on the New York Stock
Exchange ("NYSE") and the Pacific Stock Exchange and certain reports, proxy
statements and other information concerning the Company also can be inspected at
the offices of the NYSE at 20 Broad Street, New York, New York 10005. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE".
All information contained in this Proxy Statement concerning Westinghouse
and its subsidiaries, including Sub, has been supplied by Westinghouse and has
not been independently verified by the Company. Except as otherwise indicated,
all other information contained in this Proxy Statement has been supplied by the
Company.
ii
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY
The Special Meeting................................................................. 1
Solicitation of Proxies............................................................. 1
Appraisal Rights.................................................................... 2
Parties to the Merger............................................................... 2
Recommendation of Board of Directors................................................ 2
Opinion of Financial Advisor........................................................ 3
The Merger Agreement................................................................ 3
No Solicitation..................................................................... 3
Termination; Termination Fees....................................................... 4
Tender Offer........................................................................ 4
Regulatory Approvals................................................................ 5
Source and Amount of Funds.......................................................... 5
Interests of Certain Persons in the Merger.......................................... 5
Certain Tax Consequences............................................................ 5
Security Ownership of Management and Certain Beneficial Owners...................... 6
Litigation.......................................................................... 6
Market Prices of Common Stock....................................................... 6
Selected Consolidated Financial Data................................................ 6
THE SPECIAL MEETING
Matters To Be Considered at the Special Meeting..................................... 7
Record Date and Voting.............................................................. 7
Vote Required; Revocability of Proxies.............................................. 8
Appraisal Rights.................................................................... 8
Solicitation of Proxies............................................................. 10
PARTIES TO THE MERGER
The Company......................................................................... 10
Westinghouse........................................................................ 11
Sub................................................................................. 11
THE MERGER
Background of the Merger............................................................ 12
Reasons for the Merger.............................................................. 14
Opinion of Financial Advisor........................................................ 15
THE MERGER AGREEMENT
Effective Time...................................................................... 20
The Merger.......................................................................... 20
Representations and Warranties...................................................... 22
Conduct of the Business Pending the Merger.......................................... 22
No Solicitation..................................................................... 24
Other Agreements of the Company, Westinghouse and Sub............................... 25
Employee Benefit Plans.............................................................. 26
Stock Options....................................................................... 27
Indemnification and Insurance....................................................... 27
Conditions to the Merger............................................................ 27
Termination......................................................................... 28
</TABLE>
iii
<PAGE> 9
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Termination Fees and Expenses....................................................... 29
Tender Offer........................................................................ 30
Amendment; Waiver................................................................... 30
REGULATORY APPROVALS
FCC................................................................................. 31
Hart-Scott-Rodino................................................................... 33
Status of Regulatory Approvals and Other Information................................ 33
SOURCE AND AMOUNT OF FUNDS............................................................ 34
TRANSACTIONS BETWEEN THE COMPANY AND WESTINGHOUSE..................................... 35
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Executive Officers.................................................................. 36
Directors........................................................................... 37
CERTAIN TAX CONSEQUENCES TO SHAREHOLDERS.............................................. 38
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS
Security Ownership of Directors and Executive Officers.............................. 39
Other Ownership of Common Stock..................................................... 40
LITIGATION............................................................................ 41
MARKET PRICES OF COMMON STOCK......................................................... 42
SELECTED CONSOLIDATED FINANCIAL DATA.................................................. 43
Third Quarter 1995 Earnings......................................................... 43
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................................... 45
INDEPENDENT PUBLIC ACCOUNTANTS........................................................ 45
OTHER MATTERS......................................................................... 45
OTHER MEETINGS........................................................................ 45
APPENDIX A Agreement and Plan of Merger dated August 1, 1995, among Westinghouse
Electric Corporation, Group W Acquisition Corp. and CBS Inc......... A-1
APPENDIX B Voting Agreement dated August 1, 1995, between L.T. Holding Corp. and
Westinghouse Electric Corporation................................... B-1
APPENDIX C Fairness Opinion of Salomon Brothers Inc.................................. C-1
APPENDIX D New York Business Corporation Law Section 623............................. D-1
</TABLE>
iv
<PAGE> 10
SUMMARY
The following is a summary of material information contained elsewhere in
this Proxy Statement. This summary is not intended to be a complete description
and is qualified in its entirety by reference to the more detailed information
contained in this Proxy Statement or incorporated by reference in this Proxy
Statement or in the documents attached as Appendices hereto. Each Shareholder is
urged to give careful consideration to all the information contained in this
Proxy Statement and the Appendices before voting.
THE SPECIAL MEETING
Matters To Be Considered at the Special Meeting. The Special Meeting is
scheduled to be held at 10:00 a.m. on Thursday, November 16, 1995, at the Titus
1 Theater, The Museum of Modern Art, 11 West 53rd Street, New York, New York. At
the Special Meeting, Shareholders will consider and vote upon (i) a proposal to
approve and adopt the Merger Agreement and the Merger and (ii) such other
matters as may properly be brought before the Special Meeting. See "THE SPECIAL
MEETING -- Matters To Be Considered at the Special Meeting" and "OTHER MATTERS".
Record Date and Voting. The Record Date for the Special Meeting is the
close of business on October 6, 1995. At the close of business on the Record
Date, there were 64,821,446 shares of Common Stock outstanding and entitled to
vote, held by approximately 10,428 Shareholders of record. Each holder of Common
Stock on the Record Date will be entitled to one vote for each share held of
record. The presence, either in person or by proxy, of a majority of the
outstanding shares of Common Stock entitled to be voted is necessary to
constitute a quorum at the Special Meeting. Abstentions (including broker
non-votes) are included in the calculation of the number of votes represented at
a meeting for purposes of determining whether a quorum has been achieved. Each
participant in the Company's Employee Investment Fund (the "Fund"), whether or
not otherwise a Shareholder, may, by properly executing and returning the
enclosed proxy card, instruct Boston Safe Deposit and Trust Company, the trustee
of the Fund, as to the voting of Common Stock representing amounts credited to
such participant's Fund account(s) ("Fund Stock"). Under the terms of the Fund,
Fund Stock may be voted by the trustee of the Fund only; Fund participants may
not vote Fund Stock in person at the Special Meeting. All shares of Fund Stock
in respect of which Fund participants do not direct the voting thereof will be
voted by the Fund's trustee in the same manner as a majority of the shares of
Fund Stock for which valid instructions have been received. See "THE SPECIAL
MEETING -- Record Date and Voting".
Vote Required; Revocability of Proxies. Approval and adoption of the
Merger Agreement and the Merger will require the affirmative vote of the holders
of 66 2/3% of the outstanding shares of Common Stock entitled to vote thereon.
The required vote of the Shareholders on the Merger Agreement and the
Merger is based upon the total number of outstanding shares of Common Stock. The
failure to submit a proxy card (or vote in person at the Special Meeting) or the
abstention from voting by a Shareholder (including broker non-votes) will have
the same effect as an "against" vote with respect to the Merger Agreement and
the Merger. See "THE SPECIAL MEETING -- Vote Required; Revocability of Proxies".
The presence of a Shareholder at the Special Meeting will not automatically
revoke such Shareholder's proxy. However, a Shareholder may revoke a proxy at
any time prior to its exercise by (i) delivering to Ellen Oran Kaden, Secretary,
CBS Inc., 51 West 52nd Street, New York, New York 10019-6188, a written notice
of revocation prior to the Special Meeting, (ii) delivering prior to the Special
Meeting a duly executed proxy bearing a later date or (iii) attending the
Special Meeting and voting in person.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from Shareholders. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, by telegram or in person. Arrangements will also be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by such
persons, and the Company will reimburse such brokerage
1
<PAGE> 11
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred by them in connection therewith. The Company has retained
MacKenzie Partners, Inc. ("MacKenzie Partners") to aid in the solicitation of
proxies. See "THE SPECIAL MEETING -- Solicitation of Proxies".
APPRAISAL RIGHTS
Under the BCL, holders of shares of Common Stock who do not vote in favor
of approval of the Merger Agreement and the Merger and who otherwise comply with
the requirements of BCL Section 623 will be entitled to statutory appraisal
rights (such shares collectively referred to as the "Dissenting Shares"). See
"THE SPECIAL MEETING -- Appraisal Rights" and BCL Section 623, which is attached
hereto as Appendix D.
PARTIES TO THE MERGER
The Company. The Company conducts its domestic and international
operations either directly or through subsidiaries and joint ventures. The
operations of the Company are carried out primarily by the CBS/ Broadcast Group,
which, through the CBS Television Network, distributes a comprehensive schedule
of news and public affairs broadcasts, entertainment and sports programming and
feature films to CBS-owned and independently-owned and affiliated television
stations. As of June 30, 1995, the Company had total assets and shareholders'
equity of approximately $2.088 billion and $416.8 million, respectively. For the
six months ended June 30, 1995, and the year ended December 31, 1994, the
Company had net income of approximately $73.7 million and $281.6 million,
respectively.
As a television and radio broadcasting company that operates a television
network, the Company is subject to the provisions of the Communications Act of
1934, as amended (the "Communications Act"), pursuant to which the Federal
Communications Commission (the "FCC") is empowered to, among other things,
license and regulate television and radio broadcasting stations and certain
television network operations. The FCC has authority to grant or renew broadcast
licenses for a maximum term of five years for television stations and seven
years for radio stations if it determines that the "public convenience, interest
or necessity" would be served thereby. See "PARTIES TO THE MERGER -- The
Company".
Westinghouse. Westinghouse is a diversified, global, technology-based
corporation operating in the principal business areas of television and radio
broadcasting, advanced electronic systems for the defense industry,
environmental services, management services at government-owned facilities,
sales, services and fuel for the nuclear energy market, sales, services and
equipment for the power generation market, transport temperature control
equipment and office furniture systems. As of June 30, 1995, Westinghouse had
total assets and shareholders' equity of approximately $10.824 billion and
$1.820 billion, respectively. For the six months ended June 30, 1995, and the
year ended December 31, 1994, Westinghouse had net income of approximately $74.0
million and $77.0 million, respectively. See "PARTIES TO THE MERGER --
Westinghouse".
Sub. Sub is an indirect wholly owned subsidiary of Westinghouse. Pursuant
to the terms of the Merger Agreement, at the Effective Time (as hereinafter
defined), Sub would be merged with and into the Company, with the Company
continuing as the Surviving Corporation. See "PARTIES TO THE MERGER -- Sub".
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of the Company has determined that the Merger
Agreement and the Merger are advisable and fair to and in the best interests of
the Company and its Shareholders and has unanimously approved the Merger
Agreement and the Merger. Accordingly, the Board of Directors unanimously
recommends that Shareholders vote "FOR" approval and adoption of the Merger
Agreement and the Merger.
In determining to approve the Merger Agreement and the Merger and to
recommend that Shareholders approve the Merger Agreement and the Merger, the
Board of Directors considered a number of factors, as more fully described under
"THE MERGER -- Background of the Merger" and "-- Reasons for the Merger".
2
<PAGE> 12
OPINION OF FINANCIAL ADVISOR
On August 1, 1995, Salomon Brothers Inc ("Salomon Brothers"), financial
advisor to the Company, delivered its opinion to the Board of Directors that, as
of the date of such opinion, the consideration to be received by the
Shareholders in the Merger is fair to the Shareholders from a financial point of
view. The full text of the written opinion of Salomon Brothers dated August 1,
1995, which sets forth the assumptions made, general procedures followed,
matters considered and limitations on the review undertaken in connection with
the opinion, is attached hereto as Appendix C. Shareholders should read such
opinion carefully and in its entirety. See "THE MERGER -- Opinion of Financial
Advisor".
THE MERGER AGREEMENT
Subject to the provisions of the Merger Agreement, at the Effective Time:
(i) each share of Common Stock that is issued and outstanding immediately prior
to the Effective Time (other than shares of Common Stock to be cancelled as
described in clause (ii) below and other than Dissenting Shares) will be
converted into the right to receive $81 in cash plus an additional amount equal
to the product of (x) $81, (y) 6% and (z) the number of days in the period from
and including August 31, 1995, to but excluding the Closing Date, divided by
365, minus any dividends declared and payable by the Company for the period
following August 1, 1995 (such amount the "Additional Amount" and, together with
the $81, the "Merger Consideration"), from the Surviving Corporation, and will
thereafter be cancelled; and (ii) each share of Common Stock that is owned by
the Company, Westinghouse or any of their respective subsidiaries will be
automatically cancelled and retired and will cease to exist, and no
consideration will be delivered in exchange therefor. Assuming, for purposes of
the following calculation, the Merger is consummated on December 1, 1995, and
giving effect to the $0.10 per share regular quarterly dividend declared by the
Company on October 11, 1995, the Additional Amount would equal approximately
$1.15 per share of Common Stock. (If the Merger is consummated on any other date
or another such dividend is paid, the Additional Amount will be greater or less
than such amount, as the case may be, according to the foregoing formula.) The
Additional Amount is intended to compensate the Shareholders for any delay in
consummating the Merger after August 30, 1995. Based on the foregoing
assumptions, the total amount of funds required by Westinghouse to purchase all
the outstanding shares of Company Common Stock pursuant to the Merger Agreement
and to pay fees and expenses associated with the Merger would be approximately
$5.5 billion. See "THE MERGER AGREEMENT -- Effective Time" and "-- The Merger".
Consummation of the Merger is subject to various conditions, including,
among others: (i) the approval and adoption of the Merger Agreement by the
requisite vote of Shareholders; (ii) the absence of any injunction preventing
consummation of the Merger; (iii) the receipt by Westinghouse of the funds
necessary to consummate the Merger pursuant to its Credit Agreement dated as of
September 12, 1995 (the "Credit Agreement"), with certain financial institutions
named therein (the "Lenders"), Morgan Guaranty Trust Company of New York, as
Documentation Agent, and Chemical Bank, as Administrative Agent; (iv) the
issuance by the FCC of the FCC Order (as defined herein) and the satisfaction of
any condition or the taking of any action required to be so satisfied or taken
to legally effect the Merger under the FCC Order; (v) expiration of the
applicable waiting period imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); and (vi) there not having
been any material adverse change in the business, results of operations or
financial condition of the Company and its Subsidiaries (as defined in the
Merger Agreement) taken as whole, other than changes relating to the Company's
industry or the economy in general. See "THE MERGER AGREEMENT -- Conditions to
the Merger", "REGULATORY APPROVALS" and "SOURCE AND AMOUNT OF FUNDS".
NO SOLICITATION
Pursuant to the Merger Agreement, the Company has agreed that it, its
Subsidiaries and each of their respective officers, directors, employees,
representatives, agents and affiliates: (i) will cease any discussions or
negotiations with any party with respect to a Competing Transaction (as defined
herein); and (ii) will not initiate, solicit or knowingly encourage, or take any
other action to facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing
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Transaction, or enter into or maintain or continue discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a Competing
Transaction or agree to or endorse any Competing Transaction; in the case of
either clause (i) or (ii) above, except under certain circumstances to the
extent required so that the Board may, in its good faith judgment, comply with
its fiduciary duties to Shareholders under applicable law. See "THE MERGER
AGREEMENT -- No Solicitation".
TERMINATION; TERMINATION FEES
The Merger Agreement may be terminated, and the Merger abandoned, prior to
the Effective Time, either before or, if applicable, after its approval by the
Shareholders, as follows: (i) by the mutual written consent of the Company and
Westinghouse; (ii) by either the Company or Westinghouse in the event of (A) the
failure of the Shareholders to approve the Merger Agreement and the Merger or
(B) a material breach by the other party thereto of any representation,
warranty, covenant or agreement contained in the Merger Agreement which is not
cured within 30 days after notice of such breach is given, in any such case such
that the conditions to the Merger relating to such representation, warranty,
covenant or agreement, as the case may be (see "THE MERGER -- Conditions to the
Merger"), would be incapable of being satisfied by August 1, 1996; (iii) by
either the Company or Westinghouse if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Merger
shall have become final and non-appealable; (iv) by either the Company or
Westinghouse in the event the Merger is not consummated by August 1, 1996,
except that the terminating party may not have been responsible for the breach
causing or resulting in the failure of the Merger to occur on or before such
date; (v) by the Company at any time on or after the date of this Proxy
Statement, if the Credit Agreement shall not be in full force and effect; (vi)
by Westinghouse at any time on or after November 3, 1995, if the Credit
Agreement shall not be in full force and effect; or (vii) by the Company or
Westinghouse under certain circumstances in connection with a Competing
Transaction. See "THE MERGER AGREEMENT -- Termination".
Under certain circumstances, termination of the Merger Agreement would
require the payment by the Company to Westinghouse of an amount equal to the sum
of $100 million plus Westinghouse's reasonable documented out-of-pocket expenses
relating to the Merger in an amount up to but not exceeding $50 million. Such
circumstances include, without limitation, the Shareholders failing to approve
and adopt the Merger Agreement and the Merger if, at or prior to the time of the
Special Meeting, a Competing Transaction has been commenced or publicly proposed
or disclosed, and, within one year of the Special Meeting, the Company enters
into an agreement with respect to or approves or recommends such or any other
Competing Transaction. Under certain other circumstances, termination of the
Merger Agreement would require the payment by Westinghouse to the Company of an
amount equal to the sum of, depending upon the circumstance leading to
termination, (i) $100 million plus the Company's reasonable documented out-of-
pocket expenses related to the Merger in an amount up to but not exceeding $20
million or (ii) $50 million plus the Company's reasonable documented
out-of-pocket expenses in an amount up to but not exceeding $10 million. See
"THE MERGER AGREEMENT -- Termination Fees and Expenses".
TENDER OFFER
If there is a bona fide proposal made by a person other than Westinghouse
to effect a Competing Transaction or if the FCC would otherwise permit the
filing by Westinghouse and grant of an application for special temporary
authorization to an independent trustee to acquire and vote the Common Stock and
to exercise control of the Company's FCC-licensed facilities, Westinghouse has
the right, upon no less than five days' notice, to commence a cash tender offer
(the "Tender Offer") to purchase all the outstanding shares of the Company (with
a minimum tender condition of 66 2/3% of the fully-diluted shares of Common
Stock) at a price equal to or in excess of what would have been the Merger
Consideration. The terms of the Merger Agreement would remain in full force and
effect to the extent applicable to such Tender Offer. See "THE MERGER
AGREEMENT -- Tender Offer".
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<PAGE> 14
REGULATORY APPROVALS
The obligation of each of Westinghouse and the Company to consummate the
Merger is conditioned upon the approval of the FCC in the form of the FCC Order
and the expiration of the applicable HSR Act waiting period. As of the date of
this Proxy Statement, Westinghouse and the Company have filed all required
applications with all applicable regulatory agencies. See "REGULATORY
APPROVALS".
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Westinghouse to purchase all the
outstanding shares of Company Common Stock pursuant to the Merger Agreement and
to pay related fees and expenses associated with the Merger would be
approximately $5.5 billion (assuming, for purposes of such calculation, the
Merger is consummated on December 1, 1995). Westinghouse has entered into the
Credit Agreement with the Lenders to provide credit facilities to Westinghouse
in the aggregate amount of $7.5 billion. Westinghouse intends to use a portion
of these credit facilities for general corporate purposes and to refinance the
then existing bank indebtedness of Westinghouse and the Company. Westinghouse
estimates that, at December 1, 1995, it will have approximately $500 million of
outstanding bank indebtedness to be refinanced in connection with the
consummation of the Merger. At September 29, 1995, the Company had approximately
$215 million of outstanding bank indebtedness, although the Company expects such
amount to be lower at the time of the refinancing thereof in connection with the
consummation of the Merger. Chemical Bank and Morgan Guaranty Trust Company of
New York each have a $247 million commitment under the Credit Agreement, the
largest such commitments thereunder. There are 48 other Lenders under the Credit
Agreement, with varying size commitments. The Credit Agreement contains various
conditions to the Lenders' obligation to provide such credit facilities,
including that there shall have been no material adverse change in the financial
condition, operations, assets, business or prospects taken as a whole of the
combined Westinghouse/Company entity. It is a condition to Westinghouse's
obligations under the Merger Agreement that the Lenders provide the funding
under the Credit Agreement. If the Lenders fail to provide such funding or the
Credit Agreement otherwise ceases to be in full force and effect and, in either
such case, the Merger Agreement is terminated as a result thereof, Westinghouse
will be obligated to pay to the Company the applicable termination fee and to
reimburse certain of the Company's expenses. See "THE MERGER
AGREEMENT -- Conditions to the Merger" and "-- Termination Fees and Expenses"
and "SOURCE AND AMOUNT OF FUNDS".
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The executive officers of the Company and members of the Board would
receive economic benefits in the event that the Merger is consummated, including
benefits pursuant to employment agreements previously entered into between the
Company and certain of such individuals, consideration payable under the Merger
Agreement for stock options and accelerated payments pursuant to certain
deferred compensation arrangements (aggregating approximately $45,530,000,
assuming the Merger is consummated on December 1, 1995). Laurence A. Tisch,
Chairman, President and Chief Executive Officer of the Company, and his brother
Preston R. Tisch, a member of the Board of Directors, are the co-Chairmen and
co-Chief Executive Officers of Loews Corporation ("Loews"), which through L. T.
Holding Corp., a Delaware corporation and wholly owned subsidiary of Loews ("L.
T. Holding"), owned, as of August 4, 1995, 10,987,285 shares, or approximately
16.95%, of the Company's outstanding Common Stock. As of such date, Messrs.
Laurence and Preston Tisch beneficially owned, in the aggregate, approximately
32.08% of the outstanding common stock of Loews. L. T. Holding has entered into
a Voting Agreement dated August 1, 1995 (the "Loews Voting Agreement"), with
Westinghouse whereby L. T. Holding has agreed, subject to certain conditions, to
vote all shares of Common Stock held of record or beneficially owned by L. T.
Holding in favor of approval of the Merger Agreement and the Merger. See
"INTERESTS OF CERTAIN PERSONS IN THE MERGER".
CERTAIN TAX CONSEQUENCES
The Merger would be a taxable transaction to Shareholders. Shareholders
would recognize gain or loss in the Merger in an amount determined by the
difference between the Merger Consideration and their tax basis
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<PAGE> 15
in the Common Stock exchanged therefor. For further information, see "CERTAIN
TAX CONSEQUENCES TO SHAREHOLDERS".
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
As of August 4, 1995, the directors and executive officers of the Company
beneficially owned, in the aggregate, 11,434,846 shares of Common Stock
(excluding shares subject to unvested options but, in the case of Messrs.
Laurence and Preston Tisch, including the shares beneficially owned by Loews as
described above, as to which such shares Messrs. Laurence and Preston Tisch
disclaim beneficial ownership), representing approximately 17.65% of such shares
outstanding. To the knowledge of the Company, all directors and executive
officers of the Company intend to vote their outstanding shares of Common Stock
for the approval and adoption of the Merger Agreement and the Merger. See
"SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS".
LITIGATION
The Company, the individual members of its Board of Directors and, in
certain instances, Westinghouse and its Chairman and Chief Executive Officer
have been named as defendants in eight lawsuits filed in the Supreme Court of
the State of New York, New York County. In these proceedings the plaintiffs, on
behalf of themselves and other Shareholders, primarily assert that the members
of the Company's Board of Directors have failed to maximize Shareholder value
and have breached their fiduciary duties and that the Merger does not provide
sufficient value to the Company and its Shareholders. The plaintiffs seek, among
other things, to enjoin the Merger and that the Company conduct an auction to
maximize Shareholder value. The Company has consulted with counsel and believes
that each of these lawsuits is without merit and, accordingly, will have no
adverse affect on the Company or the Merger. See "LITIGATION".
MARKET PRICES OF COMMON STOCK
The Common Stock is listed on both the NYSE and the Pacific Stock Exchange
under the name CBS Inc. and traded under the symbol "CBS". On July 31, 1995, the
last trading day before the public announcement of the execution of the Merger
Agreement, the reported closing sale price per share of Common Stock was $77.75.
On October 16, 1995, the last full trading day prior to the date of this Proxy
Statement, the reported closing sale price per share of Common Stock was $80.25.
For additional information concerning historical market prices of the Common
Stock, see "MARKET PRICES OF COMMON STOCK".
SELECTED CONSOLIDATED FINANCIAL DATA
Certain selected historical financial data of the Company are set forth
under "SELECTED CONSOLIDATED FINANCIAL DATA". That data should be read in
conjunction with the financial statements and related notes incorporated by
reference in this Proxy Statement. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE".
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<PAGE> 16
THE SPECIAL MEETING
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
Each copy of this Proxy Statement mailed to Shareholders is accompanied by
a proxy card furnished in connection with the solicitation of proxies by the
Board of Directors for use at the Special Meeting. The Special Meeting is
scheduled to be held at 10:00 a.m., on Thursday, November 16, 1995, at the Titus
1 Theater, The Museum of Modern Art, 11 West 53rd Street, New York, New York. At
the Special Meeting, Shareholders will consider and vote upon (i) a proposal to
approve and adopt the Merger Agreement and the Merger and (ii) such other
matters as may properly be brought before the Special Meeting.
The Board of Directors of the Company has determined that the Merger and
the Merger Agreement are advisable and fair to and in the best interests of the
Company and its Shareholders and has unanimously approved the Merger and the
Merger Agreement. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT SHAREHOLDERS VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE MERGER. See "THE MERGER -- Background of the Merger" and "-- Reasons for the
Merger".
SHAREHOLDERS ARE REQUESTED PROMPTLY TO COMPLETE, DATE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE. FAILURE TO RETURN
A PROPERLY EXECUTED PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE MERGER AGREEMENT AND THE MERGER.
RECORD DATE AND VOTING
The Board of Directors has fixed the close of business on October 6, 1995,
as the Record Date for the determination of the holders of Common Stock entitled
to notice of and to vote at the Special Meeting. Only Shareholders of record at
the close of business on that date will be entitled to vote at the Special
Meeting. At the close of business on the Record Date, there were 64,821,446
shares of Common Stock outstanding and entitled to vote at the Special Meeting,
held by approximately 10,428 Shareholders of record.
Each holder of Common Stock on the Record Date will be entitled to one vote
for each share held of record. The presence, in person or by proxy, of a
majority of the outstanding shares of Common Stock entitled to be voted at the
Special Meeting is necessary to constitute a quorum thereat. Abstentions
(including broker non-votes) will be included in the calculation of the number
of votes represented at the Special Meeting for purposes of determining whether
a quorum has been achieved.
If the enclosed proxy card is properly executed and received by the Company
in time to be voted at the Special Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. Executed proxies
with no instructions indicated thereon will be voted "FOR" approval and adoption
of the Merger Agreement and the Merger. Each participant in the Company's
Employee Investment Fund (the "Fund"), whether or not otherwise a Shareholder,
may, by properly executing and returning the enclosed proxy card, instruct
Boston Safe Deposit and Trust Company, the trustee of the Fund, as to the voting
of Common Stock representing amounts credited to such participant's Fund
account(s) ("Fund Stock"). Under the terms of the Fund, Fund Stock may be voted
by the trustee of the Fund only; Fund participants may not vote Fund Stock in
person at the Special Meeting. All shares of Fund Stock in respect of which Fund
participants do not direct the voting will be voted by the Fund's trustee in the
same manner as a majority of the shares of Fund Stock for which valid
instructions have been received.
The Board is not aware of any matters other than that set forth in the
Notice of Special Meeting of Shareholders that may be brought before the Special
Meeting. If any other matters properly come before the Special Meeting, the
persons named in the accompanying proxy will vote the shares represented by all
properly executed proxies on such matters in such manner as shall be determined
by a majority of the Board, except that shares represented by proxies which have
been voted "against" the Merger Agreement and the
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<PAGE> 17
Merger will not be used to vote "for" postponement or adjournment of the Special
Meeting for the purpose of allowing additional time for soliciting additional
votes "for" the Merger Agreement and the Merger. See "-- Vote Required;
Revocability of Proxies" and "OTHER MATTERS".
SHAREHOLDERS SHOULD NOT FORWARD ANY COMMON STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IN THE EVENT THE MERGER IS CONSUMMATED, STOCK CERTIFICATES SHOULD
BE DELIVERED IN ACCORDANCE WITH INSTRUCTIONS SET FORTH IN A LETTER OF
TRANSMITTAL, WHICH WOULD BE SENT TO SHAREHOLDERS BY CHEMICAL BANK, IN ITS
CAPACITY AS THE PAYING AGENT, AS SOON AS REASONABLY PRACTICABLE AFTER THE
EFFECTIVE TIME.
VOTE REQUIRED; REVOCABILITY OF PROXIES
The affirmative vote of holders of 66 2/3% of the outstanding shares of
Common Stock entitled to vote thereon is required to approve and adopt the
Merger Agreement and the Merger.
Because the required vote of the Shareholders on the Merger Agreement and
the Merger is based upon the total number of outstanding shares of Common Stock,
the failure to submit a proxy card (or to vote in person at the Special Meeting)
or the abstention from voting by a Shareholder (including broker non-votes) will
have the same effect as an "against" vote with respect to approval and adoption
of the Merger Agreement and the Merger.
The presence of a Shareholder at the Special Meeting will not automatically
revoke such Shareholder's proxy. However, a Shareholder may revoke a proxy at
any time prior to its exercise by (i) delivering to Ellen Oran Kaden, Secretary,
CBS Inc., 51 West 52nd Street, New York, New York 10019-6188, a written notice
of revocation prior to the Special Meeting, (ii) delivering prior to the Special
Meeting a duly executed proxy bearing a later date or (iii) attending the
Special Meeting and voting in person.
If a quorum is not obtained, or if fewer shares of Common Stock are voted
in favor of approval and adoption of the Merger Agreement and the Merger than
the number required for approval, it is expected that the Special Meeting will
be postponed or adjourned for the purpose of allowing additional time for
soliciting and obtaining additional proxies or votes, and, at any subsequent
reconvening of the Special Meeting, all proxies will be voted in the same manner
as such proxies would have been voted at the original convening of the Special
Meeting, except for any proxies which have theretofore effectively been revoked
or withdrawn.
No vote of the shareholders of Westinghouse is required in connection with
the Merger Agreement or the Merger. The obligations of the Company and
Westinghouse to consummate the Merger are subject, among other things, to the
condition that the Shareholders approve and adopt the Merger Agreement and the
Merger. See "THE MERGER AGREEMENT -- Conditions to the Merger".
APPRAISAL RIGHTS
If the Merger is consummated, Shareholders who wish to dissent from such
transaction will be entitled to have the "fair value" of their shares of Common
Stock at the Effective Time judicially determined and paid to them in cash by
complying with the provisions of BCL Section 623. The following is a summary of
certain of the provisions of Section 623 of the BCL and is qualified in its
entirety by reference to the full text of such Section, a copy of which is
attached hereto as Appendix D.
Shareholders wishing to dissent must file an objection and notice of
election to dissent with the Company at any time prior to the Special Meeting.
(Shareholders not receiving notice of the Special Meeting are entitled to
exercise dissenting rights at any time prior to 20 days after notice from the
Company that the Merger Agreement and the Merger have been approved by the
Shareholders.) The objection shall include a notice of such Shareholder's
election to dissent, such Shareholder's name and residence address, the number
of shares as to which such Shareholder dissents ("Dissenting Shares") and a
demand for payment of the fair
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<PAGE> 18
value of such Shareholder's shares if the action is taken. The objection should
be delivered to Ellen Oran Kaden, Secretary, CBS Inc., 51 West 52nd Street, New
York, New York 10019-6188.
This written objection must be in addition to and separate from any proxy
or vote abstaining from or against the Merger Agreement. Voting against,
abstaining from voting or failing to vote on the Merger Agreement and the Merger
will not constitute a written objection within the meaning of BCL Section 623.
Shareholders electing to dissent must not vote for approval and adoption of the
Merger Agreement and the Merger. Voting in favor of the Merger Agreement and the
Merger, or delivering a proxy in connection with the Special Meeting (unless the
proxy votes against, or expressly abstains from the vote on, the Merger
Agreement and the Merger), will constitute a waiver of a Shareholder's right to
dissent and will nullify any written objection submitted by such Shareholder.
Only a holder of record of Common Stock is entitled to assert appraisal
rights for the shares of Common Stock registered in such holder's name. The
written objection and notice of election to dissent referred to above should be
executed by or for the holder of record, fully and correctly, as such holder's
name appears on such holder's Common Stock certificates. If the Common Stock is
owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, execution of the written objection should be made in that capacity,
and if the Common Stock is owned of record by more than one person, as in a
joint tenancy or tenancy in common, the written objection should be executed by
or for all owners of record. An authorized agent, including one of two or more
joint owners, may execute the written objection for a holder of record; however,
the agent must identify the record owner or owners and expressly disclose the
fact that, in executing the written objection, the agent is acting as agent for
the record owner or owners.
A Shareholder may not dissent as to less than all the shares of Common
Stock as to which such Shareholder has a right to dissent. A nominee or
fiduciary may not dissent on behalf of any beneficial owner as to less than all
the shares of Common Stock of such beneficial owner, as to which such nominee or
fiduciary has a right to dissent, held of record by such nominee or fiduciary.
However, a record holder, such as a broker, who holds Common Stock as nominee
for multiple beneficial owners may exercise such holder's right of appraisal
with respect to the shares of Common Stock held for all or less than all such
beneficial owners. In such case, the written objection should set forth the
number of shares of Common Stock covered by it; if the number of shares of
Common Stock is not so expressly set forth, the objection will be presumed to
cover all shares of Common Stock standing in the name of the record owner.
Within one month of the time of filing of a Shareholder's written objection
and notice of election to dissent, such Shareholder shall submit the
certificates representing such Shareholder's Dissenting Shares to the Company,
or to Chemical Bank, as the paying agent (the "Paying Agent") appointed for the
payment of the Merger Consideration upon surrender of certificates representing
Common Stock. The Paying Agent shall forthwith note conspicuously upon such
certificates so submitted that a notice of election to dissent has been filed
and shall thereupon return the certificates to such Shareholder. Any Shareholder
failing to so submit Common Stock certificates for this notation shall, at the
option of the Company exercised by written notice to such Shareholder, within 45
days from the date of filing such notice of election to dissent, lose such
Shareholder's dissenter's rights unless a court, for good cause shown, shall
direct otherwise.
Within 15 days after the expiration of the period within which Shareholders
may file their written objections and notices of election to dissent, or within
15 days after the Merger is consummated, whichever is later (but in no case
later than 90 days from the Effective Time), the Company shall make a written
offer to pay for Dissenting Shares at a specified price which the Company
considers to be their fair value (a "Settlement Offer"). If the Company fails to
timely make a Settlement Offer, or if it makes such Offer and any Shareholder
who has properly elected to dissent fails to agree with the Company within the
30 days thereafter upon the price to be paid for the Dissenting Shares, the
Company shall, within 20 days after the expiration of the applicable period,
institute a special proceeding in the New York Supreme Court to determine the
rights of any such Shareholder and to fix the fair value of the Dissenting
Shares. Any Shareholder who has properly elected to dissent may institute such
special proceeding within 30 days after the expiration of the foregoing period,
if the Company shall fail to do so.
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A written objection and notice of election to dissent may be withdrawn in
writing by a Shareholder at any time prior to the earlier of such Shareholder
accepting the Company's Settlement Offer or 60 days after consummation of the
Merger, unless the Company fails to make a timely Settlement Offer, in which
event such objection and election may be withdrawn at any time prior to 60 days
from the date such Settlement Offer is made.
All Dissenting Shares held by Shareholders who have failed to perfect or
who effectively shall have withdrawn or lost their rights to appraisal of such
Dissenting Shares, in either case pursuant to the BCL, shall thereupon be deemed
to have been converted into and to have become exchangeable, as of the Effective
Time, for the right to receive, without any interest thereon, the Merger
Consideration upon surrender in the manner provided in the Merger Agreement of
the certificate or certificates that, immediately prior to the Effective Time,
evidenced shares of Common Stock. Under the Merger Agreement, the Company has
agreed to give Westinghouse (i) prompt notice of any written demands for
appraisal of shares of Common Stock received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company has agreed not to voluntarily make any payment with respect
to, or settle, offer to settle or otherwise negotiate, any such demands without
the prior written consent of Westinghouse.
SOLICITATION OF PROXIES
The Company will bear the costs of soliciting proxies from Shareholders. In
addition to soliciting proxies by mail, directors, officers and employees of the
Company, without receiving additional compensation therefor, may solicit proxies
by telephone, by telegram or in person. Arrangements also will be made with
brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith. The Company has retained MacKenzie Partners to aid in
the solicitation of proxies. MacKenzie Partners' fee for solicitation of the
proxies is estimated to be $30,000 plus reimbursement for out-of-pocket costs
and expenses.
PARTIES TO THE MERGER
THE COMPANY
The Company conducts its domestic and international operations either
directly or through subsidiaries and joint ventures. The operations of the
Company are carried out primarily by the CBS/Broadcast Group, which, through the
CBS Television Network, distributes a comprehensive schedule of news and public
affairs broadcasts, entertainment and sports programming and feature films to
Company-owned and independently-owned and affiliated television stations. The
Group also is responsible through its various divisions for producing and
otherwise acquiring entertainment and sports programming and feature films,
operating a worldwide news organization, selling advertising time, maintaining
affiliate relations and operating and serving (in the case of certain television
stations, through the joint venture with Westinghouse described below) as sales
representative for the seven Company-owned television stations (excluding three
"satellite" stations), eight Company-owned AM radio stations and 13
Company-owned FM radio stations located throughout the United States.
In addition, the Company holds a 50% interest in The CBS/FOX Company,
which, together with a wholly owned subsidiary of Twentieth Century-Fox Film
Company, engages in the acquisition and marketing of videocassette rights to
feature films and other, non-theatrical products. Through the Radford Studio
Center Inc., a wholly owned subsidiary of the Company, the Company owns and
operates the largest television and film production facilities in the Los
Angeles area not owned by a movie studio.
In July 1994, the Company and Westinghouse announced that they had agreed
to a comprehensive strategic partnership involving extended affiliation
agreements between the Company's Television Network and television stations
owned by Westinghouse in four major markets, and the creation of three new
jointly-
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held entities which would be established, respectively, to acquire and operate
television stations in major markets; to combine the two companies' current
advertising sales representation businesses; and to produce and distribute
television programming. The Company and Westinghouse have subsequently formed
the television stations and sales representation joint ventures and anticipate
soon forming the other joint venture. For more information, see "TRANSACTIONS
BETWEEN THE COMPANY AND WESTINGHOUSE".
As a television and radio broadcasting company that operates a television
network, the Company is subject to the provisions of the Communications Act,
pursuant to which the FCC is empowered to, among other things, license and
regulate television and radio broadcasting stations and certain television
network operations. The FCC has authority to grant or renew broadcast licenses
for a maximum term of five years for television stations and seven years for
radio stations if it determines that the "public convenience, interest or
necessity" would be served thereby.
As of June 30, 1995, the Company had total assets and shareholders' equity
of approximately $2.088 billion and $416.8 million, respectively. For the six
months ended June 30, 1995, and the year ended December 31, 1994, the Company
had net income of approximately $73.7 million and $281.6 million, respectively.
The Company's principal offices are located at 51 West 52nd Street, New York,
New York 10019-6188, and its telephone number is (212) 975-4321.
WESTINGHOUSE
Westinghouse is a diversified, global, technology-based corporation
operating in the principal business areas of television and radio broadcasting,
advanced electronic systems for the defense industry, environmental services,
management services at government-owned facilities, sales, services and fuel for
the nuclear energy market, sales, services and equipment for the power
generation market, transport temperature control equipment and office furniture
systems. As of June 30, 1995, Westinghouse had total assets and shareholders'
equity of approximately $10.824 billion and $1.820 billion, respectively. For
the six months ended June 30, 1995, and the year ended December 31, 1994,
Westinghouse had net income of approximately $74.0 million and $77.0 million,
respectively. Westinghouse's principal offices are at 11 Stanwix Street,
Pittsburgh, Pennsylvania 15222-1384, and its telephone number is (412) 244-2000.
SUB
Sub is an indirect wholly owned subsidiary of Westinghouse. Pursuant to the
terms of the Merger Agreement, at the Effective Time, Sub would be merged with
and into the Company, with the Company continuing as the Surviving Corporation.
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THE MERGER
BACKGROUND OF THE MERGER
On June 30, 1994, the Company announced that it was in discussions with
QVC, Inc. ("QVC") concerning a possible business combination in which QVC would
merge into the Company, which would be the surviving corporation. On July 13,
1994, the Company announced that it would not pursue its acquisition of QVC in
light of the offer for QVC made by Comcast Corporation. Although, since such
date, the Company has met from time to time with certain parties who wished to
discuss the possibility of effecting a business combination with the Company, no
proposals for any business combination were made to the Company, other than the
Merger. Accordingly, since such date, the Company's Board of Directors has not
considered any business combinations other than the Merger.
In July 1994, Westinghouse and the Company agreed to a comprehensive
strategic partnership establishing extended station affiliations between the
Company and Westinghouse's television stations and creating joint ventures to
acquire and operate major market television stations, combine the two companies'
current advertising sales representation businesses and produce and distribute
television programming. Westinghouse and the Company also discussed during 1994,
but did not agree to, other joint venture relationships, including a venture
involving their respective radio stations. See "TRANSACTIONS BETWEEN THE COMPANY
AND WESTINGHOUSE".
On March 9, 1995, Michael H. Jordan, Chairman of the Board and Chief
Executive Officer of Westinghouse, met with Laurence A. Tisch, Chairman,
President and Chief Executive Officer of the Company, to inquire whether the
Company had an interest in a possible business combination. At such meeting, Mr.
Tisch expressed a lack of confidence that a transaction could be achieved with
Westinghouse because he did not believe Westinghouse would be prepared to
propose a price and other terms that would be acceptable to the Company.
Accordingly, Mr. Tisch indicated that the Company was not interested in pursuing
such a combination.
Mr. Tisch met with Mr. Jordan on April 6, 1995, at Mr. Jordan's request. At
the meeting, Mr. Jordan indicated that Westinghouse was interested in pursuing
with the Company discussions regarding a possible transaction including cash and
some form of Westinghouse securities. At such meeting, Mr. Tisch repeated that
the Company was not interested in such a transaction for the same reasons
described in the preceding paragraph. On May 2, 1995, Mr. Jordan and Frederic G.
Reynolds, Chief Financial Officer of Westinghouse, met at their request with Mr.
Tisch. Messrs. Jordan and Reynolds indicated that they remained interested in a
possible business combination and would consider an all-cash proposal. Mr. Tisch
again indicated a lack of interest in such a transaction for the same reasons
described in the preceding paragraph.
On June 23, 1995, Mr. Jordan and Roger Altman, a consultant to
Westinghouse, arranged to meet with Mr. Tisch to discuss the terms (including
price, timing and financing) of a possible proposal that Westinghouse would be
prepared to make. Messrs. Jordan and Altman indicated that such terms would
include an all-cash purchase price of $77 per share of Common Stock. At such
meeting, Mr. Tisch expressed a lack of interest in such a business combination
at such price but informed Messrs. Jordan and Altman that, if Westinghouse in
fact made a proposal, Mr. Tisch would relay it to the Company's Board of
Directors. Subsequent to such meeting, a meeting of the Board's Executive
Committee was held, at which Mr. Tisch discussed with the Committee such
possible terms. The Executive Committee advised Mr. Tisch that, while such terms
would not be acceptable, it was advisable to continue to meet with Westinghouse
if Westinghouse requested any further meetings. On June 30, 1995, Mr. Altman
arranged to meet with Mr. Tisch to further discuss possible terms (which
included price, timing and financing, although there was no change in the
purchase price Westinghouse had previously indicated it was willing to pay). Mr.
Tisch reiterated that, at such price, such terms would not be acceptable.
Mr. Jordan, Mr. Tisch and Preston R. Tisch, a member of the Company's Board
of Directors and co-Chairman and co-Chief Executive Officer of Loews, and
certain of their representatives met on July 11, 1995, to discuss the
possibility of Westinghouse making a proposal to acquire the Company.
Westinghouse's representatives indicated that Westinghouse would be prepared to
propose an all-cash purchase price of $80
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per share of Common Stock. At a meeting of the Board's Executive Committee on
July 12, 1995, Mr. Tisch informed the Committee of his discussions with
Westinghouse. The Executive Committee advised Mr. Tisch that, based on a
proposed all-cash purchase price of $80 per share of Common Stock, Mr. Tisch
should further discuss Westinghouse's possible proposal with Mr. Jordan and the
other Westinghouse representatives.
On July 18, 1995, Messrs. Jordan and Tisch and certain of their
representatives met again to discuss the terms of a possible proposal. On July
18, Mr. Altman and an attorney from Weil, Gotshal & Manges, counsel to
Westinghouse, met with attorneys from Cravath, Swaine & Moore, counsel to the
Company. At such meeting, discussions were held concerning the non-financial
terms of a possible merger agreement. The material terms discussed at such
meeting were Westinghouse's request for termination fees and expenses, an option
on new shares of Common Stock and an option on shares of Common Stock owned by
Loews. On July 19, 1995, Messrs. Jordan and Tisch and certain of their
representatives met to discuss regulatory matters in connection with a possible
proposal.
Messrs. Reynolds and Altman, Westinghouse's lead lenders and certain of
their respective representatives met on July 21, 1995, with Peter W. Keegan,
Chief Financial Officer of the Company, and attorneys from Cravath, Swaine &
Moore to discuss the feasibility of Westinghouse's financing the possible
transaction. On such date, there also was a meeting among Messrs. Jordan,
Reynolds and Altman and Messrs. Tisch and Keegan to discuss the financing, as
well as Westinghouse making an additional payment to compensate Shareholders if
the time between the signing and closing of any such transaction were more than
30 days. (The amount of the additional payment was ultimately determined as a
product of the negotiations between the parties over the various terms of the
Merger Agreement.) At the July 21 meeting, Mr. Tisch also told Messrs. Jordan,
Reynolds and Altman that he would not consider granting Westinghouse an option
on shares of Common Stock owned by Loews. Messrs. Tisch and Keegan also informed
the Westinghouse representatives at this meeting that the Company would not
consider any option on new shares of Common Stock. The attendees at this meeting
also discussed termination fees and expenses.
On July 24, 1995, Mr. Jordan telephoned Mr. Tisch to propose an all-cash
purchase price of $81 per share of Common Stock, plus an additional payment,
less any dividends which otherwise would be payable. On July 24, subsequent to
such telephone call, a meeting of the Board's Executive Committee was held, at
which Mr. Tisch updated the Committee on the terms of Westinghouse's proposal.
On July 24, 1995, Westinghouse also executed and delivered to the Company a
confidentiality agreement and Westinghouse began conducting its due diligence.
In connection therewith, the Company made available to Westinghouse confidential
information, including certain financial information relating to the Company's
revenue and earnings for fiscal years 1992, 1993, 1994 and 1995 (estimated). On
July 25, 1995, counsel to Westinghouse delivered to the Company and its counsel
a first draft of the Merger Agreement and to Loews and its counsel a first draft
of the Loews Voting Agreement.
As part of the due diligence process, Westinghouse's lead lenders met with
senior management of the Company on July 26, 1995. On July 27, 1995,
Westinghouse and the Company and their respective financial advisors and
attorneys met with Westinghouse's lead lenders to discuss the feasibility of
financing for a merger of the two companies.
During the period from July 27, 1995, through the morning of August 1,
1995, the parties negotiated the terms of the Merger Agreement, including
provisions relating to the conduct of the Company's business during the period
after execution of the Merger Agreement but prior to the Effective Time; the
maintenance of certain benefits under the Company's employee benefit plans after
the Effective Time; the situations under which the parties could terminate the
Merger Agreement and under which termination fees would be payable therefor;
obligations of each party with respect to the regulatory approval process; the
nature of Westinghouse's obligation to obtain financing for the transaction; and
the circumstances under which the Company could review and accept alternative
proposals to the Merger. Such negotiations involved, at various times, members
of Westinghouse's and the Company's respective senior managements and the
parties' respective attorneys, financial advisors and consultants. In addition,
during such period counsel to Loews negotiated with counsel to Westinghouse the
terms of the Loews Voting Agreement.
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On August 1, 1995, the Board of Directors of each of Westinghouse and the
Company independently met and approved the Merger, and Loews executed the Loews
Voting Agreement. On the afternoon of August 1, 1995, the parties executed the
Merger Agreement and issued a press release announcing the proposed Merger.
The Company does not as a matter of course publicly disclose estimates as
to its future financial results. However, in the course of the negotiation of
the terms of the Merger Agreement, certain estimates of the Company for 1995
were made available to Westinghouse (as well as to Salomon Brothers, the
Company's financial advisor). These estimates were originally prepared by the
Company in November 1994, and updated by the Company in July 1995, all as part
of the Company's ordinary budgeting and financial reporting process. The
estimates were based on a variety of assumptions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. In light of the significant uncertainties inherent in estimates of any
kind, as well as the volatility in earnings especially inherent in the
broadcasting business, the estimates provided below should not be relied on by
any Shareholder or be regarded as a representation by the Company, Westinghouse
or any other person that the estimates will be achieved. The estimates are
provided solely because they were furnished to Westinghouse. The estimates were
not prepared with a view to public disclosure or compliance with the published
guidelines of the SEC or the American Institute of Certified Public Accountants
regarding estimates. Neither the Company nor Westinghouse intends to publicly
update or publicly revise the estimates for any reason. These estimates for the
Company were, for the year ended December 31, 1995, as follows: net sales
($3,428.0 million); income from continuing operations ($171.1 million); and
income from continuing operations per common share ($2.64). The foregoing
estimates anticipated a decline in revenues from 1994 to 1995 of 8%,
attributable primarily to the absence in 1995 of broadcast rights to the
Olympics and the NFL, partially offset by higher sales in most dayparts at the
CBS Television Network; an anticipated decline in costs from 1994 to 1995 of 5%
due to the absence in 1995 of the Olympics and the NFL, partially offset by
higher programming and affiliate compensation expenses; and an anticipated
decline in income from continuing operations from 1994 to 1995 of 39%.
REASONS FOR THE MERGER
The Board of Directors has determined that the Merger Agreement and the
Merger are advisable and fair to and in the best interests of the Company and
its Shareholders and has unanimously approved the Merger Agreement and the
Merger. Accordingly, the Board of Directors unanimously recommends that
Shareholders vote "FOR" approval and adoption of the Merger Agreement and the
Merger. See "-- Background of the Merger" and "-- Opinion of Financial Advisor".
In reaching its unanimous determination that the Merger Agreement and the
Merger are in the best interests of the Company and its Shareholders, the Board
considered a number of factors (both positive and negative), including, without
limitation, the following:
(i) the written opinion of Salomon Brothers that the Merger
Consideration to be received by the Shareholders pursuant to the Merger
Agreement is fair to such Shareholders from a financial point of view (see
"-- Opinion of Financial Advisor");
(ii) the relationship of the Merger Consideration to the historical
market prices for the Common Stock (see "MARKET PRICES OF COMMON STOCK"),
including the fact that the Merger Consideration represents a substantial
multiple of the earnings per share of the Common Stock for 1994;
(iii) the Board's view that the terms of the Merger Agreement, as
reviewed by the Board with its legal advisors and Salomon Brothers (see
"THE MERGER AGREEMENT"), are advisable and fair to the Company and its
Shareholders in light of the nature of the transaction with Westinghouse
and provided the Company and its Shareholders with the flexibility to,
under certain circumstances, accept a Superior Proposal (as defined herein)
for a Competing Transaction and terminate the Merger Agreement (see "THE
MERGER AGREEMENT -- No Solicitation" and "-- Termination Fees and
Expenses");
(iv) the Board's belief, after consultation with its legal counsel,
that the required regulatory approvals could be obtained for the Merger
(see "REGULATORY APPROVALS");
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(v) information relating to the financial condition and results of
operations of the Company (see "SELECTED CONSOLIDATED FINANCIAL DATA") and
management's best estimates of the prospects of the Company (see
"-- Opinion of Financial Advisor"), which, in the Board's view, supported a
determination that the purchase price to be paid in the Merger for the
Company's Common Stock is fair to the Company and its Shareholders;
(vi) the lack of proposals from any other third party, which the Board
considered to support its determination that the Merger Agreement and the
Merger are in the best interests of the Company and its Shareholders (the
Board did not solicit any such proposals);
(vii) the Board's belief that the interests of certain executive
officers and directors of the Company in the Merger (see "INTERESTS OF
CERTAIN PERSONS IN THE MERGER") were appropriate in light of the nature of
the transaction with Westinghouse and were consistent with the advisability
and fairness of the Merger Agreement and the Merger to the Company and its
Shareholders; and
(viii) the current and prospective environment in which the Company
operates, including national and local economic conditions, the competitive
environment for broadcast companies generally and the trend toward
consolidation in the media and entertainment industries.
The foregoing discussion of the information and factors discussed by the
Board of Directors is not meant to be exhaustive but includes all material
factors considered by the Board. The Board did not quantify or attach any
particular weight to the various factors that it considered in reaching its
determination that the Merger is in the best interests of the Shareholders.
OPINION OF FINANCIAL ADVISOR
The Company retained Salomon Brothers to act as financial advisor to the
Company and to render a fairness opinion, from a financial point of view, in
connection with the Merger. Salomon Brothers rendered an opinion to the
Company's Board on August 1, 1995, that, as of such date, the consideration to
be received by the Shareholders in the Merger is fair to the Shareholders from a
financial point of view.
The full text of Salomon Brothers' fairness opinion, which sets forth the
assumptions made, general procedures followed, matters considered and limits on
the review undertaken, is attached as Appendix C to this Proxy Statement.
Salomon Brothers' opinion is directed only to the fairness, from a financial
point of view, to the Shareholders of the consideration to be received by such
holders in the Merger and does not address the Company's underlying business
decision to effect the Merger or constitute a recommendation to any Shareholder
as to how such Shareholder should vote with respect to the Merger Agreement or
the Merger. The summary of Salomon Brothers' opinion set forth below is
qualified in its entirety by reference to the full text of such opinion attached
as Appendix C. SHAREHOLDERS ARE URGED TO READ THE OPINION CAREFULLY AND IN ITS
ENTIRETY.
In connection with rendering this opinion, Salomon Brothers reviewed and
analyzed, among other things, the following: (i) the Merger Agreement; (ii)
certain publicly available information concerning the Company, including the
Annual Reports on Form 10-K of the Company for each of the years in the
five-year period ended December 31, 1994, and the Quarterly Report on Form 10-Q
of the Company for the quarter ended March 31, 1995; (iii) the Company's press
release announcing preliminary financial information for the quarter ended June
30, 1995; (iv) certain other internal information, primarily financial in
nature, including the Company's estimate of 1995 earnings, concerning the
business and operations of the Company furnished to Salomon Brothers by the
Company for purposes of its analysis; (v) certain publicly available information
concerning the trading of, and the trading market for, the Company's Common
Stock; (vi) certain publicly available information with respect to certain other
companies that Salomon Brothers believed to be comparable to the Company and the
trading markets for certain of such other companies' securities; and (vii)
certain publicly available information concerning the nature and terms of
certain other transactions that Salomon Brothers considered relevant to its
inquiry. Salomon Brothers was not requested to and did not solicit third party
interest in the Company. Salomon Brothers also met with certain officers and
employees of the Company to discuss the foregoing as well as other matters
Salomon Brothers believed relevant to its inquiry. Salomon Brothers also
considered such other information, financial studies, analyses, investigations
and financial, economic and market criteria which they deemed relevant.
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In its review and analysis and in arriving at its opinion, Salomon Brothers
assumed and relied upon the accuracy and completeness of all the financial and
other information provided to it or publicly available and neither attempted
independently to verify nor assumed responsibility for verifying any of such
information. With respect to the Company's estimate of earnings for 1995,
Salomon Brothers assumed that it had been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the Company's
management as to the financial performance of the Company for the period
covered. Salomon Brothers did not make or obtain any independent evaluations or
appraisals of any of the Company's assets, properties or facilities nor was
Salomon Brothers furnished with any such evaluations or appraisals. Salomon
Brothers assumed that the Merger would be consummated in accordance with the
terms of the Merger Agreement.
In conducting its analysis and arriving at its opinion, Salomon Brothers
considered such financial and other factors as it deemed appropriate under the
circumstances including, among others, the following: (i) the historical and
current financial position and results of operations of the Company; (ii) the
business prospects of the Company; (iii) the historical and current market for
the Company's Common Stock and for the equity securities of certain other
companies that Salomon Brothers believes to be comparable to the Company and
certain of its businesses; and (iv) the nature and terms of certain other
acquisition transactions that Salomon Brothers believes to be relevant. Salomon
Brothers also took into account its assessment of general economic, market and
financial conditions and its knowledge of the broadcasting industry as well as
its experience in connection with similar transactions and securities valuation
generally. Salomon Brothers' opinion was based on conditions as they existed and
could be evaluated on August 1, 1995, the date of its opinion.
In connection with a presentation to the Company's Board on August 1, 1995,
Salomon Brothers advised the Company's Board that, in evaluating the
consideration to be received in the Merger by the Shareholders, Salomon Brothers
had performed a variety of financial analyses with respect to the Company, all
as summarized below.
Overview of the Company and Historical Trading Analysis. Salomon Brothers
reviewed for background purposes certain aspects of the financial performance of
the Company, including revenue, earnings before interest, taxes, depreciation
and amortization ("EBITDA") and earnings before interest and taxes ("EBIT") for
fiscal years 1992, 1993 and 1994 and 1995 budget estimates (calculated as of
December 1994) and management estimates (calculated as of July 1995). Salomon
Brothers also reviewed with the Company's Board certain information concerning
the trading prices and volumes of trading of the Company's Common Stock through
July 28, 1995. Salomon Brothers observed that the Merger Consideration
(excluding the Additional Amount) represented a 23.4% premium over the trading
price of the Company's Common Stock on July 14, 1995 (which Salomon Brothers
believed to be the last trading day before the possibility of a transaction
between the Company and Westinghouse became the subject of widespread media
speculation). Salomon Brothers also noted that the consideration to be received
by holders of the Company's Common Stock pursuant to the Merger is higher than
the highest price at which the Company's Common Stock (adjusted for stock
splits) had ever traded on the NYSE. Salomon Brothers calculated, among other
things, multiples of the Merger Consideration (excluding the Additional Amount)
to the Company's earnings per share during the latest twelve months ended June
30, 1995 ("LTM"), and to its projected earnings per share for fiscal years 1995
and 1996 (based on the Institutional Brokers Estimate System), and multiples of
the Company's Firm Value (market capitalization plus debt less cash and cash
equivalents), based upon the Merger Consideration (excluding the Additional
Amount), to its LTM EBIT and its LTM EBITDA. The results of the calculations
were as follows: Merger Consideration (excluding the Additional Amount) to LTM
earnings per share of 27.3x, to projected fiscal year 1995 earnings per share of
24.3x and to projected fiscal year 1996 earnings per share of 22.8x; and Firm
Value to LTM EBIT of 18.5x and to LTM EBITDA of 14.8x.
Analysis of Selected Publicly Traded Comparable Companies. Salomon
Brothers reviewed certain publicly available financial, operating and stock
market information as of July 14, 1995, for the Company and as of July 28, 1995,
for certain selected publicly traded companies in three sectors of the media
industry (which were similar in certain respects to certain of the Company's
businesses) -- diversified media companies (Capital Cities/ABC, Inc.,
Multimedia, Inc., The News Corporation Limited, Time Warner, Inc., The Walt
Disney Company and Viacom, Inc.) (the "Diversified Media Group"), television
station companies (Granite Broadcasting, LIN Television, Renaissance
Communications, Sinclair Broadcast Group, United
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Television and Young Broadcasting) (the "Television Station Group") and radio
station companies (American Radio Systems, Citicasters Inc., Clear Channel
Communications, Inc., Emmis Broadcasting, Evergreen Media Corporation, EZ
Communications, Infinity Broadcasting, Jacor Communications, Inc. and SFX
Broadcasting) (the "Radio Station Group").
For the Company and each company in the Diversified Media Group, Salomon
Brothers calculated, among other things, multiples of Adjusted Firm Value (Firm
Value less unconsolidated assets) to LTM Net Revenue and EBITDA, multiples of
Adjusted Firm Value to estimated EBITDA for fiscal years 1995 and 1996 (derived
from media industry research reports) and multiples of pre-announcement market
price to estimated earnings per share for fiscal years 1995 and 1996 (derived
from media industry research reports). An analysis of the multiples of Adjusted
Firm Value to LTM Net Revenue yielded 1.4x for the Company, with multiples
ranging from 1.8x to 3.7x, with a median of 2.3x, for the Diversified Media
Group. An analysis of the multiples of Adjusted Firm Value to LTM EBITDA yielded
12.1x for the Company, with multiples ranging from 9.6x to 13.0x, with a median
of 10.6x, for the Diversified Media Group. An analysis of the multiples of
Adjusted Firm Value to estimated EBITDA for calendar year 1995 yielded 11.4x for
the Company, with multiples ranging from 8.9x to 12.9x, with a median of 10.6x,
for the Diversified Media Group. An analysis of the multiples of Adjusted Firm
Value to estimated EBITDA for fiscal year 1996 (derived from media industry
research reports) yielded 9.4x for the Company, with multiples ranging from 8.1x
to 11.5x, with a median of 9.4x, for the Diversified Media Group. An analysis of
the multiples of market price to estimated earnings per share for fiscal year
1995 yielded 19.6x for the Company, with multiples ranging from 18.4x to 61.3x,
with a median of 21.7x, for the Diversified Media Group. An analysis of the
multiples of market price to estimated earnings per share for fiscal year 1996
yielded 18.5x for the Company, with multiples ranging from 17.2x to 30.8x, with
a median of 20.5x, for the Diversified Media Group.
For each company in the Television Station Group and the Radio Station
Group, Salomon Brothers calculated, among other things, multiples of Adjusted
Firm Value to LTM Net Revenue, EBITDA, Broadcast Cash Flow (operating income
plus depreciation plus amortization of program rights less cash payments for
program rights plus corporate overhead) ("BCF") and estimated BCF (derived from
media industry research reports) for fiscal year 1995. An analysis of the
multiples of Adjusted Firm Value to LTM Net Revenue yielded multiples ranging
from 3.4x to 7.7x, with a median of 5.5x, for the Television Station Group and
multiples ranging from 3.3x to 9.3x, with a median of 5.3x, for the Radio
Station Group. An analysis of the multiples of Adjusted Firm Value to LTM EBITDA
yielded multiples ranging from 9.2x to 14.8x, with a median of 12.0x, for the
Television Station Group and multiples ranging from 10.6x to 21.1x, with a
median of 15.5x, for the Radio Station Group. An analysis of the multiples of
Adjusted Firm Value to LTM BCF yielded multiples ranging from 8.8x to 14.4x,
with a median of 11.1x, for the Television Station Group and multiples ranging
from 9.6x to 19.5x, with a median of 13.7x, for the Radio Station Group. An
analysis of the multiples of Adjusted Firm Value to estimated BCF for fiscal
year 1995 yielded multiples ranging from 8.5x to 13.4x, with a median of 10.8x,
for the Television Station Group and multiples ranging from 9.4x to 17.0x, with
a median of 12.5x, for the Radio Station Group.
Using a range of multiples derived from these calculations of Adjusted Firm
Value to LTM EBITDA for the Diversified Media Group and Adjusted Firm Value to
BCF for each of the Television Station Group and the Radio Station Group,
Salomon Brothers derived a valuation range on a public market basis for the
television network, television stations and radio stations segments,
respectively, of the Company which, in turn, were used in deriving a range of
implied value per share of the Company's Common Stock (based on 64.8 million
shares of Common Stock outstanding plus options for 2.0 million shares of Common
Stock) of $55.25 to $71.30.
Discounted Cash Flow Analysis. Salomon Brothers performed a discounted
cash flow analysis based on two scenarios for earnings and cash flow from the
five months ending December 31, 1995, and fiscal years 1996 to 2004 developed by
Salomon Brothers and the Company's management using forecasted financials
prepared by the Company's management for 1995 and industry trends and research
estimates for years thereafter. The first scenario reflected average network
performance over the projected period (the "Average Network Performance
Scenario"); the second scenario reflected superior network and television
station performance (which assumed approximately $130 million annual improvement
in EBITDA beyond 1997 as a
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result of improved demographics and ratings) for the projected period (the
"Superior Network Performance Scenario").
Based upon the scenario analyses, Salomon Brothers estimated EBITDA and
unlevered free cash flow for the five months ending December 31, 1995, and
fiscal years 1996 through 2004 for each of the Company's three segments. Salomon
Brothers applied to the EBITDA for fiscal year 2004 estimated terminal value
multiples ranging from 7.5x to 8.5x for the Average Network Performance Scenario
and 8.5x to 9.5x for the Superior Network Performance Scenario for the
television network segment, 9.5x to 10.5x for the Average Network Performance
Scenario and 10.5x to 11.5x for the Superior Network Performance Scenario for
the television stations segment and 10.5x to 11.5x for the radio stations
segment, from which Salomon Brothers derived ranges for the terminal values for
the Company on a segment basis. Salomon Brothers then discounted the stream of
unlevered free cash flows for the five months ending December 31, 1995, and
fiscal years 1996 through 2004 as well as the terminal values of the Company
segments so obtained at discount rates ranging from 10.5% to 11.5% for the
television network segment and 11.5% to 12.5% for each of the television
stations and the radio stations segments. Based on these calculations, Salomon
Brothers derived a valuation range for the television network, television
stations and radio stations segments, respectively, of the Company which, in
turn, were used in deriving a range of implied value per share of the Company's
Common Stock (based on 64.8 million shares of Common Stock outstanding plus
options for 2.0 million shares of Common Stock) of $54.65 to $63.85 for the
Average Network Performance Scenario and $69.50 to $80.80 for the Superior
Network Performance Scenario.
Analysis of Selected Mergers/Acquisition Transactions. Salomon Brothers
also reviewed certain publicly available financial, operating and stock market
information for certain selected recent television broadcasting and radio
broadcasting merger or acquisition transactions over $50 million in size. For
each such transaction, Salomon Brothers calculated the multiple of Firm Value to
estimated BCF for fiscal year 1995, which yielded a range of multiples of 9.3x
to 16.0x, with a median of 11.0x, for the television broadcasting transactions,
and a range of multiples of 9.2x to 12.1x, with a median of 10.8x, for the radio
broadcasting transactions. Using a range of multiples derived from these
calculations of Firm Value to estimated BCF for each of the television stations
and the radio stations segments, respectively, and a range of multiples, based,
in part on the ABC/Disney Merger, of Firm Value to LTM EBITDA for the television
network segment, Salomon Brothers derived a valuation range for each segment
which, in turn, was used in deriving a range of implied value per share of the
Company's Common Stock (based on 64.8 million shares of Common Stock outstanding
plus options for 2.0 million shares of Common Stock) of $63.95 to $85.45.
Analysis of Walt Disney and Capital Cities/ABC Announced Merger. Salomon
Brothers reviewed certain publicly available information regarding the announced
merger between The Walt Disney Company and Capital Cities/ABC, Inc. (the
"ABC/Disney Merger") and compared that information with certain information
regarding the Merger. Salomon Brothers calculated, among other things, multiples
of Firm Value to LTM EBIT, LTM EBITDA and estimated EBITDA for fiscal year 1995
and multiples of offer price to LTM earnings per share and estimated earnings
per share for fiscal years 1995 and 1996. LTM for the Company was calculated as
of June 30, 1995, and LTM for Capital Cities/ABC, Inc. was calculated as of
April 2, 1995. An analysis of Firm Value to LTM EBIT, to LTM EBITDA and to
estimated EBITDA for fiscal year 1995 (derived from media industry research
reports) yielded 18.5x for the Merger and 13.9x for the ABC/Disney Merger, 14.8x
for the Merger and 12.3x for the ABC/Disney Merger and 13.9x for the Merger and
11.5x for the ABC/Disney Merger, respectively. An analysis of the multiples of
offer price to LTM earnings per share, to estimated earnings per share for
fiscal year 1995 and to estimated earnings per share for fiscal year 1996
yielded 27.3x for the Merger and 26.1x for the ABC/Disney Merger, 24.3x for the
Merger and 23.4x for the ABC/Disney Merger and 22.8x for the Merger and 21.8x
for the ABC/Disney Merger, respectively.
The foregoing summary does not purport to be a complete description of the
analyses performed by Salomon Brothers or of its presentation to the Company's
Board. The preparation of financial analyses and fairness opinions is a complex
process and is not necessarily susceptible to partial analysis or summary
description. Salomon Brothers believes that its analyses (and the summary set
forth above) must be considered as a whole, and that selecting portions of such
analyses and of the factors considered by Salomon Brothers, without considering
all of such analyses and factors, could create an incomplete view of the
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<PAGE> 28
processes underlying the analyses conducted by Salomon Brothers and its opinion.
Salomon Brothers made no attempt to assign specific weights to particular
analyses. Any estimates contained in Salomon Brothers' analyses are not
necessarily indicative of actual values, which may be significantly more or less
favorable than as set forth therein. Estimates of values of companies do not
purport to be appraisals or necessarily to reflect the prices at which companies
may actually be sold.
Salomon Brothers is an internationally recognized investment banking firm
engaged, among other things, in the valuation of businesses and their securities
in connection with mergers and acquisitions, restructurings, leveraged buyouts,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for estate,
corporate and other purposes. The Company retained Salomon Brothers based on
Salomon Brothers' reputation and expertise in transactions similar to the
Merger, as well as its familiarity with the Company. The amount of the Merger
Consideration was determined by arms'-length negotiations between the Company
and Westinghouse, in consultation with their respective financial advisors and
other representatives. Salomon Brothers has previously rendered certain
investment banking and financial advisory services to the Company for which
Salomon Brothers received customary compensation. In addition, in the ordinary
course of its business, Salomon Brothers actively trades the debt and equity
securities of both the Company and Westinghouse for its own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Pursuant to an engagement letter with Salomon Brothers, the Company will
pay Salomon Brothers (a) $1,875,000 payable following the delivery of Salomon
Brothers' opinion to the Company's Board and (b) $3,125,000 upon the earlier of
(i) consummation of the Merger and (ii) termination of the Merger Agreement in
circumstances where the Company shall have received reimbursement of its
expenses. The Company has also agreed to reimburse Salomon Brothers for
reasonable travel and out-of-pocket expenses incurred in connection with its
engagement (including certain reasonable fees and expenses of Salomon Brothers'
counsel) and to indemnify Salomon Brothers and certain related persons against
certain liabilities and expenses relating to or arising out of its engagement,
including certain liabilities under the federal securities laws.
Additional Financial Advisor. The Company also engaged Allen & Company
Incorporated ("Allen") to act as the Company's financial advisor in connection
with the Merger, although the Company did not request that Allen deliver a
fairness opinion regarding the Merger. The Company's management consulted with
Allen during the course of the transaction. Pursuant to an engagement letter
with Allen, the Company has agreed to pay Allen a fee of $3,000,000 upon
consummation of the Merger. In addition, the Company has agreed to reimburse
Allen for expenses incurred in connection with its engagement (including certain
fees and expenses of Allen's counsel) and to indemnify Allen and certain related
persons against certain liabilities and expenses relating to or arising out of
its engagement, including certain liabilities under the federal securities laws.
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<PAGE> 29
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
attached hereto as Appendix A and incorporated by reference herein. All
references to and summaries of the Merger Agreement in this Proxy Statement are
qualified in their entirety by reference to the Merger Agreement. Shareholders
are urged to read the Merger Agreement carefully and in its entirety.
EFFECTIVE TIME
Subject to the provisions of the Merger Agreement, as soon as practicable
on or after the day the Merger closes, which will be the second business day
following the satisfaction or waiver of all the conditions set forth in the
Merger Agreement (the "Closing Date"), unless another time or date is agreed to
in writing by the Company, Westinghouse and Sub, a certificate of merger or
other appropriate documents (the "Certificate of Merger") will be filed with the
Secretary of State of the State of New York. The "Effective Time" of the Merger
will be upon the filing of the Certificate of Merger or at such time thereafter
as is provided in the Certificate of Merger.
THE MERGER
The Merger Agreement provides that, subject to the approval and adoption of
the Merger Agreement and the Merger by the Shareholders, approval by certain
regulatory authorities and compliance with certain other covenants and
conditions, Sub, a wholly owned subsidiary of Westinghouse, will be merged with
and into the Company, at which time the separate corporate existence of Sub will
cease and the Company will continue as the Surviving Corporation. Following
consummation of the Merger, the Company, as the Surviving Corporation, will be a
wholly owned subsidiary of Westinghouse. As a result of the Merger, all the
property, rights, privileges, powers and franchises of the Company and Sub will
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Company and Sub will become the debts, liabilities and duties of the Surviving
Corporation.
Conversion of Securities. At the Effective Time, (i) each share of Common
Stock that is owned by the Company, any Subsidiary of the Company, Westinghouse,
Sub or any other Subsidiary of Westinghouse will be automatically cancelled and
retired and will cease to exist, and no consideration will be delivered or
deliverable in exchange therefor, (ii) each issued and outstanding share of
Common Stock (other than shares to be cancelled in accordance with the
immediately preceding clause and other than Dissenting Shares) will be converted
into the right to receive $81 in cash plus an additional amount equal to the
product of (x) $81,(y) 6% and (z) the number of days in the period from and
including August 31, 1995, to but excluding the Closing Date, divided by 365,
minus any dividends declared and payable by the Company for the period following
August 1, 1995 (such amount the "Additional Amount" and, together with the $81,
the "Merger Consideration"), from the Surviving Corporation, without interest
thereon, upon surrender of the certificates representing shares of Common Stock,
and (iii) each share of capital stock of Sub will be converted into and become
one fully paid and nonassessable share of Common Stock of the Surviving
Corporation. Assuming, for purposes of the following calculation, the Merger is
consummated on December 1, 1995, and giving effect to the $0.10 per share
regular quarterly dividend declared by the Company on October 11, 1995, the
Additional Amount would equal approximately $1.15 per share of Common Stock. (If
the Merger is consummated on any other date or another such dividend is paid,
the Additional Amount will be greater or less than such amount, as the case may
be, according to the foregoing formula.) The Additional Amount is intended to
compensate the Shareholders for any delay in consummating the Merger after
August 30, 1995. Based on the foregoing assumptions, the total amount of funds
required by Westinghouse to purchase all the outstanding shares of Company
Common Stock pursuant to the Merger Agreement and to pay fees and expenses
associated with the Merger would be approximately $5.5 billion.
Directors and Officers; Governing Documents. At the Effective Time, the
directors of Sub will become the directors, and the officers of the Company will
become the officers, of the Surviving Corporation until the earlier of their
death, resignation or removal or until their respective successors are duly
elected or appointed and qualified, as the case may be. At the Effective Time,
the Certificate of Incorporation and the By-laws of
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<PAGE> 30
Sub, as in effect immediately prior to the Effective Time, will be the
Certificate of Incorporation and the By-laws of the Surviving Corporation until
thereafter amended as provided therein or by applicable law.
Exchange Procedures. Sub has designated Chemical Bank to act as Paying
Agent for the payment of the Merger Consideration upon surrender of certificates
representing shares of Common Stock, and prior to the Effective Time
Westinghouse will deposit or cause to be deposited with the Paying Agent in a
separate fund established for the benefit of the holders of shares of Common
Stock for payment pursuant to the Merger Agreement, through the Paying Agent
(the "Payment Fund"), immediately available funds in amounts necessary to make
the payments necessary to Shareholders pursuant to the Merger Agreement.
Portions of the Payment Fund will be invested by the Paying Agent as
Westinghouse directs. As soon as reasonably practicable after the Effective
Time, Westinghouse will instruct the Paying Agent to mail to each Shareholder of
record (other than the Company or Westinghouse, or any of their respective
subsidiaries, or holders of Dissenting Shares) a letter of transmittal with
instructions for the surrender of certificates representing ownership of shares
of Common Stock ("Certificates") in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent, together with
such letter of transmittal, duly executed, and such other customary documents as
may be required pursuant to the instructions set forth in the letter of
transmittal, the holder of such Certificate will be entitled to receive in
respect thereof cash in an amount equal to the product of (i) the number of
shares of Common Stock represented by such Certificate and (ii) the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
No interest will be paid or accrued on the Merger Consideration payable upon the
surrender of any Certificate. If payment is to be made to a person other than
the person in whose name a surrendered Certificate is registered, it will be a
condition to such payment that the Certificate so surrendered be properly
endorsed or otherwise in proper form for transfer, and that the person
requesting such payment will pay any transfer or other taxes which may be
required by reason of such payment to a person other than the registered holder
of the surrendered Certificate, or will have established to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered, after the Effective Time, each Certificate will represent
only the right to receive upon such surrender the Merger Consideration,
determined as of the Effective Time, without interest thereon. Westinghouse will
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to the Merger Agreement such amounts as Westinghouse is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that such amounts are so withheld
by Westinghouse, such withheld amounts will be treated for all purposes of the
Merger Agreement as having been paid to the holder of the shares of Common Stock
in respect of which such deduction and withholding was made by Westinghouse.
Cancellation and Retirement of Common Stock. All shares of Common Stock,
when converted as provided in the Merger Agreement, will automatically be
cancelled and retired and will cease to exist, and each holder of a Certificate
previously representing any such shares will cease to have any rights with
respect thereto, except the right to receive the Merger Consideration or as
otherwise provided by law and subject to the Surviving Corporation's obligation
to pay any dividends with a record date prior to the Effective Time which may
have been declared in accordance with the terms of the Merger Agreement on or
prior to the Effective Time and which remain unpaid at the Effective Time. At
the Effective Time, the stock transfer books of the Company will be closed, and
there will be no further registration of transfers of shares thereafter on the
records of the Company.
Any portion of the Payment Fund which remains undistributed to the
Shareholders for one year after the Effective Time will be delivered to
Westinghouse, upon demand, and any Shareholders who have not complied with the
provisions of the Merger Agreement and the instructions set forth in the letter
of transmittal shall thereafter look only to Westinghouse for payment of the
Merger Consideration to which they are entitled. All interest accrued in respect
of the Payment Fund will inure to the benefit of, and be paid to, Westinghouse.
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REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of the Company
regarding: the due organization, good standing and authority to conduct business
and own, lease and operate its properties for the Company and its Material
Subsidiaries (as defined in the Merger Agreement); the capitalization of the
Company and its Material Subsidiaries; the authority of the Company to enter
into the Merger Agreement, subject to Shareholder approval; the absence of
conflict between transactions contemplated by the Merger Agreement and other
agreements, documents and permits; consents and approvals; the adequacy of
filings with the SEC; the conduct of business in the ordinary course and the
absence of certain material adverse changes since December 31, 1994; the absence
of undisclosed material liabilities; the accuracy and truthfulness of documents
filed with or sent to the SEC or any other regulatory authority; compliance with
applicable law; the absence of (i) any suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its Subsidiaries which (in any case) (A) questions the validity of the Merger
Agreement or the Merger or any action taken or to be taken in connection
therewith or (B) is, individually or together with any other suit, action or
proceeding arising out of or based upon the same or substantially the same facts
or circumstances, reasonably likely to have a Material Adverse Effect (as
defined below) with respect to the Company or (ii) any judgment, decree,
injunction, rule or order of any governmental entity or arbitrator outstanding
against the Company or any of its Subsidiaries which is reasonably likely to
have a Material Adverse Effect on the Company or prevent, hinder or materially
delay its ability to consummate the transactions contemplated by the Merger
Agreement; taxes, including the absence of any tax-sharing agreement with any
entity which is not, directly or indirectly, a Subsidiary of the Company;
certain matters relating to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); the good standing and ownership by the Company of the
Company name and the Company "eye" logo; the absence of contracts or agreements
that would be altered, terminated or cancelled as a result of, or otherwise
affected by, the Merger and the transactions contemplated by the Merger
Agreement; the sufficiency of the Board's recommendation of the Merger Agreement
and the Merger under the BCL and the inapplicability of New York anti-takeover
laws; the opinion of Salomon Brothers as to the fairness, from a financial point
of view, of the Merger Consideration; the Shareholder vote required to approve
the Merger Agreement and the Merger; the engagement of brokers and financial
advisors; and FCC qualifications. "Material Adverse Effect" is defined in the
Merger Agreement to mean, with respect to any party, the result of one or more
events, changes or effects which, individually or in the aggregate, would have a
material adverse effect on the business, results of operations or financial
condition of such party and its Subsidiaries, taken as a whole.
The Merger Agreement also includes representations and warranties by
Westinghouse and Sub regarding: the due organization, good standing and
authority to conduct business and own, lease and operate its properties and
those of its Material Subsidiaries; the authority to enter into the Merger
Agreement; the absence of conflict with other agreements and documents; consents
and approvals; the conduct of business by Sub; the accuracy and truthfulness of
documents filed with or sent to the SEC or any other regulatory authority; the
approval of its Board of Directors; the receipt by Westinghouse of certain
financing commitments for the Merger and compliance with certain terms of such
commitments; the engagement of brokers and financial advisors; and FCC
qualifications.
CONDUCT OF THE BUSINESS PENDING THE MERGER
During the period from August 1, 1995, until the Effective Time, the
Company has agreed as to itself and its Subsidiaries that, except as expressly
contemplated or permitted by the Merger Agreement or as consented to in writing
by Westinghouse, the Company and its Subsidiaries will carry on their respective
businesses in the ordinary course in substantially the same manner as conducted
prior to August 1, 1995. Except as expressly contemplated or permitted by the
Merger Agreement or as consented to in writing by Westinghouse, the Company also
has agreed that it will not, nor shall it permit any of its Subsidiaries to: (i)
(A) declare or pay any dividends on or make any other distributions in respect
of any of its capital stock, other than regular quarterly dividends not in
excess of $.10 per share with customary record and payment dates and other than
cash dividends paid to the Company or any wholly owned Subsidiary on or with
respect to the capital stock of a wholly owned Subsidiary; (B) split, combine or
reclassify any of its capital stock or issue or authorize or
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propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (C) repurchase or acquire, or
permit any Subsidiary to purchase or otherwise acquire, any shares of its
capital stock except as required by the terms of its securities outstanding as
of August 1, 1995, as contemplated by the Merger Agreement or by any employee
benefit or dividend reinvestment plan in effect on August 1, 1995; or (ii) (A)
grant any options, warrants or rights to purchase shares of Common Stock; (B)
amend or reprice any option or SAR Unit (as defined in the Merger Agreement) or
amend the Company's 1983 Stock Rights Plan (as amended from time to time prior
to August 1, 1995, the "Stock Rights Plan"); or (C) issue, deliver or sell, or
authorize or propose the same with respect to, any shares of its capital stock,
any Company Voting Debt (as defined in the Merger Agreement) or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, Company Voting Debt or convertible securities, other than (1) the
issuance of shares upon the exercise of options granted under the Stock Rights
Plan which were outstanding on August 1, 1995, or in satisfaction of stock
grants or stock based awards made prior to August 1, 1995, pursuant to the Stock
Rights Plan or based upon any individual agreements such as employment
agreements or executive termination agreements (in each such case, as in effect
on August 1, 1995) and (2) issuances by a wholly owned Subsidiary of its capital
stock to its parent.
The Company has also agreed that it will not, and in the cases of clauses
(ii), (iii), (v), (vi) and (vii) below, will not permit any of its Subsidiaries
to: (i) amend or propose to amend its Certificate of Incorporation or By-laws;
(ii) except as disclosed in the Merger Agreement, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any material
business; (iii) sell, lease, encumber or otherwise dispose of, or agree to do
the same with, any of its assets, other than (A) dispositions or proposed
dispositions disclosed in the Merger Agreement or (B) dispositions in the
ordinary course of business consistent with past practice which are not
material, individually or in the aggregate, to such party and its Subsidiaries
taken as a whole; (iv) authorize, recommend, propose or announce an intention to
adopt a plan of complete or partial liquidation or dissolution of the Company or
any of its Subsidiaries; (v) take or agree or commit to take any action that is
reasonably likely to result in any of the Company's representations or
warranties under the Merger Agreement being untrue such that the condition to
Westinghouse's and Sub's obligations under the Merger Agreement relating to the
Company's representations and warranties (see "-- Conditions to the Merger")
would not be satisfied; (vi) except as disclosed in the Merger Agreement, (A)
grant any increases in the compensation of any of its directors, officers or key
employees, except for increases for officers and employees in the ordinary
course of business, (B) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or contemplated by any of the existing
Company ERISA Plans (as defined herein) as in effect on August 1, 1995, to any
such director, officer or key employee, whether past or present, (C) except as
permitted under the covenants described in clause (vii)(B) below, enter into any
new, or materially amend any existing, employment or severance or termination
agreement with any such director, officer or key employee or (D) except as may
be required to comply with applicable law, become obligated under any new
Company Plan (as defined in the Merger Agreement), which was not in existence on
August 1, 1995, or amend any such plan or arrangement in existence on such date
if such amendment would have the effect of enhancing any benefits thereunder;
(vii) except as disclosed in the Merger Agreement, (A) assume or incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any debt securities of
such party or any of its Subsidiaries or guarantee any debt securities of others
or create any mortgages, liens, security interest or other encumbrances on the
property of the Company or any of its Subsidiaries in connection with any
indebtedness thereof, or enter into any "keep well" or other agreement or
arrangement to maintain the financial condition of another person or (B)(1)
enter into, modify, rescind, terminate, waive, release or otherwise amend in any
material respect any of the terms or provisions of any (w) television network
affiliation agreement for a television station in one of the 50 largest markets,
(x) intercollegiate, professional or other sports television network programming
agreement having an aggregate value over its term greater than $100,000,000, (y)
new employment or consulting agreement which provides for compensation in excess
of $250,000 per year (in the case of corporate staff employees and consultants)
or $750,000 per year (in the case of entertainment division employees and
consultants) or (z) any contract, agreement, commitment or arrangement to which
the Company or any of its Subsidiaries is a party or by which it or any
Subsidiary is bound which would be required to be filed by the Company with the
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<PAGE> 33
SEC as an exhibit to its Annual Report on Form 10-K or (2) modify, rescind,
terminate, waive, release or otherwise amend in any material respect any of the
terms or provisions of certain other agreements entered into by the Company;
(viii) take any action, other than in the ordinary course of business,
consistent with past practice or as required by the SEC or by law, with respect
to accounting policies, procedures and practices; or (ix) make any material tax
election (unless required by law) or settle or compromise any material income
tax liability except if such action is taken in the ordinary course of business
and Westinghouse shall have been provided reasonable prior notice thereof.
The Company has further agreed (i) to cause its senior officers to use
reasonable efforts to promptly advise Westinghouse of any change or occurrence
having, or which, insofar as reasonably can be foreseen, could have, a Material
Adverse Effect with respect to the Company, and (ii) to the extent permitted by
law (including FCC regulations), to meet on a regular basis with Westinghouse's
senior officers to discuss the Company's business.
NO SOLICITATION
The Company has agreed that: (i) it, its Subsidiaries and their respective
officers, directors, employees, representatives, agents or affiliates
(collectively, the "Company Representatives") will immediately cease any
discussions or negotiations with any party that may be ongoing with respect to a
Competing Transaction; (ii) from and after August 1, 1995, until the termination
of the Merger Agreement, neither the Company nor any of its Subsidiaries will,
nor will the Company authorize or permit any of its Subsidiaries or any of the
Company's Representatives to, directly or indirectly, initiate, solicit or
knowingly encourage (including by way of furnishing non-public information), or
take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction or agree to or endorse any Competing Transaction,
or authorize or permit any of the Company Representatives to take any such
action; and (iii) it will in each case notify Westinghouse orally (within one
business day) and in writing (as promptly as practicable) of all the relevant
details relating to all inquiries and proposals which it, its Subsidiaries or
any of the Company's Representatives may receive relating to any of such
matters, including providing a copy of such inquiry or proposal; provided, that,
in any such case, the Company or the Board of Directors may (A)(1) take and
disclose to Shareholders a position contemplated by Rule 14e-2 of the Exchange
Act or (2) make any disclosure that, in the good faith judgment of the Board of
Directors of the Company, after consultation with and based upon the advice of
independent legal counsel, is required under applicable law, (B) furnish
information to, or enter into discussions or negotiations with, any person or
entity that makes after August 1, 1995, a written, bona fide proposal,
unsolicited after August 1, 1995, to acquire the Company and/or its Subsidiaries
if (1) the Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary to comply with its fiduciary duties to Shareholders under applicable
law and (2) prior to taking such action, the Company (x) provides reasonable
notice to Westinghouse of such action and (y) receives from such person or
entity an executed confidentiality agreement in reasonably customary form or (C)
fail to make or withdraw or modify its recommendation to Shareholders in favor
of approval of the Merger Agreement and the Merger if there exists a Competing
Transaction and the Board, after consultation with and based upon the advice of
independent counsel, determines in good faith that such action is necessary for
the Board to comply with its fiduciary duties to Shareholders under applicable
law.
Except as described in this paragraph, the Company has agreed that the
Board shall not approve or recommend, or cause the Company to enter into any
agreement with respect to, any Competing Transaction. Notwithstanding the
foregoing, if the Board, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that it is necessary to do
so in order to comply with its fiduciary duties to Shareholders under applicable
law, the Board may approve or recommend a Superior Proposal or cause the Company
to enter into an agreement with respect to a Superior Proposal, but in each case
only after providing reasonable written notice to Westinghouse advising such
party that the Board has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal and identifying the person
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<PAGE> 34
making such Superior Proposal. In addition, if the Company proposes to enter
into an agreement with respect to any Competing Transaction, it will,
concurrently with entering into such agreement, pay to Westinghouse its
termination fee and reimburse Westinghouse for certain of its expenses, all as
described below under "-- Termination Fees and Expenses".
"Competing Transaction" is defined in the Merger Agreement to mean any of
the following (other than the transactions between the Company, Westinghouse and
Sub contemplated by the Merger Agreement) involving the Company: (i) any merger,
consolidation, share exchange, recapitalization, business combination or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of all or a substantial portion of the assets of the
Company and its Subsidiaries, taken as a whole, or of more than 25% (or 50% in
the case of termination of the Merger Agreement because the Shareholders fail to
approve the Merger Agreement, where a Competing Transaction shall have been
commenced, publicly proposed or publicly disclosed at or prior to the Special
Meeting and within one year of the Special Meeting the Company shall have
entered into an agreement with respect to, approved or recommended such or any
other Competing Transaction) of the equity securities of the Company or any of
its Material Subsidiaries, in any case in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 25% (or 50% in the
case as described above in the parenthetical in clause (ii) above) or more of
the outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act of 1933 in connection therewith;
or (iv) any public announcement of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing. "Superior
Proposal" is defined in the Merger Agreement to mean any bona fide proposal to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, all or substantially all the shares of Common Stock then outstanding
or all or substantially all the assets of the Company and otherwise on terms
which the Board of Directors determines in its good faith judgment (based on the
advice of a financial advisor of nationally recognized reputation) to be more
favorable to the Shareholders than the Merger.
OTHER AGREEMENTS OF THE COMPANY, WESTINGHOUSE AND SUB
In the Merger Agreement, the Company, Westinghouse and Sub have agreed to
use their best efforts to take, or cause to be taken, all action and to do or
satisfy, or cause to be done or satisfied, all things and conditions necessary,
proper or advisable under applicable laws and regulations to consummate and make
effective as promptly as practicable the transactions contemplated by the Merger
Agreement, including: (i) cooperating fully with the other party, including by
providing information and making all necessary filings in connection with, among
other things, approvals under the HSR Act and of the FCC or any other
governmental entity; and (ii) obtaining (and cooperating with each other in
obtaining) any consent, authorization, order (including the FCC Order) or
approval of, or any exemption by, or making any filing with, any governmental
entity or other public or private third party, including the FCC, required to be
obtained or made by the Company, Westinghouse, Sub or any of their respective
Subsidiaries in connection with the Merger Agreement or any actions contemplated
thereby.
Westinghouse and Sub have agreed to use their best efforts to take, or
cause to be taken, all action to satisfy, or cause to be done or satisfied, all
things and conditions necessary, proper or advisable to obtain the FCC Order and
to satisfy all conditions and take all actions required thereby, in each case so
as to come into compliance with FCC requirements and to consummate the Merger as
promptly as practicable. The Company will also use such best efforts, but is not
required to take any action that would be effective prior to the consummation of
the Merger except as disclosed in the Merger Agreement. "FCC Order" is defined
in the Merger Agreement to mean an order or decision of the FCC which grants all
consents or approvals required under the Communications Act for the transfer of
control of all FCC licenses held by the Company to Westinghouse and/or Sub and
the consummation of the Merger and the other transactions contemplated by the
Merger Agreement, whether or not (i) any appeal or request for reconsideration
or review of such order is pending, or whether the time for filing any such
appeal or request for reconsideration or review, or for any sua sponte action by
the FCC with similar effect, has expired or (ii) such order is subject to any
condition or a provision of law or regulation of the FCC.
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The Company, Westinghouse and Sub prepared and filed with the FCC on August
3, 1995, the necessary application for approval by the FCC of the transactions
contemplated by the Merger, including for certain waivers pursuant to the
Communications Act. The parties have agreed that in making such application, and
Westinghouse and Sub have agreed that in seeking the FCC Order, they shall not
apply for waivers, except if each party to the Merger Agreement consents thereto
in writing (which consent shall not be unreasonably withheld or delayed). The
parties have also agreed that in no event will the obtaining of any waivers be a
condition to consummation of the Merger. Westinghouse and Sub on the one hand,
and the Company on the other hand, have covenanted that from August 1, 1995,
until the Effective Time, without the written consent of Westinghouse or the
Company, as the case may be, neither Westinghouse nor Sub, on the one hand, nor
the Company, on the other hand, will, except as otherwise disclosed in the
Merger Agreement, take any action that could in any way adversely affect, or
delay or interfere with, obtaining the FCC Order or complying with or satisfying
the terms thereof. See "REGULATORY APPROVALS".
To the extent permitted by law (including FCC regulations) and subject to
confidentiality agreements with third parties, the Company has agreed to (and to
cause each of its Subsidiaries to) afford, upon reasonable notice, the officers,
employees, accountants, counsel and other representatives of Westinghouse
reasonable access, during normal business hours during the period prior to the
Effective Time, to the Company's properties, books, contracts, commitments and
records and, during such period, (i) the Company will (and will cause each of
its Subsidiaries to) furnish promptly to Westinghouse all other information
concerning its business, properties and personnel as Westinghouse may reasonably
request and (ii) Westinghouse shall have reasonable access to members of senior
management of the Company and its Subsidiaries.
Westinghouse and the Company have agreed to cooperate in the preparation,
execution and filing of all returns, questionnaires, applications or other
documents regarding any Transfer Taxes (as defined in the Merger Agreement),
Westinghouse having agreed to pay or cause to be paid, without withholding from
the amounts payable to any holder of any shares, all Transfer Taxes.
EMPLOYEE BENEFIT PLANS
Westinghouse has agreed to cause the Surviving Corporation to maintain for
not less than two years following the Effective Time the Company ERISA Plans,
other than severance plans and the Company pension plan and the Midwest
Communications pension plan (collectively, the "Company Pension Plan") and
related supplemental and excess retirement plans, maintained by the Company and
its Subsidiaries as of the Effective Time, with respect to employees of the
Company and its Subsidiaries eligible for coverage under such Plans as of the
Effective Time who remain employed by the Company or its Subsidiaries or any
broadcasting unit owned by Westinghouse or its Subsidiaries. The Company has
agreed to amend its non-qualified 401(k) plan prior to the Effective Time to
permit termination or amendment of such plan two years after the Effective Time.
Westinghouse also has agreed to maintain for not less than one year following
the Effective Time the existing severance plans of the Company or of any
Subsidiary thereof in effect as of the Effective Time with respect to employees
eligible for coverage under such plan or plans as of the Effective Time. In
addition, Westinghouse has agreed to maintain for specified periods after the
Effective Time the same benefit accruals as are provided under the Company
Pension Plan (and related supplemental and excess retirement plans) as of the
Effective Time (including all provisions relating to the calculation and payment
of, and eligibility to receive, benefits, but excluding the actuarial
assumptions for the calculation of lump sum benefits, which may be modified in
accordance with applicable law), as follows: (i) for all eligible employees, for
two years following the Effective Time; (ii) for eligible employees who have
attained the age of 50 but who have not attained age 55 at the Effective Time,
for five years following the Effective Time; and (iii) for eligible employees
who have attained age 55 at the Effective Time, without limitation. With respect
to employees working under collective bargaining agreements that provide for
coverage of those employees under any of the Company's benefit plans described
above, the foregoing provisions will be made available to employees eligible to
participate in the respective plans at the Effective Time through an offer to
their collective bargaining representatives. "Company ERISA Plans" is defined in
the Merger Agreement to mean all the employee
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benefit plans (as that phrase is defined in Section 3(3) of ERISA) maintained
for the benefit of any current or former employee, officer or director of the
Company or any of its Subsidiaries.
Under the Merger Agreement, the Company has the right to (i) cause all
deferred compensation, including pursuant to the Company's Deferred Additional
Compensation Plan, as amended to July 9, 1986, the Company's Deferred
Compensation Plan for Non-Employee Directors dated as of November 2, 1981, and
certain employment agreements, to be paid out at the time of the Merger and (ii)
adopt a tax equalization plan prior to the Effective Time to provide a full
"gross-up" for any excise tax imposed under Section 4999 of the Code in
connection with transactions contemplated or permitted by the Merger Agreement.
See "INTERESTS OF CERTAIN PERSONS IN THE MERGER".
STOCK OPTIONS
At the Effective Time, each holder of a then outstanding option to purchase
shares of Common Stock under the Company's Stock Rights Plan, whether or not
then exercisable, will, in settlement thereof, receive, except under certain
circumstances relating to Section 16(a) of the Exchange Act, from the Company
for each such share subject to such option an amount (subject to any applicable
withholding tax) in cash equal to the excess, if any, of the Merger
Consideration over the per share exercise price of such option. Upon such
holder's receipt of such amount, such option and any coupled SAR Unit (as
defined in the Stock Rights Plan) will be cancelled. Such surrender of any
option (and any coupled SAR Unit) to the Company will be deemed a release of any
and all rights the holder thereof had or may have had in respect thereof. The
Company has agreed to use its best efforts to obtain all consents and releases
of the holders of the options and to take all such other lawful action as may be
necessary to effect such transactions. In addition, the Company has agreed to
terminate as of the Effective Time the Stock Rights Plan, to cancel as of the
Effective Time the provision in any other plan, program or arrangement providing
for the issuance or grant of any interest in respect of any capital stock of the
Company or any Subsidiary thereof and to take all action necessary to ensure
that following the Effective Time no participant in the Stock Rights Plan or
other plans, programs or arrangements will have any right thereunder to acquire
any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof and to terminate all such plans.
INDEMNIFICATION AND INSURANCE
The Merger Agreement provides that, from and after the Effective Time,
Westinghouse and the Surviving Corporation will indemnify, defend and hold
harmless, to the full extent permitted in the BCL, each current and former
director and officer of the Company or any of its Subsidiaries against all
losses, claims, damages, costs, expenses (including attorneys' fees and
expenses), liabilities or judgments or amounts that are paid in settlement of,
with the approval of the indemnifying party (which approval shall not be
unreasonably withheld), or otherwise in connection with any threatened or actual
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was such a
director or officer at or prior to the Effective Time. In addition, Westinghouse
has agreed to cause to be maintained in effect, for a period of six years after
the Effective Time, the Company's current directors' and officers' liability
insurance policy with respect to claims arising from facts or events which
occurred prior to the Effective Time, provided that Westinghouse does not have
to pay an annual premium for such insurance in excess of 200% of the last annual
premium paid by the Company prior to August 1, 1995.
CONDITIONS TO THE MERGER
All Parties. Pursuant to the Merger Agreement, the respective obligations
of each party to effect the Merger are subject to the satisfaction or waiver of
the following conditions at or prior to the Closing Date: (i) approval and
adoption of the Merger Agreement and the Merger by the holders of at least
66 2/3% of the Company's outstanding shares of Common Stock; (ii) termination or
expiration of the waiting period (and any extension thereof) applicable to the
Merger under the HSR Act; (iii) issuance by the FCC of the FCC Order and
satisfaction of any condition or taking of any action required to be so
satisfied or taken to legally effect the Merger in compliance with the FCC
Order, provided that in no event will the foregoing require the satisfaction of
any condition or the taking of any action that could under the terms of the FCC
Order be so
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<PAGE> 37
satisfied or taken subsequent to consummation of the Merger; and (iv) no
temporary restraining order, preliminary or permanent injunction or other order
or decree issued by any court of competent jurisdiction preventing the
consummation of the Merger being in effect.
Westinghouse and Sub. Pursuant to the Merger Agreement, the obligations of
Westinghouse and Sub to effect the Merger are subject to the satisfaction or
waiver of the following conditions: (i) the representations and warranties of
the Company set forth in the Merger Agreement being true and correct as of
August 1, 1995, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date and the Company having
performed all obligations required to be performed by it under the Merger
Agreement on or prior to Closing Date, except to the extent the failure of such
representations to be true and correct or the failure to perform the obligations
under the Merger Agreement would not, in the aggregate, have a Material Adverse
Effect with respect to the Company; (ii) there not having been since August 1,
1995, any material adverse change in the business, results of operations or
financial condition of the Company and its Subsidiaries, taken as a whole, other
than changes relating to the Company's industry or the economy in general; and
(iii) Westinghouse having received the funds pursuant to the Credit Agreement
necessary to consummate the Merger.
The Company. Pursuant to the Merger Agreement, the obligation of the
Company to effect the Merger is subject to the representations and warranties of
Westinghouse and Sub set forth in the Merger Agreement being true and correct as
of August 1, 1995, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date and Westinghouse and Sub
having performed all obligations required to be performed by them under the
Merger Agreement at or prior to the Closing Date, except to the extent the
failure of such representations to be true and correct or the failure to perform
obligations under the Merger Agreement would not, in the aggregate, have a
Material Adverse Effect with respect to the Company.
TERMINATION
The Merger Agreement may be terminated and the Merger abandoned at any time
prior to the Effective Time, whether before or after the approval of the Merger
Agreement and the Merger by the Shareholders, by mutual written consent of
Westinghouse and the Company or their respective Boards of Directors, or under
the following conditions:
Either Party. The Merger Agreement provides that either Westinghouse
or the Company may terminate the Merger Agreement and abandon the Merger
if: (i) there has been a material breach on the part of the other party of
any representation, warranty, covenant or agreement set forth in the Merger
Agreement, which breach has not been cured within 30 days following receipt
by the breaching party of notice of such breach, in any such case such that
the conditions to the Merger relating to such representation, warranty,
covenant or agreement, as the case may be (see "-- Conditions to the
Merger"), would be incapable of being satisfied by August 1, 1996; (ii) any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and
non-appealable; (iii) the Merger shall not have been consummated on or
before August 1, 1996, except that the right to terminate the Merger
Agreement under such provision is not available to any party whose breach
of the Merger Agreement has been the cause of or resulted in the failure of
the Merger to occur on or before such date; or (iv) the Merger Agreement
shall fail to be approved and adopted by the Shareholders at the Special
Meeting.
Westinghouse. The Merger Agreement provides that Westinghouse may
terminate the Merger Agreement and abandon the Merger: (i) at any time on
or after November 3, 1995, if the Credit Agreement is no longer in full
force and effect on the date Westinghouse exercises such termination
option; or (ii) (A) if the Board shall withdraw, modify or change its
recommendation of the Merger Agreement or the Merger in a manner adverse to
Westinghouse or shall have approved or recommended to the Shareholders a
Competing Transaction, (B) if the Company shall have entered into any
agreement with respect to any Competing Transaction or (C) if the Board
shall resolve to do any of the foregoing.
The Company. The Merger Agreement provides that the Company may
terminate the Merger Agreement and abandon the Merger: (i) if the Company
enters into a definitive agreement with respect to a Superior Proposal in
accordance with the provisions of the Merger Agreement for accepting such
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Superior Proposal, as described above under "-- No Solicitation" (provided
that the Company has paid to Westinghouse the termination fee and
reimbursed Westinghouse its expenses as described below under
"-- Termination Fees and Expenses"); or (ii) at any time subsequent to the
date of this Proxy Statement, if the Credit Agreement is no longer in full
force and effect on the date the Company exercises such termination option.
TERMINATION FEES AND EXPENSES
The Merger Agreement provides that all costs and expenses incurred in
connection with the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such expenses, except (i) as otherwise
provided below and (ii) that all costs and expenses, including filing fees,
related to the filing, printing or mailing of this Proxy Statement or any other
filing with any governmental entity in connection with the Merger or the Merger
Agreement will be shared equally by Westinghouse and the Company.
If the Merger Agreement is terminated: (i) by either Westinghouse or the
Company because the Shareholders did not approve and adopt the Merger Agreement
and the Merger and at or prior to the time of the Special Meeting a Competing
Transaction had been commenced, publicly proposed or publicly disclosed and
within one year after the Special Meeting the Company entered into an agreement
with respect to or approved or recommended such or any other Competing
Transaction; (ii) by Westinghouse because the Board withdrew, modified or
changed its recommendation of the Merger Agreement or the Merger in a manner
adverse to Westinghouse or approved or recommended to the Shareholders a
Competing Transaction, or the Company entered into any agreement with respect to
any Competing Transaction, or the Board shall have resolved to do any of the
foregoing; or (iii) by the Company because it shall have entered into a
definitive agreement relating to a Superior Proposal in accordance with the
provisions described above under "-- No Solicitation"; then in any such case the
Company shall (A) pay to Westinghouse an amount equal to $100,000,000 and (B)
assume and pay, or reimburse Westinghouse for, all reasonable documented out-of-
pocket fees and expenses incurred by Westinghouse (including, without
limitation, the fees and expenses of its counsel, commercial banks, accountants,
financial advisors, experts and consultants) which are specifically related to
the Merger, the Merger Agreement and the matters contemplated therein, but in no
event more than an aggregate amount of $50,000,000.
If the Merger Agreement is terminated by either the Company or Westinghouse
because: (i) on August 1, 1996, the conditions to Westinghouse's and Sub's
obligations have been satisfied and the other conditions to the Merger are
capable of being satisfied, and Westinghouse shall not have received the funds
pursuant to the Credit Agreement necessary to consummate the Merger; or (ii) on
or after November 20, 1995, the Credit Agreement shall no longer be in full
force and effect on the date such party exercises its option to terminate the
Merger Agreement; then in either such case Westinghouse shall (A) pay to the
Company an amount equal to $100,000,000 and (B) assume and pay, or reimburse the
Company for, all reasonable documented out-of-pocket fees and expenses incurred
by the Company (including, without limitation, the fees and expenses of its
counsel, accountants, financial advisors, experts and consultants) which are
specifically related to the Merger, the Merger Agreement and the matters
contemplated therein, but in no event more than an aggregate amount of
$20,000,000.
If the Merger Agreement is terminated: (i) by Westinghouse at any time on
or after November 3, 1995, but on or prior to November 20, 1995, because the
Credit Agreement shall not continue in full force and effect on the date
Westinghouse exercises such termination option; or (ii) by the Company at any
time on or after October 5, 1995, but on or prior to November 20, 1995, because
the Credit Agreement shall not continue in full force and effect on the date the
Company exercises such termination option; then in either such case Westinghouse
shall (A) pay to the Company an amount equal to $50,000,000 and (B) assume and
pay, or reimburse the Company for, all reasonable documented out-of-pocket fees
and expenses incurred by the Company (including, without limitation, the fees
and expenses of its counsel, accountants, financial advisors, experts and
consultants) which are specifically related to the Merger, the Merger Agreement
and the matters contemplated therein, but in no event more than an aggregate
amount of $10,000,000.
If the Merger Agreement had been terminated by the Company prior to October
4, 1995, because executed commitments from one or more financial institutions to
provide the financing necessary to effect the
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Merger and related transactions (on certain terms specified in the Merger
Agreement) had not continued in full force and effect on the date the Company
exercised such termination option, then Westinghouse would have been required to
(A) pay to the Company an amount equal to $25,000,000 and (B) assume and pay, or
reimburse the Company for, all reasonable documented out-of-pocket fees and
expenses incurred by the Company (including, without limitation, the fees and
expenses of its counsel, accountants, financial advisors, experts and
consultants) which are specifically related to the Merger, the Merger Agreement
and the matters contemplated therein, but in no event more than an aggregate
amount of $5,000,000.
TENDER OFFER
Under the Merger Agreement, if there is a bona fide proposal made by a
person other than Westinghouse or any affiliate thereof to effect a Competing
Transaction or if the FCC would otherwise permit the filing by Westinghouse and
grant of an application for an STA (as defined below), Westinghouse has the
right, upon no less than five days' notice, to commence a cash tender offer (a
"Tender Offer") to purchase all the outstanding shares of Common Stock (with a
minimum tender condition of 66 2/3% of the fully-diluted shares of Common Stock)
at a price equal to or in excess of what would have been the Merger
Consideration. There will be no conditions to the acceptance of shares of Common
Stock pursuant to such Tender Offer except as otherwise set forth above under
"-- Conditions to the Merger", the grant or approval by the FCC of the STA and
certain other conditions set forth in the Merger Agreement. The terms of the
Merger Agreement would remain in full force and effect to the extent applicable
to such Tender Offer, with the parties thereto executing an amendment to the
Merger Agreement to include customary provisions pertaining to cash tender
offers, including provisions relating to the extension of any such offer. Any
shares of Common Stock not purchased by Westinghouse in such Tender Offer would
be, as promptly as possible, acquired by Westinghouse at the same purchase price
paid for any such shares accepted in such Tender Offer through a short-form
merger (if available) or a long-form merger.
In connection with such a Tender Offer, Westinghouse will file an
application for special temporary authorization (an "STA") to be granted to an
independent voting trustee to enable such trustee to acquire and vote, subject
to certain restrictions, the shares obtained in such Tender Offer and to
exercise control of the Company's FCC-licensed facilities during the period when
the application to the FCC for the FCC Order is pending. Westinghouse or Sub
would enter into a voting trust agreement with such voting trustee (such voting
trustee being acceptable to the FCC), and the Company has agreed to cooperate
with Westinghouse, Sub and any such voting trustee to effect a sale of the
shares of Common Stock held by such voting trustee if shares of Common Stock
must be sold pursuant to such voting trust agreement. The Company has agreed
that it will, at the time after commencement of such Tender Offer, enter into a
loan agreement with Westinghouse pursuant to which the Company will lend to
Westinghouse, during the period from the consummation of such Tender Offer until
the sale of all the shares of Common Stock held by such voting trustee as a
result of the FCC Order not having been obtained, the Company's excess cash flow
(which will have the meaning customarily ascribed to such term). The terms of
any such loan (which will be unsecured) will be based upon market terms for
loans of this nature.
AMENDMENT; WAIVER
The Merger Agreement provides that it may be amended, modified or
supplemented only by written agreement of each of the Company, Westinghouse and
Sub at any time prior to the Effective Time; provided, however, that, after the
Shareholders have approved the Merger Agreement and the Merger at the Special
Meeting, no such amendment or modification would be permitted to reduce the
amount or change the form of consideration to be delivered to the Shareholders.
The Merger Agreement further provides that, at any time prior to the Effective
Time, the parties to the Merger Agreement, by action taken or authorized by
their respective Boards of Directors, may (i) extend the time for the
performance of any of the obligations or other acts of the other party thereto,
(ii) waive any inaccuracies in the representations and warranties of any other
party contained in the Merger Agreement or in any document delivered pursuant to
the Merger Agreement or (iii) waive compliance by any other party with any of
the conditions and agreements contained in the Merger Agreement.
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REGULATORY APPROVALS
FCC
FCC Regulation of Broadcast Stations. Television and radio broadcasting
are subject to the jurisdiction of the FCC under the Communications Act. The
Communications Act prohibits the operation of broadcasting stations except under
licenses issued by the FCC. The Communications Act further prohibits the
assignment of a station license or the transfer of control of a broadcast
station licensee without prior approval of the FCC. Because the Merger will
result in the transfer of control of the Company, which is the licensee of a
number of broadcasting stations, the prior approval of the FCC is necessary
before the Merger may be consummated.
Upon the filing of an application for consent to the transfer of control of
a broadcast station licensee, the FCC will issue an official public notice of
such filing. Interested parties have a period of 30 days following issuance of
the public notice in which to petition to deny such applications. An application
for consent to the transfer of control to Westinghouse of all broadcast licenses
held by the Company (after pending sales and acquisitions) was filed with the
FCC on August 3, 1995 (the "Application"). Public notices of the filing were
released on August 9, 1995. Accordingly, any petitions to deny the Application
were required to be filed on or before September 8, 1995. Applications relating
to the transfer of control of certain non-broadcast licenses held by the Company
also have been filed with the FCC.
Timely petitions to deny the Application were filed by the Office of
Communication of the United Church of Christ, et al. ("OOC"), Spectrum Detroit,
Inc. ("Spectrum") and Alexander J. Serafyn ("Serafyn"). The OOC petition
contended, in substance, that Westinghouse's requests for certain waivers of the
FCC's national and local broadcast ownership rules in connection with the
Application, as described below, should not be granted in the absence of a
commitment by Westinghouse to present at least three hours per week of
educational and informational children's programming on the CBS Television
Network and to donate five-minute blocks of prime time to presidential
candidates during national election years. On September 20, 1995, Westinghouse
filed an opposition to the OOC petition. On such date, OOC and the other parties
to its petition also filed a request with the FCC that the petition be
dismissed, citing an announcement by Westinghouse of its plans to increase the
amount of educational and informational children's programming on the CBS
Television Network. The Spectrum and Serafyn petitions contend that the FCC
should deny or withhold action on or conditionally grant the Application pending
the disposition of appeals which they have filed with the United States Court of
Appeals for the District of Columbia Circuit from the FCC's approval of the
Company's acquisition of WGPR-TV, Detroit, Michigan (now WWJ-TV). Westinghouse
and the Company have filed oppositions to the Spectrum and Serafyn petitions.
In reviewing applications for its consent to transfer of control, the FCC
considers whether such transfers will serve the "public interest, convenience
and necessity", as well as whether the proposed transferee has the requisite
legal, financial, technical and other qualifications to operate the licensed
entities. Following the grant of FCC approval with respect to such a transfer,
any "person who is aggrieved or whose interests are adversely affected" (as such
terms are defined in Section 402(b) of the Communications Act) may appeal such
approval to the United States Court of Appeals for the District of Columbia
Circuit. In addition, under certain circumstances, the FCC may reconsider such
approval at the request of a third party or on its own motion.
For a description of certain agreements of the Company, Westinghouse and
Sub regarding the FCC regulatory process, see "THE MERGER AGREEMENT -- Other
Agreements of the Company, Westinghouse and Sub".
Broadcast Station Ownership Restrictions. Pursuant to its authority under
the Communications Act, the FCC has promulgated rules that limit the ability of
individuals or entities to own or have "attributable" ownership interests in
broadcast stations, as well as in certain other communications media. On a
national basis, the rules generally limit any individual or entity from owning
or having an attributable interest in more than 12 television stations, 20 AM
radio stations and 20 FM radio stations. Moreover, the aggregate audience reach
of commonly owned television stations may not exceed 25% of all U.S. households.
On a local basis, FCC rules currently allow an individual or entity to own or
have an attributable interest in only one television station in a market (the
"television duopoly rule") and, depending on the size of the market and the
ratings
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achieved by commonly owned stations, up to two AM and two FM stations in a
market (the radio "contour overlap rule"). Further, ownership of a television
station and one or more radio stations in the same market may be restricted by
the FCC's "one-to-a-market" rule.
Requests for Waivers of Multiple Ownership Rules. If an acquisition will
result in an acquiror having media holdings that conflict with applicable
ownership limits, the FCC may grant temporary waivers in order to permit the
acquiror to come into compliance, through divestiture or otherwise, with
applicable law and regulation or, in certain cases, may grant permanent waivers
of the relevant rule. Because Westinghouse already owns or controls a number of
television and radio stations, some of which are in the same markets as stations
owned by the Company, Westinghouse has requested, as described below, that the
FCC issue certain waivers of the FCC's national and local broadcast station
ownership rules in connection with the application for FCC consent to the
transfer of control of the Company's broadcast licenses.
Assuming completion of each of the Company's and Westinghouse's pending
sales and acquisitions, the Merger would result in Westinghouse's owning 18 AM
radio stations, 21 FM radio stations and 15 television stations (or 16
television stations if a construction permit of Westinghouse for an unbuilt
station is included) with a national audience reach of approximately 32%. The FM
radio and television station totals exceed the FCC's limits and, accordingly,
Westinghouse has applied to the FCC for a temporary (18-month) waiver of the
national ownership rules to allow it time after consummation of the Merger to
achieve compliance with the limits imposed on FM radio and television station
ownership, through divestiture or otherwise.
In addition, Westinghouse has applied to the FCC for: (i) temporary
(18-month) waivers of the television duopoly rule and the radio contour overlap
rule in order to permit Westinghouse to come into compliance with such rules,
including, if necessary, by the divestiture of one television station (in
Providence, Rhode Island) and two radio stations (in Chicago, Illinois and
Houston, Texas) which would otherwise be commonly owned in violation of such
rules after consummation of the Merger; (ii) a permanent waiver of the
television duopoly rule to permit the common ownership after the Merger of
television stations in Philadelphia, Pennsylvania and New York, New York; (iii)
a temporary (18-month) waiver of the "one-to-a-market" rule to come into
compliance, through divestiture or otherwise, in six instances in which, after
consummation of the Merger, Westinghouse would own a television station and
multiple AM or FM radio stations in the same market (this situation would occur
in New York, New York; Los Angeles, California; Chicago, Illinois; Philadelphia,
Pennsylvania; San Francisco, California; and Detroit, Michigan); and (iv) a
permanent waiver of the "one-to-a-market" rule in three other markets (Boston,
Massachusetts; Baltimore, Maryland/ Washington, D.C.; and Minneapolis,
Minnesota) where the Merger would result in the common ownership of a television
station and one AM and/or one FM radio station (these situations are subject to
this rule's provision that the FCC will "look favorably" upon such waiver
requests if the stations to be commonly owned are located in one of the 25
largest television markets and more than 30 independently owned broadcast
"voices" would remain after the proposed transaction).
The Company also currently operates three television stations as
"satellites" of other television stations, which are accordingly exempt from the
provisions of the FCC's multiple ownership and television duopoly rules.
Westinghouse has requested that the FCC allow these stations to continue to be
operated as satellites following consummation of the Merger.
License Grant and Renewal. Television broadcasting licenses generally are
granted or renewed for a period of five years and radio broadcasting licenses
for a period of seven years. At the time an application is made for renewal of a
television or radio station license, parties in interest may file petitions to
deny the application, and such parties, including members of the public, may
comment upon the service the station has provided during the preceding license
term. At the same time, any person may file a competing application for
authority to operate the station and replace the incumbent licensee.
In the vast majority of cases, broadcast licenses are renewed by the FCC
even when petitions to deny or competing applications are filed against
broadcast license renewal applications. Currently, the Company has pending an
application for renewal of the license of one of its radio stations in Bethesda,
Maryland (the "Bethesda Station"). Petitions to deny the application and
competing applications for the right to broadcast on the frequency used by that
station were required to be filed on or before September 1, 1995. On that date,
a
32
<PAGE> 42
competing application was filed by the Ukrainian Congress Committee of America,
Inc. ("UCCA"), which application has been received but not yet accepted by the
FCC as meeting technical requirements. It is possible that the FCC will not
grant its consent to the Application until it has granted the license renewal
application for the Bethesda Station. Under applicable precedent in which a
transfer of control has been allowed, however, the FCC has the discretion to
grant consent to the Application without a prior grant of such license renewal,
subject to the right of the UCCA to an FCC hearing on its application. The
Company is not required to file any other license renewal application during the
term of the Merger Agreement except those for its Detroit and Chicago radio
stations on June 3, 1996, and August 1, 1996, respectively.
HART-SCOTT-RODINO
The HSR Act provides that certain acquisition transactions (including the
Merger) may not be consummated until notifications have been given and certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC")
and certain waiting period requirements have been satisfied. The Antitrust
Division and the FTC have received the required information from all parties
involved in the Merger. The waiting period imposed by the HSR Act began on
August 2, 1995, and expired at 11:59 p.m. on September 1, 1995. At any time
before or after the consummation of the Merger, the Antitrust Division, the FTC
or another third party could seek to enjoin or rescind the Merger on antitrust
grounds. In addition, at any time before or after the consummation of the
Merger, and notwithstanding that the waiting period under the HSR Act has
expired, any state could take such action under state antitrust laws as it deems
necessary or desirable in the public interest. On August 1, 1995, the Company
received an informal request for information from the Attorney General's Office
of the State of New York. The Company complied with such request and has had no
subsequent contacts with such Office.
STATUS OF REGULATORY APPROVALS AND OTHER INFORMATION
Westinghouse and the Company have filed applications with all applicable
regulatory agencies and have taken, or will take, other appropriate action with
respect to any requisite approvals or other action of any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic or foreign, whose consent, approval, order or authorization, or with
whom registration, declaration or filing of the Merger Agreement is required to
consummate the Merger, subject to the provisions of the Merger Agreement. See
"THE MERGER AGREEMENT -- Other Agreements of the Company, Westinghouse and Sub".
The Merger Agreement provides that the obligation of each of Westinghouse
and the Company to consummate the Merger is conditioned upon the approval of the
FCC in the form of the FCC Order, the termination of any applicable waiting
period under the HSR Act and the absence of any injunction against the Merger on
antitrust or other grounds. There can be no assurance that any governmental
agency will approve or take any other required action with respect to the
Merger, and, if approvals are received or action is taken, that such approvals
or action will not be conditioned upon matters that would cause the parties to
abandon the Merger or that no action will be brought challenging such approvals
or action, including a challenge by the Antitrust Division, or, if such
challenge is made, the result thereof. See "THE MERGER AGREEMENT -- Conditions
to the Merger".
Westinghouse and the Company are not aware of any governmental approvals or
actions that may be required for consummation of the Merger other than as
described above. Should any other approval or action be required, it is
presently contemplated that such approval or action would be sought. There can
be no assurance, however, that any such approval or action, if needed, could be
obtained and would not be conditioned in a manner that would cause the parties
to abandon the Merger.
33
<PAGE> 43
SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Westinghouse to purchase all the
outstanding shares of Company Common Stock and to pay fees and expenses
associated with the Merger will be in the aggregate approximately $5.5 billion.
(The foregoing assumes the Merger is consummated on December 1, 1995, and gives
effect to the $0.10 per share regular quarterly dividend declared by the Company
on October 11, 1995, resulting in an Additional Amount payable by Westinghouse
equal to approximately $1.15 per share of Common Stock. If the Merger is
consummated on any other date or another such dividend is paid, the Additional
Amount payable by Westinghouse will be greater or less than such amount, as the
case may be, according to the formula for calculating such amount as described
above under "THE MERGER AGREEMENT -- The Merger -- Conversion of Securities".)
The Credit Agreement provides, upon satisfaction of the conditions
contained therein and described below, for borrowing by Westinghouse under: (i)
a two and one-half year term loan facility in the amount of $2.5 billion; (ii) a
seven-year term loan facility in the amount of $2.5 billion; and (iii) a
seven-year revolving credit facility in the amount of $2.5 billion. Westinghouse
has informed the Company that, in addition to providing the above-described
required funds to consummate the Merger, the borrowing capacity under the Credit
Agreement will be used for general corporate purposes and to refinance the then
existing bank indebtedness of Westinghouse and the Company. Westinghouse
estimates that, at December 1, 1995, it will have approximately $500 million of
outstanding bank indebtedness to be refinanced in connection with the
consummation of the Merger. At September 29, 1995, the Company had approximately
$215 million of outstanding bank indebtedness, although the Company expects such
amount to be lower at the time of the refinancing thereof in connection with the
consummation of the Merger. Loans under the Credit Agreement would bear
interest, at the option of Westinghouse, at either: (i) a base rate equal to the
higher of (A) the rate of interest publicly announced by Chemical Bank as its
prime rate in effect at its principal office in New York City and (B) the
federal funds effective rate from time to time plus 0.5% or (ii) the rate for
deposits in U.S. dollars for a period equal to one, two, three or six months (as
selected by Westinghouse) appearing on page 3750 of the Telerate Screen, plus,
in the case of either clause (i) or (ii) above, a margin determined in
accordance with a pricing grid set forth in the Credit Agreement and based
solely upon Westinghouse's Consolidated Leverage Ratio (as defined in the Credit
Agreement) or the ratings established by Standard & Poor's Ratings Group or
Moody's Investors Service, Inc. for Westinghouse's senior unsecured long-term
debt. Chemical Bank and Morgan Guaranty Trust Company of New York each have a
$247 million commitment under the Credit Agreement, the largest such commitments
thereunder. There are 48 other Lenders under the Credit Agreement, with varying
size commitments.
The Credit Agreement contains various conditions to the funding of the
loans thereunder at the Effective Time, including the following: (i) execution
of the Stock Pledge Agreement and the Guarantee Agreement (each such term as
defined in the Credit Agreement) described below; (ii) the terms of the Merger
Agreement not having been waived, amended, supplemented or modified in any
material respect without the consent of Lenders holding more than 50% of the
commitments under the Credit Agreement and the Merger having been consummated;
(iii) termination of Westinghouse's commitments under its existing revolving
credit facility and repayment of all amounts owed thereunder; (iv) receipt by
the Lenders of certain financial statements; (v) satisfaction by Westinghouse on
a pro forma basis, giving effect to the Merger, of certain debt and coverage
tests; (vi) issuance of the FCC Order and satisfaction of all conditions and
taking of all actions required to be so satisfied or taken in compliance
therewith, except such conditions and actions as can be satisfied or taken
subsequent to consummation of the Merger under the terms of such FCC Order;
(vii) consummation of the Merger for consideration not in excess of the Merger
Consideration (not to exceed $5.4 billion, excluding the Additional Amount);
(viii) receipt by the Administrative Agent of certificates representing the
shares of Sub pledged pursuant to the Stock Pledge Agreement; (ix) receipt of
all necessary governmental and material third-party approvals and termination of
all applicable waiting periods without imposition of materially adverse
conditions on the Merger or the financing thereof; (x) receipt by the Lenders of
customary legal opinions and closing certificates; (xi) as of the Effective
Time, there having been no material adverse change in the consolidated financial
condition, operations, assets, business or prospects, taken as a whole, of
Westinghouse and the Company from that set forth in the pro forma financial
statements of the
34
<PAGE> 44
combined Westinghouse/Company entity (giving effect to the Merger) as of June
30, 1995, and the other representations and warranties in the Credit Agreement
being true and correct in all material respects; and (xii) absence of any
Default or Event of Default (each such term as defined in the Credit Agreement).
The Credit Agreement includes Defaults and Events of Default with respect to,
among other things, nonpayment of principal, interest and fees; material
misrepresentations; violation of covenants; cross defaults; bankruptcy; certain
ERISA events; material judgments; and change of control.
The Stock Pledge Agreement is to be entered into between the subsidiary of
Westinghouse that will own the stock of Sub immediately prior to the Merger
("Sub Holdings") and Chemical Bank, as Administrative Agent. Pursuant to the
Stock Pledge Agreement, Sub Holdings will pledge all the outstanding shares of
stock of Sub to secure its obligations under the Guarantee Agreement described
below. Upon consummation of the Merger, all the shares of stock of the Surviving
Corporation will be pledged under the Stock Pledge Agreement. The Guarantee
Agreement is to be given by certain of the subsidiaries of Westinghouse,
including Sub Holdings (collectively, the "Guarantors"), to Chemical Bank, as
Administrative Agent, for the benefit of the Lenders. Pursuant to the Guarantee
Agreement, each of the Guarantors will guarantee the payment when due of all
principal, interest and other amounts owing under the Credit Agreement and the
other documents related thereto.
It is a condition to Westinghouse's obligations under the Merger Agreement
that Westinghouse borrow the funds available under the Credit Agreement
necessary to effect the Merger. If the Lenders do not provide such funds or the
Credit Agreement otherwise ceases to be in full force and effect and, in either
such case, the Merger Agreement is terminated as a result thereof, Westinghouse
will be obligated to pay to the Company the applicable termination fee and to
reimburse the Company for certain of its out-of-pocket expenses. See "THE MERGER
AGREEMENT -- Conditions to the Merger" and "-- Termination Fees and Expenses".
TRANSACTIONS BETWEEN THE COMPANY AND WESTINGHOUSE
In July 1994, the Company and Westinghouse announced that they had agreed
to a comprehensive strategic partnership involving extended affiliation
agreements between the Company's Television Network and television stations
owned by Westinghouse in four major markets, and the creation of three new
jointly-held entities which would be established, respectively, to acquire and
operate television stations in major markets; to combine the two companies'
current advertising sales representation businesses; and to produce and
distribute television programming.
The Company formed the television station joint venture with Westinghouse
on September 10, 1995. On such date, the joint venture entity, pursuant to
agreements originally entered into in the fall of 1994 with National
Broadcasting Company, Inc. ("NBC"), acquired two NBC-owned stations and certain
assets of another NBC-owned station in exchange for one station and certain
assets of another station owned by the joint venture (through contribution
thereto by the Company). In addition, on September 10, 1995, Westinghouse
contributed one of its wholly owned television stations to the joint venture.
The respective contributions by the Company and Westinghouse of such stations
included the licenses, permits, leases, contracts, intellectual property rights
and other assets relating to such stations, together with such stations'
liabilities and working capital. Westinghouse owns 51% of the voting interests
of the managing general partner of the joint venture, with the Company owning
the remainder of such voting interests. The Company and Westinghouse share
equally in the profits and losses of the venture. For more information, see Note
2 to the Consolidated Financial Statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
On July 14, 1995, the Company and Westinghouse formed the sales
representation joint venture by contributing to such joint venture their
respective sales representation businesses (together with the leases, contracts
and other assets, as well as liabilities and working capital, relating thereto).
The sales representation joint venture has the same ownership structure as the
television station joint venture, with the Company and Westinghouse sharing
equally in the profits and losses and Westinghouse owning 51% of the voting
interests of the venture's managing general partner. However, the parties have
agreed that, if applicable FCC rules and regulations are changed to permit the
Company to own 50% of the voting interests in the joint venture, then
35
<PAGE> 45
the Company will have the option at that time, for payment of $1, to reorganize
the joint venture to give the Company such 50% control over the joint venture.
The Company and Westinghouse currently anticipate forming the production
and distribution joint venture in October 1995. At such time, Westinghouse will
contribute its existing production and distribution businesses to the venture
(together with all assets, liabilities and working capital relating thereto),
while the Company will contribute up to approximately $18,000,000. The Company
will be obligated (until five years from the date of formation) to make up to an
aggregate amount of $25,000,000 in further contributions to the joint venture to
fund its production and development expenses, subject to Westinghouse making
equal contributions. The voting interests of the production and distribution
entity will be equally owned by the Company and Westinghouse and each such party
will share equally in its profits and losses.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
EXECUTIVE OFFICERS
Chairman/CEO. Laurence A. Tisch, Chairman, President and Chief Executive
Officer of the Company, and his brother Preston R. Tisch, a member of the Board
of Directors, are the co-Chairmen and co-Chief Executive Officers of Loews,
which through its wholly owned subsidiary, L.T. Holding, owned, as of August 4,
1995, 10,987,285 shares, or approximately 16.95%, of the Company's outstanding
Common Stock. As of such date, Messrs. Laurence and Preston Tisch owned, in the
aggregate, 18,899,912 shares, or approximately 32.08%, of Loews's outstanding
common stock. See "SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL
OWNERS".
Pursuant to the Loews Voting Agreement (attached hereto as Appendix B),
L.T. Holding agreed to vote, and cause to be voted, all shares of Common Stock
of the Company held of record or beneficially owned by L.T. Holding, whenever
issued or acquired, in favor of approval of the Merger Agreement. In the event
Westinghouse elects to exercise its rights under the Merger Agreement to
commence a Tender Offer for the Common Stock, L.T. Holding has agreed to tender
all its shares in such Tender Offer and not to withdraw the same. L.T. Holding
also has agreed not to (i) sell, transfer, pledge, encumber, assign or otherwise
dispose of its shares of Common Stock, or enter into any contract, option or
other agreement or understanding with respect to such actions, or (ii) grant any
proxies, deposit any shares into a voting trust or enter into a voting agreement
with respect to any such shares. The obligations of L.T. Holding under the Loews
Voting Agreement terminate in the event the Merger Agreement is terminated or
the Board withdraws its recommendation of the Merger Agreement and the Merger.
Under the terms of the Tisch Deferred Compensation Plan (and the related
Trust Agreement dated as of January 1, 1995, which funds the Company's
obligations under such plan), entered into between the Company and Mr. Laurence
Tisch, if Mr. Tisch's employment with the Company is terminated for any reason
during a two-year period commencing with the occurrence of a Change of Control
(as defined therein), all amounts deferred under the Tisch Deferred Compensation
Plan, including credited investment returns, are required to be paid to Mr.
Tisch in a single sum on the next business day following such termination. The
Merger would constitute a Change of Control for purposes of such plan, and,
pursuant to the Merger Agreement, the Tisch Deferred Compensation Plan will be
amended to provide that, for purposes thereof, Mr. Tisch's employment will be
deemed terminated immediately prior to consummation of the Merger. Accordingly,
Mr. Tisch will receive a lump-sum payment of deferred compensation (including
credited investment returns) immediately prior to the Effective Time of the
Merger in an amount equal to approximately $1,179,200 (assuming the Merger is
consummated on December 1, 1995).
Certain Other Executive Officers. Employment Agreements (each dated June
27, 1994) between the Company and two of its executive officers (Peter W.
Keegan, Executive Vice President and Chief Financial Officer, and Ellen Oran
Kaden, Executive Vice President, Secretary and General Counsel) provide for
certain termination benefits (including pension benefits) in the event the
applicable executive officer's employment is terminated by the Company other
than for cause. Pursuant to the Merger Agreement, such Employment Agreements
will be amended to provide that, for purposes thereof, each such executive
officer's employment is
36
<PAGE> 46
deemed to be terminated without cause, and, accordingly, such termination
benefits will be payable immediately prior to consummation of the Merger. The
Company estimates that such benefits will equal, in the aggregate, approximately
$8,357,200 (assuming the Merger is consummated on December 1, 1995). Such
Employment Agreements also provide for a "gross-up" by the Company for certain
taxes so that such executive officers are in the same after-tax position they
would have been absent the acceleration of benefits under such Employment
Agreements (the aggregate amount of such gross-up would equal approximately the
amount set forth in the preceding sentence).
Pursuant to the Employment Agreement dated as of May 17, 1995, as amended
on June 29, 1995, between the Company and Leslie Moonves, President of the CBS
Entertainment Division and Executive Vice President of CBS/Broadcast Group, in
the event of a Change in Control (as defined therein), Mr. Moonves is entitled
to certain additional payments under such Employment Agreement. The amount of
such payments depends upon the consideration paid for Company Common Stock in
the transaction giving rise to the Change of Control. The Merger will constitute
such a Change of Control, and the Company currently anticipates that it will be
obligated to pay to Mr. Moonves in connection therewith $5,000,000 at the
Effective Time.
The Merger Agreement also provides that, pursuant to the Company's
Employment Agreement dated as of February 23, 1995, with Peter A. Lund,
Executive Vice President and President of CBS/Broadcast Group, there will be a
lump-sum payment to Mr. Lund of all deferred compensation thereunder immediately
prior to consummation of the Merger. Such payment is expected to equal
approximately $1,098,800 (assuming the Merger is consummated on December 1,
1995).
All Executive Officers. The following current executive officers of the
Company will receive approximately the amounts indicated parenthetically as
consideration payable under the Merger Agreement for options (vested and
unvested) held by such executive officers under the Company's Stock Rights Plan:
Laurence A. Tisch ($11,628,800); Ellen Oran Kaden ($1,197,300); Peter W. Keegan
($2,342,400); David Kenin ($458,000); Peter A. Lund ($2,154,200); Anthony C.
Malara ($2,320,700); Eric W. Ober ($1,460,400); Johnathan Rodgers ($1,065,000);
Rainer Siek ($183,500); James A. Warner ($873,000); and Nancy C. Widmann
($1,204,500). Neal H. Pilson, who was an executive officer of the Company during
the last fiscal year of the Company but no longer holds such position, will
receive $1,561,500 as consideration for options so held. The foregoing amounts
assume the Merger is consummated on December 1, 1995. See "THE MERGER
AGREEMENT -- Stock Options". It is estimated that Mr. Siek and Edward Grebow, a
former executive officer of the Company, will receive approximately $132,700 and
$219,500, respectively (assuming the Merger is consummated on December 1, 1995),
pursuant to the Company's election, under the Merger Agreement, to cause all
deferred compensation under its Deferred Additional Compensation Plan to be paid
out at the time of the Merger. See "THE MERGER AGREEMENT -- Employee Benefit
Plans". The Merger Agreement also provides certain indemnification and insurance
benefits to current and former officers of the Company, as well as that at the
Effective Time, the officers of the Company will become officers of the
Surviving Corporation. See "THE MERGER AGREEMENT -- Indemnification and
Insurance" and "-- Directors and Officers".
DIRECTORS
Under the Company's Retirement Plan for Non-Employee Directors dated as of
November 2, 1981, each eligible member of the Board not otherwise employed by
the Company is entitled to receive, upon retirement from the Board (but not
before normal retirement age), a benefit payable in installments equal in the
aggregate to the product of (i) $10,000 and (ii) the number of years of service
credited to such member. Pursuant to the Merger Agreement, this plan will be
amended at or prior to the Effective Time to provide that each participant will
be entitled to receive a lump-sum payment equal to $10,000 per year of service,
discounted from such participant's normal retirement age. In addition, pursuant
to the Merger Agreement, the Company's Deferred Compensation Plan for
Non-Employee Directors dated as of November 2, 1991, will be amended to provide
for the payment to non-employee directors participating therein of all deferred
compensation (including credited investment returns) immediately prior to the
Effective Time. Payments pursuant to these plans (which are non-funded,
non-ERISA plans) to each of the following non-employee directors of the Company
(including James D. Wolfensohn, who, in connection with his appointment as
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<PAGE> 47
President of World Bank, resigned from the Company's Board of Directors
effective March 31, 1995) are expected to equal approximately the amounts
indicated parenthetically: Michel C. Bergerac ($106,900); Harold Brown
($474,500); Ellen V. Futter ($13,400); Henry A. Kissinger ($277,100); Henry B.
Schacht ($298,100); Edson W. Spencer ($561,000); Franklin A. Thomas ($649,400);
Preston R. Tisch ($61,100); James D. Wolfensohn ($639,200); and Daniel
Yankelovich ($12,600). The foregoing amounts assume the Merger is consummated on
December 1, 1995. The Merger Agreement also contains certain provisions
providing for indemnification and insurance benefits to the current and former
directors of the Company. See "THE MERGER AGREEMENT -- Indemnification and
Insurance".
CERTAIN TAX CONSEQUENCES TO SHAREHOLDERS
The following is a summary of certain United States federal income tax
consequences of the Merger to Shareholders.
The receipt of cash in exchange for Common Stock pursuant to the Merger
will be a taxable transaction for federal income tax purposes and may also be a
taxable transaction under applicable state, local and foreign tax laws. A
Shareholder will generally recognize gain or loss for federal income tax
purposes in an amount equal to the difference between such Shareholder's
adjusted tax basis in such Shareholder's Common Stock and the Merger
Consideration (which includes the Additional Amount) received by such
Shareholder. Such gain or loss will be a capital gain or loss if such Common
Stock is held as a capital asset and will be long-term capital gain or loss if,
at the Effective Time, such Common Stock has been held for more than one year.
It is expected that, as a result of the Merger, certain state and local
real property transfer and real estate transfer gains taxes ("Transfer Taxes")
will be imposed on Shareholders. Westinghouse has agreed to pay all such
Transfer Taxes, if any, directly to state and local taxing authorities on behalf
of Shareholders. For federal income tax purposes, any such payments made on
behalf of a Shareholder should result in the deemed receipt of additional
consideration by such Shareholder in proportion to the number of shares of
Common Stock owned by such Shareholder. In such event, such Shareholder would be
deemed to have paid such tax on its own behalf and therefore such Shareholder
should be permitted to reduce such Shareholder's gain (or increase such
Shareholder's loss) on the sale by the amount of the tax.
The foregoing discussion may not apply to Shareholders who acquired their
Common Stock pursuant to the exercise of employee stock options or other
compensation arrangements with the Company, who are not citizens or residents of
the United States or who are otherwise subject to special tax treatment. EACH
SHAREHOLDER IS URGED TO CONSULT HIS, HER OR ITS TAX ADVISOR WITH RESPECT TO THE
TAX CONSEQUENCES OF THE MERGER, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL
OR OTHER TAX LAWS.
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<PAGE> 48
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information regarding beneficial ownership,
as of August 4, 1995, and within the meaning of Rule 13d-3 under the Exchange
Act, of Common Stock by directors, the five most highly compensated executive
officers (based on salary and bonus amounts paid during the 12-month period
ended August 4, 1995) and the directors and executive officers as a group. Since
the table reflects beneficial ownership determined pursuant to the applicable
rules of the SEC, the information is not necessarily indicative of beneficial
ownership for any other purpose.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OUTSTANDING
OF BENEFICIAL COMMON
OWNERSHIP STOCK
----------------- -----------
<S> <C> <C>
NAME OF DIRECTOR
Laurence A. Tisch................................. 11,187,160(1)(2)(5) 17.26%(2)
Michel C. Bergerac................................ 480 *
Harold Brown...................................... 365 *
Ellen V. Futter................................... 100 *
Henry A. Kissinger................................ 24,255(3) *
Henry B. Schacht.................................. 2,705 *
Edson W. Spencer.................................. 1,875 *
Franklin A. Thomas................................ 375 *
Preston R. Tisch.................................. 10,987,285(2) 16.95%(2)
Daniel Yankelovich................................ 500 *
NAME OF EXECUTIVE OFFICER
(information as to Laurence A. Tisch set forth
above)
Peter A. Lund..................................... 33,543(1)(4)(5) *
Peter W. Keegan................................... 39,607(1)(4)(5) *
David Kenin....................................... 2,764(1)(4)(5) *
Eric W. Ober...................................... 22,818(1)(4)(5) *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP
(21 persons, including those named above)....... 11,434,846(1)(2)(3)(4) 17.65%(2)
(5)(6)(7)
</TABLE>
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<PAGE> 49
OTHER OWNERSHIP OF COMMON STOCK
The following table sets forth information, as of August 4, 1995, in the
case of Loews and, based on their respective Schedules 13G filed with the SEC,
December 31, 1994, for the other indicated Shareholders, concerning the persons
known to the Company to be the beneficial owners of more than 5% of the
outstanding shares of Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT OF
BENEFICIAL OUTSTANDING
NAME/ADDRESS OWNERSHIP COMMON STOCK
---------------------------------------------------------- ---------- ------------
<S> <C> <C>
Loews Corporation(8)...................................... 10,987,285 16.95%
667 Madison Avenue
New York, NY 10021
J.P. Morgan & Co. Incorporated(9)......................... 4,104,315 6.60%
60 Wall Street
New York, NY 10260
The Capital Group Companies, Inc.(10)..................... 3,814,300 6.22%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
- ---------------
* less than 1%
(1) Includes shares which may be acquired upon the exercise of outstanding
vested options pursuant to the Stock Rights Plan as follows: 199,875;
29,000; 36,500; 2,750; 19,250; and 387,000 shares by Messrs. L. Tisch,
Lund, Keegan, Kenin, Ober and the group, respectively. Each executive
officer, named or otherwise, has disclaimed beneficial ownership of all
such shares underlying presently exercisable stock options held by him or
her. All such options will be accelerated and paid out at the Effective
Time as described above under "THE MERGER AGREEMENT -- Stock Options".
(2) Includes, and in the case of the Percent of Outstanding Common Stock
reflects, 10,987,285 shares of Common Stock owned by Loews through L.T.
Holding. Messrs. Laurence and Preston Tisch are co-Chairmen and co-Chief
Executive Officers of Loews and own, in the aggregate, approximately 32.08%
of Loews's outstanding common stock. Messrs. Laurence and Preston Tisch
each disclaim beneficial ownership of all shares of Common Stock owned
beneficially by L.T. Holding.
(3) Includes 21,755 shares of Common Stock owned as of August 4, 1995, by
trusts established under the will of William S. Paley, of which Dr.
Kissinger is a co-trustee. Dr. Kissinger shares investment and voting power
with respect to these shares with the other trustees and disclaims
beneficial ownership of all such shares.
(4) Includes shares of Common Stock held, as of June 30, 1995, by the Company's
Employee Investment Fund as to which voting (but not investment) power is
held as follows: 4,043; 3,107; 14; 3,538; and 23,557 shares by Messrs.
Lund, Keegan, Kenin, Ober and the group, respectively. Mr. Laurence Tisch
does not participate in such Fund.
(5) Does not include shares which may be acquired upon the exercise of
outstanding non-vested options pursuant to the Stock Rights Plan as
follows: 105,625; 38,000; 29,000; 18,050; 26,300; and 314,400 shares by
Messrs. L. Tisch, Lund, Keegan, Kenin, Ober and the group, respectively.
All such options will be accelerated and paid out at the Effective Time as
described above under "THE MERGER AGREEMENT -- Stock Options".
(6) Includes 1,612 phantom shares of Common Stock credited to one executive
officer's account under the Company's Deferred Additional Compensation
Plan.
(7) The total and the related percentage reflect the 10,987,285 shares of
Common Stock owned by L. T. Holding only being counted once.
(8) Loews has advised the Company that all such shares are owned and held of
record by L.T. Holding.
(9) J.P. Morgan & Co. Incorporated has advised the Company as to the above
shares as follows. With respect to disposition, it has shared power as to
98,580 shares and sole power as to 4,005,735 shares. In
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<PAGE> 50
respect of the power to vote, it has shared power as to 49,390 shares and
sole power as to 2,046,085 shares. Voting power as to the remaining
2,008,840 shares, which are held in various investment accounts, is
retained by the beneficial owners.
(10) The Capital Group Companies, Inc. ("The Capital Group") is the parent
company of six investment management companies, three of which are based in
the United States. The Capital Group has advised that all shares are owned
on behalf of investment clients and institutional accounts which are
managed by one of its subsidiaries. Each subsidiary of The Capital Group
exercises investment discretion in respect of shares it manages. In no case
do any managed accounts or the accounts of a single investment company own
more than 5% of the Company's outstanding shares of Common Stock. Sole
voting power is retained in respect of 526,500 shares. On behalf of itself
and its subsidiaries, The Capital Group has advised the Company that it and
its subsidiaries disclaim beneficial ownership as to all shares reflected
above.
LITIGATION
The Company, the individual members of its Board of Directors and, in
certain instances, Westinghouse and its Chairman and Chief Executive Officer,
Michael H. Jordan, have been named as defendants in the following eight lawsuits
filed in the Supreme Court of the State of New York, New York County: Carol B.
Miller IRA Account v. CBS (date filed: July 18, 1995); Roger B. Minkoff v. CBS
(July 28, 1995); Moise Katz v. CBS (August 1, 1995); Max Grill v. CBS (August 1,
1995); William Stevens v. CBS (August 1, 1995); John Stack v. CBS (August 2,
1995); Kenneth Steiner v. CBS (August 2, 1995); and Ron Stern v. CBS (August 3,
1995). In these proceedings the plaintiffs, on behalf of themselves and other
Shareholders, primarily assert that (i) the individual members of the Company's
Board of Directors have failed to act in such a manner so as to maximize
Shareholder value, including by failing to properly consider and solicit other
bids for the Company, and have acted according to their own personal interests,
instead of consistent with the fiduciary obligations they owe to the Company's
Shareholders, and (ii) the Merger does not provide sufficient value to the
Company and its Shareholders, especially in light of the Company's current
financial condition and prospects for future growth and the trading prices for
the Company's Common Stock immediately prior to announcement of the Merger.
Certain of the plaintiffs also allege that Westinghouse and Mr. Jordan aided and
abetted the foregoing alleged failures and breaches of the Company's directors.
The plaintiffs seek primarily to enjoin the Merger and that the Company conduct
an auction to maximize Shareholder value, as well as an order imposing a "voting
trust" on the shares controlled by the directors, unquantified damages and other
equitable relief (including certain declaratory relief and that the Company
disclose certain information before completing any change of control
transaction). The Company has consulted with counsel and believes that each of
these lawsuits is without merit and, accordingly, will have no adverse affect on
the Company or the Merger.
41
<PAGE> 51
MARKET PRICES OF COMMON STOCK
The Common Stock is listed on both the NYSE and the Pacific Stock Exchange
under the name CBS Inc. and traded under the symbol "CBS". The following table
sets forth, for the fiscal quarters indicated, the high and low sales price per
share of Common Stock traded on the NYSE (as adjusted for the Company's
five-for-one stock split effected in the fourth quarter of 1994):
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1992 HIGH LOW
----------------------------------------------------------------- ------- -------
<S> <C> <C>
First Quarter.................................................... $35.375 $27.250
Second Quarter................................................... 42.000 32.875
Third Quarter.................................................... 43.375 36.500
Fourth Quarter................................................... 44.125 35.250
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1993
-----------------------------------------------------------------
<S> <C> <C>
First Quarter.................................................... $43.500 $37.250
Second Quarter................................................... 50.125 42.750
Third Quarter.................................................... 55.625 45.625
Fourth Quarter................................................... 65.250 53.750
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
-----------------------------------------------------------------
<S> <C> <C>
First Quarter.................................................... $64.750 $55.000
Second Quarter................................................... 62.250 50.625
Third Quarter.................................................... 72.125 57.875
Fourth Quarter................................................... 68.750 50.000
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------------------------------------------------------
<S> <C> <C>
First Quarter.................................................... $70.375 $55.375
Second Quarter................................................... 71.000 59.250
Third Quarter.................................................... 82.250 64.875
</TABLE>
On July 31, 1995, the last trading day before the public announcement of
the execution of the Merger Agreement, the reported closing sale price per share
of Common Stock on the NYSE was $77.750. On October 16, 1995, the last full
trading day prior to the date of this Proxy Statement, the reported closing sale
price per share of Common Stock on the NYSE was $80.250. Shareholders are urged
to obtain current information with respect to the price of the Common Stock.
42
<PAGE> 52
SELECTED CONSOLIDATED FINANCIAL DATA
Set forth below is certain selected historical consolidated financial
information of the Company. The selected financial information at or for the
three years ended December 31, 1994, is derived from the audited consolidated
financial statements as reported in the Company's Annual Report on Form 10-K for
such period. The selected financial information for the six months ended June
30, 1995 and 1994 (except for Dividends per common share), is derived from the
Company's unaudited financial statements as reported in the Company's Form 10-Q
for the quarter ended June 30, 1995. More comprehensive financial information is
included in such reports, and the financial information that follows is
qualified by reference to such reports and the financial statements and related
notes, discussions and other information contained therein. See "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE". Dollars below are in millions, except for
per share amounts.
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED JUNE AT OR FOR THE YEAR ENDED
30, DECEMBER 31,
-------------------- --------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales.................................. $1,787.3 $2,129.6 $3,711.9 $3,510.1 $3,503.0
Income from continuing operations.......... 73.7 178.6 281.6 326.2 162.5
Income from continuing operations per
common share............................. 1.12 2.21 3.74 4.08 2.10
Total assets............................... 2,088.0 3,435.8 2,160.1 3,418.7 3,175.0
Long-term debt............................. 507.0 590.1 507.3 590.3 870.0
Preference stock subject to
redemption............................... 28.0 112.8 89.9 124.7 124.5
Dividends per common share................. 0.20 0.20 0.40 0.25 0.20
</TABLE>
THIRD QUARTER 1995 EARNINGS
On October 11, 1995, the Company issued a press release announcing that,
for the third quarter of 1995, the Company had net income of $33.4 million, or
$0.52 per share, compared with $58.5 million, or $0.77 per share, earned in the
prior-year's third quarter. This decline in earnings per share of 32% was due
primarily to lower operating income for the CBS Television Network, reflecting
both weakness in primetime audience delivery and increased payments to
television stations affiliated with the Company.
Results for the third quarter and the first nine months were as follows (in
millions, except per share amounts):
<TABLE>
<CAPTION>
THIRD QUARTER 1995 1994 % CHANGE
------------------------------------------- ----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Net income................................. $ 33.4 $ 58.5 - 43%
Net income per share....................... 0.52 0.77 - 32
Net sales.................................. 733.2 727.1 + 1
Average shares outstanding................. 64.4 72.6 - 11
</TABLE>
<TABLE>
<CAPTION>
FIRST NINE MONTHS 1995 1994 % CHANGE
------------------------------------------- ----------- -------- --------
(UNAUDITED)
<S> <C> <C> <C>
Net income................................. $ 107.1 $ 237.1 - 55%
Net income per share....................... 1.64 3.00 - 45
Net sales.................................. 2,520.5 2,856.7 - 12
Average shares outstanding................. 62.5 75.9 - 18
</TABLE>
Third Quarter Operating Results. For 1995's third quarter, the
consolidated net sales of the Company were $733.2 million, an increase of one
percent compared with the prior-year's third quarter. Operating income before
interest and taxes was $52.2 million, compared with $83.9 million earned a year
earlier.
43
<PAGE> 53
The CBS Television Network reported a decline in operating income, on a
slight increase in net sales, for the third quarter of 1995. As a result of a
falloff in audience ratings, the Network's unit pricing, revenues and profits
fell in the primetime daypart. In addition, the Network's earnings were
negatively affected by an increase in the compensation paid to television
stations affiliated with the Company. The decline in primetime sales was offset
in part by improved unit pricing in the late night, daytime and sports dayparts.
Net sales and earnings derived from program syndication increased significantly,
mirroring in part a stepped-up level of internally produced television
programming. The Company's operating income from program syndication also
included a one-time benefit of approximately $8 million. This benefit was due to
increased revenues reported to the Company by Viacom Inc. in the third quarter
of 1995, as a result of Viacom's conforming its accounting policies related to
libraries of television programming in connection with its merger with
Paramount. Viacom distributes in the United States and abroad certain television
programs owned by the Company.
At the CBS Television Stations Division, sales and profits declined,
stemming partly from slowing demand for local television advertising in several
major markets and weaker ratings performance, particularly in the primetime
daypart. Despite an increase in sales, CBS Radio reported lower operating
earnings, mainly as a result of sports rights fees.
The effective income tax rate was 35% for the third quarter of 1995,
compared with a rate of 29% for the comparable prior-year period. In 1994's
third quarter, a favorable state and local tax audit settlement reduced income
tax expense by $8.0 million, or $0.11 per share.
The Company had weighted average shares outstanding of 64.4 million for the
third quarter of 1995, compared with 72.6 million for 1994's third quarter. The
reduction in shares outstanding was due principally to the Company's repurchase
of 17.5 million shares of its Common Stock in September 1994.
As reported in the Company's press release issued on October 11, 1995, the
Company's unaudited condensed statements of income for the three and nine months
ended September 30, 1995 and 1994, were as follows (in millions, except per
share amounts):
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- ---------------------
ESTIMATE ACTUAL ESTIMATE ACTUAL
1995 1994 1995 1994
-------- ------ -------- --------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales........................................... $733.2 $727.1 $2,520.5 $2,856.7
====== ====== ======== ========
Operating income.................................... 52.2 83.9 181.8 360.7
------ ------ -------- --------
Interest income on investments, net................. 10.0 9.9 22.1 52.2
Interest expense on debt, net....................... (11.1) (11.5) (36.3) (33.7)
------ ------ -------- --------
Interest, net....................................... (1.1) (1.6) (14.2) 18.5
------ ------ -------- --------
Income before income taxes.......................... 51.1 82.3 167.6 379.2
Income taxes........................................ (17.7) (23.8) (60.5) (142.1)
------ ------ -------- --------
Net income.......................................... $ 33.4 $ 58.5 $ 107.1 $ 237.1
====== ====== ======== ========
Earnings per common share........................... $ 0.52 $ 0.77 $ 1.64 $ 3.00
====== ====== ======== ========
Weighted average shares outstanding(1).............. 64.4 72.6 62.5 75.9
====== ====== ======== ========
</TABLE>
- ---------------
(1) In 1995, the reduction in shares reflects the repurchase of 17.5 million
shares in September 1994.
Quarterly Cash Dividend. On October 11, 1995, the Company also issued a
press release announcing that the Company's Board of Directors had, on such
date, declared the Company's quarterly cash dividend of $0.10 per share of its
Common Stock. This cash dividend is payable December 11, 1995, to Shareholders
of record at the close of business on November 3, 1995.
44
<PAGE> 54
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the SEC are incorporated
into this Proxy Statement by reference:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994, filed on March 13, 1995, and as amended on March 16, 1995, June 2,
1995, and October 12, 1995;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995, filed on May 1, 1995;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1995, filed on August 7, 1995, and as amended on October 12, 1995;
4. The Company's Proxy Statement on Schedule 14A, filed on April 7, 1995;
and
5. The Company's Current Report on Form 8-K, filed on August 4, 1995, and
as amended on October 12, 1995.
All documents or reports subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference into this Proxy Statement and to be a part of this Proxy Statement
from the date of filing of such document. Any statement contained herein, or in
a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement.
The Company will provide without charge to any person to whom this Proxy
Statement is delivered, on the written or oral request of such person and by
first class mail or other equally prompt means within one business day of
receipt of such request, a copy of any of or all the foregoing documents
incorporated by reference (other than exhibits not specifically incorporated by
reference into the texts of such documents). Requests for such documents should
be directed to: Ellen Oran Kaden, Secretary, CBS Inc., 51 West 52nd Street, New
York, New York 10019-6188, (212) 975-4321.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements of the Company at and for the three
years ended December 31, 1994, incorporated in this Proxy Statement by reference
to the Company's Annual Report on Form 10-K for such period, have been
incorporated in reliance on the report of Coopers & Lybrand LLP, independent
certified public accountants, also incorporated by reference herein. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing. A representative of Coopers & Lybrand LLP will be at
the Special Meeting to answer questions by Shareholders and will have the
opportunity to make a statement, if so desired.
OTHER MATTERS
Under the BCL, only business related to the Merger Agreement and the Merger
may be transacted at the Special Meeting.
OTHER MEETINGS
The Company will hold a 1996 Annual Meeting only if the Merger is not
consummated prior thereto. In the event of such a meeting, any Shareholder
proposals intended to be presented thereat must, in addition to meeting the
Shareholder eligibility and other requirements of the SEC's rules governing such
proposals, be received by the Company at its principal executive offices no
later than December 8, 1995.
45
<PAGE> 55
Conformed Copy APPENDIX A
AGREEMENT AND PLAN OF MERGER
AMONG
WESTINGHOUSE ELECTRIC CORPORATION
GROUP W ACQUISITION CORP.
AND
CBS INC.
dated August 1, 1995
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE I
THE MERGER............................................................................ 1
1.1 The Merger................................................................. 1
1.2 Closing.................................................................... 1
1.3 Effective Time of the Merger............................................... 1
1.4 Effects of the Merger...................................................... 1
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES........................................................................ 2
2.1 Effect on Capital Stock.................................................... 2
2.2 Conversion of Securities................................................... 2
2.3 Payment for Shares......................................................... 3
2.4 Stock Transfer Books....................................................... 4
2.5 Stock Options.............................................................. 4
2.6 Dissenting Shares.......................................................... 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES........................................................ 5
3.1 Representations and Warranties of the Company.............................. 5
(a) Organization, Standing and Power...................................... 5
(b) Capital Structure..................................................... 6
(c) Authority; No Violations; Consents and Approvals...................... 6
(d) SEC Documents......................................................... 7
(e) Absence of Certain Changes or Events.................................. 8
(f) No Undisclosed Material Liabilities................................... 8
(g) Information Supplied.................................................. 8
(h) Compliance with Applicable Laws....................................... 8
(i) Litigation............................................................ 9
(j) Taxes................................................................. 9
(k) Employee Benefit Plans................................................ 9
(l) Intangible Property................................................... 10
(m) Contracts............................................................. 11
(n) Board Recommendation; State Takeover Statutes......................... 11
(o) Opinion of Financial Advisor.......................................... 11
(p) Vote Required......................................................... 11
(q) FCC Qualifications.................................................... 11
3.2 Representations and Warranties of Parent and Sub........................... 11
(a) Organization, Standing and Power...................................... 11
(b) Authority; No Violations; Consents and Approvals...................... 11
(c) Information Supplied.................................................. 12
(d) Financing............................................................. 12
</TABLE>
i
<PAGE> 57
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
</TABLE>
<TABLE>
<S> <C>
(e) Interim Operations of Sub............................................. 12
(f) Board Approval........................................................ 13
(g) FCC Qualifications.................................................... 13
(h) Financial Covenant Compliance......................................... 13
(i) Third-party Consents.................................................. 13
(j) Sufficient Financing.................................................. 13
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS............................................. 13
4.1 Covenants of the Company................................................... 13
(a) Ordinary Course....................................................... 13
(b) Dividends; Changes in Stock........................................... 13
(c) Issuance of Securities................................................ 13
(d) Governing Documents................................................... 14
(e) No Solicitation....................................................... 14
(f) No Acquisitions....................................................... 15
(g) No Dispositions....................................................... 15
(h) Advice of Changes..................................................... 15
(i) No Dissolution, Etc................................................... 15
(j) Other Actions......................................................... 15
(k) Certain Employee Matters.............................................. 16
(l) Indebtedness; Agreements.............................................. 16
(m) Accounting............................................................ 16
(n) Tax Election.......................................................... 16
ARTICLE V
ADDITIONAL AGREEMENTS................................................................. 17
5.1 Preparation of the Proxy Statement; Company Shareholders Meeting........... 17
5.2 Access to Information; Confidentiality..................................... 17
5.3 Transfer Taxes............................................................. 17
5.4 Fees and Expenses.......................................................... 17
5.5 Brokers or Finders......................................................... 18
5.6 Indemnification; Directors' and Officers' Insurance........................ 19
5.7 Best Efforts............................................................... 20
(a) General............................................................... 20
(b) FCC................................................................... 20
(c) Financing............................................................. 20
5.8 Conduct of Business of Sub................................................. 20
5.9 Publicity.................................................................. 20
5.10 Notification of Certain Matters............................................ 20
5.11 FCC Matters................................................................ 21
5.12 Employee Benefit Plans..................................................... 21
5.13 SEC Filings................................................................ 23
</TABLE>
ii
<PAGE> 58
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
ARTICLE VI
CONDITIONS PRECEDENT.................................................................. 23
6.1 Conditions to Each Party's Obligation to Effect the Merger................. 23
(a) Shareholder Approval.................................................. 23
(b) HSR Act............................................................... 23
(c) No Injunctions or Restraints.......................................... 23
(d) FCC Order............................................................. 23
6.2 Conditions to Obligations of Parent and Sub................................ 24
(a) Representations and Warranties; Performance of Obligations............ 24
(b) No Material Adverse Change............................................ 24
(c) Funding............................................................... 24
6.3 Conditions to Obligations of the Company................................... 24
6.4 Closing Deliveries......................................................... 24
ARTICLE VII
TERMINATION AND AMENDMENT............................................................. 24
7.1 Termination................................................................ 24
7.2 Effect of Termination...................................................... 25
7.3 Amendment.................................................................. 25
7.4 Extension; Waiver.......................................................... 26
ARTICLE VIII
TENDER OFFER.......................................................................... 26
8.1 Tender Offer............................................................... 26
ARTICLE IX
GENERAL PROVISIONS.................................................................... 27
9.1 Effectiveness of Representations, Warranties and Agreements;
Confidentiality Agreement.................................................. 27
9.2 Notices.................................................................... 27
9.3 Interpretation............................................................. 28
9.4 Counterparts............................................................... 28
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership........ 28
9.6 Governing Law.............................................................. 28
9.7 No Remedy in Certain Circumstances......................................... 28
9.8 Assignment................................................................. 28
</TABLE>
iii
<PAGE> 59
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERMS DEFINED IN SECTION
- ------------- ------------------
<S> <C>
Additional Amount............................................................ 2.2(a)
Agreement.................................................................... preamble
BCL.......................................................................... 1.1
Benefit Plans................................................................ 5.12(a)
</TABLE>
<TABLE>
<S> <C>
Certificate of Merger........................................................ 1.3
Certificates................................................................. 2.3(b)
Closing...................................................................... 1.2
Closing Date................................................................. 1.2
Code......................................................................... 2.3(e)
Commitment Letter............................................................ 3.2(d)
Communications Act........................................................... 3.1(c)(iii)
Company...................................................................... preamble
Company Common Stock......................................................... preamble
Company Disclosure Schedule.................................................. 3.1
Company ERISA Plan........................................................... 3.1(k)
Company Intangible Property.................................................. 3.1(i)
Company Pension Plans........................................................ 5.12(a)
Company Permits.............................................................. 3.1(h)
Company Plans................................................................ 3.1(k)
Company SEC Documents........................................................ 3.1(d)
Company Shareholder Approval................................................. 3.1(c)(iii)
Company Shareholders Meeting................................................. 5.1(b)
Company Voting Debt.......................................................... 3.1(b)
Competing Transaction........................................................ 4.1(e)(i)
Confidentiality Agreement.................................................... 5.2
Constituent Corporations..................................................... 1.1
Credit Agreement............................................................. 5.7(c)
Dissenting Shares............................................................ 2.6
Effective Time............................................................... 1.3
Eligible Employees........................................................... 5.12(b)
Employees.................................................................... 5.12(a)
ERISA........................................................................ 3.1(k)
Exchange Act................................................................. 2.5
FCC Order.................................................................... 6.1(d)
Financing.................................................................... 5.7(c)
GAAP......................................................................... 3.1(d)
Gains and Transfer Taxes..................................................... 3.1(c)(iii)
Governmental Entity.......................................................... 3.1(c)(iii)
HSR Act...................................................................... 3.1(c)(iii)
Indemnified Parties.......................................................... 5.6
Indemnified Liabilities...................................................... 5.6
Injunction................................................................... 6.1(c)
IRS.......................................................................... 3.1(j)
Laws......................................................................... 3.1(c)(ii)
Material Adverse Effect...................................................... 3.1(a)
Material Contracts........................................................... 4.1(l)(ii)
</TABLE>
iv
<PAGE> 60
<TABLE>
<CAPTION>
DEFINED TERMS DEFINED IN SECTION
- ------------- ------------------
<S> <C>
Material Subsidiary.......................................................... 3.1(a)
Merger....................................................................... preamble
Merger Consideration......................................................... 2.2(a)
Multiple Employer Plans...................................................... 3.1(k)(i)
Notice of Superior Proposal.................................................. 4.1(a)(ii)
Option Consideration......................................................... 2.5
Options...................................................................... 2.5
Parent....................................................................... preamble
Parent Disclosure Schedule................................................... 3.2
Paying Agent................................................................. 2.3(a)
Payment Fund................................................................. 2.3(a)
Preferred Stock.............................................................. 3.1(b)
Permitted Investments........................................................ 2.3(a)
Proxy Statement.............................................................. 3.1(c)(iii)
SAR Unit..................................................................... 2.5
SEC.......................................................................... 3.1(a)
Securities Act............................................................... 3.1(c)(iii)
SERPS........................................................................ 5.12(b)
Shares....................................................................... preamble
Stations..................................................................... 3.1(c)(iii)
Stock Rights Plan............................................................ 2.5
Sub.......................................................................... preamble
Subsidiary................................................................... 2.1(b)
Superior Proposal............................................................ 4.1(e)(ii)
Surviving Corporation........................................................ 1.1
Taxes........................................................................ 3.1(j)
Time Period.................................................................. 5.12(b)
Transfer Taxes............................................................... 5.3
Violation.................................................................... 3.1(c)(ii)
</TABLE>
v
<PAGE> 61
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated August 1, 1995 (the "Agreement "),
among Westinghouse Electric Corporation, a Pennsylvania corporation ("Parent "),
Group W Acquisition Corp., a New York corporation and a wholly-owned subsidiary
of Parent ("Sub"), and CBS Inc., a New York corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent, by means of the merger
of Sub with and into the Company, upon the terms and subject to the conditions
set forth in the Agreement;
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have approved the merger of Sub into the Company as set forth below (the
"Merger "), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value
$2.50 per share, of the Company (the "Shares" or the "Company Common Stock")
(excluding shares owned, directly or indirectly, by the Company or any
Subsidiary of the Company or by Parent, Sub or any other Subsidiary of Parent
and Dissenting Shares (as defined in Section 2.6)), shall be converted into the
right to receive the Merger Consideration (as defined in Section 2.2); and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to consummation thereof;
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, and in accordance with the Business Corporation Law of the State
of New York (the "BCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3). At the Effective Time, the separate
corporate existence of Sub shall cease, and the Company (i) shall continue as
the surviving corporation and an indirect wholly owned subsidiary of Parent (Sub
and the Company are sometimes hereinafter referred to as "Constituent
Corporations" and, as the context requires, the Company is sometimes hereinafter
referred to as the "Surviving Corporation"), (ii) shall succeed to and assume
all the rights and obligations of Sub in accordance with the BCL, and (iii)
shall continue under the name "CBS Inc.".
1.2 Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.1, and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the closing of the Merger (the "Closing") shall take place at 10:00
a.m., New York time, on the second business day after satisfaction or waiver of
the conditions set forth in Article VI (the "Closing Date"), at the offices of
Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New York 10153, unless
another date, time or place is agreed to in writing by the parties hereto.
1.3 Effective Time of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a certificate of merger or other appropriate documents (in any such case, the
"Certificate of Merger") with the New York Secretary of State, as provided in
the BCL, as soon as practicable on or after the Closing Date. The Merger shall
become effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger (the "Effective Time").
1.4 Effects of the Merger. (a) The Merger shall have the effects set forth
in the applicable provisions of the BCL, including Section 906 thereof.
(b) The directors of Sub and the officers of the Company immediately prior
to the Effective Time shall, from and after the Effective Time, be the initial
directors and officers of the Surviving Corporation until their
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successors have been duly elected or appointed and qualified, or until their
earlier death, resignation or removal, in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub as in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
BCL.
(d) The Bylaws of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided by applicable law or the Surviving Corporation's Certificate of
Incorporation or Bylaws.
(e) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject to all the restrictions, disabilities and
duties of each of the Constituent Corporations; and all and singular rights,
privileges, powers and franchises of each of the Constituent Corporations, and
all property, real, personal and mixed, and all debts due to either of the
Constituent Corporations on whatever account, as well as for stock subscriptions
and all other things in action or belonging to each of the Constituent
Corporations, shall be vested in the Surviving Corporation; and all property,
rights, privileges, powers and franchises, and all and every other interest
shall be thereafter as effectually the property of the Surviving Corporation as
they were of the Constituent Corporations; and the title to any real estate
vested by deed or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of creditors and all liens
upon any property of either of the Constituent Corporations shall be preserved
unimpaired; and all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving Corporation, and may be
enforced against it to the same extent as if said debts and liabilities had been
incurred by it.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holder of any shares of Company
Common Stock or the holder of any capital stock of Sub:
(a) Capital Stock of Sub. Each share of the capital stock of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common
Stock and other shares of capital stock of the Company owned by Parent, Sub
or any other wholly-owned Subsidiary (as defined below) of Parent or the
Company shall be canceled and retired and shall cease to exist and no
consideration shall be delivered or deliverable in exchange therefor. As
used in this Agreement, the word "Subsidiary", with respect to any party,
means any corporation, partnership, joint venture or other organization,
whether incorporated or unincorporated, of which (i) such party or any
other Subsidiary of such party is a general partner; (ii) voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation, partnership, joint venture or
other organization is held by such party or by any one or more of its
Subsidiaries, or by such party and any one or more of its Subsidiaries; or
(iii) at least 50% of the equity, other securities or other interests is,
directly or indirectly, owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and any one or more of its
Subsidiaries.
2.2 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of Sub, the Company or the holders of
any of the shares thereof:
(a) Subject to the other provisions of this Section 2.2 and Section
2.1, each share of Company Common Stock issued and outstanding immediately
prior to the Effective Time (excluding shares owned, directly or
indirectly, by the Company or any Subsidiary of the Company or by Parent,
Sub or any other
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Subsidiary of Parent and Dissenting Shares) shall be converted into the
right to receive the Merger Consideration (as defined below), in cash,
payable to the holder thereof, without any interest thereon, upon surrender
and exchange of the Certificates (as defined in Section 2.3(b)). As used in
this Agreement, the term "Merger Consideration" shall mean the sum of
$81.00 and the Additional Amount (as defined below). As used in this
Agreement, the term "Additional Amount" shall mean an amount equal to the
product of (a) $81.00, (b) a fraction, the numerator of which shall be the
number of days in the period from and including August 31, 1995 to but
excluding the Closing Date, and the denominator of which shall be 365, and
(c) 6%; provided, however, that if the Company continues to pay its regular
dividend as permitted by Section 4.1(b) of this Agreement, the Additional
Amount shall be reduced by the amount per Share of dividends declared after
the date hereof with a record date prior to the Effective Time (except that
such reduction for the regular dividend immediately succeeding the date
hereof shall only be for the pro rata portion of the period to which such
dividend relates following the date of this Agreement).
(b) All such shares of Company Common Stock, when converted as
provided in Section 2.2(a), no longer shall be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
Certificate previously evidencing Shares shall thereafter represent only
the right to receive the Merger Consideration. The holders of Certificates
previously evidencing Shares outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to the Company Common
Stock except as otherwise provided herein or by law and subject to the
Surviving Corporation's obligation to pay any dividends with a record date
prior to the Effective Time declared in accordance with the terms of this
Agreement and which remain unpaid at the Effective Time and, upon the
surrender of Certificates in accordance with the provisions of Section 2.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.
2.3 Payment for Shares. (a) Paying Agent. Prior to the Effective Time,
Sub shall appoint Chemical Bank (or if Chemical Bank is unwilling or unable to
act or to act upon commercially reasonable terms, any other United States bank
or trust company mutually acceptable to the Company and Parent) to act as paying
agent (the "Paying Agent ") for the payment of the Merger Consideration, and
Parent shall deposit or shall cause to be deposited with the Paying Agent in a
separate fund established for the benefit of the holders of shares of Company
Common Stock, for payment in accordance with this Article II, through the Paying
Agent (the "Payment Fund "), immediately available funds in amounts necessary to
make the payments pursuant to Section 2.2(a) and this Section 2.3 to holders
(other than the Company or any Subsidiary of the Company or Parent, Sub or any
other Subsidiary of Parent, or holders of Dissenting Shares). The Paying Agent
shall, pursuant to irrevocable instructions, pay the Merger Consideration out of
the Payment Fund.
From time to time at or after the Effective Time, Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest portions of the
Payment Fund as Parent directs in obligations of or guaranteed by the United
States of America or of any agency thereof, in commercial paper obligations
rated P-1 or A-1 from Moody's Investors Services, Inc. and Standard & Poor's
Corporation, respectively, or in time deposits, certificates of deposit or
banker's acceptances of, or repurchase or reverse repurchase agreements with,
commercial banks whose commercial paper (or that of its holding company) is
rated P-1 or A-1 (collectively, "Permitted Investments"); provided, however,
that the maturities of Permitted Investments shall be such as to permit the
Paying Agent to make prompt payment to former holders of Company Common Stock
entitled thereto as contemplated by this Section. Parent shall cause the Payment
Fund to be promptly replenished to the extent of any losses incurred as a result
of Permitted Investments. All earnings on Permitted Investments shall be paid to
Parent. If for any reason (including losses) the Payment Fund is inadequate to
pay the amounts to which holders of shares of Company Common Stock shall be
entitled under this Section 2.3, Parent shall in any event be liable for payment
thereof. The Payment Fund shall not be used for any purpose except as expressly
provided in this Agreement.
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall instruct the Paying Agent to mail to each holder of
record (other than the Company or any Subsidiary of the
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Company or Parent, Sub or any other Subsidiary of Parent, or holders of
Dissenting Shares) of a Certificate or Certificates which, immediately prior to
the Effective Time, evidenced outstanding shares of Company Common Stock (the
"Certificates"), (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent, and
shall be in such form and have such other provisions as Parent reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of a Certificate
for cancellation to the Paying Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in respect thereof cash in an amount equal to the product of (i) the number of
shares of Company Common Stock represented by such Certificate and (ii) the
Merger Consideration, and the Certificate so surrendered shall forthwith be
canceled. Absolutely no interest shall be paid or accrued on the Merger
Consideration payable upon the surrender of any Certificate. If payment is to be
made to a person other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the surrendered Certificate or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.3(b), each
Certificate (other than Certificates representing Shares owned by the Company or
any Subsidiary of the Company or Parent, Sub or any other Subsidiary of Parent)
shall represent for all purposes only the right to receive the Merger
Consideration.
(c) Termination of Payment Fund; Interest. Any portion of the Payment Fund
which remains undistributed to the holders of Company Common Stock for one year
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of Company Common Stock who have not theretofore complied with this
Article II and the instructions set forth in the letter of transmittal mailed to
such holder after the Effective Time shall thereafter look only to Parent for
payment of the Merger Consideration to which they are entitled. All interest
accrued in respect of the Payment Fund shall inure to the benefit of and be paid
to Parent.
(d) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for any cash from the
Payment Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(e) Withholding Rights. Parent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
holder of shares of Company Common Stock such amounts as Parent is required to
deduct and withhold with respect to the making of such payment under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
Parent, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by Parent.
2.4 Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company. On or after the Effective Time, any Certificates presented to the
Paying Agent, Parent or the Company for any reason shall be converted into the
Merger Consideration, subject to the other provisions of this Article II.
2.5 Stock Options. At the Effective Time, each holder of a then
outstanding option to purchase Shares under the 1983 Stock Rights Plan (as
amended from time to time prior to the date hereof, the "Stock Rights Plan"),
whether or not then exercisable (the "Options"), shall, in settlement thereof,
receive from the Company for each Share subject to such Option an amount
(subject to any applicable withholding tax) in cash equal to the excess, if any,
of the Merger Consideration over the per Share exercise price of such Option
(such amount being hereinafter referred to as the "Option Consideration");
provided, however, that with respect to any person subject to Section 16(a) of
the Securities Exchange Act of 1934, as amended (the
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"Exchange Act"), any such amount shall be paid as soon as practicable after the
first date payment can be made without liability to such person under Section
16(b) of the Exchange Act. Upon receipt of the Option Consideration, the Option
and any coupled SAR Unit (as defined in the Stock Rights Plan) shall be
canceled. The surrender of an Option (and any coupled SAR Unit) to the Company
in exchange for the Option Consideration shall be deemed a release of any and
all rights the holder had or may have had in respect of such Option (and any
such coupled SAR Unit). Prior to the Effective Time, the Company shall use its
best efforts to obtain all necessary consents or releases from holders of
Options under the Stock Rights Plan and take all such other lawful action as may
be necessary to give effect to the transactions contemplated by this Section 2.5
(except for such action that may require the approval of the Company's
shareholders). Except as otherwise agreed to by the parties, (i) the Stock
Rights Plan shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any Subsidiary
thereof, shall be canceled as of the Effective Time, and (ii) the Company shall
take all action necessary to ensure that following the Effective Time no
participant in the Stock Rights Plan or other plans, programs or arrangements
shall have any right thereunder to acquire equity securities of the Company, the
Surviving Corporation or any Subsidiary thereof and to terminate all such plans.
2.6 Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and which are held by shareholders who
shall not have assented to the Merger and who shall have demanded properly in
writing appraisal for such shares in accordance with the applicable provisions
of the BCL (collectively, the "Dissenting Shares") shall not be converted into
or represent the right to receive the Merger Consideration. Such shareholders
instead shall be entitled to receive payment of the appraised value of such
shares of Company Common Stock held by them pursuant to the laws of the State of
New York, except that all Dissenting Shares held by shareholders who shall have
failed to perfect or who effectively shall have withdrawn or lost their rights
to appraisal of such shares of Company Common Stock, in either case pursuant to
the BCL, shall thereupon be deemed to have been converted into and to have
become exchangeable, as of the Effective Time, for the right to receive, without
any interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 2.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock. The
Company shall give Parent (i) prompt notice of any written demands for appraisal
of shares of Company Common Stock received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with respect to any such
demands. The Company shall not, without the prior written consent of Parent,
voluntarily make any payment with respect to, or settle, offer to settle or
otherwise negotiate, any such demands.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company represents
and warrants to Parent and Sub as follows (except to the extent set forth on the
Disclosure Schedule previously delivered by the Company to Parent (the "Company
Disclosure Schedule")):
(a) Organization, Standing and Power. Each of the Company and its
Material Subsidiaries (as defined below) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation, has all requisite power and authority to
own, lease and operate its properties and to carry on its business as now
being conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure
so to qualify would not have a Material Adverse Effect (as defined below)
with respect to the Company. The Company has heretofore made available to
Parent complete and correct copies of its and its Material Subsidiaries'
respective Certificates or Articles of Incorporation and Bylaws (or other
governing instruments). As used in this Agreement, a "Material Adverse
Effect" shall mean, with respect to any party, the result of one or more
events, changes or effects which, individually or in the aggregate,
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would have a material adverse effect on the business, results of operations
or financial condition of such party and its Subsidiaries, taken as a
whole. As used in this Agreement, "Material Subsidiary", with respect to
any party, means any Subsidiary of such party that constitutes a
Significant Subsidiary of such party within the meaning of Rule 1-02 of the
Regulation S-X of the Securities and Exchange Commission (the "SEC ") and,
in the case of the Company, also shall include The CBS/Fox Company and
Radford Studio Center Inc.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of the Company consists of 100,000,000 Shares and 6,000,000 shares of
Preference Stock, $1.00 par value ("Preferred Stock"). At the close of
business on July 28, 1995: (i) 63,677,363 Shares and 320,000 shares of
Series B Preferred Stock were issued and outstanding, 1,106,400 Shares were
reserved for issuance pursuant to the conversion of the Series B Preferred
Stock and 1,850,526 Shares were reserved for issuance pursuant to the Stock
Rights Plan, and, except for the issuance of Shares pursuant to the
exercise of the Options, there were no employment, executive termination or
similar agreements providing for the issuance of Shares; (ii) 17,485,230
Shares were held by the Company in its treasury; and (iii) no bonds,
debentures, notes or other instruments or evidence of indebtedness having
the right to vote (or convertible into, or exercisable or exchangeable for,
securities having the right to vote) on any matters on which the Company
shareholders may vote ("Company Voting Debt ") were issued or outstanding.
All outstanding Shares are validly issued, fully paid and nonassessable
and, other than as provided in the BCL, are not subject to preemptive or
other similar rights. Except as set forth in Section 3.1(b) of the Company
Disclosure Schedule, all outstanding shares of capital stock of the
Material Subsidiaries of the Company are validly issued, fully paid and
nonassessable and are owned by the Company or a direct or indirect
Subsidiary of the Company, free and clear of all liens, charges,
encumbrances, claims and options of any nature. Except as set forth in this
Section 3.1(b), there are not as of the date hereof, and there will not be
at the Effective Time, any outstanding or authorized options, warrants,
calls, rights (including preemptive rights), commitments or agreements to
which the Company or any Subsidiary of the Company is a party or by which
it is bound, in any case obligating the Company or any Subsidiary of the
Company to issue, deliver, sell, purchase, redeem or acquire, or cause to
be issued, delivered, sold, purchased, redeemed or acquired, additional
shares of capital stock or any Company Voting Debt or other voting
securities of the Company or of any Subsidiary of the Company, or
obligating the Company or any Subsidiary of the Company to grant, extend or
enter into any such option, warrant, call, right, commitment or agreement.
There are not as of the date hereof and there will not be at the Effective
Time any shareholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or by which it is bound
relating to the voting of any shares of the capital stock of the Company.
Except as set forth in Section 3.1(b) of the Company Disclosure Schedule,
there are no restrictions on the Company's ability or right to vote the
stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Company has all requisite corporate power and authority to
enter into this Agreement and, subject to the Company Shareholder
Approval (as defined in Section 3.1(c)(iii)), to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of the Company, subject to the Company Shareholder Approval. This
Agreement has been duly executed and delivered by the Company and,
assuming that this Agreement constitutes the valid and binding agreement
of Parent and Sub, constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms.
(ii) Except as to which requisite waivers or consents have been
obtained and except as set forth in Section 3.1(c)(ii) of the Company
Disclosure Schedule and assuming the consents, approvals, authorizations
or permits and filings or notifications referred to in paragraph (iii)
of this Section 3.1(c) are duly and timely obtained or made and the
Company Shareholder Approval has been obtained, the execution and
delivery of this Agreement do not and the consummation of the
transactions contemplated hereby by the Company will not (A) conflict
with any provision of the Certificate or Articles of Incorporation or
By-laws (or other governing documents) of the Company
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or any of its Material Subsidiaries, (B) conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under,
or the creation of a lien, pledge, security interest or other
encumbrance on assets or property, or right of first refusal with
respect to any asset or property (any such conflict, violation, default,
right of termination, cancellation or acceleration, loss, creation or
right of first refusal, a "Violation"), of any loan or credit agreement,
note, mortgage, indenture, lease, Company Employee Benefit Plan (as
defined in Section 3.1(k)(i)) or other agreement, obligation or
instrument, or (C) result in any Violation of any Company Permit (as
defined in Section 3.1(h)), concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or their respective properties or
assets (collectively, "Laws"), except, with respect to clauses (B) and
(C), for any such Violations which would not have a Material Adverse
Effect with respect to the Company. The Board of Directors of the
Company has taken all actions necessary under the BCL, including
approving the transactions contemplated by this Agreement, to ensure
that Section 912 of the BCL does not, and will not, apply to the
transactions contemplated in this Agreement.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
Material Subsidiaries in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
transactions contemplated hereby, which if not obtained or made would
have a Material Adverse Effect with respect to the Company, except for:
(A) the filing of a pre-merger notification and report form by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act "), and the expiration or termination of the
applicable waiting period thereunder; (B) the filing with the SEC of (x)
a proxy statement in definitive form relating to a meeting of the
holders of Company Common Stock to approve the Merger ("Company
Shareholder Approval ") (such proxy statement as amended or supplemented
from time to time being hereinafter referred to as the "Proxy
Statement "), and (y) such reports under and such other compliance with
the Securities Act of 1933, as amended (the "Securities Act "), or the
Exchange Act and the rules and regulations thereunder, as may be
required in connection with this Agreement and the transactions
contemplated hereby; (C) the filing of the Certificate of Merger with
the New York Secretary of State; (D) such filings and approvals as may
be required by any applicable state securities, "blue sky" or takeover
laws; (E) such filings and approvals as may be required by any foreign
pre-merger notification, securities, corporate or other law, rule or
regulation; (F) such filings in connection with the New York State Real
Property Transfer Tax, the New York Real Property Transfer Gains Tax,
the New York City Real Property Transfer Tax or any other state or local
tax which is attributable to the beneficial ownership of the Company's
or its Subsidiaries' real property, if any (collectively, the "Gains and
Transfer Taxes"); (G) such filings with and approvals of the Federal
Communications Commission or any successor entity (the "FCC ") as may be
required under the Communications Act of 1934, as amended, and the
rules, regulations and policies of the FCC thereunder (the
"Communications Act"), including, without limitation, in connection with
the transfer of licenses in connection with the operation of the
television and radio stations owned and operated by the Company (the
"Stations"); and (H) such other such filings and consents as may be
required under any environmental, health or safety law or regulation
pertaining to any notification, disclosure or required approval
necessitated by the Merger or the transactions contemplated by this
Agreement.
(d) SEC Documents. The Company has made available to Parent a true
and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since December
31, 1992 and prior to the date of this Agreement (the "Company SEC
Documents"), which are all the documents (other than preliminary material)
that the Company was required to file with the SEC since such date. As of
their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the
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case may be, and the rules and regulations of the SEC thereunder applicable
to such Company SEC Documents, and none of the Company SEC Documents
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company (including,
in each case, the notes thereto) included in the Company SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles ("GAAP ") applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted
by Rule 10-01 of Regulation S-X of the SEC) and fairly present in
accordance with applicable requirements of GAAP (subject, in the case of
the unaudited statements, to normal, recurring adjustments, none of which
were or are expected, individually or in the aggregate, to be material in
amount) the consolidated financial position of the Company and its
consolidated Subsidiaries as of their respective dates and the consolidated
results of operations and the consolidated cash flows of the Company and
its consolidated Subsidiaries for the periods presented therein.
(e) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents, as set forth in Section 3.1(e) of the Company
Disclosure Schedule or as contemplated by this Agreement, since December
31, 1994 and through the date of this Agreement, the business of the
Company and each of its Subsidiaries has been carried on only in the
ordinary and usual course and there has not been any material adverse
change in the business, results of operations or financial condition of the
Company and its Subsidiaries, taken as a whole.
(f) No Undisclosed Material Liabilities. To the Company's knowledge,
except as set forth in Section 3.1(f) of the Company Disclosure Schedule or
the other Sections of the Company Disclosure Schedules, as of the date of
this Agreement, there are no liabilities of the Company or any Subsidiary
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, that are reasonably likely to have a Material
Adverse Effect with respect to the Company, other than: (i) liabilities
reflected in any Company SEC Document; and (ii) liabilities under this
Agreement.
(g) Information Supplied. The Proxy Statement, at the time it is
filed with SEC or any other regulatory authority, on the date it is first
mailed to the holders of the Company Common Stock, or at the time of the
Company Shareholders Meeting (as defined in Section 5.1(b)), will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Company Shareholders
Meeting, any event with respect to the Company or any of its Subsidiaries,
or with respect to other information supplied by the Company for inclusion
in the Proxy Statement, shall occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement, such event shall be
so described, and such amendment or supplement shall be promptly filed with
the SEC and, as required by law, disseminated to the shareholders of the
Company. The Proxy Statement will comply as to form, in all material
respects, with the provisions of the Exchange Act and the rules and
regulations thereunder.
(h) Compliance with Applicable Laws. The Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders, franchises and
approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Company Permits"), except where the
failure to possess the same would not have a Material Adverse Effect with
respect to the Company and except as set forth in Section 3.1(h) of the
Company Disclosure Schedule. The Company and its Subsidiaries are in
compliance with the terms of the Company Permits, except where the failure
so to comply would not have a Material Adverse Effect with respect to the
Company and except as set forth in Section 3.1(h) of the Company Disclosure
Schedule. Except as disclosed in the Company SEC Documents and except as
set forth in Section 3.1(h) of the Company Disclosure Schedule, the
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity,
including, without limitation, laws relating to the environment, or any
outstanding administrative or judicial order which, in any case, is
reasonably likely to result in a Material Adverse Effect with respect
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to the Company. As of the date of this Agreement, no investigation or
review by any Governmental Entity with respect to the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened,
other than those the outcome of which is not reasonably likely to have a
Material Adverse Effect with respect to the Company and except as set forth
on Section 3.1(h) of the Company Disclosure Schedule.
(i) Litigation. As of the date of this Agreement, except as set forth
in Section 3.1(i) of the Company Disclosure Schedule or disclosed in any
Company SEC Document, there is no suit, action or proceeding pending or, to
the knowledge of the Company, threatened against or affecting the Company
or any Subsidiary of the Company which (in any case) (i) questions the
validity of this Agreement or the Merger or any action taken or to be taken
by the Company or any of its shareholders under this Agreement in
connection with the consummation of the transactions contemplated hereby or
(ii) is, individually or together with any other suit, action or proceeding
arising out of or based upon the same or substantially the same facts or
circumstances, reasonably likely to have a Material Adverse Effect with
respect to the Company, nor is there any judgment, decree, injunction, rule
or order of any Governmental Entity or arbitrator outstanding against the
Company or any Subsidiary of the Company which is reasonably likely to have
a Material Adverse Effect on the Company or prevent, hinder or materially
delay its ability to consummate the transactions contemplated by this
Agreement.
(j) Taxes. Each of the Company and each of its Subsidiaries has filed
all material tax returns required to be filed by such party and has paid
(or the Company has paid on behalf of any such Subsidiary) all taxes shown
due on such returns, except to the extent that such failures to file or pay
are not reasonably likely to result in a Material Adverse Effect with
respect to the Company. All material deficiencies for any taxes which have
been proposed, asserted or assessed against the Company or any of its
Subsidiaries have been fully paid or are being contested and an adequate
reserve therefor has been established and is fully reflected in the most
recent financial statements contained in the Company SEC Documents, except
to the extent that such deficiencies are not reasonably likely to result in
a Material Adverse Effect with respect to the Company. The Company's
federal income tax returns for all of its taxable years through its taxable
year ended December 31, 1990 have been examined by the Internal Revenue
Service (the "IRS"). The Company has previously delivered or made available
to Parent true and complete copies of its federal income tax returns for
each of the fiscal years ended December 31, 1991, December 31, 1992 and
December 31, 1993. Except as set forth on Section 3.1(j) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
party to or bound by any agreement providing for the allocation or sharing
of taxes with any entity which is not, either directly or indirectly, a
Subsidiary of the Company. Neither the Company nor, to its knowledge, any
of its Subsidiaries has filed a consent pursuant to or agreed to the
application of Section 341(f) of the Code. The Company is not a "United
States real property holding corporation" as defined in Section 897(c)(2)
of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. For the purpose of this Agreement, the term
"tax" (and, with correlative meaning, the terms "taxes" and "taxable")
shall include all federal, state, local and foreign income, profits,
franchise, gross receipts, payroll, sales, employment, use, property,
withholding, excise and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts.
(k) Employee Benefit Plans. With respect to all the employee benefit
plans (as that phrase is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") maintained for the
benefit of any current or former employee, officer or director of the
Company or any of its Subsidiaries) ("Company ERISA Plans") and any other
benefit or compensation plan, program or arrangement maintained for the
benefit of any current or former employee, officer or director of the
Company or any of its Subsidiaries (the Company ERISA Plans and such plans
being referred to as the "Company Plans"), except as set forth in Section
3.1(k) of the Company Disclosure
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Schedule, as specifically provided in Section 5.12 or, in the case of
clause (i) below, as otherwise disclosed by the Company to Parent:
(i) none of the Company Plans is a "multiemployer plan" within the
meaning of ERISA;
(ii) none of the Company Plans promises or provides retiree medical
or life insurance benefits to any person;
(iii) none of the Company Plans provides for payment of a benefit,
the increase of a benefit amount, the payment of a contingent benefit,
or the acceleration of the payment or vesting of a benefit by reason of
the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement;
(iv) neither the Company nor any of its Subsidiaries has an
obligation to adopt, or is considering the adoption of, any new Company
Plan or, except as required by law, the amendment of an existing Company
Plan;
(v) each Company Plan intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS
that it is so qualified and, to the knowledge of the Company, nothing
has occurred since the date of such letter that could reasonably be
expected to affect the qualified status of such Company Plan;
(vi) each Company Plan has been operated in all respects in
accordance with its terms and the requirements of all applicable law;
(vii) neither the Company nor any of its Subsidiaries or members of
their "controlled group" has incurred any direct or indirect liability
under, arising out of or by operation of Title IV of ERISA in connection
with the termination of, or withdrawal from, any Company Plan or other
retirement plan or arrangement, and, to the knowledge of the Company, no
fact or event exists that could reasonably be expected to give rise to
any such liability;
(viii) the aggregate accumulated benefit obligations of each
Company Plan subject to Title IV of ERISA (as of the date of the most
recent actuarial valuation prepared for such Company Plan) does not
exceed the fair market value of the assets of such Company Plan (as of
the date of such valuation); and
(ix) the Company is not aware of any claims relating to the Company
Plans; provided, however, that the failure of the representations set
forth in clauses (vi), (vii) and (ix) to be true and correct shall not
be deemed to be a breach of any such representation unless any such
failure, individually or in the aggregate (for this purpose assuming
resolution against the Company of any claim referred to in clause (ix)
above of which the Company was aware when the representation in such
clause was made and which is reasonably likely to be resolved) is
reasonably likely to have a Material Adverse Effect.
(l) Intangible Property.
Except as set forth in Section 3.1(l) of the Company Disclosure
Schedule, each trademark, trade name and service mark listed in such
Schedule, as well as all registrations thereof, and each material license
or other material contract relating thereto (collectively, the "Company
Intangible Property") is in good standing in all material respects and is
owned by the Company or its Subsidiaries free and clear of any and all
liens or encumbrances. Except as set forth in Section 3.1(l) of the Company
Disclosure Schedule, to the knowledge of the Company, the use of the
Company Intangible Property by the Company or its Subsidiaries does not, in
any material respect, conflict with, infringe upon, violate or interfere
with or constitute an appropriation of any right, title, interest or
goodwill, including, without limitation, any intellectual property right,
trademark, trade name, service mark, or copyright or any pending
application therefor of any other person and there are no pending claims
and neither the Company nor any of its Subsidiaries has received any notice
of any pending claim or otherwise knows that any of the Company Intangible
Property is invalid or conflicts with the asserted rights of any other
person
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or has not been used or enforced or has failed to be used or enforced in a
manner that would result in the abandonment, cancellation or
unenforceability of any of the Company Intangible Property.
(m) Contracts. Except as set forth in Section 3.1(m) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
party to or is bound by any employment agreement, television network
affiliation agreement, any credit agreement, mortgage or indenture, or any
material talent, programming or joint venture agreement which (x) provides
that the terms thereof or any or all of the benefits or burdens thereunder
will be affected or altered (including, without limitation, by means of
acceleration) by, or are contingent upon, or (y) will be subject to
termination or cancellation as a result of, the execution of this Agreement
or the consummation of the transactions contemplated hereby.
(n) Board Recommendation; State Takeover Statutes. The Board of
Directors of the Company, at a meeting duly called and held, has by the
vote of those directors present (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, taken together, are
fair to and in the best interests of the Company and the shareholders of
the Company and has approved the same, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement the provisions of Section 912 of the BCL,
and (ii) resolved to recommend that the holders of the shares of Company
Common Stock approve this Agreement and the transactions contemplated
herein, including the Merger. To the best of the Company's knowledge, other
than Section 912 of the BCL, no state takeover statute or similar statute
or regulation applies or purports to apply to the Merger, this Agreement or
any of the transactions contemplated hereby.
(o) Opinion of Financial Advisor. The Company has received the
opinion of Salomon Brothers Inc, dated August 1, 1995, to the effect that,
as of the date thereof, the Merger Consideration to be received by the
holders of Company Common Stock in the Merger is fair from a financial
point of view to such holders, a signed, true and complete copy of which
opinion has been delivered to Parent, and such opinion has not been
withdrawn or modified.
(p) Vote Required. The affirmative vote of the holders of at least
two-thirds of the outstanding Shares is the only vote of the holders of any
class or series of the Company's capital stock necessary (under applicable
law or otherwise) to approve the Merger and this Agreement and the
transactions contemplated hereby.
(q) FCC Qualifications. After due investigation, except for the
matters described in Section 3.1(q) of the Company Disclosure Schedule, the
Company is not aware of any facts or circumstances that might prevent or
delay prompt consent to the transfer of control applications and issuance
of the FCC Order.
3.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows (except to the extent set forth
on the Disclosure Schedule previously delivered by Parent to the Company (the
"Parent Disclosure Schedule")):
(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation, has all requisite power and authority
to own, lease and operate its properties and to carry on its business as
now being conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such
qualification necessary, other than in such jurisdictions where the failure
so to qualify would not have a Material Adverse Effect with respect to
Parent. Parent has heretofore made available to the Company complete and
correct copies of its and Sub's respective Certificates or Articles of
Incorporation and By-laws.
(b) Authority; No Violations; Consents and Approvals.
(i) Each of Parent and Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement has been
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duly executed and delivered by each of Parent and Sub and assuming this
Agreement constitutes the valid and binding agreement of the Company,
constitutes a valid and binding obligation of Parent and Sub enforceable
in accordance with its terms.
(ii) Except as to which requisite waivers or consents have been
obtained and assuming the consents, approvals, authorizations or permits
and filings or notifications referred to in paragraph (iii) of this
Section 3.2(b) are duly and timely obtained or made and the Company
Shareholder Approval has been obtained, the execution and delivery of
this Agreement do not and the consummation of the transactions
contemplated hereby by each of Parent and Sub will not (A) conflict with
any provision of the Certificate or Articles of Incorporation or By-laws
of Parent or Sub, (B) result in any Violation of any loan or credit
agreement, note, mortgage, indenture, lease, or other agreement,
obligation or instrument or (C) result in any Violation of any Laws
applicable to Parent or Sub or their respective properties or assets,
except, with respect to clauses (B) and (C), for any such Violations
which would not have a Material Adverse Effect with respect to Parent.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of
Parent and Sub or the consummation by each of Parent or Sub of the
transactions contemplated hereby, which the failure to obtain or make
would have a Material Adverse Effect with respect to Parent, except for:
(A) filings under the HSR Act; (B) the filing with the SEC of such
reports under and such other compliance with the Exchange Act and the
rules and regulations thereunder, as may be required in connection with
this Agreement and the transactions contemplated hereby; (C) the filing
of the Certificate of Merger with the New York Secretary of State; (D)
such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; (E) such filings and approvals
as may be required by any foreign pre-merger notification, securities,
corporate or other law, rule or regulation; (F) such filings in
connection with any Gains and Transfer Taxes; (G) such filings with and
approvals of the FCC as may be required under the Communications Act,
including, without limitation, in connection with the transfer of
licenses in connection with the operation of the Stations; and (H) such
other such filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval necessitated by the Merger
or the transactions contemplated by this Agreement. Neither Parent nor
any of its Affiliates or Associates (as each such term is defined in
Section 912 of the BCL) is, at the date hereof, an "interested
shareholder" (as such term is defined in Section 912 of the BCL) of the
Company.
(c) Information Supplied. None of the information supplied or to be
supplied by Parent or Sub for inclusion or incorporation by reference in
the Proxy Statement will, at the time it is filed with the SEC or any other
regulatory authority, on the date it is first mailed to the Company's
shareholders, or at the time of the Company Shareholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Company Shareholders Meeting any
event with respect to Parent or Sub, or with respect to information
supplied by Parent or Sub for inclusion in the Proxy Statement, shall occur
which is required to be described in an amendment of, or a supplement to,
such documents, such event shall be so described to the Company.
(d) Financing. Parent has received executed commitments (including
the term sheet attached thereto, the "Commitment Letter"), copies of which
have been delivered to the Company, from one or more financial institutions
to provide, subject to the conditions specified therein, an aggregate of $2
billion of the funds required to consummate the Merger.
(e) Interim Operations of Sub. Sub was formed solely for the purpose
of engaging in the transactions contemplated hereby and has not engaged in
any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
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(f) Board Approval. The Board of Directors of the Parent, at a
meeting duly called and held, has by the vote of those directors present
and voting determined that the Merger is fair to and in the best interests
of Parent and has approved the same. At such meeting, the Board of
Directors of Parent received the opinion of J.P. Morgan Securities Inc.,
dated August 1, 1995, to the effect that, as of the date thereof, the
Merger Consideration to be paid by Parent in the Merger is fair from a
financial point of view to Parent, a signed, true and complete copy of
which opinion has been delivered to the Company, and such opinion has not
been withdrawn or modified.
(g) FCC Qualifications. Except as set forth in Section 3.2(g) to the
Parent Disclosure Schedule, (i) to Parent's knowledge, Parent and Sub are,
for purposes of obtaining the FCC Order, legally, financially and otherwise
qualified to acquire control of the Company and (ii) after due
investigation, Parent and Sub are not aware of any other facts or
circumstances that might prevent or delay prompt consent to the transfer of
control applications and issuance of the FCC Order.
(h) Financial Covenant Compliance. After due investigation and in
reliance upon financial information and projections provided by the Company
with respect to the Company, Parent has no reason to believe that it will
not be able to deliver the pro forma financial statements required by, and
satisfy the condition set forth in, Section V(f) of the Commitment Letter
on the basis contemplated in such Section.
(i) Third-party Consents. Except as described in the exceptions to
Section 3.2(b)(iii), there are no governmental or other third-party
approvals necessary in connection with, or waiting periods applicable to,
the Merger and the Financing (as defined in Section 5.7(c)) contemplated by
the Commitment Letter.
(j) Sufficient Financing. Parent believes, as of the date hereof,
that the funds to be advanced to Parent pursuant to the credit facilities
referred to in the Commitment Letter would be sufficient for the Financing.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1 Covenants of the Company. During the period from the date of this
Agreement and continuing until the Effective Time, the Company agrees as to the
Company and its Subsidiaries that (except as expressly contemplated or permitted
by this Agreement, or to the extent that Parent shall otherwise consent in
writing):
(a) Ordinary Course. Each of the Company and its Subsidiaries shall
carry on its business in the ordinary course in substantially the same
manner as heretofore conducted.
(b) Dividends; Changes in Stock. The Company shall not, nor shall it
permit any of its Subsidiaries to: (i) except for regular quarterly
dividends not in excess of $.10 per Share with customary record and payment
dates, declare or pay any dividends on or make other distributions in
respect of any of its capital stock, other than cash dividends or
distributions paid to the Company or any wholly-owned Subsidiary on or with
respect to the capital stock of a wholly-owned Subsidiary; (ii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock; or (iii) repurchase or
otherwise acquire, or permit any Subsidiary to purchase or otherwise
acquire, any shares of its capital stock, except as required by the terms
of its securities outstanding on the date hereof, as contemplated by this
Agreement or as contemplated by employee benefit and dividend reinvestment
plans as in effect on the date hereof.
(c) Issuance of Securities. Except as set forth in Section 4.1(c) of
the Company Disclosure Schedule, the Company shall not, nor shall it permit
any of its Subsidiaries to, (i) grant any options, warrants or rights, to
purchase shares of Company Common Stock, (ii) amend or reprice any Option
or SAR Unit or amend the Stock Rights Plan, or (iii) issue, deliver or
sell, or authorize or propose to issue, deliver or sell, any shares of its
capital stock of any class or series, any Company Voting Debt or any
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securities convertible into, or any rights, warrants or options to acquire,
any such shares, Company Voting Debt or convertible securities, other than
(A) the issuance of Shares upon the exercise of Options granted under the
Stock Rights Plan which are outstanding on the date hereof, or in
satisfaction of stock grants or stock based awards made prior to the date
hereof pursuant to the Stock Rights Plan or based upon any individual
agreements such as employment agreements or executive termination
agreements (in each such case, as in effect on the date hereof), (B) the
issuance of Shares upon the conversion of shares of Series B Preferred
Stock in accordance with the terms thereof and (C) issuances by a
wholly-owned Subsidiary of its capital stock to its parent.
(d) Governing Documents. The Company shall not amend or propose to
amend its Certificate of Incorporation or Bylaws.
(e) No Solicitation. (i) The Company, its Subsidiaries and their
respective officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney
or accountant retained by the Company or any of its Subsidiaries)
(collectively, the "Company's Representatives") shall immediately cease any
discussions or negotiations with any party that may be ongoing with respect
to a Competing Transaction (as defined below). From and after the date
hereof until the termination of this Agreement, neither the Company or any
of its Subsidiaries will, nor will the Company authorize or permit any of
its Subsidiaries or any of the Company Representatives to, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information), or take any other action to facilitate
knowingly, any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Competing Transaction, or enter
into or maintain or continue discussions or negotiate with any person or
entity in furtherance of such inquiries or to obtain a Competing
Transaction or agree to or endorse any Competing Transaction, or authorize
or permit any of the Company Representatives to take any such action, and
the Company shall notify Parent orally (within one business day) and in
writing (as promptly as practicable) of all of the relevant details
relating to all inquiries and proposals which it or any of its Subsidiaries
or any such Company Representative may receive relating to any of such
matters and, if such inquiry or proposal is in writing, the Company shall
deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing contained in this Section 4.1(e) shall prohibit the
Company or its Board of Directors from (A) taking and disclosing to its
shareholders a position contemplated by Exchange Act Rule 14e-2 or (B)
making any disclosure to its shareholders that, in the good faith judgment
of its Board of Directors, after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly
engaged independent legal counsel), is required under applicable law;
provided, further, however, that nothing contained in this Section 4.1(e)
shall prohibit the Company from (1) furnishing information to, or entering
into discussions or negotiations with, any person or entity that makes
after the date hereof a written, bona fide proposal unsolicited after the
date hereof to acquire the Company and/or its Subsidiaries pursuant to a
merger, consolidation, share exchange, business combination, tender or
exchange offer or other similar transaction if (A) the Board of Directors
of the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its
fiduciary duties to shareholders under applicable law and (B) prior to
taking such action, the Company (x) provides reasonable notice to Parent to
the effect that it is taking such action and (y) receives from such person
or entity an executed confidentiality agreement in reasonably customary
form or (2) failing to make or withdrawing or modifying its recommendation
referred to in Section 3.1(n) if there exists a Competing Transaction and
the Board of Directors of the Company, after consultation with and based
upon the advice of independent legal counsel (who may be the Company's
regularly engaged independent counsel), determines in good faith that such
action is necessary for the Board of Directors of the Company to comply
with its fiduciary duties to shareholders under applicable law. For
purposes of this Agreement, "Competing Transaction" shall mean any of the
following (other than the transactions between the Company, Parent and Sub
contemplated hereunder) involving the Company: (i) any merger,
consolidation, share exchange, recapitalization, business combination, or
other similar transaction; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of all or a substantial portion of
the assets of the Company
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and its Subsidiaries, taken as a whole, or of more than 25% (in the case of
Section 5.4(b)(i) only, 50%) of the equity securities of the Company or any
of its Material Subsidiaries, in any case in a single transaction or series
of transactions; (iii) any tender offer or exchange offer for 25% (in the
case of Section 5.4(b)(i) only, 50%) or more of the outstanding shares of
capital stock of the Company or the filing of a registration statement
under the Securities Act in connection therewith; or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.
(ii) Except as set forth in this Section 4.1(e)(ii), the Board of
Directors of the Company shall not approve or recommend, or cause the
Company to enter into any agreement with respect to, any Competing
Transaction. Notwithstanding the foregoing, if the Board of Directors of
the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that it is necessary
to do so in order to comply with its fiduciary duties to shareholders under
applicable law, the Board of Directors of the Company may approve or
recommend a Superior Proposal (as defined below) or cause the Company to
enter into an agreement with respect to a Superior Proposal, but in each
case only after providing reasonable written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Board of Directors of the
Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. In addition, if the Company proposes to enter into an
agreement with respect to any Competing Transaction, it shall concurrently
with entering into such an agreement pay, or cause to be paid, to Parent
the full fee and expense reimbursement required by Section 5.4(b) hereof.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting
of cash and/or securities, all or substantially all the Shares then
outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines
in its good faith judgment (based on the advice of a financial advisor of
nationally recognized reputation) to be more favorable to the Company's
shareholders than the Merger.
(f) No Acquisitions. Except as set forth in Section 4.1(f) of the
Company Disclosure Schedule, the Company shall not, nor shall it permit any
of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any material
business.
(g) No Dispositions. Other than: (i) dispositions or proposed
dispositions listed in Section 4.1(g) of the Company Disclosure Schedule;
or (ii) dispositions in the ordinary course of business consistent with
past practice which are not material, individually or in the aggregate, to
such party and its Subsidiaries taken as a whole, the Company shall not,
nor shall it permit any of its Subsidiaries to, sell, lease, encumber or
otherwise dispose of, or agree to sell, lease (whether such lease is an
operating or capital lease), encumber or otherwise dispose of, any of its
assets.
(h) Advice of Changes. The Company shall cause its senior officers to
use reasonable efforts to promptly advise Parent of any change or
occurrence having, or which, insofar as reasonably can be foreseen, could
have, a Material Adverse Effect with respect to the Company and, to the
extent permitted by law (including FCC regulations), to meet on a regular
basis with Parent's senior officers to discuss the Company's business.
(i) No Dissolution, Etc. The Company shall not authorize, recommend,
propose or announce an intention to adopt a plan of complete or partial
liquidation or dissolution of the Company or any of its Subsidiaries.
(j) Other Actions. Except as contemplated by this Agreement, the
Company will not nor will it permit any of its Subsidiaries to take or
agree or commit to take any action that is reasonably likely to result in
any of the Company's representations or warranties hereunder being untrue
such that the condition set forth in Section 6.2(a) will not be satisfied.
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(k) Certain Employee Matters. The Company and its Subsidiaries shall
not (except as contemplated in Section 4.1(k) of the Company Disclosure
Schedule (it being understood that Parent shall not unreasonably withhold
its consent to certain matters set forth therein as specified therein) and
except as provided in Section 3.1(k) of the Company Disclosure Schedule):
(i) grant any increases in the compensation of any of its directors,
officers or key employees, except for increases for officers and employees
in the ordinary course of business; (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated
by any of the existing Company Benefit Plans or Company Pension Plans as in
effect on the date hereof to any such director, officer or key employee,
whether past or present; (iii) except as permitted by Section 4.1(l)(ii),
enter into any new, or materially amend any existing, employment or
severance or termination agreement with any such director, officer or key
employee; or (iv) except as may be required to comply with applicable law,
become obligated under any new Company Plan, which was not in existence on
the date hereof, or amend any such plan or arrangement in existence on the
date hereof if such amendment would have the effect of enhancing any
benefits thereunder. The Company shall provide Parent with copies of any
amendments to any Company Plan prior to the Effective Time.
(l) Indebtedness; Agreements. (i) Except as set forth in Section
4.1(l)(i) of the Company Disclosure Schedule, the Company shall not, nor
shall the Company permit any of its Subsidiaries to, assume or incur any
indebtedness for borrowed money or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire any debt
securities of such party or any of its Subsidiaries or guarantee any debt
securities of others or create any mortgages, liens, security interests or
other encumbrances on the property of the Company or any of its
Subsidiaries in connection with any indebtedness thereof, or enter into any
"keep well" or other agreement or arrangement to maintain the financial
condition of another person.
(ii) Except as set forth in Section 4.1(l)(ii) of the Company
Disclosure Schedule, the Company shall not, nor shall the Company permit
any of its Subsidiaries to (x) enter into, modify, rescind, terminate,
waive, release or otherwise amend in any material respect any of the terms
or provisions of any (A) television network affiliation agreement for a
television station in one of the 50 largest markets (provided, however,
that this Section 4.1(l)(ii) shall be inapplicable to the ordinary course
extension of affiliation agreements upon expiration thereof), (B)
intercollegiate, professional or other sports television network
programming agreement having an aggregate value over its term greater than
$100,000,000, (C) new employment or consulting agreement which provides for
compensation in excess of $250,000 per year (in the case of corporate staff
employees and consultants) or $750,000 per year (in the case of
entertainment division employees and consultants), or (D) Material Contract
(as defined below); or (y) modify, rescind, terminate, waive, release or
otherwise amend in any material respect any of the terms or provisions of
the contract referred to in subsection (z) of Section 4.1(l)(ii) of the
Company Disclosure Schedule; provided, however, that Parent shall not
unreasonably withhold or delay its consent to any of the foregoing matters.
"Material Contract" means any contract, agreement, commitment or
arrangement to which the Company or any of its Subsidiaries is a party or
by which it or any such Subsidiary is bound which would be required to be
filed by the Company with the SEC as an exhibit to its Annual Report on
Form 10-K.
(m) Accounting. The Company shall not take any action, other than in
the ordinary course of business, consistent with past practice or as
required by the SEC or by law, with respect to accounting policies,
procedures and practices.
(n) Tax Election. The Company shall not make any material tax
election (unless required by law) or settle or compromise any material
income tax liability except if such action is taken in the ordinary course
of business and Parent shall have been provided reasonable prior notice
thereof.
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement; Company Shareholders
Meeting. (a) As promptly as practicable following the date of this Agreement,
the Company shall prepare and file with the SEC the Proxy Statement. The Company
shall use its best efforts to respond to all SEC comments with respect to the
Proxy Statement and to cause the Proxy Statement to be mailed to the Company's
shareholders at the earliest practicable date. Parent shall furnish all
information concerning itself to the Company as may be reasonably requested in
connection with such preparation, filing and response.
(b) The Company will, as soon as practicable following delivery to the
Company of the executed Credit Agreement (as defined in Section 5.7(c)), duly
call, give notice of, convene and hold a meeting of its shareholders (the
"Company Shareholders Meeting") for the purpose of approving this Agreement and
the transactions contemplated hereby. At the Company Shareholders Meeting,
Parent shall cause all the shares of Company Common Stock then owned by Parent
and Sub and any of their Subsidiaries or affiliates to be voted in favor of the
Merger.
5.2 Access to Information; Confidentiality. To the extent permitted by law
(including FCC regulations) and subject to confidentiality agreements with third
parties, upon reasonable notice, the Company shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of Parent reasonable access, during normal business hours
during the period prior to the Effective Time, to its properties, books,
contracts, commitments and records and, during such period, (a) the Company
shall (and shall cause each of its Subsidiaries to) furnish promptly to Parent
all other information concerning its business, properties and personnel as
Parent may reasonably request and (b) Parent shall have reasonable access to
members of senior management of the Company and its Subsidiaries, including the
Divisional Presidents or their designees. Parent agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 5.2 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. The Confidentiality Agreement,
dated as of July 25, 1995, between Parent and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.
5.3 Transfer Taxes. The Company and Parent shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees (including the Gains and Transfer Taxes) and any
similar taxes which become payable in connection with the transactions
contemplated by this Agreement (together with any related interest, penalties or
additions to tax, "Transfer Taxes"). Parent shall pay or cause to be paid,
without withholding from the amounts payable to any holder of any Shares, all
Transfer Taxes.
5.4 Fees and Expenses. (a) Except as otherwise provided in this Section
5.4, all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that all costs and expenses, including filing fees,
related to the printing, mailing or filing of the Proxy Statement or to any
other filing with any Governmental Entity in connection with the Merger, this
Agreement or any other transaction contemplated thereby or hereby shall be borne
equally by Parent and the Company.
(b) The Company agrees that if this Agreement shall be terminated pursuant
to:
(i) Section 7.1(f), if at or prior to the time of the Company
Shareholders Meeting a Competing Transaction shall have been commenced,
publicly proposed or publicly disclosed and if within one year after the
Company Shareholders Meeting the Company enters into an agreement with
respect to, approves or recommends such or any other Competing Transaction;
(ii) Section 7.1(g); or
(iii) Section 7.1(h);
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then the Company shall (A) pay to Parent an amount equal to $100,000,000 and (B)
assume and pay, or reimburse Parent for, all reasonable documented out-of-pocket
fees and expenses incurred by Parent (including, without limitation, the fees
and expenses of its counsel, commercial banks, accountants, financial advisors,
experts and consultants) which are specifically related to the Merger, this
Agreement and the matters contemplated by this Agreement; provided, however,
that the Company shall not be obligated to pay or reimburse more than an
aggregate of $50,000,000 pursuant to the foregoing clause (B).
(c) Parent agrees that if this Agreement shall be terminated pursuant to:
(i) Section 7.1(c) if at such time (A) the conditions set forth in
Section 6.1 shall have been satisfied and the other conditions in Article
VI were capable of being satisfied and (B) the condition set forth in
Section 6.2(c) shall not have been satisfied;
(ii) Section 7.1(d)(i);
(iii) Section 7.1(d)(ii);
(iv) Section 7.1(e)(i);
(v) Section 7.1(e)(ii);
(vi) Section 7.1(d)(iii); or
(vii) Section 7.1(e)(iii);
then Parent shall (A) pay to the Company an amount equal to (x) in the case of
clauses (i), (vi) and (vii), $100,000,000, (y) in the case of clauses (iii) and
(v), $50,000,000 and (z) in the case of clauses (ii) and (iv), $25,000,000, and
(B) in any such case, assume and pay, or reimburse the Company for, all
reasonable documented out-of-pocket fees and expenses incurred by the Company
(including, without limitation, the fees and expenses of its counsel,
accountants, financial advisors, experts and consultants) which are specifically
related to the Merger, this Agreement and the matters contemplated by this
Agreement; provided, however, that Parent shall not be obligated to pay or
reimburse pursuant to the foregoing clause (B) more than, in the case of clauses
(i), (vi) and (vii), $20,000,000, in the case of clauses (iii) and (v),
$10,000,000 and, in the case of clauses (ii) and (iv), $5,000,000.
(d) Any payment required to be made pursuant to Section 5.4(b) or 5.4(c)
shall be made as promptly as practicable but not later than five business days
after the occurrence of the event giving rise to such payment and shall be made
by wire transfer of immediately available funds to an account designated by
Parent or the Company, as the case may be, except that any payment to be made
pursuant to Section 5.4(b)(iii) shall be made not later than the termination of
this Agreement by the Company pursuant to Section 7.1(h) and any payment to be
made pursuant to Section 5.4(c)(ii), (iii) or (vi) shall be made not later than
the termination of this Agreement by Parent pursuant to Section 7.1(d). The
amount of fees and expenses so payable under clause (B) of either Section 5.4(b)
or 5.4(c) shall be the amount set forth in a written estimate delivered by
Parent or the Company, as the case may be, subject to upward or downward
adjustment (not to be in excess of the amount set forth in the foregoing
proviso) upon delivery of reasonable documentation therefor.
5.5 Brokers or Finders. (a) The Company represents, as to itself, its
Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finders fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement, except Salomon Brothers Inc and
Allen & Company, Incorporated, whose fees and expenses will be paid by the
Company in accordance with the Company's agreements with such firms (copies of
which have been delivered by the Company to Parent prior to the date of this
Agreement), and the Company agrees to indemnify and hold Parent harmless from
and against any and all claims, liabilities or obligations with respect to any
other fees, commissions or expenses asserted by any person on the basis of any
act or statement alleged to have been made by such party or its affiliate.
(b) Parent represents, as to itself, its Subsidiaries and its affiliates,
that no agent, broker, investment banker, financial advisor or other firm or
person is or will be entitled to any broker's or finders fee or any other
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commission or similar fee in connection with any of the transactions
contemplated by this Agreement, except J.P. Morgan Securities Inc. and another
consultant previously identified to the Company, whose fees and expenses will be
paid by Parent in accordance with Parent's agreements with each of them, and
Parent agrees to indemnify and hold Company harmless from and against any and
all claims, liabilities or obligations with respect to any other fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
5.6 Indemnification; Directors' and Officers' Insurance. (a) The Company
shall, and from and after the Effective Time, Parent and the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its Subsidiaries
(the "Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement of, with the approval of the indemnifying party
(which approval shall not be unreasonably withheld), or otherwise in connection
with any threatened or actual claim, action, suit, proceeding or investigation
based in whole or in part on or arising in whole or in part out of the fact that
such person is or was a director or officer of the Company or any of its
Subsidiaries at or prior to the Effective Time, whether asserted or claimed
prior to, or at or after, the Effective Time ("Indemnified Liabilities"),
including all Indemnified Liabilities based in whole or in part on, or arising
in whole or in part out of, or pertaining to this Agreement or the transactions
contemplated hereby, in each case to the full extent a corporation is permitted
under the BCL to indemnify its own directors or officers as the case may be (and
Parent and the Surviving Corporation, as the case may be, will pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the full extent permitted by law). Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain counsel
reasonably satisfactory to the Company (or to Parent and the Surviving
Corporation after the Effective Time) and the Company (or after the Effective
Time, Parent and the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; and (ii) the Company (or after the Effective Time, Parent
and the Surviving Corporation) will use all reasonable efforts to assist in the
vigorous defense of any such matter, provided that neither the Company, Parent
nor the Surviving Corporation shall be liable for any settlement effected
without its prior written consent, which consent shall not unreasonably be
withheld. Any Indemnified Party wishing to claim indemnification under this
Section 5.6, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company (or after the Effective Time, Parent and
the Surviving Corporation) (but the failure so to notify shall not relieve a
party from any liability which it may have under this Section 5.6 except to the
extent such failure prejudices such party). The Indemnified Parties as a group
may retain only one law firm in any jurisdiction to represent them with respect
to each such matter unless such counsel determines that there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties, in which
event such additional counsel as may be required may be retained by the
Indemnified Parties.
(b) For a period of six years after the Effective Time, Parent shall cause
to be maintained in effect the current policies of directors' and officers'
liability insurance maintained by the Company and its Subsidiaries (provided
that Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are no less advantageous in any
material respect to the Indemnified Parties) with respect to claims arising from
facts or events which occurred before the Effective Time, provided that Parent
shall not be required to pay an annual premium for such insurance in excess of
200% of the last annual premium paid by the Company prior to the date hereof
(which premium the Company represents and warrants to be $77,500 in the
aggregate), but in such case shall purchase as much coverage as possible for
such amount.
(c) The provisions of this Section 5.6 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of Parent, Sub, the Company and the Surviving Corporation.
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5.7 Best Efforts. (a) General. Each of the parties hereto agrees to use
its best efforts to take, or cause to be taken, all action and to do or satisfy,
or cause to be done or satisfied, all things and conditions necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement,
including (i) cooperating fully with the other party, including by provision of
information and making of all necessary filings in connection with, among other
things, approvals under the HSR Act and of the FCC or any other Governmental
Entity, and (ii) obtaining (and cooperating with each other in obtaining) any
consent, authorization, order (including the FCC Order) or approval of, or any
exemption by, or making any filing with, any Governmental Entity or other public
or private third party, including the FCC, required to be obtained or made by
the Company, Parent, Sub or any of their respective Subsidiaries in connection
with this Agreement or the taking of any action contemplated hereby. In case at
any time after the Effective Time any further action is necessary or desirable
to carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
(b) FCC. Each of Parent and Sub shall use its best efforts to take, or
cause to be taken, all action and to do or satisfy, or cause to be done or
satisfied, all things and conditions necessary, proper or advisable to obtain
the FCC Order and to satisfy all conditions and take all actions required
thereby, in each case so as to come into compliance with FCC requirements and to
consummate the Merger as promptly as practicable. The Company shall also use
such best efforts, but shall not be required to take any action that would be
effective prior to the consummation of the Merger, except as set forth in the
penultimate paragraph of Section 5.11(a) to the Parent Disclosure Schedule.
(c) Financing. Parent shall use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable (A) to obtain commitment letters to provide all of the financing
required by Parent to consummate the Merger, to refinance Parent's and the
Company's then-existing bank debt and to pay related fees and expenses on terms
not materially less favorable to Parent in the aggregate than the terms set
forth in the Commitment Letter and with conditions that are the same, except in
respects that do not adversely affect Parent's ability to obtain the Financing,
as those in the Commitment Letter (the "Financing") by no later than September
14, 1995 and (B) so that there is in effect, as promptly as practicable but in
no event later than October 4, 1995, one or more definitive credit agreements
(collectively, the "Credit Agreement") from one or more financial institutions
unaffiliated with Parent pursuant to which Parent shall have received
commitments to provide the Financing. Parent shall provide to the Company copies
of any such commitment letters and Credit Agreement and shall keep the Company
reasonably informed of the status of the financing process contemplated by the
Commitment Letter. The Company shall cause its senior management to cooperate
with all reasonable requests by Parent in connection with such efforts by
Parent, including causing such persons to attend meetings with prospective
members of and participants in any syndicate of financial institutions being
assembled to provide such financing.
5.8 Conduct of Business of Sub. During the period of time from the date of
this Agreement to the Effective Time, Sub shall not engage in any activities of
any nature except as provided in or contemplated by this Agreement.
5.9 Publicity. The parties will consult with each other and will mutually
agree upon any press release or public announcement pertaining to the Merger and
shall not issue any such press release or make any such public announcement
prior to such consultation and agreement, except as may be required by
applicable law or by obligations pursuant to any listing agreement with any
national securities exchange, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press release
or making any such public announcement.
5.10 Notification of Certain Matters. Parent shall give prompt notice to
the Company, and the Company shall give prompt notice to Parent, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement, including the Disclosure Schedules, to be untrue or inaccurate
such that one or more
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conditions set forth in Article VI would not be satisfied or (y) any condition
contained in this Agreement not to be satisfied and (ii) any failure of Parent
or the Company, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder such
that one or more conditions set forth in Article VI would not be satisfied;
provided, however, that the delivery of any notice pursuant to this Section 5.10
shall not in any manner constitute a waiver by any of the parties of any of the
conditions precedent to the Closing hereunder or limit or otherwise affect the
remedies available hereunder to the party receiving such notice. Without
limiting the foregoing and notwithstanding that the representations and
warranties contained in Section 3.1(i) (i) disclose only matters existing as of
the date hereof, the Company shall promptly deliver to Parent any information
concerning events subsequent to the date hereof which is necessary to supplement
Section 3.1(i) of the Company Disclosure Schedule in order that the information
contained therein be complete and accurate in all material respects. In
addition, the Company will provide Parent with reasonable advance notice of and
consult with Parent with respect to, any material action proposed to be taken by
the Company with respect to the contracts described in Section 5.10 of the
Company Disclosure Schedule.
5.11 FCC Matters. (a) As promptly as practicable following the date of
this Agreement, the Company and Parent and Sub shall prepare and file with the
FCC all necessary applications for approval of the Merger and the other
transactions contemplated by this Agreement. Without limiting the foregoing, the
Company, Parent and Sub shall submit to the FCC an application to be filed on
FCC Form 315 pursuant to the Communications Act and an application for certain
waivers pursuant to the Communications Act, as described in Section 5.11(a) to
the Parent Disclosure Schedule. In no event shall such parties, in making such
application, or shall Parent or Sub, in seeking the FCC Order, apply for
waivers, except if each party to this Agreement consents thereto in writing
(which consent shall not be unreasonably withheld or delayed) or except as
otherwise set forth in Section 5.11(a) to the Parent Disclosure Schedule. In no
event shall the obtaining of any waivers be a condition to consummation of the
Merger.
(b) Parent and Sub, on the one hand, and the Company, on the other hand,
further covenant that from and after the date hereof until the Effective Time,
without the prior written consent of the Company or Parent, as the case may be,
neither Parent nor Sub, on the one hand, nor the Company, on the other hand,
shall, except as otherwise set forth in Section 5.11(b) to the Company
Disclosure Schedule or Section 5.11(b) to the Parent Disclosure Schedule, take
any action that could in any way adversely affect, or delay or interfere with,
obtaining the FCC Order or complying with or satisfying the terms thereof,
including, without limitation, acquiring any new or increased attributable
interest, as defined in the FCC rules, in any media property, which property
could not be held (without the need for a waiver) in common control by Parent or
the Surviving Corporation following the Effective Time.
5.12 Employee Benefit Plans.
(a) Maintenance of Benefits. For not less than two years following
the Effective Time, Parent shall maintain or cause to be maintained the
Company ERISA Plans, other than severance plans and the CBS pension plan
and the Midwest Communications pension plan (together, the "Company Pension
Plan") and related supplemental and excess retirement plans (the "SERPS"),
maintained by the Company and its Subsidiaries as of the Effective Time
("Benefit Plans"), with respect to employees of the Company and its
Subsidiaries eligible for coverage under such Benefit Plans as of the
Effective Time who remain employed by the Company or its Subsidiaries or by
any broadcasting unit owned by either Parent or its Subsidiaries. The
Company shall amend its nonqualified 401(k) plan prior to the Effective
Time to permit termination or amendment of such plan two years after the
Effective Time. For not less than one year following the Effective Time,
Parent shall maintain or cause to be maintained the Company's and any
Subsidiary's existing severance plans (including the plan set forth in the
CBS Personnel Policy Manual) as of the Effective Time with respect to
employees of the Company and its Subsidiaries eligible for coverage under
such plan or plans as of the Effective Time.
(b) Pension Plan. With respect to all employees of the Company and
its Subsidiaries eligible for coverage under the Company Pension Plan as of
the Effective Time who remain employed by the Company or its Subsidiaries
or by any broadcasting unit owned by either Parent or its Subsidiaries
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("Eligible Employees"), (i) for the two-year period following the Effective
Time for all Eligible Employees, (ii) for the five-year period following
the Effective Time for all Eligible Employees who have attained the age of
fifty and who have not attained age fifty-five at the Effective Time and
(iii) without limitation for all Eligible Employees who have attained age
fifty-five at the Effective Time (each respective time period being
referred to as the "Time Period"), Parent shall maintain or cause to be
maintained the same benefit accruals, including the determination of final
average compensation, benefit options and early retirement eligibility and
early retirement subsidies and any other provision relating to the
calculation and payment of, and eligibility to receive, benefits (except as
otherwise provided below with respect to GATT interest rates), but only
with respect to benefit accruals for the period through the end of the
applicable Time Period, as are provided under the Company Pension Plan as
of the Effective Time. Parent may change or cause to be changed any aspect
of the calculation and payment of benefits for Eligible Employees effective
as of the end of the applicable Time Period for accruals thereafter and
shall have no obligation to adjust accruals through the end of a Time
Period for subsequent changes in final average pay. Parent may change or
cause to be changed the actuarial assumptions for the calculation of lump
sum benefits immediately after the Effective Time pursuant to GATT, all to
the extent permitted by applicable law. In addition, the accrual formulas
and other applicable provisions of the SERPS with respect to the benefits
protected above in the related Company Pension Plan shall be continued with
respect to Eligible Employees for their respective applicable Time Periods
to the same extent that accruals and other applicable provisions are
continued under the Company Pension Plan. Parent shall not by amendment
reduce the accrued benefits under the SERP, including in respect of early
retirement subsidies and lump sum options (other than to include GATT
assumptions), of an Eligible Employee for any period prior to the end of
the Time Period. Nothing provided herein shall prevent Parent from causing
the merger of the Company Pension Plan with any other pension plan
maintained by Parent or its Subsidiaries, subject to the merged plan
providing for the payment of benefits as described in this Section 5.12(b).
(c) Service. For purposes of determining eligibility to participate,
vesting, entitlement to benefits and in all other respects where length of
service is relevant under any Parent benefit plan or arrangement (including
for severance but not for pension accruals except to the extent provided in
Section 5.12(b) insofar as applicable to any successor plan to a plan
described in Section 5.12(b)), employees of the Company and its
Subsidiaries as of the Effective Time ("Employees") shall receive service
credit for service with the Company and its Subsidiaries to the same extent
such service was granted under comparable plans of the Company and its
Subsidiaries. In no event shall service credit granted result in any
duplication of benefits.
(d) Applicability. Notwithstanding anything set forth above, any
Company ERISA Plan including the Company Pension Plan, SERPS and any
severance plan (the "Plans") may be amended to the extent required to
comply with applicable law. Parent and its Subsidiaries shall not be
required to incur a cost increase to comply with applicable law except to
the extent attributable to automatic increases in compensation or benefit
limitations as applicable to "qualified plans" under the provisions of the
Internal Revenue Code, but in such event corresponding adjustments shall be
made in the SERPS. The restrictions set forth in this Section 5.12 herein
shall not be applicable to employees of the Company and its Subsidiaries as
of the Effective Time once they are transferred (through the disposition of
a subsidiary, division or business unit) to a party not controlled by
Parent, except to the extent otherwise required under applicable law,
unless such transfer occurs in connection with the disposition of all or
substantially all of the assets of the Company, in which case the
restrictions in this Section 5.12 shall continue to apply to the extent
applicable.
(e) Employees Covered by Collective Bargaining. With respect to
Employees represented for purposes of collective bargaining and eligible to
participate in any plan the subject of Section 5.12(a) through (d) ("Union
Employees"), after the Effective Time the Company shall expeditiously offer
to each collective bargaining representative of each Union Employee the
application of Section 5.12 to such Union Employee as proposed amendments
to the applicable collective bargaining agreement, but only with respect to
plans that at the Effective Time are provided to such Union Employee under
the
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applicable collective bargaining agreement; provided, however, that such
offer shall not be deemed a reopener of, or request to reopen, any such
agreement. This Section 5.12 shall not be applicable to any Union Employee
until and unless the applicable collective bargaining agent and the Company
have signed a collective bargaining agreement, or amendment thereto,
incorporating the applicable provisions of this Section 5.12.
(f) Third Party Beneficiary. This Section 5.12 is intended to be for
the benefit of and shall be enforceable by each Employee, other than a
Union Employee (but only with respect to those provisions applicable to
such Employee), and his heirs and personal representatives and, except as
provided in Section 5.12(d), shall be binding on all successors and assigns
of Parent, the Subsidiaries and the Company. To the extent that any
provision of Section 5.12(a)-(d) shall be reflected in a Company ERISA Plan
or its successor, the exclusive remedy of each such Employee with respect
to such provision or request for a related benefit provided by such plan
shall be the claims procedure under such plan.
(g) Annual Incentive Plan. Discretionary awards under the Annual
Incentive Plan for 1995 shall be limited to the amount set forth in the
last paragraph of Section 3.1(k)(iv) of the Company Disclosure Schedule.
5.13 SEC Filings. Each of Parent and the Company shall promptly provide
the other party (or its counsel) with copies of all filings made by the other
party or any of its Subsidiaries with the SEC or any other state or federal
Governmental Entity in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall have
been approved and adopted by the affirmative vote of the holders of at
least two-thirds of the outstanding shares of Company Common Stock.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or
shall have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction (an "Injunction") preventing the consummation of the
Merger shall be in effect; provided, however, that prior to invoking this
condition, each party shall use its best efforts to have any such
Injunction vacated.
(d) FCC Order. The FCC shall have issued the FCC Order and any
condition or action required to be satisfied or taken to legally effect the
Merger in compliance with the FCC Order shall have been so satisfied or
taken (provided, that in no event shall the foregoing require the
satisfaction of any condition or the taking of any action that could under
the terms of the FCC Order be so satisfied or taken subsequent to
consummation of the Merger). As used in this Agreement, the term "FCC
Order" means an order or decision of the FCC which grants all consents or
approvals required under the Communications Act for the transfer of control
of all FCC licenses held by the Company to Parent and/or Sub and the
consummation of the Merger and the other transactions contemplated by this
Agreement, whether or not (i) any appeal or request for reconsideration or
review of such order is pending, or whether the time for filing any such
appeal or request for reconsideration or review, or for any sua sponte
action by the FCC with similar effect, has expired or (ii) such order is
subject to any condition or a provision of law or regulation of the FCC.
For purposes of this paragraph, the "FCC" shall mean the FCC or its staff.
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<PAGE> 84
6.2 Conditions to Obligations of Parent and Sub. The obligations of Parent
and Sub to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by Parent and
Sub:
(a) Representations and Warranties; Performance of Obligations. The
representations and warranties of the Company set forth in this Agreement
shall be true and correct as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date)
as of the Closing Date as though made on and as of the Closing Date, except
as otherwise contemplated by this Agreement, and the Company shall have
performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, except to the extent the failure
of such representations and warranties to be true and correct or the
failure to perform obligations hereunder would not, in the aggregate, have
a Material Adverse Effect with respect to the Company. Parent shall have
received a certificate signed on behalf of the Company by the chief
executive officer and by the chief financial officer of the Company to such
effect.
(b) No Material Adverse Change. Since the date of this Agreement,
there shall not have been any material adverse change in the business,
results of operations or financial condition of the Company and its
Subsidiaries, taken as a whole, other than changes relating to the
Company's industry or the economy in general and not specifically related
to the Company or any of its Material Subsidiaries. Each of Parent and Sub
acknowledges that there may be disruptions to the Company's business as a
result of the announcement of the Merger and any changes attributable
thereto shall not constitute a material adverse change.
(c) Funding. Parent shall have received the funds pursuant to the
Financing.
6.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction of the condition,
which may be waived in whole or in part by the Company, that the representations
and warranties of Parent and Sub set forth in this Agreement shall be true and
correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement, and Parent and Sub shall have performed all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date, except to the extent the failure of such representations and
warranties to be true and correct or the failure to perform obligations
hereunder would not, in the aggregate, have a Material Adverse Effect with
respect to the Company. The Company shall have received a certificate signed on
behalf of Parent by the chief executive officer and by the chief financial
officer of Parent to such effect.
6.4 Closing Deliveries. The parties hereto shall deliver or cause to be
delivered to one another such opinions, certificates and other documents as
shall be reasonably requested.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company or Parent:
(a) by mutual written consent of the Company and Parent, or by mutual
action of their respective Boards of Directors;
(b) by either the Company or Parent (i) if there has been a material
breach of any representation, warranty, covenant or agreement on the part
of the other set forth in this Agreement which breach has not been cured
within 30 days following receipt by the breaching party of notice of such
breach, in any such case such that the conditions set forth in Section 6.2
or Section 6.3, as the case may be, would be incapable of being satisfied
by August 1, 1996, or (ii) if any permanent injunction or other order of a
24
<PAGE> 85
court or other competent authority preventing the consummation of the
Merger shall have become final and non-appealable;
(c) by either the Company or Parent, if the Merger shall not have been
consummated on or before August 1, 1996; provided, that the right to
terminate this Agreement under this Section 7.1(c) shall not be available
to any party whose breach of this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date;
(d) by Parent (i) on September 14, 1995 if executed commitments from
one or more financial institutions to provide the Financing shall not have
been entered into and continue in full force and effect on the date Parent
exercises such termination option; (ii) at any time on or after November 3,
1995 but on or prior to November 20, 1995 if the Credit Agreement shall not
have been entered into and continue in full force and effect on the date
Parent exercises such termination option; or (iii) at any time subsequent
to November 20, 1995, if the Credit Agreement no longer is in full force
and effect on the date Parent exercises such termination option;
(e) by the Company (i) at any time on or after September 15, 1995 but
on or prior to October 4, 1995 if executed commitments from one or more
financial institutions to provide the Financing shall not have been entered
into and continue in full force and effect on the date the Company
exercises such termination option; (ii) at any time on or after October 5,
1995 but on or prior to November 20, 1995 if the Credit Agreement shall not
have been entered into and continue in full force and effect on the date
the Company exercises such termination option; or (iii) at any time
subsequent to November 20, 1995, if the Credit Agreement no longer is in
full force and effect on the date the Company exercises such termination
option;
(f) by either Parent or the Company, if this Agreement and the Merger
shall fail to receive the requisite vote for approval and adoption by the
shareholders of the Company at the Company Shareholders Meeting;
(g) by Parent if (i) the Board of Directors of the Company shall
withdraw, modify or change its recommendation of this Agreement or the
Merger in a manner adverse to Parent or shall have approved or recommended
to the shareholders of the Company a Competing Transaction; (ii) the
Company shall have entered into any agreement with respect to any Competing
Transaction; or (iii) the Board of Directors shall resolve to do any of the
foregoing; or
(h) by the Company in connection with entering into a definitive
agreement relating to a Superior Proposal in accordance with Section
4.1(e)(ii), provided it has complied with all of the provisions thereof and
has made payment of the full fee and expense reimbursement required by
Section 5.4(b) hereof.
7.2 Effect of Termination. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of Parent, Sub or the Company or their respective affiliates, officers,
directors or shareholders except (i) with respect to this Section 7.2, the
second and third sentences of Section 5.2, Sections 5.4 and 5.5 and Article IX,
and (ii) to the extent that such termination results from the willful breach by
a party hereto of any of its representations or warranties, or of any of its
covenants or agreements, in each case, as set forth in this Agreement, except as
provided in Section 9.7. Notwithstanding anything to the contrary set forth in
Section 7.1(d) or 7.1(e), Parent or the Company, as the case may be, may not
exercise its right of termination thereunder if the commitments or Credit
Agreement, as the case may be, has been entered into and continues in full force
and effect at the time of such party's intended exercise of such right.
7.3 Amendment. Subject to applicable law, this Agreement may be amended,
modified or supplemented only by written agreement of Parent, Sub and the
Company at any time prior to the Effective Time with respect to any of the terms
contained herein; provided, however, that, after this Agreement is approved by
the Company's shareholders, no such amendment or modification shall reduce the
amount or change the form of consideration to be delivered to the shareholders
of the Company.
25
<PAGE> 86
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed: (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (iii) waive compliance
with any of the agreements or conditions 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 a written instrument signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE VIII
TENDER OFFER
8.1 Tender Offer. (a) If (i) there is a bona fide proposal made by a
person other than Parent or any affiliate thereof to effect a Competing
Transaction or (ii) the FCC will otherwise permit the filing and grant of an
application for special temporary authority, Parent shall have the right, in its
sole discretion, upon no less than five days' notice to the Company, to commence
a cash tender offer to purchase all the outstanding Shares (with a 66 2/3%
fully-diluted minimum condition, which cannot be waived without the written
consent of the Company) at a price equal to or in excess of what would have been
the Merger Consideration (assuming that, for purposes of calculating the
Additional Amount, the Closing Date was the date Shares are accepted for payment
under such tender offer). There shall be no conditions to the acceptance of
Shares pursuant to such tender offer except (x) such conditions as are expressly
set forth in Sections 6.1 and 6.2 of this Agreement, (y) grant or approval by
the FCC of special temporary authority pursuant to the Communications Act to
consummate the offer and (z) the additional conditions set forth in Section 8.1
of the Parent Disclosure Schedule.
(b) Notwithstanding Parent's exercise of such option to commence such
a tender offer, this Agreement shall remain in full force and effect and,
to the extent applicable, the provisions hereof shall apply to such tender
offer (including, without limitation, that the payments required to be made
at the Effective Time under Section 2.5 and as provided in Section 3.1(k)
to the Company Disclosure Schedule shall be made upon the acceptance of
Shares in the tender offer) and subsequent merger. Without limiting the
foregoing, the parties hereto agree to amend this Agreement to include
customary provisions pertaining to cash tender offers, including, without
limitation, provisions relating to the extension of any such offer, the
preparation, filing and dissemination of such documents as shall be
required under applicable law in connection with tender offers (and the
provision of information required to be included therein), the
recommendation of the offer by the Company's Board of Directors and the
appointment by Parent (or the trustee referred to below) of directors to
the Company's Board of Directors. Any Shares not purchased by Parent in
such tender offer shall be, as promptly as possible, acquired by Parent at
the same purchase price paid for Shares accepted in such tender through a
short-term merger (if available) or a long-form merger, subject to any
required approval or order of the FCC.
(c) Parent or Sub, as appropriate, will enter into a voting trust
agreement with respect to the Shares purchased pursuant to the offer with
one or more voting trustees acceptable to the FCC, and the Company will
cooperate with the trustee, Parent and Sub to effect a sale of the Shares
if Shares must be sold pursuant to the voting trust agreement.
(d) The Company agrees that it will, at the time after commencement of
the tender offer, enter into a loan agreement with Parent pursuant to which
the Company will lend to Parent, during the period from the consummation of
the offer until the sale of all the Shares held by the trustee as a result
of the FCC Order not having been obtained, the Company's excess cash flow
(which will have the meaning, to be set forth in the loan agreement,
customarily ascribed to such term). The terms of any such loan (which will
be unsecured) will be based upon market terms for loans of this nature.
(e) Each of the parties hereto represents that all necessary corporate
action has been taken to duly authorize the consummation of the
transactions contemplated by this Section 8.1.
26
<PAGE> 87
ARTICLE IX
GENERAL PROVISIONS
9.1 Effectiveness of Representations, Warranties and Agreements;
Confidentiality Agreement. None of the representations, warranties and
agreements in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Effective Time, except for the agreements contained
in Article II, this Article IX and Sections 5.6 and 5.12 hereof. The
Confidentiality Agreement shall survive the execution and delivery of this
Agreement and the Effective Time or any termination of this Agreement, and the
provisions of the Confidentiality Agreement shall apply in all respects as if
set forth herein in full, including, without limitation, with respect to all
information and material delivered by any party hereunder.
9.2 Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed to
be given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder:
(a) if to Parent or Sub, to:
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222
Attn: Louis J. Briskman, Esq., General Counsel
Telephone: (412) 244-2000
Telecopy: (412) 642-5224
with copies to:
Westinghouse Broadcasting Company
200 Park Avenue
New York, New York 10166
Attn: Martin P. Messinger, Esq., General Counsel
Telephone: (212) 885-2600
Telecopy: (212) 885-2787
and
Weil, Gotshal & Manges
767 Fifth Avenue
New York, New York 10153
Attn: Dennis J. Block, Esq.
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
(b) if to the Company, to:
CBS Inc.
51 West 52nd Street
New York, New York 10019
Attn: Ellen O. Kaden, Esq., General Counsel
Telephone: (212) 975-4321
Telecopy: (212) 975-7292
27
<PAGE> 88
with a copy to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Attn: Samuel C. Butler, Esq.
Telephone: (212) 474-1000
Telecopy: (212) 474-3700
9.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the word "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party to whom such information is to
be made available. All references herein to days are to calendar days, except
where business days are expressly referred to herein.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement),
including the Disclosure Schedules, constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and, except as provided in
Section 5.6 or as set forth in Section 5.12, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
9.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
9.7 No Remedy in Certain Circumstances. Each party agrees that, should any
court or other competent authority hold any provision of this Agreement or part
hereof to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby, unless the foregoing inconsistent action or the failure to
take an action constitutes a material breach of this Agreement and would give
rise to a failed condition under Article VI or makes the Agreement impossible to
perform in which case this Agreement shall terminate pursuant to Article VII
hereof. Except as otherwise contemplated by this Agreement, to the extent that a
party hereto took an action inconsistent herewith or failed to take action
consistent herewith or required hereby pursuant to an order or judgment of a
court or other competent authority, such party shall incur no liability or
obligation unless such party did not in good faith seek to resist or object to
the imposition or entering of such order or judgment.
9.8 Assignment. 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 (and any purported assignment shall be void), except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to any newly-formed direct or
28
<PAGE> 89
indirect wholly-owned Subsidiary of Parent. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ MICHAEL H. JORDAN
------------------------------------
Name: Michael H. Jordan
Title: Chairman and Chief Executive
Officer
GROUP W ACQUISITION CORP.
By: /s/ LOUIS J. BRISKMAN
------------------------------------
Name: Louis J. Briskman
Title: President
CBS INC.
By: /s/ LAURENCE A. TISCH
------------------------------------
Name: Laurence A. Tisch
Title: Chairman, President and
Chief Executive Officer
29
<PAGE> 90
Conformed Copy APPENDIX B
L.T. HOLDING CORP.
1013 CENTRE ROAD
SUITE 350
WILMINGTON, DELAWARE 19805
August 1, 1995
Westinghouse Electric Corporation
11 Stanwix Street
Pittsburgh, PA 15222
Gentlemen:
As an inducement and a condition to your execution of the Agreement and
Plan of Merger (the "Merger Agreement"), of even date herewith, among
Westinghouse Electric Corporation, a Pennsylvania corporation ("Parent"), Group
W Acquisition Corp., a New York corporation and an indirect wholly-owned
subsidiary of Parent ("Sub"), and CBS Inc., a New York corporation (the
"Company"), under which Sub will be merged (the "Merger") with and into the
Company, L.T. Holding Corp., a Delaware corporation ("Shareholder") hereby
agrees, subject to the last paragraph hereof, as follows:
1. Shareholder shall vote, and cause to be voted, all shares of common
stock of the Company (the "Company Shares") set forth opposite
Shareholder's name on Schedule A hereto and all other Company Shares held
of record or beneficially owned by Shareholder, whether issued, or
hereafter acquired (collectively, the "Shares") in favor of the Merger.
Moreover, in the event Parent elects to exercise its rights under the
Merger Agreement to commence a cash tender offer (the "Tender Offer") for
the Company Shares, Shareholders shall tender all Shares in the Tender
Offer and shall not withdraw any of the Shares tendered pursuant to the
Tender Offer.
2. Shareholder shall not (a) sell, transfer, pledge, encumber, assign
or otherwise dispose of, or enter into any contract, option or other
agreement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any Shares (including,
without limitation, exercising any registration rights of Shareholder with
respect to the Shares) or (b) grant any proxies, deposit any Shares into a
voting trust or enter into a voting agreement with respect to any Shares.
Notwithstanding anything to the contrary contained herein, if the Merger
Agreement is terminated or if the Board of Directors of the Company withdraws
its recommendation of the Merger Agreement and the Merger, Shareholder will have
no further obligations under this letter agreement.
Very truly yours,
L.T. HOLDING CORP.
By: /s/ DANIEL R. BUTLER
------------------------------------
Name: Daniel R. Butler
Title: Secretary
Accepted and Agreed to this
1st day of August, 1995.
WESTINGHOUSE ELECTRIC CORPORATION
By: /s/ MICHAEL H. JORDAN
--------------------------------------------------------
Name: Michael H. Jordan
Title: Chairman and Chief Executive Officer
B-1
<PAGE> 91
SCHEDULE A
<TABLE>
<CAPTION>
NAME AND ADDRESS OF SHAREHOLDER NUMBER OF SHARES
- ------------------------------- ----------------
<S> <C>
L.T. Holding Corp............................................................ 10,987,285
1013 Centre Road
Suite 350
Wilmington DE 19805
</TABLE>
<PAGE> 92
APPENDIX C
[SALOMON BROTHERS LETTERHEAD]
Confidential
August 1, 1995
Board of Directors
CBS Inc.
51 West 52nd Street
New York, New York 10019
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the holders of shares of Common Stock, $2.50
par value (the "Shares"), of CBS Inc., a New York corporation (the "Company") of
the consideration to be received by such holders in the proposed merger (the
"Merger") of Group W Acquisition Corp. ("Acquisition Sub"), a New York
corporation and a subsidiary of Westinghouse Electric Corporation, a
Pennsylvania corporation ("Westinghouse"), with and into the Company. Pursuant
to the Agreement and Plan of Merger to be dated as of July 30, 1995 (the "Merger
Agreement") among the Company, Westinghouse and Acquisition Sub, all outstanding
Shares (other than the Shares whose holders exercise their dissenter's rights)
will be converted into the right to receive $81.00 per Share, plus the
Additional Amount as defined in the Merger Agreement, in cash.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) a draft of the Merger Agreement dated
July 30, 1995; (ii) certain publicly available information concerning the
Company, including the Annual Reports on Form 10-K of the Company for each of
the years in the five-year period ended December 31, 1994 and the Quarterly
Reports on Form 10-Q of the Company for the quarter ended March 31, 1995; (iii)
the Company's press release announcing preliminary financial information for the
quarter ended June 30, 1995; (iv) certain other internal information, primarily
financial in nature, including the Company's estimate of 1995 earnings,
concerning the business and operations of the Company furnished to us by the
Company for purposes of our analysis; (v) certain publicly available information
concerning the trading of, and the trading market for, the Shares; (vi) certain
publicly available information with respect to certain other companies that we
believe to be comparable to the Company and the trading markets for certain of
such other companies' securities; and (vii) certain publicly available
information concerning the nature and terms of certain other transactions that
we consider relevant to our inquiry. We were not requested to and did not
solicit third party interest in the Company. We have also met with certain
officers and employees of the Company, to discuss the foregoing as well as other
matters we believe relevant to our inquiry. We have also considered such other
information, financial studies, analyses, investigations and financial, economic
and market criteria which we deemed relevant.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information provided us or publicly available and have neither attempted
independently to verify nor assumed responsibility for verifying any of such
information. With respect to the Company's estimate of earnings for 1995, we
have assumed that it has been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the Company's management as to
the financial performance of the Company for the period covered. We have not
made or obtained any independent evaluations or appraisals of any of the
Company's assets, properties or facilities, nor have we been furnished with any
such evaluations or appraisals. We have assumed that the Merger will be
consummated in accordance with the terms of the Merger Agreement. We have also
assumed that the
C-1
<PAGE> 93
definitive Merger Agreement will not, when executed, contain any terms or
conditions that differ materially from the terms and conditions contained in the
drafts of such document we have reviewed.
In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following: (i)
the historical and current financial position and results of the operations of
the Company; (ii) the business prospects of the Company; (iii) the historical
and current market for the Shares and for the equity securities of certain other
companies that we believe to be comparable to the Company; and (iv) the nature
and terms of certain other acquisition transactions that we believe to be
relevant. We have also taken into account our assessment of general economic,
market and financial conditions and our knowledge of the broadcasting industry
as well as our experience in connection with similar transactions and securities
valuation generally. Our opinion necessarily is based upon conditions as they
exist and can be evaluated on the date hereof. Our opinion is, in any event,
limited to the fairness, from a financial point of view, of the consideration to
be received by the holders of the Shares in the Merger and does not address the
Company's underlying business decision to effect the Merger or constitute a
recommendation to any holder of Shares as to how such holder should vote with
respect to the Merger.
As you are aware, Salomon Brothers Inc has acted as financial advisor to
the Company in connection with the Merger and will receive a fee for our
services, a substantial portion of which is contingent upon the execution by the
Company of the Merger Agreement. Additionally, Salomon Brothers Inc has
previously rendered certain investment banking and financial advisory services
to the Company for which we received customary compensation. In addition, in the
ordinary course of our business, we actively trade the debt and equity
securities of both the Company and Westinghouse for our own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the holders of Shares in the
Merger is fair to such holders from a financial point of view.
Very truly yours,
/s/ SALOMON BROTHERS INC
--------------------------------------
SALOMON BROTHERS INC
C-2
<PAGE> 94
APPENDIX D
NEW YORK BUSINESS CORPORATION LAW
SECTION 623. PROCEDURE TO ENFORCE SHAREHOLDER'S RIGHT TO RECEIVE PAYMENT
FOR SHARES.
(a) A shareholder intending to enforce his right under a section of this
chapter to receive payment for his shares if the proposed corporate action
referred to therein is taken shall file with the corporation, before the meeting
of shareholders at which the action is submitted to a vote, or at such meeting
but before the vote, written objection to the action. The objection shall
include a notice of his election to dissent, his name and residence address, the
number and classes of shares as to which he dissents and a demand for payment of
the fair value of his shares if the action is taken. Such objection is not
required from any shareholder to whom the corporation did not give notice of
such meeting in accordance with this chapter or where the proposed action is
authorized by written consent of shareholders without a meeting.
(b) Within ten days after the shareholders' authorization date, which term
as used in this section means the date on which the shareholders' vote
authorizing such action was taken, or the date on which such consent without a
meeting was obtained from the requisite shareholders, the corporation shall give
written notice of such authorization or consent by registered mail to each
shareholder who filed written objection or from whom written objection was not
required, excepting any shareholder who voted for or consented in writing to the
proposed action and who thereby is deemed to have elected not to enforce his
right to receive payment for his shares.
(c) Within twenty days after the giving of notice to him, any shareholder
from whom written objection was not required and who elects to dissent shall
file with the corporation a written notice of such election, stating his name
and residence address, the number and classes of shares as to which he dissents
and a demand for payment of the fair value of his shares. Any shareholder who
elects to dissent from a merger under section 905 (Merger of subsidiary
corporation) or paragraph (c) of section 907 (Merger or consolidation of
domestic and foreign corporations) or from a share exchange under paragraph (g)
of Section 913 (Share exchanges) shall file a written notice of such election to
dissent within twenty days after the giving to him of a copy of the plan of
merger or exchange or an outline of the material features thereof under section
905 or 913.
(d) A shareholder may not dissent as to less than all of the shares, as to
which he has a right to dissent, held by him of record, that he owns
beneficially. A nominee or fiduciary may not dissent on behalf of any beneficial
owner as to less than all of the shares of such owner, as to which such nominee
or fiduciary has a right to dissent, held of record by such nominee or
fiduciary.
(e) Upon consummation of the corporate action, the shareholder shall cease
to have any of the rights of a shareholder except the right to be paid the fair
value of his shares and any other rights under this section. A notice of
election may be withdrawn by the shareholder at any time prior to his acceptance
in writing of an offer made by the corporation, as provided in paragraph (g),
but in no case later than sixty days from the date of consummation of the
corporate action except that if the corporation fails to make a timely offer, as
provided in paragraph (g), the time for withdrawing a notice of election shall
be extended until sixty days from the date an offer is made. Upon expiration of
such time, withdrawal of a notice of election shall require the written consent
of the corporation. In order to be effective, withdrawal of a notice of election
must be accompanied by the return to the corporation of any advance payment made
to the shareholder as provided in paragraph (g). If a notice of election is
withdrawn, or the corporate action is rescinded, or a court shall determine that
the shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenters' rights, he shall not have the
right to receive payment for his shares and he shall be reinstated to all his
rights as a shareholder as of the consummation of the corporate action,
including any intervening preemptive rights and the right to payment of any
intervening dividend or other distribution or, if any such rights have expired
or any such dividend or distribution other than in cash has been completed, in
lieu thereof, at the election of the corporation, the fair value thereof in cash
as determined by the board as of the time of
D-1
<PAGE> 95
such expiration or completion, but without prejudice otherwise to any corporate
proceedings that may have been taken in the interim.
(f) At the time of filing the notice of election to dissent or within one
month thereafter the shareholder of shares represented by certificates shall
submit the certificates representing his shares to the corporation, or to its
transfer agent, which shall forthwith note conspicuously thereon that a notice
of election has been filed and shall return the certificates to the shareholder
or other person who submitted them on his behalf. Any shareholder of shares
represented by certificates who fails to submit his certificates for such
notation as herein specified shall, at the option of the corporation exercised
by written notice to him within forty-five days from the date of filing of such
notice of election to dissent, lose his dissenter's rights unless a court, for
good cause shown, shall otherwise direct. Upon transfer of a certificate bearing
such notation, each new certificate issued therefor shall bear a similar
notation together with the name of the original dissenting holder of the shares
and a transferee shall acquire no rights in the corporation except those which
the original dissenting shareholder had at the time of transfer.
(g) Within fifteen days after the expiration of the period within which
shareholders may file their notices of election to dissent, or within fifteen
days after the proposed corporate action is consummated, whichever is later (but
in no case later than ninety days from the shareholders' authorization date),
the corporation or, in the case of a merger or consolidation, the surviving or
new corporation, shall make a written offer by registered mail to each
shareholder who has filed such notice of election to pay for his shares at a
specified price which the corporation considers to be their fair value. Such
offer shall be accompanied by a statement setting forth the aggregate number of
shares with respect to which notices of election to dissent have been received
and the aggregate number of holders of such shares. If the corporate action has
been consummated, such offer shall also be accompanied by (1) advance payment to
each such shareholder who has submitted the certificates representing his shares
to the corporation, as provided in paragraph (f), of an amount equal to eighty
percent of the amount of such offer, or (2) as to each shareholder who has not
yet submitted his certificates a statement that advance payment to him of an
amount equal to eighty percent of the amount of such offer will be made by the
corporation promptly upon submission of his certificates. If the corporate
action has not been consummated at the time of the making of the offer, such
advance payment or statement as to advance payment shall be sent to each
shareholder entitled thereto forthwith upon consummation of the corporate
action. Every advance payment or statement as to advance payment shall include
advice to the shareholder to the effect that acceptance of such payment does not
constitute a waiver of any dissenters' rights. If the corporate action has not
been consummated upon the expiration of the ninety day period after the
shareholders' authorization date, the offer may be conditioned upon the
consummation of such action. Such offer shall be made at the same price per
share to all dissenting shareholders of the same class, or if divided into
series, of the same series and shall be accompanied by a balance sheet of the
corporation whose shares the dissenting shareholder holds as of the latest
available date, which shall not be earlier than twelve months before the making
of such offer, and a profit and loss statement or statements for not less than a
twelve-month period ended on the date of such balance sheet or, if the
corporation was not in existence throughout such twelve-month period, for the
portion thereof during which it was in existence. Notwithstanding the foregoing,
the corporation shall not be required to furnish a balance sheet or profit and
loss statement or statements to any shareholder to whom such balance sheet or
profit and loss statement or statements were previously furnished, nor if in
connection with obtaining the shareholders' authorization for or consent to the
proposed corporate action the shareholders were furnished with a proxy or
information statement, which included financial statements, pursuant to
Regulation 14A or Regulation 14C of the United States Securities and Exchange
Commission. If within thirty days after the making of such offer, the
corporation making the offer and any shareholder agree upon the price to be paid
for his shares, payment therefor shall be made within sixty days after the
making of such offer or the consummation of the proposed corporate action,
whichever is later, upon the surrender of the certificates for any such shares
represented by certificates.
(h) The following procedure shall apply if the corporation fails to make
such offer within such period of fifteen days, or if it makes the offer and any
dissenting shareholder or shareholders fail to agree with it within the period
of thirty days thereafter upon the price to be paid for their shares.
D-2
<PAGE> 96
(1) The corporation shall, within twenty days after the expiration of
whichever is applicable of the two periods last mentioned, institute a special
proceeding in the supreme court in the judicial district in which the office of
the corporation is located to determine the rights of dissenting shareholders
and to fix the fair value of their shares. If, in the case of merger or
consolidation, the surviving or new corporation is a foreign corporation without
an office in this state, such proceeding shall be brought in the county where
the office of the domestic corporation, whose shares are to be valued, was
located.
(2) If the corporation fails to institute such proceeding within such
period of twenty days, any dissenting shareholder may institute such proceeding
for the same purpose not later than thirty days after the expiration of such
twenty day period. If such proceeding is not instituted within such thirty day
period, all dissenter's rights shall be lost unless the supreme court, for good
cause shown, shall otherwise direct.
(3) All dissenting shareholders, excepting those who, as provided in
paragraph (g), have agreed with the corporation upon the price to be paid for
their shares, shall be made parties to such proceeding, which shall have the
effect of an action quasi in rem against their shares. The corporation shall
serve a copy of the petition in such proceeding upon each dissenting shareholder
who is a resident of this state in the manner provided by law for the service of
a summons, and upon each nonresident dissenting shareholder either by registered
mail and publication, or in such other manner as is permitted by law. The
jurisdiction of the court shall be plenary and exclusive.
(4) The court shall determine whether each dissenting shareholder, as to
whom the corporation requests the court to make such determination, is entitled
to receive payment for his shares. If the corporation does not request any such
determination or if the court finds that any dissenting shareholder is so
entitled, it shall proceed to fix the value of the shares, which, for the
purposes of this section, shall be the fair value as of the close of business on
the day prior to the shareholders' authorization date. In fixing the fair value
of the shares, the court shall consider the nature of the transaction giving
rise to the shareholder's right to receive payment for shares and its effects on
the corporation and its shareholders, the concepts and methods then customary in
the relevant securities and financial markets for determining fair value of
shares of a corporation engaging in a similar transaction under comparable
circumstances and all other relevant factors. The court shall determine the fair
value of the shares without a jury and without referral to an appraiser or
referee. Upon application by the corporation or by any shareholder who is a
party to the proceeding, the court may, in its discretion, permit pretrial
disclosure, including, but not limited to, disclosure of any expert's reports
relating to the fair value of the shares whether or not intended for use at the
trial in the proceeding and notwithstanding subdivision (d) of section 3101 of
the civil practice laws and rules.
(5) The final order in the proceeding shall be entered against the
corporation in favor of each dissenting shareholder who is a party to the
proceeding and is entitled thereto for the value of his shares so determined.
(6) The final order shall include an allowance for interest at such rate as
the court finds to be equitable, from the date the corporate action was
consummated to the date of payment. In determining the rate of interest, the
court shall consider all relevant factors, including the rate of interest which
the corporation would have had to pay to borrow money during the pendency of the
proceeding. If the court finds that the refusal of any shareholder to accept the
corporate offer of payment for his shares was arbitrary, vexatious or otherwise
not in good faith, no interest shall be allowed to him.
(7) Each party to such proceeding shall bear its own costs and expenses,
including the fees and expenses of its counsel and of any experts employed by
it. Notwithstanding the foregoing, the court may, in its discretion, apportion
and assess all or any part of the costs, expenses and fees incurred by the
corporation against any or all of the dissenting shareholders who are parties to
the proceeding, including any who have withdrawn their notices of election as
provided in paragraph (e), if the court finds that their refusal to accept the
corporate offer was arbitrary, vexatious or otherwise not in good faith. The
court may, in its discretion, apportion and assess all or any part of the costs,
expenses and fees incurred by any or all of the dissenting shareholders who are
parties to the proceeding against the corporation if the court finds any of the
following: (A) that the fair value of the shares as determined materially
exceeds the amount which the corporation offered to pay; (B) that no offer or
required advance payment was made by the corporation; (C) that the corporation
failed to institute the special proceeding within the period specified therefor;
or (D) that the
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<PAGE> 97
action of the corporation in complying with its obligations as provided in this
section was arbitrary, vexatious or otherwise not in good faith. In making any
determination as provided in clause (A), the court may consider the dollar
amount or the percentage, or both, by which the fair value of the shares as
determined exceeds the corporate offer.
(8) Within sixty days after final determination of the proceeding, the
corporation shall pay to each dissenting shareholder the amount found to be due
him, upon surrender of the certificates for any such shares represented by
certificates.
(i) Shares acquired by the corporation upon the payment of the agreed value
therefor or of the amount due under the final order, as provided in this
section, shall become treasury shares or be cancelled as provided in section 515
(Reacquired shares), except that, in the case of a merger or consolidation, they
may be held and disposed of as the plan of merger or consolidation may otherwise
provide.
(j) No payment shall be made to a dissenting shareholder under this section
at a time when the corporation is insolvent or when such payment would make it
insolvent. In such event, the dissenting shareholder shall, at his option:
(1) Withdraw his notice of election, which shall in such event be deemed
withdrawn with the written consent of the corporation; or
(2) Retain his status as a claimant against the corporation and, if it is
liquidated, be subordinated to the rights of creditors of the corporation, but
have rights superior to the non-dissenting shareholders, and if it is not
liquidated, retain his right to be paid for his shares, which right the
corporation shall be obliged to satisfy when the restrictions of this paragraph
do not apply.
(3) The dissenting shareholder shall exercise such option under
subparagraph (1) or (2) by written notice filed with the corporation within
thirty days after the corporation has given him written notice that payment for
his shares cannot be made because of the restrictions of this paragraph. If the
dissenting shareholder fails to exercise such option as provided, the
corporation shall exercise the option by written notice given to him within
twenty days after the expiration of such period of thirty days.
(k) The enforcement by a shareholder of his right to receive payment for
his shares in the manner provided herein shall exclude the enforcement by such
shareholder of any other right to which he might otherwise be entitled by virtue
of share ownership, except as provided in paragraph (e), and except that this
section shall not exclude the right of such shareholder to bring or maintain an
appropriate action to obtain relief on the ground that such corporate action
will be or is unlawful or fraudulent as to him.
(l) Except as otherwise expressly provided in this section, any notice to
be given by a corporation to a shareholder under this section shall be given in
the manner provided in section 605 (Notice of meetings of shareholders).
(m) This section shall not apply to foreign corporations except as provided
in subparagraph (e)(2) of section 907 (Merger or consolidation of domestic and
foreign corporations). (Last amended by L. 1986, Ch 117, Section 3.)
D-4
<PAGE> 98
P CBS INC.
R 51 WEST 52ND STREET
NEW YORK, NY 10019-6188
O
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
X
The undersigned hereby appoints Laurence A. Tisch, Henry B. Schacht and
Y Franklin A. Thomas as proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and vote all
the shares of the Common Stock of the Company which the undersigned would
be entitled to vote if personally present at the Special Meeting to be held
on Thursday, November 16, 1995, or at any adjournment or postponement
thereof, (1) as specified below on the matters listed and more fully
described in the Notice of Special Meeting and Proxy Statement of said
meeting, receipt of which is acknowledged, and (2) in their discretion on
such other matters as may properly come before the meeting or any
adjournment or postponement thereof. If the undersigned participates in
the Company's Employee Investment Fund (the "Fund"), pursuant to which
the Fund account(s) of the undersigned have been allocated shares of
Common Stock of the Company ("Fund Stock"), the undersigned hereby directs
Boston Safe and Trust Company, as trustee of the Fund, to vote all such
shares at the aforesaid Special Meeting or at any adjournment or
postponement thereof, as directed on the reverse side of this Proxy, and,
in its discretion, upon such other matters as may properly come before
the meeting or any adjournment or postponement thereof.
The shares represented by this Proxy will be voted as directed by the
Shareholder. If no direction is given, shares (other than, in certain
instances, shares of Fund Stock) will be voted FOR the proposal. With
respect to shares of Fund Stock, see the Proxy Statement. Specific choices
may be made on the reverse side of this Proxy.
(Continued and to be signed on the other side)
SEE REVERSE
SIDE
<PAGE> 99
PLEASE MARK YOUR
/x/ VOTE AS IN THIS 1644
EXAMPLE.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE FOLLOWING
PROPOSAL.
Approval and adoption of (i) an Agreement and Plan of Merger dated August 1,
1995, among Westinghouse Electric Corporation, a Pennsylvania corporation
("Westinghouse"), Group W Acquisition Corp., a New York corporation and indirect
wholly owned subsidiary of Westinghouse ("Sub"), and CBS Inc., a New York
corporation (the "Company"), pursuant to which (A) Sub would be merged with and
into the Company, with the Company continuing as the Surviving Corporation, (B)
the Company would thereupon become a wholly owned subsidiary of Westinghouse and
(C) each outstanding share of Common Stock would be converted into the right to
receive $81 in cash plus an additional amount equal to the product of (x) $81,
(y) 6% and (z) the number of days in the period from and including August 31,
1995, to but excluding the closing date for the Merger, divided by 365, minus
any dividends declared and payable by the Company for the period following
August 1, 1995 (collectively, the "Merger"), and (ii) the Merger.
FOR AGAINST ABSTAIN
/ / / / / /
For other than Fund Stock, this Proxy will be voted FOR the proposal unless
instructions to the contrary are indicated. Please note that abstaining from the
vote on the proposal will have the same effect as a vote AGAINST the proposal.
As to Fund Stock, see the Proxy Statement.
Please sign exactly as your name appears on this Proxy. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by an authorized officer. If a
partnership, please sign in partnership name by an authorized person.
, 1995
- ---------------------------------------
Signature Date
, 1995
- ---------------------------------------
Signature (if held jointly) Date
<PAGE> 100
[Coopers & Lybrand Letterhead]
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
-----------
To the Shareholders of CBS Inc.:
We have audited the consolidated financial statements of CBS Inc. and
subsidiaries listed in the index on page 17 of this Form 10-K. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CBS Inc. and
subsidiaries as of December 31, 1994, 1993 and 1992, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in note 5 to the consolidated financial statements, in 1994 the
Company changed its method of accounting for certain investments in debt and
equity securities.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
New York, New York
February 8, 1995
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
-----------
We consent to the incorporation by reference in the registration statements of
CBS Inc. and subsidiaries on Form S-8 (File Nos. 2-87270, 2-58540, and
2-33-2098) and the registration statement of CBS Inc. on Form S-3 (File No.
33-59462) of our report dated February 8, 1995, on our audits of the
consolidated financial statements of CBS Inc. and subsidiaries for the years
ended December 31, 1994, 1993 and 1992, which report appears above.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
New York, New York
October 17, 1995
[Coopers & Lybrand Letterhead]
