SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
August 1, 1995
Date of Report (Date of earliest event reported)
CBS INC.
(Exact name of registrant as specified in its charter)
New York 1-2931 13-0590730
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
51 West 52nd Street 10019
New York, NY (Zip code)
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (212) 975-4321
Not applicable
(Former name or former address, if charged since last report)
<PAGE>
Item 5. Other Events
On August 1, 1995, CBS Inc., a New York corporation
(the "Company"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Westinghouse Electric Corporation,
a Pennsylvania corporation ("Westinghouse"), and Group W
Acquisition Corp., a New York corporation ("Sub"), pursuant to
which Sub will merge with and into the Company (the "Merger").
As a result of the Merger, the outstanding shares of the
Company's common stock, par value $2.50 per share ("Company
Common Stock"), will be converted into the right to receive $81
per share, in cash, plus an additional amount equal to 6% per
annum of such purchase price beginning on August 31, 1995, less
any dividends declared and paid by CBS for the period after
August 1, 1995. The Merger is conditioned upon, among other
things, approval by holders of a majority of the Company Common
Stock and upon receipt of certain regulatory and governmental
approvals. The Merger Agreement is attached as Exhibit 2 hereto
and its terms are incorporated herein by reference.
A copy of the Press Release, dated August 1, 1995,
issued by the Company and Westinghouse relating to the Merger
Agreement, is attached as Exhibit 99 hereto and is incorporated
herein by reference.
As of August 3, 1995, the Company and the individual
members of the Board of Directors had been served with summonses and
complaints in the following eight legal proceedings instituted in the Supreme
Court of the State of New York, New York County: Moise Katz v. CBS;
Max Grill v. CBS; John Stack v. CBS; William Stevens v. CBS;
Roger Minkoff v. CBS; Kenneth Steiner v. CBS; Ron Stern v. CBS; and
Carol B. Miller IRA Account v. CBS. In each of these proceedings the
plaintiff, on behalf of himself/herself and other CBS shareholders, asserts
that the Merger does not provide sufficient value to the Company
and its shareholders and seeks damages, injunctive relief, that CBS conduct
an auction to maximize shareholder value, an order imposing a "voting trust"
on the shares controlled by the directors, and other equitable relief.
The Company believes that each of these actions is without merit
and will have no adverse affect on the Company or the Merger.
- 2 -<PAGE>
Item 7. Financial Statements and Exhibits
(c) The following exhibits are filed with this
report:
2. Agreement and Plan of Merger dated as of
August 1, 1995, among Westinghouse Electric Corporation, Group W
Acquisition Corp. and CBS Inc.
99. Press Release, dated August 1, 1995, relating to
transactions with Westinghouse Electric Corporation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
CBS INC.
By: /s/Richard W. Oswald
Name: Richard W. Oswald
Title: Vice President and
Treasurer
Date: August 4, 1995
- 3 -<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
2 Agreement and Plan of Merger dated as of August 1, 1995,
among Westinghouse Electric Corporation, Group W
Acquisition Corp. and CBS Inc.
99 Press Release, dated August 1, 1995, relating to
transactions with Westinghouse Electric Corporation.
- 4 - <PAGE>
AGREEMENT AND PLAN OF MERGER
among
WESTINGHOUSE ELECTRIC CORPORATION,
GROUP W ACQUISITION CORP.
and
CBS INC.
dated August 1, 1995
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . . . . 3
2.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . . . . . . 3
2.2 Conversion of Securities . . . . . . . . . . . . . . . . . . . . . 3
2.3 Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Stock Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.6 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of the Company. . . . . . . . . . . 7
(a) Organization, Standing and Power. . . . . . . . . . . . . . . 7
(b) Capital Structure . . . . . . . . . . . . . . . . . . . . . . 8
(c) Authority; No Violations; Consents and Approvals. . . . . . . 9
(d) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) Absence of Certain Changes or Events. . . . . . . . . . . . . 11
(f) No Undisclosed Material Liabilities . . . . . . . . . . . . . 11
(g) Information Supplied. . . . . . . . . . . . . . . . . . . . . 11
(h) Compliance with Applicable Laws . . . . . . . . . . . . . . . 11
(i) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 12
(j) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 13
(l) Intangible Property . . . . . . . . . . . . . . . . . . . . . 14
(m) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) Board Recommendation; State Takeover Statutes . . . . . . . . 15
(o) Opinion of Financial Advisor. . . . . . . . . . . . . . . . . 15
(p) Vote Required . . . . . . . . . . . . . . . . . . . . . . . . 15
(q) FCC Qualifications. . . . . . . . . . . . . . . . . . . . . . 15
3.2 Representations and Warranties of Parent and Sub . . . . . . . . . 15
(a) Organization, Standing and Power. . . . . . . . . . . . . . . 15
(b) Authority; No Violations; Consents and Approvals. . . . . . . 16
(c) Information Supplied. . . . . . . . . . . . . . . . . . . . . 17
(d) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(e) Interim Operations of Sub . . . . . . . . . . . . . . . . . . 17
(f) Board Approval. . . . . . . . . . . . . . . . . . . . . . . . 17
(g) FCC Qualifications. . . . . . . . . . . . . . . . . . . . . . 17
(h) Financial Covenant Compliance . . . . . . . . . . . . . . . . 18
(i) Third-party Consents. . . . . . . . . . . . . . . . . . . . . 18
(j) Sufficient Financing. . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS. . . . . . . . . . . . . . . . . . 18
4.1 Covenants of the Company . . . . . . . . . . . . . . . . . . . . . 18
(a) Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Dividends; Changes in Stock . . . . . . . . . . . . . . . . . 18
(c) Issuance of Securities. . . . . . . . . . . . . . . . . . . . 19
(d) Governing Documents . . . . . . . . . . . . . . . . . . . . . 19
(e) No Solicitation . . . . . . . . . . . . . . . . . . . . . . . 19
(f) No Acquisitions . . . . . . . . . . . . . . . . . . . . . . . 21
(g) No Dispositions . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Advice of Changes . . . . . . . . . . . . . . . . . . . . . . 21
(i) No Dissolution, Etc.. . . . . . . . . . . . . . . . . . . . . 21
(j) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . 21
(k) Certain Employee Matters. . . . . . . . . . . . . . . . . . . 21
(l) Indebtedness; Agreements. . . . . . . . . . . . . . . . . . . 22
(m) Accounting. . . . . . . . . . . . . . . . . . . . . . . . . . 23
(n) Tax Election. . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.1 Preparation of the Proxy Statement; Company Shareholders
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.2 Access to Information; Confidentiality . . . . . . . . . . . . . . 23
5.3 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5 Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . 25
5.6 Indemnification; Directors' and Officers' Insurance. . . . . . . . 26
5.7 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(a) General . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(b) FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(c) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Conduct of Business of Sub . . . . . . . . . . . . . . . . . . . . 28
5.9 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.10 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 28
5.11 FCC Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.12 Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . . 30
5.13 SEC Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.1 Conditions to Each Party's Obligation to Effect the Merger . . . . 32
(a) Shareholder Approval. . . . . . . . . . . . . . . . . . . . . 32
(b) HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(c) No Injunctions or Restraints. . . . . . . . . . . . . . . . . 32
(d) FCC Order . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.2 Conditions to Obligations of Parent and Sub. . . . . . . . . . . . 33
(a) Representations and Warranties; Performance of
Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) No Material Adverse Change. . . . . . . . . . . . . . . . . . 33
(c) Funding.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Conditions to Obligations of the Company . . . . . . . . . . . . . 33
6.4 Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE VII
TERMINATION AND AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 35
7.3 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.4 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.1 Tender Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE IX
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.1 Effectiveness of Representations, Warranties and Agreements;
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . 37
9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.7 No Remedy in Certain Circumstances . . . . . . . . . . . . . . . . 39
9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
<PAGE>
Glossary of Defined Terms
Defined Terms Defined in Section
Additional Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
BCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Certificate of Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3(b)
Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3(e)
Commitment Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.2(d)
Communications Act . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Company Disclosure Schedule. . . . . . . . . . . . . . . . . . . . . . . . . 3.1
Company ERISA Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(k)
Company Intangible Property. . . . . . . . . . . . . . . . . . . . . . . .3.1(i)
Company Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
Company Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(h)
Company Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(k)
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
Company Shareholder Approval . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Company Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . .5.1(b)
Company Voting Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(b)
Competing Transaction. . . . . . . . . . . . . . . . . . . . . . . . . 4.1(e)(i)
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.7(c)
Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Eligible Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(a)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(k)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
FCC Order. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1(d)
Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.7(c)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(d)
Gains and Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Governmental Entity. . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Indemnified Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1(c)
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(j)
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(c)(ii)
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . .3.1(a)
Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(l)(ii)
Material Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
Multiple Employer Plans. . . . . . . . . . . . . . . . . . . . . . . . 3.1(k)(i)
Notice of Superior Proposal. . . . . . . . . . . . . . . . . . . . . .4.1(a)(ii)
Option Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Parent Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . 3.2
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3(a)
Payment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3(a)
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(b)
Permitted Investments. . . . . . . . . . . . . . . . . . . . . . . . . . .2.3(a)
Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
SAR Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(a)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
SERPS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Stations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)(iii)
Stock Rights Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .preamble
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1(b)
Superior Proposal. . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(e)(ii)
Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(j)
Time Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.12(b)
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1(c)(ii)
<PAGE>
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.".
<PAGE>
1.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant
to Section 7.1, and subject to the satisfaction or waiver of the conditions
set forth in Article VI, the closing of the Merger (the "Closing") shall
take place at 10:00 a.m., New York time, on the second business day after
satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date"), at the offices of Weil, Gotshal & Manges, 767 Fifth
Avenue, New York, New York 10153, unless another date, time or place is
agreed to in writing by the parties hereto.
1.3 Effective Time of the Merger. Subject to the provisions of
this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") with the New York Secretary of
State, as provided in the BCL, as soon as practicable on or after the
Closing Date. The Merger shall become effective upon such filing or at
such time thereafter as is provided in the Certificate of Merger (the
"Effective Time").
1.4 Effects of the Merger. (a) The Merger shall have the
effects set forth in the applicable provisions of the BCL, including
Section 906 thereof.
(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation
until their successors have been duly elected or appointed and qualified,
or until their earlier death, resignation or removal, in accordance with
the Surviving Corporation's Certificate of Incorporation and Bylaws.
(c) The Certificate of Incorporation of Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof and the BCL.
(d) The Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by applicable law or the Surviving
Corporation's Certificate of Incorporation or Bylaws.
(e) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises of a public
as well as of a private nature, and be subject to all the restrictions,
disabilities and duties of each of the Constituent Corporations; and all
and singular rights, privileges, powers and franchises of each of the
Constituent Corporations, and all property, real, personal and mixed, and
all debts due to either of the Constituent Corporations on whatever
account, as well as for stock subscriptions and all other things in action
or belonging to each of the Constituent Corporations, shall be vested in
the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were of the
Constituent Corporations; and the title to any real estate vested by deed
or otherwise, in either of the Constituent Corporations, shall not revert <PAGE>
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 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 <PAGE>
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 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, <PAGE>
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 "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 <PAGE>
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 <PAGE>
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, 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 <PAGE>
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 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 <PAGE>
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 <PAGE>
their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as the case may be, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company (including,
in each case, the notes thereto) included in the Company SEC Documents
complied as to form in all material respects with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a
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 <PAGE>
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 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.
<PAGE>
(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 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;
<PAGE>
(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 <PAGE>
or other material contract relating thereto (collectively, the "Company
Intangible Property") is in good standing in all material respects and is
owned by the Company or its Subsidiaries free and clear of any and all
liens or encumbrances. Except as set forth in Section 3.1(l) of the
Company Disclosure Schedule, to the knowledge of the Company, the use of
the Company Intangible Property by the Company or its Subsidiaries does
not, in any material respect, conflict with, infringe upon, violate or
interfere with or constitute an appropriation of any right, title, interest
or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, service mark, or copyright or any pending
application therefor of any other person and there are no pending claims
and neither the Company nor any of its Subsidiaries has received any notice
of any pending claim or otherwise knows that any of the Company Intangible
Property is invalid or conflicts with the asserted rights of any other
person or has not been used or enforced or has failed to be used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Company Intangible Property.
(m) Contracts. Except as set forth in Section 3.1(m) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or is bound by any employment agreement,
television network affiliation agreement, any credit 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.
<PAGE>
(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 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 <PAGE>
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 <PAGE>
therein, an aggregate of $2 billion of the funds required to consummate the
Merger.
(e) Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby and has not
engaged in any business activities or conducted any operations other than
in connection with the transactions contemplated hereby.
(f) Board Approval. The Board of Directors of the Parent, at a
meeting duly called and held, has by the vote of those directors present
and voting determined that the Merger is fair to and in the best interests
of Parent and has approved the same. At such meeting, the Board of
Directors of Parent received the opinion of J.P. Morgan Securities Inc.,
dated August 1, 1995, to the effect that, as of the date thereof, the
Merger Consideration to be paid by Parent in the Merger is fair from a
financial point of view to Parent, a signed, true and complete copy of
which opinion has been delivered to the Company, and such opinion has not
been withdrawn or modified.
(g) FCC Qualifications. Except as set forth in Section 3.2(g)
to the Parent Disclosure Schedule, (i) to Parent's knowledge, Parent and
Sub are, for purposes of obtaining the FCC Order, legally, financially and
otherwise qualified to acquire control of the Company and (ii) after due
investigation, Parent and Sub are not aware of any other facts 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 <PAGE>
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 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 <PAGE>
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 <PAGE>
the assets of the Company and its Subsidiaries, taken as a whole, or of
more than 25% (in the case of Section 5.4(b)(i) only, 50%) of the equity
securities of the Company or any of its Material Subsidiaries, in any case
in a single transaction or series of transactions; (iii) any tender offer
or exchange offer for 25% (in the case of Section 5.4(b)(i) only, 50%) or
more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention
to do any of the foregoing or any agreement to engage in any of the
foregoing.
(ii) Except as set forth in this Section 4.1(e)(ii), the
Board of Directors of the Company shall not approve or recommend, or cause
the Company to enter into any agreement with respect to, any Competing
Transaction. Notwithstanding the foregoing, if the Board of Directors of
the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that it is necessary
to do so in order to comply with its fiduciary duties to shareholders under
applicable law, the Board of Directors of the Company may approve or
recommend a Superior Proposal (as defined below) or cause the Company to
enter into an agreement with respect to a Superior Proposal, but in each
case only after providing reasonable written notice to Parent (a "Notice of
Superior Proposal") advising Parent that the Board of Directors of the
Company has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal. In addition, if the Company proposes to enter into an
agreement with respect to any Competing Transaction, it shall concurrently
with entering 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 <PAGE>
otherwise dispose of, or agree to sell, lease (whether such lease is an
operating or capital lease), encumber or otherwise dispose of, any of its
assets.
(h) Advice of Changes. The Company shall cause its senior
officers to use reasonable efforts to promptly advise Parent of any change
or occurrence having, or which, insofar as reasonably can be foreseen,
could have, a Material Adverse Effect with respect to the Company and, to
the extent permitted by law (including FCC regulations), to meet on a
regular basis with Parent's senior officers to discuss the Company's
business.
(i) No Dissolution, Etc. The Company shall not authorize,
recommend, propose or announce an intention to adopt a plan of complete or
partial liquidation or dissolution of the Company or any of its
Subsidiaries.
(j) Other Actions. Except as contemplated by this Agreement,
the Company will not nor will it permit any of its Subsidiaries to take or
agree or commit to take any action that is reasonably likely to result in
any of the Company's representations or warranties hereunder being untrue
such that the condition set forth in Section 6.2(a) will not be satisfied.
(k) Certain Employee Matters. The Company and its Subsidiaries
shall not (except as contemplated in Section 4.1(k) of the Company
Disclosure Schedule (it being understood that Parent shall not unreasonably
withhold its consent to certain matters set forth therein as specified
therein) and except as provided in Section 3.1(k) of the Company Disclosure
Schedule): (i) grant any increases in the compensation of any of its
directors, officers or key employees, except for increases for officers and
employees in the ordinary 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 <PAGE>
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.
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 <PAGE>
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 <PAGE>
contemplated thereby or hereby shall be borne equally by Parent and the
Company.
(b) The Company agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(f), if at or prior to the time of the Company
Shareholders Meeting a Competing Transaction shall have been commenced,
publicly proposed or publicly disclosed and if within one year after the
Company Shareholders Meeting the Company enters into an agreement with
respect to, approves or recommends such or any other Competing Transaction;
(ii) Section 7.1(g); or
(iii) Section 7.1(h);
then the Company shall (A) pay to Parent an amount equal to $100,000,000
and (B) assume and pay, or reimburse Parent for, all reasonable documented
out-of-pocket fees and expenses incurred by Parent (including, without
limitation, the fees and expenses of its counsel, commercial banks,
accountants, financial advisors, experts and consultants) which are
specifically related to the Merger, this Agreement and the matters
contemplated by this Agreement; provided, however, that the Company shall
not be obligated to pay or reimburse more than an aggregate of $50,000,000
pursuant to the foregoing clause (B).
(c) Parent agrees that if this Agreement shall be terminated
pursuant to:
(i) Section 7.1(c) if at such time (A) the conditions set
forth in Section 6.1 shall have been satisfied and the
other conditions in Article VI were capable of being
satisfied and (B) the condition set forth in Section
6.2(c) shall not have been satisfied;
(ii) Section 7.1(d)(i);
(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 <PAGE>
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 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.
<PAGE>
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 <PAGE>
Subsidiaries (provided that Parent may substitute therefor policies of at
least the same coverage and amounts containing terms and conditions which
are no less advantageous in any material respect to the Indemnified
Parties) with respect to claims arising from facts or events which occurred
before the Effective Time, provided that Parent shall not be required to
pay an annual premium for such insurance in excess of 200% of the last
annual premium paid by the Company prior to the date hereof (which premium
the Company represents and warrants to be $77,500 in the aggregate), but in
such case shall purchase as much coverage as possible for such amount.
(c) The provisions of this Section 5.6 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her personal representatives and shall be binding on
all successors and assigns of Parent, Sub, the Company and the Surviving
Corporation.
5.7 Best Efforts. (a) General. Each of the parties hereto
agrees to use its best efforts to take, or cause to be taken, all action
and to do or satisfy, or cause to be done or satisfied, all things and
conditions necessary, proper or advisable under applicable laws and
regulations to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement, including (i) cooperating
fully with the other party, including by provision of information and
making of all necessary filings in connection with, among other things,
approvals under the HSR Act and of the FCC or any other Governmental
Entity, and (ii) obtaining (and cooperating with each other in obtaining)
any consent, authorization, order (including the FCC Order) or approval of,
or any exemption by, or making any filing with, any Governmental Entity or
other public or private third party, including the FCC, required to be
obtained or made by the Company, Parent, Sub or any of their respective
Subsidiaries in connection with this Agreement or the taking of any action
contemplated hereby. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement or to vest the Surviving Corporation with full title to all
properties, assets, rights, approvals, immunities and franchises of either
of the Constituent Corporations, the proper officers and directors of each
party to this Agreement shall take all such necessary action.
(b) FCC. Each of Parent and Sub shall use its best efforts to
take, or cause to be taken, all action and to do or satisfy, or cause to be
done or satisfied, all things and conditions necessary, proper or advisable
to obtain the FCC Order and to satisfy all conditions and take all actions
required thereby, in each case so as to come into compliance with FCC
requirements and to consummate the Merger as promptly as practicable. The
Company shall also use such best efforts, but shall not be required to take
any action that 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 <PAGE>
all of the financing required by Parent to consummate the Merger, to
refinance Parent's and the Company's then-existing bank debt and to pay
related fees and expenses on terms not materially less favorable to Parent
in the aggregate than the terms set forth in the Commitment Letter and with
conditions that are the same, except in respects that do not adversely
affect Parent's ability to obtain the Financing, as those in the Commitment
Letter (the "Financing") by no later than September 14, 1995 and (B) so
that there is in effect, as promptly as practicable but in no event later
than October 4, 1995, one or more definitive credit agreements
(collectively, the "Credit Agreement") from one or more financial
institutions unaffiliated with Parent pursuant to which Parent shall have
received commitments to provide the Financing. Parent shall provide to the
Company copies of any such commitment letters and Credit Agreement and
shall keep the Company reasonably informed of the status of the financing
process contemplated by the Commitment Letter. The Company shall cause its
senior management to cooperate with all reasonable requests by Parent in
connection with such efforts by Parent, including causing such persons to
attend meetings with prospective members of and participants in any
syndicate of financial institutions being assembled to provide such
financing.
5.8 Conduct of Business of Sub. During the period of time from
the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.
5.9 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement
pertaining to the Merger and shall not issue any such press release or make
any such public announcement prior to such consultation and agreement,
except as may be required by applicable law or by obligations pursuant to
any listing agreement with any national securities exchange, in which case
the party proposing to issue such press release or make such public
announcement shall use reasonable efforts to consult in good faith with the
other party before issuing any such press release or making any such public
announcement.
5.10 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent,
of (i) the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would be likely to cause (x) any representation or
warranty contained in this Agreement, including the Disclosure Schedules,
to be untrue or inaccurate such that one or more conditions set forth in
Article VI would not be satisfied or (y) any condition contained in this
Agreement not to be satisfied and (ii) any failure of Parent or the
Company, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder
such that one or more conditions set forth in Article VI would not be
satisfied; 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 <PAGE>
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 <PAGE>
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 ("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).
<PAGE>
(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 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 <PAGE>
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 <PAGE>
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.
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 <PAGE>
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 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 <PAGE>
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.
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 <PAGE>
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.
<PAGE>
(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.
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:
<PAGE>
(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
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 <PAGE>
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
indirect wholly-owned Subsidiary of Parent. Subject to the preceding <PAGE>
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<PAGE>
August 1, 1995
WESTINGHOUSE TO ACQUIRE CBS INC.
Creating Largest Group of Television, Radio Stations in U.S.
PITTSBURGH, PA., and NEW YORK, N.Y., August 1, 1995 -- Westinghouse
Electric Corporation (NYSE: WX) and CBS Inc. (NYSE: CBS) announced today that
Westinghouse had agreed to acquire CBS. By adding CBS to Westinghouse's
existing media operations, the acquisition will create a broadcasting
organization of unparalleled geographic scope, owning television and radio
station groups each reaching approximately one-third of U.S. households.
Under the terms of the agreement, which has been approved by the Board
of Directors of each company, Westinghouse will acquire all of the
outstanding shares of CBS for $81 per share in cash plus certain additional
limited consideration depending on the timing of the closing. The value of the
transaction is expected to total approximately $ 5.4 billion. The agreement
is subject to various regulatory approvals, the approval of CBS shareholders
and completion of financing. Chemical Bank and J.P. Morgan have each
committed to lend $1 billion and have agreed to arrange the remainder of the
financing. Westinghouse expects to receive the necessary FCC approvals or
waivers and complete the transaction by the end of 1995 or early 1996.
Michael H. Jordan, chairman and chief executive officer of
Westinghouse, said, "With the addition of CBS, Westinghouse is creating a
premier broadcasting powerhouse and taking a leadership position in
programming. Our television and radio stations will reach more homes than any
other broadcaster and provide a unique and powerful platform for our
advertisers. We expect to build upon our new, combined strengths and
considerable talent to restore CBS television to its historic position as the
#1 television network."
Jordan noted that this year Westinghouse is celebrating its 75th
anniversary as a broadcaster and cited the company's history of innovation,
dedication to news and commitment to the communities it serves. "Since 1920,
when Westinghouse transmitted the first commercial radio broadcast in
America, our company has been a pioneer in broadcasting, engineering and
electronics. We have been, and will continue to be, a leader in serving the
public interest," he added. "Our announcement today is, in many ways, a
return to our roots, confirming that the future of Westinghouse will be built
around our broadcasting and media business. It is the fastest growing,
highest margin segment of our company, and offers our shareholders
tremendous future value."
Laurence A. Tisch, chairman, president and chief executive officer of
CBS Inc., said, "This agreement joins two great companies with tremendous
depth and a rich history in broadcasting. This transaction also delivers
terrific value for CBS shareholders.
(Over)<PAGE>
CBS Inc. ...2
"CBS today is the result of the hard work and indomitable spirit of an
outstanding team of dedicated employees. It is their efforts that have
created a 70-year legacy of leadership in this industry, and I am confident
that their talent will bring the new Westinghouse/CBS forward as a leading
media company of the 21st Century."
Westinghouse's acquisition of CBS will produce the most preeminent
broadcasting company in the industry, including:
-- the nation's largest television station group, with 15 stations
covering nearly one-third of the nation, in seven of the country's
top 10 markets;
-- the nation's largest radio station group, with 39 stations covering
approximately 35 percent of the nation. All of the top 10 U.S.
markets will be represented, with four stations in each of the
top five radio markets. Fourteen of these will be news stations, an
area where Group W and CBS have long been market leaders;
--The CBS Television Network, one of the country's leading distribution
systems, broadcasting some of the most critically acclaimed programs
on television, including: 60 MINUTES, MURPHY BROWN, PICKET
FENCES, CHICAGO HOPE and LATE SHOW with DAVID LETTERMAN;
--A television affiliate body of more than 200 stations and radio
affiliate body of more than 585 stations, which, together with the
stations owned by Westinghouse/CBS, reach nearly 100 percent of all
U.S. households;
--The largest sales organization in the broadcasting industry, covering
network and spot television sales, radio sales, cable and sports
programming sales;
-- CBS Entertainment, which in September will launch its most
ambitious primetime schedule in CBS history with 11 new programs,
including the much anticipated CENTRAL PARK WEST;
-- David Letterman, who made CBS the undisputed leader in late night
television for the first time, and will begin his third season on
the CBS Television Network;
-- CBS News, which spans the eras of Edward R. Murrow, Walter Cronkite
and Dan Rather, enters the new television season with the return of
the most watched program in network history, 60 MINUTES, as well as
the CBS EVENING NEWS WITH DAN RATHER, CBS THIS MORNING,
48 HOURS, SUNDAY MORNING, FACE THE NATION, and other programs;
(More)<PAGE>
CBS Inc. ...3
-- CBS Sports, having completed critically acclaimed coverage of the
1992 and 1994 Winter Olympics, and which is already preparing for
the 1998 Winter Olympics in Nagano Japan. CBS Sports also has
attracted many key sports franchises with long-term agreements;
-- The industry leading CBS Entertainment Productions -- the most
prolific in-house producer of television programs -- has produced
or co-produced such popular programs as DR. QUINN, MEDICINE WOMAN,
RESCUE 911, DAVE'S WORLD and WALKER, TEXAS RANGER.
While the new Westinghouse/CBS radio group would comply with existing
federal regulatory statutes, the new combined television station group --
which would reach approximately 33 percent of the nation -- would exceed
existing federal regulatory limits. These regulations now prohibit ownership
of television properties covering more than 25 percent of the viewing public.
Legislation now pending in Congress would raise that ownership cap to at
least 35 percent.
In addition to the $81 per share consideration, CBS shareholders will
receive a special payment which will be calculated at the rate of six percent
per annum of the cash consideration, commencing from August 31, 1995 until
the closing, less any dividends which otherwise would be payable.
Westinghouse currently operates five major television stations,
including stations in Philadelphia (KYW), Boston (WBZ), San Francisco (KPIX),
Pittsburgh (KDKA) and Baltimore (WJZ).
In July, 1994, CBS and Westinghouse agreed to a comprehensive,
strategic partnership involving, among other things, the formation of a joint
venture to own major market television stations. Upon FCC approval and
consummation of several pending station transactions, the joint venture will
own stations in Philadelphia (KYW), Miami (WFOR, now WCIX), Denver (KCNC)
and Salt Lake City (KUTV). At that time, WCAU in Philadelphia and WCIX will
no longer be owned by CBS, with the latter station being contributed to the
joint venture which shall be operated by Westinghouse. Upon FCC approval of
the Westinghouse acquisition of CBS, all of the stations in the joint venture
would be wholly owned by Westinghouse.
Westinghouse radio properties comprise 18 radio stations in nine major
U.S. markets, including New York (WNEW-FM and WINS-AM), Los Angeles (KTWV-FM
and KFWB-AM), Chicago (WMAQ-AM, WSCR-AM and WXRT-FM), San Francisco (KPIX-FM
and KPIX-AM), Philadelphia (WMMR-FM and KYW-AM), Detroit (KLLZ-FM), Houston
(KIKK-FM, KIKK-AM, KILT-FM and KILT-AM), Boston (WBZ-AM) and Pittsburgh
(KDKA-AM).
Westinghouse's Group W Satellite Communications is a leader in
marketing, sales and program distribution for cable networks. Group W
Productions is responsible for program production, distribution and
advertising sales for broadcast syndication. In conjunction with CBS, it
will this fall launch "Day & Date," one of the most ambitious new shows for
daytime syndication in the last decade.
(Over)<PAGE>
CBS Inc. ...4
In addition to its interests in broadcasting, the Westinghouse
business portfolio includes Power Generation, Electronics Systems, Energy
Systems, Thermo King (mobile temperature control systems), Government &
Environmental Services, and the Knoll Group (ergonomically designed
workstations and office furnishings).
CBS currently owns television stations in New York (WCBS), Los Angeles
(KCBS), Chicago (WBBM), Minneapolis/St. Paul (WCCO), Green Bay (WFRV)
Philadelphia (WCAU) and Miami (WCIX). CBS has pending transactions to acquire
television stations in Detroit (WGPR) and Providence (WPRI).
CBS also owns eight AM radio stations in: New York (WCBS), Los Angeles
(KNX), Chicago (WBBM) San Francisco (KCBS), Philadelphia (WGMP), Detroit
(WWJ), St. Louis (KMOX) and Minneapolis (WCCO). CBS's 13 Owned FM radio
stations are located in: New York (WCBS), Los Angeles (KCBS) Chicago (WBBM),
San Francisco (KRQR), Philadelphia (WOGL), Detroit (WYST), Boston (WODS),
Dallas (KTXQ and KRRW), Washington, D.C. (WARW), Houston (KKRW), St. Louis
(KLOU) and Minneapolis (WLTE).
CONTACTS:
For Westinghouse: Gene Donati, Clark & Weinstock (212) 872-7251 (8/1 only)
(212) 953-2550 thereafter
Roy Morrow, Westinghouse (212) 872-7250 (8/1 only)
(412) 642-3005 thereafter
For CBS: Michael Claes, Burson-Marsteller(212) 614-5236
Tom Goodman, CBS Inc. (212) 975-8088
