SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 8, 1999
VIACOM, INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-9553 04-2949533
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
1515 Broadway, New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 258-6000
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2
Item 5. Other Events.
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On October 8, 1999, Viacom Inc., a Delaware corporation
("Viacom"), and CBS Corporation, a Pennsylvania corporation ("CBS"), entered
into an Amended and Restated Agreement and Plan of Merger, (the "Restated Merger
Agreement"), attached hereto as Exhibit 2.1, amending and restating the terms of
the Agreement and Plan of Merger between CBS and Viacom, dated September 6,
1999. The Restated Merger Agreement provides that, at the effective time of the
merger, holders of CBS Series B Participating Preferred Stock, par value $1.00
per share ("CBS Series B Preferred Stock"), will exchange their CBS Series B
Preferred Stock for Viacom Series C Preferred Stock, par value $.01 per share
(the "Viacom Series C Preferred Stock"). CBS is expected to issue approximately
$485 million of Series B Preferred Stock to Gaylord Entertainment Company
("Gaylord") in connection with the acquisition of two Gaylord subsidiaries that
hold a television station serving Dallas, Texas.
Attached as Exhibit A-1 to the Restated Merger Agreement is a
revised Amended and Restated Certificate of Incorporation that provides, among
other things, for the authorization of the Viacom Series C Preferred Stock.
The entire text of the Restated Merger Agreement, together
with the exhibits thereto, are attached hereto as Exhibit 2.1 and incorporated
herein by reference.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
(a) Exhibits.
2.1 Amended and Restated Agreement and Plan of Merger between
Viacom Inc. and CBS Corporation, dated as of September 6, 1999
as amended and restated as of October 8, 1999.
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EXHIBIT INDEX
Exhibit
No. Description
- ------ -----------
2.1 Amended and Restated Agreement and Plan of Merger between Viacom Inc.
and CBS Corporation, dated as of September 6, 1999 as amended and
restated as of October 8, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
VIACOM INC.
Date: October 12, 1999 /s/ Michael D. Fricklas
---------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President, General
Counsel and Secretary
CONFORMED COPY
================================================================================
AMENDED AND RESTATED AGREEMENT
AND PLAN OF MERGER
Between
VIACOM INC.
and
CBS CORPORATION
Dated as of September 6, 1999,
as amended and restated as of October 8, 1999
================================================================================
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TABLE OF CONTENTS
Section Page
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ARTICLE I
THE MERGER
1.01. The Merger.............................................................2
1.02. Effective Time; Closing................................................2
1.03. Effect of the Merger...................................................3
1.04. Certificate of Incorporation and By-Laws...............................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities...............................................3
2.02. Exchange of Certificates...............................................4
2.03. Stock Transfer Books...................................................7
2.04. Stock Options and Other Stock Plans....................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBS
3.01. Organization and Qualification; Subsidiaries...........................9
3.02. Certificate of Incorporation and By-Laws...............................9
3.03. Capitalization.........................................................9
3.04. Authority Relative to Agreement.......................................10
3.05. No Conflict; Required Filings and Consents............................11
3.06. Permits and Licenses; Contracts.......................................12
3.07. SEC Filings; Financial Statements.....................................12
3.08. Absence of Certain Changes or Events..................................13
3.09. Absence of Litigation.................................................14
3.10. Employee Benefit Plans................................................14
3.11. Labor Matters.........................................................16
3.12. Environmental Matters.................................................16
3.13. Trademarks, Patents and Copyrights....................................17
3.14. Taxes.................................................................17
3.15. Tax Matters...........................................................18
3.16. Year 2000 Compliance..................................................18
3.17. Opinion of Financial Advisors.........................................19
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Section Page
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3.18. Vote Required.........................................................19
3.19. Brokers...............................................................19
3.20. Pennsylvania Law......................................................19
3.21. Rights Agreement......................................................19
3.22. Gaylord...............................................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
4.01. Organization and Qualification; Subsidiaries..........................20
4.02. Certificate of Incorporation and By-Laws..............................21
4.03. Capitalization........................................................21
4.04. Authority Relative to Agreement.......................................22
4.05. No Conflict; Required Filings and Consents............................22
4.06. Permits and Licenses; Contracts.......................................23
4.07. SEC Filings; Financial Statements.....................................24
4.08. Absence of Certain Changes or Events..................................25
4.09. Absence of Litigation.................................................25
4.10. Employee Benefit Plans................................................26
4.11. Labor Matters.........................................................27
4.12. Environmental Matters.................................................27
4.13. Trademarks, Patents and Copyrights....................................28
4.14. Taxes.................................................................28
4.15. Tax Matters...........................................................29
4.16. Year 2000 Compliance..................................................29
4.17. Opinion of Financial Advisors.........................................30
4.18. Vote Required.........................................................30
4.19. Section 203 of Delaware Law...........................................30
4.20. Brokers...............................................................30
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by CBS Pending the Merger.........................30
5.02. Conduct of Business by Viacom Pending the Merger......................33
5.03. Other Actions.........................................................36
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Section Page
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Joint Proxy Statement.........................36
6.02. Stockholders' Meetings................................................39
6.03. Appropriate Action; Consents; Filings.................................40
6.04. Access to Information; Confidentiality................................41
6.05. No Solicitation of Competing Transactions.............................41
6.06. Directors' and Officers' Indemnification and Insurance................43
6.07. Notification of Certain Matters.......................................43
6.08. Tax Treatment.........................................................44
6.09. Stock Exchange Listing................................................44
6.10. Public Announcements..................................................44
6.11. Viacom's Directors....................................................44
6.12. Rights Agreement......................................................45
6.13. Assumption of Debt and Leases.........................................45
6.14. Affiliates of CBS.....................................................45
6.15. Prior Service.........................................................45
6.16. Employee Matters......................................................46
6.17. Gaylord...............................................................46
6.18. Gaylord Tax Matters...................................................46
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party...........................46
7.02. Conditions to the Obligations of Viacom...............................47
7.03. Conditions to the Obligations of CBS..................................48
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination...........................................................49
8.02. Effect of Termination.................................................50
8.03. Amendment.............................................................50
8.04. Waiver................................................................50
8.05. Expenses..............................................................50
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Section Page
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ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and Agreements............51
9.02. Notices...............................................................52
9.03. Interpretation, Certain Definitions...................................53
9.04. Severability..........................................................54
9.05. Entire Agreement; Assignment..........................................55
9.06. Parties in Interest...................................................55
9.07. Specific Performance..................................................55
9.08. Governing Law.........................................................55
9.09. Consent to Jurisdiction...............................................55
9.10. Counterparts..........................................................56
9.11. WAIVER OF JURY TRIAL..................................................56
EXHIBITS
Exhibit A-1 Restated Certificate of Incorporation
Exhibit A-2 By-laws
Exhibit 6.14 Form of CBS Affiliate Letter
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Index of Defined Terms
Defined Term Location of Definition
- ------------ ----------------------
affiliate......................................................Section 9.03(a)
Agreement......................................................Recitals
Articles of Merger.............................................Section 1.02
beneficial owner...............................................Section 9.03(b)
Blockbuster....................................................Section 4.02
Blockbuster Options............................................Section 4.03
Blue Sky Laws..................................................Section 3.05(b)
business day...................................................Section 9.03(c)
CBS............................................................Recitals
CBS Alternative Transaction Fee................................Section 8.05(b)
CBS Benefit Plans..............................................Section 3.10(a)
CBS Common Stock...............................................Section 2.01(a)
CBS Disclosure Schedule........................................Article III
CBS FCC Licenses...............................................Section 3.06(c)
CBS Financial Advisor..........................................Section 3.17
CBS Indentures.................................................Section 6.13(a)
CBS Licensed Facilities........................................Section 3.06(c)
CBS Material Adverse Effect....................................Section 3.01
CBS Options....................................................Section 2.04(a)
CBS Permits....................................................Section 3.06(a)
CBS Preferred Stock............................................Section 3.03
CBS Rights Agreement...........................................Section 3.03
CBS SEC Reports................................................Section 3.07(a)
CBS Series B Preferred Stock...................................Section 2.01(a)
CBS Stock Option Plans.........................................Section 2.04(a)
CBS Superior Proposal..........................................Section 6.05(c)
CBS Systems....................................................Section 3.16(b)
CBS Year 2000 Compliant........................................Section 3.16(b)
CBS Year 2000 Plan.............................................Section 3.16(a)
CERCLA.........................................................Section 3.12(d)
Certificate of Merger..........................................Section 1.02
Certificates...................................................Section 2.02(b)
Closing........................................................Section 1.02
Closing Date...................................................Section 1.02
Code...........................................................Recitals
Communications Act.............................................Section 3.05(b)
Competing Transaction..........................................Section 6.05(b)
Confidentiality Agreement......................................Section 6.04(c)
Continuing Employees...........................................Section 6.15
control........................................................Section 9.03(d)
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Defined Term Location of Definition
- ------------ ----------------------
controlled by..................................................Section 9.03(d)
Delaware Law...................................................Recitals
Effective Time.................................................Section 1.02
Environmental Laws.............................................Section 3.12(d)
Environmental Permits..........................................Section 3.12(d)
ERISA..........................................................Section 3.10(a)
Exchange Act...................................................Section 2.04(c)
Exchange Agent.................................................Section 2.02(a)
Exchange Fund..................................................Section 2.02(a)
Exchange Ratio.................................................Section 2.01(a)
Expenses.......................................................Section 8.05(a)
FCC............................................................Section 3.05(b)
Gaylord........................................................Recitals
Gaylord Agreement..............................................Recitals
Gaylord Proxy..................................................Section 3.22
Governmental Authority.........................................Section 9.03(e)
Hazardous Materials............................................Section 3.12(d)
HSR Act........................................................Section 3.05(b)
Infinity.......................................................Section 3.02
IRS............................................................Section 3.10(a)
King World.....................................................Section 3.03
knowledge......................................................Section 9.03(f)
Laws...........................................................Section 3.05(a)
Merger.........................................................Recitals
NYSE...........................................................Section 3.03
Order..........................................................Section 6.03(b)
Parent.........................................................Recitals
Parent Stockholder Agreement...................................Recitals
Parent Voting Agreements.......................................Recitals
Pending Transactions...........................................Section 5.01
Pennsylvania Law...............................................Recitals
person.........................................................Section 9.03(g)
Preferred Exchange Ratio.......................................Section 2.01(a)
Proxy Statement................................................Section 6.01(a)
Registration Statement.........................................Section 6.01(a)
Representatives................................................Section 6.04(a)
Rights.........................................................Section 3.03
SEC............................................................Article III
Securities Act.................................................Section 3.05(b)
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Defined Term Location of Definition
- ------------ ----------------------
Shares.........................................................Section 2.01(a)
Split-off......................................................Section 5.02
Stockholders' Meeting..........................................Section 6.02
subsidiaries...................................................Section 9.03(h)
subsidiary.....................................................Section 9.03(h)
Substituted Option.............................................Section 2.04(a)
Surviving Corporation..........................................Section 1.01
Tax............................................................Section 3.14(a)
Taxes..........................................................Section 3.14(a)
Terminating CBS Breach.........................................Section 8.01(f)
Terminating Viacom Breach......................................Section 8.01(e)
under common control with......................................Section 9.03(d)
Viacom.........................................................Recitals
Viacom Benefit Plans...........................................Section 4.10(a)
Viacom Class A Common Stock....................................Recitals
Viacom Class B Common Stock....................................Section 2.01(a)
Viacom Disclosure Schedule.....................................Article IV
Viacom Employee Arrangements...................................Section 6.16(a)
Viacom FCC Licenses............................................Section 4.06(c)
Viacom Financial Advisor.......................................Section 4.17
Viacom Licensed Facilities.....................................Section 4.06(c)
Viacom Material Adverse Effect.................................Section 4.01
Viacom Options.................................................Section 4.03
Viacom Permits.................................................Section 4.06(a)
Viacom Preferred Stock.........................................Section 4.03
Viacom Proposal................................................Recitals
Viacom SEC Reports.............................................Section 4.07(a)
Viacom Series C Preferred Stock................................Section 2.01(a)
Viacom Stock Option Plans......................................Section 4.03
Viacom Systems.................................................Section 4.16(b)
Viacom Year 2000 Compliant.....................................Section 4.16(b)
Viacom Year 2000 Plan..........................................Section 4.16(a)
<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of
September 6, 1999, as amended and restated as of October 8, 1999 (this
"Agreement"), between VIACOM INC., a Delaware corporation ("Viacom"), and CBS
CORPORATION, a Pennsylvania corporation ("CBS").
WHEREAS, Viacom and CBS entered into an Agreement and Plan of
Merger dated as of September 6, 1999 (the "Original Merger Agreement"), and they
now desire to amend and restate the Original Merger Agreement (i) to provide,
among other things, for the conversion at the Effective Time (as defined in
Section 1.02), by virtue of the Merger (as defined below) and without any action
on the part of Viacom, CBS or the holders of any securities of CBS or Viacom, of
each outstanding share of CBS Series B Preferred Stock (as defined in Section
2.01), if any, into the right to receive 1.085 shares of Viacom Series C
Preferred Stock (as defined in Section 2.01) and (ii) to restate Exhibit A-1 to
provide for the creation of the Viacom Series C Preferred Stock (it being
understood that all references herein to this "Agreement" refer to the Original
Merger Agreement as amended and restated hereby and that all references herein
to the date hereof or the date of this Agreement refer to September 6, 1999);
WHEREAS, Gaylord Entertainment Company ("Gaylord") and certain
of its subsidiaries and CBS and certain of its subsidiaries are parties to an
Agreement and Plan of Merger dated as of April 9, 1999, as amended as of October
8, 1999 (the "Gaylord Agreement"), pursuant to which Gaylord will receive shares
of CBS Series B Preferred Stock;
WHEREAS, the Boards of Directors of CBS and Viacom have
determined that it is in the best interests of their respective companies and
stockholders to combine their respective businesses in a "merger of equals"
transaction to be effected as set forth in this Agreement;
WHEREAS, the Board of Directors of CBS has (i) determined that
the merger of CBS with and into Viacom on the terms set forth in this Agreement
(the "Merger") pursuant to the General Corporation Law of the State of Delaware
("Delaware Law") and the Business Corporation Law of the Commonwealth of
Pennsylvania ("Pennsylvania Law") is fair to CBS and the holders of Shares (as
defined in Section 2.01) and is in the best interests of CBS and (ii) approved
this Agreement, the Merger and the other transactions contemplated hereby and
has recommended that the shareholders of CBS adopt this Agreement;
WHEREAS, the Board of Directors of Viacom has declared to be
advisable this Agreement, the Merger and the other transactions contemplated
hereby and has recommended that the holders of the Class A Common Stock, par
value $.01 per share, of Viacom (the "Viacom Class A Common Stock") adopt this
Agreement (the "Viacom Proposal");
WHEREAS, concurrently with the execution of this Agreement and
as an inducement to CBS to enter into this Agreement, National Amusements, Inc.,
a Maryland corporation and the holder of a majority of the shares of Viacom
Class A Common Stock ("Parent"), and CBS have entered into (i) a Stockholder
Agreement (the "Parent Stockholder Agreement") pursuant to which Parent has
agreed, among other things, to cause the election of
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eight members of the Board of Directors of Viacom designated by CBS for a period
of three years following the Merger and (ii) a Voting Agreement (together with
the Parent Stockholder Agreement, the "Parent Voting Agreements") pursuant to
which Parent has agreed, among other things, to vote its shares of Viacom Class
A Common Stock in favor of adoption of this Agreement and the other transactions
contemplated by this Agreement and to take certain other actions in support of
the Merger;
WHEREAS, for Federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization under the provisions of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, as an inducement to Viacom to enter into this
Agreement, concurrently with the execution and delivery of this Agreement, Mel
Karmazin is entering into an employment agreement with Viacom, to be effective
at the Effective Time (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and intending to be legally
bound hereby, Viacom and CBS hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Section 252 of
Delaware Law and Section 1921 of Pennsylvania Law, at the Effective Time CBS
shall be merged with and into Viacom. As a result of the Merger, the separate
corporate existence of CBS shall cease and Viacom shall be the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. The closing of the
Merger (the "Closing") shall take place on the first business day after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (such date, the "Closing Date"). On the Closing Date, the parties hereto
shall cause the Merger to be consummated by filing (a) a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed and acknowledged in
accordance with, Section 252 of Delaware Law and (b) articles of merger (the
"Articles of Merger") with the Department of State of the Commonwealth of
Pennsylvania, in such form as is required by, and executed in accordance with,
Section 1927 of Pennsylvania Law. The term "Effective Time" means the date and
time of the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware (or such later time as may be agreed by the parties hereto
and specified in the
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Certificate of Merger). The Closing will be held at the offices of Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022 (or such other place as
the parties may agree).
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 and Pennsylvania Law. Without limiting the generality of the
foregoing, at the Effective Time all the property, rights, privileges, powers
and franchises of CBS shall vest in the Surviving Corporation and all debts,
liabilities, obligations, restrictions, disabilities and duties of CBS shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation and By-Laws. (a)
The Restated Certificate of Incorporation of Viacom, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time to be and
read in its entirety in the form set forth as Exhibit A-1 and, as so amended,
such Restated Certificate of Incorporation shall be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-laws of Viacom, as in effect immediately prior to
the Effective Time, shall be amended as of the Effective Time so as to read in
their entirety in the form set forth as Exhibit A-2 and, as so amended, such
By-laws shall be the by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
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 Viacom, CBS or the
holders of any of the following securities:
(a) (i) Each share of Series B Participating Preferred Stock,
par value $1.00 per share, of CBS ("CBS Series B Preferred Stock"), if
any, issued and outstanding immediately prior to the Effective Time
shall be converted into the right to receive 1.085 shares (the
"Preferred Exchange Ratio") of Series C Preferred Stock, par value $.01
per share, of Viacom ("Viacom Series C Preferred Stock") and (ii) each
share of common stock, par value $1.00 per share, of CBS ("CBS Common
Stock"; all issued and outstanding shares of CBS Common Stock and all
issued and outstanding shares of CBS Series B Preferred Stock being
hereinafter collectively referred to as the "Shares") issued and
outstanding immediately prior to the Effective Time (other than any
Shares to be cancelled or converted pursuant to Section 2.01(b)) shall
be converted, subject to Section 2.02(e), into the right to receive
1.085 shares (the "Exchange Ratio") of Class B
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Common Stock, par value $.01 per share, of Viacom (the "Viacom Class B
Common Stock").
(b) Each Share held in the treasury of CBS and each Share
owned by Viacom (in each case, other than Shares held by benefit plans
or trusts (including Rabbi trusts)) immediately prior to the Effective
Time shall be cancelled and extinguished without any conversion thereof
and no payment shall be made with respect thereto, and each Share owned
by any direct or indirect wholly owned subsidiary of Viacom or CBS
immediately prior to the Effective Time shall be converted into the
right to receive a number of shares of Viacom Class B Common Stock
equal to the Exchange Ratio.
(c) If, prior to the Effective Time (and as permitted by
Sections 5.01 and/or 5.02), the outstanding shares of CBS Common Stock
or shares of Viacom Class B Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or class of
shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split,
combination or exchange of shares or other similar change in
capitalization, then an appropriate and proportionate adjustment shall
be made to the Exchange Ratio and, in the case of any such adjustments
to the Viacom Class B Common Stock, then an appropriate and
proportionate adjustment shall be made to the Preferred Exchange Ratio.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Viacom shall deposit, or shall cause to be deposited, with such bank or trust
company designated by Viacom and reasonably acceptable to CBS (the "Exchange
Agent"), for the benefit of the holders of Shares, for exchange in accordance
with this Article II through the Exchange Agent, certificates representing the
shares of Viacom Class B Common Stock and certificates representing the shares
of Viacom Series C Preferred Stock (such certificates for shares of Viacom Class
B Common Stock and such certificates for shares of Viacom Series C Preferred
Stock, together with any dividends or distributions with respect thereto and any
cash in lieu of fractional shares of Viacom Class B Common Stock or Viacom
Series C Preferred Stock payable pursuant to Section 2.02(e), being hereinafter
referred to as the "Exchange Fund") issuable pursuant to Section 2.01 in
exchange for outstanding Shares. The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Viacom Class B Common Stock and the Viacom
Series C Preferred Stock contemplated to be issued pursuant to Section 2.01 out
of the Exchange Fund. Except as contemplated by Section 2.02(f) hereof, the
Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Viacom shall cause the Exchange Agent to mail to each holder of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
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5
the Exchange Agent, and shall be in customary form) and (ii) instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing whole shares of Viacom Class B Common Stock or the shares of Viacom
Series C Preferred Stock, as the case may be, together with any dividends or
distributions with respect thereto and any cash in lieu of fractional shares.
Upon surrender to the Exchange Agent of a Certificate for exchange and
cancellation, together with such letter of transmittal, duly executed, and such
other documents as may be required pursuant to such instructions, the holder of
such Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Viacom Class B Common Stock or that
number of shares of Viacom Series C Preferred Stock, as the case may be, which
such holder has the right to receive in respect of the Shares formerly
represented by such Certificate (after taking into account all Shares then held
by such holder), cash in lieu of fractional shares of Viacom Class B Common
Stock or Viacom Series C Preferred Stock to which such holder is entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c), and the Certificate so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of Shares that is not registered in the transfer records of CBS, a
certificate representing the proper number of shares of Viacom Class B Common
Stock or the proper number of shares of Viacom Series C Preferred Stock, as the
case may be, may be issued to a transferee if the Certificate representing such
Shares is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
2.02, each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the certificate
representing shares of Viacom Class B Common Stock or the certificate
representing shares of Viacom Series C Preferred Stock, as the case may be, cash
in lieu of any fractional shares of Viacom Class B Common Stock or Viacom Series
C Preferred Stock to which such holder is entitled pursuant to Section 2.02(e)
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Viacom
Class B Common Stock and Viacom Series C Preferred Stock. No dividends or other
distributions with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Viacom
Class B Common Stock or Viacom Series C Preferred Stock represented thereby, and
no cash payment in lieu of fractional shares shall be paid to any such holder
pursuant to Section 2.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, Tax (as defined in
Section 3.14) or other applicable Laws (as defined in Section 3.05), following
surrender of any such Certificate, there shall be paid to the record holder
thereof, without interest, (i) promptly, the amount of any cash payable with
respect to a fractional share of Viacom Class B Common Stock or Viacom Series C
Preferred Stock to which such holder is entitled pursuant to Section 2.02(e) and
the amount of dividends or other distributions with a record date after the
Effective Time and theretofore paid with respect to such whole shares of Viacom
Class B Common Stock or such shares of Viacom Series C Preferred Stock, and (ii)
at the appropriate payment date, the amount of dividends or other
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6
distributions with a record date after the Effective Time and a payment date
occurring after surrender, payable with respect to such whole shares of Viacom
Class B Common Stock or such shares of Viacom Series C Preferred Stock.
(d) No Further Rights in CBS Common Stock. All shares of
Viacom Class B Common Stock and all shares of Viacom Series C Preferred Stock
issued upon conversion of the Shares in accordance with the terms hereof
(including any cash paid pursuant to Sections 2.02(c) or (e)) shall be deemed to
have been issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip
representing fractional shares of Viacom Class B Common Stock or shares of
Viacom Series C Preferred Stock shall be issued upon the surrender for exchange
of Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Viacom. Each holder
of a fractional share interest shall be paid an amount in cash equal to the
product obtained by multiplying (i) such fractional share interest to which such
holder (determined after taking into account all fractional share interests then
held by such holder) would otherwise be entitled by (ii) (x) in the case of
shares of Viacom Class B common stock, the closing price for a share of Viacom
Class B Common Stock on the Consolidated Tape, Network A, as reported in The
Wall Street Journal (Northeast edition) or any other authoritative source on the
first trading day immediately following the Effective Time or (y) in the case of
shares of Viacom Series C Preferred Stock, the product of 1000 multiplied by
such closing price. From time to time after the Effective Time, as promptly as
practicable after the determination of the amount of cash, if any, to be paid to
any holders of fractional share interests who have surrendered their
Certificates to the Exchange Agent, the Exchange Agent shall so notify Viacom,
and Viacom shall deposit such amount with the Exchange Agent and shall cause the
Exchange Agent to forward payments to such holder of fractional share interests
subject to and in accordance with the terms of Sections 2.02(b) and (c).
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund which remains undistributed to the holders of Shares for six (6) months
after the Effective Time shall be delivered to Viacom, upon demand, and any
holders of Shares who have not theretofore complied with this Article II shall
thereafter look only to Viacom for the shares of Viacom Class B Common Stock or
the shares of Viacom Series C Preferred Stock, any cash in lieu of fractional
shares of Viacom Class B Common Stock or Viacom Series C Preferred Stock to
which they are entitled pursuant to Section 2.02(e) and any dividends or other
distributions with respect to Viacom Class B Common Stock or Viacom Series C
Preferred Stock to which they are entitled pursuant to Section 2.02(c). Any
portion of the Exchange Fund remaining unclaimed by holders of Shares as of a
date which is immediately prior to such time as such amounts would otherwise
escheat to or become property of any government entity shall, to the extent
permitted by applicable Law, become the property of Viacom free and clear of any
claims or interest of any person previously entitled thereto.
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7
(g) No Liability. Neither Viacom nor CBS shall be liable to
any holder of Shares for any such Shares (or dividends or distributions with
respect hereto) or cash delivered to a public official pursuant to any abandoned
property, escheat or similar Law.
(h) Lost, Stolen or Destroyed Certificates. In the event that
any Certificate has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Viacom, the posting by such person of a
bond in such reasonable amount as Viacom may direct as indemnity against any
claim that may be made against it with respect to such Certificate, Viacom will,
in exchange for such lost, stolen or destroyed Certificate, issue or cause to be
issued the number of whole shares of Viacom Common Stock or shares of Viacom
Series C Preferred Stock, as the case may be, and pay or cause to be paid the
amounts deliverable in respect thereof pursuant to Sections 2.02(e) and 2.02(c).
(i) Withholding Rights. Viacom shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of Shares such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld by Viacom,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Viacom.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the
stock transfer books of CBS shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of CBS. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by any
Laws. On or after the Effective Time, any Certificates presented to the Exchange
Agent or Viacom for any reason shall be converted into shares of Viacom Class B
Common Stock or shares of Viacom Series C Preferred Stock, as the case may be,
any cash in lieu of fractional shares of Viacom Class B Common Stock or shares
of Viacom Series C Preferred Stock to which the holders thereof are entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.02(c).
SECTION 2.04. Stock Options and Other Stock Plans. (a) Prior
to the Effective Time, Viacom and CBS shall take such action as may be necessary
to cause each unexpired and unexercised option or warrant to purchase Shares
which are outstanding immediately prior to the Effective Time (collectively,
"CBS Options"), whether granted under CBS's stock option plans set forth in
Section 2.04 of the CBS Disclosure Schedule (as defined below) or otherwise (the
"CBS Stock Option Plans"), to be automatically converted at the Effective Time
into an option or warrant (collectively, a "Substituted Option") to purchase a
number of shares of Viacom Class B Common Stock equal to the number of Shares
that could have been purchased (assuming full vesting) under such CBS Option
multiplied by the Exchange Ratio (rounded to the nearest whole
<PAGE>
8
number of shares of Viacom Class B Common Stock) at a price per share of Viacom
Class B Common Stock equal to the per-share option exercise price specified in
the CBS Option divided by the Exchange Ratio (rounded down to the nearest whole
cent). Except as otherwise provided in this Agreement, such Substituted Option
shall otherwise be subject to the same terms and conditions as such CBS Option
(except that all vesting periods with respect thereto shall, to the extent
provided by the terms thereof, accelerate, and be subject to any other rights
which arise under the CBS Stock Option Plans or the option agreements evidencing
awards thereunder as a result of the transactions contemplated by this
Agreement). The date of grant of the Substituted Option shall be the date on
which the corresponding CBS Option was granted. At the Effective Time, (i) all
references in the related stock option agreements to CBS shall be deemed to
refer to Viacom and (ii) Viacom shall assume all of CBS's obligations with
respect to CBS Options as so amended. As promptly as reasonably practicable
after the Effective Time, Viacom shall issue to each holder of an outstanding
CBS Option a document evidencing the foregoing assumption by Viacom. Employee
and director deferrals and director common stock equivalents and all other
equity based compensation that references CBS Common Stock will as of and after
the Effective Time, be deemed to refer to Viacom Class B Common Stock (as
adjusted to reflect the Exchange Ratio).
(b) In respect of each CBS Option assumed by Viacom, and the
shares of Viacom Class B Common Stock underlying such CBS Option, Viacom shall,
no later than one Business Day after the Effective Time, file and keep current a
Form S-8 or other appropriate registration statement for as long as any
Substituted Options remain outstanding.
(c) Prior to the Effective Time, Viacom and CBS shall take all
steps reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of CBS (including derivative securities)
or acquisitions of Viacom equity securities (including derivative securities) in
connection with this Agreement by each individual who (a) is a director or
officer of Viacom or (b) at the Effective Time, will become a director or
officer of Viacom, to be exempt under Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBS
Except as disclosed in the report on Form 10-K dated March 24,
1999 for the year ended December 31, 1998, the Reports on Form 10-K/A, Form
10-Q, Form 10-Q/A and Form 8-K since December 31, 1998 or the proxy statement
dated March 25, 1999, in each case in the form filed by CBS with the United
States Securities and Exchange Commission (the "SEC") or in a separate
disclosure schedule which has been delivered by CBS to Viacom prior to the
execution of this Agreement (the "CBS Disclosure Schedule") (each section of
which qualifies the
<PAGE>
9
correspondingly numbered representation and warranty or covenant to the extent
specified therein and such other representations and warranties or covenants to
the extent a matter in such section is disclosed in such a way as to make its
relevance to the information called for by such other representation and
warranty or covenant readily apparent), CBS hereby represents and warrants to
Viacom:
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of CBS and its subsidiaries is a corporation or entity duly incorporated or
formed, validly existing and in good standing under the laws of its jurisdiction
of incorporation or formation and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to have such power, authority and governmental approvals would
not have a CBS Material Adverse Effect (as defined below). Each of CBS and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not have a CBS Material
Adverse Effect. The term "CBS Material Adverse Effect" means any change, effect
or circumstance that is or is reasonably likely to be materially adverse to the
business, results of operations or financial condition of CBS and its
subsidiaries taken as a whole, other than any change, effect or circumstance
relating to or resulting from (i) general changes in the media or entertainment
industries or the advertising markets, (ii) changes in general economic
conditions or securities markets in general or (iii) this Agreement or the
transactions contemplated hereby or the announcement thereof.
SECTION 3.02. Certificate of Incorporation and By-Laws. CBS
has made available to Viacom a complete and correct copy of the Articles of
Incorporation and the Bylaws, each as amended to date, of CBS and Infinity
Broadcasting Corporation, a Delaware corporation ("Infinity"). The Articles of
Incorporation and By-laws (or equivalent organizational documents) of CBS and
its subsidiaries are in full force and effect. Except as would not have a CBS
Material Adverse Effect, none of CBS or its subsidiaries is in violation of any
provision of its Articles of Incorporation or By-laws (or equivalent
organizational documents).
SECTION 3.03. Capitalization. The authorized capital stock of
CBS consists of 1,100,000,000 shares of CBS Common Stock and 25,000,000 shares
of preferred stock, par value $1.00 per share (the "CBS Preferred Stock"). As of
August 31, 1999, (a) 705,119,425 shares of CBS Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable, (b)
40,099,599 shares of CBS Common Stock were held in the treasury of CBS, (c)
51,007,538 shares of CBS Common Stock were reserved for future issuance pursuant
to outstanding unexercised employee stock options granted pursuant to the CBS
Stock Option Plans or otherwise and (d) 70,365,195 shares of CBS Common Stock
were reserved for future issuance in connection with the merger of a wholly
owned subsidiary of CBS with and into King World Productions, Inc. ("King
World") and 9,910,600 shares of CBS Common Stock (or some
<PAGE>
10
equivalent amount of CBS Preferred Stock, if appropriate), measured at the
September 3, 1999 New York Stock Exchange (the "NYSE") closing price, were
reserved for future issuance in connection with the acquisition from Gaylord of
television station KVTV, Dallas/Fort Worth, Texas. As of the date of this
Agreement, no shares of CBS Preferred Stock are outstanding. As of the date of
this Agreement, except for the issuance of shares of CBS Common Stock pursuant
to the exercise of CBS Options and options to purchase 5,850,555 shares of Class
A Common Stock, par value $0.01 per share, of Infinity, outstanding prior to
August 31, 1999, no shares of capital stock of CBS or any of its subsidiaries
have been issued since August 31, 1999. Except as set forth in this Section
3.03, and except for the Series A participating preferred stock purchase rights
of CBS (the "Rights") issued pursuant to the Rights Agreement, dated as of
December 28, 1995, between CBS and First Chicago Trust Company of New York (the
"CBS Rights Agreement"), as of the date of this Agreement there are no options,
warrants or other rights, agreements (including registration rights agreements),
arrangements or commitments of any character relating to the issued or unissued
capital stock of CBS or any of its subsidiaries or obligating CBS or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, CBS or any of its subsidiaries. All shares of capital stock of CBS
and its subsidiaries subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
As of the date of this Agreement, there are no outstanding contractual material
obligations of CBS or any subsidiary to repurchase, redeem or otherwise acquire
any shares of capital stock of CBS or any of its subsidiaries or to provide
material funds to, or make any material investment (in the form of a loan
capital contribution or otherwise) in, any person.
SECTION 3.04. Authority Relative to Agreement. CBS has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by CBS and the consummation by CBS of the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of CBS are
necessary to authorize the execution and delivery of this Agreement or to
consummate the Merger and the other transactions contemplated hereby (other
than, with respect to the Merger, the adoption of this Agreement by the
affirmative vote of a majority of the votes cast by all shareholders entitled to
vote at the CBS Stockholders' Meeting (as defined in Section 6.02) and the
filing and recordation of appropriate merger documents as required by
Pennsylvania Law). This Agreement has been duly and validly executed and
delivered by CBS and, assuming the due authorization, execution and delivery by
Viacom, this Agreement constitutes a legal, valid and binding obligation of CBS,
enforceable against CBS in accordance with its terms.
<PAGE>
11
SECTION 3.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by CBS does not, and the
performance of this Agreement by CBS will not, (i) conflict with or violate the
Articles of Incorporation or By-laws of (A) CBS or Infinity or (B) any of its
other subsidiaries, (ii) assuming the consents, approvals, authorizations and
waivers specified in Section 3.05(b) have been received and the waiting periods
referred to therein have expired, and any condition precedent to such consent,
approval, authorization, or waiver has been satisfied, conflict with or violate
any domestic (federal, state or local) or foreign law, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to CBS or any of its
subsidiaries or by which any property or asset of CBS or any of its subsidiaries
is bound or affected or (iii) result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration, or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of CBS or any of its subsidiaries pursuant to, any note, bond,
mortgage, indenture or credit agreement, or, to CBS's knowledge as of the date
of this Agreement, any other contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which CBS or any of its
subsidiaries is a party or by which CBS or any of its subsidiaries or any
property or asset of CBS or any of its subsidiaries is bound or affected,
except, in the case of clauses (i)(B), (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences of the type referred to
above which would not have a CBS Material Adverse Effect or would not prevent or
materially delay the consummation of the Merger; provided, however, that for
purposes of this Section 3.05(a), the definition of CBS Material Adverse Effect
shall be read so as not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by CBS do
not, and the performance of this Agreement by CBS will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic, foreign or supranational,
except for applicable requirements of the Exchange Act, the Securities Act of
1933, as amended (the "Securities Act"), state securities or "blue sky" laws
("Blue Sky Laws"), the pre-merger notification arrangements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), such filings, approvals and waivers
of the Federal Communications Commission or any successor entity (the "FCC") as
may be required under the Communications Act of 1934, as amended, and the rules
and regulations of the FCC thereunder (collectively, the "Communications Act"),
applicable requirements of the Investment Canada Act of 1985 and the Competition
Act (Canada), any other non-United States competition, antitrust and investment
law, filing and recordation of appropriate merger documents as required by
Delaware Law and Pennsylvania Law and the rules of the NYSE and except where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not have a CBS Material Adverse Effect
or would not prevent or materially delay the consummation of the Merger;
provided, however, that for purposes of this Section 3.05(b), the definition of
CBS Material Adverse Effect shall be read so as not to include clause (iii) of
the definition thereof.
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12
SECTION 3.06. Permits and Licenses; Contracts. (a) Each of CBS
and its subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders necessary for CBS or any of its subsidiaries to own, lease
and operate the properties of CBS and its subsidiaries or to carry on their
business as it is now being conducted and contemplated to be conducted (the "CBS
Permits"), and no suspension or cancellation of any of the CBS Permits is
pending or, to the knowledge of CBS, threatened, except where the failure to
have, or the suspension or cancellation of, any of the CBS Permits would not
have a CBS Material Adverse Effect. None of CBS or any of its subsidiaries is in
conflict with, or in default or violation of, (i) any Laws applicable to CBS or
any of its subsidiaries or by which any property or asset of CBS or any of its
subsidiaries is bound or affected, (ii) any of the CBS Permits or (iii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which CBS or any of its
subsidiaries is a party or by which CBS or any of its subsidiaries or any
property or asset of CBS or any of its subsidiaries is bound or affected, except
for any such conflicts, defaults or violations that would not have a CBS
Material Adverse Effect.
(b) Except as would not have a CBS Material Adverse Effect,
and to the knowledge of CBS, except as would not have a material adverse effect
on the Surviving Corporation following the Effective Time, none of CBS or any of
its subsidiaries is a party to any contracts or agreements that limits the
ability of CBS or any of its subsidiaries or, after the Effective Time, Viacom
or any of its subsidiaries, to compete in any line of business or with any
person or engage in any business in any geographic area, in each case except for
competition in businesses that neither CBS nor Viacom are currently engaged in
or will reasonably foreseeably engage in.
(c) CBS and its subsidiaries have operated the radio and
television stations and associated facilities for which CBS or any of its
subsidiaries holds licenses from the FCC, in each case which are owned or
operated by CBS and its subsidiaries (the "CBS Licensed Facilities"), in
material compliance with the terms of the CBS Permits issued by the FCC to CBS
and its subsidiaries ("CBS FCC Licenses"), and in material compliance with the
Communications Act, and CBS and its subsidiaries have timely filed or made all
applications, reports and other disclosures required by the FCC to be filed or
made with respect to the CBS Licensed Facilities and have timely paid all FCC
regulatory fees with respect thereto, in each case except as would not have a
CBS Material Adverse Effect. As of the date hereof, to CBS's knowledge, there is
not now pending or threatened before the FCC any material investigation,
proceeding, notice of violation, order of forfeiture or complaint against CBS or
any of its subsidiaries, relating to any of the CBS Licensed Facilities or FCC
regulated services conducted by CBS that, if adversely decided, would have a CBS
Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) CBS and
Infinity have filed all forms, reports and documents required to be filed by it
with the SEC from December 31, 1996 to the date of this Agreement, including:
(i) Annual Reports on Form 10-K, (ii) Quarterly
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13
Reports on Form 10-Q and (iii) proxy statements relating to CBS's and Infinity's
meetings of shareholders (whether annual or special) (the forms, reports and
other documents referred to in clauses (i), (ii), (iii) and all other forms,
reports and other registration statements filed by CBS or Infinity with the SEC
as of the date of this Agreement, including all amendments and supplements
thereto filed with the SEC as of the date of this Agreement, above being
referred to herein, collectively, as the "CBS SEC Reports"). The CBS SEC
Reports, as well as all forms, reports and documents to be filed by CBS or
Infinity with the SEC after the date hereof and prior to the Effective Time, (i)
were or will be prepared in accordance with the requirements of the Securities
Act, and the Exchange Act, as the case may be, and the rules and regulations
thereunder, (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 made therein, in the light of the circumstances under which they were
made, not misleading, and (iii) did not at the time they were filed, or will not
at the time they are filed, omit any documents required to be filed as exhibits
thereto. No CBS subsidiary, except Infinity, is subject to the periodic
reporting requirements of the Exchange Act.
(b) Each of the financial statements (including, in each case,
any notes thereto) contained in the CBS SEC Reports and each of the financial
statements to be filed by CBS or Infinity with the SEC after the date hereof and
prior to the Effective Time was or will be prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented in all material respects or will fairly
present in all material respects the consolidated financial position, results of
operations and cash flows of CBS and its subsidiaries as at the respective dates
thereof and for the respective periods indicated therein in accordance with
United States generally accepted accounting principles (subject, in the case of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected to be material).
(c) Except as and to the extent set forth in the CBS SEC
Reports, CBS and its subsidiaries do not have any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities and obligations which, individually or in the aggregate, would not
have a CBS Material Adverse Effect.
(d) CBS has heretofore furnished to Viacom complete and
correct copies of all material amendments and modifications that have not been
filed by CBS or Infinity with the SEC to all agreements, documents and other
instruments that previously had been filed by CBS or Infinity with the SEC and
are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. (a) Since
December 31, 1998, except as disclosed in any CBS SEC Report or as contemplated
by this Agreement, there has not been any change, event or circumstance which,
when taken individually or together with all other changes, events or
circumstances, has had or would have a CBS Material Adverse
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14
Effect, and (b) since December 31, 1998 to the date of this Agreement, except as
disclosed in any CBS SEC Report (i) each of CBS and its subsidiaries has
conducted its businesses only in the ordinary course and in a manner consistent
with past practice and (ii) there has not been (A) any material change by CBS or
any of its subsidiaries in its material accounting policies, practices and
procedures, (B) any entry by CBS or any of its subsidiaries into any commitment
or transaction material to CBS and its subsidiaries taken as a whole other than
in the ordinary course of business consistent with past practice, (C) any
declaration, setting aside or payment of any dividend or distribution in respect
of any capital stock of CBS or any of its subsidiaries (other than cash
dividends payable by any wholly owned subsidiary to another subsidiary or CBS),
or (D) any increase in the compensation payable or to become payable to any
corporate officers or heads of divisions of CBS or any of its subsidiaries,
except in the ordinary course of business consistent with past practice.
SECTION 3.09. Absence of Litigation. Except as disclosed in
any CBS SEC Report, there is no claim, action, proceeding or investigation
pending or, to the knowledge of CBS, threatened against CBS or any of its
subsidiaries, or any property or asset of CBS or any of its subsidiaries, before
any court, arbitrator or Governmental Authority, in each case except as would
not have a CBS Material Adverse Effect. As of the date of this Agreement, none
of CBS, any of its subsidiaries nor any property or asset of CBS or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or Governmental
Authority, in each case except as would not have a CBS Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. (a) With respect to 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")),
maintained or contributed to by CBS or any of its subsidiaries, or with respect
to which CBS or any of its subsidiaries could incur liability under Section 4069
of ERISA, other than multiemployer plans within the meaning of Section 3(37) of
ERISA (the "CBS Benefit Plans"), CBS will provide to Viacom within 15 days of
the date of this Agreement a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the Internal Revenue Service (the "IRS"), (ii)
such CBS Benefit Plan, (iii) each trust agreement relating to such CBS Benefit
Plan, (iv) the most recent summary plan description for each CBS Benefit Plan
for which a summary plan description is required, (v) the most recent actuarial
report or valuation relating to a CBS Benefit Plan subject to Title IV of ERISA,
if any, and (vi) the most recent determination letter, if any, issued by the IRS
with respect to any CBS Benefit Plan qualified under Section 401(a) of the Code.
CBS will, promptly following the date of this Agreement, request a copy of each
CBS Benefit Plan that is a multiemployer plan within the meaning of Section
3(37) of ERISA from the trustees of such multiemployer plan and CBS shall
deliver such copy of the plan to Viacom promptly upon its receipt thereof.
<PAGE>
15
(b) Each CBS Benefit Plan has been administered in accordance
with its terms, and in compliance with applicable laws, except as would not have
a CBS Material Adverse Effect. CBS and its subsidiaries have performed all
obligations required to be performed by them under, are not in any respect in
default under or in violation of, and have no knowledge of any default or
violation by any party to, any CBS Benefit Plans, except as would not have a CBS
Material Adverse Effect. With respect to the CBS Benefit Plans, no event has
occurred and, to the knowledge of CBS, there exists no condition or set of
circumstances, in connection with which CBS or any of its subsidiaries is
reasonably likely to be subject to any liability under the terms of such CBS
Benefit Plans, ERISA, the Code or any other applicable Law except as would not,
individually or in the aggregate, have a CBS Material Adverse Effect. Neither
CBS nor any of its subsidiaries has any actual or contingent liability under
Title IV of ERISA (other than the payment of premiums to the Pension Benefit
Guaranty Corporation), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any multiemployer
plan or multiple employer plan, and no fact or event exists which is reasonably
likely to give rise to any such liability, in each case except as would not,
individually or in the aggregate, have a CBS Material Adverse Effect.
(c) CBS has made available to Viacom: (i) copies of all
employment agreements with the top five most highly compensated executive
officers of CBS and its subsidiaries; (ii) copies of all material severance
agreements, programs and policies of CBS or any of its subsidiaries with or
relating to its or its subsidiaries' employees; and (iii) copies of all material
plans, programs, agreements and other arrangements of CBS or any of its
subsidiaries with or relating to its or its subsidiaries' employees which
contain change in control provisions. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, "golden parachute" or otherwise) becoming due to any director,
officer or employee of CBS or any of its subsidiaries from CBS or any of its
affiliates under any CBS Benefit Plan or otherwise, which payment is material in
relation to the compensation previously provided to such individual (other than
payments resulting from a change in responsibilities or reporting obligations of
individual employees), (ii) materially increase any benefits otherwise payable
under any CBS Benefit Plan, which increase is material in relation to the
benefits previously provided or (iii) result in any acceleration of the time of
payment or vesting of any material benefits.
(d) Each CBS Benefit Plan that is intended to be qualified
under Section 401(a) of the Code or Section 401(k) of the Code has timely
received a favorable determination letter from the IRS covering all of the
provisions applicable to the Plan for which determination letters are currently
available that the CBS Benefit Plan is so qualified and each trust established
in connection with any CBS Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event has
occurred since the date of such determination letter or
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16
letters from the IRS which is reasonably likely to adversely affect the
qualified status of any such CBS Benefit Plan or the exempt status of any such
trust.
SECTION 3.11. Labor Matters. There is no labor dispute, strike
or work stoppage against CBS or any of its subsidiaries pending or, to the
knowledge of CBS, threatened which would reasonably be expected to interfere
with the respective business activities of CBS or any of its subsidiaries,
except for such disputes, strikes or work stoppages which would not have a CBS
Material Adverse Effect. There is no charge or complaint against CBS or any of
its subsidiaries by the National Labor Relations Board or any comparable state
agency pending or threatened in writing, except for such charges or complaints
(or related unfair labor practices) which would not have a CBS Material Adverse
Effect.
SECTION 3.12. Environmental Matters. Except as would not,
individually or in the aggregate, have a CBS Material Adverse Effect:
(a) CBS and its subsidiaries (i) are in compliance with all,
and are not subject to any asserted liability or, to CBS's knowledge,
any liability (including liability with respect to current or former
subsidiaries or operations), in each case with respect to any,
Environmental Laws (as defined below), (ii) hold or have applied for
all Environmental Permits (as defined below) and (iii) are in
compliance with their respective Environmental Permits;
(b) neither CBS nor any CBS subsidiary has received any
written notice, demand, letter, claim or request for information
alleging that CBS or any of its subsidiaries is or may be in violation
of, or liable under, any Environmental Law;
(c) neither CBS nor any of its subsidiaries (i) has entered
into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of
Hazardous Materials (as defined below) and, to the knowledge of CBS, no
investigation, litigation or other proceeding is pending or threatened
in writing with respect thereto, or (ii) is an indemnitor in connection
with any threatened or asserted claim by any third-party indemnitee for
any liability under any Environmental Law or relating to any Hazardous
Materials; and
(d) none of the real property owned or leased by CBS or any of
its subsidiaries is listed or, to the knowledge of CBS, proposed for
listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
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17
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date
hereof.
"Environmental Laws" means any applicable federal, state,
local or foreign statute, law, ordinance, regulation, rule, code,
treaty, writ or order and any enforceable judicial or administrative
interpretation thereof, including any judicial or administrative order,
consent decree, judgment, stipulation, injunction, permit,
authorization, policy, opinion, or agency requirement, in each case
having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and
safety or natural resources, including those relating to the use,
handling, presence, transportation, treatment, storage, disposal,
release, threatened release or discharge of Hazardous Materials or
noise, odor, wetlands, pollution, contamination or any injury or threat
of injury to persons or property or to the siting, construction,
operation, closure and post-closure care of waste disposal, handling
and transfer facilities.
"Environmental Permits" means any permit, approval,
identification number, license and other authorization required under
any Environmental Law.
"Hazardous Materials" means (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
Environmental Law.
SECTION 3.13. Trademarks, Patents and Copyrights. Except as
would not have a CBS Material Adverse Effect, CBS and its subsidiaries own, or
possess adequate licenses or other valid rights to use, all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, service mark rights, trade secrets, applications to
register, and registrations for, the foregoing trademarks, know-how and other
proprietary rights and information used in connection with the business of CBS
and its subsidiaries as currently conducted, and no assertion or claim has been
made in writing challenging the validity of any of the foregoing which would
have a CBS Material Adverse Effect. To the knowledge of CBS, the conduct of the
business of CBS and its subsidiaries as currently conducted does not conflict in
any way with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, service mark or copyright of any third party,
except for such conflicts which would not have a CBS Material Adverse Effect.
SECTION 3.14. Taxes. (a) For purposes of this Agreement, "Tax"
or "Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed
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18
with respect thereto) imposed by any governmental or taxing authority including,
without limitation: taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs' duties, tariffs, and
similar charges.
(b) Except as would not have a CBS Material Adverse Effect:
(i) each of CBS and each of its subsidiaries has timely filed all federal,
state, local and foreign tax returns and reports (including extensions) required
to be filed by it and has paid and discharged all Taxes shown as due thereon and
has paid all of such other Taxes as are due, other than such payments as are
being contested in good faith by appropriate proceedings; (ii) neither the IRS
nor any other taxing authority or agency, domestic or foreign, is now asserting
or, to the knowledge of CBS after due inquiry, threatening to assert against CBS
or any of its subsidiaries any deficiency or claim for Taxes; (iii) no waiver of
any statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax has been granted by CBS or any of its subsidiaries; (iv)
the accruals and reserves for Taxes reflected in the CBS balance sheet included
in its Annual Report on Form 10-K for fiscal year 1998 and the most recent
quarterly financial statements are adequate to cover all Taxes accruable through
the date thereof in accordance with United States generally accepted accounting
principles; (v) no election under Section 341(f) of the Code has been made by
CBS or any of its subsidiaries; (vi) CBS and each of its subsidiaries has
withheld or collected and paid over to the appropriate governmental authorities
or is properly holding for such payment all Taxes required by law to be withheld
or collected; (vii) there are no liens for Taxes upon the assets of CBS or any
of its subsidiaries, other than liens for Taxes that are being contested in good
faith by appropriate proceedings and (viii) CBS has not constituted a
"distributing corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code in the two years prior to the date of this Agreement.
SECTION 3.15. Tax Matters. None of CBS or any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from constituting a transaction qualifying under Section 368(a) of the Code.
None of CBS or any of its affiliates or agents is aware of any agreement, plan
or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code, that could prevent them from providing
representations required in Sections 7.02(c) or 7.03(c), or that could prevent
the opinions described in such Sections from being given and to the knowledge of
CBS, the Merger will so qualify.
SECTION 3.16. Year 2000 Compliance. (a) CBS has adopted a plan
that it believes will cause CBS Systems (as defined below) to be CBS Year 2000
Compliant (as defined below) (such plan, as it may be amended, modified or
supplemented from time to time being, the "CBS Year 2000 Plan") in all material
respects. CBS has taken, and between the date of this
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19
Agreement and the Effective Time will continue to take, all reasonable steps to
implement the CBS Year 2000 Plan with respect to the CBS Systems.
Notwithstanding anything in this Section 3.16 to the contrary, CBS does not
represent or warrant that CBS Systems (or any other operations, systems,
equipment or software of CBS or its subsidiaries or any of their respective
affiliates) are or will be CBS Year 2000 Compliant at or prior to the Effective
Time, regardless of whether the CBS Year 2000 Plan has or has not been
implemented or complied with.
(b) For purposes of this Section 3.16, (i) "CBS Systems" shall
mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) embedded within or required
to operate the current products of CBS and its subsidiaries, and/or material to
or necessary for CBS and its subsidiaries to carry on their respective
businesses as currently conducted; and (ii) "CBS Year 2000 Compliant" means that
CBS Systems will (A) manage, accept, process, store and output data involving
dates reasonably expected to be encountered in the foreseeable future and (B)
accurately process date data from, into and between the 20th and 21st centuries
and each date during the years 1999 and 2000.
SECTION 3.17. Opinion of Financial Advisors. CBS has received
the written opinion of Evercore Group Inc. (the "CBS Financial Advisor") on or
prior to the date of this Agreement, to the effect that, as of the date of such
opinion, the Exchange Ratio is fair to the shareholders of CBS from a financial
point of view, and CBS will deliver a copy of such opinion to Viacom promptly
after the date of this Agreement.
SECTION 3.18. Vote Required. The affirmative vote of a
majority of the votes cast by all shareholders entitled to vote at the CBS
Stockholders' Meeting is the only vote of the holders of any class or series of
capital stock of CBS necessary to adopt this Agreement.
SECTION 3.19. Brokers. No broker, finder or investment banker
(other than the CBS Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of CBS.
SECTION 3.20. Pennsylvania Law. Pursuant to its By-laws, CBS
has opted out of anti-takeover provisions contained in the Pennsylvania Law
relating to (i) "control share acquisitions" (Sections 2561 through 2568 of the
Pennsylvania Law) and (ii) disgorgement of profits by certain controlling
shareholders following attempts to acquire control (Sections 2571 through 2576
of the Pennsylvania Law). Section 2538 of the Pennsylvania Law relating to
"interested shareholder transactions" and Sections 2551 through 2556 of the
Pennsylvania Law relating to "business combinations with interested
shareholders" are not applicable to this Agreement or the transactions
contemplated hereby.
SECTION 3.21. Rights Agreement. As of the date of this
Agreement, the copy of the Rights Agreement, including all amendments and
exhibits thereto, that is set forth as an exhibit to CBS's Form 8-K, filed with
the SEC on January 9, 1996, is a complete and correct
<PAGE>
20
copy thereof. Neither the execution of this Agreement nor the consummation of
the Merger will (A) cause the Rights issued pursuant to the Rights Agreement to
become exercisable, (B) cause Viacom to become an Acquiring Person or a
Principal Party (as each term is defined in the Rights Agreement) or (C) give
rise to a Distribution Date (as such term is defined in the Rights Agreement).
SECTION 3.22. Gaylord. CBS has entered into the Gaylord
Agreement and the Gaylord Agreement is in full force and effect. Pursuant to the
Gaylord Agreement, Gaylord has agreed, under certain circumstances, to vote its
shares of CBS Series B Preferred Stock in favor of adopting this Agreement, if
required under applicable law, and has, under certain circumstances, constituted
and appointed CBS as Gaylord's true and lawful proxy (the "Gaylord Proxy"), with
full power of substitution, for and in its name place and stead, to vote each of
Gaylord's shares of CBS Series B Preferred Stock in favor of the adoption of
this Agreement at the CBS Stockholders' Meeting and any adjournment or
postponement thereof. CBS has not waived or transferred to a third party any of
its rights to vote Gaylord's shares under the Gaylord Proxy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
Except as disclosed in the report on Form 10-K dated March 31,
1999 for the year ended December 31, 1998, the reports on Form 10-Q and Form 8-K
since December 31, 1998 or the proxy statement dated April 16, 1999, in each
case in the form filed by Viacom with the SEC or in a separate disclosure
schedule which has been delivered by Viacom to CBS prior to the execution of
this Agreement (the "Viacom Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein and such other representations and warranties or
covenants to the extent a matter in such section is disclosed in such a way as
to make its relevance to the information called for by such other representation
and warranty or covenant readily apparent), Viacom hereby represents and
warrants to CBS that:
SECTION 4.01. Organization and Qualification; Subsidiaries.
Each of Viacom and its subsidiaries is a corporation or entity duly incorporated
or formed, validly existing and in good standing, under the laws of its
jurisdiction of incorporation or formation, and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not have a Viacom Material Adverse Effect (as
defined below). Each of Viacom and its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of
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21
its business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not have
a Viacom Material Adverse Effect. The term "Viacom Material Adverse Effect"
means any change, effect or circumstance that is or is reasonably likely to be
materially adverse to the business, results of operations or financial condition
of Viacom and its subsidiaries taken as a whole, other than any change, effect
or circumstance relating to or resulting from (i) general changes in the media
or entertainment industries or the advertising markets, (ii) changes in general
economic conditions or securities markets in general or (iii) this Agreement or
the transactions contemplated hereby or the announcement thereof.
SECTION 4.02. Certificate of Incorporation and By-Laws. Viacom
has made available to CBS a complete and correct copy of the Certificate of
Incorporation and the By-laws, each as amended to date, of Viacom and
Blockbuster Corporation ("Blockbuster"). The Certificates of Incorporation and
By-laws (or equivalent organizational documents) of Viacom and its subsidiaries
are in full force and effect. Except as would not have a Viacom Material Adverse
Effect, none of Viacom or its subsidiaries is in violation of any provision of
its Certificate of Incorporation or By-laws (or equivalent organizational
documents).
SECTION 4.03. Capitalization. The authorized capital stock of
Viacom consists of 500,000,000 shares of Viacom Class A Common Stock,
3,000,000,000 shares of Viacom Class B Common Stock and 200,000,000 shares of
Preferred Stock, par value $.01 per share, of Viacom ("Viacom Preferred Stock").
As of September 3, 1999 (a) 139,923,921 shares of Viacom Class A Common Stock
and 605,085,135 shares of Viacom Class B Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable, (b)
1,356,400 shares of Viacom Class A Common Stock and 47,101,300 shares of Viacom
B Common Stock were held in the treasury of Viacom, (c) no shares of Viacom
Class A Common Stock or Viacom Class B Common Stock were held by subsidiaries of
Viacom and (d) as of September 3, 1999, approximately 1,898,946 shares of Viacom
Class B Common Stock were reserved for future issuance pursuant to stock options
or stock incentive rights (collectively "Viacom Options") granted pursuant to
Viacom's stock option plans and arrangements (the "Viacom Stock Option Plans").
As of September 3, 1999, no shares of Viacom Preferred Stock were issued and
outstanding. As of the date of this Agreement, except for the issuance of Viacom
Class B Common Stock pursuant to the exercise of Viacom Options and options to
purchase 11,600,000 shares of Class A Common Stock, par value $.01 per share, of
Blockbuster (the "Blockbuster Options") outstanding prior to September 3, 1999,
no shares of capital stock of Viacom or any of its subsidiaries have been issued
since September 3, 1999. Except as set forth in this Section 4.03, as of the
date of this Agreement, there are no options, warrants or other rights,
agreements (including registration rights agreements), arrangements or
commitments of any character relating to the issued or unissued capital stock of
Viacom or any of its subsidiaries or obligating Viacom or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, Viacom or any of its subsidiaries. All shares of capital stock of
Viacom and its subsidiaries subject to issuance as aforesaid, upon issuance on
the terms and conditions
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22
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. As of the date of this
Agreement, there are no outstanding contractual material obligations of Viacom
or any subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of Viacom or any of its subsidiaries or to provide material funds
to, or make any material investment (in the form of a loan capital contribution
or otherwise) in, any person. The Stockholder (as defined in the Parent Voting
Agreements) is the holder of a majority of the issued and outstanding shares of
Viacom Class A Common Stock.
SECTION 4.04. Authority Relative to Agreement. Viacom has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Viacom and the consummation by Viacom of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Viacom are necessary to authorize the execution and delivery of this Agreement
or to consummate the Merger and the other transactions contemplated hereby
(other than, with respect to the Merger, the approval of the Viacom Proposal by
the holders of a majority of the then outstanding shares of Viacom Class A
Common Stock and the filing and recordation of appropriate merger documents as
required by Delaware Law and Pennsylvania Law). This Agreement has been duly and
validly executed and delivered by Viacom and, assuming the due authorization,
execution and delivery by CBS, this Agreement constitutes a legal, valid and
binding obligation of Viacom, enforceable against Viacom in accordance with its
terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a)
The execution and delivery of this Agreement by Viacom does not, and the
performance of this Agreement by Viacom and the performance by Parent of the
Parent Voting Agreements will not, (i) conflict with or violate the Certificate
of Incorporation or By-laws (or similar organization documents) of (A) Viacom or
Blockbuster or (B) any of its other subsidiaries, (ii) assuming the consents,
approvals and authorizations specified in Section 4.05(b) have been received and
the waiting periods referred to therein have expired, and any condition
precedent to such consent, approval, authorization, or waiver has been
satisfied, conflict with or violate any Law applicable to Viacom or any of its
subsidiaries or by which any property or asset of Viacom or any of its
subsidiaries is bound or affected or (iii) result in any breach of or constitute
a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Viacom or any of its subsidiaries
pursuant to, any note, bond, mortgage, indenture or credit agreement, or, to
Viacom's knowledge as of the date of this Agreement, any other, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Viacom or any of its subsidiaries is a party or by which Viacom or any
of its subsidiaries or any property or asset of Viacom or any of its
subsidiaries is bound or affected, except, in the case of clauses (i)(B), (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences of the type referred to above which would not have a Viacom
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23
Material Adverse Effect or would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this Section
4.05(a), the definition of Viacom Material Adverse Effect shall be read so as
not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by Viacom do
not, the performance of this Agreement by Viacom and the performance by Parent
of the Parent Voting Agreements will not, require any consent, approval,
authorization, waiver or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic, foreign or supranational, except
for applicable requirements of the Exchange Act, the Securities Act, Blue Sky
Laws, the HSR Act, such filings, approvals and waivers as may be required by the
Communications Act, applicable requirements of the Investment Canada Act of 1985
and the Competition Act (Canada), any other non-United States competition,
antitrust and investment law, filing and recordation of appropriate merger
documents as required by Delaware Law and Pennsylvania Law and the rules of the
NYSE and except where failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not have a Viacom
Material Adverse Effect or would not prevent or materially delay the
consummation of the Merger; provided, however, that for purposes of this Section
4.05(b), the definition of Viacom Material Adverse Effect shall be read so as
not to include clause (iii) of the definition thereof.
SECTION 4.06. Permits and Licenses; Contracts. (a) Each of
Viacom and its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders necessary for Viacom or any of its
subsidiaries to own, lease and operate the properties of Viacom and its
subsidiaries or to carry on their business as it is now being conducted and
contemplated to be conducted (the "Viacom Permits"), and no suspension or
cancellation of any of the Viacom Permits is pending or, to the knowledge of
Viacom, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Viacom Permits would not have a Viacom Material
Adverse Effect. None of Viacom or any of its subsidiaries is in conflict with,
or in default or violation of (i) any Laws applicable to Viacom or any of its
subsidiaries or by which any property or asset of Viacom or any of its
subsidiaries is bound or affected, (ii) any of the Viacom Permits, or (iii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Viacom or any of its
subsidiaries is a party or by which Viacom or any of its subsidiaries or any
property or asset of Viacom or any of its subsidiaries is bound or affected,
except for any such conflicts, defaults or violations that would not have a
Viacom Material Adverse Effect.
(b) Except as would not have a Viacom Material Adverse Effect,
and to the knowledge of Viacom, except as would not have a material adverse
effect on the Surviving Corporation following the Effective Time, none of Viacom
or any of its subsidiaries is a party to any contracts or agreements that limits
the ability of Viacom or any of its subsidiaries to compete in any line of
business or with any person or engage in any business in any geographic area, in
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24
each case except for competition in businesses that neither CBS nor Viacom are
currently engaged in or will reasonably foreseeably engage in.
(c) Viacom and its subsidiaries have operated the radio and
television stations and associated facilities for which Viacom or any of its
subsidiaries holds licenses from the FCC, in each case which are owned or
operated by Viacom and its subsidiaries (the "Viacom Licensed Facilities"), in
material compliance with the terms of the Viacom Permits issued by the FCC to
Viacom and its subsidiaries ("Viacom FCC Licenses"), and in material compliance
with the Communications Act, and Viacom and its subsidiaries have timely filed
or made all applications, reports and other disclosures required by the FCC to
be filed or made with respect to the Viacom Licensed Facilities and have timely
paid all FCC regulatory fees with respect thereto, in each case except as would
not have a Viacom Material Adverse Effect. As of the date hereof, to Viacom's
knowledge, there is not now pending or threatened before the FCC any material
investigation, proceeding, notice of violation, order of forfeiture or complaint
against Viacom or any of its subsidiaries, relating to any of the Viacom
Licensed Facilities or FCC regulated services conducted by CBS that, if
adversely decided, would have a Viacom Material Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements. (a) Viacom
and Blockbuster have filed all forms, reports and documents required to be filed
by it with the SEC from December 31, 1996 to the date of this Agreement,
including: (i) Annual Reports on Form 10-K, (ii) Quarterly Reports on Form 10-Q
and (iii) proxy statements relating to Viacom's and Blockbuster's meetings of
stockholders (whether annual or special) (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and all other forms, reports and other
registration statements filed by Viacom or Blockbuster with the SEC as of the
date of this Agreement, including all amendments and supplements thereto filed
with the SEC as of the date of this Agreement, above being referred to herein,
collectively, as the "Viacom SEC Reports"). The Viacom SEC Reports, as well as
all forms, reports and documents to be filed by Viacom or Blockbuster with the
SEC after the date hereof and prior to the Effective Time, (i) were or will be
prepared in accordance with the requirements of the Securities Act, and the
Exchange Act, as the case may be, and the rules and regulations thereunder, (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 made
therein, in the light of the circumstances under which they were made, not
misleading, and (iii) did not at the time they were filed, or will not at the
time they are filed, omit any documents required to be filed as exhibits
thereto. No Viacom subsidiary, except Blockbuster, is subject to the periodic
reporting requirements of the Exchange Act.
(b) Each of the financial statements (including, in each case,
any notes thereto) contained in the Viacom SEC Reports and each of the financial
statements to be filed by Viacom or Blockbuster with the SEC after the date
hereof and prior to the Effective Time was or will be prepared in accordance
with United States generally accepted accounting principles
<PAGE>
25
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented in all material
respects or will fairly present in all material respects the consolidated
financial position, results of operations and cash flows of Viacom and its
subsidiaries as at the respective dates thereof and for the respective periods
indicated therein in accordance with United States generally accepted accounting
principles (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected to be
material).
(c) Except as and to the extent set forth in the Viacom SEC
Reports, Viacom and its subsidiaries do not have any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) other than
liabilities and obligations which, individually or in the aggregate, would not
have a Viacom Material Adverse Effect.
(d) Viacom has heretofore furnished to CBS complete and
correct copies of all material amendments and modifications that have not been
filed by Viacom or Blockbuster with the SEC to all agreements, documents and
other instruments that previously had been filed by Viacom or Blockbuster with
the SEC and are currently in effect.
SECTION 4.08. Absence of Certain Changes or Events. (a) Since
December 31, 1998, except as disclosed in any Viacom SEC Report or as
contemplated by this Agreement, there has not been any change, event or
circumstance which, when taken individually or together with all other changes,
events or circumstances, has had or would have a Viacom Material Adverse Effect,
and (b) since December 31, 1998 to the date of this Agreement, except as
disclosed in any Viacom SEC Reports (i) each of Viacom and its subsidiaries has
conducted its businesses only in the ordinary course and in a manner consistent
with past practice and (ii) there has not been (A) any material change by Viacom
or any of its subsidiaries in its material accounting policies, practices and
procedures, (B) any entry by Viacom or any of its subsidiaries into any
commitment or transaction material to Viacom and its subsidiaries taken as a
whole other than in the ordinary course of business consistent with past
practice, (C) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Viacom or any of its
subsidiaries (other than cash dividends payable by any wholly owned subsidiary
to another subsidiary or Viacom), or (D) any increase in the compensation
payable or to become payable to any corporate officers or heads of divisions of
Viacom or any of its subsidiaries, except in the ordinary course of business
consistent with past practice.
SECTION 4.09. Absence of Litigation. Except as disclosed in
any Viacom SEC Report, there is no claim, action, proceeding or investigation
pending or, to the knowledge of Viacom, threatened against Viacom or any of its
subsidiaries, or any property or asset of Viacom or any of its subsidiaries,
before any court, arbitrator or Governmental Authority, in each case except as
would not have a Viacom Material Adverse Effect. As of the date of this
Agreement, none of Viacom, any of its subsidiaries nor any property or asset of
Viacom or any of its subsidiaries is subject to any order, writ, judgment,
injunction, decree, determination or award
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26
imposed by any court, arbitration or Governmental Authority, in each case except
as would not have a Viacom Material Adverse Effect.
SECTION 4.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
maintained or contributed to by Viacom or any of its subsidiaries, or with
respect to which Viacom or any of its subsidiaries could incur liability under
Section 4069 of ERISA, other than multiemployer plans within the meaning of
Section 3(37) of ERISA (the "Viacom Benefit Plans"), Viacom will provide to CBS
within 15 days of this Agreement a true and correct copy of (i) the most recent
annual report (Form 5500) filed with the IRS, (ii) such Viacom Benefit Plan,
(iii) each trust agreement relating to such Viacom Benefit Plan, (iv) the most
recent summary plan description for each Viacom Benefit Plan for which a summary
plan description is required, (v) the most recent actuarial report or valuation
relating to a Viacom Benefit Plan subject to Title IV of ERISA, if any, and (vi)
the most recent determination letter, if any, issued by the IRS with respect to
any Viacom Benefit Plan qualified under Section 401(a) of the Code. Viacom will
promptly following the date of this Agreement request a copy of each Viacom
Benefit Plan that is a multiemployer plan within the meaning of Section 3(37) of
ERISA from the trustees of such multiemployer plan and Viacom shall deliver such
copy of the plan to CBS promptly upon its receipt thereof.
(b) Each Viacom Benefit Plan has been administered in
accordance with its terms, and in compliance with applicable laws, except as
would not have a Viacom Material Adverse Effect. Viacom and its subsidiaries
have performed all obligations required to be performed by them under, are not
in any respect in default under or in violation of, and have no knowledge of any
default or violation by any party to, any Viacom Benefit Plans, except as would
not have a Viacom Material Adverse Effect. With respect to the Viacom Benefit
Plans, no event has occurred and, to the knowledge of Viacom, there exists no
condition or set of circumstances, in connection with which Viacom or any of its
subsidiaries is reasonably likely to be subject to any liability under the terms
of such Viacom Benefit Plans, ERISA, the Code or any other applicable Law except
as would not have a Viacom Material Adverse Effect. Neither Viacom nor any of
its subsidiaries has any actual or contingent liability under Title IV of ERISA
(other than the payment of premiums to the Pension Benefit Guaranty Corporation)
except as would not have a Viacom Material Adverse Effect. Neither Viacom nor
any of its subsidiaries has any actual or contingent liability under Title IV of
ERISA (other than the payment of premiums to the Pension Benefit Guaranty
Corporation), including, without limitation, any liability in connection with
(i) the termination or reorganization of any employee benefit plan subject to
Title IV of ERISA or (ii) the withdrawal from any multiemployer plan or multiple
employer plan, and no fact or event exists which is reasonably likely to give
rise to any such liability, except as would not, individually or in the
aggregate, have a Viacom Material Adverse Effect.
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27
(c) Viacom has made available to CBS (i) copies of all
employment agreements with the top five most highly compensated executive
officers of Viacom or any of its subsidiaries; (ii) copies of all material
severance agreements, programs and policies of Viacom or any of its subsidiaries
with or relating to its or its subsidiaries' employees; and (iii) copies of all
material plans, programs, agreements and other arrangements of Viacom or any of
its subsidiaries with or relating to its or its subsidiaries' employees which
contain change in control provisions. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, unemployment
compensation, "golden parachute" or otherwise) becoming due to any director,
officer or employee of Viacom or any of its subsidiaries from Viacom or any of
its affiliates under any Viacom Benefit Plan or otherwise, which payment is
material in relation to the compensation previously provided to such individual
(other than payments resulting from a change in responsibilities or reporting
obligations of individual employees), (ii) materially increase any benefits
otherwise payable under any Viacom Benefit Plan, which increase is material in
relation to the benefits previously provided or (iii) result in any acceleration
of the time of payment or vesting of any material benefits.
(d) Each Viacom Benefit Plan that is intended to be qualified
under Section 401(a) of the Code or Section 401(k) of the Code has timely
received a favorable determination letter from the IRS covering all of the
provisions applicable to the Plan for which determination letters are currently
available that the Viacom Benefit Plan is so qualified and each trust
established in connection with any Viacom Benefit Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter or letters
from the IRS which is reasonably likely to adversely affect the qualified status
of any such Viacom Benefit Plan or the exempt status of any such trust.
SECTION 4.11. Labor Matters. There is no labor dispute, strike
or work stoppage against Viacom or any of its subsidiaries pending or, to the
knowledge of Viacom, threatened which would reasonably be expected to interfere
with the respective business activities of Viacom or any of its subsidiaries,
except for such disputes, strikes or work stoppages which would not have a
Viacom Material Adverse Effect. There is no charge or complaint against Viacom
or any of its subsidiaries by the National Labor Relations Board or any
comparable state agency pending or threatened in writing, except for such
charges or complaints (or related unfair labor practices) which would not have a
Viacom Material Adverse Effect.
SECTION 4.12. Environmental Matters. Except as would not,
individually or in the aggregate, have a Viacom Material Adverse Effect:
(a) Viacom and its subsidiaries (i) are in compliance with
all, and are not subject to any asserted liability or, to Viacom's
knowledge, any liability (including liability with respect to current
or former subsidiaries or operations), in each case with
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28
respect to any, Environmental Laws (as defined below), (ii) hold or
have applied for all Environmental Permits (as defined below) and (iii)
are in compliance with their respective Environmental Permits;
(b) neither Viacom nor any Viacom subsidiary has received any
written notice, demand, letter, claim or request for information
alleging that Viacom or any of its subsidiaries is or may be in
violation of, or liable under, any Environmental Law;
(c) neither Viacom nor any of its subsidiaries (i) has entered
into or agreed to any consent decree or order or is subject to any
judgment, decree or judicial order relating to compliance with
Environmental Laws, Environmental Permits or the investigation,
sampling, monitoring, treatment, remediation, removal or cleanup of
Hazardous Materials (as defined below) and, to the knowledge of Viacom,
no investigation, litigation or other proceeding is pending or
threatened in writing with respect thereto, or (ii) is an indemnitor in
connection with any threatened or asserted claim by any third-party
indemnitee for any liability under any Environmental Law or relating to
any Hazardous Materials; and
(d) none of the real property owned or leased by Viacom or any
of its subsidiaries is listed or, to the knowledge of Viacom, proposed
for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
SECTION 4.13. Trademarks, Patents and Copyrights. Except as
would not have a Viacom Material Adverse Effect, Viacom and its subsidiaries
own, or possess adequate licenses or other valid rights to use, all material
patents, patent rights, trademarks, trademark rights, trade names, trade name
rights, copyrights, service marks, service mark rights, trade secrets,
applications to register, and registrations for, the foregoing trademarks,
service marks, know-how and other proprietary rights and information used in
connection with the business of Viacom and its subsidiaries as currently
conducted, and no assertion or claim has been made in writing challenging the
validity of any of the foregoing which would have a Viacom Material Adverse
Effect. To the knowledge of Viacom, the conduct of the business of Viacom and
its subsidiaries as currently conducted does not conflict in any way with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service mark or copyright of any third party, except for such
conflicts which would not have a Viacom Material Adverse Effect.
SECTION 4.14. Taxes. Except as would not have a Viacom
Material Adverse Effect, (a) each of Viacom and each of its subsidiaries has
timely filed all federal, state, local and foreign tax returns and reports
(including extensions) required to be filed by it and has paid and discharged
all Taxes shown as due thereon and has paid all of such other Taxes as are due,
other than such payments as are being contested in good faith by appropriate
proceedings, (b) neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting or, to the
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29
knowledge of Viacom after due inquiry, threatening to assert against Viacom or
any of its subsidiaries any deficiency or claim for Taxes, (c) no waiver of any
statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax has been granted by Viacom or any of its subsidiaries,
(d) the accruals and reserves for Taxes reflected in the Viacom balance sheet
included in its Annual Report on Form 10-K for fiscal year 1998 and the most
recent quarterly financial statements are adequate to cover all Taxes accruable
through the date thereof in accordance with United States generally accepted
accounting principles, (e) no election under Section 341(f) of the Code has been
made by Viacom or any of its subsidiaries, (f) Viacom and each of its
subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected, (g) there are no liens for Taxes
upon the assets of Viacom or any of its subsidiaries, other than liens for Taxes
that are being contested in good faith by appropriate proceedings and (h) Viacom
has not constituted a "distributing corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to the date of
this Agreement.
SECTION 4.15. Tax Matters. None of Viacom or any of its
affiliates has taken or agreed to take any action that would prevent the Merger
from constituting a transaction qualifying under Section 368(a) of the Code.
None of Viacom or any of its affiliates or agents is aware of any agreement,
plan or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code, that could prevent them from providing
representations required in Sections 7.02(c) or 7.03(c), or that could prevent
the opinions described in such Sections from being given and to the knowledge of
Viacom the Merger will so qualify.
SECTION 4.16. Year 2000 Compliance. (a) Viacom has adopted a
plan that it believes will cause Viacom Systems (as defined below) to be Viacom
Year 2000 Compliant (as defined below) (such plan, as it may be amended,
modified or supplemented from time to time being, the "Viacom Year 2000 Plan")
in all material respects. Viacom has taken, and between the date of this
Agreement and the Effective Time will continue to take, all reasonable steps to
implement the Viacom Year 2000 Plan with respect to the Viacom Systems.
Notwithstanding anything in this Section 4.16 to the contrary, Viacom does not
represent or warrant that Viacom Systems (or any other operations, systems,
equipment or software of Viacom or its subsidiaries or any of their respective
affiliates) are or will be Viacom Year 2000 Compliant at or prior to the
Effective Time, regardless of whether the Viacom Year 2000 Plan has or has not
been implemented or complied with.
(b) For purposes of this Section 4.16, (i) "Viacom Systems"
shall mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) embedded within or required
to operate the current products of Viacom and its subsidiaries, and/or material
to or necessary for Viacom and its subsidiaries to carry on their respective
businesses as currently conducted; and (ii) "Viacom Year 2000
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30
Compliant" means that Viacom Systems will (A) manage, accept, process, store and
output data involving dates reasonably expected to be encountered in the
foreseeable future and (B) accurately process date data from, into and between
the 20th and 21st centuries and each date during the years 1999 and 2000.
SECTION 4.17. Opinion of Financial Advisors. Viacom has
received the written opinion of Morgan Stanley Dean Witter & Co. (the "Viacom
Financial Advisor") on or prior to the date of this Agreement, to the effect
that, as of the date of such opinion, the Exchange Ratio is fair to the
stockholders of Viacom, from a financial point of view, and Viacom will deliver
a copy of such opinion to CBS promptly after the date of this Agreement.
SECTION 4.18. Vote Required. The affirmative vote of the
holders of a majority of the outstanding Viacom Class A Common Stock is the only
vote of the holders of any class or series of capital stock of Viacom necessary
to approve the transactions contemplated by this Agreement.
SECTION 4.19. Section 203 of Delaware Law. The Board of
Directors of Viacom has approved this Agreement and such Viacom approval is
sufficient to render inapplicable to this Agreement, the Parent Voting
Agreements and the transactions contemplated hereby and thereby the provisions
of Section 203 of Delaware Law.
SECTION 4.20. Brokers. No broker, finder or investment banker
(other than the Viacom Financial Advisor) is entitled to any brokerage, finder's
or other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Viacom.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by CBS Pending the Merger.
CBS covenants and agrees that, between the date of this Agreement and the
Effective Time, except (w) as contemplated by this Agreement or as set forth in
Section 5.01 of the CBS Disclosure Schedule, (x) as Viacom shall otherwise agree
in advance in writing, which agreement shall not be unreasonably withheld or
delayed, (y) for actions taken in connection with the consummation of the
acquisitions of King World, Outdoor Systems, Inc. and of the subsidiaries of
Gaylord that own KTVT, Dallas, Texas (the "Pending Transactions") on
substantially the same terms that have heretofore been agreed between such
parties or on such other terms and conditions which would not be reasonably
likely to have an impact that is both material and detrimental to CBS and its
subsidiaries, taken as a whole, unless Viacom shall have consented thereto, such
consent not to be unreasonably withheld or delayed, provided that CBS may not
amend or otherwise modify the terms of the CBS Series B Preferred Stock to be
received by Gaylord pursuant to the
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31
Gaylord Agreement, without the written consent of Viacom, and (z) for the
exercise of options, warrants and similar securities which would otherwise
expire prior to the Effective Time, or the exercise of any put rights, call
rights, rights of first refusal and other similar rights, in each case under
agreements in existence on the date of this Agreement and otherwise in
accordance with the terms of this Agreement, the business of CBS and its
subsidiaries shall be conducted only in, and CBS and its subsidiaries shall not
take any action except in, the ordinary course of business and in a manner
consistent with past practice; and CBS and its subsidiaries shall use their
reasonable best efforts to preserve substantially intact CBS's business
organization, to keep available the services of the current officers, employees
and consultants of CBS and its subsidiaries (provided that the foregoing
covenant to use reasonable best efforts shall not require CBS to offer retention
bonuses to such individuals) and to preserve the current relationships of CBS
and its subsidiaries with customers, distributors, dealers, suppliers and other
persons with which CBS and its subsidiaries have significant business relations.
By way of amplification and not limitation, between the date of this Agreement
and the Effective Time, CBS will not do, and will not permit any of its
subsidiaries to do, directly or indirectly, any of the following except in
compliance with the exceptions listed above:
(a) amend or otherwise change the Articles of Incorporation or
By-laws of CBS or any CBS subsidiary other than Infinity if such
amendment or change would have a CBS Material Adverse Effect;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of its or its subsidiaries' capital stock, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of its or its subsidiaries' capital stock or any
other ownership interest (including any phantom interest), of CBS or
any of its subsidiaries (except (A) for the issuance of Shares issuable
pursuant to CBS Options or shares of Infinity common stock pursuant to
Infinity stock options outstanding on the date hereof, (B) for the
issuance of options, and other stock grants of CBS or Shares which
(other than as permitted under any severance arrangement established by
CBS in accordance with Section 6.16 hereof or with respect to 1,200,000
options to be issued to two senior executives of King World upon its
acquisition by CBS) do not provide for accelerated vesting in
connection with the Merger and the other transactions contemplated by
this Agreement, (x) to purchase a maximum of 5,000,000 Shares, (y) to
purchase a maximum of 17,200,000 Shares as set forth in Section 5.01 of
the CBS Disclosure Schedule and (z) to purchase a maximum of 12,500,000
shares of Infinity common stock as set forth in Section 5.01 of the CBS
Disclosure Schedule, in each case in the ordinary course of business
consistent with past practice and allocated to persons who are
officers, employees, directors, independent contractors and production
company writers and talent of CBS or Infinity, as applicable, or any of
their respective subsidiaries (including past practice of any such
subsidiary before its acquisition by CBS) and (C) the issuance of
shares of CBS and Infinity stock in connection with the Pending
Transactions (including the issuance of shares of CBS Series
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32
B Preferred Stock and the issuance of shares of CBS Common Stock upon
conversion of CBS Series B Preferred Stock in accordance with its terms
and the terms and conditions of the Gaylord Agreement and other
agreements and documents executed in connection therewith), or (ii) any
assets material to CBS and its subsidiaries, taken as a whole, except
for sales in the ordinary course of business and in a manner consistent
with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its or its subsidiaries' capital stock other than
cash dividends payable by any wholly owned CBS subsidiary to another
CBS subsidiary or CBS and other than dividends made or paid by
Infinity, so long as the aggregate amount of such dividends paid by
Infinity shall not exceed $500,000,000;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its or its
subsidiaries' capital stock;
(e) (i) except in connection with the Pending Transactions and
in connection with acquisitions which individually do not exceed
$200,000,000 and in the aggregate do not exceed $1,000,000,000 (A)
acquire (including by merger, consolidation, or acquisition of stock or
assets), or otherwise make any investment in, any corporation,
partnership, limited liability company, other business organization or
any division thereof, or any material amount of assets; or (B) incur
any indebtedness for borrowed money, issue any debt securities, assume,
guarantee or endorse, or otherwise as an accommodation become
responsible for, the obligations of any person, agree to amend or
otherwise modify in any manner any agreement or instrument pursuant to
which CBS has incurred indebtedness, or make any loans or advances,
except in the ordinary course of business and consistent with past
practice, except the refinancing of existing indebtedness, borrowings
under commercial paper programs in the ordinary course of business or
borrowings under existing bank lines of credit in the ordinary course
of business, (ii) enter into any material contract, agreement or
transaction, other than (X) in the ordinary course of business, and (Y)
which would not be reasonably likely to prevent or materially delay the
consummation of the Merger, (iii) authorize any capital expenditures
which are, in the aggregate, in excess of the amounts currently
budgeted for the fiscal year 1999 (including the applicable 1999
capital expenditures of the companies subject to the Pending
Transactions) and, with respect to fiscal year 2000, 10% in excess of
such amount, in each case for CBS and its subsidiaries taken as a whole
or (iv) enter into or amend any contract, agreement, commitment or
arrangement which would require CBS to take any action prohibited by
this subsection (e) and will, or will cause Infinity to, not amend in
any material respect, or waive any material right or condition under or
relating to the definitive agreements relating to the Pending
Transactions, in each case except for any such amendment or waiver the
impact of which would not be reasonably likely to be both material and
detrimental to CBS and its subsidiaries, taken as a whole;
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33
(f) increase the compensation payable or to become payable to
its executive officers or employees, except as set forth in Section
6.16 or as required by Law or by the terms of any collective bargaining
agreement or other agreement currently in effect between CBS or any
subsidiary of CBS and any executive officer or employee thereof and
except for increases in the ordinary course of business in accordance
with past practices, or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director or
executive officer of it or any of its subsidiaries, or establish,
adopt, enter into or amend in any material respect or take action to
accelerate any rights or benefits under any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, executive officer or
employee, provided that this clause shall not prevent any CBS
subsidiary from (i) entering into employment contracts with newly-hired
or promoted executive officers, or from making severance payments, on
terms substantially consistent with the contractual arrangements
currently existing at such subsidiary or (ii) providing for the payment
of severance to executive officers or employees on terms substantially
consistent with the past practices of such subsidiary (including past
practice preceding such subsidiaries' acquisition by CBS);
(g) change in any material respect (except as required by the
SEC or changes in United States generally accepted accounting
principles which become effective after the date of this Agreement) any
accounting policies, practices or procedures;
(h) make any tax election that, individually or in the
aggregate, would have a CBS Material Adverse Effect or settle or
compromise any material Tax liability; or
(i) enter into any contract, agreement, lease, license,
permit, franchise or other instrument or obligation which if in
existence and known to CBS prior to the date of this Agreement would
have resulted in a breach of Section 3.05, except to the extent the
conflict, violation, breach, default or occurrence of the type referred
to therein giving rise to such breach would not have a CBS Material
Adverse Effect;
provided that Infinity shall not be prohibited from taking any action under this
Section 5.01 which the Board of Directors of Infinity determines is required to
be taken in the exercise of the Board's fiduciary duties to the stockholders of
Infinity (other than CBS).
SECTION 5.02. Conduct of Business by Viacom Pending the
Merger. Viacom covenants and agrees that, between the date of this Agreement and
the Effective Time, except (w) as contemplated by this Agreement or as set forth
in Schedule 5.02 of the Viacom Disclosure Schedule, (x) as CBS shall otherwise
agree in advance in writing, which agreement shall not be unreasonably withheld
or delayed, (y) for the exercise of options, warrants and similar securities
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34
which would otherwise expire prior to the Effective Time, or the exercise of any
put rights, call rights, rights of first refusal and other similar rights, in
each case under agreements in existence on the date of this Agreement and
otherwise in accordance with the terms of this Agreement and (z) an exchange
offer of Blockbuster shares owned by Viacom for shares of Viacom Class B Common
Stock owned by the stockholders of Viacom (the "Split-off") in accordance with
the procedures set forth in Section 5.02 of the Viacom Disclosure Schedule, the
business of Viacom and its subsidiaries shall be conducted only in, and Viacom
and its subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and Viacom and its
subsidiaries shall use their reasonable best efforts to preserve substantially
intact Viacom's business organization, to keep available the services of the
current officers, employees and consultants of Viacom and its subsidiaries
(provided that the foregoing covenant to use reasonable best efforts shall not
require Viacom to offer retention bonuses to such individuals) and to preserve
the current relationships of Viacom and its subsidiaries with customers,
distributors, suppliers and other persons with which Viacom and its subsidiaries
have significant business relations. By way of amplification and not limitation,
between the date of this Agreement and the Effective Time, Viacom will not do,
and will not permit any of its subsidiaries to do, directly or indirectly, any
of the following except in compliance with the exceptions listed above:
(a) amend or otherwise change the Certificate of Incorporation
or By-laws of Viacom or Blockbuster, or any other Viacom subsidiary if
such amendment or change would have a Viacom Material Adverse Effect;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of its or its subsidiaries' capital stock, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of its or its subsidiaries' capital stock or any
other ownership interest (including any phantom interest), of Viacom or
any of its subsidiaries (except (A) for the issuance of Shares issuable
pursuant to Viacom Options outstanding on the date hereof and (B) for
the issuance of options, which do not provide for accelerated vesting
or other consequences in connection with the Merger and the other
transactions contemplated by this Agreement, to purchase a maximum of
6,000,000 shares of Viacom Class B Common Stock in the ordinary course
of business consistent with past practice and allocated to persons who
are officers, employees, directors, independent contractors and
production company writers and talent of Viacom or any of its
subsidiaries on a basis substantially consistent with past practice),
or (ii) any assets material to Viacom and its subsidiaries, taken as a
whole, except for sales in the ordinary course of business and in a
manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its or its subsidiaries' capital stock other than
cash dividends payable by any wholly owned Viacom subsidiary to
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35
another Viacom subsidiary or Viacom, other than dividends made or paid
by Blockbuster, so long as the aggregate amount of such dividends paid
by Blockbuster shall not exceed $50,000,000;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its or its
subsidiaries' capital stock;
(e) (i) except in connection with acquisitions which
individually do not exceed $200,000,000 and in the aggregate do not
exceed $1,000,000,000 (A) acquire (including by merger, consolidation,
or acquisition of stock or assets), or otherwise make any investment
in, any corporation, partnership, limited liability company, other
business organization or any division thereof, or any material amount
of assets; or (B) incur any indebtedness for borrowed money, issue any
debt securities, assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person,
agree to amend or otherwise modify in any manner any agreement or
instrument pursuant to which Viacom has incurred indebtedness, or make
any loans or advances, except in the ordinary course of business and
consistent with past practice, except the refinancing of existing
indebtedness, borrowings under commercial paper programs in the
ordinary course of business or borrowings under existing bank lines of
credit in the ordinary course of business, (ii) enter into any
contract, agreement or transaction, other than (X) in the ordinary
course of business, consistent with past practice and (Y) which would
not be reasonably likely to prevent or materially delay the
consummation of the Merger, (iii) authorize any capital expenditures
which are, in the aggregate, in excess of the amount currently budgeted
therefor (and previously disclosed to CBS) for the fiscal year ending
December 31, 1999, and, with respect to fiscal year December 31, 2000,
10% in excess of such amount, in each case for Viacom and its
subsidiaries taken as a whole or (iv) enter into or amend any contract,
agreement, commitment or arrangement which would require Viacom to take
any action prohibited by this subsection (e);
(f) increase the compensation payable or to become payable to
its executive officers or employees, except as required by Law or by
the terms of any collective bargaining agreement or other agreement
currently in effect between Viacom or any subsidiary of Viacom and any
executive officer or employee thereof and except for increases in the
ordinary course of business in accordance with past practices, or grant
any severance or termination pay to, or enter into any employment or
severance agreement with, any director or executive officer of it or
any of its subsidiaries, or establish, adopt, enter into or amend in
any material respect or take action to accelerate any rights or
benefits under any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any director, executive officer or employee, provided that
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36
this clause shall not prevent any Viacom subsidiary from (i) entering
into employment contracts with newly-hired or promoted executive
officers on terms substantially consistent with the contractual
arrangements currently existing at such subsidiary or (ii) providing
for the payment of severance to executive officers or employees on
terms substantially consistent with the past practices of such
subsidiary;
(g) change in any material respect (except as required by the
SEC or changes in United States generally accepted accounting
principles which become effective after the date of this Agreement) any
accounting policies, practices or procedures;
(h) make any tax election that, individually or in the
aggregate, would have a Viacom Material Adverse Effect or settle or
compromise any material Tax liability; or
(i) enter into any contract, agreement, lease, license,
permit, franchise or other instrument or obligation which if in
existence and known to Viacom prior to the date of this Agreement would
have resulted in a breach of Section 4.05, except to the extent the
conflict, violation breach, default or occurrence of the type referred
to therein giving rise to such breach would not have a Viacom Material
Adverse Effect;
provided that Blockbuster shall not be prohibited from taking any action under
this Section 5.02 which the Board of Directors of Blockbuster determines is
required to be taken in the exercise of the Board's fiduciary duties to the
stockholders of Blockbuster (other than Viacom).
SECTION 5.03. Other Actions. Except as required by Law, CBS
and Viacom shall not, and shall not permit any of their respective subsidiaries
to, take any action that would, or that is reasonably likely to, result in any
of the conditions to the Merger set forth in Article VII not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, (i) Viacom
and CBS shall cooperate in preparing and each shall cause to be filed with the
SEC a joint proxy statement (together with any amendments thereof or supplements
thereto, the "Proxy Statement") relating to the meetings of Viacom's and CBS's
stockholders to be held to consider approval and adoption of this Agreement and
the Viacom Proposal and (ii) Viacom shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with
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the registration under the Securities Act of the shares of Viacom Class B Common
Stock (including such shares of Viacom Class B Common Stock into which the
Viacom Series C Preferred Stock is convertible) and the shares of Viacom Series
C Preferred Stock to be issued to the shareholders of CBS pursuant to the
Merger. Each of Viacom and CBS shall use its reasonable best efforts to cause
the Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Viacom shall use
reasonable best efforts to take all or any action required under any applicable
federal or state securities Laws in connection with the issuance of shares of
Viacom Class B Common Stock (including such shares of Viacom Class B Common
Stock into which the Viacom Series C Preferred Stock is convertible) and the
shares of Viacom Series C Preferred Stock pursuant to the Merger. Each of Viacom
and CBS shall furnish all information concerning it as may reasonably be
requested by the other party in connection with such actions and the preparation
of the Registration Statement and Proxy Statement. As promptly as practicable
after the Registration Statement shall have become effective, each of Viacom and
CBS shall mail the Proxy Statement to its stockholders and to its shareholders,
respectively. Each of Viacom and CBS shall also promptly file, use reasonable
best efforts to cause to become effective as promptly as practicable and, if
required, mail to its stockholders and shareholders, respectively, any amendment
to the Registration Statement or Proxy Statement which may become necessary
after the date the Registration Statement is declared effective.
(b) (i) The Proxy Statement shall include the recommendation
of the Board of Directors of Viacom to the stockholders of Viacom in favor of
approval of the Viacom Proposal; provided, however, that the Board of Directors
of Viacom may take or disclose to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or make any disclosure required
under applicable Law and may, prior to the date of its Stockholders' Meeting,
withdraw, modify, or change any such recommendation to the extent that the Board
of Directors of Viacom determines in good faith that such withdrawal,
modification or change is required in order to comply with its fiduciary duties
to Viacom's stockholders under applicable Law after receiving advice from
independent legal counsel (who may be Viacom's regularly engaged outside legal
counsel).
(ii) The Proxy Statement shall include the recommendation of
the Board of Directors of CBS to the shareholders of CBS in favor of adoption of
this Agreement; provided, however, that the Board of Directors of CBS may take
or disclose to its shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or make any disclosure required under
applicable Law and may, prior to the date of its Stockholders' Meeting,
withdraw, modify, or change any such recommendation to the extent that the Board
of Directors of CBS determines in good faith that such withdrawal, modification
or change is required in order to comply with its fiduciary duties under
applicable Law after receiving advice from independent legal counsel (who may be
CBS's regularly engaged outside legal counsel).
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(c) Notwithstanding any withdrawal, modification or change in
any approval or recommendation of the Board of Directors of CBS or Viacom, as
the case may be, each of CBS and Viacom agree to hold their respective
Stockholders Meeting in accordance with the time period specified in Section
6.02.
(d) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Viacom or CBS without the approval of the
other party, which shall not be unreasonably withheld or delayed. Each of Viacom
and CBS will advise the other, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective or any supplement or
amendment has been filed, the issuance of any stop order, the suspension of the
qualification of the Viacom Class B Common Stock or the Viacom Series C
Preferred Stock issuable in connection with the Merger for offering or sale in
any jurisdiction, or any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(e) The information supplied by CBS for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders and shareholders of
Viacom and CBS, respectively, (iii) the time of each of the Stockholders'
Meetings (as hereinafter defined), and (iv) 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 not
misleading. If at any time prior to the Effective Time any event or circumstance
relating to CBS or any of its subsidiaries, or their respective officers or
directors, should be discovered by CBS which, pursuant to the Securities Act or
Exchange Act, should be set forth in an amendment or a supplement to the
Registration Statement or Proxy Statement, CBS shall promptly inform Viacom. All
documents that CBS is responsible for filing with the SEC in connection with the
Merger will comply as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(f) The information supplied by Viacom for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Viacom and the
shareholders of CBS, (iii) the time of each of the Stockholders' Meetings, and
(iv) 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 not misleading. If at any time prior to the
Effective Time any event or circumstance relating to Viacom or any of its
subsidiaries, or their respective officers or directors, should be discovered by
Viacom which, pursuant to the Securities Act or Exchange Act, should be set
forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, Viacom shall promptly inform CBS. All documents that Viacom is
responsible for filing with the SEC in connection with the
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39
Merger will comply as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act.
(g) Viacom and CBS each hereby (i) consents to the use of its
name and, on behalf of its subsidiaries and affiliates, the names of such
subsidiaries and affiliates and to the inclusion of financial statements and
business information relating to such party and its subsidiaries and affiliates
(in each case, to the extent required by applicable securities laws) in any
registration statement or proxy statement prepared by Viacom, CBS or any person
or entity with which Viacom or CBS, consistent with their obligations under this
Agreement, has entered into, or may prior to the Effective Time enter into, a
definitive acquisition agreement, (ii) agrees to use its reasonable best efforts
to obtain the written consent of any person or entity retained by it which may
be required to be named (as an expert or otherwise) in such registration
statement or proxy statement; provided that such party shall not be required to
make any material payment to such person or entity in connection with such
party's efforts to obtain any such consent, and (iii) agrees to cooperate, and
agrees to use its reasonable best efforts to cause its subsidiaries and
affiliates to cooperate, with any legal counsel, investment banker, accountant
or other agent or representative retained by any of the parties specified in
clause (i) in connection with the preparation of any and all information
required, as determined after consultation with each party's counsel, to be
disclosed by applicable securities laws in any such registration statement or
proxy statement.
(h) CBS and Viacom will use their best efforts to complete the
pro forma financial statements with respect to the Merger, in a form suitable
for filing in connection with a registration statement under the Securities Act,
as soon as possible, and in any event within 10 days after the execution of this
Agreement.
(i) CBS shall consult with Viacom, and provide Viacom
reasonable opportunity to review and comment on, and CBS and Viacom will use
their respective reasonable best efforts to agree on, CBS's and Infinity's
accounting for the Pending Transactions.
SECTION 6.02. Stockholders' Meetings. Each of Viacom and CBS
shall call and hold a meeting of its stockholders or shareholders, respectively
(collectively, the "Stockholders' Meetings"), as promptly as practicable for the
purpose of voting upon, in the case of Viacom, the Viacom Proposal, and, in the
case of CBS, the adoption of this Agreement, and CBS and Viacom shall hold the
Stockholders' Meeting as soon as practicable after the date on which the
Registration Statement becomes effective and will use reasonable best efforts to
hold the Stockholders' Meetings on the same day. Each of Viacom and CBS shall
use its reasonable best efforts to solicit from its stockholders proxies in
favor of the adoption of this Agreement, in the case of CBS, and the Viacom
Proposal, in the case of Viacom, and shall take all other action necessary or
advisable to secure the vote of its stockholders and shareholders, respectively,
required by the NYSE, Pennsylvania Law or Delaware Law, as applicable, to obtain
such approvals; provided, however, that Viacom or CBS, as applicable, shall not
be obligated to solicit
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proxies in favor of the adoption of this Agreement, in the case of CBS, or in
favor of the Viacom Proposal, in the case of Viacom, at its Stockholders'
Meeting to the extent that the Board of Directors of Viacom or CBS, as
applicable, determines in good faith that such failure to solicit proxies is
required in order to comply with its fiduciary duties under applicable Law after
receiving advice to such effect from independent legal counsel (who may be such
party's regularly engaged outside legal counsel); provided further, however,
that notwithstanding anything to the contrary in the foregoing, each of CBS and
Viacom shall hold its Stockholders Meeting in accordance with the time periods
specified in the first sentence of this Section 6.02.
SECTION 6.03. Appropriate Action; Consents; Filings. (a) Each
of the parties hereto shall (i) make promptly its respective filings, and
thereafter make any other required submissions under the HSR Act with respect to
the transactions contemplated herein and (ii) make promptly filings with or
applications to the FCC with respect to the transactions contemplated herein.
The parties hereto will use their respective best efforts, and will take all
actions necessary, to consummate and make effective the transactions
contemplated herein and to cause the conditions to the Merger set forth in
Article VII to be satisfied, (including using best efforts, and taking all
actions necessary, to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the transactions contemplated herein),
and will do so in a manner designed to obtain such regulatory clearance and the
satisfaction of such conditions as expeditiously as possible.
(b) CBS and Viacom each agree to take promptly any and all
steps necessary to avoid or eliminate each and every impediment and obtain all
consents or waivers under any antitrust, competition or communications or
broadcast Law that may be asserted by any U.S. federal, state and local and
non-United States antitrust or competition authority, or by the FCC or similar
authority, so as to enable the parties to close the transactions contemplated by
this Agreement as expeditiously as possible, including committing to or
effecting, by consent decree, hold separate orders, trust, or otherwise, the
sale or disposition of such of its assets or businesses as are required to be
divested in order to obtain the consent of the FCC to or avoid the entry of, or
to effect the dissolution of, any decree, order, judgment, injunction, temporary
restraining order or other order in any suit or proceeding, that would otherwise
have the effect of preventing or materially delaying the consummation of the
Merger and the other transactions contemplated by this Agreement. In addition,
each of CBS and Viacom agree to take promptly any and all steps necessary to
obtain any consent or to vacate or lift any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority (each, an "Order") relating to antitrust or communications or
broadcast matters that would have the effect of making any of the transactions
contemplated by this Agreement illegal or otherwise prohibiting or materially
delaying their consummation. The parties will expeditiously agree on a complete
plan for compliance with applicable FCC ownership requirements for inclusion in
the FCC filings and will expeditiously make such filings (including such agreed
plan) with the FCC following the date of this Agreement.
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(c) Each of Viacom and CBS shall give (or shall cause its
respective subsidiaries to give) any notices to third parties, and Viacom and
CBS shall use, and cause each of its subsidiaries to use, its reasonable best
efforts to obtain any third party consents, necessary, proper or advisable to
consummate the Merger. Each of the parties hereto will furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with the preparation of any required governmental filings or
submissions and will cooperate in responding to any inquiry from a Governmental
Authority, including immediately informing the other party of such inquiry,
consulting in advance before making any presentations or submissions to a
Governmental Authority, and supplying each other with copies of all material
correspondence, filings or communications between either party and any
Governmental Authority with respect to this Agreement.
SECTION 6.04. Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, to the extent permitted by applicable Law
and contracts, Viacom will provide to CBS (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") access to all information and
documents which CBS may reasonably request regarding the business, assets,
liabilities, employees and other aspects of Viacom.
(b) From the date hereof to the Effective Time, to the extent
permitted by applicable Law and contracts, CBS will provide to Viacom and its
Representatives access to all information and documents which Viacom may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of CBS.
(c) The parties shall comply with, and shall cause their
respective Representatives to comply with all of their respective obligations
under the Confidentiality Agreement dated August 27, 1999 (the "Confidentiality
Agreement") between CBS and Viacom.
(d) No investigation pursuant to this Section 6.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. (a)
CBS shall not, directly or indirectly, through any officer, director, agent or
otherwise, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information), or take any other action knowingly 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 below),
or enter into or maintain or continue discussions or negotiate with any person
or entity in furtherance of such inquiries or to obtain a Competing Transaction,
or agree to or endorse any Competing Transaction, or authorize any of the
officers, directors or employees of CBS or any investment banker, financial
advisor, attorney, accountant or other agent or representative of CBS to take
any such action, and CBS shall notify Viacom as promptly as practicable of all
of the relevant
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material details relating to all inquiries and proposals which CBS or any such
officer, director, employee, investment banker, financial advisor, attorney,
accountant or other agent or representative may receive relating to any of such
matters, provided, however, that prior to the adoption of this Agreement by the
shareholders of CBS, nothing contained in this Section 6.05 shall prohibit the
Board of Directors of CBS from (i) furnishing information to, or entering into
and engaging in discussions or negotiations with, any person that makes a bona
fide unsolicited written proposal that the Board of Directors of CBS determines
in good faith, after consultation with CBS's financial advisors and independent
legal counsel, can be reasonably expected to result in a CBS Superior Proposal;
provided that prior to furnishing such information to, or entering into
discussions or negotiations with, such person, CBS (1) provides notice to Viacom
to the effect that it is furnishing information to, or entering into discussions
or negotiations with, such person and provides in any such notice to Viacom in
reasonable detail the identity of the person making such proposal and the
material terms and conditions of such proposal, (2) provides Viacom with all
information regarding CBS provided or to be provided to such person which Viacom
has not previously been provided, and provided further that CBS shall keep
Viacom informed, on a prompt basis, of the status and material terms of any such
proposal and the status of any such discussions and negotiations and (3)
receives from such person or entity an executed confidentiality agreement
containing customary terms (which need not contain "standstill" or similar
provisions), (ii) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer or making any disclosure required
under applicable Law or (iii) failing to make or withdrawing or modifying its
recommendation referred to in Section 6.01 following the making of a CBS
Superior Proposal if, solely in the case of this clause (iii), the Board of
Directors of CBS, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors of CBS to comply with its fiduciary duties
under applicable law.
(b) For purposes of this Agreement, "Competing Transaction"
shall mean any of the following involving CBS: (i) any merger, consolidation,
share exchange, business combination, issuance or purchase of securities or
other similar transaction other than transactions specifically permitted
pursuant to Section 5.01 of this Agreement; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of the assets of CBS in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for CBS securities or the filing of a registration statement
under the Securities Act in connection with any such exchange offer; in the case
of clauses (i), (ii) or (iii) above, which transaction would result in a third
party (or its shareholders) acquiring more than 35% of the voting power of the
Shares then outstanding or more than 35% of the assets of CBS and its
subsidiaries, taken as a whole; or (iv) any public announcement of an agreement,
proposal, plan or intention to do any of the foregoing, either during the
effectiveness of this Agreement or at any time thereafter.
(c) For purposes of this Agreement, a "CBS Superior Proposal"
means any proposal made by a third party which would result in such party (or in
the case of a parent-to-parent merger, its stockholders) acquiring, directly or
indirectly, including pursuant to a tender
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offer, exchange offer, merger, consolidation, share exchange, business
combination, share purchase, asset purchase, recapitalization, liquidation,
dissolution, joint venture or similar transaction, more than 50% of the voting
power of the Shares then outstanding or all or substantially all the assets of
CBS and its subsidiaries, taken as a whole, for consideration which the Board of
Directors of CBS determines in its good faith judgment to be more favorable to
CBS's shareholders than the Merger.
SECTION 6.06. Directors' and Officers' Indemnification and
Insurance. (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 Viacom on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at any time prior to the Effective Time
were directors or officers of CBS 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) The Surviving Corporation shall maintain in effect for six
years from the Effective Time directors' and officers' liability insurance
covering those persons who are currently covered by CBS's directors' and
officers' liability insurance policy on terms comparable to such existing
insurance coverage; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 6.06 more than an
amount per year equal to 300% of current annual premiums paid by CBS for such
insurance; and provided further that if the annual premiums exceed such amount,
Viacom shall be obligated to obtain a policy with the greatest coverage
available for an annual cost not exceeding such amount.
(c) This Section 6.06 shall survive the consummation of the
Merger, is intended to benefit each indemnified party, shall be binding, jointly
and severally, on all successors and assigns of the Surviving Corporation, and
shall be enforceable by the indemnified parties and their successors.
SECTION 6.07. Notification of Certain Matters. CBS shall give
prompt notice to Viacom, and Viacom shall give prompt notice to CBS, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence, of
which would be likely to cause (x) any representation or warranty contained in
this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of CBS or Viacom, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.07 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
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SECTION 6.08. Tax Treatment. (a) The Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code.
(b) Between the date of this Agreement and the Effective Time,
neither CBS nor Viacom nor their affiliates shall directly or indirectly take
any action that could prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code, that could prevent each of them from providing
representations required from them in Sections 7.02(c) or 7.03(c), or that could
prevent the opinions described in such Sections from being provided. Each of
them shall use all reasonable efforts to cause the opinions described in such
Sections to be provided, and to cause similar opinions to be provided at the
date of filing of the Registration Statement.
(c) Neither CBS nor Viacom shall (without the consent of the
other) take any action, except as specifically contemplated by this Agreement,
that could adversely affect the intended tax treatment of the Pending
Transactions.
SECTION 6.09. Stock Exchange Listing. Viacom shall as promptly
as reasonably practicable prepare and submit to NYSE a listing application
covering the shares of Viacom Class B Common Stock to be issued in the Merger,
the shares of Viacom Class B Common Stock underlying the CBS Options outstanding
immediately prior to the Effective Time and the shares of Viacom Class B Common
Stock issuable upon conversion of the Viacom Series C Preferred Stock and shall
use its best efforts to cause such shares to be approved for listing on the NYSE
prior to the Effective Time.
SECTION 6.10. Public Announcements. Viacom and CBS shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement and shall not issue any such
press release or make any such public statement without the prior consent of the
other (which consent shall not be unreasonably withheld or delayed), except as
may be required by Law or any listing agreement with the NYSE to which Viacom or
CBS is a party. The parties have agreed on the text of a joint press release by
which Viacom and CBS will announce the execution of this Agreement.
SECTION 6.11. Viacom's Directors. The Board of Directors of
Viacom shall take all such action as may be necessary to cause the number of
directors on the Board of Directors of Viacom to be increased to eighteen as of
the Effective Time and to cause to be appointed to the Board of Directors of
Viacom as of the Effective Time eight designees of CBS, one of whom shall be Mel
Karmazin (unless Mel Karmazin shall no longer be available to serve in such
capacity) and the other seven of whom shall consist of CBS directors designated
in writing by CBS to Viacom prior to the Effective Time as set forth in Exhibit
A-1 hereto.
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SECTION 6.12. Rights Agreement. The Board of Directors of CBS
shall take such action as is necessary to render the Rights inapplicable to the
Merger and the other transactions contemplated by this Agreement.
SECTION 6.13. Assumption of Debt and Leases. (a) With respect
to debt issued by CBS under indentures qualified under the Trust Indenture Act
of 1939, and any other debt of CBS the terms of which require Viacom to assume
such debt in order to avoid default thereunder (collectively, the "CBS
Indentures"), Viacom shall execute and deliver to the trustees or other
representatives in accordance with the terms of the respective CBS Indentures,
Supplemental Indentures, in form satisfactory to the respective trustees or
other representatives, expressly assuming the obligations of CBS with respect to
the due and punctual payment of the principal of (and premium, if any) and
interest, if any, on all debt securities issued by CBS under the respective
Indentures and the due and punctual performance of all the terms, covenants and
conditions of the respective CBS Indentures to be kept or performed by CBS and
shall deliver such Supplemental Indentures to the respective trustees or other
representatives under the CBS Indentures.
(b) Viacom shall, promptly upon the reasonable request of CBS,
provide CBS with a letter which states that Viacom agrees that, as the Surviving
Corporation in the Merger, as of and following the Effective Time, it will
succeed to, honor, and satisfy all obligations and liabilities of CBS.
SECTION 6.14. Affiliates of CBS. CBS represents and warrants
to Viacom that prior to the date of the CBS Stockholders' Meeting CBS will
deliver to Viacom a letter identifying all persons who may be deemed affiliates
of CBS under Rule 145 of the Securities Act, including, without limitation, all
directors and executive officers of CBS, and CBS represents and warrants to
Viacom that CBS has advised the persons identified in such letter of the resale
restrictions imposed by applicable securities laws. CBS shall use its reasonable
best efforts to obtain from each person identified in such letter a written
agreement, substantially in the form of Exhibit 6.14. CBS shall use its
reasonable best efforts to obtain as soon as practicable from any person who may
be deemed to have become an affiliate of CBS after CBS's delivery of the letter
referred to above and prior to the Effective Time, a written agreement
substantially in the form of Exhibit 6.14.
SECTION 6.15. Prior Service. With respect to any medical and
dental benefits provided to Continuing Employees as of or following the
Effective Time under Viacom's benefit plans, Viacom agrees that it will waive
waiting periods and pre-existing condition requirements under such plans (to the
extent waived under CBS's plans), and will give Continuing Employees credit for
any co-payments and deductibles actually paid by such employees under CBS's
medical and dental plans during the calendar year in which the Effective Time
occurs. In addition, service with CBS shall be recognized for all purposes under
Viacom's compensation and benefit plans, programs, policies and arrangements,
except where crediting such service would result in a
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duplication of benefits. Without limiting the generality of the foregoing,
Viacom shall honor all vacation, personal and sick days accrued by Continuing
Employees under CBS's plans, policies, programs and arrangements immediately
prior to the Effective Time.
SECTION 6.16. Employee Matters. (a) Viacom may establish
retention and severance arrangements for its officers or employees consistent
with the terms and conditions set forth in Section 6.16 of the Viacom Disclosure
Schedule (the "Viacom Employee Arrangements").
(b) CBS may establish retention and severance and similar
compensation arrangements for its officers or employees; provided that the
aggregate amount expended pursuant to such arrangements does not materially
exceed the estimated value of the Viacom Employee Arrangements.
(c) Each of CBS and Viacom shall consult with the other on the
design and implementation of the retention arrangements and the allocations of
the payments thereunder.
SECTION 6.17. Gaylord. CBS shall, if permitted under the terms
of the Gaylord Proxy, exercise its rights under the Gaylord Proxy to vote the
shares of CBS Series B Preferred Stock held by Gaylord in favor of adoption of
this Agreement at the CBS Stockholders' Meeting, or any adjournment or
postponement thereof, and shall not waive or transfer to any person its rights
under the Gaylord Proxy.
SECTION 6.18. Gaylord Tax Matters. CBS covenants and agrees
that, between October 8, 1999 and the Effective Time, CBS shall not, without
Viacom's consent, take any action or permit any action to be taken that would
cause Viacom to be in violation of any provision of the First Amendment to the
Amended and Restated Tax Matters Agreement (as referred to in the Gaylord
Agreement), at the time such amendment is executed in the form attached as Annex
A to the Amended and Restated Tax Matters Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of CBS and Viacom to consummate the Merger are subject to the
satisfaction or waiver of the following conditions:
(a) (i) this Agreement shall have been adopted by the
affirmative vote of a majority of the votes cast by all shareholders
entitled to vote at the CBS Stockholders' Meeting in accordance with
Pennsylvania Law and CBS's Articles of Incorporation and
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(ii) the Viacom Proposal shall have been approved by the affirmative
vote of the holders of a majority of the Viacom Class A Common Stock;
(b) any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated;
(c) no Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any Law, rule, regulation, executive order or Order which is
then in effect and has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger;
(d) the Registration Statement shall have been declared
effective, and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such
purpose shall be pending before or threatened by the SEC;
(e) (i) all authorizations, consents, waivers, orders or
approvals for the Merger required to be obtained and all conditions
precedent to such authorizations, consents, waivers, orders or
approvals shall have been satisfied, and all filings, notices or
declarations required to be made, by Viacom and CBS prior to the
consummation of the Merger and the transactions contemplated hereunder,
shall have been obtained from, and made with, the FCC and competition
and antitrust Governmental Authorities in Canada and either the
European Union or the United Kingdom, as applicable, and (ii) all other
authorizations, consents, waivers, orders or approvals for the Merger
required to be obtained, and all other filings, notices or declarations
required to be made, by Viacom and CBS prior to the consummation of the
Merger and the transactions contemplated hereunder, shall have been
obtained from, and made with, all required Governmental Entities,
except for such authorizations, consents, waivers, orders, approvals,
filings, notices or declarations the failure to obtain or make which
would not have a material adverse effect, at or after the Effective
Time, on the business, results of operations or financial condition of
CBS and its subsidiaries and Viacom and its subsidiaries, collectively
taken as a whole; and
(f) the shares of Viacom Class B Common Stock issuable to
CBS's shareholders in the Merger, to holders of CBS Options outstanding
immediately prior to the Effective Time and upon conversion of the
Viacom Series C Preferred Stock shall have been authorized for listing
on the NYSE, subject to official notice of issuance.
SECTION 7.02. Conditions to the Obligations of Viacom. The
obligations of Viacom to consummate the Merger are subject to the satisfaction
or waiver of the following further conditions:
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48
(a) each of the representations and warranties of CBS
contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time (except
to the extent expressly made as of an earlier date, in which case as of
such date), except where the failure to be so true and correct would
not have, individually or in the aggregate, a CBS Material Adverse
Effect, and Viacom shall have received a certificate of an officer of
CBS to such effect;
(b) CBS shall have performed or complied in all material
respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and Viacom shall have received a certificate of an
officer of CBS to that effect; and
(c) Viacom shall have received the opinion of Paul, Weiss,
Rifkind, Wharton & Garrison, in form and substance reasonably
satisfactory to Viacom, to the effect that the Merger will be treated
for federal income tax purposes as a reorganization qualifying under
the provisions of Section 368(a) of the Code, and Viacom and CBS will
each be a party to the reorganization within the meaning of Section
368(b) of the Code. In rendering such opinion, counsel may require and
rely upon representations contained in certificates of officers of CBS
and Viacom.
SECTION 7.03. Conditions to the Obligations of CBS. The
obligations of CBS to consummate the Merger are subject to the satisfaction or
waiver of the following further conditions:
(a) each of the representations and warranties of Viacom
contained in this Agreement shall be true and correct as of the
Effective Time as though made on and as of the Effective Time (except
to the extent expressly made as of an earlier date, in which case as of
such date), except where failure to be so true and correct would not
have, individually or in the aggregate, a Viacom Material Adverse
Effect, and CBS shall have received a certificate of an officer of
Viacom to such effect;
(b) Viacom shall have performed or complied in all material
respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time, and CBS shall have received a certificate of an officer
of Viacom to that effect; and
(c) CBS shall have received the opinion of Cravath, Swaine &
Moore, in form and substance reasonably satisfactory to CBS, to the
effect that the Merger will be treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section 368(a)
of the Code, and Viacom and CBS will each be a party to such
reorganization within the meaning of Section 368(b) of the Code. In
rendering such
<PAGE>
49
opinion, counsel may require and rely upon representations contained in
certificates of officers of Viacom and CBS.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement, as
follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Viacom and CBS;
(b) by either Viacom or CBS, if the Effective Time shall not
have occurred on or before August 31, 2000; provided, however, that the
right to terminate this Agreement under this Section 8.01(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Effective Time to occur by such time;
(c) by CBS upon delivery to Viacom of written notice that a
Competing Proposal constitutes a CBS Superior Proposal; provided,
however, that such termination pursuant to this subsection (c) shall
not be effective until two business days have elapsed following
delivery to Viacom of such written notice (which written notice will
inform Viacom of the material terms and conditions of the CBS Superior
Proposal); provided further, however, that such termination under this
subsection (c) shall not be effective until CBS has made payment to
Viacom of the amounts required to be paid pursuant to Section 8.05;
(d) by either CBS or Viacom, if this Agreement shall fail to
receive the requisite vote for adoption at the CBS Stockholders'
Meeting;
(e) by CBS, upon a breach of any representation, warranty,
covenant or agreement on the part of Viacom set forth in this
Agreement, or if any representation or warranty of Viacom shall have
become untrue, in either case such that the conditions set forth in
Sections 7.03(a) or (b) are not capable of being satisfied on or before
August 31, 2000 (a "Terminating Viacom Breach");
(f) by Viacom, upon breach of any representation, warranty,
covenant or agreement on the part of CBS set forth in this Agreement,
or if any representation or warranty of CBS shall have become untrue,
in either case such that the conditions set
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50
forth in Sections 7.02(a) or (b) are not capable of being satisfied on
or before August 31, 2000 ("Terminating CBS Breach"); or
(g) by either Viacom or CBS, if any Governmental Authority
shall have issued an Order or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such Order or other action shall
have become final and nonappealable.
SECTION 8.02. Effect of Termination. Subject to Section 8.05
hereof, in the event of termination of this Agreement pursuant to Section 8.01,
this Agreement shall forthwith become void, there shall be no liability under
this Agreement on the part of Viacom or CBS or any of their respective officers
or directors and all rights and obligations of each party hereto shall cease;
provided, however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in 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; provided, however, that,
after the approval and adoption of this Agreement by either the stockholders of
Viacom or shareholders of CBS, there shall not be any amendment that by Law
requires further approval by the stockholders of Viacom or shareholders of CBS
without the further approval of such stockholders or such shareholders. 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 obligation
or other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) subject to the proviso of Section 8.03, waive compliance
with any agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.05. Expenses. (a) Except as set forth in this
Section 8.05, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger or any other
transaction is consummated, except that CBS and Viacom each shall pay one-half
of all Expenses relating to (i) printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Proxy Statement,
(ii) any filing with the FCC or similar authority and (iii) any filing with
antitrust authorities. "Expenses" as used in this Agreement shall include all
reasonable out-of-pocket expenses (including all fees and expenses of counsel,
accountants, investment bankers, experts and consultants to a party hereto and
its affiliates)
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51
incurred by a party or on its behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement, the preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement, the solicitation of stockholder and
shareholder approvals, the filing of any required notices under the HSR Act or
other similar regulations and all other matters related to the closing of the
Merger and the other transactions contemplated by this Agreement.
(b) CBS agrees that:
(i) if CBS shall terminate this Agreement pursuant to
Section 8.01(c); or
(ii) if (A) Viacom or CBS shall terminate this
Agreement pursuant to Section 8.01(d) due to the failure of CBS's
shareholders to approve this Agreement, (B) at or prior to the time of
such failure to so approve this Agreement a Competing Transaction with
respect to CBS shall have been made public and (C) within twelve months
after such termination (i) a Competing Transaction is consummated or
(ii) a binding agreement to enter into a Competing Transaction is
entered into by CBS (solely for purposes of this Section 8.05(b)(ii),
the term "Competing Transaction" shall have the meaning assigned to
such term in Section 6.05(b) except that references to "35%" in the
definition of "Competing Transaction" in Section 6.05(b) shall be
deemed to be references to 50%),
then CBS shall pay to Viacom an amount equal to $1,000,000,000 (the "CBS
Alternative Transaction Fee").
(c) Each of CBS and Viacom agrees that the agreements
contained in Section 8.05(b) are an integral part of the transactions
contemplated by this Agreement.
(d) All payments to Viacom under this Section 8.05 shall be
made by wire transfer of immediately available funds to an account designated by
Viacom.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificate delivered pursuant hereto by any person shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01, as the case may be, except that this Section 9.01 shall not limit any
covenant or agreement of the parties which by its terms contemplates performance
after the Effective Time or after termination of this Agreement.
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52
SECTION 9.02. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by facsimile, by courier service or by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 9.02):
if to Viacom:
Viacom Inc.
1515 Broadway
New York, New York 10036
Telecopier: (212) 258-6099
Attention: Michael D. Fricklas, Senior Vice President,
General Counsel and Secretary
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 848-7179
Attention: Creighton O'M. Condon, Esq. and
Stephen R. Volk, Esq.
if to CBS:
CBS Corporation
51 West 52nd Street
35th Floor
New York, New York 10019
Telecopier No.: (212) 597-4031
Attention: Louis J. Briskman, Esq.
Executive Vice President and
General Counsel
with copies to:
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
Telecopier No.: (212) 474-3700
<PAGE>
53
Attention: Allen Finkelson, Esq. and
Scott A. Barshay, Esq.
SECTION 9.03. Interpretation, Certain Definitions. When a
reference is made in this Agreement to an Article, Section or Exhibit, such
reference shall be to an Article or Section of, or an Exhibit to, this Agreement
unless otherwise indicated. The table of contents and headings for this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
statute defined or referred to herein or in any agreement or instrument that is
referred to herein means such statute as from time to time amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes. References to a person are also its permitted successors and
assigns.
For purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a
person who shall be deemed to be the beneficial owner of such shares
(i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indirectly, (A)
the right to acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration
rights, exchange rights, warrants or options, or otherwise, or (B) the
right to vote pursuant to any agreement, arrangement or understanding
or (iii) which are beneficially owned, directly or indirectly, by any
other persons with whom such person or any of its affiliates or
associates or any person with whom such person or any of its affiliates
or associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares;
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54
(c) "business day" means any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of New
York;
(d) "control" (including the terms "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 and policies of a person, whether through the
ownership of voting securities, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "Governmental Authority" means any United States (federal,
state or local) or foreign government, or governmental, regulatory or
administrative authority, agency or commission;
(f) "knowledge" means the actual knowledge of the following
officers and employees of CBS and Viacom, without benefit of an
independent investigation of any matter, as to (i) CBS: Mel Karmazin,
Leslie Moonves, Louis Briskman and Robert Freedline, and (ii) Viacom:
Sumner Redstone, Philippe Dauman, Thomas Dooley, Michael Fricklas,
George Smith and Susan Gordon;
(g) "person" means an individual, corporation, limited
liability company, partnership, limited partnership, syndicate, person
(including, without limitation, a "person" as defined in Section
13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government; and
(h) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either above or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% 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.
SECTION 9.04. 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 Merger 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 a mutually acceptable manner in
order that the Merger be consummated as originally contemplated to the fullest
extent possible.
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55
SECTION 9.05. Entire Agreement; Assignment. This Agreement
(including the Exhibits, the CBS Disclosure Schedule and the Viacom Disclosure
Schedule which are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein), the Parent Voting Agreements and the
Confidentiality Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. The parties agree to comply with all
covenants and agreements set forth on the CBS Disclosure Schedule and the Viacom
Disclosure Schedule as if such covenants and agreements were fully set forth in
this Agreement. This Agreement shall not be assigned by operation of law or
otherwise.
SECTION 9.06. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Article II and Section 6.06 (which are
intended to be for the benefit of the persons covered thereby and may be
enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
SECTION 9.08. Governing Law. This Agreement shall be governed
by, and construed in accordance with the laws of the State of Delaware, except
for such provisions where Pennsylvania Law is mandatorily applicable, which
provisions shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania.
SECTION 9.09. Consent to Jurisdiction. (a) Each of Viacom and
CBS hereby irrevocably submits to the exclusive jurisdiction of the courts of
the State of Delaware and to the jurisdiction of the United States District
Court for the State of Delaware, for the purpose of any action or proceeding
arising out of or relating to this Agreement and each of Viacom and CBS hereby
irrevocably agrees that all claims in respect to such action or proceeding may
be heard and determined exclusively in any Delaware state or federal court. Each
of Viacom and CBS agrees that a final judgment in any action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.
(b) Each of Viacom and CBS irrevocably consents to the service
of the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such process
to such party. Nothing in this Section 9.09 shall affect the right of any party
to serve legal process in any other manner permitted by law.
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56
SECTION 9.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF VIACOM AND CBS
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF VIACOM OR CBS IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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57
IN WITNESS WHEREOF, Viacom and CBS have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
VIACOM INC.
By: /s/ Michael D. Fricklas
----------------------------------
Name: Michael D. Fricklas
Title: Senior Vice President
CBS CORPORATION
By: /s/ Fredric G. Reynolds
----------------------------------
Name: Fredric G. Reynolds
Title: Executive Vice President,
Chief Financial Officer
<PAGE>
EXHIBIT A-1 TO THE
MERGER AGREEMENT
RESTATED CERTIFICATE OF INCORPORATION
OF
VIACOM INC.
(Originally incorporated on November 10, 1986 under the name Arsenal Holdings,
Inc.)
ARTICLE I
NAME
The name of this Corporation is Viacom Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT FOR SERVICE
The registered office of the Corporation in the State of Delaware is
located at 1013 Centre Road, City of Wilmington, County of New Castle. The name
and address of the Corporation's registered agent for service of process in
Delaware is:
Corporation Service Company
1013 Centre Road
Wilmington, Delaware 19805-1297
ARTICLE III
CORPORATE PURPOSES
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
CAPITAL STOCK
(1) Shares, Classes and Series Authorized.
(a) The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 3,525,000,000
shares. The classes and the
1
<PAGE>
aggregate number of shares of stock of each class which the Corporation
shall have authority to issue are as follows:
(i) 500,000,000 shares of Class A Common Stock, $0.01 par
value ("Class A Common Stock").
(ii) 3,000,000,000 shares of Class B Common Stock, $0.01 par
value ("Class B Common Stock").
(iii) 25,000,000 shares of Preferred Stock, $0.01 par value
("Preferred Stock").
(b) The number of authorized shares of Class B Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by the affirmative vote of the holders
of a majority of the stock of the Corporation entitled to vote.
(2) Powers and Rights of the Class A Common Stock and the Class B
Common Stock.
Except as otherwise expressly provided in this Restated Certificate of
Incorporation, all issued and outstanding shares of Class A Common Stock and
Class B Common Stock shall be identical and shall entitle the holders thereof to
the same rights and privileges.
A. Voting Rights and Powers. Except as otherwise provided in this
Restated Certificate of Incorporation or required by law, with respect to
all matters upon which stockholders are entitled to vote, the holders of the
outstanding shares of Class A Common Stock shall vote together with the
holders of any other outstanding shares of capital stock of the Corporation
entitled to vote, without regard to class, and every holder of outstanding
shares of Class A Common Stock shall be entitled to cast thereon one vote in
person or by proxy for each share of Class A Common Stock standing in his
name. The holders of shares of Class A Common Stock shall have the relevant
class voting rights set forth in Article IX. Except as otherwise required by
law, the holders of outstanding shares of Class B Common Stock shall not be
entitled to any votes upon any questions presented to stockholders of the
Corporation, including but not limited to, whether to increase or decrease
(but not below the number of shares
2
<PAGE>
then outstanding) the number of authorized shares of Class B Common Stock.
B. Dividends. Subject to the rights and preferences of the Preferred
Stock set forth in this Article IV and in any resolution or resolutions
providing for the issuance of such stock as set forth in Section (3) of this
Article IV, the holders of Class A Common Stock and Class B Common Stock
shall be entitled to receive ratably such dividends as may from time to time
be declared by the Board of Directors out of funds legally available
therefor.
C. Distribution of Assets Upon Liquidation. In the event the
Corporation shall be liquidated, dissolved or wound up, whether voluntarily
or involuntarily, after there shall have been paid or set aside for the
holders of all shares of the Preferred Stock then outstanding the full
preferential amounts to which they are entitled under Section 5 of this
Article IV or the resolutions, as the case may be, authorizing the issuance
of such Preferred Stock, the net assets of the Corporation remaining
thereafter shall be divided ratably among the holders of Class A Common
Stock and Class B Common Stock.
D. Split, Subdivision or Combination. If the Corporation shall in any
manner split, subdivide or combine the outstanding shares of Class A Common
Stock or Class B Common Stock, the outstanding shares of the other class of
Common Stock shall be proportionally split, subdivided or combined in the
same manner and on the same basis as the outstanding shares of the other
class of Common Stock have been split, subdivided or combined.
E. Conversion. So long as there are 10,000 shares of Class A Common
Stock outstanding, each record holder of shares of Class A Common Stock may
convert any or all of such shares into an equal number of shares of Class B
Common Stock by surrendering the certificates for such shares, accompanied
by payment of documentary, stamp or similar issue or transfer taxes, if any,
along with a written notice by such record holder to the Corporation stating
that such record holder desires to convert such shares into the same number
of shares of Class B Common Stock and requesting that the Corporation issue
all of such Class B Common Stock to the persons named therein,
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<PAGE>
setting forth the number of shares of Class B Common Stock to be issued to
each such person and the denominations in which the certificates therefor
are to be issued.
(3) Powers and Rights of the Preferred Stock.
Subject to Article XIII of this Restated Certificate of Incorporation,
the Preferred Stock may be issued from time to time in one or more series, with
such distinctive serial designations as may be stated or expressed in the
resolution or resolutions providing for the issue of such stock adopted from
time to time by the Board of Directors; and in such resolution or resolutions
providing for the issuance of shares of each particular series, the Board of
Directors is also expressly authorized to fix: the right to vote, if any; the
consideration for which the shares of such series are to be issued; the number
of shares constituting such series, which number may be increased (except as
otherwise fixed by the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time by action of the
Board of Directors; the rate of dividends upon which and the times at which
dividends on shares of such series shall be payable and the preference, if any,
which such dividends shall have relative to dividends on shares of any other
class or classes or any other series of stock of the Corporation; whether such
dividends shall be cumulative or noncumulative, and, if cumulative, the date or
dates from which dividends on shares of such series shall be cumulative; the
rights, if any, which the holders of shares of such series shall have in the
event of any voluntary or involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or winding up of the affairs of the
Corporation; the rights, if any, which the holders of shares of such series
shall have to convert such shares into or exchange such shares for shares of any
other class or classes or any other series of stock of the Corporation or for
any debt securities of the Corporation and the terms and conditions, including,
without limitation, price and rate of exchange, of such conversion or exchange;
whether shares of such series shall be subject to redemption, and the redemption
price or prices and other terms of redemption, if any, for shares of such series
including, without limitation, a redemption price or prices payable in shares of
Class A Common Stock or Class B Common Stock; the terms and amounts of any
sinking fund for the purchase or
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<PAGE>
redemption of shares of such series; and any and all other powers, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof pertaining to shares of such
series permitted by law.
(4) Issuance of Class A Common Stock, Class B Common Stock and
Preferred Stock.
Subject to Article XIII of this Restated Certificate of Incorporation,
the Board of Directors of the Corporation may from time to time authorize by
resolution the issuance of any or all shares of Class A Common Stock, Class B
Common Stock and Preferred Stock herein authorized in accordance with the terms
and conditions set forth in this Restated Certificate of Incorporation for such
purposes, in such amounts, to such persons, corporations, or entities, for such
consideration, and in the case of the Preferred Stock, in one or more series,
all as the Board of Directors in its discretion may determine and without any
vote or other action by any of the stockholders of the Corporation, except as
otherwise required by law.
(5) Series C Preferred Stock
(a). DESIGNATION AND AMOUNT. The shares of this series shall be
designated as "Series C Preferred Stock" (the "Series C Preferred Stock"). The
par value of each share of Series C Preferred Stock shall be $.01. The number of
shares constituting the Series C Preferred Stock shall initially be the
Preferred Exchange Ratio (as defined in the Amended and Restated Agreement and
Plan of Merger dated as of September 6, 1999, as amended and restated as of
October 8, 1999, as it may be further amended from time to time, among the
Corporation and CBS (as defined in Article XIII of this Restated Certificate of
Incorporation)(the "Merger Agreement")) multiplied by the number of shares of
CBS Series B Participating Preferred Stock, par value $1.00 per share, issued
and outstanding immediately prior to the Effective Time (as defined in the
Merger Agreement). The Corporation is authorized to issue fractional shares of
Series C Preferred Stock to 1/1000th of a share in accordance with the terms
herein. All references herein to shares of Series C Preferred Stock shall be
deemed to include, if applicable, references to such fractional shares.
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(b). DIVIDENDS AND DISTRIBUTIONS.
(1) Subject to the provisions for adjustment hereinafter set forth, the
holders of outstanding shares of Series C Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, a cash dividend in an amount per share (rounded to
the nearest cent) equal to 1000 times the aggregate per share amount of each
cash dividend declared or paid on the Class B Common Stock. In addition, in the
event the Corporation shall, at any time after the issuance of any share or
fraction of a share of Series C Preferred Stock, pay any dividend or make any
distribution on the shares of Class B Common Stock of the Corporation, whether
by way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Corporation or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal property
or any other property (other than (x) cash dividends subject to the immediately
preceding sentence, (y) a distribution of shares of Class B Common Stock or
other capital stock of the Corporation subject to paragraph (h)(1) below or (z)
a distribution of rights or warrants to acquire any such shares subject to
paragraph (h)(3) or (h)(5) below, including as such a right any debt security
convertible into or exchangeable for any such shares, at a price less than the
Fair Market Value (as hereinafter defined) of such shares on the date of
issuance of such rights or warrants), then, and in each such event, the
Corporation shall simultaneously pay on each then outstanding share of Series C
Preferred Stock a distribution, in like kind, of 1000 times such distribution
paid on a share of Class B Common Stock (subject to the provisions for
adjustment hereinafter set forth). The dividends and distributions on the Series
C Preferred Stock to which holders thereof are entitled pursuant to the first
and second sentences of this paragraph (b)(1) are hereinafter referred to as
"Dividends" and the multiple of such cash and non-cash dividends and
distributions on the Class B Common Stock applicable to the determination of the
Dividends, which shall be 1000 initially but shall be adjusted from time to time
as hereinafter provided, is hereinafter referred to as the "Dividend Multiple."
In the event the Corporation shall, at any time after the issuance of any share
or fraction of a share of Series C Preferred Stock, declare or pay any dividend
or make any distribution
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on Class B Common Stock payable in shares of Class B Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Class B Common Stock into a greater or lesser number of
shares of Class B Common Stock, then in each such case the Dividend Multiple
thereafter applicable to the determination of the amount of Dividends which
holders of shares of Series C Preferred Stock shall be entitled to receive shall
be the Dividend Multiple applicable immediately prior to such event multiplied
by a fraction the numerator of which is the number of shares of Class B Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Class B Common Stock that were outstanding immediately
prior to such event.
(2) The Corporation shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Class B Common
Stock in respect of which a Dividend is required to be paid. No cash or non-cash
dividend or distribution on the Class B Common Stock in respect of which a
Dividend is required to be paid shall be paid or set aside for payment on the
Class B Common Stock unless a Dividend in respect of such dividend or
distribution on the Class B Common Stock shall be simultaneously paid, or set
aside for payment, on the Series C Preferred Stock.
(3) All Dividends paid with respect to shares of the Series C Preferred
Stock shall be paid pro rata on a share-by-share basis to the holders entitled
thereto.
(4) The holders of shares of Series C Preferred Stock shall not be
entitled to receive any dividends or distributions except as provided herein.
(c). VOTING RIGHTS. The holders of record of outstanding shares of
Series C Preferred Stock shall have the following voting rights:
(1) Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of the Common Stock. The
number of votes which a holder of a share of Series C Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided,
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is hereinafter referred to as the "Vote Multiple." In the event the Corporation
shall, at any time after the issuance of any share or fraction of a share of
Series C Preferred Stock, declare or pay any dividend on Class A Common Stock,
payable in shares of Class A Common Stock, or effect a subdivision or split or a
combination, consolidation or reverse split of the outstanding shares of Class A
Common Stock into a greater or lesser number of shares of Class A Common Stock,
then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series C Preferred Stock shall be entitled after such event shall be the Vote
Multiple applicable immediately prior to such event multiplied by a fraction the
numerator of which is the number of shares of Class A Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Class A Common Stock that were outstanding immediately prior to such
event.
(2) Except as otherwise provided in this Restated Certificate of
Incorporation or required by law, the holders of shares of Series C Preferred
Stock and the holders of shares of Class A Common Stock shall vote together as
one class on all matters submitted to a vote of shareholders of the Corporation.
(3) Except as otherwise provided in this Restated Certificate of
Incorporation or required by law, holders of Series C Preferred Stock shall have
no other special voting rights and their consent shall not be required (except
to the extent they are entitled to vote with holders of Class A Common Stock as
set forth herein) for the taking of any corporate action.
(d). CONVERSION. The shares of Series C Preferred Stock shall be
convertible as follows:
(1) Each share of Series C Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share at the office of the Corporation or any transfer agent for the Series C
Preferred Stock. Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall be convertible into 1000 shares of
Class B Common Stock. The number of shares of Class B Common Stock into which
each share of Series C Preferred Stock may be
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converted is hereinafter referred to as the "Conversion Rate." In the event the
Corporation shall, at any time after the issuance of any share or fraction of a
share of Series C Preferred Stock, declare or pay any dividend or make any
distribution on Class B Common Stock payable in shares of Class B Common Stock,
or effect a subdivision or split or a combination, consolidation or reverse
split of the outstanding shares of Class B Common Stock into a greater or lesser
number of shares of Class B Common Stock, then in each such case the Conversion
Rate thereafter applicable shall be the Conversion Rate applicable immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Class B Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class B Common
Stock that were outstanding immediately prior to such event.
(2) No fractional shares of Class B Common Stock shall be issued upon
conversion of the Series C Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Corporation shall pay cash
equal to such fraction multiplied by the then Fair Market Value per share of the
Class B Common Stock. For such purpose, all shares of Series C Preferred Stock
being converted by a holder shall be aggregated, and any resulting fractional
share of Class B Common Stock shall be paid in cash. Before any holder of shares
of Series C Preferred Stock shall be entitled to convert the same into full
shares of Class B Common Stock, and to receive certificates therefor, the holder
shall surrender the certificate or certificates representing the shares of
Series C Preferred Stock, duly endorsed, at the office of the Corporation or of
any transfer agent for the Series C Preferred Stock, and shall give written
notice to the Corporation at such office that such holder elects to convert the
same.
The Corporation shall, as soon as practicable after such delivery,
issue and deliver at such office to such holder of Series C Preferred Stock a
certificate or certificates for the number of shares of Class B Common Stock to
which such holder shall be entitled and a check payable to such holder in the
amount of any cash amount payable as the result of a conversion into fractional
shares of Class B Common Stock, plus any declared and unpaid dividends on the
converted Series C Preferred Stock. Such
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conversion shall be deemed to have been made immediately prior to the close of
business on the date of receipt of such surrender of the shares of Series C
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Class B Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of Class
B Common Stock on such date.
(3) The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Class B Common Stock, solely for the
purpose of effecting the conversion of the shares of Series C Preferred Stock,
such number of shares of Class B Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series C
Preferred Stock.
(4) Any notice required by the provisions of this Section 4 to be given
to the holders of shares of Series C Preferred Stock or to the Corporation shall
be given via facsimile transmission or via certified or registered U.S. mail or
via private overnight delivery service, if to the holder, at (615) 316-6570 or
such holder's address appearing on the books of the Corporation, and if to the
Corporation, at 1515 Broadway, New York, NY 10036, attention General Counsel,
facsimile no.: 212-258-6134, or such other facsimile number or address as the
holder or the Corporation shall notify the other of in accordance with the
notice provisions set forth in this paragraph (d)(5). Notice shall be deemed to
have been given on the date of facsimile transmission (if the notice is faxed)
or five days after mailing (if the notice is mailed) or the day after the notice
is given to the delivery service (if sent by overnight courier).
(e). CERTAIN RESTRICTIONS.
(1) Whenever Dividends are in arrears or the Corporation shall be in
default on payment thereof, thereafter and until all accrued and unpaid
Dividends, whether or not declared, on shares of Series C Preferred Stock
outstanding shall have been paid or set irrevocably aside for payment in full,
and in addition to any and all other rights which any holder of shares of Series
C Preferred Stock may have in such circumstances, the Corporation shall not:
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<PAGE>
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on any
shares of stock ranking on a parity as to dividends with the Series C
Preferred Stock, unless dividends are paid ratably on the Series C Preferred
Stock and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such shares
are then entitled if the full dividends accrued thereon were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
(e)(1), redeem or purchase or otherwise acquire for consideration shares of
any stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series C Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares
of any such parity stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon liquidation,
dissolution or winding up) to the Series C Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series C Preferred Stock, or any shares of stock ranking on a parity with
the Series C Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up) except as permitted by subparagraph (iii) of this
paragraph (e)(1) or in accordance with a purchase offer made to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among the
respective series or classes.
(2) The Corporation shall not permit any Subsidiary (as hereinafter
defined) of the Corporation to
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<PAGE>
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under subparagraph (1) of this
paragraph (e), purchase or otherwise acquire such shares at such time and in
such manner. A "Subsidiary" of the Corporation shall mean any corporation or
other entity of which securities or other ownership interests entitled to cast
at least a majority of the votes that would be entitled to be cast in an
election of the board of directors of such corporation or other entity or other
persons performing similar functions are beneficially owned, directly or
indirectly, by the Corporation or by any corporation or other entity that is
otherwise controlled by the Corporation.
(3) The Corporation shall not issue any shares of Series C Preferred
Stock except pursuant to the Merger Agreement, a copy of which is on file with
the Secretary of the Corporation at its principal executive offices and shall be
made available to holders of Series C Preferred Stock without charge upon
written request therefor addressed to the Secretary of the Corporation at the
address set forth in paragraph (d)(4) above. Notwithstanding the foregoing
sentence, nothing contained in the provisions of this Article IV shall prohibit
or restrict the Corporation from issuing for any purpose any series of Preferred
Stock with rights and privileges similar to, different from, or greater than,
those of the Series C Preferred Stock or, subject to the limitations set forth
in paragraph (n), from creating other securities senior to, junior to or on a
parity with the Series C Preferred Stock.
(f). REACQUIRED SHARES. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be redesignated and reissued as part of any series of Preferred
Stock.
(g). LIQUIDATION, DISSOLUTION OR WINDING UP.
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, no distribution shall be made (i) to the holders
of shares
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of stock ranking junior (upon liquidation, dissolution or winding up) to the
Series C Preferred Stock unless the holders of shares of Series C Preferred
Stock outstanding shall have received out of the assets of the Corporation
available for distribution to its shareholders after payment or provision for
payment of any securities ranking senior to the Series C Preferred Stock, for
each share of Series C Preferred Stock, subject to adjustment as hereinafter
provided, (A) $.01 plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment or,
(B) if greater than the amount specified in clause (i)(A) of this sentence, an
amount equal to 1000 times the aggregate amount to be distributed per share to
holders of Class B Common Stock, as the same may be adjusted as hereinafter
provided, and (ii) to the holders of stock ranking on a parity upon liquidation,
dissolution or winding up with the Series C Preferred Stock, unless
simultaneously therewith distributions are made ratably on the Series C
Preferred Stock and all other shares of such parity stock in proportion to the
total amounts to which the holders of shares of Series C Preferred Stock are
entitled under clause (i)(A) of this sentence and to which the holders of such
parity shares are entitled, in each case upon such liquidation, dissolution or
winding up. The amount to which holders of Series C Preferred Stock may be
entitled upon liquidation, dissolution or winding up of the Corporation pursuant
to clause (i)(B) of the foregoing sentence is hereinafter referred to as the
"Participation Liquidation Amount" and the multiple of the amount to be
distributed to holders of shares of Class B Common Stock upon the liquidation,
dissolution or winding up of the Corporation applicable pursuant to said clause
to the determination of the Participating Liquidation Amount, as said multiple
may be adjusted from time to time as hereinafter provided, is hereinafter
referred to as the "Liquidation Multiple". In the event the Corporation shall,
at any time after the issuance of any share or fraction of a share of Series C
Preferred Stock, declare or pay any dividend or make any distribution on Class B
Common Stock payable in shares of Class B Common Stock, or effect a subdivision
or split or a combination, consolidation or reverse split of the outstanding
shares of Class B Common Stock into a greater or lesser number of shares of
Class B Common Stock, then in each such case the Liquidation Multiple thereafter
applicable to the determination of the Participating
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Liquidation Amount to which holders of Series C Preferred Stock shall be
entitled after such event shall be the Liquidation Multiple applicable
immediately prior to such event multiplied by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event. Except as provided in this
paragraph (g)(1), holders of Series C Preferred Stock shall not be entitled to
any distribution in the event of liquidation, dissolution or winding up of the
Corporation.
(2) For the purposes of this paragraph (g), none of the following shall
be deemed to be a voluntary or involuntary liquidation, dissolution or winding
up of the Corporation:
(i) the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation;
(ii) the consolidation or merger of the Corporation with or into one or
more other corporations or other associations;
(iii) the consolidation or merger of one or more corporations or other
associations with or into the Corporation; or
(iv) the participation by the Corporation in a share exchange.
(h). CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(1) In the event that holders of shares of Class B Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class B Common Stock any share of
capital stock of the Corporation (other than any share of Class B Common Stock),
whether by way of reclassification, recapitalization, reorganization, dividend
or other distribution or otherwise (a "Class B Transaction"), then, and in each
such event, the dividend rights, conversion rights and rights upon the
liquidation, dissolution or
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winding up of the Corporation of the shares of Series C Preferred Stock shall be
adjusted so that after such Transaction the holders of Series C Preferred Stock
shall be entitled, in respect of each share of Series C Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such adjustment, (i) to such additional dividends as equal
the Dividend Multiple in effect immediately prior to such Class B Transaction
multiplied by the additional dividends which the holder of a share of Class B
Common Stock shall be entitled to receive by virtue of the receipt in the Class
B Transaction of such capital stock, (ii) upon surrender of shares of Series C
Preferred Stock for conversion, to the aggregate number and kind of shares of
capital stock of the Corporation which, if such shares of Series C Preferred
Stock had been converted immediately prior to such Class B Transaction, such
holder would have been entitled to receive by virtue of such Class B Transaction
and (iii) to such additional distributions upon liquidation, dissolution or
winding up of the Corporation as equal the Liquidation Multiple in effect
immediately prior to such Class B Transaction multiplied by the additional
amount which the holder of a share of Class B Common Stock shall be entitled to
receive upon liquidation, dissolution or winding up of the Corporation by virtue
of the receipt in the Class B Transaction of such capital stock, as the case may
be, all as provided by the terms of such capital stock.
(2) In the event that holders of shares of Class A Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class A Common Stock any share of
capital stock of the Corporation (other than any share of Class A Common Stock),
whether by way of reclassification, recapitalization, reorganization, dividend
or other distribution or otherwise (a "Class A Transaction"), then, and in each
such event, the voting rights of the shares of Series C Preferred Stock shall be
adjusted so that after such Class A Transaction the holders of Series C
Preferred Stock shall be entitled, in respect of each share of Series C
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such adjustment, to such
additional voting rights as equal the Vote Multiple in effect immediately prior
to such Class A Transaction multiplied by the additional voting rights to which
the holder of a share
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of Class A Common Stock shall be entitled by virtue of the receipt in the Class
A Transaction of such capital stock.
(3) In the event that holders of shares of Class B Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class B Common Stock any right or
warrant to purchase Class B Common Stock (including as such a right, for all
purposes of this paragraph (h)(3), any security convertible into or exchangeable
for Class B Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Class B Common Stock on the date of issuance of such
right or warrant, then and in each such event the dividend rights, conversion
rights and rights upon the liquidation, dissolution or winding up of the
Corporation of the shares of Series C Preferred Stock shall each be adjusted so
that after such event the Dividend Multiple, the Conversion Rate and the
Liquidation Multiple shall each be the product of the Dividend Multiple, the
Conversion Rate and the Liquidation Multiple, as the case may be, in effect
immediately prior to such event multiplied by a fraction the numerator of which
shall be the number of shares of Class B Common Stock outstanding immediately
before such issuance of rights or warrants plus the maximum number of shares of
Class B Common Stock which could be acquired upon exercise in full of all such
rights or warrants and the denominator of which shall be the number of shares of
Class B Common Stock outstanding immediately before such issuance of rights or
warrants plus the number of shares of Class B Common Stock which could be
purchased, at the Fair Market Value of the Class B Common Stock at the time of
such issuance, by the maximum aggregate consideration payable upon exercise in
full of all such rights or warrants.
(4) In the event that holders of shares of Class A Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class A Common Stock any right or
warrant to purchase Class A Common Stock (including as such a right, for all
purposes of this paragraph (h)(4), any security convertible into or exchangeable
for Class A Common Stock) at a purchase price per share less than the Fair
Market Value of a share of Class A Common Stock on the date of issuance of such
right or warrant, then and in each such event the voting rights of the shares of
Series C Preferred
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Stock shall be adjusted so that after such event the Vote Multiple shall be the
product of the Vote Multiple in effect immediately prior to such event
multiplied by a fraction the numerator of which shall be the number of shares of
Class A Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Class A Common Stock which could
be acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Class A Common Stock
outstanding immediately before such issuance of rights or warrants plus the
number of shares of Class A Common Stock which could be purchased, at the Fair
Market Value of the Class A Common Stock at the time of such issuance, by the
maximum aggregate consideration payable upon exercise in full of all such rights
or warrants.
(5) In the event that holders of shares of Class B Common Stock of the
Corporation receive, after the issuance of any share or fraction of a share of
Series C Preferred Stock, in respect of their shares of Class B Common Stock any
right or warrant to purchase capital stock of the Corporation (other than shares
of Class B Common Stock), including as such a right, for all purposes of this
paragraph (h)(5), any security convertible into or exchangeable for capital
stock of the Corporation (other than Class B Common Stock) at a purchase price
per share less than the Fair Market Value of a share of such capital stock on
the date of issuance of such right or warrant, then and in each such event the
dividend rights, conversion rights and rights upon liquidation, dissolution or
winding up of the Corporation of the shares of Series C Preferred Stock shall
each be adjusted so that after such event each holder of a share of Series C
Preferred Stock shall be entitled, in respect of each share of Series C
Preferred Stock held, in addition to such rights in respect thereof to which
such holder was entitled immediately prior to such event, to receive (i) such
additional dividends as equal the Dividend Multiple in effect immediately prior
to such event multiplied, first, by the additional dividends to which the holder
of a share of Class B Common Stock shall be entitled upon exercise of such right
or warrant by virtue of the capital stock which could be acquired upon such
exercise, and multiplied again by the Discount Fraction (as hereinafter
defined),(ii) such additional conversion rights as equal the Conversion Rate in
effect immediately prior to such event multiplied by a fraction the numerator of
which
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shall be the Fair Market Value per share of Class B Common Stock on the date of
such event less the Fair Market Value of the portion of the right or warrant so
distributed applicable to one share of Class B Common Stock and the denominator
of which shall be the Fair Market Value per share of Class B Common Stock on the
date of such event and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Corporation as equal the Liquidation Multiple
in effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Class B Common Stock shall be entitled to
receive upon liquidation, dissolution or winding up of the Corporation upon
exercise of such right or warrant by virtue of the capital stock which could be
acquired upon such exercise, and multiplied again by the Discount Fraction. For
purposes of this paragraph, the "Discount Fraction" shall be a fraction the
numerator of which shall be the difference between the Fair Market Value of a
share of the capital stock subject to a right or warrant distributed to holders
of shares of Class B Common Stock of the Corporation as contemplated by this
paragraph (h)(5) immediately after the distribution thereof and the purchase
price per share for such share of capital stock pursuant to such right or
warrant and the denominator of which shall be the Fair Market Value of a share
of such capital stock immediately after the distribution of such right or
warrant.
(6) In the event that holders of shares of Class A Common Stock of the
Corporation receive, after the issuance of any share or fraction of a share of
Series C Preferred Stock, in respect of their shares of Class A Common Stock any
right or warrant to purchase capital stock of the Corporation (other than shares
of Class A Common Stock), including as such a right, for all purposes of this
paragraph (h)(6), any security convertible into or exchangeable for capital
stock of the Corporation (other than Class A Common Stock) at a purchase price
per share less than the Fair Market Value of a share of such capital stock on
the date of issuance of such right or warrant, then and in each such event the
voting rights of the shares of Series C Preferred Stock shall be adjusted so
that after such event each holder of a share of Series C Preferred Stock shall
be entitled, in respect of each share of Series C Preferred Stock held, in
addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive such additional
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voting rights as equal the Vote Multiple in effect immediately prior to such
event multiplied, first, by the additional voting rights to which the holder of
a share of Class A Common Stock shall be entitled upon exercise of such right or
warrant by virtue of the capital stock which could be acquired upon such
exercise, and multiplied again by the Voting Discount Fraction (as hereinafter
defined). For purposes of this paragraph, the "Voting Discount Fraction" shall
be a fraction the numerator of which shall be the difference between the Fair
Market Value of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Class A Common Stock of the Corporation as
contemplated by this paragraph (h)(6) immediately after the distribution thereof
and the purchase price per share for such share of capital stock pursuant to
such right or warrant and the denominator of which shall be the Fair Market
Value of a share of such capital stock immediately after the distribution of
such right or warrant.]
(7) For purposes of this Section 5 of Article IV, the "Fair Market
Value" of a share of capital stock of the Corporation on any date shall be
deemed to be the average of the daily closing price per share thereof over the
15 consecutive Trading Days (as hereinafter defined) immediately prior to such
date; provided, however, that in the event the Fair Market Value of any such
share of capital stock is determined during a period which includes any date
that is within 15 Trading Days after (i) the ex-dividend date for a dividend or
distribution on stock payable in shares of such stock or securities convertible
into shares of such stock, or (ii) the effective date of any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
capital stock, then, and in each such case, the Fair Market Value shall be
appropriately adjusted by the Board of Directors of the Corporation to take into
account ex-dividend or post-effective date trading. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way
(in either case, as reported in the applicable transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange), or, if the shares are not listed or admitted to trading on the New
York Stock Exchange, as reported in the applicable transaction reporting system
with respect to securities listed on the
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principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by The Nasdaq Stock Market or such other system then in use, or if
on any such date the shares are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by a professional market maker
making a market in the shares selected by the Board of Directors of the
Corporation. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which the shares are listed or admitted to
trading is open for the transaction of business or, if the shares are not listed
or admitted to trading on any national securities exchange, on which the New
York Stock Exchange or such other national securities exchange as may be
selected by the Board of Directors of the Corporation is open. If the shares are
not publicly held or not so listed or traded on any day within the 15 Trading
Day period applicable to the determination of Fair Market Value thereof as
aforesaid, "Fair Market Value" shall mean the fair market value thereof per
share as determined in good faith by the Board of Directors of the Corporation.
In either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Corporation.
(i). CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, division, share exchange, combination, sale of
all or substantially all of the Corporation's assets, or other transaction in
which the shares of Class B Common Stock are exchanged for or changed into other
securities, cash and/or any other property, then in any such case each
outstanding share of Series C Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of securities, cash
and/or other property (payable in like kind), as the case may be, for which or
into which each share of Class B Common Stock is changed or exchanged multiplied
by the highest of the Dividend Multiple, the Conversion Rate or the Liquidation
Multiple in effect immediately prior to such event; provided, however, that no
fractional share or scrip representing fractional shares of any other securities
shall be issued. Instead of any fractional interest in a share of such other
securities
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which would otherwise be deliverable pursuant to this paragraph (i), the
Corporation will pay to the holder thereof an amount in cash (computed to the
nearest cent) equal to the same fraction of the Fair Market Value of a share of
such other security or such other amount as may be set forth in the agreement
governing the related consolidation, division, share exchange, combination, sale
of all or substantially all of the Corporation's assets or other transactions.
(j). EFFECTIVE TIME OF ADJUSTMENTS.
(1) Adjustments to the Series C Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event requiring
such adjustments occurs.
(2) The Corporation shall give prompt written notice to each holder of
a share of outstanding Series C Preferred Stock of the effect of any adjustment
to the voting rights, dividend rights, conversion rights or rights upon
liquidation, dissolution or winding up of the Corporation of such shares
required by the provisions hereof. Notwithstanding the foregoing sentence, the
failure of the Corporation to give such notice shall not affect the validity or
the force or effect of, or the requirement for, such adjustment.
(k). NO REDEMPTION. The shares of Series C Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this paragraph (11), the Corporation
may acquire shares of Series C Preferred Stock in any other manner permitted by
law, the provisions of this Restated Certificate of Incorporation.
(l). RANKING. Unless otherwise provided in this Restated Certificate of
Incorporation or in any certificate of designation relating to the determination
of a subsequent series of Preferred Stock, the Series C Preferred Stock shall
rank senior to the Class B Common Stock and the Class A Common Stock and the
Series C Preferred Stock shall rank junior to all other series of Preferred
Stock as to the payment of dividends and the distribution of assets on
liquidation, dissolution or winding up.
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(m). LIMITATIONS. Except as may otherwise be required by law, the
shares of Series C Preferred Stock shall not have any powers, preferences or
relative, participating, optional or other special rights other than those
specifically set forth in this Article IV (as such may be amended from time to
time) or otherwise in the Restated Certificate of Incorporation.
(n). AMENDMENT. So long as any shares of the Series C Preferred Stock
are outstanding, the Corporation shall not amend this Article IV or the Restated
Certificate of Incorporation in any manner which would alter or change the
rights, preferences or limitations of the Series C Preferred Stock so as to
affect such rights, preferences or limitations in any material respect
prejudicial to the holders of the Series C Preferred Stock without, in addition
to any other vote of shareholders required by law, the affirmative vote of the
holders of at least two-thirds of the outstanding shares of Series C Preferred
Stock, voting together as a single class either in writing or by resolution
adopted at an annual or special meeting called for the purpose; provided,
however, that the creation of another series of Preferred Stock ranking senior
to or on a parity with the Series C Preferred Stock as to the payment of
dividends or the distribution of assets on liquidation, dissolution or winding
up, or which has equivalent or greater voting rights than the Series C Preferred
Stock, in each case shall not be deemed to be prejudicial to the holders of the
Series C Preferred Stock for the purposes of this paragraph (n).
ARTICLE V
DIRECTORS
(1) Power of the Board of Directors. Subject to Article XIII of this
Restated Certificate of Incorporation, the property and business of the
Corporation shall be controlled and managed by or under the direction of its
Board of Directors. In furtherance, and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, subject in all cases to Article XIII of this Restated
Certificate of Incorporation:
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(a) To make, alter, amend or repeal the By-Laws of the Corporation;
provided that no By-Laws hereafter adopted shall invalidate any prior act of
the Directors that would have been valid if such By-Laws had not been
adopted;
(b) To determine the rights, powers, duties, rules and procedures that
affect the power of the Board of Directors to manage and direct the
property, business and affairs of the Corporation, including, without
limitation, the power to designate and empower committees of the Board of
Directors, to elect, appoint and empower the officers and other agents of
the Corporation, and to determine the time and place of, and the notice
requirements for Board meetings, as well as the manner of taking Board
action; and
(c) To exercise all such powers and do all such acts as may be
exercised by the Corporation, subject to the provisions of the laws of the
State of Delaware, this Restated Certificate of Incorporation, and the
By-Laws of the Corporation.
(2) Number and Qualifications of Directors. The number of directors
constituting the entire Board of Directors shall be fixed from time to time by
resolution of the Board of Directors but shall not be less than three nor more
than twenty. Directors shall be elected to hold office for a term of one year.
As used in this Restated Certificate of Incorporation, the term "entire Board of
Directors" means the total number of Directors fixed in the manner provided in
this Article V Section (2) and in the By-Laws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the
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request of the Corporation as a director, officer, employee or agent (including,
without limitation, a trustee) of another corporation, partnership, joint
venture, trust or other enterprise, against judgments, fines, amounts paid in
settlement and expenses (including, without limitation, attorneys' fees),
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the Corporation, and with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(2) Action By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, or other
enterprise against expenses (including, without limitation, attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability and in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
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(3) Successful Defense. To the extent that a present or former
Director, officer, employee or agent of the Corporation has been successful on
the merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or 2 of this Article VI, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including, without
limitation, attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(4) Determination of Right to Indemnification in Certain Circumstances.
Any indemnification under Section 1 or 2 of this Article VI (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the present or former Director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 or 2 of this Article IV.
Such determination shall be made, with respect to a person who is a Director or
officer at the time of such determination, (1) by a majority vote of the
Directors who are not parties to such action, suit or proceeding, even though
less than a quorum, or (2) by a committee of such Directors designated by a
majority vote of such Directors, even though less than a quorum, or (3) if there
are no such Directors, or if such Directors so direct, by independent legal
counsel in a written opinion, or (4) by the stockholders of the Corporation
entitled to vote thereon.
(5) Advance Payment of Expenses.
(a) Expenses (including attorneys' fees) incurred by a Director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Director or officer, to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized in this Article.
(b) Expenses (including attorneys' fees) incurred by any other employee
or agent in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon
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such terms and conditions, if any, as the Corporation deems appropriate.
(6) Not Exclusive. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article VI shall
not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested Directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office. Without limiting the foregoing, the Corporation is
authorized to enter into an agreement with any Director, officer, employee or
agent of the Corporation providing indemnification for such person against
expenses, including, without limitation, attorneys' fees, judgments, fines and
amounts paid in settlement that result from any threatened, pending or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative, including, without limitation, any action by or in the right of
the Corporation, that arises by reason of the fact that such person is or was a
Director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
the full extent allowed by law, except that no such agreement shall provide for
indemnification for any actions that constitute fraud, actual dishonesty or
willful misconduct.
(7) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of the
Corporation, or is or was serving as the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article VI.
(8) Certain Definitions. For the purposes of this Article VI, (A) any
Director, officer, employee or agent of the Corporation who shall serve as a
director, officer, employee or agent of any other corporation, joint venture,
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trust or other enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is or was in any
way interested, or (B) any director, officer, employee or agent of any
subsidiary corporation, joint venture, trust or other enterprise wholly owned by
the Corporation, shall be deemed to be serving as such director, officer,
employee or agent at the request of the Corporation, unless the Board of
Directors of the Corporation shall determine otherwise. In all other instances
where any person shall serve as a director, officer, employee or agent of
another corporation, joint venture, trust or other enterprise of which the
Corporation is or was a stockholder or creditor, or in which it is or was
otherwise interested, if it is not otherwise established that such person is or
was serving as such director, officer, employee or agent at the request of the
Corporation, the Board of Directors of the Corporation may determine whether
such service is or was at the request of the Corporation, and it shall not be
necessary to show any actual or prior request for such service. For purposes of
this Article VI, references to a corporation include all constituent
corporations absorbed in a consolidation or merger as well as the resulting or
surviving corporation so that any person who is or was a director, officer,
employee or agent of such a constituent corporation or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, joint venture, trust or other enterprise shall
stand in the same position under the provisions of this Article VI with respect
to the resulting or surviving corporation as he would if he had served the
resulting or surviving corporation in the same capacity. For purposes of this
Article VI, references to "other enterprises" shall include employee benefit
plans; references to "fines" shall include any excise taxes assessed on a person
with respect to an employee benefit plan; and references to "serving at the
request of the Corporation" shall include any service as a director, officer,
employee or agent of the Corporation which imposes duties on, or involves
services by, such director, officer, employee, or agent with respect to an
employee benefit plan, its participants, or beneficiaries, and a person who
acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan shall be
deemed to have acted in a manner "not opposed to
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the best interests of the Corporation" as referred to in this Article VI.
(9) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE VII
DIRECTOR LIABILITY TO THE CORPORATION
(a) A Director's liability to the Corporation for breach of duty to the
Corporation or its stockholders shall be limited to the fullest extent permitted
by Delaware law as now in effect or hereafter amended. In particular no Director
of the Corporation shall be liable to the Corporation or any of its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the Director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, as the same exists or
hereafter may be amended, or (iv) for any transaction from which the Director
derived an improper personal benefit.
(b) Any repeal or modification of the foregoing paragraph (a) by the
stockholders of the Corporation entitled to vote thereon shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
(c) If the General Corporation Law of the State of Delaware is amended to
authorize corporate action further eliminating or limiting the liability of
directors, then a director of the Corporation, in addition to the circumstances
in which he is not now liable, shall be free of liability to the fullest extent
permitted by the General Corporation Law of the State of Delaware, as so
amended.
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ARTICLE VIII
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
Subject to Article XIII of this Restated Certificate of Incorporation,
the Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation in the manner
now or hereafter prescribed by law, and all the provisions of this Restated
Certificate of Incorporation and all rights and powers conferred in this
Restated Certificate of Incorporation on stockholders, directors and officers
are subject to this reserved power.
Each reference in the Restated Certificate of Incorporation to "the
Restated Certificate of Incorporation," "hereunder," "hereof," or words of like
import and each reference to the Restated Certificate of Incorporation set forth
in any amendment to the Restated Certificate of Incorporation shall mean and be
a reference to the Restated Certificate of Incorporation as supplemented and
amended through such amendment to the Restated Certificate of Incorporation.
ARTICLE IX
VOTING RIGHTS
(1) Class A Common Stock. In addition to any other approval required by
law or by this Restated Certificate of Incorporation, the affirmative vote of a
majority of the then outstanding shares of Class A Common Stock, voted
separately as a class, shall be necessary to approve any consolidation of the
Corporation with another corporation, any merger of the Corporation into another
corporation or any merger of any other corporation into the Corporation pursuant
to which shares of Common Stock are converted into or exchanged for any
securities or any other consideration.
(2) Preferred Stock. Subject to Article XIII of this Restated
Certificate of Incorporation, in addition to any other approval required by law
or by this Restated Certificate of Incorporation, each particular series of any
class of Preferred Stock shall have such right to vote, if any, as shall be
fixed in the resolution or resolutions, adopted by the Board of Directors,
providing for the issuance of shares of such particular series.
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ARTICLE X
STOCK OWNERSHIP
AND THE FEDERAL COMMUNICATIONS LAWS
(1) Requests for Information. So long as the Corporation or any of its
subsidiaries holds any authorization from the Federal Communications Commission
(or any successor thereto), if the Corporation has reason to believe that the
ownership, or proposed ownership, of shares of capital stock of the Corporation
by any stockholder or any person presenting any shares of capital stock of the
Corporation for transfer into his name (a "Proposed Transferee") may be
inconsistent with, or in violation of, any provision of the Federal
Communications Laws (as hereinafter defined), such stockholder or Proposed
Transferee, upon request of the Corporation, shall furnish promptly to the
Corporation such information (including, without limitation, information with
respect to citizenship, other ownership interests and affiliations) as the
Corporation shall reasonably request to determine whether the ownership of, or
the exercise of any rights with respect to, shares of capital stock of the
Corporation by such stockholder or Proposed Transferee is inconsistent with, or
in violation of, the Federal Communications Laws. For purposes of this Article
X, the term "Federal Communications Laws" shall mean any law of the United
States now or hereafter in effect (and any regulation thereunder) pertaining to
the ownership of, or the exercise of the rights of ownership with respect to,
capital stock of corporations holding, directly or indirectly, Federal
Communications Commissions authorizations, including, without limitation, the
Communications Act of 1934, as amended (the "Communications Act"), and
regulations thereunder pertaining to the ownership, or the exercise of the
rights of ownership, of capital stock of corporations holding, directly or
indirectly, Federal Communications Commission authorizations, by (i) aliens, as
defined in or under the Communications Act, as it may be amended from time to
time, (ii) persons and entities having interests in television or radio
stations, daily newspapers and cable television systems or (iii) persons or
entities, unilaterally or otherwise, seeking direct or indirect control of the
Corporation, as construed under the Communications Act, without having obtained
any requisite prior Federal regulatory approval to such control.
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(2) Denial of Rights, Refusal to Transfer. If any stockholder or
Proposed Transferee from whom information is requested should fail to respond to
such request pursuant to Section (1) of this Article or the Corporation shall
conclude that the ownership of, or the exercise of any rights of ownership with
respect to, shares of capital stock of the Corporation, by such stockholder or
Proposed Transferee, could result in any inconsistency with, or violation of,
the Federal Communications Laws, the Corporation may refuse to permit the
transfer of shares of capital stock of the Corporation to such Proposed
Transferee, or may suspend those rights of stock ownership the exercise of which
would result in any inconsistency with, or violation of, the Federal
Communications Laws, such refusal of transfer or suspension to remain in effect
until the requested information has been received and the Corporation has
determined that such transfer, or the exercise of such suspended rights, as the
case may be, is permissible under the Federal Communications Laws, and the
Corporation may exercise any and all appropriate remedies, at law or in equity,
in any court of competent jurisdiction, against any such stockholder or Proposed
Transferee, with a view towards obtaining such information or preventing or
curing any situation which would cause any inconsistency with, or violation of,
any provision of the Federal Communications Laws.
(3) Legends. The Corporation may note on the certificates of its
capital stock that the shares represented by such certificates are subject to
the restrictions set forth in this Article.
(4) Certain Definitions. For purposes of this Article, the word
"person" shall include not only natural persons but partnerships, associations,
corporations, joint ventures and other entities, and the word "regulation" shall
include not only regulations but rules, published policies and published
controlling interpretations by an administrative agency or body empowered to
administer a statutory provision of the Federal Communications Laws.
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ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board or
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or the committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or (b)
the material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good faith
by vote of such stockholders, or (c) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof, or the stockholders entitled to vote
thereon. Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
ARTICLE XII
COMPROMISE AND REORGANIZATION
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the
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provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agrees to any compromise or arrangement and to any reorganization of the
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
ARTICLE XIII
GOVERNANCE OF THE CORPORATION
DURING SPECIFIED PERIOD
(1) Definitions. As used in this Article XIII, the following terms
shall have the following meanings:
(a) "CBS" shall mean CBS Corporation, a Pennsylvania corporation,
immediately prior to the Effective Time.
(b) "CBS Directors" shall mean (i) eight (8) of those directors
serving as members of the Board of Directors of CBS on September 6, 1999 (or any
Independent Directors elected or appointed prior to the Effective Time to serve
as a CBS Director) who are designated as such by the Board of Directors of CBS
prior to the Effective Time and (ii) any Replacement CBS Director (as defined in
Section 2(b) of this Article XIII).
(c) "CEO" shall mean the Chief Executive Officer.
(d) "COO" shall mean the President and Chief Operating Officer.
(e) "Effective Time" shall mean the time of filing of the
Certificate of Merger to which this Certificate of Incorporation is attached.
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(f) "Independent Director" shall mean a disinterested, independent
person (determined in accordance with customary standards for independent
directors applicable to U.S. public companies).
(g) "NAI" shall mean National Amusements, Inc., a Maryland
corporation, and its successors or assigns.
(h) "Specified Independent Directors" shall mean the directors of
the Corporation first elected after 1993 and who are not management of the
Corporation or NAI (together with any replacements of such persons).
(i) "Specified Period" shall mean the period of three years
commencing at the Effective Time.
(j) "Stockholder Agreement" shall mean the Stockholder Agreement
dated as of September 6, 1999, by and between NAI and CBS, relating to
Corporation governance matters.
(k) "Viacom Directors" shall mean the ten (10) directors of the
Corporation serving as the Board of Directors of the Corporation immediately
prior to the Effective Time (including the Specified Independent Directors).
(2) Directors.
(a) Effective immediately at the Effective Time, the Board of
Directors shall consist of eighteen (18) directors. The number of directors may
be fixed by resolution of the Board from time to time, provided, however, that
the size of the Board of Directors may not be changed during the Specified
Period without the approval of at least fourteen (14) directors. At the
Effective Time, ten (10) directors shall be Viacom Directors and eight (8)
directors shall be CBS Directors.
(b) Until the expiration of the Specified Period, the Board of
Directors (subject to the fiduciary duties of the directors) shall take all
action necessary to ensure that any seat on the Board of Directors held by (i) a
CBS Director which becomes vacant is filled promptly by a person qualifying as
an Independent Director and designated to fill such seat by a majority of the
CBS Directors remaining on
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the Board of Directors (a "Replacement CBS Director") and (ii) a Specified
Independent Director which becomes vacant is filled promptly by an Independent
Director who is the chief executive officer, chief operating officer or chief
financial officer or former chief executive officer of a Fortune 500 company or
a non-U.S. public company of comparable size.
(c) During the Specified Period, all committees of the Board of
Directors (other than the Compensation Committee and the Officers Nominating
Committee) shall have such number of CBS Directors as equals the total number of
members of the Committee multiplied by a fraction, the numerator of which is
eight (8) and the denominator of which is eighteen (18), rounded to the closest
whole number; provided that in no event shall any committee have (x) fewer than
one (1) CBS Director or (y) less than a majority of Viacom Directors.
(d) During the Specified Period, the Board of Directors shall not
take any action or fail to take any action which would have the effect of
eliminating, limiting, restricting, avoiding or otherwise modifying the effect
of the provisions set forth in this Article XIII (e.g., by creating a holding
company structure if the certificate of incorporation or similar document of
such holding company does not contain equivalent provisions).
(3) Chairman and Chief Executive Officer.
(a) At the Effective Time, Sumner Redstone shall remain the
Chairman and CEO. In the event that Sumner Redstone is not the CEO at the
Effective Time or ceases to be the CEO at any time during the Specified Period,
then Mel Karmazin, if he is COO at such time, shall succeed to the position of
CEO for the remainder of the Specified Period. During any such period of
succession, Mel Karmazin shall continue to exercise the powers, rights,
functions and responsibilities of the COO in addition to exercising those of the
CEO.
(b) The Chairman shall chair all meetings of the Board of
Directors and stockholders at which he is present.
(c) The CEO shall be responsible, in consultation with the COO,
for corporate policy and strategy and the COO shall
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consult on all major decisions with, and shall report directly to, the CEO,
during the Specified Period; provided, however, that the CEO shall not exercise
any powers, rights, functions or responsibilities of the COO unless Mel Karmazin
is the CEO.
(4) President and Chief Operating Officer.
(a) At the Effective Time, the President and Chief Operating
Officer of the Corporation shall be Mel Karmazin. During the Specified Period,
Mel Karmazin may not be terminated or demoted from the position of COO (or, in
the event that Sumner Redstone is not the CEO, from the position of CEO) and no
COO Functions (as defined below) may be changed without the affirmative vote of
at least fourteen (14) directors.
(b) Subject to the requirement that the COO consult with the CEO
on all major decisions, the powers, rights, functions and responsibilities of
the COO (collectively, the "COO Functions") shall include, without limitation,
the following:
(i) supervising, coordinating and managing the Corporation's
business, operations, activities, operating expenses and capital allocation;
(ii) matters relating to officers (other than the Chairman, CEO
and COO) and employees, including, without limitation, hiring (subject to
(A) the specific Board of Directors authority described below with respect
to the CFO, the General Counsel and the Controller and (B) Section 5 below),
terminating, changing positions and allocating responsibilities of such
officers and employees; and
(iii) substantially all of the powers, rights, functions and
responsibilities typically exercised by a chief operating officer.
All officers (other than the Chairman, CEO and COO) will report,
directly or indirectly, to the COO (this reporting relationship will be deemed a
COO Function).
(c) In the event that Mel Karmazin is not COO or CEO, the Board
may terminate the COO's employment, eliminate the
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COO position and the Officers Nominating Committee and reallocate the COO
Functions without regard to the other provisions of this Article XVIII.
(5) Officers Nominating Committee; Compensation Committee.
(a) Subject to the powers of the Compensation Committee set forth
below, during the Specified Period, all powers of the Board of Directors,
including, without limitation, the right to hire, elect, terminate, change
positions, allocate responsibilities or determine non-equity compensation, with
respect to officers and employees, shall be exercised, subject to clauses (b)
and (c) below, by, and delegated to, the Officers Nominating Committee of the
Board of Directors. The Officers Nominating Committee shall consist solely of
the member of the Board of Directors who is the COO, except that in the event
Mel Karmazin succeeds to the position of CEO, the sole member of the Officers
Nominating Committee shall be the member of the Board of Directors who is the
CEO.
(b) The Officers Nominating Committee shall have no powers with
respect to the Chairman, CEO and COO, and shall not have the power to fill the
positions of Chief Financial Officer, Controller or General Counsel of the
Corporation without the approval of the Board of Directors; provided that this
provision shall in no way affect the other powers and authorities of the
Officers Nominating Committee with respect to the Chief Financial Officer,
Controller and General Counsel positions, including, without limitation, the
power to terminate employment of persons holding such positions.
(c) The Compensation Committee shall not be required to, or have
any power to, approve the annual compensation of (i) any employee if the total
value of such employee's annual cash compensation (assuming for this purpose
that the actual bonus of each officer and employee is equal to his or her target
bonus) is less than $1 million or (ii) talent (as such term is commonly used in
the media or entertainment industries), in each such case which power shall be
delegated to the Officers Nominating Committee. The annual compensation of all
other officers and employees and any equity or equity-based compensation of any
officer or employee must be approved by the Compensation Committee.
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(d) The Compensation Committee shall consist of three CBS
Directors who are Independent Directors and three non- CBS Directors, two of
whom will be the Specified Independent Directors and the other of whom will be
an Independent Director.
(e) Any decision or determination of the Officers Nominating
Committee may be reversed or overridden by (and only by) the affirmative vote of
at least fourteen (14) directors.
(6) Stockholder Agreement.
The Stockholder Agreement may not be amended, and no provision
thereof may be modified or waived, except with the approval of at least fourteen
(14) directors.
(7) Issuance of Voting Stock.
During the Specified Period, in addition to any other approval
required by law or by this Restated Certificate of Incorporation, the
Corporation may not issue (i) additional shares of Class A Common Stock or (ii)
any shares of Preferred Stock or any other class or series of stock or
securities, in each case with, or convertible into or exchangeable or
exercisable for stock or other securities with, the right to vote on any matter
on which stockholders are entitled to vote if the result would be that parties
bound by the Stockholder Agreement could fail to own at least a majority of the
outstanding shares of voting stock of the Corporation.
(8) Voting.
During the Specified Period, except for those actions set forth on
Annex I to this Restated Certificate of Incorporation, which shall require the
approval of the Board of Directors, all action by the Board of Directors shall
require the affirmative vote of at least fourteen (14) directors. At all
meetings of the Board of Directors a majority of the full Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or this Restated Certificate of Incorporation.
If a quorum shall
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not be present at any meeting of the Board of Directors, the Directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
(9) Amendment.
Until the expiration of the Specified Period the provisions of any
Article of this Restated Certificate which refer to this Article XIII, the
provisions of this Article XIII, and the provisions of Article VIII of the
by-laws of the Corporation, may not be amended, altered, repealed or waived in
any respect without the approval of at least fourteen (14) directors.
(10) Successors.
During the Specified Period, the provisions of this Article XIII
shall be applicable to (i) any successor to the Corporation as the result of a
merger, consolidation or other business combination, whether or not the
Corporation is the surviving company in such transaction, or otherwise and (ii)
any corporation or other entity with respect to which the Corporation or its
successor is or becomes a direct or indirect subsidiary, the Board of Directors
shall not permit the Corporation to be a party to any transaction which would
not comply with the foregoing without the approval of at least fourteen (14)
directors.
(11) Subsidiaries.
The Board of Directors shall have the right, following
consultation with the COO or, if Mel Karmazin is the CEO, the CEO, with respect
to any public company which is a subsidiary of the Corporation, to take such
steps as the Board of Directors reasonably determines are necessary to implement
corporate governance arrangements applicable to such subsidiary in a manner as
consistent as practicable with the provisions contained in this Restated
Certificate of Incorporation; provided that any such steps shall not vest in the
Board of Directors greater power or provide the COO with fewer rights than those
provided for in this Restated Certificate of Incorporation.
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ANNEX I
TO VIACOM INC. RESTATED
CERTIFICATE OF INCORPORATION
The provisions of this Annex I shall form a part of, and be
incorporated in all respects in, the Restated Certificate of Incorporation to
which this Annex I is attached. The following actions shall require the approval
of a majority of the directors:
A. Acquisitions, Divestitures, Joint Ventures, Guarantees
o Any acquisition, equity investment or joint venture (each an
"Acquisition") by the Corporation or any of its subsidiaries for more
than $25 million.
o Any divestiture or other sale of assets (each a "Divestiture") (not in
the ordinary course) by the Corporation or any of its subsidiaries for
more than $25 million (based on purchase price or net book value of
assets).
o Any real estate purchase, sale or lease by the Corporation or any of
its subsidiaries for more than $25 million.
o Any guarantee by the Corporation or any of its subsidiaries of an
obligation of a third party where the obligation guaranteed is more
than $25 million.
o Notwithstanding the above, any Acquisition or Divestiture by the
Corporation or any of its subsidiaries of (a) internet or internet
related businesses for more than $25 million but less than $100
million, with the value thereof represented by multi-year commitments
for advertising, promotion and content licensing, is excluded, so long
as the aggregate of such Acquisitions or Divestitures, in each case,
does not exceed $550 million and (b) radio or outdoor advertising
businesses for more than $25 million but less than $100 million, is
excluded, so long as the aggregate of such Acquisitions or
Divestitures, in each case, does not exceed $300 million; provided that
(i) any Divestiture of shares of a publicly traded internet or internet
related business with a value of up to $75 million is excluded and
shall not be included in the calculation of any of the threshold
amounts set forth above, (ii) Board approval may be secured (but is not
required) for any transaction of more than
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$25 million but less than $100 million where the regular meeting
schedule of the Board so permits (and shall not otherwise be required),
(iii) the Board will be provided with information about and a status
report on such transactions completed without Board approval and (iv)
this limit of authority will be reviewed in 12 months from the
Effective Time (as defined in Article XIII of the Restated Certificate)
and may be amended only with the approval of 14 members of the Board of
Directors.
o Any contract of the Corporation or any of its subsidiaries not in the
ordinary course with a value in excess of $25 million.
o Notwithstanding the above, any of the foregoing transactions that is
approved by the Board shall not be included in the calculation of any
of the threshold amounts set forth above.
B. Employee Matters
o Employee benefit plans (at the Corporation or a subsidiary): (a)
creating a new plan, (b) suspending or terminating an existing plan,
(c) any amendment that materially increases cost to the Corporation or
subsidiary.
o Entering into any modifications or amendments to the employment
agreements with the CEO or the COO.
C. General
o The Annual Report on Form 10-K.
o Proxy statement and notice of meeting (including annual or special
meeting date, location, record date for voting).
o Any issuance of Corporation stock, or options, warrants or other
similar rights (including stock appreciation rights) or debt or other
securities convertible into or exchangeable for Corporation stock.
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o Any issuance of debt unless such debt is short term and is within the
spending limits of the annual operating budget or is replacing existing
debt.
o Annual capital expenditure and annual operating budgets and individual
capital expenditure transactions in excess of $25 million for the
Corporation or any of its subsidiaries.
o Any Corporation or subsidiary pays a dividend or repurchases stock from
a third party.
o Review and approve any action or transaction where Board action is
required by law (other than ss. 141(a) of the Delaware General
Corporation Law) or by the terms of the transaction (in all cases other
than as specifically set forth in the Restated Certificate of
Incorporation).
o Review and approve Board minutes.
o Subject to Article XIII of the Restated Certificate of Incorporation,
determine Board administration, including number of directors, meeting
schedule, nominees, committees, director compensation, D&O insurance
authorization, internal investigations and retention of advisors in
connection therewith, and decisions regarding indemnification of
individuals.
o Subject to Article XIII of the Restated Certificate of Incorporation,
amendments to the Restated Certificate of Incorporation and by-laws of
the Corporation.
o Commencement and settlement of major litigation.
o Selection of independent auditors.
o All matters on which the Corporation Board of Directors has
historically taken action other than (1) matters relating to the
subject matters addressed in this Annex I and not requiring approval of
the Board of Directors hereunder and (2) those matters delegated to the
COO, including all of the COO Functions (as defined in Article XIII of
this Restated Certificate of Incorporation).
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EXHIBIT A-2 TO THE MERGER AGREEMENT
VIACOM INC.
AMENDED AND RESTATED
B Y - L A W S
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such
other places both within and without the state of Delaware as the board of
directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders may be held at such time
and place, within or without the State of Delaware, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof. The annual
meeting of stockholders may be held at such place, within or without the State
of Delaware, as shall be designated by the board of directors and stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
<PAGE>
2
Section 2. The annual meeting of stockholders for the purpose
of electing directors and for the transaction of such other business as may
properly come before the meeting shall be held at such date and hour as shall be
determined by the board of directors or, in the absence of such determination,
on the third Thursday of the ninth month after the month end most nearly
coinciding with the close of the fiscal year of the Corporation.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder entitled
to vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice
<PAGE>
3
of the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept open at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the Restated
Certificate of Incorporation, may be called by the affirmative vote of a
majority of the board of directors, the Chairman of the Board, the Chief
Executive Officer, the Vice Chairman of the Board or the President and Chief
Operating Officer and shall be called by the Chairman of the Board, the Chief
Executive Officer, the Vice Chairman of the Board, the President and Chief
Operating Officer or Secretary at the request in writing of the holders of
record of at least 50.1% of the aggregate voting power of all outstanding shares
of capital stock of the Corporation entitled to vote generally in the election
of Directors, acting together as a single class. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before
<PAGE>
4
the date of the meeting to each stockholder of record entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the aggregate voting
power of the shares of the capital stock issued and outstanding and entitled to
vote thereat, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the Restated Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
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5
Section 9. When a quorum is present at any meeting, the vote
of the holders of a majority of the aggregate voting power of the shares of the
capital stock having voting power present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, by provision of applicable law or of the Restated Certificate of
Incorporation, a different vote is required in which case such express provision
shall govern and control the decision of such question.
Section 10. At every meeting of the stockholders, each
stockholder shall be entitled to vote, in person or by proxy executed in writing
by the stockholder or his duly authorized attorney-in-fact, each share of the
capital stock having voting power held by such stockholder in accordance with
the provisions of the Restated Certificate of Incorporation and, if applicable,
the certificate of designations relating thereto, but no proxy shall be voted or
acted upon after three years from its date, unless the proxy provides for a
longer period.
Section 11. Any action required to be taken at any annual or
special meeting of stockholders of the Corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
<PAGE>
6
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by stockholders
representing not less than the minimum number of votes that would be necessary
to authorize or take such actions at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of such action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. The Secretary shall file such
consents with the minutes of the meetings of the stockholders.
Section 12. At all meetings of stockholders, the chairman of
the meeting shall have absolute authority over matters of procedure, and there
shall be no appeal from the ruling of the chairman.
Section 13. Attendance of a stockholder, in person or by
proxy, at any meeting shall constitute a waiver of notice of such meeting,
except where the stockholder, in person or by proxy, attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
<PAGE>
7
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the
entire Board of Directors shall be fixed as set forth in Article XIII of the
Restated Certificate of Incorporation, and shall not be less than three nor more
than eighteen. Directors shall have such qualifications as may be prescribed by
these by-laws. Directors need not be stockholders. If required by regulations of
the Federal Communications Commission, each director shall be a citizen of the
United States of America
Section 2. Subject to the rights of the holders of any series
of Preferred Stock or any other class of capital stock of the corporation then
outstanding (other than the Common Stock), and subject to Article XIII of the
Restated Certificate of Incorporation, vacancies in the board of directors for
any reason, including by reason of an increase in the authorized number of
directors, shall, if occurring prior to the expiration of the term of office in
which the vacancy occurs, be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual meeting of
stockholders of the Corporation or until their successors are duly elected and
shall qualify, unless sooner displaced. Subject to
<PAGE>
8
Article XIII of the Restated Certificate of Incorporation, if there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
Section 3. The property and business of the Corporation shall
be controlled and managed in accordance with the terms of the Restated
Certificate of Incorporation by its board of directors which may, subject to
Article XIII of the Restated Certificate of Incorporation, exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Restated Certificate of Incorporation or by these by-laws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the Corporation, or any
committees thereof, may hold meetings, both regular and special, either within
or without the State of Delaware.
Section 5. A regular annual meeting of the board of
directors, including newly elected directors, shall be held immediately after
each annual meeting of stockholders at the place of such stockholders' meeting,
and no notice of such meeting to the directors shall be necessary in order
legally to constitute the meeting, provided a quorum shall be present. If such
meeting is held at any other time or
<PAGE>
9
place, notice thereof must be given or waived as hereinafter provided for
special meetings of the board of directors.
Section 6. Additional regular meetings of the board of
directors shall be held on such dates and at such times and at such places as
shall from time to time be determined by the board of directors.
Section 7. The Chairman of the Board, the Chief Executive
Officer, Vice Chairman of the Board or the President and Chief Operating Officer
of the Corporation and the Secretary may call a special meeting of the board of
directors at any time by giving notice, specifying the business to be transacted
at and the purpose or purposes of the meeting, to each member of the board at
least twenty-four (24) hours before the time appointed.
Section 8. At all meetings of the board a majority of the
full board of directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the board of directors, except as
may be otherwise specifically provided by statute, the Restated Certificate of
Incorporation or these by-laws. If a quorum shall not be present at any meeting
of the board of directors, the directors present thereat may adjourn the meeting
from time to time, without
<PAGE>
10
notice other than announcement at the meeting, until a quorum shall be present.
Section 9. Any action required or permitted to be taken at
any meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, setting forth the action so taken, and the writing
or writings are filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the Restated
Certificate of Incorporation or these by-laws, members of the board of
directors, or any committee thereof, may participate in a meeting of the board
of directors, or any committee, by means of conference telephone or similar
communications equipment whereby all persons participating in the meeting can
hear each other, and such participation in a meeting shall constitute presence
in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. Designation of Committees. Subject to Article
XIII of the Restated Certificate of Incorporation, the board of directors may,
by resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of
<PAGE>
11
the directors of the Corporation. Subject to Article XIII of the Restated
Certificate of Incorporation, the board of directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 12. Vacancies. Subject to Article XIII of the
Restated Certificate of Incorporation, in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
Section 13. Powers. Subject to Article XIII of the Restated
Certificate of Incorporation, any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors to the extent provided by Section 141(c)
of the General Corporation Law of the State of Delaware as it exists now or may
hereafter be amended.
Section 14. Each committee of the board of directors shall
keep regular minutes of its meetings and report the same to the board of
directors when required.
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12
COMPENSATION OF DIRECTORS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 15. Unless otherwise restricted by the Restated
Certificate of Incorporation or these by-laws, the board of directors shall have
the authority to fix the compensation of directors. All directors may be paid
their expenses, if any, of attendance at each meeting of the board of directors,
and directors who are not full-time employees of the Corporation may be paid a
fixed sum for attendance at each meeting of the board of directors and/or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or standing committees may be allowed like
compensation and expenses for attending committee meetings.
REMOVAL OF DIRECTORS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 16. Subject to the rights of the holders of any
series of Preferred Stock or any other class of capital stock of the Corporation
(other than the Common Stock) then outstanding, (a) any director, or the entire
<PAGE>
13
board of directors, may be removed from office at any time prior to the
expiration of his term of office, with or without cause, only by the affirmative
vote of the holders of record of outstanding shares representing at least a
majority of all of the aggregate voting power of outstanding shares of capital
stock of the Corporation then entitled to vote generally in the election of
directors, voting together as a single class at a special meeting of
stockholders called expressly for that purpose; provided that, any director may
be removed from office by the affirmative vote of a majority of the entire board
of directors, at any time prior to the expiration of his term of office, as
provided by law, in the event a director fails to meet the qualifications stated
in these by-laws for election as a director or in the event such director is in
breach of any agreement between such director and the Corporation relating to
such director's service as a director or employee of the Corporation.
INDEMNIFICATION OF DIRECTORS
Section 17. The Corporation shall have the right to indemnify
directors, officers and agents of the Corporation to the fullest extent
permitted by the General Corporation Law of Delaware and by the Restated
Certificate of Incorporation, as both may be amended from time to time.
<PAGE>
14
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of applicable law
or of the Restated Certificate of Incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall be construed to
mean written or printed notice given either personally or by mail or wire
addressed to such director or stockholder, at his address as it appears on the
records of the Corporation, with postage or other charges thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail or at the appropriate office for
transmission by wire. Notice to directors may also be given by telephone.
Section 2. Whenever any notice is required to be given under
the provisions of applicable law or of the Restated Certificate of Incorporation
or of these by-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
Section 3. Attendance at a meeting shall constitute a waiver
of notice except where a director or shareholder attends a meeting for the
express purpose of
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15
objecting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 4. Neither the business to be transacted at, nor the
purpose of, any regular meeting of the board of directors need be specified in
the notice or waiver of notice of such meeting.
ARTICLE V
OFFICERS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 1. The officers of the Corporation shall be elected
by the board of directors at its first meeting after each annual meeting of the
stockholders and shall be a President and Chief Operating Officer, a Treasurer
and a Secretary. The board of directors may also elect a Chairman of the Board,
a Chief Executive Officer, one or more Vice Chairmen of the Board and Vice
Presidents and one or more Assistant Treasurers and Assistant Secretaries. Any
number of offices may be held by the same person, except that the offices of
President and Chief Operating Officer and Secretary shall not be held by the
same person. Vice Presidents may be given distinctive designations such as
Executive Vice President or Senior Vice President. Every officer shall be a
citizen of the United States of America.
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16
Section 2. The board of directors may elect such other
officers and agents as it shall deem necessary who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board of directors.
Section 3. The officers of the Corporation shall hold office
until their successors are elected or appointed and qualify or until their
earlier resignation or removal. Any officer elected or appointed by the board of
directors may be removed at any time with or without cause by the affirmative
vote of a majority of the whole board of directors. Any vacancy occurring in any
office of the Corporation shall be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 4. The Chairman of the Board, if any shall be
elected, shall preside at all meetings of the board of directors and the
stockholders and shall have such other powers and perform such other duties as
may from time to time be assigned to him by the board of directors.
VICE CHAIRMAN OF THE BOARD
Section 5. The Vice Chairman of the Board, if any shall be
elected, or if there be more than one, the Vice Chairmen of the Board in order
of their election, shall, in
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17
the absence of the Chairman of the Board, or in the case the Chairman of the
Board shall resign, retire, become deceased or otherwise cease or be unable to
act, perform the duties and exercise the powers of the Chairman of the Board. In
addition, the Vice Chairman of the Board shall have such other powers and
perform such other duties as may from time to time be assigned to him by the
board of directors.
THE CHIEF EXECUTIVE OFFICER
Section 6. The Chief Executive Officer shall be responsible,
in consultation with the President and Chief Operating Officer, for corporate
policy and strategy. The President and Chief Operating Officer shall consult on
all major decisions with, and shall report directly to, the Chief Executive
Officer; provided, however, that the Chief Executive Officer shall not exercise
any powers, rights, functions or responsibilities of the President and Chief
Operating Officer unless Mel Karmazin is the Chief Executive Officer.
THE PRESIDENT AND CHIEF OPERATING OFFICER
Section 7. Subject to Article XIII of the Restated
Certificate of Incorporation and to the requirement that the President and Chief
Operating Officer consult with the Chief Executive Officer on all major
decisions, the
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18
President and Chief Operating Officer shall be responsible for:
(i) supervising, coordinating and managing
the Corporation's business, operations and
activities, operating expenses and capital
allocation;
(ii) matters relating to officers (other than the
Chairman, the Chief Executive Officer and the President and
Chief Operating Officer) and employees, including, without
limitation, hiring, terminating, changing positions and
allocation of responsibilities of such officers and
employees;
(iii) substantially all of the powers, rights,
functions and responsibilities typically exercised
by a chief operating officer; and
(iv) all officers (other than the Chairman, the
Chief Executive Officer and the President and Chief Operating
Officer) will report, directly or indirectly, to the
President and Chief Operating Officer.
THE VICE-PRESIDENTS
Section 8. The Vice-Presidents shall have such powers and
perform such duties as may from time to time be assigned to them by the board of
directors or the President and Chief Operating Officer.
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19
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The Secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the Corporation and of the board of directors in
a book to be kept for that purpose and shall perform like duties for the
standing committees of the board of directors when required. He shall give, or
cause to be given, notice of all meetings of the stockholders and special
meetings of the board of directors, and shall perform such other duties as may
be prescribed by the board of directors or the President and Chief Operating
Officer, under whose supervision he shall be. He shall have custody of the
corporate seal of the Corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary. The board of directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature.
Section 10. The Assistant Secretary, if any shall be elected,
or if there be more than one, the Assistant
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20
Secretaries in the order determined by the board of directors (or if there be no
such determination, then in the order of their election), shall, in the absence
of the Secretary or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the Secretary and shall have such other powers
and perform such other duties as may from time to time be assigned to them by
the board of directors or the President and Chief Operating Officer.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The Treasurer, under the supervision of the
President and Chief Operating Officer, shall have charge of the corporate funds
and securities and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositaries as may be designated by or at the direction
of the board of directors.
Section 12. The Treasurer shall disburse or cause to be
disbursed the funds of the Corporation as may be ordered by or at the direction
of the President and Chief Operating Officer or the board of directors, taking
proper vouchers for such disbursements, and subject to the
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21
supervision of the President and Chief Operating Officer, shall render to the
board of directors, when they or either of them so require, an account of his
transactions as Treasurer and of the financial condition of the Corporation.
Section 13. If required by the board of directors, the
Treasurer shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 14. The Assistant Treasurer, if any shall be elected,
or if there shall be more than one, the Assistant Treasurers in the order
determined by the board of directors (or if there be no such determination, then
in the order of their election), shall, in the absence of the Treasurer or in
the event of his inability or refusal to act, perform the duties and exercise
the powers of the Treasurer and shall have such other powers and perform such
other duties as may from time to time be assigned to them by the board of
directors.
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22
Section 15. In addition to the corporate officers elected by
the board of directors pursuant to this Article V, the President and Chief
Operating Officer may, from time to time, appoint one or more other persons as
appointed officers who shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the President and Chief
Operating Officer may deem appropriate. The President and Chief Operating
Officer may prescribe the powers to be exercised and the duties to be performed
by each such appointed officer, may designate the term for which each such
appointment is made, and may, from time to time, terminate any or all of such
appointments. Such appointments and termination of appointments shall be
reported to the board of directors.
ARTICLE VI
CERTIFICATES Of STOCK
Section 1. Every holder of shares of capital stock in the
Corporation shall be entitled to have a certificate sealed with the seal of the
Corporation and signed by, or in the name of the Corporation by, the Chairman of
the Board, the Chief Executive Officer, Vice Chairman of the Board or the
President and Chief Operating Officer and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the
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23
Corporation. If the Corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights shall be set forth in full or summarized on the face
or back of the certificate which the Corporation shall issue to represent such
class or series of stock, provided that, except as otherwise provided in section
202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the designations, preferences and relative, participating,
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.
Section 2. Any or all of the signatures on the certificate
may be facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar
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24
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer, transfer agent or registrar at the date
of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of capital stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of
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25
succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution, or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meetings, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
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26
REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of the capital stock, subject to the provisions of any statute, the
Restated Certificate of Incorporation and these by-laws.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the Corporation
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27
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purposes as the directors shall
think conducive to the interest of the Corporation, and the directors may modify
or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each
annual meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
CHECKS
Section 4. All checks or demands for money of the Corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be as
specified by the board of directors.
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28
SEAL
Section 6. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
CONTRACTS
Section 7. An Officer of the Corporation may sign any note,
bond, or mortgage of the Corporation in furtherance of the Corporation's
ordinary business and in order to implement any action authorized by these
by-laws.
ARTICLE VIII
RESTATED CERTIFICATE OF INCORPORATION
In addition to all other provisions of the Restated
Certificate of Incorporation, and notwithstanding that these by-laws may contain
any provision contrary thereto, these by-laws shall be subject in all respects
to Article XIII of the Restated Certificate of Incorporation.
ARTICLE IX
AMENDMENTS
In furtherance of and not in limitation of the powers
conferred by statute, the board of directors of the
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29
Corporation from time to time may make, amend, alter, change or repeal the
by-laws of the Corporation; provided, that any by-laws made, amended, altered,
changed or repealed by the board of directors or the stockholders of the
Corporation may be amended, altered, changed or repealed, and that any by-laws
may be made, by the stockholders of the Corporation. Notwithstanding any other
provisions of the Restated Certificate of Incorporation of the Corporation or
these by-laws (and notwithstanding the fact that a lesser percentage may be
specified by law, the Restated Certificate of Incorporation or these by-laws),
the affirmative vote of not less than a majority of the aggregate voting power
of all outstanding shares of capital stock of the Corporation then entitled to
vote generally in this election of Directors, voting together as a single class,
shall be required for the stockholders of the Corporation to amend, alter,
change, repeal or adopt any by-laws of the Corporation.
<PAGE>
EXHIBIT 6.14
FORM OF AFFILIATE LETTER
Viacom Inc.
1515 Broadway
New York, New York 10036
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of CBS Corporation, a Pennsylvania corporation
(the "Company"), as the term "affiliate" is defined for purposes of paragraphs
(c) and (d) of Rule 145 of the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission") under
the Securities Act of 1933, as amended (the "Act"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of September , 1999 (the "Agreement"),
between Viacom Inc., a Delaware corporation ("Viacom"), and the Company, the
Company will be merged with and into Viacom (the "Merger").
As a result of the Merger, I may receive (i) shares of Class
B common stock, par value $.01 per share, of Viacom (the "Viacom Class B Common
Stock"), or (ii) an option (a "Substituted Option") to purchase a number of
shares of Viacom Class B Common Stock (the Viacom Class B Common Stock and the
Substituted Options collectively referred to as the "Viacom Securities"). In
respect of shares of Viacom Class B Common Stock, I would receive such shares in
exchange for shares owned by me of common stock, par value $1.00 per share, of
the Company (the "Company Common Stock"). In respect of the Substituted Options,
I would receive such options in exchange for options to purchase Company Common
Stock held by me under the CBS Stock Option Plans (as defined in the Agreement).
I represent, warrant and covenant to Viacom that in the event
I receive any Viacom Securities as a result of the merger:
A. I shall not make any sale, transfer or other disposition
of the Viacom Securities in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and
discussed the requirements of such documents and other applicable
limitations upon my ability to sell, transfer or otherwise dispose of
Viacom Securities to the extent I felt necessary, with my counsel or
counsel for the Company.
C. I have been advised that the issuance of Viacom Securities
to me pursuant to the Merger has been registered with the Commission
under the Act on a Registration
<PAGE>
2
Statement Form S-4. However, I have also been advised that, because at
the time the Merger is submitted for a vote of the stockholders of the
Company, (a) I may be deemed to be an affiliate of the Company and (b)
the distribution by me of the Viacom Securities has not been
registered under the Act, I may not sell, transfer or otherwise
dispose of Viacom Securities issued to me in the Merger unless (i)
such sale, transfer or other disposition is made in conformity with
the volume and other limitations of Rule 145 promulgated by the
Commission under the Act, (ii) such sale, transfer or other
disposition has been registered under the Act or (iii) in the opinion
of counsel reasonably acceptable to Viacom, such sale, transfer or
other disposition is otherwise exempt from registration under the Act.
D. I understand that Viacom is under no obligation to
register the sale, transfer or other disposition of the Viacom
Securities by me or on my behalf under the Act or to take any other
action necessary in order to make compliance with an exemption from
such registration available solely as a result of the Merger.
E. I also understand that there will be placed on the
certificates for the Viacom Securities issued to me, or any
substitutions therefor, a legend stating in substance:
"THE [SHARES] [OPTIONS] REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER
THE SECURITIES ACT OF 1933 APPLIES. THE [SHARES] [OPTIONS]
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED __________
BETWEEN THE REGISTERED HOLDER HEREOF AND VIACOM, A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF
VIACOM."
F. I also understand that unless a sale or transfer is made
in conformity with the provisions of Rule 145, or pursuant to a
registration statement, Viacom reserves the right to put the following
legend on the certificates issued to my transferee:
"THE [SHARES] [OPTIONS] REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE [SHARES] [OPTIONS] HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
IN
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3
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING
OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933."
It is understood and agreed that the legends set forth in
paragraphs E and F above shall be removed by delivery of substitute certificates
without such legend if the undersigned shall have delivered to Viacom a copy of
a letter from the staff of the Commission, or an opinion of counsel reasonably
satisfactory to Viacom in form and substance reasonably satisfactory to Viacom,
to the effect that such legend is not required for purposes of the Act.
Execution of this letter should not be considered an
admission on my part that I am an "affiliate" of the Company as described in the
first paragraph of this letter, or as a waiver of any rights I may have to
object to any claim that I am such an affiliate on or after the date of this
letter.
Very truly yours,
------------------------------------
Name:
Accepted this ____ day of
__________, ____, by
VIACOM INC.
By:
-------------------------------------
Name:
Title:
