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SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box
/ / Preliminary Information Statement
/X/ Definitive Information Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
Outlet Communications, Inc.
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(Name of Registrant as Specified in Charter)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is calculated and state
how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Filing Party:
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(3) Filing Party:
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(4) Date Filed:
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OUTLET
COMMUNICATIONS, INC.
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23 Kenney Drive
Cranston
Rhode Island 02920-4489
January 9, 1996
Dear Stockholder:
As you may be aware, on August 2, 1995, upon the unanimous recommendation
of the Board of Directors of Outlet Communications, Inc. (the "Company"), and in
accordance with Delaware law, holders of a majority of the outstanding shares of
Class A Common Stock, par value $.01 per share, of the Company executed written
consents approving and adopting a Merger Agreement providing for the merger (the
"Merger") of the Company with a subsidiary of National Broadcasting Company,
Inc. The closing of the Merger is expected to occur during the first half of
February 1996, pending satisfaction of certain closing conditions. Under the
Merger Agreement, each outstanding share of Class A Common Stock of the Company
will be converted into the right to receive $47.25 in cash, without interest
thereon. You will be receiving additional information on how to receive payment
for your shares of Class A Common Stock in connection with the closing.
The attached Information Statement is being provided to you pursuant to
Rule 14c-2 under the Securities Exchange Act of 1934, as amended. The
Information Statement contains a more detailed description of the Merger. I
encourage you to read the Information Statement thoroughly.
Very truly yours,
/s/ JAMES G. BABB
JAMES G. BABB
Chairman of the Board
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SUMMARY OF INFORMATION STATEMENT
The following is a summary of certain information contained elsewhere in
this Information Statement. Certain capitalized terms used in this Summary are
defined elsewhere in this Information Statement. Reference is made to, and this
Summary is qualified in its entirety by, the more detailed information contained
in this Information Statement and in the Annexes hereto. Stockholders are urged
to carefully read this Information Statement, including the Annexes hereto, in
its entirety.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
THE COMPANIES
Outlet Communications, Inc. Outlet Communications, Inc. (the "Company")
owns and operates three television stations, consisting of two NBC
network-affiliated VHF television stations and one NBC network-affiliated UHF
television station. In addition, the Company operates a UHF television station
affiliated with The WB Network under a local marketing agreement ("LMA"). Of the
two owned VHF television stations, one is located in Columbus, Ohio and one
serves the Providence, Rhode Island/New Bedford, Massachusetts market. The owned
UHF television station broadcasts in Raleigh, North Carolina, and the LMA is
based in Chillicothe, Ohio. The Company's stations all broadcast in the nation's
major (top 50) markets. The principal executive offices of the Company are
located at 23 Kenney Drive, Cranston, Rhode Island 02920 (telephone (401)
455-9200).
National Broadcasting Company, Inc. National Broadcasting Company, Inc., a
Delaware corporation ("NBC"), and its subsidiaries are principally engaged in
furnishing, within the United States, network television services to affiliated
television stations, the production of live and recorded television programs,
the operation, under licenses from the Federal Communications Commission (the
"FCC"), of six VHF television broadcasting stations, the operation of
cable/satellite networks around the world, and investment and programming
activities in multimedia and cable television. The NBC Television Network is one
of the major U.S. commercial broadcast television networks and serves more than
200 affiliated stations within the United States.
The sole stockholder of NBC is National Broadcasting Holding Company, Inc.
("NBC Holding"). NBC Holding is a holding company whose principal asset is the
stock of NBC. The principal offices of NBC and NBC Holding are located at 30
Rockefeller Plaza, New York, New York 10112.
The sole stockholder of NBC Holding is General Electric Company, a New York
corporation ("GE"). GE is a diversified technology, manufacturing and services
company engaged directly and through its subsidiaries in a variety of businesses
around the world, including aircraft engines, appliances, broadcasting,
electrical distribution and control, financial services, information services,
lighting, medical systems, motors and industrial systems, plastics and other
materials, power generation and transportation systems. GE's principal executive
offices are located at 3135 Easton Turnpike, Fairfield, Connecticut 06431.
CO Acquisition Corporation. CO Acquisition Corporation (the "Purchaser")
is a newly incorporated Delaware corporation organized in connection with the
Merger and has not carried on any activities other than incident to its
formation and in connection with the Merger. The Purchaser is a direct wholly
owned subsidiary of NBC. The principal executive offices of the Purchaser are
located at 30 Rockefeller Plaza, New York, New York 10112.
CONSENT TO THE MERGER AGREEMENT BY A MAJORITY OF THE OUTSTANDING SHARES
As of August 2, 1995, the Board of Directors of the Company (the "Board")
approved, and the holders of a majority of the outstanding shares of the
Company's Class A Common Stock, par value $.01 per share ("Company Common
Stock"), executed written consents approving and adopting, the Merger Agreement
dated as of August 2, 1995, among NBC, the Purchaser and the Company (the
"Merger Agreement"). A copy of the Merger Agreement is attached to this
Information Statement as Annex A. Prior to executing such
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consents, such stockholders entered into Consent and Voting/Conditional Option
Agreements (the "Option Agreements") with NBC pursuant to which each such
stockholder agreed to deliver a written consent approving and adopting the
Merger Agreement. See "DESCRIPTION OF THE OPTION AGREEMENTS". The form of Option
Agreement is attached to this Information Statement as Annex B. No additional
approval of the Merger Agreement by the Company's stockholders is required.
THE MERGER AGREEMENT
General. Pursuant to and subject to the terms and conditions of the Merger
Agreement, the Company will merge (the "Merger") with the Purchaser, with the
Company continuing as the surviving corporation (the "Surviving Corporation"),
and each outstanding share of Company Common Stock (excluding shares held (a) in
the treasury of the Company or owned by any direct or indirect subsidiary of the
Company (which will be cancelled and retired without any conversion thereof and
without any payment with respect thereto) or (b) by holders who shall have
effectively exercised their appraisal rights with respect to such shares in
accordance with Section 262 of the Delaware General Corporation Law (the
"DGCL")) will be cancelled and converted into the right to receive $47.25 per
share in cash, without interest thereon (the "Share Consideration"). Each share
of Company Common Stock held by NBC or the Purchaser will be converted into and
exchanged for one duly and validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation. The effective time of the Merger is
the date and time of the filing of a Certificate of Merger with the Secretary of
State of Delaware (the "Effective Time"), which is scheduled to occur within
five business days following satisfaction of certain closing conditions,
including receipt of FCC approval, and will occur no earlier than 20 days from
the date of this Information Statement. As a result of the Merger, the Surviving
Corporation will be a wholly owned subsidiary of NBC, and NBC will hold all the
outstanding voting securities of the Surviving Corporation. The Surviving
Corporation will continue to own all the voting securities of the Company's
operating subsidiary, Outlet Broadcasting, Inc., a Rhode Island corporation
("Outlet Broadcasting"), and all the voting securities of the Company's inactive
subsidiary, Atlin Communications, Inc., a Delaware corporation. A copy of the
Merger Agreement is attached to this Information Statement as Annex A. See
"DESCRIPTION OF THE MERGER AGREEMENT".
Payment for Shares; No Further Ownership of Company Common Stock. As of
the Effective Time, NBC will deposit, or will cause to be deposited, with The
Chase Manhattan Bank, N.A. (the "Paying Agent"), for the benefit of the holders
of shares of Company Common Stock, for payment in accordance with the Merger
Agreement, through the Paying Agent, cash in an amount equal to the Share
Consideration multiplied by the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time (such cash being hereinafter
referred to as the "Payment Fund"). The Paying Agent will mail to each record
holder, as of the Effective Time, of a certificate that immediately prior to the
Effective Time evidenced outstanding shares of Company Common Stock (the
"Certificates") a form letter of transmittal and instructions for use in
effecting the surrender of the Certificates for payment therefor. Upon surrender
to the Paying Agent of a Certificate, together with such letter of transmittal
duly executed, and any other required documents, the holder of such Certificate
will be entitled to receive in exchange therefor the Share Consideration, and
such Certificate will forthwith be cancelled. Until surrendered to the Paying
Agent in accordance with the provisions of the Merger Agreement, each
Certificate will represent for all purposes only the right to receive the Share
Consideration.
Payment for Options; No Rights to Receive Company Common Stock. NBC and
the Company will take all action necessary to (a) terminate the Company's 1992
Stock Incentive Plan, as amended to the date of the Merger Agreement (the "1992
Stock Plan"), effective as of the close of business on the day after the
Effective Time, (b) provide that each outstanding employee stock option or
"Restricted Share" award to purchase shares of Company Common Stock granted
under the 1992 Stock Plan (an "Option") will become fully vested, whether or not
previously vested, immediately prior to the Effective Time and (c) provide that,
with respect to any such Option that is outstanding immediately prior to the
Effective Time, such Option will be cancelled as of the close of business on the
day after the Effective Time and the holder will be entitled to receive from the
Surviving Corporation, immediately after the Effective Time, an amount in cash
in cancellation of such Option equal to the excess, if any, of the Share
Consideration over the per share exercise
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price of such Option, multiplied by the number of shares of Company Common Stock
to which the Option remains unexercised. Any such payment will be subject to all
applicable Federal, state and local tax withholding requirements.
Conditions to the Merger Agreement. The obligations of the Company and NBC
to consummate the Merger are subject to certain conditions, including approval
by the FCC of the transfer of control of the Company's broadcast licensee
subsidiary pursuant to a final order that is not subject to judicial appeal or
administrative review. Such order became a final order on January 8, 1996. On
August 29, 1995, the Company and NBC, respectively, received early termination
of the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Recommendation of the Board of Directors. The Board has unanimously
approved the Merger Agreement, and believes that the Merger is fair to, and in
the best interests of, the Company and its stockholders. For a description of
certain factors considered by the Board in evaluating the Merger, see
"BACKGROUND OF THE TRANSACTION" and "APPROVAL BY THE BOARD OF DIRECTORS".
Fairness Opinion. The Company retained the investment banking firm of
Goldman, Sachs & Co. ("Goldman Sachs") as its financial advisor in connection
with the Merger. Goldman Sachs provided the Board with an oral fairness opinion,
which opinion was subsequently confirmed in writing, relating to the fairness of
the consideration to be received by stockholders in connection with the Merger.
See "OPINION OF FINANCIAL ADVISOR". A copy of Goldman Sachs' opinion is attached
to this Information Statement as Annex C.
Interests of Management in the Merger Agreement. The directors and
executive officers of the Company who own Company Common Stock will receive
$47.25 per share of Company Common Stock owned, and the executive officers who
hold Options to purchase Company Common Stock will receive a cash payment equal
to the difference between $47.25 and the applicable Option exercise price. The
table set forth under the heading "DESCRIPTION OF INTERESTS OF MANAGEMENT AND
AFFILIATES IN THE MERGER AGREEMENT" identifies such directors and officers, the
number of shares owned, the number of Options owned and the cash payments to be
received by each in respect of such ownership.
In addition to payments listed in the table referenced above for his
ownership of Company Common Stock, and the assumption of liabilities under (or
present value payout on) his employment agreement in the amount of approximately
$1,110,230, James G. Babb, Chairman, President and Chief Executive Officer of
the Company, is entitled to receive at the Effective Time a total of
approximately $7,514,868 (based on the number of shares of Company Common Stock
outstanding at the Effective Time), pursuant to a provision in his employment
agreement that triggers such payments by the Company or its successor in the
event of a merger or sale of assets valued in excess of $9 per share of Company
Common Stock. On December 14, 1995, the Board, with the approval of NBC,
authorized the unconditional acceleration of all of Mr. Babb's Options, and the
unconditional payment to him, prior to the Effective Time, of $5.5 million of
the amount due him at the Effective Time pursuant to his employment agreement,
which amount was paid prior to December 31, 1995.
Felix W. Oziemblewski, the Chief Financial Officer of the Company, in
addition to payments listed in the table referenced above for his ownership of
Company Common Stock and Options and the assumption of liabilities under his
employment agreement, will be entitled to receive at the Effective Time a total
of approximately $204,013 for benefits accrued as of January 31, 1996, under the
Company's Supplemental Retirement Plan.
Other executive officers have clauses in their employment agreements that
require the Company or its successor-in-interest to assume all liabilities under
such agreements.
The Merger Agreement also provides for up to a total of $200,000 to be paid
to certain officers and employees of the Company or its subsidiaries as bonuses
to encourage such persons to remain in the employment of the Company pending
consummation of the Merger. See "DESCRIPTION OF THE MERGER AGREEMENT".
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SELECTED FINANCIAL INFORMATION OF THE COMPANY
The following table presents selected consolidated financial data of the
Company as of and for the years ended December 31, 1994, 1993, 1992, 1991 and
1990. The comparability of the data in the following table is affected by
dispositions of broadcast stations, including two radio stations and two UHF
television stations that were sold in 1990. Also, net income in 1993 includes
the cumulative effect of a change in method of accounting for income taxes in
the amount of $4,434,000 and an extraordinary loss for debt extinguishment of
$1,826,000. The Company has not paid cash dividends on its capital stock during
any of the periods presented below.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net revenue......................... $ 59,442 $ 46,952 $ 45,153 $ 39,434 $ 55,662
Operating income.................... 20,175 12,428 10,297 2,232 6,388
Income (loss) before non-recurring
items and income taxes............ 11,229 2,342 (2,825) (12,643) (9,532)
Net income (loss)................... 10,569 4,634 (1,552) (9,265) 6,112
Net income (loss) per share......... 1.61 .71 (.24) (1.41) .93
Total assets........................ 129,928 117,611 126,646 143,029 156,370
Long-term debt, excluding current
maturities........................ 75,000 79,500 87,447 95,961 91,855
Other long-term liabilities......... 15,098 13,392 18,085 18,933 24,154
Stockholders' equity................ 16,404 5,785 1,113 2,665 11,930
</TABLE>
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INFORMATION STATEMENT
OUTLET COMMUNICATIONS, INC.
23 KENNEY DRIVE
CRANSTON, RHODE ISLAND 02920
INTRODUCTION
This Information Statement is being furnished to the holders of Class A
Common Stock, par value $.01 per share ("Company Common Stock"), of Outlet
Communications, Inc., a Delaware corporation (the "Company"), in connection with
the approval and adoption by written consents dated as of August 2, 1995
(collectively, the "Stockholder Consents"), from the holders of a majority of
the outstanding shares of Company Common Stock of the Merger Agreement dated as
of August 2, 1995, among National Broadcasting Company, Inc., a Delaware
corporation ("NBC"), CO Acquisition Corporation, a Delaware corporation and a
subsidiary of NBC (the "Purchaser"), and the Company (the "Merger Agreement"). A
copy of the Merger Agreement is attached to this Information Statement as Annex
A. The effective time of the merger of the Purchaser with and into the Company
(the "Merger") will be the date and time of the filing of a Certificate of
Merger with the Secretary of State of Delaware (the "Effective Time"), which is
scheduled to occur within five business days following satisfaction of certain
closing conditions, including receipt of the approval by the Federal
Communications Commission (the "FCC") of the transfer of control of the
Company's broadcast licensee subsidiary pursuant to a final order that is not
subject to judicial appeal or administrative review. Such order became a final
order on January 8, 1996. This Information Statement is being mailed on or about
January 12, 1996, to holders of record of Company Common Stock on January 4,
1996. There were approximately 300 holders of record of Company Common Stock on
such date.
VOTING
Stockholder Vote Required and Obtained. In accordance with the Delaware
General Corporation Law (the "DGCL"), the Merger Agreement required approval and
adoption by the affirmative vote of the holders of a majority of the outstanding
shares of Company Common Stock. As of August 2, 1995, there were 6,579,631
shares of Company Common Stock issued and outstanding, each share of which was
entitled to one vote on the proposal to approve and adopt the Merger Agreement.
Stockholder Consents representing 3,433,091 shares of Company Common Stock,
constituting 52.2% of the outstanding shares of Company Common Stock, were
executed in favor of approval and adoption of the Merger Agreement as of such
date. The stockholders executing such Stockholder Consents were stockholders who
had also entered into Consent and Voting/Conditional Option Agreements ("Option
Agreements") with NBC in connection with the Merger. See "DESCRIPTION OF THE
OPTION AGREEMENTS". No additional approval of the Merger Agreement by the
Company's stockholders is required.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY.
SUMMARY OF THE TRANSACTION
The Merger Agreement has been approved by the Board of Directors of the
Company (the "Board") and has been approved and adopted by the holders of a
majority of the outstanding shares of Company Common Stock. If the other
conditions to consummating the Merger are satisfied, the Company will be
acquired by NBC for approximately $322.5 million as described below. The
purchase of the Company by NBC will be effected through an all-cash merger of
the Purchaser into the Company. Consummation of the Merger was contingent upon,
among other things, approval by the FCC of the transfer of control of the
Company's broadcast licensee subsidiary to NBC. By action of November 9, 1995,
the FCC approved the transfer of control of the Company's broadcast licensee
subsidiary to NBC. That action became final for purposes of the Merger Agreement
on January 8, 1996. See "REGULATORY APPROVALS".
The purchase price of approximately $322.5 million represents a price of
$47.25 per share of Company Common Stock (the "Share Consideration"), based upon
6,724,714 shares and Options to purchase 120,969
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shares issued and outstanding on January 5, 1996. After consummation of the
Merger, the current stockholders of the Company will cease to be stockholders of
the Company.
The Company's address is Outlet Communications, Inc., 23 Kenney Drive,
Cranston, Rhode Island 02920. Its telephone number is (401) 455-9200. As
described below, the Purchaser was formed for the sole purpose of acquiring the
Company. The address of both NBC and the Purchaser is National Broadcasting
Company, Inc., 30 Rockefeller Plaza, New York, New York 10112; telephone number:
(212) 664-4555.
RECOMMENDATION OF THE BOARD
THE BOARD BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS
OF, THE COMPANY AND ITS STOCKHOLDERS. ACCORDINGLY, THE BOARD HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT. THE HOLDERS OF A MAJORITY OF THE OUTSTANDING
SHARES OF COMPANY COMMON STOCK HAVE EXECUTED WRITTEN CONSENTS APPROVING AND
ADOPTING THE MERGER AGREEMENT. NO ADDITIONAL APPROVAL OF THE MERGER AGREEMENT BY
THE COMPANY'S STOCKHOLDERS IS REQUIRED.
BACKGROUND OF THE TRANSACTION
During the last quarter of 1994 and the first quarter of 1995, the Company
was approached by several parties interested in discussing an acquisition of the
Company. The Company entered into confidentiality agreements and had informal
discussions with several of these parties.
On December 16, 1994, the Board authorized management to retain an
investment banker to assist the Company in exploring various strategic
alternatives to enhance stockholder value. On February 7, 1995, the Company
engaged Goldman, Sachs & Co. ("Goldman Sachs") as its financial advisor to
assist the Board in connection therewith. The Company also retained Shearman &
Sterling, as special legal counsel, to work with Hinckley, Allen & Snyder, the
Company's regular counsel, in connection therewith.
On March 15, the Company received a written proposal from a broadcasting
company that was one of the parties that had previously approached the Company,
offering to acquire the Company by means of a merger in which each Company
stockholder would receive a combination of cash and stock in the merged entity
with an aggregate value of approximately $26.50 per share, based on the then
current market value of the other party's stock. On March 16, the Company
received a second proposal from such broadcasting company, proposing a merger in
which each Company stockholder would receive a combination of cash and stock in
the merged entity with an aggregate value of approximately $34.00 per share,
based on the then current market value of the other party's stock.
On March 21, the Company issued a press release announcing that it had
retained Goldman Sachs as its financial advisor to help the Company explore
strategic alternatives, including a possible business combination, the sale of
all or a portion of the Company, potential acquisitions or other similar
transactions.
Also on March 21, the Company received a letter from the broadcasting
company referred to above proposing that the Company and such broadcasting
company enter into merger negotiations and that the Company grant such
broadcasting company a 60-day exclusivity period to negotiate a definitive
merger agreement. Such broadcasting company indicated that it would withdraw its
offer if the Company solicited other offers to acquire the Company by causing
Goldman Sachs to distribute an offering memorandum. The Company declined to
pursue separate negotiations with such broadcasting company.
Thereafter, with the assistance of its financial and legal advisors, the
Board evaluated a variety of strategic alternatives for the Company. The Board
determined that, as a part of such evaluation, offers for the acquisition of the
Company should be solicited pursuant to a controlled auction process. The Board
authorized Goldman Sachs to begin contacting potential acquirors for the
Company. During March, April and May,
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approximately 80 interested parties contacted, or were contacted by, the Company
or Goldman Sachs, or both. In April and May, 45 interested parties entered into
confidentiality agreements with the Company in order to receive confidential
information regarding the Company to assist each such party in making a
preliminary proposal for the Company or portions thereof.
In response to a request from Goldman Sachs for preliminary proposals, on
or prior to May 17, 12 such proposals were received, 10 for the entire equity
interest in the Company (ranging in value from approximately $32.00 per share to
$38.00 per share) and two for less than all the assets of the Company. Of these
12 bidders, eight were invited to conduct due diligence with respect to the
Company and attend management presentations during May and June in anticipation
of submitting final proposals on June 28. In addition, NBC also requested access
to the Company's confidential information and, after signing a confidentiality
agreement, was permitted to perform due diligence.
On June 28, five of the nine bidders who performed due diligence on the
Company submitted definitive proposals to acquire the Company, ranging in value
from approximately $246 million ($36.25 per share) to $289 million ($42.25 per
share). In this round of bidding, NBC submitted an offer of $38.00 per share in
the form of common stock of General Electric Company, a New York corporation
("GE"), the parent of NBC. NBC's offer also provided that NBC would be prepared
to acquire the Company for equivalent consideration in an all-cash transaction.
Renaissance Communications Corp., a Delaware corporation ("Renaissance"),
submitted an offer of $42.25 per share in cash.
On June 29 and 30, the Company and its financial and legal advisors
negotiated the terms of a merger agreement with Renaissance (the "Renaissance
Merger Agreement") providing for the acquisition of the Company by Renaissance
for $42.25 per share in cash (the "Renaissance Merger").
On June 30, the Board met to consider the Renaissance offer.
Representatives of Goldman Sachs reviewed the terms of the proposed Renaissance
Merger Agreement, discussed their financial analysis with respect thereto, and
orally advised the Board that, as of such date, in their opinion, the
consideration to be received by the holders of shares of Company Common Stock
pursuant to the Renaissance Merger Agreement was fair to such holders. Based
upon the Board's review and consideration of the terms of the Renaissance Merger
Agreement and, among other things, the oral opinion of Goldman Sachs referenced
above, the Board members who were present unanimously determined that the
Renaissance Merger was fair to, and in the best interests of, the Company and
the holders of Company Common Stock, approved the Renaissance Merger Agreement
and recommended that the holders of outstanding shares of Company Common Stock
approve and adopt the Renaissance Merger Agreement. In connection with the
foregoing, the Board considered the fact that the Renaissance Merger Agreement
(a) permitted the Board to enter into negotiations with a third party that made
an unsolicited bona fide proposal to acquire the Company if the Board determined
in good faith that such action was required for the Board to comply with its
fiduciary duties to stockholders imposed by the DGCL, (b) permitted the Company
to unilaterally terminate it if the Board recommended any other business
combination involving the Company, (c) required the Company to pay Renaissance a
termination fee of $6.5 million in the event that the Renaissance Merger
Agreement was so terminated and a competing transaction was consummated within
12 months thereafter, and (d) contained no other provision that would materially
impede the Board from considering and pursuing a better unsolicited offer to
acquire the Company that might be made by a third party. The Board also noted
that MBL Life Assurance Corp. ("MBL") and the Company's other principal
stockholders were not entering into an agreement to vote in favor of the
Renaissance Merger Agreement or entering into any other form of "lockup"
agreement with Renaissance.
The Renaissance Merger Agreement was executed later the same day and a
joint press release was issued announcing the Renaissance Merger Agreement.
At a Board meeting on July 26, James G. Babb, Chairman, President and Chief
Executive Officer of the Company, reported to the Board concerning reports that
officials of NBC had contacted representatives of MBL and of certain other
stockholders of the Company about the possibility of NBC making another proposal
to acquire the Company. At the Board's direction, Mr. Babb telephoned
Renaissance to inform Renaissance of such reported contacts.
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On July 28, the Board received a written offer from NBC to acquire the
Company for $47.25 per share in cash. On that date, a committee of the Board met
to review NBC's offer. NBC's proposal contemplated that at the time a merger
agreement between the Company and NBC was entered into, holders of a majority of
the outstanding shares of Company Common Stock would execute written consents
approving the transaction pursuant to the DGCL and enter into the Option
Agreements. NBC's proposal provided that it would terminate unless accepted in
accordance with its terms prior to 5:00 p.m. on August 2.
On July 30, the Board met to review NBC's offer and consider the various
courses of action open to the Board with respect to the Renaissance Merger
Agreement and the NBC proposal. The Board determined to commence negotiations
with NBC with respect to its proposal.
On July 31, the Company issued a press release announcing that it had
received the NBC proposal and would consider it. The Company also informed
Renaissance that it (a) was entering into negotiations with NBC with respect to
its proposal, (b) had waived compliance by Renaissance with the "standstill"
agreement contained in the confidentiality agreement dated April 7, 1995,
between the Company and Renaissance, and (c) intended to terminate the
Renaissance Merger Agreement if the Board recommended the proposed transaction
with NBC to the Company's stockholders, but that the Board had not, as of that
date, withdrawn, modified or changed its recommendation of the Renaissance
Merger Agreement to the Company's stockholders in a manner adverse to
Renaissance.
On July 31, Renaissance filed suit in the Chancery Court of the State of
Delaware (the "Chancery Court") against NBC, the Company and the Company's
directors alleging, among other things, that the Company had breached the
Renaissance Merger Agreement and that NBC had tortiously interfered with
Renaissance's rights under the Renaissance Merger Agreement. On August 1, a
hearing was held in the Chancery Court regarding a motion by Renaissance for a
temporary restraining order against the Company prohibiting it from terminating
the Renaissance Merger Agreement and against the Company and NBC prohibiting
them from entering into a merger agreement. The Chancery Court denied
Renaissance's motion in a ruling issued that day.
On July 31 and August 1, the Company and its financial and legal advisors
negotiated the terms of the Merger Agreement with NBC providing for the
acquisition of the Company by NBC for $47.25 per share in cash pursuant to the
Merger. Also, NBC negotiated the terms of the Option Agreements with MBL and
certain other stockholders of the Company.
On August 2, the Board met at the offices of Shearman & Sterling in New
York to consider and act upon NBC's proposal and on any revised proposal that
might be received from Renaissance. During the meeting, the Board was informed
by NBC that NBC and Renaissance had reached an agreement providing for, among
other things, a settlement of the litigation referred to above. The Board was
also informed that NBC was reconfirming its existing proposal and that
Renaissance would not be submitting a new proposal. Thereafter, Goldman Sachs
reviewed the terms of the proposed Merger Agreement, discussed their financial
analysis with respect thereto, and provided its oral opinion to the Board that,
as of the date of such opinion, the Share Consideration to be received by the
holders of shares of Company Common Stock pursuant to the Merger Agreement is
fair to such holders. Based upon the Board's review and consideration of the
terms of the Merger Agreement and, among other things, the oral opinion of
Goldman Sachs, the Board members who were present unanimously determined that
the Merger is fair to, and in the best interests of, the Company and the holders
of Company Common Stock, approved the Merger Agreement and recommended that the
holders of outstanding shares of Company Common Stock approve and adopt the
Merger Agreement. The Board also simultaneously terminated the Renaissance
Merger Agreement. Later that day, MBL and certain other principal stockholders
of the Company (owning in the aggregate 52.2% of the outstanding shares of
Company Common Stock) executed written consents approving and adopting the
Merger Agreement pursuant to the DGCL and entered into the Option Agreements
with NBC. Thereafter, the Board members not present at the meeting ratified the
actions taken by the Board on August 2.
4
<PAGE> 11
APPROVAL BY THE BOARD OF DIRECTORS
At special meetings of the Board held on June 30 and August 2, 1995, the
Company's management and representatives of Goldman Sachs made presentations
concerning the business and prospects of the Company. At the special meeting of
the Board held on August 2, the Company's management and representatives of
Goldman Sachs and the Company's legal advisors also made a presentation
concerning the proposed acquisition of the Company by NBC, including a review of
the terms of the Merger Agreement and the Option Agreements. At such meeting,
the Board (with two members absent) unanimously determined that the Merger is
fair to, and in the best interests of, the Company and the holders of
outstanding shares of Company Common Stock, approved the Merger Agreement and
recommended that the holders of the outstanding shares of Company Common Stock
approve and adopt the Merger Agreement.
In reaching its determination, the Board consulted with the Company's
management, as well as its financial and legal advisors, and considered a number
of factors, including, without limitation, the following:
(a) NBC's proposal was the result of a five-month public auction
process conducted with the assistance of Goldman Sachs in which
approximately 80 potential acquirors had contacted, or were contacted by,
the Company or Goldman Sachs, or both, 12 of such parties submitted
preliminary acquisition proposals and five of such parties submitted
definitive acquisition proposals;
(b) NBC's proposal reflected the highest level of consideration per
share of Company Common Stock received from any potential acquiror;
(c) the Board's belief that NBC's proposal was superior to the terms
of the Renaissance Merger Agreement, and the fact that, at the August 2
Board meeting, Renaissance informed the Board that it would not be
submitting a revised proposal to acquire the Company;
(d) no third party had contacted the Company after the public
announcement of the Renaissance Merger Agreement on June 30 indicating an
interest in making an offer to acquire the Company that was superior to
either the Renaissance Merger Agreement or NBC's final proposal;
(e) the Company's business, assets, liabilities, management, strategic
objectives, competitive position and prospects, as well as its financial
condition, results of operations and cash flows, both on a historical and
prospective basis; see "OPINION OF FINANCIAL ADVISOR";
(f) recent market prices for the Company Common Stock as well as
market prices during the past several years and the relationship thereto of
the price per share of Company Common Stock payable in the Merger; see
"PRINCIPAL STOCKHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT -- Market for
Common Stock and Dividends";
(g) the presentation of Goldman Sachs made to the Board on August 2,
including Goldman Sachs' oral opinion to the effect that, as of the date of
such opinion, the Share Consideration to be received by the holders of
shares of Company Common Stock pursuant to the Merger Agreement is fair to
such holders; see "OPINION OF FINANCIAL ADVISOR";
(h) the analysis and recommendation of the Merger by the Company's
management;
(i) the review of other strategic alternatives, including the sale of
certain of the Company's assets, potential acquisitions and continuing as
an independent company; based upon their review of other strategic
alternatives, as well as the terms of the Merger, the Board did not believe
that pursuing another strategic alternative could reasonably be expected to
provide the Company's stockholders with a higher level of stockholder value
than that reflected in NBC's proposal;
(j) that NBC had available all necessary financing for the Merger and
the lack of any condition in the Merger Agreement to NBC's obligation to
close the Merger based upon financing not being available;
(k) the Board's belief that a transfer of control of the Company's
broadcast licensee subsidiary to NBC would not present any material issues
under Federal communications laws and was likely to be approved by the FCC
in a timely manner;
5
<PAGE> 12
(l) the Board was informed at its August 2 meeting that MBL and
certain other principal stockholders of the Company (owning in the
aggregate 52.2% of the outstanding shares of Company Common Stock) were
prepared to execute on that date written consents approving and adopting
the Merger Agreement pursuant to the DGCL and enter into the Option
Agreements with NBC;
(m) the terms and conditions of the Merger Agreement, including the
parties' representations, warranties and agreements, and the conditions to
their respective obligations to close the Merger set forth in the Merger
Agreement; the Board, based on presentations by its legal and financial
advisors, deemed the terms of the Merger Agreement, including, in
particular, the limited conditions to NBC's obligation to close the Merger,
to be generally favorable to the Company when compared with other
transactions of a similar nature; and
(n) the terms of the Merger Agreement that restrict the ability of the
Board, after the Company's stockholders approve and adopt the Merger
Agreement pursuant to the DGCL, to enter into negotiations with another
third party that makes an unsolicited proposal to acquire the Company or to
unilaterally terminate the Merger Agreement if the Board recommended any
other business combination involving the Company to its stockholders.
The foregoing discussion of information and factors considered and given
weight by the Board is not intended to be exhaustive. In view of the wide
variety of factors considered in connection with its evaluation of the terms of
the Merger, the Board did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative weight to the specific factors considered
in reaching its determinations. In addition, individual members of the Board may
have given different weight to different factors.
OPINION OF FINANCIAL ADVISOR
On August 2, 1995, Goldman Sachs delivered its oral opinion to the Board
that, as of the date of such opinion, the Share Consideration to be received by
the holders of shares of Company Common Stock pursuant to the Merger Agreement
is fair to such holders. Such oral opinion was subsequently confirmed in
writing.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS DATED AUGUST 2, 1995,
WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS ANNEX C
AND IS INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS OF THE COMPANY ARE URGED
TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
In connection with rendering its opinion, Goldman Sachs reviewed, among
other things, (a) the Merger Agreement; (b) the Annual Report to Stockholders
and Annual Reports on Form 10-K of the Company for the five years ended December
31, 1994; (c) certain interim reports to stockholders and the Quarterly Report
on Form 10-Q of the Company for the three months ended March 31, 1995; (d)
certain other communications from the Company to its stockholders; and (e)
certain internal financial analyses and forecasts for the Company prepared by
its management. Goldman Sachs also held discussions with members of the senior
management of the Company regarding its past and current business operations,
financial condition and future prospects. In addition, Goldman Sachs reviewed
the reported prices and trading activity for Company Common Stock, compared
certain financial and stock market information for the Company with similar
information for certain other companies, the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the television broadcasting industry specifically and in other industries
generally, and performed such other studies and analyses as it considered
appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all the financial and other information reviewed by it for
purposes of its opinion. In addition, Goldman Sachs has not made an independent
evaluation or appraisal of the assets or liabilities of the Company or any of
its subsidiaries and Goldman Sachs has not been furnished with any such
evaluation or appraisal.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to the Board on
August 2, 1995, which oral opinion was subsequently confirmed in writing.
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<PAGE> 13
Historical Stock Trading Analysis. Goldman Sachs reviewed the historical
trading prices and volumes for Company Common Stock and the relationship between
movements of such stock and movements in a composite index of stocks of selected
companies in the television broadcasting industry (the "Television Composite
Index"). The Television Composite Index is composed of the following companies:
Citicasters, Inc., Clear Channel Communications, Inc., Granite Broadcasting
Corp., LIN Television Corp., Renaissance, United Television, Inc., and Young
Broadcasting, Inc. Between July 31, 1994 and mid-February 1995, the time at
which the Company retained Goldman Sachs to advise it, the trading price of
Company Common Stock performed substantially in line with the Television
Composite Index. Since mid-February 1995, Company Common Stock has outperformed
the Television Composite Index.
Analysis of Purchase Price. Goldman Sachs prepared a financial analysis of
the Merger and calculated the aggregate consideration and various financial
multiples based upon the cash consideration of $47.25 per share of Company
Common Stock. The multiples were as follows, in each case for 1994, for the 12
months ended May 31, 1995 (the "LTM"), for 1995, (based on management
estimates), and for 1996 (also based on management estimates), respectively: (a)
aggregate consideration as a multiple of net revenue -- 6.6x, 6.2x, 6.0x and
4.8x; (b) aggregate consideration as a multiple of earnings before interest,
taxes, depreciation and amortization (and before corporate expenses)
("EBITDA") -- 13.9x, 13.0x, 13.4x and 9.8x; and (c) equity consideration
(aggregate consideration less net estimated debt at time of closing) as a
multiple of net income -- 30.4x, 34.7x, 47.4x and 21.5x. Such analysis also
indicated that such cash consideration of $47.25 per share of Company Common
Stock represented a 130.5% premium over the closing price of $20.50 per share of
Company Common Stock on February 7, 1995, the date upon which the Company
retained Goldman Sachs to advise it. Aggregate consideration as a multiple of
"Broadcast Cash Flow" (defined as operating income before corporate expenses
plus amortization of intangibles and film amortization and depreciation less
cash film payments) for 1994 and (based on management estimates) 1995 and 1996
was as follows: 14.1x, 13.7x and 9.6x.
Valuation Summary of Selected Publicly Traded Companies. Goldman Sachs
reviewed and compared certain financial information relating to the Company with
the corresponding financial information for Clear Channel Communications, Inc.,
Granite Broadcasting Corp., LIN Television Corp., Renaissance, Sinclair
Broadcasting Group, United Television, Inc. and Young Broadcasting, Inc. (the
"Selected Companies") and for Belo (A.H.) Corp., Capital Cities/ABC, Inc., CBS,
Inc., Heritage Media Corp. (the "Mixed Media Companies"). The Selected Companies
were chosen because they were publicly traded companies with operations that for
purposes of analysis were considered by Goldman Sachs to be similar to the
Company. Goldman Sachs calculated and compared various financial multiples and
ratios for the Company and each of the Selected Companies and the Mixed Media
Companies. Such multiples for the Company were calculated using a price of
$46.00 per share of Company Common Stock, which was the closing price of Company
Common Stock on NASDAQ on August 1, 1995. The multiples and ratios for the
Company were based on information provided by the Company's management and the
multiples for each of the Selected Companies and the Mixed Media Companies were
based on the most recent publicly available information.
Using trading prices as of August 1, 1995: (a) the levered multiple of
estimated 1995 Broadcast Cash Flow (the multiple of Broadcast Cash Flow to the
total value of the Company) was 13.2x for the Company, compared with a range of
8.5x to 13.9x (and a mean of 11.3x and a median of 11.2x) for the Selected
Companies; and (b) the levered multiple of estimated 1996 Broadcast Cash Flow
was 9.2x for the Company, compared with a range of 9.2x to 12.1x (and a mean of
10.8x and a median of 11.0x) for the Selected Companies.
The levered multiple of LTM revenues for the Company (the multiple of
revenues to the total value of the Company) was 6.1x compared with a range of
3.5x to 7.4x (and a mean of 5.6x and a median of 5.1x) for the Selected
Companies and a range of 1.6x to 2.7x (and a mean of 2.4x and a median of 2.6x)
for the Mixed Media Companies. The levered multiple of LTM EBITDA for the
Company was 13.2x compared with a range of 9.4x to 19.0x (and a mean of 13.4x
and median of 13.4x) for the Selected Companies and a range of 9.4x to 13.6x
(and a mean of 10.6x and a median of 9.7x) for the Mixed Media Companies. The
LTM EBITDA margin for the Company was 37.0% compared with a range of 36.0% to
48.6% for the Selected Companies and a range of 14.7% to 28.2% for the Mixed
Media Companies. The compound annual growth
7
<PAGE> 14
rate for revenue for 1992 to 1994 was 14.7% for the Company, compared with a
range of 14.5% to 81.0% for the Selected Companies and a range of 2.9% to 12.5%
for the Mixed Media Companies. The compound annual growth rate for EBITDA for
the Company was 29.3%, compared with a range of 22.1% to 61.9% for the Selected
Companies and a range of 22.8% to 42.6% for the Mixed Media Companies.
Selected Transactions Analysis: Goldman Sachs analyzed certain information
relating to selected transactions in the television broadcasting industry since
1994 (the "Selected Transactions"). Such analysis indicated that the aggregate
consideration paid as a multiple of estimated cash flow in the Selected
Transactions ranged from a low of 6.3x to a high of 14.5x. This compared with a
multiple of 13.7x for the Merger.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all such analyses. No company or
transaction used in the above analyses as a comparison is identical to the
Company or NBC or the contemplated transaction. The analyses were prepared
solely for purposes of Goldman Sachs providing its opinion to the Board as to
the fairness of the Share Consideration to be received by the holders of Company
Common Stock pursuant to the Merger Agreement and do not purport to be
appraisals or necessarily reflect the prices at which businesses or securities
actually may be sold. As described above, certain of the analyses performed by
Goldman Sachs relied on estimates of future financial performance provided by
the Company. Analyses based upon forecasts of future results are not necessarily
indicative of actual future results, which may be significantly more or less
favorable than suggested by such analyses. Because such analyses are inherently
subject to uncertainty, being based upon numerous factors or events beyond the
control of the parties or their respective advisors, none of the Company, NBC,
Goldman Sachs or any other person assumes responsibility if future results are
materially different from those forecast. As described above, Goldman Sachs'
opinion and presentation to the Board were among the many factors taken into
consideration by the Board in making its determination to approve the Merger
Agreement and the Merger. The foregoing summary does not purport to be a
complete description of the analysis performed by Goldman Sachs and is qualified
by reference to the written opinion of Goldman Sachs attached hereto as Annex C,
which stockholders are urged to read in its entirety.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
Prior to retaining Goldman Sachs as the Company's financial advisor, the
Board considered several leading investment banking firms to assist it in
exploring various strategic alternatives to enhance stockholder value. In making
its decision, the Board considered, among other things, the reputation and
experience of each firm (in particular, the experience of each firm in the
communications industry), each firm's familiarity with the Company, the manner
in which each firm proposed to assist the Company in exploring its strategic
alternatives, and the competitiveness of the fee structure proposed by each
firm. Ultimately, the Board retained Goldman Sachs based on, among other things,
its reputation and experience.
Pursuant to a letter agreement dated February 7, 1995 (the "Engagement
Letter"), the Company engaged Goldman Sachs to act as its financial advisor in
connection with the Company's analysis and consideration of various financial
alternatives available to it. Pursuant to the Engagement Letter, the Company has
agreed to pay Goldman Sachs upon consummation of the Merger a transaction fee in
an amount equal to 0.875% of the aggregate consideration paid in the Merger
(including the principal amount of all indebtedness of the Company) up to $325
million plus an amount equal to 3.50% of the aggregate consideration paid in the
Merger exceeding $325 million. The Company has agreed to reimburse Goldman Sachs
for its reasonable out-of-pocket expenses, including attorney's fees, and to
indemnify Goldman Sachs against certain liabilities, including certain
liabilities under the federal securities laws. If the Merger is consummated,
Goldman Sachs will receive a fee of approximately $5,383,000 for its services.
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<PAGE> 15
Goldman Sachs has provided certain investment banking services to NBC and
GE from time to time, and may provide investment banking services to NBC and GE
in the future.
DESCRIPTION OF INTERESTS OF MANAGEMENT AND AFFILIATES
IN THE MERGER AGREEMENT
The directors and officers of the Company owned of record an aggregate of
447,816 shares (6.7% of the outstanding shares) of Company Common Stock as of
January 5, 1996, and Options to acquire an aggregate of 108,802 shares (89.9% of
the outstanding Options) of Company Common Stock as of such date.
The directors and officers of the Company who own Company Common Stock will
receive $47.25 per share of Company Common Stock owned, and the executive
officers who hold Options to purchase Company Common Stock will receive a cash
payment of the difference between $47.25 and the applicable Option exercise
price. The table below identifies such directors and officers, the number of
shares owned, the number of Options owned and the cash payments to be received
by each in respect of such ownership:
<TABLE>
<CAPTION>
NO. NO. CASH FOR CASH FOR
NAME TITLE SHARES OPTIONS(1) SHARES OPTIONS TOTAL CASH
- -------------------------------- --------------------- -------- ----------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
James G. Babb(2)................ Chairman, President & 96,924 0 $ 4,579,659.00 $ 0 $ 4,579,659.00
CEO
Felix W. Oziemblewski(3)........ Vice President-CFO & 41,866 21,334 1,978,168.50 846,197.50 2,824,366.00
Treasurer
Douglas E. Gealy................ Vice President-GM 6,300 25,334 297,675.00 972,197.50 1,269,872.50
WCMH-TV, WWHO-TV
Linda W. Sullivan............... Vice President-GM 6,766 25,334 319,693.50 979,696.75 1,299,390.25
WJAR-TV
Adam G. Polacek................. Vice President-GM 0 15,000 0 594,375.00 594,375.00
WNCN-TV
Steven Soldinger................ Vice President- 0 9,000 0 356,625.00 356,625.00
Television
Joanne Schenck.................. Secretary 1,200 12,800 56,700.00 523,325.00 580,025.00
Letitia Baldrige................ Director 200 0 9,450.00 0 9,450.00
Robert C. Butler................ Director 200 0 9,450.00 0 9,450.00
Stephen J. Carlotti............. Director 0 0 0 0 0
Frederick R. Griffiths(4)....... Director 14,290 0 675,202.50 0 675,202.50
Julius Koppelman................ Director 16,842 0 795,784.50 0 795,784.50
Leonard Lieberman............... Director 1,000 0 47,250.00 0 47,250.00
James K. Makrianes.............. Director 0 0 0 0 0
Victor H. Palmieri(5)........... Director 2,000 0 94,500.00 0 94,500.00
Frank E. Richardson(6).......... Director 256,228 0 12,106,773.00 0 12,106,773.00
Frank E. Walsh, Jr.(7).......... Director 0 0 0 0 0
Solomon M. Yas.................. Director 4,000 0 189,000.00 0 189,000.00
</TABLE>
- ---------------
(1) Includes awards of "restricted shares".
(2) Mr. Babb will also receive additional compensation as described in this
section.
(3) Mr. Oziemblewski will also receive additional compensation as described in
this section.
(4) Includes 11,000 shares held by The Frederick R. Griffiths Charitable Trust
-- 1995, of which Mr. Griffiths serves as a Trustee.
(5) Mr. Palmieri resigned as a director of the Company effective July 31, 1995.
(6) Mr. Richardson's shares as listed above include 2,500 shares owned by his
minor children, as to which shares he disclaims beneficial ownership.
(7) Certain of Mr. Walsh's children are the beneficiaries of The OCI Trust, a 5%
holder of Company Common Stock (the "Trust"), but Mr. Walsh has no
beneficial interest in the Trust and is not a Trustee of the Trust.
In addition to the payment listed in the preceding table for his ownership
of Company Common Stock, and the assumption of liabilities under (or present
value payout on) his employment agreement in the amount of approximately
$1,110,230, Mr. Babb is entitled to receive at the Effective Time a total of
approximately $7,514,868 (based on the total number of shares of Company Common
Stock outstanding at the Effective Time), pursuant to a provision in his
employment agreement that is triggered by the Merger. Such provision
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<PAGE> 16
specifies that Mr. Babb is to receive an amount in cash equal to 2% of the
aggregate amount by which the per share cash price paid in the Merger exceeds
$9.00 per share, up to $12.00 per share, and 3% of the aggregate amount by which
the per share cash price paid in the Merger exceeds $12.00 per share. On
December 14, 1995, the Board, with the approval of NBC, authorized the
unconditional acceleration of all of Mr. Babb's Options and the unconditional
payment to him, prior to the Effective Time, of $5.5 million of the amount due
to him at the Effective Time, pursuant to his employment agreement, which amount
was paid prior to December 31, 1995.
Mr. Oziemblewski, in addition to payments listed in the preceding table for
his ownership of Company Common Stock and Options and the assumption of
liabilities under his employment agreement, will be entitled to receive at the
Effective Time a total of approximately $204,013 for benefits accrued as of
January 31, 1996, under the Company's Supplemental Retirement Plan. Such Plan
contains a provision that makes benefits accrued thereunder fully vested and
payable upon the date of a change-in-control of the Company.
Other executive officers, including Ms. Sullivan and Messrs. Gealy, Polacek
and Soldinger, have clauses in their employment agreements that require the
Company or its successor-in-interest to assume all liabilities under such
agreements.
The Merger Agreement also provides for up to a total of $200,000 to be paid
to certain officers and employees of the Company or its subsidiaries as bonuses
to encourage such persons to remain in the employment of the Company pending
consummation of the Merger.
Messrs. Koppelman, Richardson and Walsh, directors of the Company, are also
directors of Harding Service Corporation, a company that provides management
consulting services to the Company pursuant to an agreement entered into in July
1986. The Company pays Harding Service Corporation consulting fees equal to
.333% of annual gross revenues of the Company, which fees totaled $236,630 in
1994. However, as a condition of closing of the Merger, the agreement with
Harding Service Corporation will be cancelled.
PAYMENT FOR SHARES OF COMPANY COMMON STOCK
Payment for Shares; No Further Ownership of Company Common Stock. As a
result of the Merger, holders of certificates formerly evidencing shares of
Company Common Stock will cease to have any equity interest in the Company.
After consummation of the Merger, all certificates formerly evidencing shares of
Company Common Stock, (excluding shares held (a) in the treasury of the Company
or owned by any direct or indirect subsidiary of the Company (which will be
cancelled and retired without any conversion thereof and without any payment
with respect thereto) or (b) by holders who shall have effectively exercised
their appraisal rights with respect to such shares in accordance with Section
262 of the DGCL) will be cancelled and converted into the right only to receive
a cash payment of $47.25 per share, without interest thereon. No interest will
be paid or accrued on the cash payable upon the surrender of such certificates.
As of the Effective Time, NBC will deposit, or will cause to be deposited, with
The Chase Manhattan Bank, N.A. (the "Paying Agent"), for the benefit of the
holders of shares of Company Common Stock, for payment in accordance with the
Merger Agreement, through the Paying Agent, cash in an amount equal to the Share
Consideration multiplied by the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time, (such cash being
hereinafter referred to as the "Payment Fund"). The Paying Agent will, pursuant
to irrevocable instructions, deliver the cash contemplated to be paid pursuant
to the Merger Agreement out of the Payment Fund. The Payment Fund will not be
used for any other purpose. Promptly after the Effective Time, the Paying Agent
will mail to each record holder, as of the Effective Time, of a certificate that
immediately prior to the Effective Time evidenced outstanding shares of Company
Common Stock (a "Certificate") a form letter of transmittal and instructions for
use in effecting the surrender of the Certificates for payment therefor. Upon
surrender to the Paying Agent of a Certificate, together with such letter of
transmittal duly executed, and any other required documents, the holder of such
Certificate will be entitled to receive in exchange therefor the Share
Consideration, and such Certificate will forthwith be cancelled. Until
surrendered to the Paying Agent in accordance with the provisions of the Merger
Agreement, each Certificate will represent for all purposes only the right to
receive the consideration set forth in the Merger Agreement, without any
interest thereon. All cash paid upon conversion of the shares of Company
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<PAGE> 17
Common Stock in accordance with the terms of the Merger Agreement shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of Company Common Stock.
DETAILED INSTRUCTIONS ABOUT THE SURRENDER OF CERTIFICATES, TOGETHER WITH A
LETTER OF TRANSMITTAL, WILL BE FORWARDED TO FORMER HOLDERS OF SHARES OF COMPANY
COMMON STOCK BY THE PAYING AGENT PROMPTLY FOLLOWING THE EFFECTIVE TIME OF THE
MERGER. HOLDERS OF SHARES OF COMPANY COMMON STOCK SHOULD NOT SUBMIT THEIR
CERTIFICATES TO THE PAYING AGENT UNTIL THEY HAVE RECEIVED SUCH MATERIALS.
PAYMENT FOR SHARES OF COMPANY COMMON STOCK WILL BE MADE TO FORMER HOLDERS OF
SHARES AS PROMPTLY AS PRACTICABLE FOLLOWING RECEIPT BY THE PAYING AGENT OF THEIR
CERTIFICATES AND OTHER REQUIRED DOCUMENTS.
Payment for Options; No Rights to Receive Company Common Stock. NBC and
the Company will take all action necessary to (a) terminate the Company's 1992
Stock Incentive Plan, as amended to the date of this Agreement (the "1992 Stock
Plan"), effective as of the close of business on the day after the Effective
Time, (b) provide that each outstanding employee stock option or "Restricted
Share" award to purchase shares of Company Common Stock granted under the 1992
Stock Plan (an "Option") will become fully vested, whether or not previously
vested, immediately prior to the Effective Time, and (c) provide that, with
respect to any such Option that is outstanding immediately prior to the
Effective Time, such Option will be cancelled as of the close of business on the
day after the Effective Time and the holder shall be entitled to receive from
the Surviving Corporation, immediately after the Effective Time, an amount in
cash in cancellation of such Option equal to the excess, if any, of the Share
Consideration over the per share exercise price of such Option, multiplied by
the number of shares of Company Common Stock to which the Option remains
unexercised. Any such payment will be subject to all applicable Federal, state
and local tax withholding requirements.
MANAGEMENT OF THE COMPANY'S BUSINESS AFTER THE MERGER
Under the Merger Agreement, the Company will merge with the Purchaser at
the Effective Time. Although the Company will continue as the surviving
corporation, it will be a wholly owned subsidiary of NBC as of the Effective
Time. The directors of the Purchaser immediately prior to the Effective Time
will be the initial directors of the Company after the Merger, each to hold
office in accordance with the Certificate of Incorporation and Bylaws of the
Company, and the officers of the Purchaser immediately prior to the Effective
Time will be the initial officers of the Company after the Merger, in each case
until their respective successors are duly elected or appointed and qualified.
ACCOUNTING TREATMENT OF TRANSACTION
The Merger will be accounted for as a "purchase" for accounting and
financial reporting purposes. Accordingly, a determination of the fair value of
the Company's assets and liabilities will be made in order to allocate the
purchase price to the assets acquired and the liabilities assumed.
REGULATORY APPROVALS
FCC. The Merger may not be consummated without the prior approval of the
FCC. On August 16, 1995, an application requesting such approval was filed with
the FCC (the "FCC Application"). The time period within which parties in
interest would have been permitted to file petitions to deny the FCC Application
under the rules of the FCC expired on September 27, 1995, and, to the best of
the Company's knowledge, no such petitions were filed. On November 9, 1995, the
FCC granted its approval to the transfer of control of the Company's broadcast
licensee subsidiary contemplated by the Merger, and the FCC issued a Public
Notice of grant of the FCC Application on November 27, 1995.
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<PAGE> 18
The FCC's rules and policies permit consummation of the Merger following
issuance of an FCC Public Notice of grant of the FCC Application. Under the
Merger Agreement, however, either party may, as a condition of closing, require
that the FCC grant have become a "Final Order". The FCC staff grant became a
Final Order on January 8, 1996 because as of such date if (a) no party had filed
a petition requesting that the FCC staff reconsider its action granting the FCC
Application, (b) no party had filed an "Application for Review" asking the full
FCC to reverse its staff's action granting the FCC Application, and (c) the FCC
had not decided on its own motion to review its staff's action granting the FCC
Application.
Antitrust. The transactions contemplated by the Merger Agreement are
subject to review by the Federal Trade Commission and the Antitrust Division of
the Department of Justice pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the applicable waiting
period thereunder. On August 29, 1995, the Company and NBC, respectively,
received early termination of the applicable waiting period under the HSR Act.
DESCRIPTION OF THE MERGER AGREEMENT
The following is a summary of certain provisions of the Merger Agreement, a
conformed copy of which is attached to this Information Statement as Annex A.
Such summary is qualified in its entirety by reference to the Merger Agreement.
General. Pursuant to and subject to the terms and conditions of the Merger
Agreement, at the Effective Time, the Company will merge with the Purchaser,
with the Company continuing as the surviving corporation (the "Surviving
Corporation"). The Effective Time is scheduled to occur within five business
days following satisfaction of certain closing conditions, including receipt of
the approval by the FCC and satisfaction of certain other conditions described
below. As a result of the Merger, the Surviving Corporation will be a wholly
owned subsidiary of NBC and NBC will hold all the outstanding voting securities
of the Surviving Corporation. The Surviving Corporation will continue to own all
the voting securities of its operating subsidiary, Outlet Broadcasting, Inc., a
Rhode Island corporation ("Outlet Broadcasting"), and all the voting securities
of its inactive subsidiary, Atlin Communications, Inc., a Delaware corporation.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with the DGCL, at the Effective
Time, the Purchaser will be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the Surviving Corporation and will become a direct,
wholly owned subsidiary of NBC. Upon consummation of the Merger, each issued and
then outstanding share of Company Common Stock (other than any shares held in
the treasury of the Company, or owned by any direct or indirect subsidiary of
the Company and any shares that are held by stockholders who have not voted in
favor of the Merger or consented thereto in writing and who shall have demanded
properly in writing appraisal for such shares in accordance with Section 262 of
the DGCL) will be cancelled and converted into the right to receive the Share
Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value
$.01 per share, of the Purchaser issued and outstanding immediately prior to the
Effective Time will be converted into and exchanged for one share of common
stock, par value $.01 per share, of the Surviving Corporation.
The Merger Agreement provides that the directors of the Purchaser
immediately prior to the Effective Time will be the initial directors of the
Surviving Corporation and that the officers of the Purchaser immediately prior
to the Effective Time will be the initial officers of the Surviving Corporation.
The Merger Agreement provides that, at the Effective Time, the Certificate of
Incorporation and By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and By-Laws of the
Surviving Corporation.
Treatment of Stock Options. See "PAYMENT FOR SHARES OF COMPANY COMMON
STOCK -- Payment for Options; No Rights to Receive Company Common Stock".
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<PAGE> 19
Indemnification and Insurance. The Merger Agreement further provides that
the Certificate of Incorporation and By-Laws of the Surviving Corporation and
each of its subsidiaries will contain the provisions with respect to
indemnification of officers and directors set forth in the Certificate of
Incorporation and By-Laws of the Company on the date of the Merger Agreement,
which provisions will not be amended, repealed or otherwise modified for a
period of six years after the Effective Time in any manner that would adversely
affect the rights thereunder of persons who at any time prior to the Effective
Time were identified as prospective indemnitees under the Certificate of
Incorporation or By-laws of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by the Merger Agreement or the Renaissance Merger
Agreement), unless such modification is required by law.
The Merger Agreement also provides that, from and after the Effective Time,
the Surviving Corporation will indemnify, defend and hold harmless the present
and former officers, directors and employees of the Company (collectively, the
"Indemnified Parties") against all losses, expenses, claims, damages,
liabilities or amounts that are paid in settlement of, with the approval of NBC
and the Surviving Corporation (which approval will not be unreasonably
withheld), or otherwise in connection with, any claim, action, suit, proceeding
or investigation (a "Claim"), based in whole or in part on the fact that such
person is or was such a director, officer or employee and arising out of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement or the
Renaissance Merger Agreement), in each case to the fullest extent permitted
under the DGCL (and will pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the fullest extent
permitted under the DGCL, upon receipt from the Indemnified Party to whom
expenses are advanced of the undertaking to repay such advances contemplated by
Section 145(e) of the DGCL). Pursuant to the Merger Agreement, NBC has
guaranteed the Surviving Corporation's obligations to provide the
indemnification herein described.
In the event any Claim is brought against any Indemnified Party (whether
arising before or after the Effective Time) after the Effective Time, the Merger
Agreement provides that (a) the Indemnified Parties may retain the Company's
regularly engaged independent legal counsel as of the date of the Merger
Agreement, or other independent legal counsel satisfactory to them provided that
such other counsel shall be reasonably acceptable to NBC and the Surviving
Corporation, (b) the Surviving Corporation will pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received and (c) the Surviving Corporation will use its reasonable
efforts to assist in the vigorous defense of any such matter, provided that the
Surviving Corporation will not be liable for any settlement of any Claim
effected without its written consent, which consent will not be unreasonably
withheld. Any Indemnified Party wishing to claim indemnification under the
Merger Agreement, upon learning of any such Claim, will notify the Surviving
Corporation (although the failure so to notify the Surviving Corporation will
not relieve the Surviving Corporation from any liability that the Surviving
Corporation may have under the Merger Agreement, except to the extent such
failure prejudices the Surviving Corporation), and will deliver to the Surviving
Corporation the undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Parties as a group may retain one law firm (in addition to local
counsel) to represent them with respect to each such matter unless there is,
under applicable standards of professional conduct (as determined by counsel to
such Indemnified Parties), a conflict on any significant issue between the
positions of any two or more of such Indemnified Parties, in which event, an
additional counsel as may be required may be retained by such Indemnified
Parties.
The Merger Agreement also provides that NBC will cause to be maintained in
effect for not less than five years after the Effective Time (except to the
extent not generally available in the market) the current policies of directors'
and officers' liability insurance and fiduciary liability insurance maintained
by the Company with respect to matters occurring prior to the Effective Time;
provided, however, that (a) NBC may substitute therefor policies of
substantially the same coverage containing terms and conditions that are
substantially the same for the Indemnified Parties to the extent reasonably
available and (b) NBC will not be required to pay an annual premium for such
insurance in excess of 300% of the last annual premium paid prior to the date of
the Merger Agreement, but in such case shall purchase as much coverage as
possible for such amount.
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<PAGE> 20
Representations and Warranties. The Merger Agreement contains
representations and warranties of the Company, NBC and the Purchaser relating
to, among other things (a) due organization and qualification and authority to
enter into and perform the respective obligations of the parties under the
Merger Agreement, (b) capital structure, (c) authorization of the Merger
Agreement and no violation of certain instruments or of any law resulting from
the execution and performance of the Merger Agreement, (d) accuracy of
information supplied, and (e) matters relating to brokers, fees and other
expenses. In addition, the Company has made certain representations and
warranties concerning the following matters: (a) documents filed with the
Securities and Exchange Commission (the "SEC"), financial statements, and
undisclosed liabilities, (b) material contracts, (c) FCC licenses and station
operations, (d) permits, (e) intellectual property, (f) taxes, (g) compliance
with laws, (h) absence of material adverse changes prior to January 1, 1995, (i)
litigation, (j) employee benefits plans, (k) insurance, (l) environmental
matters, and (m) the Renaissance Merger Agreement.
FCC Application; Other Further Action. The Merger Agreement provides that
as promptly as practicable after the execution of the Merger Agreement, NBC and
the Company will prepare and file the FCC Application, and such other documents
as may be required, with respect to the transfer of control of the Company's
broadcast licensee subsidiary to NBC. On August 16, 1995, the Company filed the
FCC Application. The Merger Agreement provides that NBC and the Company will
prosecute the FCC Application in good faith and with due diligence in order to
obtain such FCC approval as expeditiously as practicable. The Merger Agreement
provides further that if the Effective Time will not have occurred for any
reason within the initial effective period of the granting of approval by the
FCC of the FCC Application, and neither NBC nor the Company will have terminated
the Merger Agreement, NBC and the Company will jointly request one or more
extensions of the effective period of such grant. The Merger Agreement provides
that neither NBC nor the Company will knowingly take, or fail to take, any
action the intent or reasonably anticipated consequence of which action or
failure to act would be to cause the FCC not to grant approval of the FCC
Application. Pursuant to the Merger Agreement, prior to FCC approval of the FCC
Application, NBC and the Company have agreed that NBC, its employees and agents,
will not directly or indirectly control, supervise or direct or attempt to
control, supervise or direct the operation of any of the Company's broadcast
stations, and such operations shall be the sole responsibility of and in the
complete discretion of the Company.
The Merger Agreement provides further that the Company and NBC will each
use their reasonable efforts to (a) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or advisable
under applicable law or otherwise to consummate and make effective the
transactions contemplated by the Merger Agreement, (b) obtain any consents or
approvals with respect to the Merger the absence of which would result in a
material adverse effect on the Company, (c) make all necessary filings, and
thereafter make any other required submissions, with respect to the Merger
Agreement and the Merger required under (i) the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the rules and regulations thereunder, and
any other applicable Federal or state securities laws, (ii) the HSR Act, and
(iii) any other applicable law; provided that NBC and the Company shall
cooperate with each other in connection with the making of all such filings.
Pursuant to the Merger Agreement, the Company and NBC have agreed to furnish all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable law (including all information
required to be included in this Information Statement) in connection with the
transactions contemplated thereby. Each of the Company and NBC have agreed to
cooperate and use their reasonable efforts to contest and resist any action,
including legislative, administrative or judicial action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) (an "Order") that is in effect and
that restricts, prevents or prohibits the consummation of the Merger or any
other transactions contemplated by the Merger Agreement, including, without
limitation, by pursuing any necessary administrative or judicial appeal or
legislative action.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction,
at or prior to the Effective Time, of the following conditions: (a) the FCC
shall have issued a Final Order (as defined in Section 9.03 of the Merger
Agreement) approving
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<PAGE> 21
the FCC Application, and such Final Order shall include the granting of such
waivers, if any, of the FCC Rules and Regulations as may be necessary to permit
the consummation of the transactions contemplated thereby; and all the terms and
conditions contained in the Final Order required to be satisfied on or prior to
the Effective Time shall have been satisfied and performed; (b) the applicable
waiting period under the HSR Act shall have expired or been terminated; (c) no
governmental entity or Federal or state court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) that then remains in effect and that has
the effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger; and (d) the holders of a majority of the outstanding shares of
Company Common Stock shall have approved and adopted the Merger Agreement in
accordance with the DGCL and the rules and regulations of NASDAQ.
The obligation of NBC to effect the Merger is also subject to the following
conditions: (a) each of the representations and warranties of the Company
contained in the Merger Agreement (i) in the case of any thereof that are
expressly qualified by any materiality qualification, shall be true and correct,
subject to such materiality qualification, and (ii) in the case of all other
representations and warranties, shall be true and correct in all material
respects, in each case as of the Effective Time as though made on and as of the
Effective Time, and except that those representations and warranties that
address matters only as of a particular date shall remain true and correct,
subject to such materiality qualifications or in all material respects, as the
case may be, as of such date and NBC shall have received a certificate of the
Chief Executive Officer of the Company to such effect; (b) the Company shall
have performed or complied with all agreements and covenants required by the
Merger Agreement to be performed or complied with by it on or prior to the
Effective Time, except where the failure to so comply would not have a material
adverse effect upon the Company and NBC shall have received a certificate of the
Chief Executive Officer of the Company to that effect; and (c) all required
consents, approvals and authorizations that are described in the Merger
Agreement shall have been obtained.
The obligation of the Company to effect the Merger is also subject to the
following conditions: (a) each of the representations and warranties of NBC and
the Purchaser contained in the Merger Agreement (i) in the case of any thereof
that are expressly qualified by any materiality qualification, shall be true and
correct, subject to such materiality qualification, and (ii) in the case of all
other representations and warranties, shall be true and correct in all material
respects, in each case as of the Effective Time as though made on and as of the
Effective Time, and except that those representations and warranties that
address matters only as of a particular date shall remain true and correct,
subject to such materiality qualifications or in all material respects, as the
case may be, as of such date, and the Company shall have received a certificate
of the Chief Financial Officer of NBC to such effect; and (b) NBC shall have
performed or complied with all agreements and covenants required by the Merger
Agreement to be performed or complied with by it on or prior to the Effective
Time, except where the failure to comply would not have a material adverse
effect upon NBC, and the Company shall have received a certificate of the Chief
Financial Officer of NBC to that effect.
Certain Obligations. The Merger Agreement provides that NBC will cause the
Surviving Corporation to pay to Mr. Babb the bonus of approximately $7.5 million
which is provided for in Section 5 of Mr. Babb's employment agreement with the
Company. Mr. Babb received $5.5 million of such payment from the Company prior
to December 31, 1995, pursuant to action by the Company's Board with the
approval of NBC.
Conduct of Business Prior to the Merger. Pursuant to the Merger Agreement,
the Company has agreed that, prior to the Effective Time, unless otherwise
expressly contemplated by the Merger Agreement or consented to in writing by
NBC, the Company will and will cause its subsidiaries to (a) operate its
business in the usual and ordinary course consistent with past practices; (b)
use its reasonable efforts to preserve substantially intact its business
organization, maintain its rights and franchises, retain the services of its
respective principal officers and key employees and maintain its relationships
with its respective principal customers and suppliers; (c) use its reasonable
efforts to maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted; and (d) use its
reasonable efforts to keep in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained. The Merger Agreement
provides, however, that in the event the Company deems it necessary to take
certain
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<PAGE> 22
actions that would otherwise be prohibited as described above, the Company will
consult with NBC, which shall consider in good faith the Company's request to
take such action and not unreasonably withhold or delay its consent for such
action.
The Merger Agreement provides that, except as consented to in writing by
NBC, prior to the Effective Time, the Company will not take any extraordinary
corporate action, and in particular will not: initiate, solicit or encourage
(including by way of furnishing information or assistance), or take any other
action to facilitate, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Competing Transaction
(as defined in Section 5.02 of the Merger Agreement), or negotiate with any
person or entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize or
permit any of the officers, directors or employees of the Company or any of its
subsidiaries or any representative retained by the Company or any of the
Company's subsidiaries to take any such action, and the Company shall promptly
notify NBC of all relevant terms of any such inquiries and proposals received by
the Company or any of its subsidiaries, or by any such officer, director or
representative, relating to any of such matters and if such inquiry or proposal
is in writing, the Company shall deliver or cause to be delivered to NBC a copy
of such inquiry or proposal; provided, however, that prior to the time the
stockholders of the Company approved and adopted the Merger Agreement in
accordance with the DGCL, nothing contained in the relevant section of the
Merger Agreement would have prohibited the Board from (a) furnishing information
to, or entering into discussions or negotiations with, any person or entity that
made an unsolicited bona fide proposal to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction, if, and only to the extent that, (i) the Board, after consultation
with independent legal counsel, determined in good faith that such action was
required for the Board to comply with its fiduciary duties to stockholders
imposed by the DGCL, (ii) prior to furnishing such information to, or entering
into discussions or negotiations with, such person or entity, the Company had
provided written notice to NBC to the effect that it was furnishing information
to, or entering into discussions or negotiations with, such person or entity,
(iii) prior to furnishing such information to such person or entity, the Company
had received from such person or entity an executed confidentiality agreement
with terms no less favorable to the Company than those contained in the
confidentiality agreement between the Company and NBC, and (iv) the Company had
informed NBC, on a current basis, of the status of any such discussions or
negotiations; or (b) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a Competing Transaction.
Access and Information. The Merger Agreement further provides that,
subject to confidentiality agreements to which the Company or any of its
subsidiaries is a party, the Company will, and will cause its subsidiaries to
(a) afford to NBC and its officers, directors, employees, accountants,
consultants, legal counsel, agents, lenders (including representatives of any
lenders) and other representatives (collectively, the "NBC Representatives")
reasonable access at reasonable times upon reasonable prior notice to the
officers, employees, agents, properties, offices and other facilities of the
Company and its subsidiaries and to the books and records thereof and (b)
furnish promptly to NBC and the NBC Representatives such information concerning
the business, properties, contracts, records and personnel of the Company and
its subsidiaries (including, without limitation, financial, operating and other
data and information) as may be reasonably requested, from time to time, by NBC.
Termination; Fees and Expenses. The Merger Agreement provides that it may
be terminated at any time prior to the Effective Time: (a) by mutual consent of
NBC and the Company; (b) by NBC, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in the
Merger Agreement, or if any representation or warranty of the Company shall have
become untrue in any material respect, in either case such that the conditions
to the Merger Agreement described above would not be satisfied (a "Terminating
Company Breach"), provided that, if such Terminating Company Breach is curable
by the Company through the exercise of its reasonable efforts and for so long as
the Company continues to exercise such reasonable efforts, NBC may not terminate
the Merger Agreement; (c) by the Company, upon a material breach of any
representation, warranty, covenant or agreement on the part of NBC set forth in
the Merger Agreement, or if any representation or warranty of NBC shall have
become untrue in any material respect, in either case such that the conditions
to the Merger Agreement described above would
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<PAGE> 23
not be satisfied (a "Terminating NBC Breach"), provided that, if such
Terminating NBC Breach is curable by NBC through the exercise of its reasonable
efforts and for so long as NBC continues to exercise such reasonable efforts,
the Company may not terminate the Merger Agreement; (d) by either NBC or the
Company, if there shall be any Order that is final and nonappealable preventing
the consummation of the Merger, except if the party relying on such Order has
not complied with its obligations under the Merger Agreement to take all action
to secure the required governmental approvals and resist all Orders that
interfere with the consummation of the Merger Agreement; (e) by NBC or the
Company, if the Merger shall not have been consummated before August 2, 1996,
except if the party seeking to terminate the Merger Agreement shall be in breach
hereof; (f) by NBC or the Company, if the approval and adoption of the Merger
Agreement by the stockholders of the Company had not been obtained by written
consent as provided therein or by the requisite vote by the stockholders of the
Company at a meeting of the stockholders of the Company called for the purpose
of approving the Merger Agreement; (g) by NBC, if (i) the Board withdraws,
modifies or changes its recommendation of the Merger Agreement or the Merger in
a manner adverse to NBC or the Purchaser or shall have resolved to do any of the
foregoing, or (ii) the Board shall have recommended to the stockholders of the
Company any Competing Transaction or resolved to do so; and (h) by the Company,
if prior to the time the stockholders of the Company approved and adopted the
Merger Agreement in accordance with the DGCL, the Board had recommended to the
stockholders of the Company any Competing Transaction or resolved to do so;
provided that any termination of the Merger Agreement by the Company pursuant to
the relevant section of the Merger Agreement would not have been effective until
the close of business on the second full business day after notice thereof to
NBC.
The Merger Agreement provides that all expenses incurred by the parties
thereto shall be borne solely by the party that has incurred such expenses;
provided, however, that if the Merger Agreement had been terminated by the
Company pursuant to its right to do so in the event the Board recommended a
Competing Transaction, the Company would have been obligated to pay NBC a fee of
$6.5 million in cash.
DESCRIPTION OF THE OPTION AGREEMENTS
Following the execution and delivery by the Company, NBC and the Purchaser
of the Merger Agreement, certain stockholders of the Company (the "Consenting
Stockholders") entered into the Option Agreements with NBC, pursuant to which
each such Consenting Stockholder agreed to deliver a written stockholder consent
in lieu of a meeting of stockholders of the Company approving and adopting the
Merger Agreement (each, a "Stockholder Consent") in respect of each share of
Company Common Stock owned of record by such Consenting Stockholder. Following
execution of the Option Agreements, the parties to the Option Agreements
delivered the Stockholder Consents to the Company, which Stockholder Consents
covered an aggregate of 3,433,091 shares of Company Common Stock (approximately
52.2% of the shares of Company Common Stock outstanding on such date),
representing the aggregate number of shares of Company Common Stock owned of
record by the Consenting Stockholders. The form of Option Agreement is attached
to this Information Statement as Annex B.
Pursuant to the Option Agreements, each Consenting Stockholder also agreed
that, until the Expiration Date (defined in the Option Agreements as the earlier
of the Effective Time and the date which is 360 days following the date of the
Option Agreements or such shorter period as may be dictated by applicable law or
FCC policy or regulation (unless extended by the mutual written consent of NBC
and the Consenting Stockholder)), at any meeting of the stockholders of the
Company, however called, or in connection with any written consent of the
stockholders of the Company, and to the extent permitted by applicable law, the
Consenting Stockholder will vote (or cause to be voted) or act by written
consent with respect to the shares of Company Common Stock held by the
Consenting Stockholder (as to each Consenting Stockholder, the "Shares") (a) in
favor of approval and adoption of the Merger Agreement and the Merger and the
approval of the terms thereof and each of the other actions contemplated by the
Merger Agreement and the Option Agreement; (b) against any action or agreement
that would result in a breach of any covenant, representation or warranty or any
other obligation or agreement of the Company contained in the Merger Agreement
or of the Consenting Stockholder contained in the Option Agreement; and (c)
against any Competing Transaction (as defined in the Option Agreements) or any
other action, agreement or transaction (other than the Merger
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<PAGE> 24
Agreement or the transactions contemplated thereby) that is intended, or could
reasonably be expected, to impede, interfere or be inconsistent with, or delay,
postpone, discourage or materially adversely affect the Merger or the Option
Agreement, including, but not limited to: (i) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a
material amount of assets of the Company and its subsidiaries or a
reorganization, recapitalization or liquidation of the Company or its
subsidiaries; (iii) a material change in the policies or management of the
Company, except as otherwise agreed to in writing by NBC; (iv) an election of
new members to the Board, except where the vote is cast in favor of the nominees
of a majority of the existing directors; (v) any material change in the present
capitalization or dividend policy of the Company or any amendment to the
Company's Certificate of Incorporation; or (vi) any other material change in the
Company's corporate structure or business (collectively, the "Merger-Related
Matters"). Each Consenting Stockholder also agreed in its Option Agreement not
to enter into any agreement or understanding with any person or entity prior to
the Expiration Date to vote or give instructions in any manner inconsistent with
clauses (a), (b) or (c) of the next preceding sentence. Under the Option
Agreements, each Consenting Stockholder has granted an irrevocable proxy to a
trustee designated by NBC to vote or act by written consent, to the fullest
extent permitted by applicable law, with respect to the Consenting Stockholder's
shares in accordance with the foregoing provisions of this paragraph.
The Option Agreements also provide that the Consenting Stockholder party
thereto shall not (a) sell, transfer, pledge, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption agreement
with the Company or enter into any contract, option or other arrangement or
understanding with respect to or consent to the offer for sale, sale, transfer,
pledge, encumbrance, assignment or other disposition of, any of the existing
shares of Company Common Stock, or any shares acquired after August 2, 1995, or
any interest in any of the foregoing, except to NBC, (b) grant any proxies or
powers of attorney, deposit any of such shares into a voting trust or enter into
a voting agreement with respect to any such shares or any cash or other property
received as a dividend or distribution on the Shares by the Consenting
Stockholder, or any interest in any of the foregoing, except to NBC, (c) consent
or otherwise agree to any amendment, waiver or other modification of the
Stockholders Agreement dated as of December 10, 1986, as amended, among the
Company, Outlet Broadcasting and certain stockholders (the "Stockholders
Agreement") or the Certificate of Incorporation or By-Laws of the Company or its
subsidiaries without the prior written consent of NBC, or (d) take any action
that would make any representation or warranty of such Consenting Stockholder
contained in its Option Agreement untrue or incorrect or have the effect of
preventing or disabling such Consenting Stockholder from performing his or its
obligations under the Option Agreement, or that would otherwise hinder or delay
NBC from acquiring a majority of the outstanding shares of Company Common Stock,
determined on a fully diluted basis.
In addition, each of the Consenting Stockholders agreed, except with
respect to NBC and its affiliates, not to initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal with respect
to any matter described in the next preceding paragraph or any Competing
Transaction, participate in any negotiations concerning, or provide to any other
person any information or data relating to the Company or its subsidiaries for
the purpose of, or have any substantive discussions with, any person relating
to, or otherwise cooperate with or assist or participate in, or facilitate, any
inquiries or the making of any proposal which constitutes, or would reasonably
be expected to lead to, any effort or attempt by any other person to seek to
effect any matter described in the next preceding paragraph or any Competing
Transaction, or agree to or endorse any Competing Transaction. Each of the
Consenting Stockholders has also agreed, pursuant to their respective Option
Agreements, immediately to cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted theretofore
with respect to any possible Competing
Transactions or any matter described in the next preceding paragraph.
In addition, pursuant to the Option Agreements, and subject to certain
conditions, the Consenting Stockholders have granted NBC options to purchase
all, but not part, of the shares of Company Common Stock at any time on or after
the earlier of (a) the termination of the Merger Agreement and (b) such time as
a permanent injunction or other order, decree or ruling preventing the
consummation of the Merger shall have been issued, provided that under no
circumstances may the option be exercised more than 60 days after any
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<PAGE> 25
termination of the Merger Agreement. In the event that NBC exercises its
purchase option under any Option Agreement, the obligation of NBC to effect the
purchase of shares of Company Common Stock thereunder would be subject to
certain conditions set forth in the Option Agreements. If NBC exercises such
option (the "Option Purchase"), NBC must propose to the Company a merger on
terms substantially the same as those provided for in the Merger Agreement. In
addition, NBC must extend an offer to acquire shares of Company Common Stock to
the other stockholders of the Company.
The Option Agreements provide that in the event that, within one year from
the date of the Option Agreements, NBC or another subsidiary of GE consummates a
transaction pursuant to which it acquires more than 50% of the outstanding
Company Common Stock or effects a merger or similar business combination with
the Company pursuant to which it acquires all the Company Common Stock (any such
transaction, an "Alternate Transaction") and, in respect of any Alternate
Transaction, the per share consideration paid to the largest number of
stockholders of the Company pursuant to the Alternate Transaction exceeds the
Share Consideration (the amount of such excess per share, the "Excess
Consideration"), then NBC shall pay to each of the Consenting Stockholders
promptly following the consummation of the Alternate Transaction an amount in
cash equal to the amount of the Excess Consideration times the number of such
Consenting Stockholder's shares purchased pursuant to the Option Agreement.
If, solely as a result of an acquisition of shares of Company Common Stock
by NBC or any other subsidiary of GE, the Company is required to make a Change
of Control Offer (as defined in the Indenture referred to below) pursuant to
Section 1010 of the Indenture pursuant to which on the date hereof the Company
has issued and outstanding $60 million aggregate principal amount of Senior
Subordinated Notes due July 15, 2003 (the "Notes"), as now in effect (the
"Indenture"), then, so long as such Change of Control Offer is made in
accordance with the terms of the Indenture, NBC shall be obligated, within five
business days of the commencement of the Change of Control Offer, to offer to
purchase or to cause another person to offer to purchase from the Company on the
Change of Control Payment Date (as defined in the Indenture) indebtedness of the
Company (a) in an aggregate principal amount equal to the aggregate Repurchase
Price of the Notes (as defined in the Indenture) repurchased by the Company on
such Change of Control Payment Date pursuant to Section 1010 of the Indenture
and (b) with terms, conditions, covenants and other provisions substantially the
same as the Notes.
Also, each Consenting Stockholder has agreed in its Option Agreement that
if, between the date of the Option Agreement and the closing date under any
Option Purchase, the Company declares, pays or makes any dividend or other
distribution of any kind of cash or property on the Company Common Stock, the
Consenting Stockholder will receive and hold such cash or property for the
benefit of NBC and will deliver such cash or property, with appropriate
instruments of transfer, if necessary, to NBC on such closing date (or, in the
event of a payment date occurring after the closing date, on the date such
payment is received).
DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES
OF MERGER
The receipt of cash for shares of Company Common Stock in the Merger or
pursuant to the exercise of dissenters' appraisal rights will be a taxable
transaction for Federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign or other tax laws. Generally,
a stockholder will recognize gain or loss for such purposes equal to the
difference between the cash received in connection with the Merger and such
stockholder's tax basis for the shares of Company Common Stock such stockholder
owned immediately prior to the Effective Time. For Federal income tax purposes,
such gain or loss will be a capital gain or loss if the shares of Company Common
Stock are a capital asset in the hands of the stockholder, and a long-term
capital gain or loss if the stockholder's holding period is more than one year
as of the Effective Time. There are limitations on the deductibility of capital
losses.
The summary of tax consequences set forth above is for general information
only. The tax treatment of each stockholder will depend in part upon his or her
particular situation. Actual tax consequences not described herein may be
applicable to particular classes of taxpayers, such as financial institutions,
broker-dealers, persons who are not citizens or residents of the United States,
stockholders who acquired the shares of
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<PAGE> 26
Company Common Stock through the exercise of an employee stock option or
otherwise as compensation, and persons who received payments in respect of
options to acquire shares of Company Common Stock. ALL STOCKHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE
MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND
FOREIGN LAWS.
APPRAISAL RIGHTS FOR DISSENTING STOCKHOLDERS
Under Section 262 of the DGCL ("Section 262"), holders of Company Common
Stock who do not wish to accept the Share Consideration to be paid pursuant to
the Merger have the right to dissent from the Merger and elect to have the "fair
value" of their Company Common Stock judicially determined and paid to them in
cash, provided that they comply with the requirements of Section 262.
The following discussion is not a complete statement of the law relating to
appraisal rights under Section 262 and is qualified in its entirety by reference
to the full text of Section 262, which is attached in its entirety as Annex D
hereto. THIS DISCUSSION AND ANNEX D SHOULD BE REVIEWED CAREFULLY BY ANY HOLDER
WHO WISHES TO EXERCISE STATUTORY APPRAISAL RIGHTS OR WHO WISHES TO PRESERVE THE
RIGHT TO DO SO, SINCE FAILURE TO COMPLY STRICTLY WITH THE PROCEDURES SET FORTH
HEREIN AND THEREIN WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS.
The stockholders of the Company who desire to exercise their appraisal
rights must: (a) hold Company Common Stock on the date of making a demand for
appraisal; (b) continuously hold such shares through the Effective Time, (c) not
vote in favor of the approval and adoption of the Merger Agreement; and (d)
otherwise satisfy all the conditions set forth below.
WITHHOLD VOTE IN FAVOR OF MERGER
Company stockholders electing to exercise their appraisal rights under
Section 262 ("Appraisal Rights") must not have voted in favor of approval and
adoption of the Merger Agreement nor consented thereto in writing pursuant to
Section 228. Those stockholders who executed the Stockholder Consents are not
entitled to Appraisal Rights. All other stockholders are entitled to Appraisal
Rights, provided that they comply with the steps described below.
NOTICE FROM THE COMPANY
Not later than 10 days after the Effective Time, the Company will notify
each stockholder who has not voted for the approval and adoption of the Merger
Agreement of the date the Merger became effective and that Appraisal Rights are
available for such stockholder's shares of Company Common Stock. Such notice
does not create any rights in the stockholder receiving the same to demand
payment for such stockholder's shares. The notice shall be sent by certified or
registered mail, return receipt requested, addressed to the stockholder at his
address as it appears on the records of the Company.
WRITTEN DEMAND
To exercise Appraisal Rights, a stockholder must deliver a written demand
for appraisal of shares to the Company, Attention: Secretary, within 20 days of
the mailing of the notice described above.
A demand for appraisal must be signed by or for the stockholder of record,
fully and correctly, as such stockholder's name appears on the certificate or
certificates evidencing shares of Company Common Stock. Such stockholder of
record must hold his shares of Company Common Stock continuously through the
Effective Time and as of the date of making the demand for appraisal. A person
who is a beneficial owner, but not a record owner, of Company Common Stock and
who desires to exercise Appraisal Rights cannot do so in his or her own name,
but must cause the record owner of such Company Common Stock to take all
required action. If the Company Common Stock is owned of record in a fiduciary
capacity, such as by a trustee, guardian, or custodian, such demand must be
signed by the fiduciary. Any person signing a demand for appraisal on behalf of
a partnership or a corporation or in any other representative or fiduciary
capacity must indicate his title, and, if the Company requests, must furnish
written proof of his capacity and his authority to sign the demand. If the
Company Common Stock is owned of record by more than one person, as in a joint
20
<PAGE> 27
tenancy or tenancy in common, such demand must be executed by all joint owners.
An authorized agent, including an agent for two or more joint owners, may sign
the demand for appraisal for a stockholder of record; however, the agent must
identify the owner and expressly disclose the fact that, in exercising the
demand, he is acting as agent for the record owner.
A stockholder who elects to exercise appraisal rights should mail or
deliver a written or telegraphic demand to: Secretary, Outlet Communications,
Inc., 23 Kenney Drive, Cranston, Rhode Island 02920. The written demand for
appraisal should specify the stockholder's name and mailing address, the number
of shares of Company Common Stock owned and that the stockholder is thereby
demanding appraisal of his or her shares.
RIGHT TO STATEMENT FROM SURVIVING CORPORATION
Within 120 days after the Effective Time, any stockholder who has complied
with the requirements for exercise of Appraisal Rights will be entitled, upon
written request, to receive from the Company a statement setting forth the
aggregate number of shares of Company Common Stock with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares of Company Common Stock. Such statement must be mailed within 10 days
after a written request therefor has been received by the Company or within 10
days after expiration of the period for delivery of demands for appraisal,
whichever is later.
FILING SUITS
Within 120 days after the Effective Time, either the Company or any
stockholder entitled to appraisal rights under Section 262 may file a petition
in the Delaware Court of Chancery demanding a determination of the value of the
shares of all stockholders entitled to appraisal, provided that during the first
60 days after the Effective Time any stockholder has the right to withdraw his
demand for appraisal and accept the terms offered upon the Merger as provided
for in the Merger Agreement.
APPRAISAL
Within 20 days after the service upon the Company of a copy of a petition
filed in the Delaware Court of Chancery demanding an appraisal, the Company is
obligated to file in the office of the Register in Chancery a verified list of
all stockholders who have demanded appraisal and with whom agreements as to the
value of their shares have not been reached by the Company. After notice to such
stockholders, the Delaware Court of Chancery is empowered to conduct a hearing
upon the petition of any such stockholder. The court shall then determine those
stockholders entitled to appraisal and appraise the fair value of the shares
held by them, exclusive of any element of value arising from the accomplishment
or expectation of the Merger, together with a fair rate of interest to be paid,
if any, upon the amount determined to be the fair value. In determining fair
value, the Delaware Court of Chancery is to take in account all relevant
factors. In Weinberger v. UOP, Inc. et al, decided February 1, 1983, the
Delaware Supreme Court discussed the considerations that could be considered in
determining fair value in an appraisal proceeding, stating that "proof of value
by any techniques or methods which are generally considered acceptable in the
financial community and otherwise admissible in court" should be considered and
that "fair price obviously requires consideration of all relevant factors
involving the value of a company". The Delaware Supreme Court stated that in
making this determination of fair value the court must consider market value,
asset value, dividends, earnings, prospects, the nature of the enterprise and
any other facts which could be ascertained as of the date of the Merger. Section
262 provides that fair value is to be "exclusive of any element of value arising
from the accomplishment or expectation of the merger". In Weinberger, the
Delaware Supreme Court construed Section 262 to mean that "elements of future
value, including the nature of the enterprise, which are known or susceptible of
proof as of the date of the merger and not the product of speculation, may be
considered."
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<PAGE> 28
COSTS OF APPRAISAL
Stockholders of the Company considering appraisal should bear in mind that
the fair value of their shares determined under Section 262 could be more than,
the same as, or less than the value of the Share Consideration. Costs of the
appraisal proceeding may be taxed upon the parties thereto by the court as the
court deems equitable in the circumstances. Upon application of a dissenting
stockholder, the Delaware Court of Chancery may order that all or a portion of
the expenses incurred by any dissenting stockholder in connection with the
appraisal proceeding, including, without limitation, reasonable attorneys' fees
and the fees and expenses of experts, be charged pro rata against the value of
all shares entitled to appraisal. In the absence of such a determination or
assessment, each party bears his or her own expenses.
EXPIRATION OF APPRAISAL RIGHTS
If no petition for an appraisal shall be filed within 120 days after the
Effective Time of the Merger, or if such stockholder shall deliver to the
Company a written withdrawal of his demand for an appraisal and an acceptance of
the Merger, either within 60 days after the Effective Time or thereafter with
the written approval of the Company, then the right of such stockholder to an
appraisal shall cease, and all such stockholders shall be entitled to receive
the consideration offered per share of Company Common Stock as provided for in
the Merger Agreement by following the procedures described in section 2.02 of
the Merger Agreement. Such stockholders shall receive such consideration
promptly after such procedures are completed. Notwithstanding the foregoing, no
appraisal proceeding in the Delaware Court of Chancery shall be dismissed as to
any stockholder without the approval of the Court, and such approval may be
conditioned upon such terms as the Court deems just.
DESCRIPTION OF FINANCING OF THE MERGER
Approximately $322.5 million will be required to purchase the shares of
Company Common Stock pursuant to the Merger. The Purchaser will receive the
necessary funds to purchase the shares of Company Common Stock from NBC and GE.
NBC and GE will obtain the required amount from their general corporate funds.
INFORMATION CONCERNING NBC AND THE PURCHASER
NBC and its subsidiaries are principally engaged in furnishing, within the
United States, network television services to affiliated television stations,
the production of live and recorded television programs, the operation, under
licenses from the FCC, of six VHF television broadcasting stations, the
operation of cable/satellite networks in the United States, Europe and Asia, and
investment and programming activities in multimedia and cable television. The
NBC Television Network is one of the major U.S. commercial broadcast television
networks and serves more than 200 affiliated stations within the United States.
NBC's operations include investment and programming activities in cable
television, principally through its ownership of CNBC and America's Talking and
equity investments in Arts and Entertainment, Court TV, American Movie Classics,
Bravo, Prime Network and regional Sports Channels across the United States.
NBC's principal executive offices are located at 30 Rockefeller Plaza, New York,
New York 10112.
The sole stockholder of NBC is National Broadcasting Holding Company, Inc.
("NBC Holding"). NBC Holding is a holding company whose principal asset is the
stock of NBC. NBC Holding's principal office is located at 30 Rockefeller Plaza,
New York, New York 10112.
The sole stockholder of NBC Holding is GE. From its founding, GE has
engaged in developing, manufacturing and marketing a wide variety of products
for the generation, transmission, distribution, control and utilization of
electricity. Over the years, development and application of related and new
technologies have broadened considerably the scope of GE's activities. GE's
products include, but are not limited to, lamps and other lighting products;
major appliances for the home; industrial automation products and components;
motors; electrical distribution and control equipment; locomotives; power
generation and delivery products; nuclear reactors, nuclear powers support
services and fuel assemblies; commercial and military aircraft jet
22
<PAGE> 29
engines; materials, including engineered plastics, silicones and cutting
materials; and a wide variety of high technology products, including products
used in medical diagnostic applications.
In addition to the services offered by NBC, GE also offers a broad variety
of other services including product support services; electrical product supply
houses; electrical apparatus installation, engineering, repair and rebuilding
services; and computer-related information services. Through a wholly owned
subsidiary, General Electric Capital Services, Inc. and its two principal
subsidiaries, GE engages in a broad spectrum of financial services, including
consumer financing, commercial and industrial financing, real estate financing,
asset management and leasing, annuity and mutual fund sales, specialty
insurance, and reinsurance. Other services offered include U.S. satellite
communications furnished by GE Americom. GE also licenses patents and provides
technical know-how related to products it develops, but such activities are not
material to GE. GE's principal executive offices are located at 3135 Easton
Turnpike, Fairfield, Connecticut 06431.
PRINCIPAL STOCKHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to those persons known
to the Company to be the beneficial owners of more than 5% of the shares of
Company Common Stock outstanding as of August 2, 1995. For information
concerning share ownership of directors and executive officers of the Company,
none of whom beneficially owns more than 5% of the Company Common Stock, see
"DESCRIPTION OF INTERESTS OF MANAGEMENT AND AFFILIATES IN THE MERGER AGREEMENT".
<TABLE>
<CAPTION>
NUMBER PERCENT
BENEFICIAL OWNER OF SHARES OF CLASS
------------------------------------------------------ ---------------- ----------------
<S> <C> <C>
MBL Life Assurance Corp............................... 2,135,000 32.4
520 Broad Street
Newark, NJ 07102
Sandler Associates.................................... 995,000 15.1
Sandler Capital Management
767 Fifth Avenue
New York, NY 10153
Gabelli Group Inc. ................................... 916,531 13.9
(aggregate holdings of affiliates and entities)
655 Third Avenue
New York, NY 10017
The Hartington Trust(a)............................... 626,764 9.5
P.O. Box 1975
Morristown, NJ 07962
The OCI Trust......................................... 331,625 5.0
P.O. Box 1975
Morristown, NJ 07962
</TABLE>
- ---------------
(a) As the grantor of such revocable trust, Raymond G. Chambers may, for
purposes of the Exchange Act, be deemed to be the beneficial owner of the
shares of Company Common Stock held by such trust. Additionally, as
co-trustees of such trust, Kurt T. Borowsky and David J. Roy may, for
purposes of the Exchange Act, be deemed to be the beneficial owners of the
shares of Company Common Stock held by the such trust.
On August 2, 1995, MBL Life Assurance Corp., The Hartington Trust and The
OCI Trust, along with certain other stockholders of the Company, entered into
the Option Agreements with NBC granting NBC the right, subject to certain
conditions, to purchase their shares of Company Common Stock and granting NBC an
irrevocable proxy to vote their shares of Company Common Stock. Such options are
not currently exercisable. For additional information concerning the Option
Agreements, see "DESCRIPTION OF THE OPTION AGREEMENTS".
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<PAGE> 30
MARKET FOR COMMON STOCK AND DIVIDENDS
The following table sets forth, for the fiscal quarters indicated, the
range of high and low sale prices for Company Common Stock as reported on
NASDAQ.
<TABLE>
<CAPTION>
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER
------------ ------------ ------------ ------------
HIGH LOW HIGH LOW HIGH LOW HIGH LOW
---- --- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995........................ 30 5/8 16 1/2 39 29 1/4 46 1/2 39 7/8 47 1/4 45 7/8
1994........................ 10 1/2 9 14 9 1/4 15 1/2 13 18 1/4 14
1993........................ 6 4 1/2 6 3/4 4 1/4 9 1/2 6 1/2 10 1/2 8
</TABLE>
On June 29, 1995, the last full day of trading prior to the announcement of
the Renaissance Merger Agreement, the closing sale price as reported by NASDAQ
was $38 per share of Company Common Stock. On July 28, 1995, the last full day
of trading prior to the announcement of NBC's offer to acquire the Company, the
closing sale price as reported by NASDAQ was $41 7/8 per share of Company Common
Stock. On August 1, 1995, the last full day of trading prior to execution of the
Merger Agreement, the closing sale price as reported by NASDAQ was $46 per share
of Company Common Stock. On January 8, 1996, the closing sale price reported by
NASDAQ was $46 5/8 per share of Company Common Stock. No dividends have been
paid on the Company Common Stock.
SELECTED FINANCIAL INFORMATION OF THE COMPANY
The following table presents selected consolidated financial data of the
Company as of and for the years ended December 31, 1994, 1993, 1992, 1991 and
1990. The comparability of the data in the following table is affected by
dispositions of broadcast stations including two radio stations and two UHF
television stations that were sold in 1990. Also, net income in 1993 includes
the cumulative effect of a change in method of accounting for income taxes in
the amount of $4,434,000 and an extraordinary loss for debt extinguishment of
$1,826,000. The Company has not paid cash dividends on its capital stock during
any of the periods presented below.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net revenue......................... $ 59,442 $ 46,952 $ 45,153 $ 39,434 $ 55,662
Operating income.................... 20,175 12,428 10,297 2,232 6,388
Income (loss) before non-recurring
items and income taxes............ 11,229 2,342 (2,825) (12,643) (9,532)
Net income (loss)................... 10,569 4,634 (1,552) (9,265) 6,112
Net income (loss) per share......... 1.61 .71 (.24) (1.41) .93
Total assets........................ 129,928 117,611 126,646 143,029 156,370
Long-term debt, excluding current
maturities........................ 75,000 79,500 87,447 95,961 91,855
Other long-term liabilities......... 15,098 13,392 18,085 18,933 24,154
Stockholders' equity................ 16,404 5,785 1,113 2,665 11,930
</TABLE>
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<PAGE> 31
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company under the Exchange
Act with the SEC are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
(2) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1995.
(3) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1995.
(4) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1995.
(5) The Company's Current Report on Form 8-K dated July 11, 1995.
(6) The Company's Current Report on Form 8-K dated August 16, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Information Statement
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Information Statement to the
extent that a statement contained herein or in any other subsequently filed
documents that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Information Statement. The Company will provide,
without charge, to each person to whom a copy of this Information Statement has
been delivered, on the written or oral request of such person, a copy of any or
all of the documents referred to above that have been or may be incorporated by
reference herein other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference herein). Requests for such copies should
be directed to: Joanne Schenck, Secretary, Outlet Communications, Inc., 23
Kenney Drive, Cranston, Rhode Island 02920; (401) 455-9200.
ACCOUNTANTS
The accounting firm of Ernst & Young LLP provides various services to the
Company and its subsidiaries in addition to audit services.
By Order of the Board of Directors,
JOANNE SCHENCK
Secretary
January 9, 1996
25
<PAGE> 32
<TABLE>
<S> <C> <C>
ANNEX A -- Merger Agreement
ANNEX B -- Form of Option Agreement
ANNEX C -- Fairness Opinion of Goldman, Sachs & Co.
ANNEX D -- Section 262 of Delaware General Corporation Law (appraisal rights)
</TABLE>
26
<PAGE> 33
ANNEX A
MERGER AGREEMENT dated as of August 2, 1995 (the "Agreement"), among
NATIONAL BROADCASTING COMPANY, INC., a Delaware corporation ("Parent"), CO
ACQUISITION CORPORATION, a Delaware corporation ("Parent Sub"), and a wholly
owned subsidiary of Parent, and OUTLET COMMUNICATIONS, INC., a Delaware
corporation (the "Company").
WHEREAS, Parent Sub, upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), will merge with and into the Company (the "Merger");
and
WHEREAS, the Board of Directors of the Company has (i) determined that the
Merger is fair to, and in the best interests of, the holders of Common Stock (as
hereinafter defined) and (ii) approved this Agreement and the transactions
contemplated hereby and recommended approval and adoption of this Agreement by
the stockholders of the Company;
WHEREAS, the Board of Directors of Parent has determined that the Merger is
in the best interests of Parent and its stockholders and has approved this
Agreement and the transactions contemplated hereby;
WHEREAS, Parent has informed the Company that immediately following the
execution and delivery of this Agreement by the parties hereto, Parent
contemplates that stockholders of the Company holding a majority of the
outstanding shares of its voting common stock will enter into Consent and
Voting/Conditional Option Agreements (collectively, the "Voting Agreements")
with Parent, pursuant to which such stockholders will agree to vote for and/or
consent to the adoption and approval of this Agreement and the Merger, grant to
Parent an option to purchase the shares of the Common Stock owned by such
stockholder and take and refrain from taking certain other actions as set forth
therein;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with Delaware Law, at the
Effective Time (as hereinafter defined), Parent Sub shall be merged with and
into the Company. As a result of the Merger, the separate corporate existence of
Parent Sub shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). The name of the
Surviving Corporation shall be Outlet Communications, Inc.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
the filing of the Certificate of Merger or the time specified therein being the
"Effective Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Parent Sub and the Company shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Parent Sub
and the Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. At the Effective
Time, the Certificate of Incorporation and By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation and By-Laws, respectively, of the Surviving Corporation.
A-1
<PAGE> 34
SECTION 1.05. Directors and Officers. The directors of Parent Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of
Parent Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 1.06. Closing. (a) The closing (the "Closing") of the Merger will
take place at the offices of Simpson Thacher & Bartlett, New York, New York at
10:00 a.m., local time, on a date to be mutually agreed upon by Parent and the
Company, which date shall be no later than the fifth business day following the
date upon which the last to occur of the conditions set forth in Article VII is
fulfilled or duly waived.
(b) Subject to the satisfaction or waiver of each of the conditions set
forth in Article VII, at the Closing, (i) the closing certificates and other
documents required by Article VII shall be delivered, and (ii) the appropriate
officers of the Company shall execute and acknowledge the Certificate of Merger.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Parent Sub, the
Company or the holders of any of the following securities:
(a) Subject to the other provisions of this Section 2.01, each share
of Class A Common Stock, par value $.01 per share ("Common Stock"), issued
and outstanding immediately prior to the Effective Time (excluding any
shares described in Section 2.01(b) and any Dissenting Shares (as
hereinafter defined)) shall be converted into the right to receive $47.25
in cash, without interest (the "Per Share Amount"). All such shares of
Common Stock shall cease to be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each certificate
previously evidencing any such shares shall thereafter represent only the
right to receive the Per Share Amount as described below. The holders of
certificates previously evidencing such shares of Common Stock outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Common Stock, except as otherwise provided herein
or by law. Each such certificate previously evidencing shares of Common
Stock shall be exchanged for the Per Share Amount multiplied by the number
of shares previously evidenced by the canceled certificate upon the
surrender of such certificate in accordance with the provisions of Section
2.02, without interest;
(b) Each share of Common Stock held in the treasury of the Company and
each share of Common Stock owned by any direct or indirect subsidiary of
the Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made
with respect thereto; and
(c) Each share of Common Stock, par value $.01 per share, of Parent
Sub ("Parent Sub Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one duly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
SECTION 2.02. Payment. (a) Paying Agent. As of the Effective Time, Parent
shall deposit, or shall cause to be deposited, with a bank theretofore
designated by the Company and Parent (the "Paying Agent"), for the benefit of
the holders of shares of Common Stock, for payment in accordance with this
Article II, through the Paying Agent, cash in an amount equal to the Per Share
Amount multiplied by the number of shares of Common Stock outstanding
immediately prior to the Effective Time, (such cash being hereinafter referred
to as the "Payment Fund"). The Paying Agent shall, pursuant to irrevocable
instructions, deliver the cash contemplated to be paid pursuant to Section
2.01(a) out of the Payment Fund. The Payment Fund shall not be used for any
other purpose.
(b) Payment Procedures. Promptly after the Effective Time, the Paying
Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate that immediately prior to the Effective
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Time evidenced outstanding shares of Common Stock (the "Certificates") a form
letter of transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor. Upon surrender to the Paying Agent of a
Certificate, together with such letter of transmittal duly executed, and any
other required documents, the holder of such Certificate shall be entitled to
receive in exchange therefor the consideration set forth in Section 2.01(a) (the
"Merger Consideration"), and such Certificate shall forthwith be cancelled. No
interest will be paid or accrued on the cash payable upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section 2.02, each Certificate shall represent for all purposes only the right
to receive the consideration set forth in Section 2.01(a), without any interest
thereon.
(c) No Further Rights in Common Stock. All cash paid upon conversion of
the shares of Common Stock in accordance with the terms of this Article II, and
all cash paid pursuant to Section 2.05, shall be deemed to have been paid in
full satisfaction of all rights pertaining to such shares of Common Stock.
(d) Termination of Payment Fund. Any portion of the Payment Fund that
remains undistributed to the holders of Common Stock for 180 days after the
Effective Time shall be delivered to Parent, upon demand, and any holders of
Common Stock that have not theretofore complied with this Article II shall
thereafter look only to Parent for the Merger Consideration to which they are
entitled.
(e) No Liability. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Common Stock for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
SECTION 2.03. Options. Parent and the Company shall take all action
necessary to (i) terminate the Company's 1992 Stock Incentive Plan, as amended
to the date of this Agreement (the "1992 Stock Plan"), effective as of the close
of business on the day after the Effective Time, (ii) provide that each
outstanding employee stock option or "Restricted Share" award to purchase shares
of Common Stock granted under the 1992 Stock Plan (an "Option") shall become
fully vested, whether or not previously vested, immediately prior to the
Effective Time and (iii) provide that, with respect to any such Option that is
outstanding immediately prior to the Effective Time, such Option shall be
cancelled as of the close of business on the day after the Effective Time and
the holder shall be entitled to receive from the Surviving Corporation,
immediately after the Effective Time, an amount in cash in cancellation of such
Option equal to the excess, if any, of the Per Share Amount over the per share
exercise price of such Option, multiplied by the number of shares of Common
Stock to which the Option remains unexercised. Any such payment shall be subject
to all applicable Federal, state and local tax withholding requirements.
SECTION 2.04. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Common Stock thereafter on the records of
the Company. On or after the Effective Time, any certificates for shares of
Common Stock presented to the Paying Agent, the Surviving Corporation or Parent
for any reason shall be converted into the Merger Consideration.
SECTION 2.05. Dissenting Shares. Notwithstanding any other provisions of
this Agreement to the contrary, shares of Common Stock that are outstanding
immediately prior to the Effective Time and that are held by stockholders who
shall not have voted in favor of the Merger or consented thereto in writing and
who shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of Delaware Law (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders shall be entitled to receive payment of
the appraised value of such shares of Common Stock held by them in accordance
with the provisions of such Section 262, except that all Dissenting Shares held
by stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such shares of Common Stock under
such Section 262 shall thereupon be deemed to have been converted into and to
have become exchangeable, as of the Effective Time, for the right to receive,
without any interest thereon, the Merger Consideration, upon surrender, in the
manner provided in Section 2.02, of the certificate or certificates that
formerly evidenced such shares of Common Stock.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure schedule delivered by the Company to
Parent concurrent with the execution of this Agreement (the "Company Disclosure
Schedule"), the Company hereby represents and warrants to Parent and Parent Sub
that:
SECTION 3.01. Organization and Qualification; Subsidiaries. (a) The
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of the business conducted by it or the ownership or leasing
of its properties makes such qualification necessary, other than where the
failure to be so duly organized, validly existing and in good standing, or to
have such power and authority, or to be duly qualified and in good standing, as
the case may be, would not have a Company Material Adverse Effect (as
hereinafter defined). The term "Company Material Adverse Effect" as used in this
Agreement means any change or effect (other than a change or effect relating to
the industry of the Company, the financial markets or the economy generally)
that, individually or when taken together with all other such changes or
effects, would be materially adverse to the financial condition, business,
operations, earnings or prospects of the Company and its subsidiaries, taken as
a whole.
(b) Section 3.01 of the Company Disclosure Schedule sets forth a complete
and correct list of all the Company's directly or indirectly owned subsidiaries,
together with (i) the jurisdiction of incorporation of each subsidiary and the
percentage of each subsidiary's outstanding capital stock owned by each holder
of such stock, and (ii) indication of whether each such subsidiary is a
"Significant Subsidiary" (as hereinafter defined).
SECTION 3.02. Certificates of Incorporation and By-Laws. The Company has
heretofore furnished to Parent complete and accurate copies of the Certificates
of Incorporation and the By-Laws, in each case as amended or restated to the
date of this Agreement, of the Company and each of its subsidiaries.
SECTION 3.03. Capitalization. (a) The authorized capital stock of the
Company, as of immediately prior to the Effective Time, will consist of (i)
10,000,000 shares of Common Stock; (ii) 1,879,375 shares of Class B Common
Stock, par value $.01 per share, and (iii) 1,000,000 shares of Preferred Stock,
no par value. As of the date of this Agreement, (i) 6,579,631 shares of Common
Stock (none of which is subject to preemptive rights created by statute, the
Company's Certificate of Incorporation or By-Laws or any agreement to which the
Company is a party or is bound), no shares of Class B Common Stock, and no
shares of Preferred Stock are issued and outstanding, (ii) no shares of Common
Stock are held in the treasury of the Company; (iii) 272,469 shares of Common
Stock are reserved for issuance pursuant to outstanding Options granted pursuant
to the 1992 Stock Plan, (iv) no shares of Common Stock are issued and
outstanding as "Restricted Shares" under the 1992 Stock Plan, and (v) no
"Limited Rights" are issued and outstanding under the 1992 Stock Plan. Each of
the outstanding shares of capital stock of the Company and each of its
subsidiaries is duly authorized and validly issued, fully paid and
nonassessable, and such shares owned by the Company or another subsidiary of the
Company are owned free and clear of all liens, claims, encumbrances, security
interests or other charges ("Encumbrances"), except for such Encumbrances as
would not have a Company Material Adverse Effect.
(b) Immediately prior to the Effective Time, there will be no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments of any character to which the Company or any of its
subsidiaries is a party relating to the issued or unissued capital stock of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, issue or sell any shares of the capital stock of the
Company or any of its subsidiaries, by sale or otherwise. There are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to (i) repurchase, redeem or otherwise reacquire any shares of Common Stock or
the capital stock of any subsidiary of the Company; or (ii) (other than advances
to subsidiaries in the ordinary course of business) provide material funds to,
or make any material investment
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in (in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any subsidiary of the Company or
any other person. As of the date of this Agreement, none of the Company or any
of its subsidiaries directly or indirectly owns, or has agreed to purchase or
otherwise acquire, the capital stock of, or any interest convertible into or
exchangeable or exercisable for, the capital stock of any corporation,
partnership, joint venture or other business association or entity. Except for
any agreements, arrangements or commitments between the Company and any of its
subsidiaries or between such subsidiaries, there are no material agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person is or may be entitled to receive any payment based on the
revenues or earnings, or calculated in accordance therewith, of the Company or
any of its subsidiaries. There are no voting trusts, proxies or other material
agreements or understandings to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound with respect
to the voting of any shares of capital stock of the Company or any of its
subsidiaries.
(c) The Company has made available to Parent complete and accurate copies
of the 1992 Stock Plan and the forms of agreements related to Options and
Restricted Shares awarded pursuant to the 1992 Stock Plan, including all
amendments thereto.
SECTION 3.04. Authority. The Company has all requisite corporate power
and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by the Company. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Parent Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by the availability of equitable
remedies. Prior to the execution of this Agreement, the Company has taken all
necessary corporate action to permit this Agreement and the Merger to be
approved immediately following execution of this Agreement by the written
consent of the holders of a majority of the outstanding Common Stock.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws of the Company or any of its
subsidiaries, (ii) conflict with or violate any Federal, state, local or foreign
law, statute, ordinance, rule, regulation, permit, order, judgment or decree
(collectively, "Laws") applicable to the Company or any of its subsidiaries or
by which any of their respective properties is bound, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of any Encumbrance on any of the properties or
assets of the Company or any of its subsidiaries pursuant to, or trigger any
right of first refusal under, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound, except for any thereof that would not have a Company Material Adverse
Effect. The Board of Directors of the Company has taken all actions necessary
under Delaware Law, including approving the transactions contemplated by this
Agreement and by each Voting Agreement, to ensure that Section 203 of Delaware
Law does not, or will not, apply to the transactions contemplated by this
Agreement or by the Voting Agreements.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require the Company
to obtain any consent, approval, authorization or permit of, or to make any
filing with or notification to, any governmental or regulatory authority,
domestic or foreign ("Governmental Entity"), based on the Laws of any
Governmental Entity, except (i) the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Communications Act of 1934, as amended (the
"Communications Act"), and the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended
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(the "HSR Act"); (ii) the filing and recordation of the Certificate of Merger as
required by Delaware Law; and (iii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent the Company from performing its obligations under this
Agreement and would not have a Company Material Adverse Effect.
SECTION 3.06. Reports; Financial Statements. (a) Since June 30, 1992, (i)
the Company and Outlet Broadcasting, Inc., a Rhode Island corporation
("Broadcasting") have filed all forms, reports, statements, schedules and other
documents required to be filed with (A) the Securities and Exchange Commission
(the "SEC"), including, without limitation, (I) all Annual Reports on Form 10-K,
(II) all Quarterly Reports on Form 10-Q, (III) all Current Reports on Form 8-K,
(IV) all other forms, reports, statements, schedules and other documents
required to be filed, and (V) all amendments and supplements to all such forms,
reports, statements, schedules and other documents (collectively, the "Company
SEC Reports"); (B) any other applicable state securities authorities, and (C)
the Federal Communications Commission (the "FCC") and (ii) the Company and
Broadcasting and their respective subsidiaries have filed all forms, reports,
statements, schedules and other documents required to be filed with any other
applicable Federal or state regulatory authorities, except where the failure to
file any such forms, reports, statements, schedules or other documents would not
have a Company Material Adverse Effect (all such forms, reports, statements,
schedules and other documents in clauses (i) and (ii) of this Section 3.06(a)
being referred to herein, collectively, as the "Company Reports"). The Company
Reports, including all Company Reports filed after the date hereof and prior to
the Effective Time, (i) were or will be prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect to
the Company SEC Reports, the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, and the rules and regulations of the SEC thereunder
applicable to such Company SEC Reports), and (ii) did not at the time they were
filed, or will not at the time they are filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that, to the extent that the foregoing relates to facts or omissions regarding
persons other than the Company and its affiliates, such representation and
warranty is being made to the Company's knowledge.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports filed prior to
the Effective Time (i) have been or will be prepared in accordance with the
published rules and regulations of the SEC and generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
(A) to the extent required by changes in generally accepted accounting
principles and (B) with respect to Company SEC Reports filed prior to the date
hereof, as may be indicated in the notes thereto) and (ii) fairly present or
will fairly present the consolidated financial position of the Company and its
subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated,
except that (x) any unaudited interim financial statements were or will be
subject to normal and recurring year-end adjustments and (y) any pro forma
financial information contained in such consolidated financial statements is not
necessarily indicative of the consolidated financial position of the Company and
its subsidiaries, as the case may be, as of the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated.
SECTION 3.07. Undisclosed Liabilities. As of the date of this Agreement,
none of the Company or any of its subsidiaries has, to the knowledge of the
Company, any material liability (whether accrued, absolute, contingent or
otherwise) that is required to be reflected on the financial statements (or the
notes thereto) of the Company in accordance with generally accepted accounting
principles, other than liabilities (a) reflected or reserved against in the
consolidated balance sheets included in the Company's Form 10-Q for the quarter
ended March 31, 1995, and Form 10-K for the year ended December 31, 1994 (the
"Balance Sheets") (or in the notes thereto), (b) with respect to matters
disclosed in the Company Disclosure Schedule or excluded from the coverage of
any of the representations, warranties or covenants herein, (c) that are covered
by enforceable insurance, indemnification, contribution or comparable
arrangements, (d) under the Laws of any jurisdiction, except for violation of
any such Laws that would have a Company Material Adverse Effect, (e) under any
contract or instrument, other than liabilities arising out of breaches of such
contracts or instruments
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that would have a Company Material Adverse Effect, (f) under this Agreement, the
Renaissance Merger Agreement (as hereinafter defined) or any agreement entered
into in connection herewith, (g) with respect to matters addressed in Sections
3.13, 3.16 and 3.19 (which shall be governed solely by the terms of such
Sections), and (h) incurred or arising in the ordinary course of business of the
Company or such subsidiary since March 31, 1995.
SECTION 3.08. Material Contracts. Section 3.08 of the Company Disclosure
Schedule sets forth a list, as of the date of this Agreement, of all (a) written
employment, severance, termination, consulting (to the extent any thereof
involve annual payments of at least $25,000 or are not terminable on less than
366 days' notice without material penalty) and retirement agreements to which
the Company or any of its subsidiaries is a party, (b) written collective
bargaining agreements to which the Company or any of its subsidiaries is a
party, (c) written agreements that require aggregate future payments by or to
the Company or any of its subsidiaries of more than $500,000 that are not
terminable by the Company or any of its subsidiaries on less than 366 days'
notice without material penalty (other than purchase orders and advertising
sales contracts entered into in the ordinary course of business), (d) written
agreements containing covenants limiting the freedom of the Company or any of
its subsidiaries to compete with any person in any line of business or in any
area or territory, (e) license agreements involving annual payments in excess of
$500,000, (f) indentures, mortgages and notes or other debt instruments
evidencing indebtedness (other than purchase money indebtedness) in excess of
$1,000,000, (g) material agreements of the Company or any of its subsidiaries
with any shareholder or director of the Company, (h) agreements of the Company
involving payments in excess of $500,000 containing any provisions with respect
to a "change in control" of the Company, and (i) agreements under which the
Company or any of its subsidiaries has advanced or loaned any amount in excess
of $50,000 to any of its directors, officers or employees (collectively, the
"Material Contracts"). Except as would not have a Company Material Adverse
Effect, (a) the Company and its subsidiaries are not in default under any of the
Material Contracts, and (b) to the Company's knowledge, the other parties
thereto are not in default and the Material Contracts are valid and binding
obligations of the other parties thereto, in accordance with their terms.
SECTION 3.09. FCC Licenses; Station Operation. Except for such matters as
would not have a Company Material Adverse Effect, (a) to the Company's
knowledge, it is operating the Licensed Stations (as hereinafter defined) in
accordance with generally accepted industry practice, in compliance with the
terms of the FCC Licenses (as hereinafter defined), and in compliance with the
Communications Act and all applicable rules, regulations and policies of the FCC
(collectively, the "FCC Rules and Regulations"); (b) the Company has filed or
made all applications, reports and other disclosures required by the FCC to be
filed or made with respect to the Licensed Stations and has timely paid all FCC
regulatory fees with respect thereto; (c) all FCC Licenses used or useful in
connection with the ownership and operation of the Licensed Stations as
commercial broadcast television stations are valid and in full force and effect;
(d) no application, action or proceeding is pending for the renewal or
modification of any of the FCC Licenses and, to the Company's knowledge, there
is not now before the FCC any investigation or complaint against the Company
relating to the Licensed Stations; (e) there is no proceeding pending before the
FCC (other than proceedings affecting the broadcast industry generally), and
there is no outstanding notice of violation from the FCC, relating to the
Licensed Stations; (f) to the Company's knowledge, there is no reasonable basis
for the initiation or issuance by the FCC of any investigation, proceeding or
notice of violation with respect to the Licensed Stations and there is no
reasonable basis on which any third party could file such a complaint, which
could reasonably be expected to prevent FCC approval of the FCC Application (as
defined in Section 6.03); (g) to the Company's knowledge, no event has occurred
which, individually or in the aggregate, and with or without the giving of
notice or the lapse of time or both, would constitute grounds for revocation or
termination of any FCC License or the imposition of any restriction or
limitation on the operation of the Licensed Stations; and (h) no judgment,
decree, order or notice of violation has been issued by any Governmental Entity
which permits, or would permit, revocation, modification or termination of any
FCC License or which results, or could result, in any impairment of any rights
thereunder.
SECTION 3.10. Permits. (a) Each of the Company and its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates,
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approvals and orders (collectively, the "Company Permits"), that are necessary
to own, lease and operate the properties of the Company and its subsidiaries and
to carry on their business as they or it are or is owned, leased, operated or
carried on, except, in each case, where the failure to possess such Company
Permits would not have a Company Material Adverse Effect. The Company Permits
are in full force and effect and there is no action, proceeding or investigation
pending or, to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits, except, in each case, where the
failure to possess, or the suspension or cancellation of, such Company Permits
would not have a Company Material Adverse Effect.
SECTION 3.11. Properties. Each of the Company and its subsidiaries has
good, valid and, in the case of real property, marketable fee simple, title to
all the material assets and properties that it owns and that are reflected on
the Balance Sheets (except for assets and properties sold, consumed or otherwise
disposed of by them since the dates thereof), and such assets and properties are
owned free and clear of all Encumbrances, except for (a) liens for taxes and
assessments not yet due and payable or for taxes the validity of which is being
contested in good faith, (b) Encumbrances to secure indebtedness reflected on
the Balance Sheets or indebtedness (including purchase money indebtedness)
incurred in the ordinary course of business and consistent with past practice
after the date thereof, (c) mechanic's, materialmen's and other Encumbrances
that have arisen in the ordinary course of business and (d) imperfections of
title and Encumbrances the existence of which do not have a Company Material
Adverse Effect. All the material buildings, structures, equipment and other
tangible assets of the Company and its subsidiaries (whether owned or leased)
are in normal operating condition (normal wear and tear excepted) and are fit
for use in the ordinary course of business of the Company.
SECTION 3.12. Intellectual Property. Section 3.12 of the Company
Disclosure Schedule sets forth a complete and accurate list and a brief
description of all patents, patent applications, trademarks, trade names,
service marks and other intellectual property (the "Intellectual Property")
owned, used or licensed by or to the Company and pertaining to the business of
the Company, which is all the Intellectual Property necessary to conduct the
business of the Company, except for Intellectual Property, the lack of which
would not have a Company Material Adverse Effect. Except as would not have a
Company Material Adverse Effect, to the Company's knowledge, the rights of the
Company in or to such Intellectual Property do not conflict with or infringe on
the rights of any other person, and the Company has not received any claim or
notice from any person to such effect.
SECTION 3.13. Taxes. Except for such matters as would not have a Company
Material Adverse Effect, (a) the Company and its subsidiaries have filed or will
timely file all returns and reports required to be filed prior to the Effective
Time by them with any taxing authority with respect to Taxes (as hereinafter
defined) for any period ending on or before the Effective Time, (b) all Taxes
shown to be payable on such returns or reports that are due prior to the
Effective Time have been paid or will be paid, (c) no deficiency for any
material amount of Tax has been asserted or assessed by a taxing authority
against the Company or its subsidiaries, and (d) no consent under Section 341(f)
of the Internal Revenue Code of 1986, as amended (the "Code"), has been filed
with respect to the Company or any of its subsidiaries. As of the date of this
Agreement, there are no examinations of Federal income tax returns of the
Company currently being conducted by the Internal Revenue Service.
SECTION 3.14. Compliance. To the Company's knowledge, none of the Company
or any of its subsidiaries is in default or violation of (a) any Law applicable
to the Company or any of its subsidiaries or by which any of their respective
properties is bound or (b) any of the Company Permits, except for any such
defaults or violations that would not have a Company Material Adverse Effect.
None of the Company or any of its subsidiaries has received from any
Governmental Entity any written notification with respect to possible defaults
or violations of Laws by the Company or any of its subsidiaries, except, in each
case, for written notices relating to possible defaults or violations that would
not have a Company Material Adverse Effect or have been resolved.
SECTION 3.15. Certain Changes or Events. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement or as contemplated
by this Agreement, during the period commencing
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January 1, 1995, and ending on the date of this Agreement, the Company and its
subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and there has not been: (a)
any material damage, destruction or loss (not covered by insurance) with respect
to any material assets of the Company or any of its subsidiaries that has
resulted in a Company Material Adverse Effect; (b) any material change by the
Company or its subsidiaries in their accounting methods, principles or
practices; (c) except for dividends by a subsidiary of the Company to the
Company or another subsidiary of the Company or repurchases of shares of Common
Stock from terminated employees pursuant to the 1992 Stock Plan, any
declaration, setting aside or payment of any dividends or distributions in
respect of shares of Common Stock or the shares of stock of, any subsidiary of
the Company or any redemption, repurchase or other reacquisition of any of the
Company's equity securities or any of the equity securities of any subsidiary of
the Company; (d) any material increase in the benefits under, or the
establishment or amendment of, any material bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted stock awards), stock
purchase or other employee benefit plan, or any material increase in the
compensation payable or to become payable to directors, officers or employees of
the Company or its subsidiaries, except for increases in salaries or wages
payable or to become payable in the ordinary course of business and consistent
with past practice; or (e) a Company Material Adverse Effect.
SECTION 3.16. Litigation. As of the date of this Agreement, there is no
claim, action, suit, litigation, proceeding, arbitration or, to the knowledge of
the Company, investigation of any kind, at law or in equity (including actions
or proceedings seeking injunctive relief), pending or, to the knowledge of the
Company, threatened in writing against the Company or any of its subsidiaries or
any properties or rights of the Company or any of its subsidiaries (except for
claims, actions, suits, litigations, proceedings, arbitrations or investigations
that would not have a Company Material Adverse Effect), and neither the Company
nor any of its subsidiaries is subject to any continuing order of, consent
decree, settlement agreement or other similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any Governmental Entity,
or any judgment, order, writ, injunction, decree or award of any Governmental
Entity or arbitrator, including, without limitation, cease-and-desist or other
orders, except as disclosed in the Company SEC Reports filed prior to the date
of this Agreement and except for matters that would not have a Company Material
Adverse Effect.
SECTION 3.17. Employee Benefit Plans; Labor Matters. (a) Section 3.17(a)
of the Company Disclosure Schedule sets forth a complete and accurate list of
each employee benefit plan, program, arrangement and contract (including,
without limitation, any "employee benefit plan", as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
employment agreements, personnel policies or fringe benefit plans, policies,
programs and arrangements, stock bonus, deferred compensation, pension,
severance, bonus, vacation, travel, incentive, and health, disability and other
welfare plans), maintained or contributed to by the Company or any of its
subsidiaries, or with respect to which the Company or any of its subsidiaries
could incur liability under Section 4069, 4212(c) or 4204 of ERISA (the "Company
Benefit Plans").
(b) None of the Company or any of its subsidiaries contributes to, has any
material obligation to contribute to or otherwise has any material liability or
potential material liability with respect to (i) any "multiemployer plan" (as
such term is defined in Section 3(37) of ERISA), (ii) any plan of the type
described in Section 4063 and 4064 of ERISA or (iii) any plan that provides
health, life insurance, accident or other "welfare-type" benefits to current or
future retirees or current or future former employees, their spouses or
dependents, other than in accordance with Section 4980B of the Code, or
applicable state benefit continuation law. None of the Company or any of its
subsidiaries has any liability or, to the knowledge of the Company, potential
liability with respect to any employee benefit plan subject to Title IV of ERISA
or Section 412 of the Code that is currently or was formerly maintained by any
other current or former member of the controlled group of corporations, trades
or businesses (within the meaning of Sections 414(b), (c), (m) and (o) of the
Code) of which the Company or any of its subsidiaries is or was a member that
would have a Company Material Adverse Effect.
(c) Each Company Benefit Plan has been maintained, funded and administered
in compliance in all material respects with applicable Law, including, without
limitation, ERISA and the Code. None of the
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Company or any of its subsidiaries has engaged in any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) with
respect to any Company Benefit Plan that has resulted or could reasonably be
expected to result in any material liability to the Company or any of its
subsidiaries. No Company Benefit Plan that is subject to the funding
requirements of Section 412 of the Code or Section 302 of ERISA has incurred any
"accumulated funding deficiency" as such term is defined in such sections of
ERISA and the Code, whether or not waived. No material liability to the Pension
Benefit Guaranty Corporation ("PBGC") (except for payment of premiums in the
ordinary course) has been or is reasonably expected to be incurred with respect
to any Company Benefit Plan that is subject to Title IV of ERISA; no reportable
event (as such term is defined in Section 4043 of ERISA) has occurred with
respect to any such Company Benefit Plan; and the PBGC has not commenced or
threatened the termination of any such Company Benefit Plan. None of the assets
of the Company or any of its subsidiaries is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; and none of the
Company or any of its subsidiaries has been required to post any security
pursuant to Section 307 of ERISA or Section 401(a)(29) of the Code.
(d) Each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code, and each trust (if any) forming a part thereof, has
received a favorable determination letter from the Internal Revenue Service as
to the qualification under the Code of such Company Benefit Plan and the
tax-exempt status of such related trust.
(e) With respect to each Company Benefit Plan that is subject to the
funding requirements of Section 412 of the Code and Section 302 of ERISA, all
material required contributions for all periods ending prior to or as of the
Effective Time (including periods from the first day of the then-current plan
year to the Effective Time) have been or will be made or properly accrued.
(f) With respect to each Company Benefit Plan, the Company has made
available to Parent, complete and accurate copies, to the extent applicable, of
(i) all documents embodying or governing such Company Benefit Plan and any
funding medium for the Company Benefit Plan, (ii) the 1993 annual report (Form
5500 series) filed with the Internal Revenue Service (with attachments), (iii)
the most recent actuarial report, (iv) the two most recent financial statements
and (v) the most recent IRS determination or approval letter with respect to
such Company Benefit Plan under Section 401 or 501(a)(9) of the Code (and
pending requests or applications for determinations or approvals).
(g) The Company and each of its subsidiaries are in compliance with all
applicable Laws relating to the employment of personnel and labor, except where
a failure to be in compliance would not have a Company Material Adverse Effect.
(h) Except for such exceptions as do not have a Material Adverse Effect, as
of the date of this Agreement, (i) there are no controversies pending or, to the
knowledge of the Company, threatened between the Company or any of its
subsidiaries and any of their respective employees; (ii) none of the Company or
any of its subsidiaries is a party to any collective bargaining agreement or
other labor union contract applicable to persons employed by the Company or any
of its subsidiaries, nor, to the knowledge of the Company, are there any
activities or proceedings of any labor union to organize any such employees;
(iii) there are no grievances outstanding against the Company or any of its
subsidiaries under any such agreement or contract; (iv) there are no unfair
labor practice complaints pending against the Company or any of its subsidiaries
before the National Labor Relations Board or any current union representation
questions involving employees of the Company or any of its subsidiaries; and (v)
there is no strike, slowdown, work stoppage or lockout, or, to the knowledge of
the Company, threat thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
SECTION 3.18. Insurance. All material insurance policies (the "Insurance
Policies") with respect to the property, assets, operations and business of the
Company and its subsidiaries are in full force and effect in all material
respects. The coverage amounts set forth in such Insurance Policies (subject to
applicable deductibles) are not less than the replacement cost of the assets
insured by such Insurance Policies. There are no pending material claims against
the Insurance Policies by the Company or any of its subsidiaries as to which the
insurers have denied material liability.
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SECTION 3.19. Environmental Matters. (a) Except as would not have a
Company Material Adverse Effect, (i) the Company is in compliance with all
applicable Federal, state, local and foreign laws and regulations relating to
pollution and the discharge of materials into the environment ("Environmental
Laws"), (ii) the Company holds all the permits, licenses and approvals of
governmental authorities and agencies necessary for the current use, occupancy
or operation of its assets and business under Environmental Laws ("Environmental
Permits"), and (iii) the Company is in compliance with all its Environmental
Permits.
(b) The Company has not received any written request for information, or
been notified that it is a potentially responsible party, under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or any similar state, local or foreign law with respect to
any real property owned or leased by it.
(c) The Company has not entered into or agreed to any consent decree or
order and is not subject to any judgment, decree or judicial order relating to
compliance with or the cleanup of regulated substances under any applicable
Environmental Law.
(d) None of the real property owned or leased by the Company is listed or,
to the knowledge of the Company, proposed for listing on the "National
Priorities List" under CERCLA, or on the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the United States
Environmental Protection Agency, as updated through the date of this Agreement,
or any similar state list of sites requiring investigation or cleanup.
SECTION 3.20. Brokers. Other than Goldman, Sachs & Co., no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.21. Renaissance Merger Agreement. The Board of Directors of the
Company has recommended to the stockholders of the Company that the stockholders
of the Company approve and adopt this Agreement. The Company has notified
Renaissance Communications Corp., a Delaware corporation ("Renaissance"), that
it has terminated the Merger Agreement dated as of June 30, 1995 (as such
agreement is in effect on the date hereof, the "Renaissance Merger Agreement"),
among the Company, Renaissance and Renaissance Communications Acquisition Corp.,
a Delaware corporation, pursuant to Section 8.01(h) thereof, and such
termination became effective prior to the execution of this Agreement.
SECTION 3.22. Absence of Certain Other Actions. Between June 30, 1995,
and the date of this Agreement (inclusive), neither the Company nor any of its
subsidiaries has taken, or agreed to take, any action that would constitute a
breach of Section 5.02 (other than Section 5.02(l)) if taken after the date of
this Agreement.
SECTION 3.23. Renaissance Documentation. As of the date of this
Agreement, there are no written agreements between Outlet and Renaissance other
than the Renaissance Merger Agreement and the Confidentiality Agreement referred
to therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PARENT SUB
Except as set forth in the disclosure schedule delivered by Parent and
Parent Sub to the Company concurrent with the execution of this Agreement (the
"Parent Disclosure Schedule"), Parent and Parent Sub hereby jointly and
severally represent and warrant to the Company that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of
Parent and Parent Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted. The term
"Parent Material Adverse Effect" as used in this Agreement means any change or
effect (other than a change or effect relating to the industry of Parent, the
financial markets or the economy generally) that, individually or when taken
together with all such other
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changes or effects, would be materially adverse to the financial condition,
business, operations, earnings or prospects of Parent and its subsidiaries,
taken as a whole.
SECTION 4.02. Certificate of Incorporation and By-Laws. Parent has
heretofore furnished to the Company a complete and accurate copy of the
Certificate of Incorporation and the By-Laws, as amended or restated to the date
of this Agreement, of each of Parent and Parent Sub.
SECTION 4.03. Authority. (a) Parent has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by Parent. The execution and delivery of this Agreement and the
consummation by Parent of the transactions contemplated hereby have been duly
authorized by all necessary corporate action and no other corporate proceedings
on the part of Parent are necessary to authorize this Agreement or to consummate
the transactions contemplated hereby. This Agreement has been validly executed
and delivered by Parent and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies.
(b) Parent Sub has all requisite corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by Parent Sub.
The execution and delivery of this Agreement by Parent Sub and the consummation
by Parent Sub of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Parent Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been validly executed and
delivered by Parent Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent Sub, enforceable against Parent Sub in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
the availability of equitable remedies. Parent, as the sole stockholder of
Parent Sub, has duly approved and adopted this Agreement in accordance with
Delaware Law.
SECTION 4.04. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Parent Sub do not, and
the performance of this Agreement by Parent and Parent Sub will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Parent,
Parent Sub or any of Parent's subsidiaries, (ii) conflict with or violate any
Laws applicable to Parent, Parent Sub or any of Parent's subsidiaries or by
which any of their respective properties is bound, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of any Encumbrance on any of the properties or assets of Parent,
Parent Sub or any of Parent's subsidiaries pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Parent, Parent Sub or any of Parent's
subsidiaries is a party or by which Parent, Parent Sub or any of Parent's
subsidiaries or any of their respective properties is bound, except for any
thereof that would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Parent Sub
do not, and the performance of this Agreement by Parent and Parent Sub will not,
require Parent or Parent Sub to obtain any consent, approval, authorization or
permit of, or to make any filing with or notification to, any Governmental
Entity based on the Laws of any Governmental Entity, except (i) for applicable
requirements, if any, of the Exchange Act, the Communications Act and the HSR
Act and the filing and recordation of the Certificate of Merger as required by
Delaware Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent Parent or Parent Sub from performing its obligations under this
Agreement and would not have a Parent Material Adverse Effect.
SECTION 4.05. Ownership of Parent Sub; No Prior Activities. Parent Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement. As of the date of this Agreement and
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the Effective Time, except for obligations or liabilities incurred in connection
with its incorporation or organization and the transactions contemplated by this
Agreement and the financing thereof and except for this Agreement and any other
agreements or arrangements contemplated by this Agreement or related to the
financing of the transactions contemplated hereby, Parent Sub has not and will
not have incurred, directly or indirectly, through any subsidiary or affiliate,
any obligations or liabilities or engaged in any business activities of any type
or kind whatsoever or entered into any agreements or arrangements with any
person.
SECTION 4.06. Vote Required. No vote of the holders of any class or
series of capital stock of Parent is necessary to approve any of the
transactions contemplated hereby. The affirmative vote of the holders of a
majority of the outstanding shares of common stock of Parent Sub is the only
vote of the holders of any class or series of Parent Sub capital stock necessary
to approve any of the transactions contemplated hereby.
SECTION 4.07. Financing. (a) Parent and its affiliates have, and at the
Effective Time Parent will have, funds in an amount sufficient to (i) consummate
the Merger (and make all the payments contemplated by Article II), (ii) pay all
related fees and expenses, including, without limitation, the fee of $6.5
million which the Company is required to pay Renaissance under the Renaissance
Merger Agreement upon consummation of the Merger, (iii) permit Broadcasting to
comply with paragraph 4 of the 1988 Agreement (as hereinafter defined), (iv)
permit the Company to comply with Section 5 of the Babb Agreement (as
hereinafter defined), and (v) provide adequate working capital for the operation
of the Company as of the Effective Time.
(b) Parent and Parent Sub have no reason to believe that they are not
financially qualified under applicable FCC requirements to acquire and exercise
control over the Company as contemplated under this Agreement and are not aware
of any matters or relationships involving the Parent or Parent Sub or any of
their affiliates that could reasonably be expected to cause the FCC to
disapprove the transfer of control of the Company contemplated hereunder or to
designate the FCC Application (as defined in Section 6.03(a)) for evidentiary
hearing.
SECTION 4.8. Brokers. Except for Allen & Company Incorporated, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Parent Sub.
ARTICLE V
COVENANTS
SECTION 5.01. Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Parent,
the Company will and will cause its subsidiaries to (a) operate its business in
the usual and ordinary course consistent with past practices; (b) use its
reasonable efforts to preserve substantially intact its business organization,
maintain its rights and franchises, retain the services of its respective
principal officers and key employees and maintain its relationships with its
respective principal customers and suppliers; (c) use its reasonable efforts to
maintain and keep its properties and assets in as good repair and condition as
at present, ordinary wear and tear excepted; and (d) use its reasonable efforts
to keep in full force and effect insurance comparable in amount and scope of
coverage to that currently maintained; provided, however, that in the event the
Company deems it necessary to take certain actions that would otherwise be
proscribed by clauses (a) - (d) of this Section 5.01, the Company shall consult
with Parent and Parent shall consider in good faith the Company's request to
take such action and not unreasonably withhold or delay its consent for such
action.
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SECTION 5.02. Negative Covenants of the Company. Except as expressly
contemplated by this Agreement and except as set forth in Section 5.02 of the
Company Disclosure Schedule, or otherwise consented to in writing by Parent,
from the date hereof until the Effective Time, the Company will not do, and will
not permit any of its subsidiaries to do, any of the following:
(a) (i) increase the periodic compensation payable to or to become
payable to any director or executive officer of the Company or any of its
subsidiaries, except for increases in salary, wages or bonuses payable or
to become payable in the ordinary course of business and consistent with
past practice; (ii) grant any severance or termination pay (other than
pursuant to existing severance arrangements or policies as in effect on the
date of this Agreement and "stay" bonuses which do not exceed $200,000 in
the aggregate) to, or enter into any employment or severance agreement
with, any director, officer or employee of the Company or any of its
subsidiaries involving an annual payment of more than $100,000 and not
terminable on or before the Closing (other than employment, severance or
similar agreements entered into with the consent of Parent, which consent
shall not be unreasonably withheld or delayed); or (iii) adopt any employee
benefit plan or arrangement, except as may be required by applicable Law or
pursuant to any collective bargaining agreement between the Company or any
of its subsidiaries and their respective employees;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of capital stock of the Company;
(c) (i) redeem, repurchase or otherwise reacquire any shares of its or
any of its subsidiaries' capital stock or any securities or obligations
convertible into or exchangeable for any shares of its or its subsidiaries'
capital stock (other than any such acquisition directly from any wholly
owned subsidiary of the Company in exchange for capital contributions or
loans to such subsidiary, or any options, warrants or conversion or other
rights to acquire any shares of its or its subsidiaries' capital stock or
any such securities or obligations (except in connection with the exercise
of outstanding Options referred to in Section 3.03 in accordance with their
terms); (ii) effect any reorganization or recapitalization of the Company;
or (iii) split, combine or reclassify any of the Company's capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its capital
stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale (including the grant of any
Encumbrances) of, any shares of any class of its or its subsidiaries'
capital stock (including shares held in treasury), any securities
convertible into or exercisable or exchangeable for any such shares, or any
rights, warrants or options to acquire, any such shares (except for the
issuance of shares upon the exercise of outstanding Options and except for
the issuance of options to employees with the consent of Parent); or (ii)
amend or otherwise modify the terms of any such rights, warrants or options
the effect of which shall be to make such terms more favorable to the
holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division (other than a wholly owned
subsidiary) thereof, or otherwise acquire or agree to acquire any assets of
any other person (other than the purchase of assets in the ordinary course
of business and consistent with past practice) in the case of asset
purchases which are material, individually or in the aggregate, to the
Company and its subsidiaries, taken as a whole, or make or commit to make
any capital expenditures other than capital expenditures in the ordinary
course of business consistent with past practice and with the Company's
1995 Capital Plan;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its material assets or any material assets
of any of its subsidiaries except for the grant of purchase money security
interests and dispositions in the ordinary course of business and
consistent with past practice;
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(g) propose or adopt any amendments to its Certificate of
Incorporation or, as to its By-Laws, any amendments that would have an
adverse impact on the consummation of the transactions contemplated by this
Agreement or would be adverse to Parent's interests;
(h) (A) change any of its methods of accounting in effect at March 31,
1995, or (B) make or rescind any express or deemed election relating to
Taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes (except where the amount of such settlements or controversies,
individually or in the aggregate, does not exceed $250,000), or change any
of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of the federal income tax
returns for the taxable year ending December 31, 1993, except, in the case
of clause (A) or clause (B), as may be required by Law or generally
accepted accounting principles;
(i) incur any obligation for borrowed money other than purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except in the ordinary course of business under
existing loan agreements or capitalized leases, or prepay, before the
scheduled maturity thereof, any of its long-term debt;
(k) agree in writing or otherwise to do any of the foregoing;
(l) initiate, solicit or encourage (including by way of furnishing
information or assistance), or take any other action to facilitate, any
inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Competing Transaction (as hereinafter defined),
or negotiate with any person or entity in furtherance of such inquiries or
to obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or
employees of the Company or any of its subsidiaries or any representative
retained by the Company or any of the Company's subsidiaries to take any
such action, and the Company shall promptly notify Parent of all relevant
terms of any such inquiries and proposals received by the Company or any of
its subsidiaries, or by any such officer, director or representative,
relating to any of such matters and if such inquiry or proposal is in
writing, the Company shall deliver or cause to be delivered to Parent a
copy of such inquiry or proposal; provided, however, that prior to such
time as the stockholders of the Company shall have adopted and approved
this Agreement in accordance with Delaware Law, nothing contained in this
subsection (l) 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 proposal to
acquire the Company pursuant to a merger, consolidation, share exchange,
business combination or other similar transaction, if, and only to the
extent that, (A) the Board of Directors of the Company, after consultation
with independent legal counsel, determines in good faith that such action
is required for the Board of Directors of the Company to comply with its
fiduciary duties to shareholders imposed by Delaware 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 Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity, (C)
prior to furnishing such information to such person or entity, the Company
receives from such person or entity an executed confidentiality agreement
with terms no less favorable to the Company than those contained in the
Confidentiality Agreement (as hereinafter defined), and (D) the Company
keeps Parent informed, on a current basis, of the status of any such
discussions or negotiations; or (ii) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a Competing Transaction. For purposes
of this Agreement, "Competing Transaction" shall mean any of the following
involving the Company or any of its subsidiaries: (a) any merger,
consolidation, share exchange, business combination, or other similar
transaction (other than the transactions contemplated by this Agreement);
(b) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or series of
transactions; (c) any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of the Company; (d) any person shall
have acquired, after the date hereof, beneficial ownership or the right to
acquire beneficial ownership of, or any "group" (as such term is defined
under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) shall have been formed that beneficially owns or
has the
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right to acquire beneficial ownership of, 25% or more of the then
outstanding shares of capital stock of the Company; or (e) any public
announcement of a proposal, plan or intention to do any of the foregoing;
(m) except in the ordinary course of business and consistent with
prior practice or with the consent of Parent (which shall not be
unreasonably withheld or delayed), enter into, renew, renegotiate, modify,
amend or terminate any time sales contracts involving an annual payment of
more than $100,000;
(n) except in the ordinary course of business and consistent with
prior practice or with the consent of Parent (which shall not be
unreasonably withheld or delayed), enter into, amend or modify any contract
involving an annual payment of more than $100,000 under which the Company
is authorized to broadcast programming; or
(o) settle or compromise, or permit any settlement or compromise of,
any claim, action, proceeding or litigation relating to this Agreement, the
Renaissance Merger Agreement or the transactions contemplated hereby or
thereby brought against the Company or any of its subsidiaries, or against
any of its or their respective officers or directors or any other person or
entity indemnified by the Company or any of its subsidiaries, without the
prior written consent of Parent (it being agreed that, in connection with
any such claim, action, proceeding or litigation, the Company shall keep
Parent informed on a current basis and consult with Parent with respect to
the conduct of such litigation).
SECTION 5.03. Access and Information. Subject to confidentiality
agreements to which the Company or any of its subsidiaries is a party, the
Company shall, and shall cause its subsidiaries to (i) afford to Parent and its
officers, directors, employees, accountants, consultants, legal counsel, agents,
lenders (including representatives of any lenders) and other representatives
(collectively, the "Parent Representatives") reasonable access at reasonable
times upon reasonable prior notice to the officers, employees, agents,
properties, offices and other facilities of the Company and its subsidiaries and
to the books and records thereof and (ii) furnish promptly to Parent and the
Parent Representatives such information concerning the business, properties,
contracts, records and personnel of the Company and its subsidiaries (including,
without limitation, financial, operating and other data and information) as may
be reasonably requested, from time to time, by Parent.
SECTION 5.04. Confidentiality. The parties hereto will comply or will
cause their respective affiliates to comply with all their respective
obligations under the Confidentiality Agreement between the Company and Parent
(the "Confidentiality Agreement"). The Company agrees to not use, and to keep
confidential, any information provided to it by Parent or its subsidiaries (and
cause its employees, lenders and advisors to do the same) to the same extent and
under the same covenants as provided in the Confidentiality Agreement with
respect to Parent's treatment of the Company's confidential information.
SECTION 5.05. Certain Obligations. (a) At the Effective Time, Parent will
cause the Surviving Corporation to discharge its obligations under Section 5(d)
of the Babb Agreement.
(b) The Company shall pay to Renaissance any and all amounts due to
Renaissance pursuant to Section 8.05(b) of the Renaissance Merger Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholder Approval. Unless this Agreement shall be
approved and adopted by the stockholders of the Company by written consent in
lieu of a stockholders' meeting, the Company shall, promptly after the date of
this Agreement, take all action necessary in accordance with Delaware Law and
its Certificate of Incorporation and By-Laws to convene a meeting of the
Company's stockholders (the "Company Stockholders' Meeting"), to approve and
adopt this Agreement. Unless this Agreement shall be approved and adopted by the
stockholders of the Company by written consent in lieu of a stockholders'
meeting, the Company shall use its reasonable efforts to solicit from
stockholders of the Company proxies in favor of the approval and adoption of
this Agreement, unless otherwise required by applicable fiduciary duties
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of the directors of the Company, as determined by such directors in good faith
after consultation with independent legal counsel.
SECTION 6.02. Information or Proxy Statement. (a)(i) If this Agreement
shall be adopted and approved by the stockholders of the Company by written
consent in lieu of a stockholders' meeting, as promptly as practicable
thereafter, the Company shall prepare and file with the SEC an information
statement (the "Company Information Statement") pursuant to Rule 14c-2 under the
Exchange Act. The Company shall use its reasonable efforts to cause the Company
Information Statement to be "cleared" by the SEC for mailing to the stockholders
of the Company as promptly as practicable. In addition, as promptly as
practicable after such approval by written consent, the Company shall prepare a
notice pursuant to Section 228(d) of Delaware Law (the "Notice"). The Company
shall mail the Company Information Statement and the Notice to its stockholders
as promptly as practicable after the Company Information Statement is "cleared"
by the SEC for mailing to the stockholders of the Company. Parent shall furnish
all information concerning it and the holders of its capital stock as the
Company may reasonably request in connection with such actions. Parent shall
have the right to review the Company Information Statement before it is filed
with the SEC.
(ii) Unless this Agreement shall be adopted and approved by the
stockholders of the Company by written consent in lieu of a stockholders'
meeting, as promptly as practicable after the execution of this Agreement, the
Company shall prepare and file with the SEC a proxy statement in connection with
the matters to be considered at the Company Stockholders' Meeting (the "Company
Proxy Statement"). The Company shall use its reasonable efforts to cause the
Company Proxy Statement to be "cleared" by the SEC for mailing to the
stockholders of the Company as promptly as practicable and shall mail the
Company Proxy Statement to its stockholders as promptly as practicable
thereafter. Parent shall furnish all information concerning it and the holders
of its capital stock as the Company may reasonably request in connection with
such actions. The Company Proxy Statement shall include the recommendation of
the Company's Board of Directors in favor of approval and adoption of this
Agreement, unless otherwise required by applicable fiduciary duties of the
directors of the Company, as determined by such directors in good faith after
consultation with independent legal counsel. Parent shall have the right to
review the Company Proxy Statement before it is filed with the SEC.
(b) The information supplied by Parent for inclusion in the Company
Information Statement or the Company Proxy Statement shall not, at the date the
Company Information Statement or the Company Proxy Statement (or any supplement
thereto) is first mailed to stockholders, at the time of the Company
Stockholders' Meeting, if any, or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event or circumstance relating to Parent or
any of its affiliates, or its or their respective officers or directors, should
be discovered by Parent that should be set forth in a supplement to the Company
Information Statement or the Company Proxy Statement, Parent shall promptly
inform the Company.
(c) All information contained in the Company Information Statement or the
Company Proxy Statement (other than information provided by Parent for inclusion
therein) shall not, at the date the Company Information Statement or the Company
Proxy Statement (or any supplement thereto) is first mailed to stockholders, at
the time of the Company Stockholders' Meeting, if any, or at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to the Company or any of its affiliates, or to its or their respective
officers or directors, should be discovered by the Company that should be set
forth in a supplement to the Company Information Statement or the Company Proxy
Statement, the Company shall promptly inform Parent. All documents that the
Company is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Exchange Act and the
rules and regulations thereunder.
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SECTION 6.03. FCC Application. (a) As promptly as practicable after the
execution of this Agreement, Parent and the Company shall prepare an appropriate
application for FCC consent, and such other documents as may be required, with
respect to the transfer of control of the Company to Parent (the "FCC
Application"). Not later than the tenth business day following execution, Parent
shall deliver to the Company its completed portion of the FCC Application. Not
later than the twelfth business day following the execution, the Company shall
file, or cause to be filed, the FCC Application. Parent and the Company shall
prosecute the FCC Application in good faith and with due diligence in order to
obtain such FCC consent as expeditiously as practicable. If the Closing shall
not have occurred for any reason within the initial effective period of the
granting of approval by the FCC of the FCC Application, and neither Parent nor
the Company shall have terminated this Agreement pursuant to Section 8.01,
Parent and the Company shall jointly request one or more extensions of the
effective period of such grant. Neither Parent nor the Company shall knowingly
take, or fail to take, any action the intent or reasonably anticipated
consequence of which action or failure to act would be to cause the FCC not to
grant approval of the FCC Application.
(b) Parent and the Company shall each pay one-half of any FCC fees that may
be payable in connection with the filing or granting of approval of the FCC
Application. Parent and the Company shall each oppose any request for
reconsideration or judicial review of the granting of approval of the FCC
Application. The Company shall pay any cost incurred in connection with
complying with the FCC notice and advertisement requirements in connection with
the transfer of control of the Company.
(c) Prior to FCC grant of the FCC Application, Parent, its employees and
agents, shall not directly or indirectly control, supervise or direct or attempt
to control, supervise or direct the operation of any of Company's broadcast
stations, and such operations shall be the sole responsibility of and in the
complete discretion of the Company.
SECTION 6.04. Other Appropriate Action; Consents; Filings. (a) The
Company and Parent shall each use their reasonable efforts to (i) take, or cause
to be taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement, (ii) obtain
any consents or approvals with respect to the Merger the absence of which would
result in a Company Material Adverse Effect (it being understood that obtaining
(i) any thereof that are referred to in Section 7.01(a) or listed on Exhibit
7.02(c) shall be a condition to Parent's obligation to consummate the Merger,
and (ii) any thereof that are not referred to in Section 7.01(a) or are not
listed on Exhibit 7.02(c) shall not be a condition to Parent's obligation to
consummate the Merger), (iii) make all necessary filings, and thereafter make
any other required submissions, with respect to this Agreement and the Merger
required under (A) the Exchange Act and the rules and regulations thereunder,
and any other applicable federal or state securities laws, (B) the HSR Act, and
(C) any other applicable Law; provided that Parent and the Company shall
cooperate with each other in connection with the making of all such filings,
including providing copies of all such documents (except those filed in
connection with the HSR Act) to the nonfiling party and its advisors prior to
filing and, if requested, to accept all reasonable additions, deletions or
changes suggested in connection therewith. The Company and Parent shall furnish
all information required for any application or other filing to be made pursuant
to the rules and regulations of any applicable Law (including all information
required to be included in the Company Proxy Statement) in connection with the
transactions contemplated by this Agreement.
(b) Each of the Company and Parent agree to cooperate and use their
reasonable efforts to contest and resist any action, including legislative,
administrative or judicial action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) (an "Order") that is in effect and that restricts,
prevents or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including, without limitation, by pursuing any
necessary administrative or judicial appeal or legislative action.
SECTION 6.05. Public Announcements. Unless otherwise required by
applicable Law or stock exchange or NASDAQ requirements, Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the Merger and shall not issue any
such press release or make any such public statement prior to such consultation.
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SECTION 6.06. Indemnification. (a) The Certificate of Incorporation and
By-Laws of the Surviving Corporation shall contain the provisions with respect
to indemnification set forth in the Certificate of Incorporation and By-Laws of
the Company on the date of this Agreement, which provisions shall not be
amended, repealed or otherwise modified for a period of six years after the
Effective Time in any manner that would adversely affect the rights thereunder
of persons who at any time prior to the Effective Time were identified as
prospective indemnitees under the Certificate of Incorporation or By-laws of the
Company in respect of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement or the Renaissance Merger Agreement), unless such modification is
required by Law.
Parent will not permit the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-laws of any of the Company's
subsidiaries on the date of this Agreement to be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of persons who at any time prior to
the Effective Time were identified as prospective indemnitees under any such
Certificate of Incorporation or By-laws in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement), unless such modification is
required by Law.
(b) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless the present and former officers, directors
and employees of the Company (collectively, the "Indemnified Parties") against
all losses, expenses, claims, damages, liabilities or amounts that are paid in
settlement of, with the approval of Parent and the Surviving Corporation (which
approval shall not be unreasonably withheld), or otherwise in connection with,
any claim, action, suit, proceeding or investigation (a "Claim"), based in whole
or in part on the fact that such person is or was such a director, officer or
employee and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement or the Renaissance Merger Agreement), in each case to the fullest
extent permitted under Delaware Law (and shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the fullest extent permitted under Delaware Law, upon receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay such
advances contemplated by Section 145(e) of Delaware Law). Parent hereby
guarantees the Surviving Corporation's obligations pursuant to this Section
6.06(b).
(c) Without limiting the foregoing, in the event any Claim is brought
against any Indemnified Party (whether arising before or after the Effective
Time) after the Effective Time (i) the Indemnified Parties may retain the
Company's regularly engaged independent legal counsel as of the date of this
Agreement, or other independent legal counsel satisfactory to them provided that
such other counsel shall be reasonably acceptable to Parent and the Surviving
Corporation, (ii) the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received and (iii) the Surviving Corporation will use its
reasonable efforts to assist in the vigorous defense of any such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any Claim effected without its written consent, which consent shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 6.06, upon learning of any such Claim, shall notify the
Surviving Corporation (although the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability which
the Surviving Corporation may have under this Section 6.06, except to the extent
such failure prejudices the Surviving Corporation), and shall deliver to the
Surviving Corporation the undertaking contemplated by Section 145(e) of Delaware
Law. The Indemnified Parties as a group may retain one law firm (in addition to
local counsel) to represent them with respect to each such matter unless there
is, under applicable standards of professional conduct (as determined by counsel
to such Indemnified Parties), a conflict on any significant issue between the
positions of any two or more of such Indemnified Parties, in which event, an
additional counsel as may be required may be retained by such Indemnified
Parties.
(d) Parent shall cause to be maintained in effect for not less than five
years after the Effective Time (except to the extent not generally available in
the market) the current policies of directors' and officers' liability insurance
and fiduciary liability insurance maintained by the Company with respect to
matters occurring prior to the Effective Time; provided, however, that (i)
Parent may substitute therefor policies of
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substantially the same coverage containing terms and conditions that are
substantially the same for the Indemnified Parties to the extent reasonably
available and (ii) Parent shall not be required to pay an annual premium for
such insurance in excess of 300% of the last annual premium paid prior to the
date of this Agreement, but in such case shall purchase as much coverage as
possible for such amount.
(e) This Section 6.06 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on Parent and Parent Sub and the
Surviving Corporation and their respective successors and assigns.
SECTION 6.07. Obligations of Parent Sub. Parent shall take all action
necessary to cause Parent Sub to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement.
SECTION 6.08. Investigation. Parent acknowledges and agrees that it (a)
has made its own inquiry and investigation into, and based thereon has formed an
independent judgment concerning, the Company, (b) has been furnished with or
given adequate access to such information about the Company as it has requested,
and (c) it will not assert any claim against any of the Company's officers,
directors, employees, agents, stockholders, affiliates, advisors or other
representatives, or hold any of such persons liable, for any inaccuracies,
misstatements or omissions with respect to information furnished by the Company
or such persons concerning the Company. Parent acknowledges and agrees that none
of the Company's stockholders, officers, directors, employees, agents,
affiliates, advisors or other representatives have made, or are making, any
representations or warranties with respect to the Company, this Agreement, or
any of the transactions contemplated hereby.
SECTION 6.09. Certain Agreements. Parent agrees to comply with paragraph
10 of each Voting Agreement. Parent agrees not to amend, waive, change or
otherwise modify any of the provisions of the Voting Agreements to the extent
that any thereof would adversely affect the Company.
SECTION 6.10. FCC Approval. Parent has determined in good faith that this
Agreement and the Voting Agreements can be entered into and implemented pursuant
to their terms, without filing any application with the FCC seeking its consent
or approval, except as set forth in Section 6.03 or as contemplated by Section
5(b)(iv)(E) of each Voting Agreement. Parent hereby agrees to indemnify the
Company from and against any damages should the FCC impose any fine, forfeiture
or other sanction against the Company in connection with the implementation of
this Agreement and the Voting Agreements pursuant to their terms and conditions.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions, any or all of which may be waived, in whole or in part, to
the extent permitted by applicable Law:
(a) FCC Approval. The FCC shall have issued a Final Order (as
hereinafter defined) approving the FCC application, and such Final Order
shall include the granting of such waivers, if any, of the FCC Rules and
Regulations as may be necessary to permit the consummation of the
transactions contemplated hereby. All the terms and conditions contained in
the Final Order required to be satisfied on or prior to the Closing shall
have been satisfied and performed.
(b) Antitrust. The applicable waiting period under the HSR Act shall
have expired or been terminated.
(c) Litigation, etc. No Governmental Entity or Federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
that then remains in
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effect and that has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(d) Stockholder Approval. The holders of a majority of the
outstanding shares of Common Stock shall have approved and adopted this
Agreement in accordance with Delaware Law and the rules and regulations of
NASDAQ.
SECTION 7.02. Additional Conditions to Obligation of Parent. The
obligation of Parent to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement (i) in the case of
any thereof that are expressly qualified by any materiality qualification,
shall be true and correct, subject to such materiality qualification, and
(ii) in the case of all other representations and warranties, shall be true
and correct in all material respects, in each case as of the Effective Time
as though made on and as of the Effective Time, and except that those
representations and warranties that address matters only as of a particular
date shall remain true and correct, subject to such materiality
qualifications or in all material respects, as the case may be, as of such
date. Parent shall have received a certificate of the Chief Executive
Officer of the Company to such effect.
(b) Agreements and Covenants. The Company shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, except
where the failure to so comply would not have a Company Material Adverse
Effect. Parent shall have received a certificate of the Chief Executive
Officer of the Company to that effect.
(c) Consents and Approvals. All consents, approvals and
authorizations that are described on Exhibit 7.02(c) shall have been
obtained.
SECTION 7.03. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Parent Sub contained in this Agreement (i) in the
case of any thereof that are expressly qualified by any materiality
qualification, shall be true and correct, subject to such materiality
qualification, and (ii) in the case of all other representations and
warranties, shall be true and correct in all material respects, in each
case as of the Effective Time as though made on and as of the Effective
Time, and except that those representations and warranties that address
matters only as of a particular date shall remain true and correct, subject
to such materiality qualifications or in all material respects, as the case
may be, as of such date. The Company shall have received a certificate of
the Chief Financial Officer of Parent to such effect.
(b) Agreements and Covenants. Parent shall have performed or complied
with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, except
where the failure to comply would not have a Parent Material Adverse
Effect. The Company shall have received a certificate of the Chief
Financial Officer of Parent to that effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time:
(a) by mutual consent of Parent and the Company;
(b) by Parent, upon a material breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall have
become untrue in any material respect, in either case such that the
conditions set forth in
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Section 7.02(a) or Section 7.02(b) would not be satisfied (a "Terminating
Company Breach"), provided that, if such Terminating Company Breach is
curable by the Company through the exercise of its reasonable efforts and
for so long as the Company continues to exercise such reasonable efforts,
Parent may not terminate this Agreement under this Section 8.01(b);
(c) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in this
Agreement, or if any representation or warranty of Parent shall have become
untrue in any material respect, in either case such that the conditions set
forth in Section 7.03(a) or Section 7.03(b) would not be satisfied (a
"Terminating Parent Breach"), provided that, if such Terminating Parent
Breach is curable by Parent through the exercise of its reasonable efforts
and for so long as Parent continues to exercise such reasonable efforts,
the Company may not terminate this Agreement under this Section 8.01(c);
(d) by either Parent or the Company, if there shall be any Order that
is final and nonappealable preventing the consummation of the Merger,
except if the party relying on such Order has not complied with its
obligations under Section 6.03 or 6.04;
(e) by Parent or the Company, if the Merger shall not have been
consummated before the date which is one year from the date hereof, except
if the party seeking to terminate the Agreement shall be in breach hereof;
(f) by Parent or the Company, if the approval and adoption of this
Agreement by the stockholders of the Company is not obtained by written
consent as provided herein or by the requisite vote by the stockholders of
the Company at the Company Stockholders' Meeting;
(g) by Parent, if (i) the Board of Directors of the Company withdraws,
modifies or changes its recommendation of this Agreement or the Merger in a
manner adverse to Parent or Parent Sub or shall have resolved to do any of
the foregoing, or the Board of Directors of the Company shall have
recommended to the stockholders of the Company any Competing Transaction or
resolved to do so; and
(h) by the Company, if prior to such time as the stockholders of the
Company shall have adopted and approved this Agreement in accordance with
Delaware Law, the Board of Directors of the Company shall have recommended
to the stockholders of the Company any Competing Transaction or resolved to
do so; provided that any termination of this Agreement by the Company
pursuant to this Section 8.01(h) shall not be effective until the close of
business on the second full business day after notice thereof to Parent.
The right of any party hereto to terminate this Agreement pursuant to this
Section 8.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers or directors,
whether prior to or after the execution of this Agreement.
SECTION 8.02. Effect of Termination. Except as provided in Section 8.05
or Section 9.01, in the event of the termination of this Agreement pursuant to
Section 8.01, this Agreement shall forthwith become void, there shall be no
liability on the part of Parent, Parent Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any party hereto shall cease, except that nothing herein shall relieve any party
for any breach of this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
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SECTION 8.05. Expenses. (a) Except as otherwise expressly provided
herein, all expenses incurred by the parties hereto shall be borne solely by the
party that has incurred such expenses.
(b) In the event that this Agreement shall be terminated pursuant to
Section 8.01(h) and within 12 months thereafter a Competing Transaction shall be
consummated, the Company shall pay Parent a fee of $6.5 million in cash.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Effectiveness of Representations, Warranties and
Agreements. (a) Except as set forth in Section 9.01(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement.
(b) The representations, warranties and agreements in this Agreement (and
in any certificate delivered in connection with the Closing) shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Article
VIII, except that the agreements set forth in Articles I and II and Sections
6.06, 6.07 and 6.08 shall survive the Effective Time and those set forth in
Sections 5.04, 5.05, 6.08, 6.09, 6.10, 8.02, 8.05 and Article IX hereof shall
survive termination.
SECTION 9.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier number
specified below:
(a) If to Parent or Parent Sub:
National Broadcasting Company, Inc.
30 Rockefeller Center
New York, New York 10112
Attention: Senior Vice President and Chief Financial Officer
with copies to:
National Broadcasting Company, Inc.
30 Rockefeller Center
New York, New York 10112
Attention: General Counsel
(b) If to the Company:
23 Kenney Drive
Cranston, R.I. 02920
Attention: Chief Executive Officer
SECTION 9.03. Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "Babb Agreement" means the Employment Agreement dated January 1,
1993, as amended on December 17, 1993, between Outlet Communications, Inc.
and James G. Babb, Jr.
(c) "business day" means any day other than a day on which banks in
the City of New York are authorized or obligated to be closed;
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(d) "control" (including the terms "controlled", "controlled by" and
"under common control with") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction of
the management or policies of a person, whether through the ownership of
stock or as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "FCC Licenses" means the licenses described in Section 3.09(a) of
the Company Disclosure Schedule;
(f) "Final Order" means an action by the FCC that has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect
to which no timely request for stay, petition for reconsideration or appeal
or sua sponte action of the FCC with comparable effect is pending and as to
which the time for filing any such request, petition or appeal or for the
taking of any such sua sponte action by the FCC has expired;
(g) "knowledge" or "known" means, with respect to any matter in
question, if an executive officer of the Company or Parent, as the case may
be, has actual knowledge of such matter;
(h) "Licensed Station" means each of (i) WJAR (TV), Providence, Rhode
Island, (ii) WCMH (TV), Columbus, Ohio, and (iii) WNCN (TV) Goldsboro,
North Carolina;
(i) "1988 Agreement" means the Agreement dated as of July 26, 1988,
among Bruce G. Sundlun, David E. Henderson, the Company, Broadcasting and
the persons and entities listed on the signature pages thereto;
(j) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(k) "Significant Subsidiary" or "Significant Subsidiaries" means any
subsidiary of the Company that would constitute a Significant Subsidiary of
such party within the meaning of Rule 1-02 of Regulation S-X of the SEC;
(l) "subsidiary" or "subsidiaries" of the Company, Parent, the
Surviving Corporation or any other person, means any corporation,
partnership, joint venture or other legal entity of which the Company,
Parent, the Surviving Corporation or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
directly or indirectly, 50% or more of the stock or other equity interests
the holders of which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation or other
legal entity; and
(m) "Tax" or "Taxes" shall mean any and all taxes, charges, fees,
levies, payable to any federal, state, local or foreign taxing authority or
agency, including, without limitation, (i) income, franchise, profits,
gross receipts, minimum, alternative minimum, estimated, ad valorem, value
added, sales, use, real or personal property, payroll, withholding,
employment, social security, workers compensation, unemployment
compensation, utility, severance, excise, stamp, and transfer and gains
taxes, (ii) customs duties, imposts, charges, levies or other similar
assessments of any kind, and (iii) interest, penalties and additions to tax
imposed with respect thereto.
SECTION 9.04. 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 9.05. 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 in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
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SECTION 9.06. Entire Agreement. This Agreement (together with the
Exhibits hereto), and the Confidentiality Agreement constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
SECTION 9.07. Assignment. This Agreement shall not be assigned by
operation of law or otherwise; provided, however, that Parent may assign its
rights hereunder (but not its obligations) to any wholly owned subsidiary of
General Electric Company, a New York corporation.
SECTION 9.08. 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 (other than the provisions of Sections 6.06, 6.07
and 6.08), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.10. Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of law, and each party hereto hereby submits to the
exclusive jurisdiction of the Delaware courts sitting in chancery for the
resolution of all disputes under this Agreement.
SECTION 9.11. 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.
IN WITNESS WHEREOF, Parent, Parent Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
NATIONAL BROADCASTING COMPANY, INC.
/S/ RICHARD COTTON
By .................................
Name: Richard Cotton
Title: Executive Vice President
and General Counsel
CO ACQUISITION CORPORATION
/S/ RICHARD COTTON
By .................................
Name: Richard Cotton
Title: Secretary
OUTLET COMMUNICATIONS, INC.
/S/ JAMES G. BABB
By .................................
Name: James G. Babb
Title: Chairman, President & CEO
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ANNEX B
CONSENT AND VOTING/
CONDITIONAL OPTION AGREEMENT
CONSENT AND VOTING/CONDITIONAL OPTION AGREEMENT, dated as of
, 1995, between NATIONAL BROADCASTING COMPANY, INC., a Delaware
corporation ("Parent"), and the stockholder of Outlet Communications, Inc., a
Delaware corporation (the "Company"), whose name and signature is set forth on
the signature page hereof (the "Stockholder").
RECITALS
The Company, Parent and CO Acquisition Corporation, a Delaware corporation
and a wholly owned subsidiary of Parent ("Parent Sub") are entering into an
Agreement and Plan of Merger dated as of the date hereof (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which, subject to the
terms and conditions of the Merger Agreement, Parent Sub will merge with and
into the Company (the "Merger"), and each outstanding share of Company Common
Stock, other than shares owned by the Company or Parent or certain of their
respective affiliates, will be converted into the right to receive $47.25 in
cash, all as more fully set forth in the Merger Agreement.
As of the date hereof, the Stockholder is the record and beneficial owner
of the number of shares of Company Common Stock set forth on the signature page
hereof (the "Existing Shares" and, together with any shares of Company Common
Stock acquired after the date hereof, whether upon the exercise of warrants,
options, conversion of convertible securities or otherwise, the "Shares").
In accordance with Section 228 of the Delaware Law, the Stockholder desires
to grant the Stockholder's consent to the adoption and approval of the Merger
Agreement and the Merger without a meeting of stockholders of the Company.
The Stockholder and Parent desire to set forth their agreement with respect
to the voting of the Shares in connection with the Merger and the Stockholder
desires to grant to Parent a conditional option, subject to FCC consent if
necessary, to acquire the Shares, upon the terms and subject to the conditions
set forth herein.
AGREEMENT
To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties agree as follows:
1. Delivery of Consent. Immediately following the execution and
delivery of the Merger Agreement by the parties thereto, the Stockholder
shall execute and deliver to the Secretary of the Company a written consent
in the form of Exhibit A hereto.
2. Agreement to Vote. The Stockholder hereby agrees that, from and
after the date hereof and until the Expiration Date (as defined in Section
4), at any meeting of the stockholders of the Company, however called, or
in connection with any written consent of the stockholders of the Company,
and to the extent permitted by applicable law, the Stockholder shall vote
(or cause to be voted) or act by written consent with respect to the Shares
(a) in favor of adoption and approval of the Merger Agreement and the
Merger and the approval of the terms thereof and each of the other actions
contemplated by the Merger Agreement and this Agreement; (b) against any
action or agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the
Company contained in the Merger Agreement or of the Stockholder contained
in this Agreement; and (c) against any Competing Transaction or any other
action, agreement or transaction (other than the Merger
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Agreement or the transactions contemplated thereby) that is intended, or
could reasonably be expected, to impede, interfere or be inconsistent with,
delay, postpone, discourage or materially adversely affect the Merger or
this Agreement, including, but not limited to: (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or its subsidiaries; (ii) a sale, lease
or transfer of a material amount of assets of the Company and its
subsidiaries or a reorganization, recapitalization or liquidation of the
Company or its subsidiaries; (iii) a material change in the policies or
management of the Company, except as otherwise agreed to in writing by
Parent; (iv) an election of new members to the board of directors of the
Company, except where the vote is cast in favor of the nominees of a
majority of the existing directors; (v) any material change in the present
capitalization or dividend policy of the Company or any amendment of the
Company's certificate of incorporation; or (vi) any other material change
in the Company's corporate structure or business. The Stockholder shall not
enter into any agreement or understanding with any person or entity prior
to the Expiration Date to vote or give instructions in any manner
inconsistent with clauses (a), (b) or (c) of the preceding sentence.
3. PROXY. THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS A TRUSTEE
TO BE DESIGNATED BY PARENT, AND ANY SUCCESSOR TRUSTEE, THE STOCKHOLDER'S
PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT
BY WRITTEN CONSENT, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, WITH
RESPECT TO THE SHARES IN ACCORDANCE WITH SECTION 2 HEREOF. THIS PROXY IS
COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE, AND THE STOCKHOLDER WILL
TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE
NECESSARY TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY
PROXY PREVIOUSLY GRANTED BY HIM WITH RESPECT TO THE SHARES.
4. Expiration of Proxy. The proxy set forth in Section 3 hereof
shall terminate on the Expiration Date. As used herein, the term
"Expiration Date" means the earlier of the Effective Time and the date
which is 360 days following the date hereof or such shorter period as may
be dictated by applicable law or FCC policy or regulation (unless extended
by the mutual written consent of Parent and the Stockholder).
5. Conditional Option. (a) The Stockholder hereby grants to Parent
an irrevocable option to purchase the Shares, on the terms and subject to
the conditions set forth herein, including, but not limited to the consent
of the FCC, if required (the "Option").
(b) (i) The Option may be exercised by Parent, as a whole and not in
part, at any time on or after the earlier to occur of (A) the termination,
if any, of the Merger Agreement pursuant to the terms thereof or otherwise
and (B) such time as a permanent injunction or other order, decree or
ruling by any United States federal or state court of competent
jurisdiction or by any United States federal or state governmental,
regulatory or administrative agency or authority preventing the
consummation of the Merger shall have been issued, provided that the Option
may not be exercised on any date after the 60th day following the
occurrence of the event specified in clause (A) above.
(ii) If Parent wishes to exercise the Option (the "Option Purchase"),
Parent shall send a written notice to the Stockholder of its intention to
exercise the Option, specifying the place, and, if then known, the time and
the date (the "Closing Date") of the closing (the "Closing") of the
purchase. The Closing Date shall not be less than 20 days (or such longer
period as may be required by applicable law or regulation) from the date on
which such notice is delivered or prior to such time as the condition
specified in Section 5(b) (iv) (E) below shall have been satisfied.
(iii) Following delivery of the exercise notice referred to in Section
5(b) (ii) above, (x) the Stockholder shall promptly forward or cause to be
forwarded a copy of the exercise notice and of the terms of the proposed
Option Purchase to the Company and to the other Stockholders (as defined in
the Stockholders Agreement) in accordance with Section 5 of the
Stockholders Agreement, and (y) Parent shall extend an offer (which
complies with Section 5 of the Stockholders Agreement) to acquire shares of
Company Common Stock to such other Stockholders. The Stockholder further
agrees that, if the Option
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is exercised, the Stockholder shall cause Section 19 of the Stockholders
Agreement to be complied with prior to the Closing.
(iv) The obligation of Parent or its designee to consummate the
Closing after exercise of the Option shall be subject to the satisfaction
or waiver by Parent of the following conditions:
(A) The provisions of Sections 5 and 19 of the Stockholders
Agreement, as such agreement is in effect on the date hereof, and the
other provisions of the Stockholders Agreement applicable to the
consummation of the transactions contemplated hereby, shall have been
complied with, and such agreement shall not have been amended,
supplemented or otherwise modified since the date hereof without the
consent of Parent.
(B) After giving effect to the Option Purchase and all other
purchases of shares of Company Common Stock theretofore made or made
concurrently therewith, Parent shall beneficially own a number of shares
of Company Common Stock sufficient to approve (without the affirmative
vote or consent of any stockholder of the Company other than Parent
and/or its designee) or to consummate pursuant to Section 253 of the
Delaware Law a merger between Parent or another wholly owned subsidiary
of General Electric Company, a New York corporation ("GE"), and the
Company pursuant to which the stockholders of the Company (other than
the Company, any direct or indirect subsidiary of the Company, Parent or
any other direct or indirect wholly owned subsidiary of GE) will receive
as consideration an amount of cash consideration per share of Company
Common Stock at least equal to $47.25.
(C) The acquisitions of shares of Company Common Stock pursuant to
this Agreement and each other similar agreement between Parent and a
stockholder of the Company shall have been approved by the Board of
Directors of the Company for purposes of Section 203 of the Delaware
Law.
(D) The waiting periods applicable to the consummation of the
Option Purchase under the HSR Act shall have expired or been earlier
terminated.
(E) The FCC shall have issued a Final Order approving the FCC
Application, and such Final Order shall include the granting of such
waivers, if any, of the rules and regulations under the Communications
Act, as may be necessary to permit the purchase and sale contemplated
hereby. All the terms and conditions contained in the Final Order
required to be satisfied on or prior to the Closing shall have been
satisfied.
(F) No preliminary or permanent injunction or other order, decree
or ruling by any United States federal or state court of competent
jurisdiction or by any United States federal or state governmental,
regulatory or administrative agency or authority which prevents the
Option Purchase shall have been issued and remain in effect.
(G) No statute, rule or regulation shall have been enacted by any
United States federal or state governmental, regulatory or
administrative agency or authority that makes the consummation of the
Option Purchase illegal or would otherwise prevent the consummation of
the Option Purchase.
(H) The representations and warranties of the Stockholder contained
herein shall have been true and correct in all material respects as of
the date hereof and shall be true and correct in all material respects
at and as of the Closing Date as if made at and as of the Closing Date.
The Stockholder shall have performed in all material respects all of its
covenants and obligations required to be performed by it on or prior to
the Closing Date hereunder.
(c) At the Closing, the Stockholder shall deliver to Parent (or its
designee) all of the Shares by delivery of a certificate or certificates
evidencing such Shares in the denominations designated by Parent in its
exercise notice delivered pursuant to Section 5(b) (ii), duly endorsed to
Parent or accompanied by stock powers duly executed in favor of Parent,
with all necessary stock transfer stamps affixed.
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(d) At the Closing, the Parent shall deliver to the Stockholder a
check or checks payable in New York Clearing House (next-day) funds in an
amount equal to the product of $47.25 and the number of Shares purchased
hereunder.
6. Representation and Warranties of Parent. Parent represents and
warrants to the Stockholder as follows:
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) Parent has the requisite corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by Parent's
Board of Directors and no other corporate proceedings on the part of
Parent are necessary to authorize this Agreement and the consummation of
the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and (assuming the valid authorization,
execution and delivery of this Agreement by the Stockholder) is a valid
and binding obligation of Parent, enforceable in accordance with its
terms, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws relating to
or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by Parent do not,
and the performance of this Agreement by Parent will not, (i) conflict
with or violate the Certificate of Incorporation or By-Laws of Parent or
any of its subsidiaries, (ii) conflict with or violate any federal,
state, local or foreign law, statute, ordinance, rule, regulation,
permit, order, judgment or decree (collectively, "Laws") applicable to
Parent or any of its subsidiaries or by which any of their respective
properties is bound, or (iii) conflict with, result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of any lien, claim, security
interest or other charge or encumbrance (collectively, "Encumbrances")
on any of the properties or assets of Parent or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to
which Parent or any of its subsidiaries is a party or by which Parent or
any of its subsidiaries or any of their respective properties is bound,
except for any thereof that could not reasonably be expected to
materially impair the ability of Parent to perform its obligations
hereunder or to consummate the transactions contemplated hereby.
(d) The execution and delivery of this Agreement by Parent do not,
and the consummation of the purchase and sale of the Shares hereunder by
Parent will not, require Parent to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification
to, any governmental or regulatory authority, domestic or foreign
("Governmental Entity"), based on the Laws of any Governmental Entity,
except (i) the Communications Act and the HSR Act; and (ii) where the
failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, could not reasonably be
expected to materially impair the ability of Parent to perform its
obligations hereunder or to consummate the transactions contemplated
hereby.
(e) There is no suit, action, investigation or proceeding pending
or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its subsidiaries at law or in equity before or
by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, or before any arbitrator of any kind, that could reasonably be
expected to materially impair the ability of Parent to perform its
obligations hereunder or to consummate the transactions contemplated
hereby, and there is no judgment, decree, injunction, rule or order of
any court, governmental department, commission, board, bureau, agency,
instrumentality or arbitrator to which Parent or any of its subsidiaries
is subject that could reasonably be expected to materially impair the
ability of Parent to perform its obligations hereunder or to consummate
the transactions contemplated hereby.
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(f) Parent and its affiliates have, and on the Closing Date Parent
will have, funds in an amount sufficient to consummate the purchase and
sale of the Shares contemplated hereunder and the purchases and sales of
Company Common Stock under each other similar agreement between Parent
and a stockholder of the Company.
7. Representation and Warranties of the Stockholder. The Stockholder
represents and warrants to Parent as follows:
(a) If the Stockholder is a corporation, partnership or trust, the
Stockholder has been duly organized and is validly existing and in good
standing under the laws of the jurisdiction of its organization.
(b) If the Stockholder is a corporation, partnership or trust, the
Stockholder has all necessary corporate, partnership or trust power and
authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. If the
Stockholder is a corporation, partnership or trust, the execution,
delivery and performance of this Agreement by the Stockholder and the
consummation by the Stockholder of the transactions contemplated hereby
have been duly authorized by all necessary corporate, partnership or
trust action on the part of the Stockholder.
(c) This Agreement has been duly executed and delivered by the
Stockholder and (assuming the valid authorization, execution and
delivery of this Agreement by Parent) is a valid and binding obligation
of the Stockholder, enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general equitable principles
(whether considered in a proceeding in equity or at law).
(d) The execution and delivery of this Agreement by the Stockholder
do not, and the performance of this Agreement by the Stockholder will
not, (i) if the Stockholder is a corporation, partnership or trust,
conflict with or violate the Certificate of Incorporation or By-Laws, or
other organizational documents, of the Stockholder, (ii) conflict with
or violate any Law applicable to the Stockholder or by which any of its
properties is bound, or (iii) conflict with, result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of any Encumbrance on any of
the properties or assets of the Stockholder pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Stockholder is
a party or by which the Stockholder or any of its properties is bound,
except for any thereof that could not reasonably be expected to
materially impair the ability of the Stockholder to perform its
obligations hereunder or to consummate the transactions contemplated
hereby.
(e) The execution and delivery of this Agreement by the Stockholder
do not, and the consummation of the purchase and sale of the Shares
hereunder by the Stockholder will not, require the Stockholder to obtain
any consent, approval, authorization or permit of, or to make any filing
with or notification to, any Governmental Entity based on the Laws of
any Governmental Entity, except (i) the Communications Act and the HSR
Act; and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications,
could not reasonably be expected to materially impair the ability of the
Stockholder to perform its obligations hereunder or to consummate the
transactions contemplated hereby.
(f) There is no suit, action, investigation or proceeding pending
or, to the knowledge of the Stockholder, threatened against the
Stockholder at law or in equity before or by any federal, state,
municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or before any arbitrator
of any kind, that could reasonably be expected to materially impair the
ability of the Stockholder to perform its obligations hereunder or to
consummate the transactions contemplated hereby, and there is no
judgment, decree, injunction,
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rule or order of any court, governmental department, commission, board,
bureau, agency, instrumentality or arbitrator to which the Stockholder
is subject that could reasonably be expected to materially impair the
ability of the Stockholder to perform its obligations hereunder or to
consummate the transactions contemplated hereby.
(g) The Existing Shares are, and the Shares on the Closing Date
will be, owned beneficially and of record by the Stockholder. The
Existing Shares constitute all of the shares of Company Common Stock
owned of record or beneficially by the Stockholder. All of the Existing
Shares are issued and outstanding and, except as indicated on the
signature page hereto, the Stockholder does not own, of record or
beneficially, any warrants, options or other rights to acquire any
shares of Company Common Stock. If the Stockholder owns any such
warrants, options or other rights to acquire shares of Company Common
Stock, such Stockholder agrees, to the extent permitted by the terms
thereof, to exercise such warrants, options or other rights prior to
Closing. The Stockholder has sole voting power and sole power of
disposition with respect to all of the Existing Shares and will have
sole voting power and sole power of disposition with respect to all of
the Shares on the Closing Date, with no restrictions, other than those
contained in the Stockholders Agreement and subject to applicable
federal securities laws, on the Stockholder's rights of disposition
pertaining thereto. The Stockholder has good and valid title to the
Existing Shares and on the Closing Date will have good and valid title
to the Shares, free and clear of all Encumbrances, and, upon delivery
thereof to Parent against delivery of the consideration thereof or
pursuant to this Agreement, good and valid title thereto, free and clear
of all Encumbrances (other than any arising as a result of actions taken
or omitted by Parent), will pass to Parent.
(h) A true, correct and complete copy of the Stockholders Agreement
has been delivered to the Parent.
8. Investment Representations of the Stockholder. The Stockholder
represents and warrants to, and agrees with, Parent as follows:
(a) The Stockholder has been given the opportunity to obtain any
additional information or documents and to ask questions and receive
answers about such documents, the Company and the business and prospects
of the Company which the Stockholder deems necessary to evaluate the
merits and risks related to the Stockholder's determination to enter
into this Agreement and to consummate the transactions contemplated
hereby.
(b) The Stockholder is an "accredited investor," as such term is
defined in Rule 501 under the Securities Act. If the Stockholder is a
natural person, (A) the Stockholder's individual net worth, or joint net
worth with his or her spouse, at the time of the Closing, will exceed
$1,000,000 or (B) the Stockholder had (x) individual income in excess of
$200,000 in each of the two most recent years or (y) joint income with
his or her spouse in excess of $300,000 in each of those years, and the
Stockholder has a reasonable expectation of reaching the same income
level in the current year.
9. Agreements of the Stockholder. (a) The Stockholder hereby agrees,
while this Agreement is in effect, and except as contemplated hereby, not
to (i) sell, transfer, pledge, encumber, assign or otherwise dispose of,
enforce or permit the execution of the provisions of any redemption
agreement with the Company or enter into any contract, option or other
arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, pledge, encumbrance, assignment or other disposition
of, any of the Existing Shares, or any Shares acquired after the date
hereof, or any interest in any of the foregoing, except to the Parent, (ii)
grant any proxies or powers of attorney, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares or any
cash or other property described in Section 11 hereof, or any interest in
any of the foregoing, except to the Parent, (iii) consent or otherwise
agree to any amendment, waiver or other modification of the Stockholders
Agreement or the Certificate of Incorporation or By-laws of the Company or
its subsidiaries without the prior written consent of Parent or (iv) take
any action that would make any representation or warranty of the
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling the Stockholder from performing
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his obligations under this Agreement, or that would otherwise hinder or
delay the Parent from acquiring a majority of the outstanding Company
Common Stock, determined on a fully diluted basis.
(b) The Stockholder hereby agrees, while this Agreement is in effect,
to notify promptly Parent of the number of any additional shares of Company
Common Stock acquired by the Stockholder, if any, after the date hereof.
(c) The Stockholder hereby agrees, except with respect to Parent and
its affiliates, on or after the date hereof, that the Stockholder shall not
initiate, solicit or encourage, directly or indirectly, any inquiries or
the making of any proposal with respect to any matter described in Section
9(a) hereof or any Competing Transaction, participate in any negotiations
concerning, or provide to any other person any information or data relating
to the Company or its subsidiaries for the purpose of, or have any
substantive discussions with, any person relating to, or otherwise
cooperate with or assist or participate in, or facilitate, any inquiries or
the making of any proposal which constitutes, or would reasonably be
expected to lead to, any effort or attempt by any other person to seek to
effect any matter described in Section 9(a) hereof or any Competing
Transaction, or agree to or endorse any Competing Transaction. The
Stockholder agrees immediately to cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any possible Competing Transactions or any
matter described in Section 9(a) hereof.
(d) Promptly following the execution hereof, the Stockholder shall
tender or cause to be tendered a copy of this Agreement to the Company with
a request that it be filed by the Company with the Secretary of the FCC in
conformity with Section 73.3613 of the FCC's rules.
10. Certain Covenants. (a) Parent hereby agrees that, in the event
that Parent purchases shares of Company Common Stock pursuant to the
Option, it will propose to the Company a merger as promptly as reasonably
practicable thereafter, on terms and subject to conditions substantially
the same as those provided for in the Merger Agreement, between itself or
another wholly owned subsidiary of GE and the Company pursuant to which the
stockholders of the Company (other the Company, any direct or indirect
subsidiary of the Company, Parent or any other direct or indirect
subsidiary of the GE) will receive an amount of cash consideration per
share of Company Common Stock at least equal to $47.25.
(b) In the event that Parent exercises the Option pursuant to Section
5, the Stockholder agrees that it will take all actions reasonably
requested by Parent to seek to cause the Stockholders Agreement to be
amended prior to the Closing, pursuant to a written instrument in form and
substance reasonably satisfactory to Parent, so that the rights of a member
of the Wesray Group (as defined in the Stockholders Agreement) under
Sections 6 and 7 of the Stockholders Agreement shall inure to the benefit
of any purchaser of the Company Common Stock owned by the Stockholder,
including without limitation by executing the foregoing instrument
providing for such amendment.
(c) In the event that, within one year from the date hereof, Parent or
another subsidiary of GE consummates a transaction pursuant to which it
acquires more than 50% of the outstanding Company Common Stock or effects a
merger or similar business combination with the Company pursuant to which
it acquires all of the Company Common Stock (any such transaction, an
"Alternate Transaction") and, in respect of any Alternate Transaction, the
per share consideration paid to the largest number of stockholders of the
Company pursuant to the Alternate Transaction exceeds the purchase price
per Share hereunder pursuant to the Option Purchase (the amount of such
excess per share, the "Excess Consideration"), then Parent shall pay to the
Stockholder promptly following the consummation of the Alternate
Transaction an amount in cash equal to the amount of the Excess
Consideration times the number of such Stockholder's Shares purchased
hereunder pursuant to the Option Purchase.
(d) If, solely as a result of an acquisition of shares of Company
Common Stock by Parent or any other subsidiary of GE, the Company is
required to make a Change of Control Offer (as defined in the Indenture
referred to below) pursuant to Section 1010 of the Indenture pursuant to
which on the date hereof the Company has issued and outstanding $60 million
aggregate principal amount of Senior Subordinated Notes due July 15, 2003
(the "Notes"), as in effect on the date hereof (the "Indenture"),
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then, so long as such Change of Control Offer is made in accordance with
the terms of the Indenture, Parent shall be obligated, within five business
days of the commencement of the Change of Control Offer, to offer to
purchase or to cause another Person to offer to purchase from the Company
on the Change of Control Payment Date (as defined in the Indenture)
indebtedness of the Company (i) in an aggregate principal amount equal to
the aggregate Repurchase Price of the Notes repurchased by the Company on
such Change of Control Payment Date pursuant to Section 1010 of the
Indenture and (ii) with terms, conditions, covenants and other provisions
substantially the same as the Notes.
11. Adjustment. If, between the date of this Agreement and the
Closing, the Company Common Stock shall have been changed into a different
number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the purchase price for the Shares hereunder shall be
correspondingly adjusted to reflect such event. If, between the date of
this Agreement and the Closing Date, the Company declares, pays or makes
any dividend or other distribution of any kind of cash or property on the
Company Common Stock, the Stockholder shall receive and hold such cash or
property for the benefit of the Parent and shall deliver such cash or
property, with appropriate instruments of transfer, if necessary, to the
Parent on the Closing Date (or, in the event of a payment date occurring
after the Closing Date, on the date such payment is received).
12. Licensee Control. Notwithstanding anything to the contrary
contained herein, without first obtaining the consent of the FCC through
grant of the FCC Application, Parent, its employees and agents shall not
directly or indirectly control, manage, supervise or direct, or attempt to
control, manage, supervise or direct, the Company or any of its broadcast
stations, and such control, management, supervision and direction shall be
the sole responsibility of and in the complete discretion of the Company.
13. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute
and deliver such additional documents and take all such further action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
14. Survival. The covenants of the parties hereto, and the
representations and warranties of the parties hereto, shall survive until
the earlier to occur of the Effective Time and the Closing.
15. Miscellaneous. (a) This Agreement (i) constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and
(ii) shall not be assigned by operation of law or otherwise, provided that
Parent may assign its rights and obligations hereunder to any direct or
indirect wholly owned subsidiary of GE, but no such assignment shall
relieve Parent of its obligations hereunder. Subject to the foregoing, this
Agreement will be binding upon, inure to the benefit of, and be enforceable
by the parties hereto and their respective successors (including any
successor in interest by merger, sale of all or substantially all of the
assets or otherwise) and assigns.
(b) This Agreement may not be amended or supplemented, except upon the
execution and delivery of a written agreement executed by the parties
hereto. The Parent or the Stockholder may, from time to time, waive, on
such terms and conditions as the Parent or the Stockholder, as the case may
be, may specify in such instrument, any of the requirements of this
Agreement. Any such amendment shall be binding upon the parties thereto and
any such waiver shall be binding upon the Parent or the Stockholder, as the
case may be, executing the same. No such waiver shall extend to any
subsequent or other event or circumstance or impair any right consequent
thereon.
(c) All notices and other communications hereunder shall be in writing
and shall be deemed given (i) on the date delivered, if delivered
personally, (ii) on the first Business Day following the deposit thereof
with Federal Express, if sent by Federal Express, and (iii) on the fourth
Business Day following the mailing thereof with postage prepaid, if mailed
by registered or certified mail (return receipt
B-8
<PAGE> 66
requested), in each case to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to the Stockholder, to it at its address set forth on the
signature page hereof; and
(ii) if to the Parent, to it at:
National Broadcasting Company, Inc.
30 Rockefeller Center
New York, New York 10112
Attention: Senior Vice President and Chief
Financial Officer
with copies to:
National Broadcasting Company, Inc.
30 Rockefeller Center
New York, New York 10112
Attention: General Counsel
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Charles I. Cogut, Esq.
(d) This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(e) The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were 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 of this Agreement in any court of the
United States located in the State of New York or in the Chancery Courts of
the State of Delaware (and any appellate courts therefrom), this being in
addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of (i) the United States District Court
for the Southern District of New York in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement
to the extent such court would have subject matter jurisdiction with
respect to such dispute and (ii) the Chancery Courts of the State of
Delaware otherwise, and (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction or venue by motion or other request for
leave from any such court and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than such courts.
(f) This Agreement may be executed in two counterparts, each of which
shall be deemed to be an original, but both of which shall constitute one
and the same Agreement.
(g) 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.
(h) 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
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 in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to
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<PAGE> 67
the fullest extent possible.
(i) If the FCC should determine that this Agreement is inconsistent
with Company's licensee obligations or is otherwise contrary to FCC
policies, rules and regulations, the parties shall reform this Agreement in
good faith and recast them in terms that are likely to cure the defects
perceived by the FCC and return a balance of benefits to both parties
comparable to the balance of benefits provided by this Agreement in its
current terms. If, after such good faith negotiations, either party
determines that recasting this Agreement to meet the defects perceived by
the FCC is impracticable, either party may terminate this Agreement without
further liability on 30 days' prior written notice. If termination shall
occur pursuant to this paragraph, such termination shall extinguish and
cancel this Agreement without further liability on the part of either party
to the other.
IN WITNESS WHEREOF, Parent and the Stockholder have caused this Agreement
to be duly executed as of the day and year first above written.
NATIONAL BROADCASTING COMPANY, INC.
By:.................................
Name:
Title:
THE STOCKHOLDER:
....................................
(Print Name)
By:.................................
Name:
Title:
Number of Existing Shares: .........
Options, Warrants or other Rights:
.....................................
....................................
....................................
(Insert Number and Describe)
Address:
....................................
....................................
....................................
....................................
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<PAGE> 68
EXHIBIT A
STOCKHOLDER CONSENT
ACTION TAKEN BY THE WRITTEN
CONSENT OF STOCKHOLDERS
OF
OUTLET COMMUNICATIONS, INC.
, 1995
The undersigned stockholder of Outlet Communications, Inc. , a Delaware
corporation (the "Corporation"), acting by written consent in lieu of a meeting
pursuant to Section 228 of the General Corporation Law of the State of Delaware,
hereby consents to the adoption of and adopts the following resolution with
respect to each share of the capital stock of the Corporation owned of record by
such stockholder on the date hereof:
RESOLVED, that the Merger Agreement, dated as of August , 1995 (the
"Merger Agreement"), among the Corporation, National Broadcasting Company, Inc.,
a Delaware corporation ("NBC"), and CO Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of NBC, a copy of which has been
furnished to the stockholder, be, and it hereby is adopted and approved by the
stockholder, and that the Merger (as defined in the Merger Agreement) and the
other transactions contemplated by the Merger Agreement be, and they hereby are,
approved and ratified in all respects.
....................................
....................................
(Print Name)
By: ................................
Name:...........................
Title:..........................
Number of Shares:...................
Address of the stockholder:
....................................
....................................
....................................
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<PAGE> 69
ANNEX C
[GOLDMAN, SACHS & CO. LETTERHEAD]
August 2, 1995
Board of Directors
Outlet Communications, Inc.
23 Kenney Drive
Cranston, RI 02920
Gentlemen and Madame:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Class A Common Stock, par value $.01 per share (the
"Shares"), of Outlet Communications, Inc. (the "Company") of the $47.25 per
Share in cash (the "Consideration") to be received by such holders pursuant to
the Merger Agreement dated as of August 2, 1995 between National Broadcasting
Company, Inc. ("Buyer"), CO Acquisition Corporation, a wholly owned subsidiary
of Buyer and the Company (the "Agreement").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain of the negotiations leading to, the
Agreement. We have also provided certain investment banking services to Buyer
and to General Electric Company (Buyer's parent company) from time to time and
may provide investment banking services to Buyer and General Electric Company in
the future.
In connection with this opinion, we have reviewed, among other things, the
Agreement; Annual Reports to Stockholders and Annual Reports on Form 10-K of the
Company for the five years ended December 31, 1994; certain interim reports to
stockholders and the quarterly Report on Form 10-Q for the three months ended
March 31, 1995; certain other communications from the Company to its
stockholders; and certain internal financial analyses and forecasts for the
Company prepared by its management. We also have held discussions with members
of the senior management of the Company regarding its past and current business
operations, financial condition and future prospects. In addition, we have
reviewed the reported price and trading activity for the Shares, compared
certain financial and stock market information for the Company with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the television broadcasting industry specifically and in other industries
generally and performed such other studies and analyses as we considered
appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of the Company or any of
its subsidiaries and we have not been furnished with any such evaluation or
appraisal.
Based upon the foregoing and such other matters as we consider relevant, it
is our opinion that as of the date hereof the $47.25 per Share in cash to be
received by the holders of Shares pursuant to the Agreement is fair to such
holders.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
GOLDMAN, SACHS & CO.
[GOLDMAN, SACHS & CO. LETTERHEAD]
<PAGE> 70
ANNEX D
SECTION 262
OF THE
DELAWARE GENERAL CORPORATION LAW
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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<PAGE> 71
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of
D-2
<PAGE> 72
their shares have not been reached by the surviving or resulting corporation. If
the petition shall be filed by the surviving or resulting corporation, the
petition shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and place
fixed for the hearing of such petition by registered or certified mail to the
surviving or resulting corporation and to the stockholders shown on the list at
the addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall
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<PAGE> 73
be dismissed as to any stockholder without the approval of the Court, and such
approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
262, L. '94, eff. 7-1-94.)
D-4
<PAGE> 1
Consent of Independent Auditors
We agree to the incorporation by reference in this information statement of
our report dated February 10, 1995, with respect to the financial statements of
Outlet Communications, Inc.
/s/ Ernst & Young LLP
Providence, Rhode Island
January 8, 1996
