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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
Date of Report (Date of earliest event reported):
July 31, 1995
The Walt Disney Company
(Exact name of registrant as specified in its charter)
Delaware
(State or jurisdiction of incorporation)
1-4083 95-0684440
(Commission File Number) (IRS Employer Identification No.)
500 South Buena Vista Street, Burbank, California 91521
(Address of principal executive offices) (Zip Code)
(818) 560-1000
(Registrant's Telephone Number)
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Item 5. Other Events
------------
On July 31, 1995, The Walt Disney Company (the "Company") and Capital
Cities/ABC, Inc. ("CC/ABC") entered into (i) an Agreement and Plan of
Reorganization and (ii) a Programming Agreement. Such agreements are attached
hereto as Exhibit 2.1 and Exhibit 99.1, respectively, and are incorporated
herein by reference. In connection with the Agreement and Plan of
Reorganization, on July 31, 1995, the Company entered into a Stock Agreement
with Berkshire Hathaway, Inc. and Thomas S. Murphy. Such agreement is attached
hereto as Exhibit 99.2 and is incorporated herein by reference. In addition, on
July 31, 1995, the Company and CC/ABC issued a joint press release announcing
the execution of the Agreement and Plan of Reorganization, which press release
is attached hereto as Exhibit 99.3 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
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2.1 Agreement and Plan of Reorganization, dated
as of July 31, 1995, between The Walt Disney
Company and Capital Cities/ABC, Inc.
99.1 Programming Agreement, dated July 31, 1995,
between The Walt Disney Company and Capital
Cities/ABC, Inc.
99.2 Stock Agreement, dated as of July 31, 1995,
among The Walt Disney Company, Berkshire
Hathaway, Inc. and Thomas S. Murphy.
99.3 Joint press release, dated July 31, 1995, of
The Walt Disney Company and Capital Cities/ABC,
Inc.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE WALT DISNEY COMPANY
By: /s/ David K. Thompson
-------------------------
David K. Thompson
Senior Vice President --
Assistant General Counsel
Date: August 3, 1995
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EXHIBIT INDEX
-------------
Number Subject Matter
- ------ --------------
2.1 Agreement and Plan of Reorganization, dated as of July 31,
1995, between The Walt Disney Company and Capital Cities/ABC,
Inc.
99.1 Programming Agreement, dated July 31, 1995, between
The Walt Disney Company and Capital Cities/ABC, Inc.
99.2 Stock Agreement, dated as of July 31, 1995, among
The Walt Disney Company, Berkshire Hathaway, Inc.
and Thomas S. Murphy.
99.3 Joint press release, dated July 31, 1995, of
The Walt Disney Company and Capital Cities/ABC, Inc.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF REORGANIZATION
between
THE WALT DISNEY COMPANY
and
CAPITAL CITIES/ABC, INC.
Dated as of July 31, 1995
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Table of Contents
PAGE
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
FORMATION OF HOLDING COMPANY AND
SUBSIDIARIES . . . . . . . . . . . . . . . . 2
1.1. ORGANIZATION OF HOLDING COMPANY. . . . . . . 2
1.2. DIRECTORS AND OFFICERS OF HOLDING
COMPANY. . . . . . . . . . . . . . . . . . . 2
1.3. ORGANIZATION OF MERGER SUBSIDIARIES. . . . . 2
1.4. ACTIONS OF DIRECTORS AND OFFICERS. . . . . . 3
1.5. ACTIONS OF PURCHASER AND COMPANY . . . . . . 3
ARTICLE 2
THE MERGERS; CLOSING . . . . . . . . . . . . 3
2.1. THE MERGERS. . . . . . . . . . . . . . . . . 3
2.2. THE CLOSING. . . . . . . . . . . . . . . . . 4
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
MERGER SUBSIDIARIES AND SURVIVING
CORPORATIONS . . . . . . . . . . . . . . . . 4
3.1. DIRECTORS. . . . . . . . . . . . . . . . . . 4
3.2. OFFICERS . . . . . . . . . . . . . . . . . . 5
ARTICLE 4
EFFECT OF THE MERGERS ON SECURITIES OF THE
PURCHASER, THE COMPANY AND THE MERGER
SUBSIDIARIES . . . . . . . . . . . . . . . . 5
4.1. MERGER SUB STOCK . . . . . . . . . . . . . . 5
4.2. CANCELLATION OF HOLDING COMPANY CAPITAL
STOCK. . . . . . . . . . . . . . . . . . . . 5
4.3. CONVERSION OF PURCHASER STOCK. . . . . . . . 5
4.4. CONVERSION OF COMPANY COMMON STOCK . . . . . 6
4.5. COMPANY COMMON STOCK ELECTIONS . . . . . . . 8
4.6. PRORATION. . . . . . . . . . . . . . . . . . 10
4.7. DIVIDENDS, FRACTIONAL SHARES, ETC. . . . . . 12
I
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF
COMPANY. . . . . . . . . . . . . . . . . . . 13
5.1. EXISTENCE; GOOD STANDING; CORPORATE
AUTHORITY. . . . . . . . . . . . . . . . . . 13
5.2. AUTHORIZATION, VALIDITY AND EFFECT OF
AGREEMENTS . . . . . . . . . . . . . . . . . 14
5.3. CAPITALIZATION . . . . . . . . . . . . . . . 14
5.4. SUBSIDIARIES . . . . . . . . . . . . . . . . 15
5.5. OTHER INTERESTS. . . . . . . . . . . . . . . 16
5.6. NO CONFLICT; REQUIRED FILINGS AND
CONSENTS . . . . . . . . . . . . . . . . . . 16
5.7. COMPLIANCE . . . . . . . . . . . . . . . . . 17
5.8. SEC DOCUMENTS. . . . . . . . . . . . . . . . 18
5.9. LITIGATION . . . . . . . . . . . . . . . . . 19
5.10. ABSENCE OF CERTAIN CHANGES . . . . . . . . . 19
5.11. TAXES. . . . . . . . . . . . . . . . . . . . 19
5.12. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . 20
5.13. LABOR MATTERS. . . . . . . . . . . . . . . . 21
5.14. NO BROKERS . . . . . . . . . . . . . . . . . 21
5.15. OPINION OF FINANCIAL ADVISOR . . . . . . . . 21
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF
PURCHASER. . . . . . . . . . . . . . . . . . 22
6.1. EXISTENCE; GOOD STANDING; CORPORATE
AUTHORITY. . . . . . . . . . . . . . . . . . 22
6.2. AUTHORIZATION, VALIDITY AND EFFECT OF
AGREEMENTS . . . . . . . . . . . . . . . . . 22
6.3. CAPITALIZATION . . . . . . . . . . . . . . . 23
6.4. SUBSIDIARIES . . . . . . . . . . . . . . . . 23
6.5. OTHER INTERESTS. . . . . . . . . . . . . . . 24
6.6. NO CONFLICT; REQUIRED FILINGS AND
CONSENTS . . . . . . . . . . . . . . . . . . 24
6.7. COMPLIANCE . . . . . . . . . . . . . . . . . 25
6.8. SEC DOCUMENTS. . . . . . . . . . . . . . . . 26
6.9. LITIGATION . . . . . . . . . . . . . . . . . 27
6.10. ABSENCE OF CERTAIN CHANGES . . . . . . . . . 27
6.11. TAXES. . . . . . . . . . . . . . . . . . . . 27
6.12. EMPLOYEE BENEFIT PLANS . . . . . . . . . . . 28
6.13. LABOR MATTERS. . . . . . . . . . . . . . . . 28
6.14. OPINION OF FINANCIAL ADVISOR . . . . . . . . 29
6.15. NO BROKERS . . . . . . . . . . . . . . . . . 29
II
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ARTICLE 7
COVENANTS. . . . . . . . . . . . . . . . . . 29
7.1. ALTERNATIVE PROPOSALS. . . . . . . . . . . . 29
7.2. INTERIM OPERATIONS . . . . . . . . . . . . . 31
7.3. MEETINGS OF STOCKHOLDERS . . . . . . . . . . 33
7.4. FILINGS, OTHER ACTION. . . . . . . . . . . . 34
7.5. INSPECTION OF RECORDS. . . . . . . . . . . . 35
7.6. PUBLICITY. . . . . . . . . . . . . . . . . . 35
7.7. REGISTRATION STATEMENT . . . . . . . . . . . 35
7.8. LISTING APPLICATION. . . . . . . . . . . . . 37
7.9. FURTHER ACTION . . . . . . . . . . . . . . . 37
7.10. AFFILIATE LETTERS. . . . . . . . . . . . . . 37
7.11. EXPENSES . . . . . . . . . . . . . . . . . . 37
7.12. INSURANCE; INDEMNITY . . . . . . . . . . . . 37
7.13. RIGHTS AGREEMENTS. . . . . . . . . . . . . . 39
7.14. TAKEOVER STATUTE . . . . . . . . . . . . . . 39
7.15. CONDUCT OF BUSINESS BY HOLDING COMPANY
AND THE MERGER SUBSIDIARIES PENDING THE
MERGERS. . . . . . . . . . . . . . . . . . . 39
7.16. EMPLOYEE BENEFITS. . . . . . . . . . . . . . 40
7.17. CONVEYANCE TAXES . . . . . . . . . . . . . . 40
7.18. GAINS TAX. . . . . . . . . . . . . . . . . . 41
ARTICLE 8
CONDITIONS . . . . . . . . . . . . . . . . . 41
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGERS . . . . . . . . . . . . . 41
8.2. CONDITIONS TO OBLIGATION OF COMPANY TO
EFFECT THE MERGERS . . . . . . . . . . . . . 42
8.3. CONDITIONS TO OBLIGATION OF PURCHASER TO
EFFECT THE MERGERS . . . . . . . . . . . . . 43
ARTICLE 9
TERMINATION. . . . . . . . . . . . . . . . . 44
9.1. TERMINATION BY MUTUAL CONSENT. . . . . . . . 44
9.2. TERMINATION BY EITHER PURCHASER OR
COMPANY. . . . . . . . . . . . . . . . . . . 44
9.3. TERMINATION BY COMPANY . . . . . . . . . . . 45
9.4. TERMINATION BY PURCHASER . . . . . . . . . . 45
9.5. EFFECT OF TERMINATION AND ABANDONMENT. . . . 46
9.6. EXTENSION, WAIVER. . . . . . . . . . . . . . 47
III
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ARTICLE 10
GENERAL PROVISIONS . . . . . . . . . . . . . 47
10.1. NONSURVIVAL OF REPRESENTATIONS,
WARRANTIES AND AGREEMENTS. . . . . . . . . . 47
10.2. NOTICES. . . . . . . . . . . . . . . . . . . 47
10.3. ASSIGNMENT; BINDING EFFECT . . . . . . . . . 48
10.4. ENTIRE AGREEMENT . . . . . . . . . . . . . . 48
10.5. AMENDMENT. . . . . . . . . . . . . . . . . . 48
10.6. GOVERNING LAW. . . . . . . . . . . . . . . . 49
10.7. COUNTERPARTS . . . . . . . . . . . . . . . . 49
10.8. HEADINGS . . . . . . . . . . . . . . . . . . 49
10.9. INTERPRETATION . . . . . . . . . . . . . . . 49
10.10. WAIVERS. . . . . . . . . . . . . . . . . . . 49
10.11. INCORPORATION OF EXHIBITS. . . . . . . . . . 49
10.12. SEVERABILITY . . . . . . . . . . . . . . . . 49
10.13. ENFORCEMENT OF AGREEMENT . . . . . . . . . . 50
10.14. SUBSIDIARIES . . . . . . . . . . . . . . . . 50
_____________
Exhibit A Form of Affiliate Letter
Exhibit B Form of Registration Rights Agreement
iv<PAGE>
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement"), dated as of July 31, 1995, between The Walt
Disney Company, a Delaware corporation (the "Purchaser") and
Capital Cities/ABC, Inc., a New York corporation (the
"Company").
RECITALS
A. The Boards of Directors of the Purchaser
and the Company have approved, and deem it advisable and in
the best interests of their respective companies and
stockholders to consummate the reorganization (the
"Reorganization") provided for herein, pursuant to which a
newly-formed holding company ("Holding Company") will
acquire all of the common stock of each of the Purchaser and
the Company through mergers of Subsidiaries (as defined in
Section 10.14) of Holding Company with and into each of the
Purchaser and the Company.
B. For federal income tax purposes, it is
intended that (i) the Purchaser Merger (as hereinafter
defined) qualify as an exchange under the provisions of
Section 351 of the United States Internal Revenue Code of
1986, as amended (the "Code") and/or as a reorganization
under the provisions of Section 368(a) of the Code and (ii)
that the Company Merger (as hereinafter defined) qualify as
an exchange under the provisions of Section 351 of the Code.
C. Concurrently with the execution hereof,
in order to induce the Purchaser to enter into this
Agreement, the Purchaser is entering into a Stock Agreement
(the "Stock Agreement") with Berkshire Hathaway, Inc. and
Thomas S. Murphy providing for certain voting and other
restrictions with respect to the shares of Company Common
Stock (as defined in Section 4.4 herein) beneficially owned
by Berkshire Hathaway, Inc. upon the terms and conditions
specified therein.
D. The Purchaser and the Company desire to
make certain representations, warranties, covenants and
agreements in connection with the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the
foregoing, and of the representations, warranties, covenants
and agreements contained herein, the parties hereto hereby
agree as follows:
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ARTICLE 1
FORMATION OF HOLDING COMPANY AND SUBSIDIARIES
1.1. ORGANIZATION OF HOLDING COMPANY. As
promptly as practicable following the execution of this
Agreement and receipt of any required approvals, the
Purchaser and the Company shall cause Holding Company to be
organized under the laws of the State of Delaware. The
Certificate of Incorporation and By-Laws of Holding Company
shall be in such forms as shall be determined by Purchaser
as soon as practicable following the execution of this
Agreement; provided that the Certificate of Incorporation of
Holding Company shall be substantially in the form of the
Certificate of Incorporation of the Purchaser. The
authorized capital stock of Holding Company shall consist
initially of 1,200,000,000 shares of common stock, $.01 par
value (the "Holding Company Common Stock"), of which one
share shall be issued to the Purchaser and one share shall
be issued to the Company at a price of $1.00 per share, and
100,000,000 shares of preferred stock, $.10 par value (the
"Holding Company Preferred Stock"), none of which shall be
initially issued.
1.2. DIRECTORS AND OFFICERS OF HOLDING COMPANY.
(i) Upon formation of Holding Company, the directors and
officers of Holding Company shall be designated by the
Purchaser. Each such officer and director shall remain in
office until his or her successors are elected.
1.3. ORGANIZATION OF MERGER SUBSIDIARIES. As
promptly as practicable following the execution of this
Agreement, the Purchaser and the Company shall cause the
following companies (the "Merger Subsidiaries") to be
organized for the sole purpose of effectuating the Purchaser
Merger and the Company Merger contemplated herein:
(i) DCA Merger Corp., a corporation organized
under the laws of the State of Delaware ("Merger Sub A").
The Certificate of Incorporation and By-laws of Merger Sub
A shall be in such forms as shall be determined by the
Purchaser as soon as practicable following the execution
of this Agreement. The authorized capital stock of Merger
Sub A shall initially consist of 100 shares of common
stock, par value $.01 per share, which shall be issued to
Holding Company at a price of $1.00 per share.
(ii) DCB Merger Corp., a corporation organized
under the laws of the State of New York ("Merger Sub B"
and, together with Merger Sub A, the "Merger
Subsidiaries"). The Certificate of Incorporation and By-
laws of Merger Sub B shall be in such forms as shall be
determined by the Purchaser as soon as practicable
2<PAGE>
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following the execution of this Agreement. The authorized
capital stock of Merger Sub B shall initially consist of
100 shares of common stock, par value $.01 per share,
which shall be issued to Holding Company at a price of
$1.00 per share.
1.4. ACTIONS OF DIRECTORS AND OFFICERS. As
promptly as practicable following the execution of this
Agreement, the Purchaser shall designate the directors and
officers of Merger Sub A and Merger Sub B. The Purchaser
and the Company shall cause (i) Holding Company to elect the
directors of the Merger Subsidiaries, (ii) the directors of
Merger Sub A and Merger Sub B to elect their respective
officers, (iii) the directors of Holding Company to ratify
and approve this Agreement and to approve the forms of the
Merger Agreements (as defined in Section 2.1), (iv) the
Merger Agreements to be executed on behalf of the parties
thereto, and (v) the directors and officers of the Merger
Subsidiaries to take such steps as may be necessary or
appropriate to complete the organization of the Merger
Subsidiaries and to approve the Merger Agreements.
1.5. ACTIONS OF PURCHASER AND COMPANY. As
promptly as practicable following the execution of this
Agreement, as the holders of all of the outstanding shares
of capital stock of Holding Company, the Purchaser and the
Company shall cause Holding Company to ratify and approve
this Agreement, and shall cause Holding Company, as the sole
shareholder of each of the Merger Subsidiaries, to adopt the
Merger Agreements. Each of the Purchaser and the Company
shall cause Holding Company and the Merger Subsidiaries to
perform their respective obligations under this Agreement
and the Merger Agreements.
ARTICLE 2
THE MERGERS; CLOSING
2.1. THE MERGERS. Pursuant to Plans of Merger,
in forms to be mutually agreed upon by the Purchaser and the
Company (sometimes hereinafter referred to individually as
the "Purchaser Merger Agreement" and the "Company Merger
Agreement", respectively, and collectively as the "Merger
Agreements"), upon the terms and subject to the conditions
set forth in this Agreement and in the Merger Agreements:
(a) Merger Sub A shall be merged with and into
the Purchaser (the "Purchaser Merger") in accordance with
the applicable provisions of the laws of the State of
Delaware. Purchaser shall be the surviving corporation in
the Purchaser Merger and shall continue its corporate
existence under the laws of the State of Delaware. As a
3
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result of the Purchaser Merger, Purchaser shall become a
wholly owned Subsidiary of Holding Company. The effects
and consequences of the Purchaser Merger shall be as set
forth in the Purchaser Merger Agreement.
(b) Merger Sub B will be merged with and into
the Company (the "Company Merger"), in accordance with the
applicable provisions of the laws of the State of New
York. The Company shall be the surviving corporation in
the Company Merger and shall continue its corporate
existence under the laws of the State of New York. As a
result of the Company Merger, the Company shall become a
wholly owned Subsidiary of Holding Company. The effects
and consequences of the Company Merger shall be as set
forth in the Company Merger Agreement. The term "Mergers"
shall mean the Purchaser Merger and the Company Merger.
(c) The term "Effective Time" shall mean the
time and date which is the later of (i) the date and time
of the filing of the certificate of merger relating to the
Purchaser Merger with the Secretary of State of the State
of Delaware (or such other date and time as may be
specified in such certificate as may be permitted by
Delaware) and (ii) the date and time of the filing of a
certificate of merger by the Department of State of the
State of New York with respect to the Company Merger (or
such other date and time as may be specified in such
certificate as may be permitted by law).
2.2. THE CLOSING. Subject to the terms and
conditions of this Agreement, the closing of the
transactions contemplated by this Agreement and the Merger
Agreements (the "Closing") shall take place (a) at the
offices of Dewey Ballantine, 1301 Avenue of the Americas,
New York, New York, at 10:00 a.m., local time, on the first
business day following the day on which the last to be
fulfilled or waived of the conditions set forth in Article 8
shall be fulfilled or waived in accordance herewith or (b)
at such other time, date or place as the Purchaser and the
Company may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
ARTICLE 3
DIRECTORS AND OFFICERS OF THE MERGER SUBSIDIARIES AND
SURVIVING CORPORATIONS
3.1. DIRECTORS. The directors of the Purchaser
immediately prior to the Effective Time shall be the
directors of the surviving corporation of the Purchaser
Merger as of the Effective Time and until their successors
are duly appointed or elected in accordance with applicable
4<PAGE>
<PAGE>
law. The directors of Merger Sub B immediately prior to the
Effective Time shall be the directors of the surviving
corporation of the Company Merger as of the Effective Time
and until their successors are duly appointed or elected in
accordance with applicable law.
3.2. OFFICERS. The officers of the Purchaser
and the Company immediately prior to the Effective Time
shall be the officers of the surviving corporations of the
Purchaser Merger and the Company Merger, respectively, as of
the Effective Time and until their successors are duly
appointed or elected in accordance with applicable law.
ARTICLE 4
EFFECT OF THE MERGERS ON SECURITIES OF
THE PURCHASER, THE COMPANY AND THE MERGER SUBSIDIARIES
4.1. MERGER SUB STOCK. At the Effective Time,
each share of the common stock of Merger Sub A outstanding
immediately prior to the Effective Time shall be converted
into and shall become one share of common stock of the
surviving corporation of the Purchaser Merger. At the
Effective Time, each share of the common stock of Merger Sub
B outstanding immediately prior to the Effective Time shall
be converted into and shall become one share of common stock
of the surviving corporation of the Company Merger.
4.2. CANCELLATION OF HOLDING COMPANY CAPITAL
STOCK. At the Effective Time, each share of the capital
stock of Holding Company issued and outstanding immediately
prior to the Effective Time shall be cancelled and cease to
exist.
4.3. CONVERSION OF PURCHASER STOCK. (a)
Subject to Section 4.3(b), at the Effective Time, each share
of common stock, par value $0.025 per share, of the
Purchaser, together with the associated Purchaser Rights (as
hereinafter defined) ("Purchaser Common Stock") issued and
outstanding at the Effective Time shall be converted into
one share of Holding Company Common Stock. Upon such
conversion, all such shares of Purchaser Common Stock shall
be cancelled and cease to exist, and each certificate
theretofore representing any such shares shall, without any
action on the part of the holder thereof, be deemed to
represent an equivalent number of shares of Holding Company
Common Stock.
(b) At the Effective Time, each share of
Purchaser Common Stock which is held in the treasury of the
Purchaser immediately prior to the Effective Time shall, by
virtue of the Mergers, cease to be outstanding and shall be
5
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cancelled and retired without payment of any consideration
therefor.
4.4. CONVERSION OF COMPANY COMMON STOCK.
(a) Except as otherwise provided in Section 4.6 and subject
to Sections 4.4(c) and 4.4(d), at the Effective Time each
issued and outstanding share of Common Stock, $.10 par value
of the Company (the "Company Common Stock"), shall be
converted into at the election of the holder thereof one of
the following (as adjusted pursuant to Section 4.6, the
"Merger Consideration"):
(i) for each such share of Company Common Stock
with respect to which an election to receive Holding
Company Common Stock has been effectively made and not
revoked or lost, pursuant to Sections 4.5(c), (d) and (e)
(a "Stock Election"), the right to receive (x) one share
of Holding Company Common Stock plus (y) a number of
shares of Holding Company Common Stock equal to a
fraction, the numerator of which is $65 and the
denominator of which is the Purchaser Common Stock Price
(collectively, the "Stock Consideration"). The "Purchaser
Common Stock Price" means an amount equal to the average
of the closing sales prices of Purchaser Common Stock on
the New York Stock Exchange Composite Tape on each of the
ten consecutive trading days immediately preceding the
second trading day prior to the date of the Effective
Time;
(ii) for each such share of Company Common Stock
(other than shares as to which a Stock Election was made),
the right to receive in cash from the Purchaser, without
interest, an amount equal to $65 plus the Purchaser Common
Stock Price (collectively, the "Cash Consideration").
(b) As a result of the Company Merger and
without any action on the part of the holder thereof, at the
Effective Time all shares of Company Common Stock shall
cease to be outstanding and shall be cancelled and retired
and shall cease to exist, and each holder of shares of
Company Common Stock shall thereafter cease to have any
rights with respect to such shares of Company Common Stock,
except the right to receive, without interest, the Merger
Consideration and cash for fractional shares of Holding
Company Common Stock in accordance with Sections 4.7(c) upon
the surrender of a certificate representing such shares of
Company Common Stock (a "Company Certificate").
(c) Notwithstanding anything contained in this
Section 4.4 to the contrary, each share of Company Common
Stock issued and held in the Company's treasury immediately
prior to the Effective Time shall, by virtue of the Company
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Merger, cease to be outstanding and shall be cancelled and
retired without payment of any consideration therefor.
(d) Notwithstanding anything in this Section
4.4 to the contrary, shares of Company Common Stock which
are issued and outstanding immediately prior to the
Effective Time and which are held by stockholders who have
not voted such shares in favor of the Company Merger and who
shall have properly exercised their rights of appraisal for
such shares in the manner provided by the New York Business
Corporation Law (the "NYBCL") (the "Dissenting Shares")
shall not be converted into or be exchangeable for the right
to receive the Merger Consideration, unless and until such
holder shall have failed to perfect or shall have
effectively withdrawn or lost his right to appraisal and
payment, as the case may be. If such holder shall have so
failed to perfect or shall have effectively withdrawn or
lost such right, his shares shall thereupon be deemed to
have been converted into and to have become exchangeable
for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company
shall give the Purchaser prompt notice of any Dissenting
Shares (and shall also give the Purchaser prompt notice of
any withdrawals of such demands for appraisal rights) and
the Purchaser shall have the right to direct all
negotiations and proceedings with respect to any such
demands. Neither the Company nor the surviving corporation
of the Company Merger shall, except with the prior written
consent of the Purchaser, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand
for appraisal rights.
(e) At the Effective Time, each outstanding
option or right to purchase shares of Company Common Stock
(a "Company Option") shall, if agreed by the holder of any
such Company Option, be assumed by Holding Company in such
manner that it is converted into an option to purchase
shares of Holding Company Common Stock, as provided below.
Following the Effective Time, each such Company Option shall
be exercisable upon the same terms and conditions as then
are applicable to such Company Option, except that (i) each
such Company Option shall be exercisable for that number of
shares of Holding Company Common Stock equal to the product
of (x) the number of shares of Company Common Stock for
which such Company Option was exercisable and (y) the Stock
Consideration specified in Section 4.4(a)(i) (before
adjustment pursuant to Section 4.6(c)) and (ii) the exercise
price of such option shall be equal to the exercise price of
such option as of the date hereof divided by the Stock
Consideration (before adjustment pursuant to Section
4.6(c)). It is the intention of the parties that, to the
extent that any such Company Option constituted an
"incentive stock option" (within the meaning of Section 422
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of the Code) immediately prior to the Effective Time, such
option continue to qualify as an incentive stock option to
the maximum extent permitted by Section 422 of the Code, and
that the assumption of the Company Stock Options provided by
this Section 4.4(e) satisfy the conditions of Section 424(a)
of the Code. From and after the date of this Agreement, no
additional options to purchase shares of Company Common
Stock shall be granted under the Company stock option plans
or otherwise (other than an aggregate of 75,000 options to
acquire Company Common Stock granted pursuant to the terms
existing on the date hereof of the Company's stock option
plan). Notwithstanding the foregoing provisions of this
Section 4.4(e) or any other provision of this Agreement, the
Company and the holder of any Company Option may amend such
Company Option so that the holder of such Company Option (if
it is outstanding at the Effective Time) may elect to
receive, in settlement thereof, for each share of Company
Common Stock subject to a Company Option an amount (subject
to any applicable withholding tax) in cash equal to the Cash
Consideration (before adjustment pursuant to Section 4.6(d))
minus the per share exercise or purchase price of such
Company Option as of the date hereof. Except as otherwise
agreed to by the parties, the Company shall use reasonable
efforts to ensure that no person shall have any right under
any stock option plan (or any option granted thereunder) or
other plan, program or arrangement with respect to,
including any right to acquire, equity securities of the
Company following the Effective Time.
4.5. COMPANY COMMON STOCK ELECTIONS. (a) Each
person who, at the Effective Time, is a record holder of
shares of Company Common Stock (other than holders of shares
of Company Common Stock to be cancelled as set forth in
Section 4.4(c) or Dissenting Shares) shall have the right to
submit an Election Form (as defined in Section 4.5(c))
specifying the number of shares of Company Common Stock that
such person desires to have converted into the right to
receive Holding Company Common Stock pursuant to the Stock
Election and the number of shares of Company Common Stock
that such person desires to have converted into the right to
receive cash (a "Cash Election")
(b) Promptly after the Allocation Determination
(as defined in Section 4.5(d)), (i) Holding Company shall
deposit (or cause to be deposited) with a bank or trust
company to be designated by Purchaser and reasonably
acceptable to the Company (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock,
for exchange in accordance with this Article IV, cash in the
amount sufficient to pay the aggregate cash portion of the
Merger Consideration and (ii) Holding Company shall deposit
(or cause to be deposited) with the Exchange Agent, for the
benefit of the holders of shares of Purchaser Common Stock
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and for the benefit of holders of shares of Company Common
Stock, certificates representing the shares of Holding
Company Common Stock ("Holding Company Certificates") for
exchange in accordance with this Article IV (the cash and
shares deposited pursuant to clauses (i) and (ii) being
hereinafter referred to as the "Exchange Fund"). Holding
Company Common Stock into which Purchaser Common Stock and
Company Common Stock shall be converted pursuant to the
Mergers shall be deemed to have been issued at the Effective
Time.
(c) As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder
of record of Company Common Stock immediately prior to the
Effective Time (excluding any shares of Company Common Stock
which will be cancelled pursuant to Section 4.4(c) or
Dissenting Shares) (A) a letter of transmittal (the "Company
Letter of Transmittal") (which shall specify that delivery
shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon delivery of such Company
Certificates to the Exchange Agent and shall be in such form
and have such other provisions as Purchaser shall specify),
(B) instructions for use in effecting the surrender of the
Company Certificates in exchange for the Merger
Consideration with respect to the shares of Company Common
Stock formerly represented thereby, and (C) an election form
(the "Election Form") providing for such holders to make the
Cash Election or the Stock Election. As of the Election
Deadline (as hereinafter defined) all holders of Company
Common Stock immediately prior to the Effective Time that
shall not have submitted to the Exchange Agent or shall have
properly revoked an effective, properly completed, Election
Form shall be deemed to have made a Cash Election.
(d) Any Cash Election (other than a deemed Cash
Election) or Stock Election shall have been validly made
only if the Exchange Agent shall have received by 5:00 p.m.
New York, New York time on a date (the "Election Deadline")
to be mutually agreed upon by the Purchaser and the Company
(which date shall not be later than the twentieth business
day after the Effective Time), an Election Form properly
completed and executed (with the signature or signatures
thereof guaranteed to the extent required by the Election
Form) by such holder accompanied by such holder's Company
Certificates, or by an appropriate guarantee of delivery of
such Company Certificates from a member of any registered
national securities exchange or of the National Association
of Securities Dealers, Inc. or a commercial bank or trust
company in the United States as set forth in such Election
Form. Any holder of Company Common Stock who has made an
election by submitting an Election Form to the Exchange
Agent may at any time prior to the Election Deadline change
such holder's election by submitting a revised Election
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Form, properly completed and signed that is received by the
Exchange Agent prior to the Election Deadline. Any holder
of Company Common Stock may at any time prior to the
Election Deadline revoke his election and withdraw his
Company Certificates deposited with the Exchange Agent by
written notice to the Exchange Agent received by the close
of business on the day prior to the Election Deadline. As
soon as practicable after the Election Deadline, the
Exchange Agent shall determine the allocation of the cash
portion of the Merger Consideration and the stock portion of
the Stock Consideration and shall notify Holding Company of
its determination (the "Allocation Determination").
(e) Upon surrender of a Company Certificate for
cancellation to the Exchange Agent, together with the
Company Letter of Transmittal, duly executed, and such other
documents as Purchaser or the Exchange Agent shall
reasonably request, the holder of such Company Certificate
shall be entitled to receive promptly after the Election
Deadline in exchange therefor (A) a certified or bank
cashier's check in the amount equal to the cash, if any,
which such holder has the right to receive pursuant to the
provisions of this Article IV (including any cash in lieu of
fractional shares of Holding Company Common Stock pursuant
to Section 4.8(c)), and (B) a Holding Company Certificate
representing that number of shares of Holding Company Common
Stock, if any, which such holder has the right to receive
pursuant to this Article IV (in each case less the amount of
any required withholding taxes), and the Company Certificate
so surrendered shall forthwith be cancelled. Until
surrendered as contemplated by this Section 4.5, each
Company Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the
Merger Consideration with respect to the shares of Company
Common Stock formerly represented thereby.
(f) Purchaser shall have the right to make
rules, not inconsistent with the terms of this Agreement,
governing the validity of the Election Forms, the manner and
extent to which Cash Elections or Stock Elections are to be
taken into account in making the determinations prescribed
by Section 4.6, the issuance and delivery of certificates
for Holding Company Common Stock into which shares of
Company Common Stock or Purchaser Common Stock are converted
in the Mergers, and the payment of cash for shares of
Company Common Stock converted into the right to receive
cash in the Company Merger.
4.6. PRORATION. (a) As is more fully set forth
below, the maximum number of shares of Holding Company
Common Stock to be issued to holders of Company Common Stock
(the "Stock Cap") shall not exceed the number of Outstanding
Company Shares. "Outstanding Company Shares" shall mean
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those shares of Company Common Stock outstanding immediately
prior to the Effective Time minus (x) shares of Company
Common Stock which will be cancelled pursuant to Section
4.4(c) and (y) Dissenting Shares (as long as such remain
Dissenting Shares).
(b) As is more fully set forth below, the
aggregate amount of cash to be paid to holders of
Outstanding Company Shares (the "Cash Cap") shall not exceed
the product of (x) $65 and (y) the number of Outstanding
Company Shares; provided, however, that the Purchaser shall
have the right, in its sole discretion, to increase the Cash
Cap so long as notice of such change is given to holders of
the Outstanding Company Shares in the Company Letter of
Transmittal or in any other manner reasonably calculated to
so notify holders of Outstanding Company Shares not later
than the day the Letter of Transmittal is transmitted to
holders of Outstanding Company Shares.
(c) In the event that the aggregate number of
shares of Holding Company Common Stock represented by the
Stock Elections received by the Exchange Agent (the
"Requested Stock Amount") exceeds the Stock Cap, each holder
making a Stock Election shall receive, for each share of
Company Common Stock for which a Stock Election has been
made, (x) a number of shares of Holding Company Common Stock
equal to the product of the Stock Consideration and the
Stock Proration Factor (as defined below) (such product, the
"Prorated Stock Amount") and (y) cash in an amount equal to
the product of (A) the Stock Consideration minus the
Prorated Stock Amount and (B) the Purchaser Common Stock
Price. The "Stock Proration Factor" shall be a fraction,
the numerator of which is the Stock Cap and the denominator
of which is the Requested Stock Amount.
(d) In the event that the aggregate amount of
cash represented by the Cash Elections received by the
Exchange Agent (the "Requested Cash Amount") exceeds the
Cash Cap (as such amount may have been increased at
Purchaser's sole discretion pursuant to Section 4.6(b)),
each holder making a Cash Election (and each holder who is
deemed to have made a Cash Election pursuant to Section
4.5(c)) shall receive, for each share of Company Common
Stock for which a Cash Election has been made, (x) cash in
an amount equal to the product of the Cash Consideration and
a fraction, the numerator of which is the Cash Cap and the
denominator of which is the Requested Cash Amount (such
product, the "Prorated Cash Amount") and (y) a number of
shares of Holding Company Common Stock equal to a fraction,
the numerator of which is equal to the Cash Consideration
minus the Prorated Cash Amount and the denominator of which
is the Purchaser Common Stock Price.
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4.7. DIVIDENDS, FRACTIONAL SHARES, ETC.
(a) Notwithstanding any other provisions of this Agreement,
no dividends or other distributions declared after the
Effective Time on Holding Company Common Stock shall be paid
with respect to any shares of Company Common Stock
represented by a Company Certificate, until such Company
Certificate is surrendered for exchange as provided herein.
Subject to the effect of applicable laws, following
surrender of any such Company Certificate, there shall be
paid to the holder of the Holding Company Certificates
issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of
Holding Company Common Stock and not paid, less the amount
of any withholding taxes which may be required thereon, and
(ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole
shares of Holding Company Common Stock, less the amount of
any withholding taxes which may be required thereon.
(b) At or after the Effective Time, there shall
be no transfers on the stock transfer books of the Purchaser
or the Company of the shares of Purchaser Common Stock or
Company Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
certificates representing any such shares are presented to
the surviving corporations of the Purchaser Merger or the
Company Merger, they shall be cancelled and exchanged for
certificates for the consideration, if any, deliverable in
respect thereof pursuant to this Agreement and the Merger
Agreements in accordance with the procedures set forth in
this Article 4. Company Certificates surrendered for
exchange by any person constituting an "affiliate" of the
Company for purposes of Rule 145(c) under the Securities Act
of 1933, as amended (the "Securities Act"), shall not be
exchanged until the Purchaser has received a written
agreement from such person as provided in Section 7.10.
(c) No fractional shares of Holding Company
Common Stock shall be issued pursuant to the Company Merger.
In lieu of the issuance of any fractional share of Holding
Company Common Stock pursuant to the Company Merger, cash
adjustments will be paid to holders in respect of any
fractional share of Holding Company Common Stock that would
otherwise be issuable, and the amount of such cash
adjustment shall be equal to the product of such fractional
amount and the Purchaser Common Stock Price.
(d) Any portion of the Exchange Fund (including
the proceeds of any investments thereof and any shares of
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Holding Company Common Stock) that remains unclaimed by the
former stockholders of the Purchaser and the Company six
months after the Effective Time shall be delivered to the
Holding Company. Any former stockholder of the Purchaser or
the Company who have not theretofore complied with this
Article 4 shall thereafter look only to the applicable
surviving corporation for payment of the applicable merger
consideration, cash in lieu of fractional shares and unpaid
dividends and distributions on the Holding Company Common
Stock deliverable in respect of each share of Purchaser
Common Stock or Company Common Stock such stockholder holds
as determined pursuant to this Agreement, in each case
without any interest thereon.
(e) None of the Purchaser, the Company, the
Holding Company, the surviving corporations of the Mergers,
the Exchange Agent or any other person shall be liable to
any former holder of shares of Purchaser Common Stock or
Company Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property,
escheat or similar laws.
(f) In the event that any Company Certificate
shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such
Company Certificate to be lost, stolen or destroyed and, if
required by Holding Company, the posting by such person of a
bond in such reasonable amount as Holding Company may direct
as indemnity against any claim that may be made against it
with respect to such Company Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed
Company Certificate the applicable merger consideration,
cash in lieu of fractional shares, and unpaid dividends and
distributions on shares of Holding Company Common Stock as
provided in Section 4.7, deliverable in respect thereof
pursuant to this Agreement and the Company Merger Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF COMPANY
Except as set forth in the disclosure letter
delivered at or prior to the execution hereof to the
Purchaser (the "Company Disclosure Letter") or in the
Company Reports (as defined below), the Company represents
and warrants to the Purchaser as of the date of this
Agreement as follows:
5.1. EXISTENCE; GOOD STANDING; CORPORATE
AUTHORITY. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Company is duly licensed
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or qualified to do business as a foreign corporation and is
in good standing under the laws of any other state of the
United States in which the character of the properties owned
or leased by it or in which the transaction of its business
makes such qualification necessary, except where the failure
to be so qualified or to be in good standing would not have
a material adverse effect on the business, results of
operations or financial condition of the Company and its
Subsidiaries taken as a whole (a "Company Material Adverse
Effect"). The Company has all requisite corporate power and
authority to own, operate and lease its properties and carry
on its business as now conducted. Each of the Company's
Significant Subsidiaries (as defined in Section 10.14
hereof) is a corporation or partnership duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the
corporate or partnership power and authority to own its
properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in
good standing in each jurisdiction in which the ownership of
its property or the conduct of its business requires such
qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would
not have a Company Material Adverse Effect. The copies of
the Company's Certificate of Incorporation and Bylaws
previously made available to the Purchaser are true and
correct.
5.2. AUTHORIZATION, VALIDITY AND EFFECT OF
AGREEMENTS. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. Subject only
to the approval of this Agreement and the transactions
contemplated hereby by the holders of two-thirds of the
outstanding shares of Company Common Stock, the consummation
by the Company of the transactions contemplated hereby has
been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant
hereto for value received) will constitute, the valid and
legally binding obligations of the Company, enforceable in
accordance with their respective terms, subject to
applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general
principles of equity.
5.3. CAPITALIZATION. The authorized capital
stock of the Company consists of 300,000,000 shares of
Company Common Stock and 4,000,000 shares of preferred
stock, no par value (the "Company Preferred Stock"). As of
July 15, 1995, there were 154,061,655 shares of Company
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Common Stock, and no shares of Company Preferred Stock,
issued and outstanding, plus 29,873,305 shares of Company
Common Stock held in the Company's treasury. Since such
date, (i) no additional shares of capital stock of the
Company have been issued, except pursuant to the terms
existing on the date hereof of the Company's stock option
and employee stock purchase plans and other similar employee
benefit plans (the "Company Stock Plans") and (ii) no
options or other rights to acquire shares of the Company's
capital stock have been granted (other than an aggregate of
75,000 options to acquire Company Common Stock granted
pursuant to the terms existing on the date hereof of the
Company's stock option plan). The Company has no
outstanding bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any
matter (other than the preferred stock purchase rights of
the Company (the "Rights") issued pursuant to the Rights
Agreement, dated December 14, 1989, between the Company and
Harris Trust Company (the "Company Rights Agreement")). All
issued and outstanding shares of Company Common Stock are
duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. There are not at the date of
this Agreement any existing options, warrants, calls,
subscriptions, convertible securities, or other rights,
agreements or commitments which obligate the Company or any
of its Subsidiaries to issue, transfer or sell any shares of
capital stock of the Company or any of its Subsidiaries
(other than under the Company Stock Plans and other than the
Rights).
5.4. SUBSIDIARIES. The Company owns directly or
indirectly each of the outstanding shares of capital stock
(or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others
performing similar functions with respect to such Company
Significant Subsidiary) of each of the Company's Significant
Subsidiaries. Each of the outstanding shares of capital
stock of each of the Company's Significant Subsidiaries is
duly authorized, validly issued, fully paid and
nonassessable, and is owned, directly or indirectly, by the
Company. Each of the outstanding shares of capital stock of
each Significant Subsidiary of the Company is owned,
directly or indirectly, by the Company free and clear of
all liens, pledges, security interests, claims or other
encumbrances other than liens imposed by local law which are
not material. The following information for each
Significant Subsidiary of the Company has been previously
provided to the Purchaser, if applicable: (i) its name and
jurisdiction of incorporation or organization; (ii) its
authorized capital stock or share capital; and (iii) the
number of issued and outstanding shares of capital stock or
share capital. All of the Subsidiaries of the Company other
than the Significant Subsidiaries, when taken together, do
15<PAGE>
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not in the aggregate constitute a Significant Subsidiary of
the Company.
5.5. OTHER INTERESTS. Except for interests in
the Company Subsidiaries, neither the Company nor any
Company Significant Subsidiary owns directly or indirectly
any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or
entity (other than (i) non-controlling investments in the
ordinary course of business and corporate partnering,
development, cooperative marketing and similar undertakings,
arrangements entered into in the ordinary course of business
and (ii) other investments of less than $100,000,000).
5.6. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the
Company do not, and the consummation by the Company of the
transactions contemplated hereby will not, (i) conflict with
or violate the certificate of incorporation or by-laws or
equivalent organizational documents of (x) the Company or
(y) any Significant Subsidiary, (ii) subject to making the
filings and obtaining the approvals identified in Section
5.6(b) hereof, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the
Company or any Company Subsidiary or by which any property
or asset of the Company or any Company Subsidiary is bound
or affected, or (iii) subject to making the filings and
obtaining the approvals identified in Section 5.6(b) hereof,
result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a
default) under, result in the loss of a material benefit
under, or give to others any right of purchase or sale, or
any right of termination, amendment, acceleration, increased
payments or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of the
Company or any Company Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or
by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary
is bound or affected, except, in the case of clauses (i)(y),
(ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not
prevent or delay consummation of any of the transactions
contemplated hereby in any material respect, or otherwise
prevent the Company from performing its obligations under
this Agreement in any material respect, and would not,
individually or in the aggregate, have a Company Material
Adverse Effect. The execution and delivery of this
Agreement by the Company do not, and the consummation by the
Company of the transactions contemplated hereby will not,
result in any material breach of or constitute a material
16<PAGE>
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default (or an event which with notice or lapse of time or
both would become a material default) under, result in the
loss of a material benefit under, or give to others any
right of purchase or sale, or any right of termination,
amendment, acceleration, increased payments or cancellation
of, or result in the creation of a lien or other encumbrance
on any property or asset of the Company or any Company
Subsidiary pursuant to, any Material Contract to which the
Company or any Company Subsidiary is a party or by which the
Company or any Company Subsidiary or any property or asset
of the Company or any Company Subsidiary is bound or
affected. For the purposes hereof, "Material Contract"
shall mean any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation that is material to the ownership
or operation of any of ESPN, Lifetime Television and A&E
Television Network (each a "Station"), or any network
affiliate agreement.
(b) The execution and delivery of this
Agreement by the Company do not, and the performance of this
Agreement and the consummation by the Company of the
transactions contemplated hereby will not, require any
consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory
authority, domestic or foreign (each a "Governmental
Entity"), except (i) for (A) applicable requirements, if
any, of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act of 1933, as amended (the
"Securities Act"), state securities or "blue sky" laws
("Blue Sky Laws") and state takeover laws, (B) the pre-
merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"),
(C) applicable approvals of the Federal Communications
Commission (the "FCC") pursuant to the Communications Act of
1934, as amended, and any regulations promulgated thereunder
(the "Communications Act"), (D) filing and recordation of
appropriate merger and similar documents as required by New
York law and Delaware law and (E) applicable requirements,
if any, of the Code and state, local and foreign tax laws,
and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of
any of the transactions contemplated hereby in any material
respect, or otherwise prevent the Company from performing
its obligations under this Agreement in any material
respect, and would not, individually or in the aggregate,
have a Company Material Adverse Effect.
5.7. COMPLIANCE. Neither the Company nor any
Company Subsidiary is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment
17<PAGE>
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or decree applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company
or any Company Subsidiary is bound or affected, or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or
by which the Company or any Company Subsidiary or any
property or asset of the Company or any Company Subsidiary
is bound or affected, in each case except for any such
conflicts, defaults or violations that would not,
individually or in the aggregate, have a Company Material
Adverse Effect. The Company and its Subsidiaries have
obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or
governmental regulations in connection with their business
as now conducted, where the failure to obtain any such item
or to take any such action would have, individually or in
the aggregate, a Company Material Adverse Effect. The
Company and the Company Subsidiaries that are FCC licensees
are financially qualified, and to the best of the Company's
knowledge, are otherwise qualified to be FCC licensees. The
Company is not aware of any facts or circumstances that
might prevent or delay any necessary FCC approval of the
transactions contemplated hereby.
5.8 SEC DOCUMENTS. (a) The Company has filed
all forms, reports and documents required to be filed by it
with the Securities and Exchange Commission ("SEC") since
December 31, 1992 (collectively, the "Company Reports"). As
of their respective dates, the Company Reports and any such
reports, forms and other documents filed by the Company with
the SEC after the date of this Agreement (i) complied, or
will comply, as to form in all material respects with the
applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder and (ii) did
not, or will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in
the light of the circumstances under which they were made,
not misleading. The representation in clause (ii) of the
preceding sentence shall not apply to any misstatement or
omission in any Company Report filed prior to the date of
this Agreement which was superseded by a subsequent Company
Report filed prior to the date of this Agreement. No
Company Subsidiary is required to file any report, form or
other document with the SEC.
(b) Each of the consolidated balance sheets of
Company included in or incorporated by reference into the
Company Reports (including the related notes and schedules)
fairly presents the consolidated financial position of
Company and the Company Subsidiaries as of its date, and
each of the consolidated statements of income, retained
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earnings and cash flows of Company included in or
incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents
the results of operations, retained earnings or cash flows,
as the case may be, of Company and the Company Subsidiaries
for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments
which would not be material in amount or effect), in each
case in accordance with generally accepted accounting
principles consistently applied during the periods involved,
except as may be noted therein. Neither Company nor any of
the Company Subsidiaries has any liabilities or obligations
of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of Company or in the
notes thereto, prepared in accordance with generally
accepted accounting principles consistently applied, except
for (i) liabilities or obligations that were so reserved on,
or reflected in (including the notes to), the consolidated
balance sheet of the Company as of December 31, 1994 or
March 31, 1995; (ii) liabilities or obligations arising in
the ordinary course of business since March 31, 1995,
(iii) liabilities or obligations which would not,
individually or in the aggregate, have a Company Material
Adverse Effect and (iv) payments required as a result of the
Reorganization under the acceleration provisions of the
terms existing on the date hereof of the Company's employee
benefit plans, which acceleration provisions are referred to
in the Company Disclosure Letter.
5.9. LITIGATION. There are no actions, suits or
proceedings pending against Company or the Company
Subsidiaries or, to the actual knowledge of the executive
officers of Company, threatened against Company or the
Company Subsidiaries, at law or in equity, or before or by
any federal or state commission, board, bureau, agency or
instrumentality, that are reasonably likely to have a
Company Material Adverse Effect.
5.10. ABSENCE OF CERTAIN CHANGES. Except as
specifically contemplated by this Agreement, since December
31, 1994, there has not been (i) any Company Material
Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect
to its capital stock (other than regular quarterly cash
dividends not in excess of $.05 per share); or (iii) any
material change in its accounting principles, practices or
methods.
5.11. TAXES. (a) Each of the Company and the
Company Subsidiaries has filed all material tax returns and
reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely
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filed and granted and have not expired, and all tax returns
and reports are complete and accurate in all respects,
except to the extent that such failures to file, have
extensions granted that remain in effect or be complete and
accurate in all respects, as applicable, individually or in
the aggregate, would not have a Company Material Adverse
Effect. The Company and each of the Company Subsidiaries
has paid (or the Company has paid on its behalf) all taxes
shown as due on such tax returns and reports. The most
recent financial statements contained in the Company Reports
reflect an adequate reserve for all taxes payable by the
Company and the Company Subsidiaries for all taxable periods
and portions thereof accrued through the date of such
financial statements, and no deficiencies for any taxes have
been proposed, asserted or assessed against the Company or
any Company Subsidiary that are not adequately reserved for,
except for inadequately reserved taxes and inadequately
reserved deficiencies that would not, individually or in the
aggregate, have a Company Material Adverse Effect. No
requests for waivers of the time to assess any taxes against
the Company or any Company Subsidiary have been granted or
are pending, except for requests with respect to such taxes
that have been adequately reserved for in the most recent
financial statements contained in the Company Reports, or,
to the extent not adequately reserved, the assessment of
which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(b) Neither the Company nor any Company
Subsidiary has taken any action or has any knowledge of any
fact or circumstance that is reasonably likely to prevent
the Company Merger from qualifying as an exchange described
in Section 351(a) or Section 351(b) of the Code.
(c) As used in this Section 5.11 and in Section
6.11, "taxes" shall include all Federal, state, local and
foreign income, franchise, property, sales, use, excise and
other taxes, including obligations for withholding taxes
from payments due or made to any other person and any
interest, penalties or additions to tax.
5.12. EMPLOYEE BENEFIT PLANS. Except as
described in the Company Reports or as would not have a
Company Material Adverse Effect, (i) all employee benefit
plans or programs maintained for the benefit of the current
or former employees or directors of the Company or any
Company Subsidiary that are sponsored, maintained or
contributed to by the Company or any Company Subsidiary, or
with respect to which the Company or any Company Subsidiary
has any liability, including without limitation any such
plan that is an "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act
of 1974 ("ERISA"), are in compliance with all applicable
20<PAGE>
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requirements of law, including ERISA and the Code, and (ii)
neither the Company nor any Company Subsidiary has any
liabilities or obligations with respect to any such employee
benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the executive officers of
the Company are any such liabilities or obligations expected
to be incurred. The execution of, and performance of the
transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan
that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebted-
ness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
The only severance agreements or severance policies
applicable to the Company or its Subsidiaries are the
agreements and policies specifically referred to in the
Company Disclosure Letter.
5.13. LABOR MATTERS. There is no labor strike,
labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the executive officers of
the Company, threatened against or affecting the Company or
any Company Subsidiary, except as would not, individually or
in the aggregate, have a Company Material Adverse Effect.
There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of the executive
officers of the Company, threatened against the Company or
its Subsidiaries relating to their business, except for any
such proceeding which would not have a Company Material
Adverse Effect.
5.14. NO BROKERS. The Company has not entered
into any contract, arrangement or understanding with any
person or firm which may result in the obligation of the
Company or the Purchaser to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby, except
that the Company has retained Allen & Company Incorporated
as its financial advisor, the arrangements with which have
been disclosed in writing to the Purchaser prior to the date
hereof. Other than the foregoing arrangements, the Company
is not aware of any claim for payment of any finder's fees,
brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement
or the consummation of the transactions contemplated hereby.
5.15. OPINION OF FINANCIAL ADVISOR. The Company
has received the opinion of Allen & Company Incorporated to
the effect that, as of the date hereof, the consideration to
be received by the holders of the Company Common Stock in
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the Company Merger is fair to such holders from a financial
point of view.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the disclosure letter
delivered at or prior to the execution hereof to the Company
(the "Purchaser Disclosure Letter") or in the Purchaser
Reports (as defined below), the Purchaser represents and
warrants to the Company as of the date of this Agreement as
follows:
6.1. EXISTENCE; GOOD STANDING; CORPORATE
AUTHORITY. The Purchaser is a corporation duly
incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation. The
Purchaser is duly licensed or qualified to do business as a
foreign corporation and is in good standing under the laws
of any other state of the United States in which the
character of the properties owned or leased by it or in
which the transaction of its business makes such
qualification necessary, except where the failure to be so
qualified or to be in good standing would not have a
material adverse effect on the business, results of
operations or financial condition of the Purchaser and its
Subsidiaries taken as a whole (a "Purchaser Material Adverse
Effect"). The Purchaser has all requisite corporate power
and authority to own, operate and lease its properties and
carry on its business as now conducted. Each of the
Purchaser's Significant Subsidiaries is a corporation or
partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation
or organization, has the corporate or partnership power and
authority to own its properties and to carry on its business
as it is now being conducted, and is duly qualified to do
business and is in good standing in each jurisdiction in
which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdic-
tions in which such failure to be so qualified or to be in
good standing would not have a Purchaser Material Adverse
Effect. The copies of the Purchaser's Certificate of
Incorporation and Bylaws previously made available to the
Company are true and correct.
6.2. AUTHORIZATION, VALIDITY AND EFFECT OF
AGREEMENTS. The Purchaser has the requisite corporate power
and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. Subject only
to the approval of this Agreement and the transactions
contemplated hereby by the holders of a majority of the
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outstanding shares of Purchaser Common Stock, the consumma-
tion by the Purchaser of the transactions contemplated
hereby has been duly authorized by all requisite corporate
action. This Agreement constitutes, and all agreements and
documents contemplated hereby (when executed and delivered
pursuant hereto for value received) will constitute, the
valid and legally binding obligations of the Purchaser,
enforceable in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general
principles of equity.
6.3. CAPITALIZATION. The authorized capital
stock of the Purchaser consists of 1,200,000,000 shares of
Purchaser Common Stock, and 100,000,000 shares of preferred
stock, $.10 par value (the "Purchaser Preferred Stock"). As
of July 15, 1995, there were 522,526,566 shares of Purchaser
Common Stock and no shares of Purchaser Preferred Stock,
issued and outstanding, plus 50,986,941 shares of Purchaser
Common Stock held in the Purchaser's treasury. Since such
date, no additional shares of capital stock of the Purchaser
have been issued except pursuant to the Purchaser's stock
option and employee stock purchase plans, pension plans and
other similar employee benefit plans (the "Purchaser Stock
Plans"). The Purchaser has no outstanding bonds,
debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with
the stockholders of the Purchaser on any matter (other than
the preferred stock purchase rights of the Purchaser (the
"Purchaser Rights") issued pursuant to the Rights Agreement,
dated as of June 21, 1989, between the Purchaser and Bank of
America (the "Purchaser Rights Agreement")). All such issued
and outstanding shares of Purchaser Common Stock are duly
authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Except as contemplated by this
Agreement, there are not at the date of this Agreement any
existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or
commitments which obligate the Purchaser or any of its
Subsidiaries to issue, transfer or sell any shares of
capital stock of the Purchaser or any of its Subsidiaries
(other than under the Purchaser Stock Plans and other than
the Rights).
6.4. SUBSIDIARIES. The Purchaser owns directly
or indirectly each of the outstanding shares of capital
stock of each of the Purchaser's Significant Subsidiaries
(or other ownership interests having by their terms ordinary
voting power to elect a majority of directors or others
performing similar functions with respect to such Purchaser
Significant Subsidiary). Each of the outstanding shares of
capital stock of each of the Purchaser's Significant
23<PAGE>
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Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by
the Purchaser. Each of the outstanding shares of capital
stock of each Significant Subsidiary of the Purchaser is
owned, directly or indirectly, by the Purchaser free and
clear of all liens, pledges, security interests, claims or
other encumbrances other than liens imposed by local law
which are not material. The following information for each
Significant Subsidiary of the Purchaser has been previously
made available to the Company, if requested and if
applicable: (i) its name and jurisdiction of incorporation
or organization; (ii) its authorized capital stock or share
capital; and (iii) the number of issued and outstanding
shares of capital stock or share capital.
6.5. OTHER INTERESTS. Except for interests in
the Purchaser Subsidiaries, neither the Purchaser nor any
Purchaser Significant Subsidiary owns directly or indirectly
any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or
entity (other than (i) passive investments in securities in
the ordinary course of business and corporate partnering,
development, cooperative marketing and similar undertakings
and arrangements entered into in the ordinary course of
business and (ii) other investments of less than
$100,000,000).
6.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the
Purchaser does not, and the consummation by the Purchaser of
the transactions contemplated hereby will not, (i) conflict
with or violate the certificate of incorporation or by-laws
or equivalent organizational documents of (x) the Purchaser
or (y) any Significant Subsidiary, (ii) subject to making
the filings and obtaining the approvals identified in
Section 6.6(b) hereof, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to
the Purchaser or any Purchaser Subsidiary or by which any
property or asset of the Purchaser or any Purchaser
Subsidiary is bound or affected, or (iii) subject to making
the filings and obtaining the approvals identified in
Section 6.6(b) hereof, result in any breach of or constitute
a default (or an event which with notice or lapse of time or
both would become a default) under, result in the loss of a
material benefit under, or give to others any right of
termination, amendment, acceleration, increased payments or
cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of the Purchaser
or any Purchaser Subsidiary pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
the Purchaser or any Purchaser Subsidiary is a party or by
which the Purchaser or any Purchaser Subsidiary or any
24<PAGE>
<PAGE>
property or asset of the Purchaser or any Purchaser
Subsidiary is bound or affected, except, in the case of
clauses (i)(y), (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which
would not prevent or delay consummation of any of the
transactions contemplated hereby in any material respect, or
otherwise prevent the Purchaser from performing its
obligations under this Agreement in any material respect,
and would not, individually or in the aggregate, have a
Purchaser Material Adverse Effect.
(b) The execution and delivery of this
Agreement by the Purchaser does not, and the performance of
this Agreement and the consummation of the transactions
contemplated hereby will not, require any consent, approval,
authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for (A) applicable
requirements, if any, of the Exchange Act, the Securities
Act, Blue Sky Laws and state takeover laws, (B) the pre-
merger notification requirements of the HSR Act,
(C) applicable approvals of the FCC pursuant to the
Communications Act, (D) filing and recordation of
appropriate merger and similar documents as required by New
York law and Delaware law and (E) applicable requirements,
if any, of the Code and state, local and foreign tax laws,
and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of
any of the transactions contemplated hereby in any material
respect, or otherwise prevent the Purchaser or Merger Sub
from performing its obligations under this Agreement in any
material respect, and would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
6.7. COMPLIANCE. Neither the Purchaser nor any
Purchaser Subsidiary is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to the Purchaser or any Purchaser
Subsidiary or by which any property or asset of the
Purchaser or any Purchaser Subsidiary is bound or affected,
or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which the Purchaser or any
Purchaser Subsidiary is a party or by which the Purchaser or
any Purchaser Subsidiary or any property or asset of the
Purchaser or any Purchaser Subsidiary is bound or affected,
in each case except for any such conflicts, defaults or
violations that would not, individually or in the aggregate,
have a Purchaser Material Adverse Effect. The Purchaser and
its Subsidiaries have obtained all licenses, permits and
other authorizations and have taken all actions required by
applicable law or governmental regulations in connection
with their business as now conducted, where the failure to
25<PAGE>
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obtain any such item or to take any such action would have,
individually or in the aggregate, a Purchaser Material
Adverse Effect. The Purchaser and the Purchaser's
Subsidiaries that are FCC licensees are financially
qualified, and to the best of the Purchaser's knowledge, are
otherwise qualified to be FCC licensees. The Purchaser is
not aware of any facts or circumstances that might prevent
or delay any necessary FCC approval of the transactions
contemplated hereby.
6.8. SEC DOCUMENTS. (a) The Purchaser has
filed all forms, reports and documents required to be filed
by it with the SEC since September 30, 1992 (collectively,
the "Purchaser Reports"). As of their respective dates,
the Purchaser Reports, and any such reports, forms and
other documents filed by the Purchaser with the SEC after
the date of this Agreement (i) complied, or will comply,
as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and
the rules and regulations thereunder and (ii) did not, or
will not, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading.
The representation in clause (ii) of the preceding sentence
shall not apply to any misstatement or omission in any
Purchaser Report filed prior to the date of this Agreement
which was superseded by a subsequent Purchaser Report filed
prior to the date of this Agreement. No Purchaser
Subsidiary is required to file any report, form or other
document with the SEC.
(b) Each of the consolidated balance sheets
included in or incorporated by reference into the Purchaser
Reports (including the related notes and schedules) fairly
presents the consolidated financial position of the
Purchaser and the Purchaser Subsidiaries as of its date, and
each of the consolidated statements of income, retained
earnings and cash flows included in or incorporated by
reference into the Purchaser Reports (including any related
notes and schedules) fairly presents the results of
operations, retained earnings or cash flows, as the case may
be, of the Purchaser and the Purchaser Subsidiaries for the
periods set forth therein (subject, in the case of unaudited
statements, to normal year-end audit adjustments which would
not be material in amount or effect), in each case in
accordance with generally accepted accounting principles
consistently applied during the periods involved, except as
may be noted therein. Neither the Purchaser nor any of the
Purchaser Subsidiaries has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of the Purchaser or in
26<PAGE>
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the notes thereto, prepared in accordance with generally
accepted accounting principles consistently applied, except
for (i) liabilities and obligations that were reserved on or
reflected in (including the notes to), the consolidated
balance sheet of the Purchaser as of September 30, 1994 or
March 31, 1995, (ii) liabilities arising in the ordinary
course of business since March 31, 1995, (iii) liabilities
or obligations which would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect and (iv)
payments required as a result of the Reorganization under
the acceleration provisions of the terms of the Purchaser's
employee benefit plans.
6.9. LITIGATION. There are no actions, suits or
proceedings pending against the Purchaser or the Purchaser
Subsidiaries or, to the actual knowledge of the executive
officers of the Purchaser, threatened against the Purchaser
or the Purchaser Subsidiaries, at law or in equity, or
before or by any federal or state commission, board, bureau,
agency or instrumentality, that are reasonably likely to
have a Purchaser Material Adverse Effect.
6.10. ABSENCE OF CERTAIN CHANGES. Except as
specifically contemplated by this Agreement, since December
31, 1994, there has not been (i) any Purchaser Material
Adverse Effect; (ii) any declaration, setting aside or
payment of any dividend or other distribution with respect
to its capital stock (other than regular quarterly cash
dividends including any increase thereof consistent with
past practice); or (iii) any material change in its
accounting principles, practices or methods.
6.11. TAXES. (a) Each of the Purchaser and the
Purchaser Subsidiaries has filed all material tax returns
and reports required to be filed by it, or requests for
extensions to file such returns or reports have been timely
filed and granted and have not expired, and all tax returns
and reports are complete and accurate in all respects,
except to the extent that such failures to file, have
extensions granted that remain in effect or be complete and
accurate in all respects, as applicable, individually or in
the aggregate, would not have a Purchaser Material Adverse
Effect. The Purchaser and each of the Purchaser
Subsidiaries has paid (or the Purchaser has paid on its
behalf) all taxes shown as due on such tax returns and
reports. The most recent financial statements contained in
the Purchaser Reports reflect an adequate reserve for all
taxes payable by the Purchaser and the Purchaser
Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements, and
no deficiencies for any taxes have been proposed, asserted
or assessed against the Purchaser or any Purchaser
Subsidiary that are not adequately reserved for, except for
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inadequately reserved taxes and inadequately reserved
deficiencies that would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect. No
requests for waivers of the time to assess any taxes against
the Purchaser or any Purchaser Subsidiary have been granted
or are pending, except for requests with respect to such
taxes that have been adequately reserved for in the most
recent financial statements contained in the Purchaser
Reports, or, to the extent not adequately reserved, the
assessment of which would not, individually or in the
aggregate, have a Purchaser Material Adverse Effect.
(b) Neither the Purchaser nor any Purchaser
Subsidiary has taken any action or has any knowledge of any
fact or circumstance that is reasonably likely to prevent
the Purchaser Merger from qualifying as at least one of (i)
an exchange described in Section 351(a) or Section 351(b) of
the Code or (ii) a reorganization described in Section
368(a) of the Code.
6.12. EMPLOYEE BENEFIT PLANS. Except as
described in the Purchaser Reports or as would not have a
Purchaser Material Adverse Effect, (i) all employee benefit
plans or programs maintained for the benefit of the current
or former employees or directors of Purchaser or any
Purchaser Subsidiary that are sponsored, maintained or
contributed to by Purchaser or any Purchaser Subsidiary, or
with respect to which Purchaser or any Purchaser Subsidiary
has any liability, including without limitation any such
plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable
requirements of law, including ERISA and the Code, and (ii)
neither Purchaser nor any Purchaser Subsidiary has any
liabilities or obligations with respect to any such employee
benefit plans or programs, whether accrued, contingent or
otherwise, nor to the knowledge of the executive officers of
Purchaser are any such liabilities or obligations expected
to be incurred. Except as disclosed in the Purchaser
Reports or pursuant to the Disney Salaried Savings and
Investment Plan, the execution of, and performance of the
transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit
plan, policy, arrangement or agreement or any trust or loan
that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebted-
ness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee.
6.13. LABOR MATTERS. There is no labor strike,
labor dispute, work slowdown, stoppage or lockout actually
pending, or to the knowledge of the executive officers of
the Purchaser, threatened against or affecting the Purchaser
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or any Purchaser Subsidiary, except as would not,
individually or in the aggregate, have a Purchaser Material
Adverse Effect. There is no unfair labor practice or labor
arbitration proceeding pending or, to the knowledge of the
executive offices of the Purchaser, threatened against the
Purchaser or its Subsidiaries relating to their business,
except for any such proceeding which would not have a
Purchaser Material Adverse Effect.
6.14. OPINION OF FINANCIAL ADVISOR. The
Purchaser has received the opinion of Bear, Stearns & Co.
Inc. to the effect that, as of the date hereof, the
Reorganization is fair to the holders of Purchaser Common
Stock from a financial point of view.
6.15. NO BROKERS. The Purchaser has not entered
into any contract, arrangement or understanding with any
person or firm which may result in the obligation of the
Company or the Purchaser to pay any finder's fee, brokerage
or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby except
that the Purchaser has retained Bear, Stearns & Co. Inc. and
James D. Wolfensohn Incorporated as its financial advisors,
the arrangements with which have been disclosed in writing
to the Company prior to the date hereof. Other than the
foregoing arrangements, the Company is not aware of any
claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
ARTICLE 7
COVENANTS
7.1. ALTERNATIVE PROPOSALS. Prior to the
Effective Time, the Company agrees (a) that neither it nor
any of its Subsidiaries shall, nor shall it or any of its
Subsidiaries permit their respective officers, directors,
employees, agents and representatives (including, without
limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to, initiate,
solicit or encourage, directly or indirectly, any inquiries
or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition,
consolidation or similar transaction involving, and purchase
of (i) all or any significant portion of the assets of the
Company and its Subsidiaries taken as a whole, or of any
Subsidiary of the Company which owns or operates any
Station, (ii) 25% or more of the outstanding shares of
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Company Common Stock or (iii) 25% of the outstanding shares
of the capital stock of any Subsidiary of the Company which
owns or operates any Station (any such proposal or offer
being hereinafter referred to as an "Alternative Proposal")
or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions
with, any person relating to an Alternative Proposal
(excluding the Mergers contemplated by this Agreement), or
otherwise facilitate any effort or attempt to make or
implement an Alternative Proposal; and (b) that it will
notify the Purchaser immediately if any such inquiries or
proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to
be initiated or continued with, it; provided, however, that
nothing contained in this Section 7.1 shall prohibit the
Board of Directors of the Company from (i) furnishing
information to or entering into discussions or negotiations
with, any person or entity that makes an unsolicited bona
fide Alternative Proposal, if, and only to the extent that,
(A) the Board of Directors of the Company, based upon the
advice of outside counsel, determines in good faith that
such action is required for the Board of Directors to comply
with its fiduciary duties to stockholders imposed by law,
(B) prior to furnishing such information to, or entering
into discussions or negotiations with, such person or
entity, the Company provides written notice to the Purchaser
to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person
or entity, and (C) the Company keeps the Purchaser informed
of the status and all material information with respect to
any such discussions or negotiations; and (ii) to the extent
applicable, complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Alternative Proposal.
Nothing in this Section 7.1 shall (x) permit the Company to
terminate this Agreement (except as specifically provided in
Article 9 hereof), (y) permit the Company to enter into any
agreement with respect to an Alternative Proposal for as
long as this Agreement remains in effect (it being agreed
that for as long as this Agreement remains in effect, the
Company shall not enter into any agreement with any person
that provides for, or in any way facilitates, an Alternative
Proposal (other than a confidentiality agreement in
customary form)), or (z) affect any other obligation of the
Company under this Agreement. Nothing contained in this
Section 7.1 or any other provision of this Agreement shall
prohibit the Company or any of its Subsidiaries from
engaging in any discussions or providing any information or
data, or entering into any agreement with any person to the
extent the Company or any of its Subsidiaries is obligated
to do so pursuant to the terms of any agreement relating to
a Station as in effect on the date hereof; provided that
nothing in this sentence shall be deemed to limit the
Company's representation set forth in Section 5.6.
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7.2. INTERIM OPERATIONS. (a) Prior to the
Effective Time, except as set forth in the Company
Disclosure Letter or as contemplated by any other provision
of this Agreement, unless the Purchaser has consented in
writing thereto, the Company:
(i) Shall, and shall cause each of its
Significant Subsidiaries to, conduct its operations
according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(ii) Shall use its reasonable efforts, and shall
cause each of its Significant Subsidiaries to use its
reasonable efforts, to preserve intact their business
organizations and goodwill, keep available the services of
their respective officers and employees and maintain
satisfactory relationships with those persons having
business relationships with them;
(iii) Shall not amend its Certificate of
Incorporation or Bylaws or comparable governing
instruments (other than Bylaw amendments which are not
material to the Company or to the consummation of the
transactions contemplated by this Agreement);
(iv) Shall promptly notify the Purchaser of any
breach of any representation or warranty contained herein
or any Company Material Adverse Effect;
(v) Shall promptly deliver to the Purchaser true
and correct copies of any report, statement or schedule
filed with the SEC subsequent to the date of this
Agreement;
(vi) Shall not (x) except pursuant to the
exercise of options, warrants, conversion rights and other
contractual rights existing on the date hereof and
disclosed pursuant to this Agreement, issue any shares of
its capital stock, effect any stock split or otherwise
change its capitalization as it existed on the date
hereof, (y) grant, confer or award any option, warrant,
conversion right or other right not existing on the date
hereof to acquire any shares of its capital stock (other
than an aggregate of 75,000 options to acquire Company
Common Stock pursuant to the terms existing on the date
hereof of the Company's stock option plan) or grant,
confer or award any bonuses or other forms of cash
incentives to any officer, director or key employee except
consistent with past practice or grant or confer any
awards (other than those granted as of the date hereof)
under the Incentive Compensation Plan of the Company (as
amended through December 9, 1993), (z) increase any
compensation under any employment agreement with any of
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its present or future officers, directors or employees,
except for normal increases consistent with past practice,
grant any severance or termination pay to, or enter into
any employment or severance agreement with any officer or
director or amend any such agreement in any material
respect other than severance arrangements which are
consistent with past practice with respect to employees
terminated by the Company, or (aa) adopt any new employee
benefit plan (including any stock option, stock benefit or
stock purchase plan) or amend any existing employee
benefit plan in any material respect;
(vii) Shall not (i) declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock or other
ownership interests (other than regular quarterly cash
dividends not in excess of $.05 per share) or (ii)
directly or indirectly redeem, purchase or otherwise
acquire any shares of its capital stock or capital stock
of any of its Subsidiaries, or make any commitment for any
such action;
(viii) Shall not, and shall not permit any of its
Subsidiaries to, sell, lease or otherwise dispose of any
of its assets (including capital stock of Subsidiaries)
except in the ordinary course of business, or to acquire
any business or assets, in each case for an amount
exceeding $100,000,000;
(ix) Shall not incur any material amount of
indebtedness for borrowed money or make any loans,
advances or capital contributions to, or investments
(other than non-controlling investments in the ordinary
course of business) in, any other person other than a
wholly owned Company Subsidiary, or issue or sell any debt
securities, other than borrowings under existing lines of
credit in the ordinary course of business, in each case in
an amount exceeding $100,000,000;
(x) Shall not, except as previously approved by
the Board of Directors of the Company and identified to
the Purchaser prior to the date hereof, or except in the
ordinary course of business, authorize or make capital
expenditures in excess of $200,000,000 in the aggregate;
(xi) Shall not mortgage or otherwise encumber or
subject to any lien any properties or assets except as
would not be reasonably likely to have a Company Material
Adverse Effect;
(xii) Shall not make any change to its accounting
(including tax accounting) methods, principles or
practices, except as may be required by generally accepted
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accounting principles and except, in the case of tax
accounting methods, principles or practices, in the
ordinary course of business of the Company or any of its
Subsidiaries; and
(xiii) shall not, nor shall it permit any of its
Subsidiaries to, enter into any program production or
distribution arrangements, including without limitation
joint venture arrangements, with a term in excess of one
year without consulting with the Purchaser prior thereto.
(b) Prior to the Effective Time, except as set
forth in the Purchaser Disclosure Letter or as contemplated
by this Agreement, unless the Company has consented in
writing thereto, the Purchaser:
(i) shall not issue any shares of its capital
stock at less than fair market value (other than pursuant
to any Purchaser Stock Plans) or effect any stock split of
its capital stock;
(ii) shall not amend its Certificate of
Incorporation (provided that the Purchaser may issue up to
$100,000,000 of its preferred stock);
(iii) shall promptly notify the Company of any
breach of any representation or warranty contained herein
or any Purchaser Material Adverse Effect;
(iv) shall promptly deliver to the Company true
and correct copies of any report, statement or schedule
filed with the SEC subsequent to the date of this
Agreement; and
(v) shall not declare, set aside or pay any
dividend or make any other distribution or payment with
respect to any shares of its capital stock or other
ownership interests (other than regular quarterly cash
dividends including any increases thereof consistent with
past practice).
7.3. MEETINGS OF STOCKHOLDERS. Each of the
Purchaser and the Company will take all action necessary in
accordance with applicable law and its Certificate of
Incorporation and Bylaws to convene a meeting of its
stockholders as promptly as practicable to consider and vote
upon (i) in the case of the Purchaser, the approval of this
Agreement, the Purchaser Merger Agreement and the Purchaser
Merger and (ii) in the case of the Company, the approval of
this Agreement and the Company Merger Agreement and the
Company Merger. The Board of Directors of each of the
Purchaser and the Company shall recommend such approval and
the Purchaser and the Company shall each take all lawful
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action to solicit such approval, including, without
limitation, timely mailing the Proxy Statement/Prospectus
(as defined in Section 7.7); provided, however, that such
recommendation or solicitation is subject to any action
(including any withdrawal or change of its recommendation)
taken by, or upon authority of, the Board of Directors of
the Purchaser or the Company, as the case may be, in the
exercise of its good faith judgment based upon the advice of
outside counsel as to its fiduciary duties to its
stockholder imposed by law.
7.4. FILINGS, OTHER ACTION. Subject to the
terms and conditions herein provided, the Company and the
Purchaser shall: (a) promptly make their respective filings
and thereafter make any other required submissions under the
HSR Act and the Communications Act; (b) use all reasonable
efforts to cooperate with one another in (i) determining
which filings are required to be made prior to the Effective
Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory authorities
of the United States, the several states and foreign
jurisdictions in connection with the execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby and (ii) timely making all such filings
and timely seeking all such consents, approvals, permits or
authorizations; and (c) use all reasonable efforts to take,
or cause to be taken, all other action and do, or cause to
be done, all other things necessary, proper or appropriate
to consummate and make effective the transactions
contemplated by this Agreement. The parties hereto
recognize and acknowledge that under applicable rules and
regulations of the FCC, certain assets currently held by, or
attributable to, the Purchaser, the Company or their
officers or directors cannot be held by, or be attributable
to, Holding Company or its officers and directors after the
Effective Time, unless appropriate waivers of such rules and
regulations are obtained. In no event shall the obtaining
of permanent waivers with respect to assets of the Purchaser
or its officers or directors be a condition to consummation
of the Mergers. In no event shall a permanent waiver be
sought without also seeking in the alternative to obtain a
temporary waiver to allow the consummation of the Mergers
including the divestiture of assets or other action required
in order to obtain such waiver. If necessary in order to
obtain the FCC's approval of the transactions contemplated
hereby the Purchaser and the Company will divest any or all
of such assets and take such other actions prior to
consummation of the transactions contemplated hereby. If,
at any time after the Effective Time, any further action is
necessary or desirable to carry out the purpose of this
Agreement, the proper officers and directors of the
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Purchaser and the Company shall take all such necessary
action.
7.5. INSPECTION OF RECORDS. From the date
hereof to the Effective Time, each of the Company and the
Purchaser shall, subject to any applicable rules and
regulations of the FCC, (i) allow all designated officers,
attorneys, accountants and other representatives of the
other reasonable access at all reasonable times to the
offices, records and files, correspondence, audits and
properties, as well as to all information relating to
commitments, contracts, titles and financial position, or
otherwise pertaining to the business and affairs, of the
Company and the Purchaser and their respective Subsidiaries,
as the case may be, (ii) furnish to the other, the other's
counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other
information as such persons may reasonably request and (iii)
instruct the employees, counsel and financial advisors of
the Company or the Purchaser, as the case may be, to
cooperate with the other in the other's investigation of the
business of it and its Subsidiaries.
7.6. PUBLICITY. The initial press release
relating to this Agreement shall be a joint press release
and thereafter the Company and the Purchaser shall, subject
to their respective legal obligations (including
requirements of stock exchanges and other similar regulatory
bodies), consult with each other, and use reasonable efforts
to agree upon the text of any press release, before issuing
any such press release or otherwise making public statements
with respect to the transactions contemplated hereby and in
making any filings with any federal or state governmental or
regulatory agency or with any national securities exchange
with respect thereto.
7.7. REGISTRATION STATEMENT. The Purchaser and
the Company shall cooperate and promptly prepare and the
Purchaser shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under
the Securities Act, with respect to the Holding Company
Common Stock issuable in the Mergers, a portion of which
Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the stockholders
of the Company and of the Purchaser in connection with the
Mergers (the "Proxy Statement/Prospectus"). The respective
parties will cause the Proxy Statement/Prospectus and the
Form S-4 to comply as to form in all material respects with
the applicable provisions of the Securities Act, the
Exchange Act and the rules and regulations thereunder. The
Purchaser shall use all reasonable efforts, and the Company
will cooperate with the Purchaser, to have the Form S-4
declared effective by the SEC as promptly as practicable and
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to keep the Form S-4 effective as long as is necessary to
consummate the Mergers. The Purchaser shall, as promptly as
practicable, provide copies of any written comments received
from the SEC with respect to the Form S-4 to the Company and
advise the Company of any verbal comments with respect to
the Form S-4 received from the SEC. The Purchaser shall use
its best efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "Blue
Sky" permits or approvals required to carry out the
transactions contemplated by this Agreement and will pay all
expenses incident thereto. The Purchaser agrees that the
Proxy Statement/Prospectus and each amendment or supplement
thereto at the time of mailing thereof and at the time of
the respective meetings of stockholders of the Company and
the Purchaser, or, in the case of the Form S-4 and each
amendment or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the foregoing
shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was
made by the Purchaser in reliance upon and in conformity
with written information concerning the Company furnished to
the Purchaser by the Company specifically for use in the
Proxy Statement/Prospectus. The Company agrees that the
written information concerning the Company provided by it
for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing
thereof and at the time of the respective meetings of
stockholders of the Company and the Purchaser, or, in the
case of written information concerning the Company provided
by the Company for inclusion in the Form S-4 or any
amendment or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. No amendment or supplement to the
Proxy Statement/Prospectus will be made by the Purchaser or
the Company without the approval of the other party. The
Purchaser will advise the Company, promptly after it
receives notice thereof, of the time when the Form S-4 has
become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the
qualification of the Purchaser Common Stock issuable in
connection with the Mergers for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the
Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for
additional information.
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7.8. LISTING APPLICATION. The Purchaser shall
promptly cause Holding Company to prepare and submit to the
NYSE and the Pacific Exchanges listing applications covering
the shares of Holding Company Common Stock issuable in the
Mergers, and shall use reasonable efforts to obtain, prior
to the Effective Time, approval for the listing of such
Holding Company Common Stock, subject to official notice of
issuance.
7.9. FURTHER ACTION. Each party hereto shall,
subject to the fulfillment at or before the Effective Time
of each of the conditions of performance set forth herein or
the waiver thereof, perform such further acts and execute
such documents as may be reasonably required to effect the
Mergers.
7.10. AFFILIATE LETTERS. At least 30 days prior
to the Closing Date, the Company shall deliver to the
Purchaser a list of names and addresses of those persons who
were, in the Company's reasonable judgment, at the record
date for its stockholders' meeting to approve the Mergers,
"affiliates" (each such person, an "Affiliate") of the
Company within the meaning of Rule 145 of the rules and
regulations promulgated under the Securities Act. The
Company shall use all reasonable efforts to deliver or cause
to be delivered to the Purchaser, prior to the Closing Date,
from each of the Affiliates of the Company identified in the
foregoing list, an Affiliate Letter in the form attached
hereto as Exhibit A. Holding Company shall be entitled to
place legends as specified in such Affiliate Letters on the
certificates evidencing any Holding Company Common Stock to
be received by such Affiliates pursuant to the terms of this
Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the Holding Company
Common Stock, consistent with the terms of such Affiliate
Letters.
7.11. EXPENSES. Whether or not the Mergers are
consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses except as
expressly provided herein and except that (a) the filing fee
in connection with the HSR Act filing, (b) the filing fee in
connection with the filing of the Form S-4 or Proxy State-
ment/Prospectus with the SEC (c) the filing fees in
connection with necessary applications to the FCC and (d)
the expenses incurred in connection with printing and
mailing the Form S-4 and the Proxy Statement/Prospectus,
shall be shared equally by the Company and the Purchaser.
7.12. INSURANCE; INDEMNITY. (a) From and after
the Effective Time, Holding Company shall indemnify, defend
and hold harmless to the fullest extent that the Company
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would have been permitted under applicable law each person
who is now, or has been at any time prior to the date
hereof, an officer or director of the Company (individually,
an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities,
costs or expenses (including attorneys' fees), judgments,
fines, penalties and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or
omissions, or alleged acts or omissions, by them in their
capacities as such occurring at or prior to the Effective
Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), (i) any
Indemnified Party wishing to claim indemnification shall
promptly notify Holding Company thereof, (ii) Holding
Company shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Party, which counsel
shall be reasonably acceptable to Holding Company, in
advance of the final disposition of any such Action to the
full extent permitted by applicable law, upon receipt of any
undertaking required by applicable law, and (iii) the
Holding Company will cooperate in the defense of any such
matter; provided, however, that Holding Company shall not be
liable for any settlement effected without its written
consent and provided, further, that Holding Company shall
not be obligated pursuant to this Section to pay the fees
and disbursements of more than one counsel for all
Indemnified Parties in any single Action except to the
extent that, in the opinion of counsel for the Indemnified
Parties, two or more of such Indemnified Parties have
conflicting interests in the outcome of such action.
(b) Holding Company shall cause the surviving
corporation of the Company Merger to keep in effect
provisions in its Certificate of Incorporation and Bylaws
providing for exculpation of director and officer liability
and its indemnification of the Indemnified Parties to the
fullest extent permitted under the NYBCL, which provisions
shall not be amended except as required by applicable law or
except to make changes permitted by law that would enlarge
the Indemnified Parties' right of indemnification.
(c) For a period of three years after the
Effective Time, Holding Company shall cause to be maintained
officers' and directors' liability insurance covering the
Indemnified Parties who are currently covered, in their
capacities as officers and directors, by the Company's
existing officers' and directors' liability insurance
policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance; provided,
however, that Holding Company shall not be required in order
to maintain or procure such coverage to pay an annual
premium in excess of one and one-half times the current
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annual premium paid by the Company for its existing coverage
(the "Cap") (which current annual premium the Company
represents and warrants to be approximately $300,000); and
provided, further, that if equivalent coverage cannot be
obtained, or can be obtained only by paying an annual
premium in excess of the Cap, Holding Company shall only be
required to obtain as much coverage as can be obtained by
paying an annual premium equal to the Cap.
(d) The provisions of this Section shall
survive the consummation of the Mergers and expressly are
intended to benefit each of the Indemnified Parties.
7.13. RIGHTS AGREEMENTS. Each of the Purchaser
and the Company shall take all necessary action prior to the
Effective Time to cause the dilution provisions of the
Purchaser Rights Agreement and the Company Rights Agreement,
respectively, to be inapplicable to the transactions
contemplated by this Agreement, without any payment to
holders of rights issued pursuant to such Rights Agreements.
7.14. TAKEOVER STATUTE. If any "fair price",
"moratorium", "control share acquisition" or other form of
antitakeover statute or regulation shall become applicable
to the transactions contemplated hereby or the transactions
contemplated by the Stock Agreement, the Company and the
members of the Board of Directors of the Company shall grant
such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby and
the transactions contemplated by the Stock Agreement may be
consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to
eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby and
thereby.
7.15. CONDUCT OF BUSINESS BY HOLDING COMPANY AND
THE MERGER SUBSIDIARIES PENDING THE MERGERS. Prior to the
Effective Time and subject to any applicable regulatory
approvals, the Purchaser and the Company shall cause Holding
Company and the Merger Subsidiaries to (a) perform their
respective obligations hereunder and under this Agreement
and the Merger Agreements in accordance with the terms
hereof and thereof and take all other actions necessary or
appropriate for the consummation of the transactions
contemplated hereby and thereby, (b) not incur directly or
indirectly any liabilities or obligations except those
incurred in connection with the consummation of this
Agreement and the Merger Agreements and the transactions
contemplated hereby and thereby, (c) not engage directly or
indirectly in any business or activities of any type or kind
whatsoever and not enter into any agreements or arrangements
with any person or entity, or be subject to or be bound by
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any obligation or undertaking which is not contemplated by
this Agreement or the Merger Agreements and (d) not create,
grant or suffer to exist any lien upon their respective
properties or assets which would attach to any properties or
assets of the Purchaser or the Company after the Effective
Time.
7.16. EMPLOYEE BENEFITS. Purchaser will cause to
remain in effect for the benefit of the Company's employees
for a period of at least two years after the Effective Time
all employee benefit plans of the Company and its
Subsidiaries (including the Company's existing severance
policies and programs but excluding stock and incentive
compensation plans and those plans that are the subject of
collective bargaining) in effect on the date of this
Agreement and, with respect to employees who are subject to
collective bargaining, all benefits shall be provided in
accordance with the applicable collective bargaining
agreement ; provided,however, that no severance payments
shall be required to be made to any employee of the Company
or any Company Subsidiary who is not terminated by the
Company or any Company Subsidiary. No amendment shall be
made to any such plan that materially adversely affects the
rights or interests of the plan participants or
beneficiaries except to the extent required by applicable
law or to maintain tax qualifications. In the event that
any employee of the Company or its Subsidiaries is at any
time after the Effective Time transferred to the Purchaser
or any affiliate of Purchaser or becomes a participant in an
employee benefit plan, program or arrangement maintained by
or contributed by the Purchaser or its affiliates, Purchaser
shall cause such plan, program or arrangement to treat the
prior service of such employee with the Company or its
Subsidiaries, to the extent such prior service is recognized
under the comparable plan, program or arrangement of the
Company, as service rendered to the Purchaser or its
affiliates, as the case may be; provided, however, that in
administering such plans, programs or arrangements of
Purchaser or its affiliates, Purchaser may cause a reduction
of benefits under any such plans, programs or arrangements
to the extent necessary to avoid duplication of benefits
with respect to the same covered matter or years of service.
7.17. CONVEYANCE TAXES. The Company and the
Purchaser shall cooperate in the preparation, execution and
filing of all returns, questionnaires, applications or other
documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees,
and any similar taxes which become payable in connection
with the transactions contemplated by this Agreement that
are required or permitted to be filed on or before the
Effective Time.
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7.18. GAINS TAX. The Company shall pay, without
deduction or withholding from any amount payable to the
holders of Company Common Stock, any New York State Tax on
Gains Derived from Certain Real Property Transfers (the
"Gains Tax"), New York State Real Estate Transfer Tax, New
York City Real Property Transfer Tax and New York State
Stock Transfer Tax (the "Transfer Taxes") and any similar
taxes imposed by any other State of the United States (and
any penalties and interest with respect to such taxes),
which become payable in connection with the transactions
contemplated by this Agreement, on behalf of the
stockholders of the Company. The Company and the Purchaser
shall cooperate in the preparation, execution and filing of
any required returns with respect to such taxes (including
returns on behalf of the stockholders of the Company) and in
the determination of the portion of the consideration
allocable to the real property of the Company and the
Company Subsidiaries in New York State and City (or in any
other jurisdiction, if applicable). The terms of the Proxy
Statement/Prospectus shall provide that the stockholders of
the Company shall be deemed to have agreed to be bound by
the allocation established pursuant to this Section 7.18 in
the preparation of any return with respect to the Gains Tax
and the Transfer Taxes and any similar taxes, if applicable.
ARTICLE 8
CONDITIONS
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGERS. The respective obligation of each party
to effect the Mergers shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions
contemplated hereby shall have been approved in the manner
required by applicable law or by the applicable regulations
of any stock exchange or other regulatory body, as the case
may be, by the holders of the issued and outstanding shares
of capital stock of the Company and the Purchaser,
respectively.
(b) The waiting period applicable to the
consummation of the Mergers under the HSR Act shall have
expired or been terminated.
(c) Neither of the parties hereto shall be
subject to any order or injunction of a court of competent
jurisdiction which prohibits the consummation of the
transactions contemplated by this Agreement. In the event
any such order or injunction shall have been issued, each
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party agrees to use its reasonable efforts to have any such
injunction lifted.
(d) The Form S-4 shall have become effective
and shall be effective at the Effective Time, and no stop
order suspending effectiveness of the Form S-4 shall have
been issued, no action, suit, proceeding or investigation by
the SEC to suspend the effectiveness thereof shall have been
initiated and be continuing, or, to the knowledge of the
Purchaser or the Company, threatened, and all necessary
approvals under state securities laws relating to the
issuance or trading of the Purchaser Common Stock to be
issued to the Company stockholders in connection with the
Mergers shall have been received.
(e) All orders and approvals of the FCC
required in connection with the consummation of the
transactions contemplated hereby shall have been obtained or
made, whether or not any appeal or request for
reconsideration of such order is pending, or whether the
time for filing any such appeal or request for
reconsideration or for any SUA SPONTE action by the FCC has
expired.
(f) All consents, authorizations, orders and
approvals of (or filings or registrations with) any
governmental commission, board or other regulatory body
(other than the FCC) required in connection with the
execution, delivery and performance of this Agreement shall
have been obtained or made, except for filings in connection
with the Mergers and any other documents required to be
filed after the Effective Time and except where the failure
to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a
material adverse effect on the business, results of
operations or financial condition of the Purchaser and the
Company (and their respective Subsidiaries), taken as a
whole, following the Effective Time.
(g) The Holding Company Common Stock to be
issued to the Company stockholders in connection with the
Mergers shall have been approved for listing on the NYSE,
subject only to official notice of issuance.
8.2. CONDITIONS TO OBLIGATION OF COMPANY TO
EFFECT THE MERGERS. The obligation of the Company to effect
the Mergers shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions:
(a) The Purchaser shall have performed in all
material respects its agreements contained in this Agreement
required to be performed on or prior to the Closing Date,
the representations and warranties of the Purchaser and
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Merger Sub contained in this Agreement and in any document
delivered in connection herewith shall be true and correct
as of the Closing Date, except (i) for changes specifically
permitted by this Agreement and (ii) that those
representations and warranties which address matters only as
of a particular date shall remain true and correct as of
such date, and the Company shall have received a certificate
of the President or a Vice President of the Purchaser, dated
the Closing Date, certifying to such effect.
(b) The Company shall have received the opinion
of Cravath, Swaine & Moore, special counsel to the Company,
based upon reasonably requested representation letters and
dated the Closing Date, to the effect that (i) the Company
Merger will be treated as a transfer of property to Holding
Company by the holders of Company Common Stock described in
Section 351(a) or Section 351(b) of the Code and (ii) no
gain or loss will be recognized for federal income tax
purposes by the Company in connection with the Company
Merger.
(c) From the date of this Agreement through the
Effective Time, there shall not have occurred any change in
the financial condition, business or operations of the
Purchaser and its Subsidiaries, taken as a whole, that would
have or would be reasonably likely to have a Purchaser
Material Adverse Effect.
(d) The Holding Company shall have executed a
Registration Rights Agreement substantially in the form
attached hereto as Exhibit B.
8.3. CONDITIONS TO OBLIGATION OF PURCHASER TO
EFFECT THE MERGERS. The obligation of the Purchaser to
effect the Mergers shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions:
(a) The Company shall have performed in all
material respects its agreements contained in this Agreement
required to be performed on or prior to the Closing Date,
the representations and warranties of the Company contained
in this Agreement and in any document delivered in
connection herewith shall be true and correct as of the
Closing Date, except (i) for changes specifically permitted
by this Agreement and (ii) that those representations and
warranties which address matters only as of a particular
date shall remain true and correct as of such date, and the
Purchaser shall have received a certificate of the President
or a Vice President of the Company, dated the Closing Date,
certifying to such effect.
(b) The Purchaser shall have received the
opinion of Dewey Ballantine, special counsel to the
43<PAGE>
<PAGE>
Purchaser, based upon reasonably requested representation
letters and dated the Closing Date, to the effect that (i)
the Purchaser Merger will be treated as an exchange governed
by Section 351 of the Code or as a reorganization governed
by Section 368 of the Code and (ii) no gain or loss will be
recognized for federal income tax purposes by the Purchaser
in connection with the Purchaser Merger.
(c) From the date of this Agreement through the
Effective Time, there shall not have occurred any change in
the financial condition, business or operations of the
Company and its Subsidiaries, taken as a whole, that would
have or would be reasonably likely to have a Company
Material Adverse Effect.
(d) The Stock Agreement shall have remained in
full force and effect through the Effective Time.
(e) After the Effective Time, no person shall
have any right under any stock option plan (or any option
granted thereunder) or other plan, program or arrangement to
acquire any equity securities of the Company.
ARTICLE 9
TERMINATION
9.1. TERMINATION BY MUTUAL CONSENT. This
Agreement may be terminated and the Mergers may be abandoned
at any time prior to the Effective Time, before or after the
approval of this Agreement by the stockholders of the
Purchaser or the Company, by the mutual consent of the
Purchaser and the Company.
9.2. TERMINATION BY EITHER PURCHASER OR COMPANY.
This Agreement may be terminated and the Mergers may be
abandoned by action of the Board of Directors of either the
Purchaser or the Company if (a) the Mergers shall not have
been consummated by October 1, 1996, or (b) the approval of
the Company's stockholders required by Section 8.1(a) shall
not have been obtained at a meeting duly convened therefor
or at any adjournment thereof, or (c) the approval of the
Purchaser's stockholders required by Section 8.1(a) shall
not have been obtained at a meeting duly convened therefor
or at any adjournment thereof, (d) a United States federal
or state court of competent jurisdiction or United States
federal or state governmental, regulatory or administrative
agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and
44<PAGE>
<PAGE>
non-appealable; provided, that the party seeking to
terminate this Agreement pursuant to this clause (d) shall
have used all reasonable efforts to remove such injunction,
order or decree; and provided, in the case of a termination
pursuant to clause (a) above, that the terminating party
shall not have breached in any material respect its
obligations under this Agreement in any manner that shall
have proximately contributed to the failure to consummate
the Mergers by October 1, 1996 or (e) the FCC shall have
issued an order or ruling or taken other action denying
approval of the transactions contemplated by this Agreement,
and such order, ruling or other action shall have become
final and non-appealable.
9.3. TERMINATION BY COMPANY. This Agreement may
be terminated and the Mergers may be abandoned at any time
prior to the Effective Time, before or after the adoption
and approval by the stockholders of the Company referred to
in Section 8.1(a), by action of the Board of Directors of
the Company, if (a) in the exercise of its good faith
judgment as to fiduciary duties to its stockholders imposed
by law, as advised by outside counsel, the Board of
Directors of the Company determines that such termination is
required by reason of an Alternative Proposal being made;
provided that the Company shall notify the Purchaser
promptly of its intention to terminate this Agreement or
enter into a definitive agreement with respect to any
Alternative Proposal, but in no event shall such notice be
given less than 48 hours prior to the public announcement of
the Company's termination of this Agreement; or (b) there
has been a breach by the Purchaser of any representation or
warranty contained in this Agreement which would have or
would be reasonably likely to have a Purchaser Material
Adverse Effect; or (c) there has been a material breach of
any of the covenants or agreements set forth in this
Agreement on the part of the Purchaser, which breach is not
curable or, if curable, is not cured within 30 days after
written notice of such breach is given by the Company to the
Purchaser; or (d) the Board of Directors of the Purchaser
shall have withdrawn or modified in a manner materially
adverse to the Company its approval or recommendation of
this Agreement or the Mergers. Notwithstanding the
foregoing, the Company's ability to terminate this Agreement
pursuant to Section 9.2 or this 9.3 is conditioned upon the
prior payment by the Company of any amounts owed by it
pursuant to Section 9.5(a)(i).
9.4. TERMINATION BY PURCHASER. This Agreement
may be terminated and the Mergers may be abandoned at any
time prior to the Effective Time, before or after the
approval by the stockholders of the Purchaser referred to in
Section 8.1(a), by action of the Board of Directors of the
Purchaser, if (a) the Board of Directors of the Company
45<PAGE>
<PAGE>
shall have withdrawn or modified in a manner materially
adverse to the Purchaser its approval or recommendation of
this Agreement or the Mergers or shall have recommended an
Alternative Proposal to the Company stockholders, or (b)
there has been a breach by the Company of any representation
or warranty contained in this Agreement which would have or
would be reasonably likely to have a Company Material
Adverse Effect, or (c) there has been a material breach of
any of the covenants or agreements set forth in this
Agreement on the part of the Company, which breach is not
curable or, if curable, is not cured within 30 days after
written notice of such breach is given by the Purchaser to
the Company.
9.5. EFFECT OF TERMINATION AND ABANDONMENT.
(a) In the event that any person shall have made an
Alternative Proposal for the Company and thereafter (i) this
Agreement is terminated pursuant to Section 9.3(a) or
Section 9.4 or (ii) this Agreement is terminated for any
other reason (other than the breach of this Agreement by the
Purchaser and other than pursuant to Section 9.2(c)) and, in
the case of this clause (ii) only, a definitive agreement
with respect to such Alternative Proposal is executed within
one year after such termination, then the Company shall pay
the Purchaser a fee of $400,000,000, which amount shall be
payable by wire transfer of same day funds either on the
date contemplated in the last sentence of Section 9.3 if
applicable or, otherwise, within two business days after
such amount becomes due. The Company acknowledges that the
agreements contained in this Section 9.5(a) are an integral
part of the transactions contemplated in this Agreement, and
that, without these agreements, the Purchaser would not
enter into this Agreement; accordingly, if the Company fails
to promptly pay the amount due pursuant to this Section
9.5(a), and, in order to obtain such payment, the Purchaser
commences a suit which results in a judgment against the
Company for the fee set forth in this Section 9.5(a), the
Company shall pay to the Purchaser its costs and expenses
(including attorneys' fees) in connection with such suit,
together with interest on the amount of the fee at the rate
of 12% per annum.
(b) In the event of termination of this
Agreement and the abandonment of the Mergers pursuant to
this Article 9, all obligations of the parties hereto shall
terminate, except the obligations of the parties pursuant to
this Section 9.5 and Section 7.11 and except for the
provisions of Sections 10.3, 10.4, 10.6, 10.8, 10.9, 10.12,
10.13 and 10.14. Moreover, in the event of termination of
this Agreement pursuant to Section 9.3 or 9.4, nothing
herein shall prejudice the ability of the non-breaching
party from seeking damages from any other party for any
willful breach of this Agreement, including without
46<PAGE>
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limitation, attorneys' fees and the right to pursue any
remedy at law or in equity.
9.6. EXTENSION, WAIVER. At any time prior to
the Effective Time, any party hereto, by action taken by its
Board of Directors, may, to the extent legally allowed,
(a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
10.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES
AND AGREEMENTS. All representations, warranties and
agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall be deemed to the extent
expressly provided herein to be conditions to the Mergers
and shall not survive the Mergers, provided, however, that
the agreements contained in Article 4, Section 7.12, Section
7.16 and this Article 10 shall survive the Mergers and
Section 9.5 shall survive termination.
10.2. NOTICES. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by
facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid),
addressed as follows:
If to the Purchaser: If to the Company:
The Walt Disney Company Capital Cities/ABC, Inc.
500 South Buena Vista Street 77 West 66th Street
Burbank, CA 91521 New York, NY 10023
Attention: Attention:
Sanford M. Litvack Alan N. Braverman
Telecopier No.: Telecopier No.:
(818) 563-4160 (212) 456-6908
47<PAGE>
<PAGE>
With copies to: With copies to:
Dewey Ballantine Cravath, Swaine & Moore
1301 Avenue of the Americas Worldwide Plaza
New York, NY 10019 825 Eighth Avenue
Attention: New York, NY 10019
Morton A. Pierce Attention:
Mark R. Baker Samuel C. Butler
Telecopier No.: Telecopier No.:
(212) 259-6333 (212) 474-3700
or to such other address as any party shall specify by
written notice so given, and such notice shall be deemed to
have been delivered as of the date so telecommunicated,
personally delivered or mailed.
10.3. ASSIGNMENT; BINDING EFFECT. Neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto
(whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, except for the
provisions of Section 7.12 and Section 7.16, nothing in this
Agreement, expressed or implied, is intended to confer on
any person other than the parties hereto or their respective
heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by
reason of this Agreement.
10.4. ENTIRE AGREEMENT. This Agreement, the
Exhibits, the Company Disclosure Letter, the Purchaser
Disclosure Letter, the Confidentiality Agreement dated
July 29, 1995, between the Company and the Purchaser and any
documents delivered by the parties in connection herewith
constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of
this Agreement shall be binding upon any party hereto unless
made in writing and signed by all parties hereto.
10.5. AMENDMENT. This Agreement may be amended
by the parties hereto, by action taken by their respective
Boards of Directors, at any time before or after approval of
matters presented in connection with the Mergers by the
stockholders of the Company and the Purchaser, but after any
such stockholder approval, no amendment shall be made which
by law requires the further approval of stockholders without
obtaining such further approval. This Agreement may not be
48<PAGE>
<PAGE>
amended except by an instrument in writing signed on behalf
of each of the parties hereto.
10.6. GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Delaware without regard to its rules of conflict of
laws, except that the provisions of Article 2 and Article 4
with respect to the Company Merger shall be governed by and
construed in accordance with the laws of the State of New
York.
10.7. COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an
original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart
may consist of a number of copies hereof each signed by less
than all, but together signed by all of the parties hereto.
10.8. HEADINGS. Headings of the Articles and
Sections of this Agreement are for the convenience of the
parties only, and shall be given no substantive or
interpretive effect whatsoever.
10.9. INTERPRETATION. In this Agreement, unless
the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and
words denoting natural persons shall include corporations
and partnerships and vice versa.
10.10. WAIVERS. Except as provided in this
Agreement, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver
by the party taking such action of compliance with any
representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto
of a breach of any provision hereunder shall not operate or
be construed as a waiver of any prior or subsequent breach
of the same or any other provision hereunder.
10.11. INCORPORATION OF EXHIBITS. The Company
Disclosure Letter, the Purchaser Disclosure Letter and all
Exhibits attached hereto and referred to herein are hereby
incorporated herein and made a part hereof for all purposes
as if fully set forth herein.
10.12. SEVERABILITY. Any term or provision of
this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
49<PAGE>
<PAGE>
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is
enforceable.
10.13. ENFORCEMENT OF AGREEMENT. The parties
hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement was not
performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any Delaware
Court, this being in addition to any other remedy to which
they are entitled at law or in equity.
10.14. SUBSIDIARIES. As used in this Agreement,
the word "Subsidiary" when used with respect to any party
means any corporation or other organization, whether
incorporated or unincorporated, of which such party directly
or indirectly owns or controls at least a majority of the
securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors
or others performing similar functions with respect to such
corporation or other organization, or any organization of
which such party is a general partner. When a reference is
made in this Agreement to Significant Subsidiaries, the
words "Significant Subsidiaries" shall refer to Subsidiaries
(as defined above) which constitute "significant
subsidiaries" under Rule 405 promulgated by the SEC under
the Securities Act.
50<PAGE>
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IN WITNESS WHEREOF, the parties have executed this
Agreement and caused the same to be duly delivered on their
behalf on the day and year first written above.
ATTEST: THE WALT DISNEY COMPANY
By: /s/ David K. Thompson By: /s/ Michael D. Eisner
---------------------------- ---------------------------
David K. Thompson Michael D. Eisner
Senior Vice President Chairman of the Board
Assistant General Counsel and Chief Executive Officer
ATTEST: CAPITAL CITIES/ABC, INC.
By: /s/ Alan Braverman By: /s/ Thomas S. Murphy
---------------------------- ---------------------------
Alan Braverman Thomas S. Murphy
Vice President and General Chairman of the Board
Counsel and Chief Executive Officer
<PAGE>
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EXHIBIT A
TO REORGANIZATION
AGREEMENT
FORM OF AFFILIATE LETTER
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Ladies and Gentlemen:
I have been advised that as of the date of this
letter I may be deemed to be an "affiliate" of __________, a
New York corporation (the "Company"), as the term
"affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 of the rules and regulations (the "Rules
and Regulations") of the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as
amended (the "Act"), or (ii) used in and for purposes of
Accounting Series, Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan
of Reorganization dated as of _____________, 1995 (the
"Agreement"), between ________________________, a Delaware
corporation (the "Purchaser") and the Company, the Company
will be merged with and into Merger Sub B (as defined in the
Agreement) (the "Merger").
As a result of the Merger, I may receive shares of
Common Stock, par value $.___ per share, of the Holding
Company (as defined in the Agreement) (the "Holding Company
Securities") in exchange for shares owned by me of Common
Stock, par value $.10 per share, of the Company.
I represent, warrant and covenant to the Purchaser
that in the event I receive any Holding Company Securities
as a result of the Merger:
A. I shall not make any sale, transfer or other
disposition of the Holding Company Securities in violation
of the Act or the Rules and Regulations.
B. I have carefully read this letter and the
Agreement and discussed the requirements of such documents
and other applicable limitations upon my ability to sell,
transfer or otherwise dispose of the Purchaser Securities to
the extent I felt necessary, with my counsel or counsel for
the Company.
C. I have been advised that the issuance of
Holding Company Securities to me pursuant to the Merger has
been registered with the Commission under the Act on a
Registration Statement on Form S-4. However, I have also
A-1<PAGE>
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been advised that, since at the time the Merger was
submitted for a vote of the stockholders of the Company, I
may be deemed to have been an affiliate of the Company and
the distribution by me of the Holding Company Securities has
not been registered under the Act, I may not sell, transfer
or otherwise dispose of the Holding Company Securities
issued to me in the Merger unless (i) such sale, transfer or
other disposition has been registered under the Act, (ii)
such sale, transfer or other disposition is made in
conformity with Rule 145 promulgated by the Commission under
the Act, or (iii) in the opinion of counsel reasonably
acceptable to the Holding Company, or pursuant to a "no
action" letter obtained by the undersigned from the staff of
the Commission, such sale, transfer or other disposition is
otherwise exempt from registration under the Act.
D. I understand that, except as may be provided
in any registration rights agreement entered into by the
Holding Company and the undersigned, the Holding Company is
under no obligation to register the sale, transfer or other
disposition of the Holding Company Securities by me or on my
behalf under the Act or to take any other action necessary
in order to make compliance with an exemption from such
registration available.
E. I also understand that stop transfer
instructions will be given to the Holding Company's transfer
agents with respect to the Holding Company Securities and
that there will be placed on the certificates for the
Holding Company Securities issued to me, or any
substitutions therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE
WITH THE TERMS OF AN AGREEMENT DATED ____________,
BETWEEN THE REGISTERED HOLDER HEREOF AND
____________________________, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
________________________."
F. I also understand that unless the transfer by
me of my Holding Company Securities has been registered
under the Act or is a sale made in conformity with the
provisions of Rule 145, the Holding Company reserves the
right to put the following legend on the certificates issued
to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
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SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN
THE MEANING OF THE SECURITIES ACT OF 1933 AND MAY
NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933."
It is understood and agreed that the legends set
forth in paragraphs E and F above shall be removed by
delivery of substitute certificates without such legend if
such legend is not required for purposes of the Act or this
Agreement. It is understood and agreed that such legends
and the stop orders referred to above will be removed if (i)
two years shall have elapsed from the date the undersigned
acquired the Securities received in the Merger and the
provisions of Rule 145(d)(2) are then available to the
undersigned, (ii) three years shall have elapsed from the
date the undersigned acquired the Holding Company Securities
received in the Merger and the provisions of Rule 145(d)(3)
are then available to the undersigned, or (iii) the Holding
Company has received either an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to the
Holding Company, or a "no action" letter obtained by the
undersigned from the staff of the Commission, to the effect
that the restrictions imposed by Rule 145 under the Act no
longer apply to the undersigned.
A-3<PAGE>
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Execution of this letter should not be considered
an admission on my part that I am an "affiliate" of the
Company as described in the first paragraph of this letter
or as a waiver of any rights I may have to object to any
claim that I am such an affiliate on or after the date of
this letter.
Very truly yours,
___________________________________
Name:
Accepted this_______ day of
____________, 199__ by
THE WALT DISNEY COMPANY
By:_____________________________
Name:
Title:
A-4<PAGE>
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EXHIBIT B TO
REORGANIZATION AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as
of [ ], 1995, between THE WALT
DISNEY COMPANY, a Delaware corporation (the
"Holding Company"), and the persons listed on
the signature pages hereto (each an
"Affiliate" and collectively, the
"Affiliates").
This Agreement is made pursuant to Section 8.2(d) of
the Agreement and Plan of Reorganization dated as of [ ],
1995 (as such agreement may be amended from time to time, the
"Merger Agreement"), between [ ], a Delaware
corporation (the "Purchaser") and [ ], a
New York corporation (the "Company"). In order to induce each
Affiliate to deliver an Affiliate Letter as contemplated by
Section 7.10 of the Merger Agreement, and in further consideration
therefor, the Purchaser has agreed to cause the Holding Company to
execute and deliver this Agreement and provide the registration
rights set forth in this Agreement.
Accordingly, it is hereby agreed as follows:
1. DEFINITIONS. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to
such terms in the Merger Agreement. For purposes of this
Agreement, the following terms shall have the following
meanings:
"BLACKOUT PERIOD" has the meaning specified in
Section 6(a).
"BUSINESS DAY" means a day, other than a Saturday
or Sunday, on which banking institutions and securities
exchanges in New York, New York are required to be open.
"COUNSEL TO THE HOLDERS" means the single law firm
from time to time representing the Holders, as appointed by
the Holders of a majority in number of the Registrable
Securities, which law firm shall be reasonably acceptable to
the Holding Company.
"EFFECTIVE PERIOD" means, with respect to any
Holder, a period commencing on the date of this Agreement
and ending on the earlier of (i) the first date as of which
all Registrable Securities cease to be Registrable
Securities and (ii) the date on which such Holder may sell
Registrable Securities in accordance with Rule 145(d)(3)
under the Securities Act.
1<PAGE>
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"EXCHANGE ACT" means the Securities Exchange Act
of 1934, as amended.
"HOLDER" means (i) each Affiliate and each person
who is an affiliate (as defined in Rule 405 of the
Securities Act) of such Affiliate that is a holder of
Registrable Securities and (ii) each Person that is a
registered holder of Registrable Securities who received or
will receive certificates for Registrable Securities bearing
a legend pursuant to paragraph E of an Affiliate Letter;
provided, however, that, if such Person is not an Affiliate,
such Person has agreed in writing to become a Holder
hereunder and to be bound by the terms and conditions of
this Agreement.
"NASD" means the National Association of
Securities Dealers, Inc.
"PROSPECTUS" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Securities
covered by any Registration Statement and by all other
amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by
reference in such prospectus.
"REGISTRABLE SECURITIES" means, collectively,
(i) the shares of Holding Company Common Stock (including
any associated Rights) issued pursuant to the Merger,
(ii) any shares of securities of the Holding Company
purchased pursuant to the exercise of any Right issued
together with a share of Holding Company Common Stock as
described in Section 4.2 of the Merger Agreement (the
securities referred to in (i) and (ii) are, collectively,
the "Shares") and (iii) any securities paid, issued or
distributed in respect of any Shares by way of stock
dividend or distribution or stock split or in connection
with a combination of shares, recapitalization,
reorganization, merger, consolidation or otherwise.
Securities will cease to be Registrable Securities in
accordance with Section 2 hereof.
"REGISTRATION EXPENSES" means any and all
reasonable expenses incident to performance of or compliance
with this Agreement, including, without limitation, (i) all
SEC, NASD and securities exchange registration and filing
fees, (ii) all fees and expenses of complying with state
securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters in connection
2<PAGE>
<PAGE>
with blue sky qualifications of the Registrable Securities),
(iii) all printing, messenger and delivery expenses,
(iv) all fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities
exchange or automated quotation system pursuant to
Section 7(h), (v) the fees and disbursements of counsel for
the Holding Company and of its independent public
accountants, (vi) the reasonable fees and expenses of any
special experts retained by the Holding Company in
connection with the requested registration, (vii) the
reasonable fees and expenses of Counsel to the Holders and
(viii) out-of-pocket expenses of underwriters customarily
paid by the issuer to the extent provided for in any
underwriting agreement, but excluding (x) underwriting
discounts and commissions and transfer taxes, if any, and
(y) any fees or disbursements of counsel to the Holders or
any Holder (other than Counsel to the Holders).
"REGISTRATION STATEMENT" means any registration
statement of the Holding Company referred to in Section 3 or
4, including any Prospectus, amendments and supplements to
any such registration statement, including post-effective
amendments, and all exhibits and all material incorporated
by reference in any such registration statement.
"REGISTRATION HOLD PERIOD" means a Section 7(e)
Period or a Section 7(m) Period.
"RELATED SECURITIES" means any securities of the
Holding Company similar or identical to any of the
Registrable Securities, including, without limitation,
Holding Company Common Stock and all options, warrants,
rights and other securities convertible into, or
exchangeable or exercisable for, Holding Company Common
Stock.
"SECTION 7(E) PERIOD" has the meaning specified in
Section 7(e).
"SECTION 7(M) PERIOD" has the meaning specified in
Section 7(m).
"Securities Act" means the Securities Act of 1933,
as amended.
"SHELF REGISTRATION" means a "shelf" registration
statement on an appropriate form pursuant to Rule 415 under
the Securities Act (or any successor rule that may be
adopted by the SEC).
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"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN
OFFERING" shall mean an underwritten offering in which
securities of the Holding Company are sold to an underwriter
for reoffering to the public.
2. SECURITIES SUBJECT TO THIS AGREEMENT. The
securities entitled to the benefits of this Agreement are
the Registrable Securities. For the purposes of this
Agreement, Registrable Securities will cease to be
Registrable Securities when and to the extent that (i) a
Registration Statement covering Registrable Securities has
been declared effective under the Securities Act and
Registerable Securities have been disposed of pursuant to
such effective Registration Statement, (ii) Registrable
Securities are distributed to the public pursuant to
Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) Registrable Securities have been
otherwise transferred to a party that is not an affiliate of
an Affiliate and new certificates for such Registrable
Securities not bearing the legends specified in paragraphs
(E) and (F) of the form of Affiliate Letter shall have been
delivered by the Holding Company or (iv) Registrable
Securities have ceased to be outstanding.
3. PIGGY-BACK REGISTRATION RIGHTS. (a) Whenever
during the Effective Period the Holding Company shall
propose to file a registration statement under the
Securities Act relating to the public offering of Holding
Company Common Stock for cash pursuant to a firm commitment
underwritten offering (other than pursuant to a registration
statement on Form S-4 or Form S-8 or any successor forms, or
filed in connection with an exchange offer or an offering of
securities solely to existing stockholders or employees of
the Holding Company), the Holding Company shall (i) give
written notice at least 15 Business Days prior to the filing
thereof to each Holder of Registrable Securities then
outstanding, specifying the approximate date on which the
Holding Company proposes to file such registration statement
and advising such Holder of his right to have any or all of
the Registrable Securities then held by such Holder included
among the securities to be covered thereby and (ii) at the
written request of any such Holder given to the Holding
Company at least two Business Days prior to the proposed
filing date, include among the securities covered by such
registration statement the number of Registrable Securities
which such Holder shall have requested be so included
(subject, however, to reduction in accordance with paragraph
(b) of this Section). The Holding Company shall use
commercially reasonable efforts to cause the managing
underwriter of the proposed underwritten offering to permit
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the Holders of Registrable Securities requested to be
included in the Registration Statement for such offering to
include such securities in such offering on the same terms
and conditions as any similar securities of the Holding
Company included therein.
(b) Each Holder of Registrable Securities
desiring to participate in an offering pursuant to
Section 3(a) may include shares of Holding Company Common
Stock in any Registration Statement relating to such
offering to the extent that the inclusion of such shares of
Holding Company Common Stock shall not reduce the number of
shares of Holding Company Common Stock to be offered and
sold by the Holding Company or any other person (other than
a Holder) pursuant thereto. If the lead managing
underwriter selected by the Holding Company for an
underwritten offering pursuant to Section 3(a) determines
that marketing factors require a limitation on the number of
shares of Holding Company Common Stock to be offered and
sold by the stockholders of the Holding Company in such
offering, there shall be included in the offering only that
number of shares of Holding Company Common Stock, if any,
that such lead managing underwriter reasonably and in good
faith believes will not jeopardize the success of the
offering of all the shares of Holding Company Common Stock
that the Holding Company desires to sell for its own
account. In such event and provided the managing
underwriter has so notified the Holding Company in writing,
the number of shares of Holding Company Common Stock to be
offered and sold by stockholders of the Holding Company,
including Holders of Registrable Securities, desiring to
participate in such offering shall be allocated among such
stockholders of the Holding Company on a pro rata basis
based on their holdings of Holding Company Common Stock
(subject to any written agreements between two or more
Holders requiring a different priority).
(c) Nothing in this Section 3 shall create any
liability on the part of the Holding Company to the Holders
of Registrable Securities if the Holding Company for any
reason should decide not to file a registration statement
proposed to be filed under Section 3(a) or to withdraw such
registration statement subsequent to its filing, regardless
of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by the Holding Company
of any notice hereunder or otherwise.
(d) A request by Holders to include Registrable
Securities in a proposed underwritten offering pursuant to
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Section 3(a) shall not be deemed to be a request for a
demand registration pursuant to Section 4.
4. DEMAND REGISTRATION RIGHTS. (a) Upon the
written request during the Effective Period of Holders of at
least 25% of the Registrable Securities that the Holding
Company effect the registration with the SEC under and in
accordance with the provisions of the Securities Act of all
or part of such Holder's or Holders' Registrable Securities
(which written request shall specify the aggregate number of
shares of Registrable Securities requested to be registered
and the means of distribution), the Holding Company will
file a Registration Statement covering such Holder's or
Holders' Registrable Securities requested to be registered
within 20 Business Days after receipt of such request;
PROVIDED, HOWEVER, that the Holding Company shall not be
required to take any action pursuant to this Section 4:
(1) if prior to the date of such request the
Holding Company shall have effected three registrations
pursuant to this Section 4;
(2) if the Holding Company has effected a
registration pursuant to this Section 4 within the 120-
day period next preceding such request which permitted
Holders of Registrable Securities to register
Registrable Securities;
(3) if the Holding Company shall at the time have
effective a Shelf Registration pursuant to which the
Holder or Holders that requested registration could
effect the disposition of such Holder's or Holders'
Registrable Securities in the manner requested;
(4) if the Registrable Securities which the
Holding Company shall have been requested to register
shall have a then current market value of less than
$50,000,000, unless such registration request is for
all remaining Registrable Securities; or
(5) during the pendency of any Blackout Period;
PROVIDED FURTHER, HOWEVER, that the Holding Company shall be
permitted to satisfy its obligations under this Section 4(a)
by amending (to the extent permitted by applicable law) any
registration statement previously filed by the Holding
Company under the Securities Act so that such registration
statement (as amended) shall permit the disposition (in
accordance with the intended methods of disposition
specified as aforesaid) of all of the Registrable Securities
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for which a demand for registration has been made under this
Section 4(a). If the Holding Company shall so amend a
previously filed registration statement, it shall be deemed
to have effected a registration for purposes of this
Section 4.
(b) The Holders delivering such request may
distribute the Registrable Securities covered by such
request by means of an underwritten offering or any other
means, as determined by the Holders of a majority of
Registrable Securities so requested to be registered.
(c) A registration requested pursuant to this
Section 4 shall not be deemed to be effected for purposes of
this Section 4 if it has not been declared effective by the
SEC or become effective in accordance with the Securities
Act and the rules and regulations thereunder.
(d) Holders of a majority in number of the
Registrable Securities to be included in a Registration
Statement pursuant to this Section 4 may, at any time prior
to the effective date of the Registration Statement relating
to such registration, revoke such request by providing a
written notice to the Holding Company revoking such request.
The Holders of Registrable Securities who revoke such
request shall reimburse the Holding Company for all its out-
of-pocket expenses incurred in the preparation, filing and
processing of the Registration Statement; provided, however,
that, if such revocation was based on (x) the Holding
Company's failure to comply in any material respect with its
obligations hereunder or (y) the occurrence of a Blackout
Period, such reimbursement shall not be required and the
remaining provisions of this Section 4(d) shall not apply.
(e) The Holding Company will not include any
securities which are not Registrable Securities in any
Registration Statement filed pursuant to a demand made under
this Section 4 without the prior written consent of the
Holders of a majority in number of the Registrable
Securities covered by such Registration Statement.
5. SELECTION OF UNDERWRITERS. In connection with
any underwritten offering pursuant to a Registration
Statement filed pursuant to a demand made pursuant to
Section 4, Holders of a majority in number of the
Registrable Securities to be included in the Registration
Statement shall have the right to select a managing
underwriter or underwriters to administer the offering,
which managing underwriter or underwriters shall be
reasonably satisfactory to the Holding Company.
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6. BLACKOUT PERIOD. (a) If (i) during the
Effective Period, the Holding Company shall file or propose
to file a registration statement (other than in connection
with the registration of securities issuable pursuant to a
continuous "at the market offering" pursuant to
Rule 415(a)(4) under the Securities Act, an employee stock
option, stock purchase, dividend reinvestment plan or
similar plan or pursuant to a merger, exchange offer or a
transaction of the type specified in Rule 145(a) under the
Securities Act) with respect to any securities of the
Holding Company and (ii) with reasonable prior notice,
(A) the Holding Company (in the case of a non-underwritten
offering pursuant to such registration statement) advises
the Holders in writing that a sale or distribution of
Registrable Securities would adversely affect such offering
or (B) the managing underwriter or underwriters (in the case
of an underwritten offering) advise the Holding Company in
writing (in which case the Holding Company shall notify the
Holders), that a sale or distribution of Registrable
Securities would adversely affect such offering, then the
Holding Company shall not be obligated to effect the initial
filing of a Registration Statement pursuant to Section 4
during the period commencing on the date that is 30 days
prior to the date the Holding Company in good faith
estimates (as certified in writing by an officer of the
Holding Company to the Holder following a request for
registration pursuant to Section 4(a)) will be the date of
filing of, and ending on the date which is 90 days following
the effective date of, such registration statement (a
"Section 6(a) Period").
(b) If the Holding Company determines in good
faith that the registration and distribution of Registrable
Securities (i) would materially impede, delay or interfere
with any pending financing (other than a financing of the
type described in Section 6(a)), acquisition, corporate
reorganization or other significant transaction involving
the Holding Company or (ii) would require disclosure of non-
public material information, the disclosure of which would
materially and adversely affect the Holding Company, and, in
the case of (ii), the Holding Company is concurrently
forbidding purchases or sales in the open market by senior
executives of the Holding Company, the Holding Company shall
promptly give the Holders written notice of such
determination and shall be entitled to postpone the filing
or effectiveness of a Registration Statement for a
reasonable period of time not to exceed 90 days (a "Section
6(b) Period" and, together with a Section 6(a) Period, a
"Blackout Period"); PROVIDED, HOWEVER, that the Holding
Company shall deliver to Counsel to the Holders (as
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identified at such time to the Company) a general statement,
signed by an officer of the Holding Company, of the reasons
for such postponement or restriction on use and an estimate
of the anticipated delay. The Holding Company shall
promptly notify each Holder of the expiration or earlier
termination of a Section 6(b) Period.
(c) Notwithstanding anything in this Section 6 to
the contrary, (i) the beginning of any Blackout Period shall
be at least 120 days after the end of the prior Blackout
Period and (ii) the aggregate number of days included in all
Blackout Periods and all Registration Hold Periods during
any consecutive 12 month period during the Effective Period
shall not exceed 180 days.
7. REGISTRATION PROCEDURES. If and whenever the
Holding Company is required to use commercially reasonable
efforts to effect or cause the registration of any
Registrable Securities under the Securities Act as provided
in this Agreement, the Holding Company will, as
expeditiously as possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities
on any form for which the Holding Company then
qualifies or which counsel for the Holding Company
shall deem appropriate, and which form shall be
available for the sale of the Registrable Securities in
accordance with the intended methods of distribution
thereof (including, if so requested by the Holders,
distributions under Rule 415 under the Securities Act
pursuant to a Shelf Registration Statement), and use
commercially reasonable efforts to cause such
Registration Statement to become and remain effective;
(b) prepare and file with the SEC amendments and
post-effective amendments to such Registration
Statement and such amendments and supplements to the
Prospectus used in connection therewith as may be
necessary to maintain the effectiveness of such
registration or as may be required by the rules,
regulations or instructions applicable to the
registration form utilized by the Holding Company or by
the Securities Act or rules and regulations thereunder
necessary to keep such Registration Statement effective
for up to 90 days, in the case of an underwritten
offering, or 180 days, in any other case (or longer
period in the event of a Registration Hold Period
during such 90 or 180 days, as provided in this
Section 7) and cause the Prospectus as so supplemented
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to be filed pursuant to Rule 424 under the Securities
Act, and to otherwise comply with the provisions of the
Securities Act with respect to the disposition of all
securities covered by such Registration Statement until
the earlier of (x) such 90th or 180th day (or longer
period) and (y) such time as all Registrable Securities
covered by such Registration Statement have ceased to
be Registrable Securities; provided that a reasonable
time before filing a Registration Statement or
Prospectus, or any amendments or supplements thereto,
the Holding Company will furnish to the Holders, the
managing underwriter and their respective counsel for
review and comment, copies of all documents proposed to
be filed and will not file any such documents (other
than as aforesaid) to which any of them reasonably
object prior to the filing thereof;
(c) furnish to each Holder of such Registrable
Securities such number of copies of such Registration
Statement and of each amendment and post-effective
amendment thereto (in each case including all
exhibits), any Prospectus or Prospectus supplement and
such other documents as such Holder may reasonably
request in order to facilitate the disposition of the
Registrable Securities by such Holder (the Holding
Company hereby consenting to the use (subject to the
limitations set forth in the last paragraph of this
Section 7) of the Prospectus or any amendment or
supplement thereto in connection with such
disposition);
(d) use commercially reasonable efforts to
register or qualify such Registrable Securities covered
by such Registration Statement under such other
securities or blue sky laws of such jurisdictions as
each Holder shall reasonably request, and do any and
all other acts and things which may be reasonably
necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the
Registrable Securities owned by such Holder, except
that the Holding Company shall not for any such purpose
be required to qualify generally to do business as a
foreign corporation in any jurisdiction where, but for
the requirements of this Section 7(d), it would not be
obligated to be so qualified, to subject itself to
taxation in any such jurisdiction, or to consent to
general service of process in any such jurisdiction;
(e) notify each Holder of any such Registrable
Securities covered by such Registration Statement, at
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any time when a Prospectus relating thereto is required
to be delivered under the Securities Act within the
appropriate period mentioned in Section 7(b), of the
Holding Company's becoming aware that the Prospectus
included in such Registration Statement, as then in
effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances then existing
(the period during which the Holders are required to
refrain from effective public sales or distributions in
such case being referred to as a "Section 7(e)
Period"), and prepare and furnish to such Holder a
reasonable number of copies of an amendment to such
Registration Statement or related Prospectus as may be
necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such
Prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and the time during which
such Registration Statement shall remain effective
pursuant to Section 7(b) shall be extended by the
number of days in the Section 7(e) Period;
(f) notify each Holder of Registrable Securities
covered by such Registration Statement at any time,
(1) when the Prospectus or any Prospectus
supplement or post-effective amendment has been
filed, and, with respect to the Registration
Statement or any post-effective amendment, when
the same has become effective;
(2) of any request by the SEC for amendments
or supplements to the Registration Statement or
the Prospectus or for additional information;
(3) of the issuance by the SEC of any stop
order of which the Holding Company or its counsel
is aware or should be aware suspending the
effectiveness of the Registration Statement or any
order preventing the use of a related Prospectus,
or the initiation or any threats of any
proceedings for such purposes;
(4) of the receipt by the Holding Company of
any written notification of the suspension of the
qualification of any of the Registrable Securities
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for sale in any jurisdiction or the initiation or
any threats of any proceeding for that purpose;
and
(5) if at any time the representations and
warranties of the Holding Company contemplated by
paragraph (i)(1) below cease to be true and
correct in any material respect;
(g) otherwise use commercially reasonable efforts
to comply with all applicable rules and regulations of
the SEC, and make available to the Holders an earnings
statement which shall satisfy the provisions of
Section 11(a) of the Securities Act, provided that the
Holding Company shall be deemed to have complied with
this paragraph if it has complied with Rule 158 under
the Securities Act;
(h) use commercially reasonable efforts to cause
all such Registrable Securities to be listed on any
securities exchange or automated quotation system on
which the Holding Company Common Stock is then listed,
if such Registrable Securities are not already so
listed and if such listing is then permitted under the
rules of such exchange or automated quotation system,
and to provide a transfer agent and registrar for such
Registrable Securities covered by such Registration
Statement no later than the effective date of such
Registration Statement;
(i) enter into agreements (including underwriting
agreements) and take all other appropriate and
reasonable actions in order to expedite or facilitate
the disposition of such Registrable Securities and in
such connection, whether or not an underwriting
agreement is entered into and whether or not the
registration is an underwritten registration:
(1) make such representations and warranties
to the Holders of such Registrable Securities and
the underwriters, if any, in form, substance and
scope as are customarily made by issuers to
underwriters in comparable underwritten offerings;
(2) obtain opinions of counsel to the Holding
Company thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any,
and the Holders of a majority in number of the
Registrable Securities being sold) addressed to
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each Holder and the underwriters, if any, covering
the matters customarily covered in opinions
requested in comparable underwritten offerings and
such other matters as may be reasonably requested
by the Holders of a majority in number of the
Registrable Securities being sold and the managing
underwriter, if any;
(3) obtain "cold comfort" letters and bring-
downs thereof from the Holding Company's
independent certified public accountants addressed
to the selling Holders of Registrable Securities
and the underwriters, if any, such letters to be
in customary form and covering matters of the type
customarily covered in "cold comfort" letters by
independent accountants in connection with
underwritten offerings;
(4) if requested, provide indemnification in
accordance with the provisions and procedures of
Section 10 hereof to all parties to be indemnified
pursuant to said Section; and
(5) deliver such documents and certificates
as may be reasonably requested by the Holders of a
majority in number of the Registrable Securities
being sold and the managing underwriters, if any,
to evidence compliance with clause (f) above and
with any customary conditions contained in the
underwriting agreement or other agreement entered
into by the Holding Company.
(j) cooperate with the Holders of Registrable
Securities covered by such Registration Statement and
the managing underwriter or underwriters or agents, if
any, to facilitate, to the extent commercially
reasonable under the circumstances, the timely
preparation and delivery of certificates (not bearing
any restrictive legends) representing the securities to
be sold under such Registration Statement, and enable
such securities to be in such denominations and
registered in such names as the managing underwriter or
underwriters or agents, if any, or such Holders may
request;
(k) if reasonably requested by the managing
underwriter or underwriters or a Holder of Registrable
Securities being sold in connection with an
underwritten offering, incorporate in a Prospectus
supplement or post-effective amendment such information
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as the managing underwriters and the Holders of a
majority in number of the Registrable Securities being
sold agree should be included therein relating to the
plan of distribution with respect to such Registrable
Securities, including, without limitation, information
with respect to the principal amount of Registrable
Securities being sold to such underwriters, the
purchase price being paid therefor by such underwriters
and with respect to any other terms of the underwritten
offering of the Registrable Securities to be sold in
such offering and make all required filings of such
Prospectus supplement or post-effective amendment as
promptly as practicable upon being notified of the
matters to be incorporated in such Prospectus
supplement or post-effective amendment;
(l) provide any Holder of Registrable Securities
included in such Registration Statement, any
underwriter participating in any disposition pursuant
to such Registration Statement and any attorney,
accountant or other agent retained by any such Holder
or underwriter (collectively, the "Inspectors") with
reasonable access to appropriate officers of the
Holding Company and the Holding Company's subsidiaries
to ask questions and to obtain information reasonably
requested by any such Inspector and make available for
inspection all financial and other records and other
information, pertinent corporate documents and
properties of any of the Holding Company and its
subsidiaries and affiliates (collectively, the
"Records"), as shall be reasonably necessary to enable
them to exercise their due diligence responsibility;
PROVIDED, HOWEVER, that the Records that the Holding
Company determines, in good faith, to be confidential
and which it notifies the Inspectors in writing are
confidential shall not be disclosed to any Inspector
unless such Inspector signs a confidentiality agreement
reasonably satisfactory to the Holding Company but in
any event permitting disclosure by an Inspector if
(i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission of a
material fact in such Registration Statement or
(ii) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent
jurisdiction; PROVIDED FURTHER, HOWEVER, that any
decision regarding the disclosure of information
pursuant to subclause (i) shall be made only after
consultation with counsel for the applicable
Inspectors. Each Holder of Registrable Securities
agrees that it will, promptly after learning that
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disclosure of such Records is sought in a court having
jurisdiction, give notice to the Holding Company and
allow the Holding Company, at the Holding Company's
expense, to undertake appropriate action to prevent
disclosure of such Records; and
(m) in the event of the issuance of any stop order
of which the Holding Company or its counsel is aware or
should be aware suspending the effectiveness of the
Registration Statement or of any order suspending or
preventing the use of any related Prospectus or
suspending the qualification of any Registrable
Securities included in the Registration Statement for
sale in any jurisdiction, the Holding Company will use
commercially reasonable efforts promptly to obtain its
withdrawal; and the period for which the Registration
Statement shall be kept effective shall be extended by
a number of days equal to the number of days between
the issuance and withdrawal of any stop orders (a
"Section 7(m) Period").
The Holding Company may require each Holder of
Registrable Securities as to which any registration is being
effected to furnish the Holding Company with such
information regarding such Holder and pertinent to the
disclosure requirements relating to the registration and the
distribution of such securities as the Holding Company may
from time to time reasonably request in writing.
Each Holder of Registrable Securities agrees that,
upon receipt of any notice from the Holding Company of the
happening of any event of the kind described in
Section 7(e), such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to the
Prospectus or Registration Statement covering such
Registrable Securities until such Holder's receipt of the
copies of the supplemented or amended Prospectus
contemplated by Section 7(e), and, if so directed by the
Holding Company, such Holder will deliver to the Holding
Company (at the Holding Company's expense) all copies, other
than permanent file copies then in such Holder's possession,
of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
8. REGISTRATION EXPENSES. The Holding Company
will pay all Registration Expenses in connection with all
registrations of Registrable Securities pursuant to
Sections 3 and 4 upon the written request of any of the
Holders, and each Holder shall pay (x) any fees or
disbursements of counsel to such Holder (other than Counsel
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to the Holders) and (y) all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale
or disposition of such Holder's Registrable Securities
pursuant to the Registration Statement.
9. REPORTS UNDER THE EXCHANGE ACT. The Holding
Company agrees to:
(a) file with the SEC in a timely manner all
reports and other documents required of the Holding
Company under the Exchange Act; and
(b) furnish to any Holder, during the Effective
Period, forthwith upon request (A) a written statement
by the Holding Company that it has complied with the
current public information and reporting requirements
of Rule 144 under the Securities Act and the Exchange
Act and (B) a copy of the most recent annual or
quarterly report of the Holding Company and such other
reports and documents so filed by the Holding Company.
10. INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE HOLDING COMPANY. The Holding
Company agrees to indemnify and hold harmless each Holder of
Registrable Securities, its officers, directors, agents,
trustees, stockholders and each Person who controls such
Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), against all losses,
claims, damages, liabilities and expenses (including
reasonable attorneys' fees, disbursements and expenses)
incurred by such party pursuant to any actual or threatened
action, suit, proceeding or investigation arising out of or
based upon (i) any violation by the Holding Company (or its
officers, directors or controlling persons) of any Federal
or state law, rule or regulation applicable to the Holding
Company and relating to any action required or inaction by
the Holding Company (or such other person) in connection
with any Registration Statement, (ii) any untrue or alleged
untrue statement of material fact contained in the
Registration Statement, any Prospectus or preliminary
Prospectus, or any amendment or supplement to any of the
foregoing or (iii) any omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a
Prospectus or a preliminary Prospectus, in light of the
circumstances then existing) not misleading, except in each
case insofar as the same arise out of or are based upon any
such untrue statement or omission made in reliance on and in
conformity with information with respect to such indemnified
party furnished in writing to the Holding Company by such
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indemnified party or its counsel expressly for use therein.
In connection with an underwritten offering, the Holding
Company will indemnify the underwriters thereof, their
officers, directors, agents, trustees, stockholders and each
Person who controls such underwriters (within the meaning of
Section 15 of the Securities Act or Section 20 of the
Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable
Securities. Notwithstanding the foregoing provisions of
this Section 10(a), the Holding Company will not be liable
to any Holder of Registrable Securities (or any officer,
director, agent, trustee, stockholder or controlling person
thereof), any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other
Person, if any, who controls such Holder or underwriter
(within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act), under the indemnity
agreement in this Section 10(a) for any such loss, claim,
damage, liability (or action or proceeding in respect
thereof) or expense that arises out of such Holder's or
other Person's failure to send or deliver a copy of the
final Prospectus to the Person asserting an untrue statement
or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of the
Registrable Securities to such Person if such statement or
omission was corrected in such final Prospectus and the
Holding Company has previously furnished copies thereof to
such Holder or other Person in accordance with this
Agreement.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE
SECURITIES. In connection with the Registration Statement,
each Holder will furnish to the Holding Company in writing
such information, including the name, address and the amount
of Registrable Securities held by such Holder, as the
Holding Company reasonably requests for use in such
Registration Statement or the related Prospectus and agrees
to indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 10(a)) the Holding
Company, all other Holders or any underwriter, as the case
may be, and any of their respective affiliates, directors,
officers, agents, trustees, stockholders and controlling
Persons (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act), against any losses,
claims, damages, liabilities and expenses resulting from
(i) any violation by such Holder (or its officers,
directors, agents, trustees, stockholders or controlling
persons) of any Federal or state law, rule or regulation
relating to action required of or inaction by such Holder
(or other Person) in connection with its offer and sale of
17<PAGE>
<PAGE>
Registrable Securities and (ii) any untrue or alleged untrue
statement of a material fact contained in, or any omission
or alleged omission of a material fact required to be stated
in, such Registration Statement or Prospectus or any
amendment or supplement to either of them or necessary to
make the statements therein (in the case of a Prospectus, in
the light of the circumstances then existing) not
misleading, but only to the extent that any such untrue
statement or omission is made in reliance on and in
conformity with information with respect to such Holder
furnished in writing to the Holding Company by such Holder
or its counsel specifically for inclusion therein.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any
Person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying party after the
receipt by such indemnified party of any written notice of
the commencement of any action, suit, proceeding or
investigation or threat thereof made in writing for which
such indemnified party may claim indemnification or
contribution pursuant to this Agreement (provided that
failure to give such notification shall not affect the
obligations of the indemnifying party pursuant to this
Section 10 except to the extent the indemnifying party shall
have been actually prejudiced as a result of such failure).
In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under
these indemnification provisions for any legal expenses of
other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable
costs of investigation, unless in the reasonable judgment of
any indemnified party a conflict of interest is likely to
exist, based on the written opinion of counsel, between such
indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying
party shall be obligated to pay the reasonable fees and
expenses of such additional counsel or counsels. No
indemnifying party, in defense of any such action, suit,
proceeding or investigation, shall, except with the consent
18<PAGE>
<PAGE>
of each indemnified party, consent to the entry of any
judgment or entry into any settlement which does not include
as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all
liability in respect to such action, suit, proceeding or
investigation to the extent the same is covered by the
indemnity obligation set forth in this Section 10. No
indemnified party shall consent to entry of any judgment or
enter into any settlement without the consent of each
indemnifying party.
(d) CONTRIBUTION. If the indemnification from
the indemnifying party provided for in this Section 10 is
unavailable to an indemnified party hereunder in respect of
any losses, claims, damages, liabilities or expenses
referred to herein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and expenses in
such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified party in
connection with the actions which resulted in such losses,
claims, damages, liabilities and expenses, as well as any
other relevant equitable considerations. The relative fault
of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission
to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct
or prevent such action. The amount paid or payable by a
party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed
to include, subject to the limitations set forth in
Section 10(c), any legal and other fees and expenses
reasonably incurred by such indemnified party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 10(d)
were determined by pro rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this
Section 10(d), no underwriter shall be required to
contribute any amount in excess of the underwriting discount
or commission applicable to the Registrable Securities
underwritten by it. No Person guilty of fraudulent
19<PAGE>
<PAGE>
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent
misrepresentation. Each Holder's obligation to contribute
is several in the proportion that the proceeds of the
offering received by such Holder bears to the total proceeds
of the offering, and not joint.
If indemnification is available under this
Section 10, the indemnifying parties shall indemnify each
indemnified party to the full extent provided in
Section 10(a) or (b), as the case may be, without regard to
the relative fault of said indemnifying parties or
indemnified party or any other equitable consideration
provided for in this Section 10(d).
(e) In no event shall any Holder of Registrable
Securities be liable or required to contribute any amount
under this Section 10 or otherwise in respect of any untrue
or alleged untrue statement or omission or alleged omission
for amounts in excess of the amount by which the total price
at which the Registrable Securities of such Holder were
offered to the public exceeds the amount of any damages
which such Holder has otherwise been required to pay by
reason of such untrue statement or omission.
(f) The provisions of this Section 10 shall be in
addition to any liability which any indemnifying party may
have to any indemnified party and shall survive the
termination of this Agreement.
11. PARTICIPATION IN UNDERWRITTEN OFFERINGS. No
Holder of Registrable Securities may participate in any
underwritten offering pursuant to Section 3 hereunder unless
such Holder (a) agrees to sell such Holder's securities on
the basis provided in any underwriting arrangements approved
by the Holding Company in its reasonable discretion and
(b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements.
12. MISCELLANEOUS. (a) REMEDIES. Each Holder of
Registrable Securities in addition to being entitled to
exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its
rights under this Agreement.
(b) AMENDMENTS AND WAIVERS. Except as otherwise
provided herein, the provisions of this Agreement may not be
20<PAGE>
<PAGE>
amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given,
unless the Holding Company has obtained the written consent
of Holders of at least a majority in number of the
Registrable Securities then outstanding.
(c) NOTICES. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by
facsimile transmission and by courier service (with proof of
service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid),
addressed as follows:
(i) if to a Holder of Registrable Securities, at
the address of such Holder below such Holder's name on
the signature pages hereof or, if not a party hereto or
the date hereof, such other address as such Holder may
designate to the Holding Company in writing; and
(ii) if to the Holding Company to:
with copies to:
or to such other address as any party shall specify by
written notice so given, and such notice shall be deemed to
have been delivered as of the date so telecommunicated,
personally delivered or mailed.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall
inure to the benefit of and be binding upon the parties
hereto, any Holder other than the Affiliates and any
successors thereof; provided, however, that (i) any Holder
shall have agreed in writing to become a Holder under this
Agreement and to be bound by the terms and conditions hereof
and (ii) subject to clause (i), this Agreement and the
provisions of this Agreement that are for the benefit of the
Holders shall not be assignable by any Holder to any Person
that is not so permitted to be a Holder, and any such
purported assignment shall be null and void.
(e) COUNTERPARTS. This Agreement may be executed
in one or more counterparts, all of which shall be
considered one and the same agreement and shall become
effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
21<PAGE>
<PAGE>
(f) DESCRIPTIVE HEADINGS. The descriptive
headings used herein are inserted for convenience of
reference only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
(g) GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of
laws thereof.
(h) SEVERABILITY. In the event that any one or
more of the provisions contained herein, or the application
thereof in any circumstances, is held invalid, illegal or
unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every
other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby and that all
remaining provisions contained herein shall not be in any
way impaired thereby.
(i) ENTIRE AGREEMENT. This Agreement is intended
by the parties as a final expression and a complete and
exclusive statement of the agreement and understanding of
the parties hereto in respect of the subject matter hereof.
There are no restrictions, promises, warranties or
undertakings with respect to the subject matter hereof,
other than those set forth or referred to herein and
therein. This Agreement supersedes all prior agreements and
22<PAGE>
<PAGE>
understandings between the parties with respect to such
subject matter.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
THE WALT DISNEY COMPANY,
by
__________________________
Name:
Title:
[AFFILIATES],
by
_________________________
Name:
Title:
23
<PAGE>
<PAGE>
Exhibit 99.1
[Letterhead of The Walt Disney Company]
July 31, 1995
Mr. Thomas Murphy
Chief Executive Officer
Capital Cities/ABC Inc.
77 West 66th Street
New York, New York 10023-6298
PROGRAMMING AGREEMENT
Dear Tom:
This letter will summarize the agreement reached
today between The Walt Disney Company ("Disney") and Capital
Cities/ABC Inc. ("ABC") with respect to the establishment of
a strategic alliance for the production of television
programming for the ABC network.
The purpose of the alliance will be to enhance the
overall program offering of the ABC network by providing ABC
with access to Disney programming on an ongoing basis,
subject to the provisions of this Agreement. The key
components of this relationship are:
(1) SATURDAY MORNING PROGRAMMING
During each of the three ABC programming seasons
commencing with the Fall 1996 season (or, at Disney's
option, the Fall 1997 season), Disney shall provide to ABC,
and ABC shall present, subject to pre-existing ABC
commitments, a full slate of Saturday morning (8 a.m. to
noon) programming designed for the children's market,
consisting of Disney-produced programs, including animation,
and programming acquired by Disney from third parties.
Disney shall create an overall programming environment for
this time period with a distinctive identity and
interstitial material reflecting Disney standards of
quality. Such programming shall, to the extent required by
the network, conform to the needs of the network to provide
affiliates with programming responsive to the affiliates'
obligation to air qualifying children's programming pursuant
to FCC regulations.
<PAGE>
<PAGE>
(2) MAGICAL WORLD OF DISNEY
During each of the three ABC programming seasons
commencing with the Fall 1996 season, Disney shall provide
to ABC, and ABC shall present, a weekly one-hour Disney-
themed program to be presented under the name "Magical World
of Disney" or a similar name reasonably acceptable to both
parties. ABC shall run the program in a prime-time time
slot determined by ABC after consultation with Disney.
(3) SPECIALS
During each of the three ABC programming seasons
commencing with the Fall 1996 season, Disney shall provide
to ABC, and ABC shall present, three prime-time specials,
each being at least 60 minutes in length and presented in a
time slot determined by ABC after consultation with Disney,
featuring Disney-themed materials (e.g., "The Making of
Pocahontas" or "Disneyland's 40th Anniversary").
All programs provided to ABC pursuant to this
Agreement shall be so provided (a) subject to ABC's ultimate
creative approval of content; provided that in the event any
Disney program is disapproved, or a program series is
cancelled, Disney shall have the right to provide, and ABC
shall present, substitute programming subject to such
approval; and (b) on terms and conditions consistent with
then-prevailing industry standards for comparable programs
(including ABC's Standards and Practices requirements).
Each party agrees to enter into definitive programming
agreements with respect to such programs giving effect to
such terms and conditions.
This Agreement shall be terminable (a) by ABC, by
written notice to Disney delivered within 60 days following
any termination by ABC of the Agreement and Plan of
Reorganization, dated as of the date hereof, between Disney
and ABC (the "Reorganization Agreement"), authorized by the
Reorganization Agreement in the event that (i) Disney does
not obtain approval of the FCC to consummate the
transactions contemplated by the Reorganization Agreement or
(ii) ABC's or Disney's shareholders do not approve the
transactions contemplated by the Reorganization Agreement in
a shareholder vote thereon, (iii) failure to meet a
condition in Section 8.1 or 8.2 of the Reorganization<PAGE>
<PAGE>
Agreement that gives ABC a right of termination of the
Reorganization Agreement or (iv) termination under Section
9.1, 9.2 or 9.3(b) or (c) of the Reorganization Agreement,
and (b) by Disney, by written notice following any other
authorized termination of the Reorganization Agreement,
delivered to ABC no later than 90 days prior to the next
scheduled first-run broadcast of the programs described in
paragraphs (2) and (3) above or 180 days prior to the next
scheduled first-run broadcast of the programs described in
paragraph (1), whichever is earlier.
If the foregoing correctly reflects your
understanding of our agreement, please so indicate by
countersigning the enclosed copy of this letter whereupon
this letter shall constitute a binding agreement between
Disney and ABC.
Very truly yours,
/s/ Michael D. Eisner
Acknowledged and agreed
as of the date first above written.
CAPITAL CITIES/ABC INC.
By: /s/ Thomas S. Murphy
-----------------------
Thomas Murphy
Chief Executive Officer
<PAGE>
Exhibit 99.2
STOCK AGREEMENT
STOCK AGREEMENT, dated as of July 31, 1995, among The Walt Disney
Company, a Delaware corporation ("Purchaser"), Berkshire Hathaway, Inc.,
a Delaware corporation ("BH") and Thomas S. Murphy (solely for purposes
of Section 1.04 hereof).
WHEREAS, as of the date hereof subsidiaries and affiliates of BH
(the "Shareholders") own (either beneficially or of record) 20,000,000
shares of common stock, par value $0.10 per share ("Company Common
Stock"), of Capital Cities/ABC Inc., a New York corporation (the
"Company") (all such shares and any shares hereafter acquired by the
Shareholders prior to the termination of this Agreement being referred
to herein as the "Shares");
WHEREAS, concurrently herewith, the Purchaser and the Company are
entering into an Agreement and Plan of Reorganization (as such Agreement
may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which, upon the terms and subject to the conditions thereof,
Merger Sub B (as defined in the Merger Agreement) will be merged (the
"Company Merger") with and into the Company; and
WHEREAS, as a condition to the willingness of the Purchaser to
enter into the Merger Agreement, the Purchaser has requested that each
Shareholder agree, and, in order to induce the Purchaser to enter into
the Merger Agreement, each Shareholder has agreed to grant the Purchaser
proxies to vote such Shareholder's Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements set forth herein
and in the Merger Agreement, the parties hereto, intending to be legally
bound, hereby agree as follows:
ARTICLE I
SECTION 1.01. TRANSFER OF SHARES. Until the close of business on
the date of the special meeting of shareholders called to consider and
vote upon the Company Merger (the "Special Meeting") and except as
otherwise provided herein, BH will cause each Shareholder not to (a)
sell, pledge or otherwise dispose of any of its Shares, (b) deposit its
Shares into a voting trust or enter into a voting agreement or
arrangement with respect to such Shares or grant any proxy with respect
thereto or (c) enter into any contract, option or other arrangement or
undertaking with respect to the direct or indirect acquisition or sale,
assignment, transfer or other disposition of any Company Common Stock.
<PAGE>
<PAGE>
SECTION 1.02. VOTING OF SHARES; FURTHER ASSURANCES. BH will
cause each Shareholder, by this Agreement, with respect to those Shares
that it owns of record on the record date for voting at the Special
Meeting, to vote such shares (or to execute written consents with
respect to such Shares) (i) in favor of the adoption of the Merger
Agreement and approval of the Company Merger and the other transactions
contemplated by the Merger Agreement, (ii) against any Alternative
Proposal (as defined in the Merger Agreement) and (iii) in favor of any
other matter necessary to consummation of the transactions contemplated
by the Merger Agreement and considered and voted upon at the Special
Meeting. BH will cause each Shareholder to cause the Shares owned by it
beneficially to be voted in accordance with the foregoing. BH
acknowledges receipt and review of a copy of the Merger Agreement.
SECTION 1.03. NO SOLICITATION. Prior to the Effective Time, (a)
BH shall not permit any Shareholder or any subsidiary of any Shareholder
or any of their respective officers, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of its subsidiaries) to,
initiate, solicit or encourage, directly or indirectly, any inquiries or
the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to the Company's shareholders)
with respect to an Alternative Proposal (as defined in the Merger
Agreement) or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any
person relating to an Alternative Proposal, or otherwise facilitate any
effort or attempt to make or implement an Alternative Proposal and (b)
BH will cause each Shareholder to notify the Purchaser immediately if
any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, it.
SECTION 1.04. PRIOR PROXY. Thomas S. Murphy hereby agrees to
relinquish all rights with respect to, and to not exercise any rights or
powers pursuant to, the proxies given by the Shareholders pursuant to
that certain Agreement dated July 2, 1986 among Capital Cities
Communications, Inc., a New York corporation, and the Shareholders, as
amended, and releases each Shareholder from any further liability or
obligation thereunder to the extent necessary to comply with this
Agreement.
ARTICLE II
SECTION 2.01. NOTICES. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to
have been duly given or made as of the date delivered, mailed or
transmitted, and shall be effective upon receipt, if delivered
personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes
of address) or sent by electronic transmission to the telecopier number
specified below:
2<PAGE>
<PAGE>
(a) If to the Purchaser:
The Walt Disney Company
500 South Buena Vista Street
Burbank, CA 91521
Attention: General Counsel
with a copy to:
Dewey Ballantine
1301 Avenue of the Americas
New York, NY 10019
Attention: Morton A. Pierce
Telecopier No.: (212) 259-6333
(b) If to a Shareholder, at the address set forth on
Schedule I hereto.
Berkshire Hathaway, Inc.
1440 Kiewit Plaza
Omaha, NE 68131
Attention: Warren E. Buffett
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Samuel C. Butler
Telecopier No.: (212) 474-3700
SECTION 2.02. HEADINGS. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 2.03. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest
extent
3<PAGE>
<PAGE>
permitted by applicable law in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent
possible.
SECTION 2.04. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement of the parties and supersedes all prior agreements and
undertakings, both written and oral, between the parties, or any of
them, with respect to the subject matter hereof.
SECTION 2.05. CERTAIN EVENTS. BH agrees that this Agreement and
the obligations hereunder shall attach to each Shareholder's Shares and
shall be binding upon any person to which legal or beneficial ownership
(as such term is applied under Rule 13d-3 of the Exchange Act) of such
Shares shall pass, whether by operation of law or otherwise.
Notwithstanding any transfer of Shares, the transferor shall remain
liable for the performance of all obligations under this Agreement of
the transferor.
SECTION 2.06. ASSIGNMENT. This Agreement shall not be assigned
by operation of law or otherwise.
SECTION 2.07. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall
confer upon any person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
SECTION 2.08. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event any provision of this
Agreement was not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or in equity.
SECTION 2.09. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York,
without giving effect to principles of conflicts of laws.
SECTION 2.10. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be
an original but all of which, taken together, shall constitute one and
the same agreement.
SECTION 2.11. TERMINATION. This Agreement shall terminate
automatically immediately upon termination of the Merger Agreement.
4<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE WALT DISNEY COMPANY
By: /s/ Michael D. Eisner
----------------------------
Name: Michael D. Eisner
Title: Chairman of the Board
and Chief Executive Officer
BERKSHIRE HATHAWAY, INC.
By: /s/ Warren E. Buffett
----------------------------
Name: Warren E. Buffett
Title: Chairman of the Board
and Chief Executive Officer
/s/ Thomas S. Murphy
----------------------------
Thomas S. Murphy
(solely for purposes of
Section 1.04 hereof)
5
<PAGE>
Exhibit 99.3
CONTACT: CAPITAL CITIES/ABC INC. THE WALT DISNEY COMPANY
Patricia J. Matson, Media John Dreyer, Media
212-456-7325 818-560-5300
Julie Hoover, Media Tom Deegan, Media
212-456-6641 818-560-1572
Joseph M. Fitzgerald, Investors Winifred Markus Webb,
Investors 212-456-7008 818 570-5758
FOR IMMEDIATE RELEASE
DISNEY, CAPITAL CITIES/ABC AGREE TO MERGE
--$19 BILLION TRANSACTION WILL ENHANCE SHAREHOLDER VALUES
BY CREATING WORLD'S LEADING ENTERTAINMENT AND COMMUNICATIONS COMPANY -
- -
BURBANK, CA, AND NEW YORK, JULY 31, 1995 -- The Walt Disney Company
(NYSE: DIS) and Capital Cities/ABC Inc. (NYSE: CCB), two of the
world's leading entertainment and media companies, today announced
that they have agreed to merge. The combined enterprise will have a
unique ability in creating, packaging and delivering entertainment,
news, and sports -- all of which will generate significant new
opportunities for domestic and international growth.
Under terms of the agreement, which has been approved by the Board of
Directors of each company, Capital Cities/ABC shareholders will have
the right to receive one share of Disney common stock and $65 in cash
for each of their shares. At current share prices, the value of the
transaction is approximately $19 billion.
In a joint statement, Michael D. Eisner and Thomas S. Murphy, chairman
and chief executive officer of Disney and Capital Cities/ABC,
respectively, said: "The combined company will become a vital and
dynamic force in the entertainment and media business, reaching family
audiences worldwide and providing them with unparalleled news,
information and entertainment both inside and outside the home.
"Disney and Capital Cities/ABC have created some of the most
recognized and respected brands in the world. The merger will create
tremendous value of the shareholders of each company by taking full
advantage of the complementary strengths of each organization. The
combined enterprise will be better equipped to grow, to provide
valuable services for our viewers, listeners, readers, sports fans and
vacationers, and to capture the imagination of future generations."
As a result of the merger, Capital Cities/ABC Inc. will become a
wholly-owned subsidiary of Disney. The combined enterprise, which
will be known as The Walt Disney Company, will<PAGE>
<PAGE>
be led by Mr. Eisner, who will continue as chairman and CEO.
Mr. Murphy, chairman and CEO
of Capital Cities/ABC, will relinquish his current titles on the
effective date of the merger and join Disney's Board of Directors.
Robert A. Iger will continue in his role as president of Capital
Cities/ABC. The companies had combined annual revenues of 1994 of
approximately $16.5 billion.
"This transaction is a once-in-a-lifetime opportunity to create an
outstanding entertainment and media company," Mr. Eisner said. "The
merger positions us for substantial growth worldwide and puts us in a
strong competitive position in an industry which, by this transaction,
we are helping to define. The Walt Disney Company will now have more
global outlets to provide the highest quality entertainment, news and
sports programming."
"We sought a merger with Capital Cities/ABC in particular because of
our tremendous respect for the management team Tom Murphy has
assembled and the outstanding collection of broadcasting and
publishing assets they have built," Mr. Eisner said.
Mr. Murphy said, "This is a terrific opportunity for our shareholders
and employees and will result in a world-class organization dedicated
to providing the finest in information, entertainment and news. The
dynamism of Disney, under the leadership of Michael Eisner, combined
with the experience and energy of our operations under Bob Iger, makes
this the most exciting new business venture in many years."
Mr. Iger said, "I have always had tremendous respect for The Walt
Disney Company and its excellent management. Our assets and reach can
help increase the scope of what is already a world-wide enterprise;
but it will be our enthusiasm and spirit, added to theirs, that will
give this combination a special dimension. I am very excited to be a
part of this new venture and to have the opportunity to help build a
unique force in international media."
Under the terms of the merger, any shareholder of Capital Cities/ABC
can elect to receive proportionally more cash or common stock than
provided for in the exchange ratio, subject to proration if either the
stock or cash portion is oversubscribed, and subject to the option of
Disney to increase the cash portion if requested by Capital Cities/ABC
shareholders.
The transaction, which is subject to regulatory review and approval of
the shareholders of each company, is expected to be completed by early
1996. The companies noted that because their businesses are
complementary, they do not expect staff reductions as a result of the
combination.
The Walt Disney Company is a worldwide leader in motion pictures and
television production, theme parks and consumer products. Its film
division, led by the success of animated titles like POCAHONTAS, THE
LION KING, and ALADDIN, has been either first or second at the
domestic theatrical box office over the past five years.
In television, Disney offers more than 58 hours a week of network and
syndicated shows in the U.S. Two of its top network shows, HOME
IMPROVEMENT and ELLEN, run on the ABC network. Disney will establish
a new record with the launch of 9 new shows in syndication
2<PAGE>
<PAGE>
during the 1995 season. In addition, Disney's international television
programming is seen by audiences on every continent.
The Disney Channel, with 14 million U.S. subscribers, is currently
extending its reach overseas. It made its foreign debut in Taiwan
this spring and will debut in the U.K. this fall. Disney recently
launched Super RTL as a joint-venture channel in Germany with a
significant amount of Disney programming.
In addition to its film and television activities, Disney owns and
operates theme parks in California (Disneyland) and Florida (Walt
Disney World). The company also receives royalties from Tokyo
Disneyland and owns 39% of Disneyland Paris. Disney also licenses it
characters to manufacturers worldwide, operates 400 Disney Stores
around the world, and publishes books, magazines and music.
In addition to the ABC Television Network, which consists of 225
affiliated stations reaching 99.9 percent of the nation's television
households, Capital Cities/ABC owns and operates 8 television
stations, with plans to purchase two others in August, reaching about
25 percent of the U.S. market.
Capital Cities/ABC also has a significant and rapidly expanding
international operation -- one of the most aggressive of any U.S.
media company. These holdings include significant equity interests in
Tele-Munchen and RTL2, Munich; Scandinavian Broadcasting Systems,
Luxembourg; Hamster Productions and Eurosport, Paris; and The Japan
Sports Channel, Tokyo.
Capital Cities/ABC also owns:
80 percent of ESPN, Inc., which includes ESPN, its U.S. flagship
sports channel which reaches 67 million households and, through
its international program services, over 100 million households
overseas; as well as ESPN2, serving 22 million households;
21 radio stations and radio networks serving more than 3,400
radio stations;
50 percent of Lifetime Television, serving 58 million U.S.
households;
37.5 percent of A&E Television Networks, reaching 56 million
domestic households;
a large publishing group, with 7 daily newspapers, weekly
newspapers and shopping guides, various specialty and business
periodicals and books; and
a multimedia group which develops and manages business
opportunities in new and emerging media technologies.
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