EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
VIACOM INC.,
IBC MERGER CORP.
and
INFINITY BROADCASTING CORPORATION
Dated as of October 30, 2000
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Table of Contents
Page
ARTICLE I
The Merger
SECTION 1.01. The Merger.......................................................2
SECTION 1.02. Effective Time; Closing..........................................2
SECTION 1.03. Effect of the Merger.............................................2
SECTION 1.04. Certificate of Incorporation; By-laws............................2
SECTION 1.05. Directors and Officers...........................................3
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities.........................................3
SECTION 2.02. Exchange of Certificates.........................................4
SECTION 2.03. Stock Transfer Books.............................................6
SECTION 2.04. Company Stock Options............................................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification...................................8
SECTION 3.02. Restated Certificate of Incorporation and Restated By-laws.......8
SECTION 3.03. Capitalization...................................................8
SECTION 3.04. Authority Relative to This Agreement.............................9
SECTION 3.05. No Conflict; Required Filings and Consents......................10
SECTION 3.06. SEC Filings; Financial Statements...............................11
SECTION 3.07. Absence of Litigation...........................................11
SECTION 3.08. Compliance......................................................12
SECTION 3.09. Intellectual Property Rights....................................12
SECTION 3.10. Tax Matters.....................................................12
SECTION 3.11. Brokers.........................................................12
SECTION 3.12. Opinions of Financial Advisors..................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT and Merger Sub
SECTION 4.01. Organization and Qualification..................................13
i
SECTION 4.02. Certificate of Incorporation and By-laws........................13
SECTION 4.03. Capitalization; Ownership of Company Class B Shares.............14
SECTION 4.04. Authority Relative to This Agreement............................14
SECTION 4.05. No Conflict; Required Filings and Consents......................15
SECTION 4.06. SEC Filings; Financial Statements...............................15
SECTION 4.07. Absence of Litigation...........................................16
SECTION 4.08. Compliance......................................................16
SECTION 4.09. Intellectual Property Rights....................................16
SECTION 4.10. Tax Matters.....................................................17
SECTION 4.11. Brokers.........................................................17
SECTION 4.12. Operations of Merger Sub........................................17
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger...........17
SECTION 5.02. Conduct of Business by Parent Pending the Merger................18
SECTION 5.03. Notification of Certain Matters.................................18
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Stockholder Approval....................................18
SECTION 6.02. Registration Statement; Disclosure Document.....................19
SECTION 6.03. Access to Information; Confidentiality..........................21
SECTION 6.04. Directors' and Officers' Indemnification and Insurance..........21
SECTION 6.05. Affiliates......................................................23
SECTION 6.06. Tax Treatment...................................................23
SECTION 6.07. Further Action; Consents; Filings...............................23
SECTION 6.08. Public Announcements............................................24
SECTION 6.09. NYSE Listing....................................................24
SECTION 6.10. Permitted Transfers.............................................24
SECTION 6.11. Obligations of Merger Sub.......................................24
SECTION 6.12. Reasonable Best Efforts and Further Assurances..................24
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party.....................25
SECTION 7.02. Conditions to the Obligations of Parent and Merger Sub..........25
SECTION 7.03. Conditions to the Obligations of the Company....................26
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination.....................................................27
SECTION 8.02. Effect of Termination...........................................28
SECTION 8.03. Amendment.......................................................28
SECTION 8.04. Waiver..........................................................28
SECTION 8.05. Expenses........................................................29
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements......29
SECTION 9.02. Notices.........................................................29
SECTION 9.03. Certain Definitions.............................................30
SECTION 9.04. Severability....................................................31
SECTION 9.05. Entire Agreement; Assignment....................................31
SECTION 9.06. Parties in Interest.............................................31
SECTION 9.07. Governing Law...................................................31
SECTION 9.08. Headings........................................................31
SECTION 9.09. Counterparts....................................................32
SECTION 9.10. Consent to Jurisdiction.........................................32
SECTION 9.11. WAIVER OF JURY TRIAL............................................32
Exhibit 6.05 Form of Affiliate Letter for Affiliates of the Company
iii
Glossary of Defined Terms
Defined Term Location of
Definition
affiliate.......................................................ss. 9.03(a)
Agreement.......................................................Preamble
Blue Sky Laws...................................................ss. 3.05(b)
business day....................................................ss. 9.03(b)
CBSBI...........................................................ss. 4.03(b)
Certificate of Merger...........................................ss. 1.02
Certificates....................................................ss. 2.02(b)
Closing.........................................................ss. 1.02
Code............................................................Recitals
Company.........................................................Preamble
Company Class A Shares..........................................Recitals
Company Class B Shares..........................................Recitals
Company Disclosure Schedule.....................................ss. 3.03
Company Material Adverse Effect.................................ss. 3.01
Company Preferred Stock.........................................ss. 3.03
Company SEC Reports.............................................ss. 3.06(a)
Company Stock Options...........................................ss. 2.04(a)
Consent Solicitation Statement..................................ss. 6.02(a)
control.........................................................ss. 9.03(c)
Delaware Law....................................................Recitals
Disclosure Document.............................................ss. 6.02(a)
Effective Time..................................................ss. 1.02
Exchange Act....................................................ss. 2.04(c)
Exchange Agent..................................................ss. 2.02(a)
Exchange Fund...................................................ss. 2.02(a)
Exchange Ratio..................................................ss. 2.01(a)
Expenses........................................................ss. 8.05
Governmental Entity.............................................ss. 3.05(b)
Indemnified Parties.............................................ss. 6.04(b)
Information Statement...........................................ss. 6.02(a)
Law.............................................................ss. 3.05(a)
Merger..........................................................Recitals
Merger Sub .....................................................Preamble
NYSE............................................................ss. 3.05(b)
Order...........................................................ss. 7.01(c)
Parent..........................................................Preamble
Parent Class A Common Shares....................................ss. 4.03
Parent Class B Common Shares....................................ss. 2.01(a)
Parent Disclosure Schedule......................................ss. 4.03
Parent Material Adverse Effect..................................ss. 4.01
Parent Preferred Shares.........................................ss. 4.03
Parent SEC Reports..............................................ss. 4.06(a)
iv
person..........................................................ss. 9.03(d)
Proxy Statement.................................................ss. 6.02(a)
Registration Statement..........................................ss. 6.02(a)
Representatives.................................................ss. 6.03(a)
SEC.............................................................ss. 2.04(b)
Securities Act..................................................ss. 3.05(b)
Shares..........................................................Recitals
Special Committee...............................................Recitals
subsidiary......................................................ss. 9.03(e)
Substituted Options.............................................ss. 2.04(a)
Surviving Corporation...........................................ss. 1.01
Terminating Company Breach......................................ss. 8.01(e)
Terminating Parent Breach.......................................ss. 8.01(f)
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AGREEMENT AND PLAN OF MERGER, dated as of October 30, 2000
(this "Agreement"), among VIACOM INC., a Delaware corporation ("Parent"), IBC
MERGER CORP., a Delaware corporation and a direct wholly owned subsidiary of
Parent ("Merger Sub"), and INFINITY BROADCASTING CORPORATION, a Delaware
corporation (the "Company").
W I T N E S S E T H
WHEREAS, Parent beneficially owns an aggregate of 700,000,000
shares of Class B common stock, par value $.01 per share, of the Company
("Company Class B Shares") and no shares of Class A common stock, par value $.01
per share, of the Company ("Company Class A Shares" and, together with the
Company Class B Shares, the "Shares") constituting approximately 64.3% of the
total outstanding Shares, and has proposed to the Board of Directors of the
Company that Parent acquire the remaining outstanding Shares;
WHEREAS, a special committee of the Board of Directors of the
Company consisting solely of independent directors (the "Special Committee") (i)
has determined that it is fair to, and in the best interests of, the Company and
its stockholders (excluding Parent and its affiliates) to consummate the merger
of the Company with and into Merger Sub, with Merger Sub being the surviving
corporation (the "Merger"), upon the terms and subject to the conditions of this
Agreement and in accordance with the General Corporation Law of the State of
Delaware ("Delaware Law"), (ii) has determined that this Agreement and the
Merger should be approved and declared advisable and (iii) has resolved to
recommend that the Board of Directors of the Company approve and declare the
advisability of this Agreement and the Merger;
WHEREAS, the Board of Directors of the Company, in reliance
upon the advice of the Special Committee, (i) has determined that it is fair to,
and in the best interests of, the Company and its stockholders (excluding Parent
and its affiliates) to consummate the Merger, upon the terms and subject to the
conditions of this Agreement and in accordance with Delaware Law, (ii) has
approved and declared the advisability of this Agreement and the Merger and
(iii) has resolved to recommend that the stockholders of the Company approve the
Merger and adopt this Agreement;
WHEREAS, the Board of Directors of Parent (i) has determined
that the Merger is fair to, and in the best interests of, Parent and its
stockholders and (ii) has approved and declared the advisability of this
Agreement and the Merger; and
WHEREAS, for United States 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").
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, the Company and Merger Sub 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 Delaware Law, at the
Effective Time (as defined below), the Company shall be merged with and into
Merger Sub. As a result of the Merger, the separate corporate existence of the
Company shall cease and Merger Sub shall continue as the surviving corporation
of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. As promptly as
practicable and in no event later than the third business day following the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (other than conditions providing for the delivery of opinions, documents or
certificates at the Closing (as defined below)) (or such other date as may be
agreed in writing by each of the parties hereto), the parties hereto shall cause
the Merger to be consummated by filing a certificate of merger (the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as is required by, and executed in accordance with, the relevant provisions of
Delaware Law. The term "Effective Time" means the date and time of the filing
with, and the acceptance for record by, the Secretary of State of the State of
Delaware of the Certificate of Merger (or such later time as may be agreed upon
in writing by each of the parties hereto and specified in the Certificate of
Merger). Immediately prior to the filing of the Certificate of Merger, a closing
(the "Closing") will be held at the offices of Parent, 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000 (or such other place as the parties hereto 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 (including, without limitation, Sections 259, 260 and 261 of the
General Corporation Law of the State of Delaware). Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company shall vest in
the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company shall become the debts,
liabilities, obligations, restrictions, disabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-laws. (a) At
the Effective Time, the Certificate of Incorporation of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; provided, however, that at the
Effective Time, Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the Corporation is
Infinity Broadcasting Corporation."
(b) At the Effective Time, the By-laws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law, the
Certificate of Incorporation of the Surviving Corporation and such By-laws.
2
SECTION 1.05. Directors and Officers. The directors of the
Company immediately prior to the Effective Time shall become the directors of
the Surviving Corporation effective as of the Effective Time. The Surviving
Corporation shall, and shall cause the directors of the Surviving Corporation
to, take such action, as of immediately following the Effective Time, as may be
necessary to cause the board of directors of the Surviving Corporation
thereafter to be comprised solely of persons designated by Parent (including,
without limitation, by nominating any such Parent designees to the board of
directors of the Surviving Corporation). The directors of the Surviving
Corporation, after giving effect to the actions contemplated by the preceding
sentence, shall each hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation until the earlier of
their resignation or removal or until their successors are duly elected or
appointed and qualified. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, and
shall each hold office in accordance with the Certificate of Incorporation and
By-laws of the Surviving Corporation until the earlier of their resignation or
removal or until their respective successors are duly elected or appointed and
qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent,
Merger Sub, the Company or the holders of any of the following securities:
(a) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
Section 2.01(b)) shall be converted, subject to Section 2.02(e), into
the right to receive 0.592 (the "Exchange Ratio") of a share of Class B
common stock, par value $.01 per share, of Parent ("Parent Class B
Common Shares"); provided, however, that if between the date of this
Agreement and the Effective Time the outstanding Parent Class B Common
Shares shall have been changed into a different number of shares or a
different 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; at the
Effective Time, each Share issued and outstanding immediately prior to
the Effective Time shall no longer be outstanding and shall
automatically be cancelled and retired and cease to exist, and, other
than certificates evidencing Shares to be cancelled pursuant to Section
2.01(b), each certificate previously evidencing such Shares shall
evidence only the right to receive the number of Parent Class B Common
Shares set forth above; and
(b) each Share held in the treasury of the Company immediately
prior to the Effective Time shall be canceled and extinguished without
any conversion thereof and no payment or distribution shall be made
with respect thereto; and
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(c) each share of common stock, par value $0.01 per share, of
Merger Sub issued and outstanding immediately prior to the Effective
Time shall be converted into one validly issued, fully paid and
non-assessable share of common stock, par value $0.01 per share, of the
Surviving Corporation.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent.
Parent shall deposit, or shall cause to be deposited, with a bank or trust
company designated by Parent and reasonably acceptable to the Company (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 Parent Class B Common Shares issuable pursuant to Section 2.01
as of the Effective Time, and cash, from time to time as required to make
payments in lieu of any fractional shares pursuant to Section 2.02(e) (such cash
and certificates for Parent Class B Common Shares, together with any dividends
or distributions with respect thereto, being hereinafter referred to as the
"Exchange Fund"). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Parent Class B Common Shares contemplated to be issued
pursuant to Section 2.01 out of the Exchange Fund. Except as contemplated by
Section 2.02(f), the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
record of a certificate or certificates which immediately prior to the Effective
Time represented outstanding Shares (the "Certificates") (i) a letter of
transmittal (which shall be in customary form and shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing whole Parent Class B Common Shares, together with
any dividends or distributions with respect thereto, and any cash in lieu of any
fractional shares. Upon surrender to the Exchange Agent of a Certificate for
exchange and cancellation, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, 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 Parent Class B Common Shares 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 any fractional Parent Class B Common Shares 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 canceled. In the event of a
transfer of ownership of Shares which is not registered in the transfer records
of the Company, a certificate representing the proper number of Parent Class B
Common Shares, cash in lieu of any fractional Parent Class B Common Shares 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), 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 satisfactory to the
Surviving Corporation that any applicable share transfer taxes have been paid.
Until surrendered as contemplated by this Section 2.02, each Certificate shall
be deemed at all times after the Effective Time to represent only the right to
receive upon such surrender the certificate representing Parent Class B Common
Shares, cash in lieu of any fractional Parent Class B Common Shares to which
such holder is entitled pursuant to
4
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 Parent Class B
Common Shares. No dividends or other distributions declared or made after the
Effective Time with respect to the Parent Class B Common Shares with a record
date after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the Parent Class B Common Shares represented
thereby, and no cash payment in lieu of any 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 as provided in Section 2.02(b).
Subject to the effect of escheat, tax or other applicable Laws (as hereinafter
defined), following surrender of any such Certificate, there shall be paid to
the holder of the certificates representing whole Parent Class B Common Shares
issued in exchange therefor, without interest, (i) promptly, the amount of any
cash payable with respect to a fractional Parent Class B Common Share 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 Parent Class B Common Shares, and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date after the Effective Time but prior to
surrender and a payment date occurring after surrender, payable with respect to
such whole Parent Class B Common Shares.
(d) No Further Rights in the Company's Common Stock. All
Parent Class B Common Shares issued upon conversion of the Shares in accordance
with the terms hereof (including any cash paid pursuant to Section 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 Parent Class B Common Shares 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
Parent. Each holder of a fractional share interest shall be paid an amount in
cash (without interest) equal to the product obtained by multiplying (i) such
fractional share interest to which such holder (after taking into account all
fractional share interests then held by such holder) would otherwise be
entitled, by (ii) the 4:00 p.m. (New York time) closing price for a Parent Class
B Common Share, as reported in The Wall Street Journal (Northeast edition) or,
if there is no such report in The Wall Street Journal, any other authoritative
source, on the first trading day immediately following the Effective Time. 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 holders of fractional
share interests who have surrendered their Certificates to the Exchange Agent,
the Exchange Agent shall so notify Parent, and Parent shall deposit such amount
with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holders 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 Parent, upon demand, and any
holders of Shares who have not theretofore complied with this Article II shall
thereafter look only to Parent for the Parent Class B Common Shares, any cash in
lieu of fractional Parent Class B Common Shares to which they are entitled
pursuant to Section 2.02(e) and any dividends or other distributions with
respect to the Parent Class B
5
Common Shares to which they are entitled pursuant to Section 2.02(c), in each
case, without any interest thereon. 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 Parent free and clear of any claims or interest of any person
previously entitled thereto.
(g) No Liability. Neither Parent nor the Surviving Corporation
shall be liable to any holder of Shares for any Parent Class B Common Shares (or
dividends or distributions with respect thereto) or cash from the Exchange Fund
delivered to a public official pursuant to any abandoned property, escheat or
similar Law.
(h) Withholding Rights. Each of the Surviving Corporation,
Parent and the Exchange Agent 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 or local tax
Law. To the extent that amounts are so withheld by the Surviving Corporation,
Parent or the Exchange Agent, as the case may be, 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 the
Surviving Corporation, Parent or the Exchange Agent, as the case may be.
(i) Lost Certificates. If any Certificate shall have 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 the Surviving Corporation, the posting by such person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate, the Parent Class B Common Shares, any cash in lieu of fractional
Parent Class B Common Shares 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), in each case, without any
interest thereon.
SECTION 2.03. Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed and there shall be no
further registration of transfers of Shares thereafter on the records of the
Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided in this Agreement or by
Law. On or after the Effective Time, any Certificates presented to the Exchange
Agent or Parent for any reason shall be converted into the right to receive
Parent Class B Common Shares, any cash in lieu of fractional Parent Class B
Common Shares 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. Company Stock Options. (a) Prior to the
Effective Time, Parent and the Company shall take such action as may be
necessary to cause each unexpired and unexercised option to purchase Shares
which is outstanding immediately prior to the Effective
6
Time (collectively, "Company Stock Options"), to be automatically converted at
the Effective Time into an option (collectively, "Substituted Options") to
purchase a number of Parent Class B Common Shares equal to the number of Shares
that could have been purchased under such Company Stock Option multiplied by the
Exchange Ratio (rounded to the nearest whole number of Parent Class B Common
Shares) at a price per Parent Class B Common Share equal to the per-share option
exercise price specified in the Company Stock 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 were applicable to such Company Stock Option. The date
of grant of the Substituted Option shall be the date on which the corresponding
Company Stock Option was granted and, at the Effective Time all references in
the related stock option agreements to the Company shall be deemed to refer to
Parent. Except as otherwise provided herein or in the applicable plan or
program, employee deferrals and all other equity-based compensation that
references Shares will as of and after the Effective Time, be deemed to refer to
Parent Class B Common Shares (as adjusted to reflect the Exchange Ratio). The
adjustments provided herein with respect to any options that are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with the requirements of Section 424(a) of the Code.
(b) Parent shall take such corporate action as may be
necessary or appropriate to, at or prior to the Effective Time, file with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-8 (or any successor or other appropriate form) with respect to the Parent
Class B Common Shares subject to the Substituted Options to the extent such
registration is required under applicable Law in order for such Parent Class B
Common Shares to be sold without restriction in the United States, and Parent
shall use its reasonable best efforts to obtain and maintain the effectiveness
of such registration statement for so long as such Substituted Options remain
outstanding.
(c) Prior to the Effective Time, Parent and the Company shall
take all steps reasonably necessary to cause the transactions contemplated
hereby and any other dispositions of equity securities of the Company (including
derivative securities) or acquisitions of Parent equity securities (including
derivative securities) in connection with this Agreement by each individual who
(i) is a director or officer of Parent or the Company or (ii) at the Effective
Time, will become a director or officer of Parent, to be exempt under Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended (together with
the rules and regulations promulgated thereunder, the "Exchange Act"), such
steps to be consistent with then-current interpretive letters or rules and
regulations of the SEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as disclosed in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, the Company's Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 2000 and June 30, 2000, any of
the Company's Current Reports on Form 8-K filed with the SEC since December 31,
1999 or the Company's Proxy Statement on Schedule
7
14A dated March 30, 2000, including any amendments to any of the foregoing, in
each case in the form filed by the Company with the SEC prior to the date of
this Agreement:
SECTION 3.01. Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except, in
the case of the subsidiaries of the Company, where the failure to be duly
organized, validly existing or in good standing, or to have such requisite
corporate power and authority, would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect (as hereinafter
defined). Each of the Company and its subsidiaries has all necessary licenses,
permits, authorizations, and governmental approvals to own, lease and operate
its properties and to carry on its business as it is currently being conducted,
except where the failure to have such licenses, permits, authorizations and
governmental approvals would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. Each of the Company and
its subsidiaries is duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary, other
than where the failure to be so duly qualified and in good standing would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. The term "Company Material Adverse Effect", as used in
this Agreement, means any change or effect that, individually or when taken
together with all other such changes or effects, would have a material adverse
effect on the financial condition, assets, liabilities, business, operations or
earnings of the Company and its subsidiaries, taken as a whole, other than any
change or effect relating to the United States economy in general or to United
States stock market conditions in general or to the radio industry or the
industries of selling outdoor advertising or advertising in general.
SECTION 3.02. Restated Certificate of Incorporation and
Restated By-laws. The Company has heretofore furnished to Parent a complete and
correct copy of the Restated Certificate of Incorporation and the Restated
By-laws, each as amended to date, of the Company. Such Restated Certificate of
Incorporation and Restated By-laws are in full force and effect. None of the
Company or any of its subsidiaries is in violation of any provision of its
Restated Certificate of Incorporation or Restated By-laws (or equivalent
organizational documents) except, in the case of the subsidiaries of the
Company, for violations which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.03. Capitalization. The authorized capital stock of
the Company consists of 2,000,000,000 Class A Common Shares, 2,000,000,000 Class
B Common Shares and 50,000,000 shares of Preferred Stock, par value $.01 per
share (the "Company Preferred Stock"). As of September 30, 2000, (i) 390,332,441
Class A Common Shares (excluding treasury shares) and 700,000,000 Class B Common
Shares (excluding treasury shares) are issued and outstanding, all of which have
been validly issued and are fully paid and nonassessable, (ii) 25,377,233 Class
A Common Shares, no Class B Common Shares and no shares of Company Preferred
Stock were held in the treasury of the Company, (iii) 14,970,518 Class A Common
Shares were reserved for future issuance (with respect to which options to
acquire 11,220,518 Class A Common Shares are issued and outstanding) pursuant to
stock options or stock incentive
8
rights granted pursuant to the Company's stock option plans and arrangements or
pursuant to the Company's 401(k) plans and (iv) no shares of Company Preferred
Stock are issued and outstanding. During the period from September 30, 2000 to
the date of this Agreement, (x) there have been no issuances by the Company of
shares of capital stock of, or other equity or voting interests in, the Company
other than issuances of Company Class A Shares pursuant to the exercise of
employee stock options or stock incentive rights granted pursuant to the
Company's stock option plans and arrangements outstanding on such date or
issuances of Company Class A Shares pursuant to the Company's 401(k) plans in
the ordinary course of business and (y) there have been no issuances by the
Company of options, warrants or other rights to acquire shares of capital stock
of, or other equity or voting interests in, the Company. Except as set forth in
Section 3.03 of the disclosure schedule delivered by the Company to Parent and
Merger Sub concurrently with the execution of this Agreement (the "Company
Disclosure Schedule") or as otherwise contemplated by or specified in this
Agreement, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any of its subsidiaries or obligating the
Company or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries. All
shares of capital stock of the Company and any of 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. Except as set forth in Section
3.03 of the Company Disclosure Schedule, there are no outstanding contractual
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any person, except for any such
obligations which would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
SECTION 3.04. Authority Relative to This Agreement. (a) The
Company has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. Except as set forth in Section 3.04(a) of the
Company Disclosure Schedule, the execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the adoption of this Agreement by the
affirmative vote of a majority of the combined voting power of the outstanding
Shares entitled to vote thereon and the filing and recordation of appropriate
merger documents as required by Delaware Law). This Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar Laws affecting or relating to
enforcement of creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
9
(b) (i) The Special Committee has been duly authorized and
constituted, (ii) the Special Committee, at a meeting thereof duly called and
held on October 30, 2000, (A) determined that this Agreement and the Merger are
fair to and in the best interests of the Company and its stockholders (excluding
Parent and its affiliates), (B) determined that this Agreement and the Merger
should be approved and declared advisable and (C) resolved to recommend that the
Board of Directors of the Company approve and declare the advisability of this
Agreement and the Merger, and (iii) the Board of Directors of the Company, at a
meeting thereof duly called and held on October 30, 2000, in reliance upon the
advice of the Special Committee (A) determined that this Agreement and the
Merger are fair to and in the best interests of the Company and its stockholders
(excluding Parent and its affiliates), (B) approved and declared the
advisability of this Agreement and the Merger and (C) resolved to recommend that
the stockholders of the Company approve the Merger and adopt this Agreement.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Restated Certificate of Incorporation or Restated By-laws of the
Company or equivalent organizational documents of any of its subsidiaries,
except, in the case of the subsidiaries of the Company, for violations which
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, (ii) assuming that all consents, approvals,
authorizations, and other actions described in Section 3.05(b) have been
obtained or made, conflict with or violate any law, statute, ordinance, rule,
regulation, order, injunction, judgment or decree ("Law") applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected, except as set forth in
Section 3.05(a) of the Company Disclosure Schedule, or (iii) except as set forth
in Section 3.05(a) of the Company Disclosure Schedule, result in any breach of
or constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or require payment under, or result
in the creation of a lien or other encumbrance on any property or asset of the
Company or any of its subsidiaries pursuant to, or trigger any right of first
refusal under, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound, except, in the
case of clauses (ii) and (iii), for any thereof that would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or would not reasonably be expected to prevent or materially delay the
consummation of the Merger.
(b) Except as set forth in Section 3.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any domestic, foreign or supranational governmental, regulatory
or administrative authority, agency or commission or any court, tribunal or
arbitral body ("Governmental Entity"), except (i) for applicable requirements of
the Exchange Act, the Securities Act of 1933, as amended (together with the
rules and regulations promulgated thereunder, the "Securities Act") state
securities or "blue sky" laws ("Blue Sky Laws"), the rules and regulations of
the New York Stock Exchange, Inc. (the "NYSE"), Delaware State takeover laws and
the filing and recordation of appropriate merger documents as
10
required by Delaware Law and (ii) for such other consents, approvals,
authorizations, permits, filings or notifications which if not obtained or made
would not prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
SECTION 3.06. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed by it
with the SEC since September 18, 1998, and has heretofore made available to
Parent, in the form filed with the SEC, (i) its Annual Reports on Form 10-K for
the fiscal years ended December 31, 1998 and 1999, respectively, (ii) its
Quarterly Reports on Form 10-Q for the periods ended March 31, 2000 and June 30,
2000, (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since September 18, 1998, and (iv)
all other forms, reports and other registration statements filed by the Company
with the SEC since September 18, 1998 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the "Company SEC Reports"). The Company SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act and the
Exchange Act, as the case may be, (ii) did not, at the time they were 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) were filed in a timely manner. Except as set forth in
Section 3.06 of the Company Disclosure Schedule, no subsidiary of the Company
was or is required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company SEC Reports was or
will be prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each presented fairly in
all material respects or will present fairly in all material respects the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except that any unaudited interim
financial statements were or will be subject to normal and recurring year-end
adjustments that did not and would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(c) The Company has no liabilities or obligations of any
nature, except: (i) as and to the extent set forth on the balance sheet of the
Company as at December 31, 1999, including the notes thereto or (ii) as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(d) Since December 31, 1999, there has not been any Company
Material Adverse Effect.
SECTION 3.07. Absence of Litigation. Except as disclosed
in the Company SEC Reports filed prior to the date hereof or as set forth in
Section 3.07 of the Company Disclosure Schedule, there are no suits,
arbitrations, mediations, complaints, claims, actions, proceedings or
investigations pending or, to the knowledge of the Company, threatened, against
the Company or any of its subsidiaries, before any Governmental Entity that (a)
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect or (b) seek to delay
11
or prevent the consummation of the Merger. Neither the Company nor any of its
subsidiaries nor any of their material properties or assets is subject to any
order, writ, judgment, injunction, decree, determination or award that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.08. Compliance. Neither the Company nor any of
its subsidiaries is in conflict with, or in default or violation of, (a) any Law
applicable to the Company or any of its subsidiaries or by which any property or
asset of the Company or any of its subsidiaries is bound or affected or (b) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries is
bound or affected, except for any such conflicts, defaults or violations that
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.09. Intellectual Property Rights. Except as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company 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 xxxx rights, trade secrets, applications to
register, and registrations for, the foregoing trademarks, know-how and other
proprietary rights and information, including all contracts, agreements and
licenses relating thereto, used in connection with the business of the Company
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,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. To the knowledge of the Company, the conduct of the
business of the Company 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 xxxx or copyright of any third
party, except for such conflicts which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.10. Tax Matters. To the knowledge of the Company,
neither the Company nor any of its subsidiaries has taken or agreed to take any
action that would prevent the Merger from constituting a reorganization
qualifying under Section 368(a) of the Code. The Company is not aware of any
agreement, plan or other circumstance that would prevent the Merger from
qualifying under Section 368(a) of the Code.
SECTION 3.11. Brokers. No broker, finder or investment banker
(other than Deutsche Banc Alex. Xxxxx and Bear Xxxxxxx & Co. Inc.) 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 the Company. The Company
has heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and Deutsche Banc Alex. Xxxxx and Bear Xxxxxxx & Co. Inc.
pursuant to which such firm would be entitled to any payment relating to the
Merger.
SECTION 3.12. Opinions of Financial Advisors. The Special
Committee has received the written opinions of Deutsche Bank Securities Inc. and
Bear Xxxxxxx & Co. Inc. dated the date of this Agreement to the effect that, as
of the date of this Agreement, the Exchange Ratio is fair to the stockholders of
the Company (excluding Parent and its affiliates) from a financial
12
point of view, and such opinions have not been withdrawn. Copies of such
opinions have been delivered to Parent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT and Merger Sub
Each of Parent and Merger Sub hereby represents and warrants
to the Company that, except as disclosed in Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, Parent's Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, 2000 and June 30, 2000, any of
Parent's Current Reports on Form 8-K filed with the SEC since December 31, 1999
or Parent's Proxy Statement on Schedule 14A dated June 5, 2000, including any
amendments to any of the foregoing, in each case in the form filed by Parent
with the SEC prior to the date of this Agreement:
SECTION 4.01. Organization and Qualification. Each of Parent,
Merger Sub and Parent's other subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except, in the case of the subsidiaries of Parent, where the failure
to be duly organized, validly existing or in good standing, or to have such
requisite corporate power and authority, would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect (as
hereinafter defined). Each of Parent, Merger Sub and Parent's other subsidiaries
has all necessary licenses, permits, authorizations, and governmental approvals
to own, lease and operate its properties and to carry on its business as it is
currently being conducted, except where the failure to have such licenses,
permits, authorizations and governmental approvals would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Each of Parent, Merger Sub and Parent's other subsidiaries is duly qualified and
in good standing to do business in each jurisdiction in which the nature of the
business conducted by it or the ownership or leasing of its properties makes
such qualification necessary, other than where the failure to be so duly
qualified and in good standing would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect. The term
"Parent Material Adverse Effect", as used in this Agreement, means any change or
effect that, individually or when taken together with all other such changes or
effects, would have a material adverse effect on the financial condition,
assets, liabilities, business, operations or earnings of Parent and its
subsidiaries (including the Company and its subsidiaries), taken as a whole,
other than any change or effect relating to the United States economy in general
or to United States stock market conditions in general or to the entertainment
industry in general or to the industry of selling advertising in general.
SECTION 4.02. Certificate of Incorporation and By-laws.
Parent has heretofore furnished to the Company a complete and correct copy of
the Restated Certificate of Incorporation and Amended and Restated By-laws, each
as amended to date, of Parent and the Certificate of Incorporation and By-laws,
each as amended to date, of Merger Sub. Each such certificate of incorporation
and by-laws is in full force and effect. Neither Parent nor Merger Sub is in
violation of any provision of its certificate of incorporation or by-laws.
13
SECTION 4.03. Capitalization; Ownership of Company Class B
Shares. (a) The authorized capital stock of Parent consists of 500,000,000
shares of Class A common stock, par value $.01 per share ("Parent Class A Common
Shares"), 3,000,000,000 Parent Class B Common Shares and 25,000,000 shares of
Preferred Stock, par value $.01 per share ("Parent Preferred Shares"). As of
September 30, 2000, (i) 137,547,269 Parent Class A Common Shares (excluding
treasury shares) and 1,377,788,352 Parent Class B Common Shares (excluding
treasury shares) were issued and outstanding, all of which have been validly
issued and are fully paid and nonassessable, (ii) 1,366,410 Parent Class A
Shares and 75,683,914 Parent Class B Shares were held in the treasury of Parent
and (iii) 118,236,100 shares of Parent Class B Common Shares were reserved for
future pursuant to employee stock options or stock incentive rights granted
pursuant to Parent's stock option plans and arrangements. During the period from
September 30, 2000 to the date of this Agreement, (x) there have been no
issuances by Parent of shares of capital stock of, or other equity or voting
interests in, Parent other than issuances of Parent Class B Common Shares
pursuant to the exercise of employee stock options or stock incentive rights
granted pursuant to Parent's stock option plans and arrangements outstanding on
such date and (y) there have been no issuances by Parent of options, warrants or
other rights to acquire shares of capital stock of, or other equity or voting
interests in, Parent. As of the date hereof, except as otherwise contemplated by
or specified in this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of Parent or any of its subsidiaries or obligating
Parent or any of its subsidiaries to issue or sell any shares of capital stock
of, or other equity interests in, Parent or any of its subsidiaries. All shares
of capital stock of Parent and any of 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. There are no outstanding
contractual obligations of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Parent or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any person, except for any such obligations which would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
(b) CBS Broadcasting, Inc. ("CBSBI") is the owner,
beneficially and of record, of an aggregate of 700,000,000 Company Class B
Shares and CBSBI holds such Company Class B Shares free and clear of all liens,
pledges, security interests, claims, options, rights of first refusal,
encumbrances or other restrictions or limitations.
SECTION 4.04. Authority Relative to This Agreement. (a) Each
of Parent and Merger Sub has all necessary corporate 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 Parent and Merger Sub and the
consummation by Parent and Merger Sub of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action, and no
other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than, with respect to the Merger, the filing and recordation of
appropriate merger documents as required by Delaware Law). This Agreement has
been duly and validly executed and delivered by Parent and Merger Sub and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and Merger
Sub enforceable against Parent
14
and Merger Sub in accordance with its terms, except that such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar Laws affecting or relating to
enforcement of creditors' rights generally and general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity).
(b) The Board of Directors of Parent on October 30, 2000 (i)
determined that this Agreement and the Merger are fair to, and in the best
interests of, Parent and its stockholders and (ii) approved and declared the
advisability of this Agreement and the Merger.
SECTION 4.05. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent do not, and the
performance of this Agreement by Parent will not, (i) conflict with or violate
the Restated Certificate of Incorporation or Amended and Restated By-laws of
Parent, (ii) assuming that all consents, approvals, authorizations, and other
actions described in Section 4.05(b) have been obtained or made, conflict with
or violate any Law applicable to Parent or any of its subsidiaries or by which
any property or asset of Parent or any of its subsidiaries is bound or affected
or (iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or
require payment under, or result in the creation of a lien or other encumbrance
on any property or asset of Parent or any of its subsidiaries pursuant to, or
trigger any right of first refusal under, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or any of their respective properties is
bound, except, in the case of clauses (ii) and (iii), for any thereof that would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect or would not reasonably be expected to prevent or
materially delay the consummation of the Merger.
(b) The execution and delivery of this Agreement by Parent do
not, and the performance of this Agreement by Parent will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity, except (i) for applicable requirements of the
Exchange Act, the Securities Act, Blue Sky Laws, the NYSE, Delaware State
takeover laws and the filing and recordation of appropriate merger documents as
required by Delaware Law and (ii) for such other consents, approvals,
authorizations, permits, filings or notifications, which if not obtained or made
would not prevent or materially delay the consummation of the transactions
contemplated by this Agreement.
SECTION 4.06. SEC Filings; Financial Statements. (a) Parent
has filed all forms, reports and documents required to be filed by it with the
SEC since December 31, 1998, and has heretofore made available to Parent, in the
form filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal
years ended December 31, 1998 and 1999, respectively, (ii) its Quarterly Reports
on Form 10-Q for the periods ended March 31, 2000 and June 30, 2000, (iii) all
proxy statements relating to Parent's meetings of stockholders (whether annual
or special) held since December 31, 1998 and (iv) all other forms, reports and
other registration statements filed by Parent with the SEC since December 31,
1998 (the forms, reports and other documents referred to in clauses (i), (ii),
(iii) and (iv) above being referred to herein, collectively, as the "Parent SEC
Reports"). The Parent SEC Reports (i) were prepared in accordance with the
15
requirements of the Securities Act and the Exchange Act, as the case may be,
(ii) did not, at the time they were 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) were filed
in a timely manner. No subsidiary of Parent, except Blockbuster Corporation and
the Company, is required to file any form, report or other document with the
SEC.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Parent SEC Reports was or will
be prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly in all material
respects or will present fairly in all material respects the consolidated
financial position, results of operations and cash flows of Parent and its
consolidated subsidiaries as at the respective dates thereof and for the
respective periods indicated therein, except that any unaudited interim
financial statements were or will be subject to normal and recurring year-end
adjustments that did not and would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
(c) Parent has no liabilities or obligations of any nature,
except: (i) as and to the extent set forth on the balance sheet of Parent as at
December 31, 1999, including the notes thereto or (ii) as would not,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
(d) Since December 31, 1999, there has not been any Parent
Material Adverse Effect.
SECTION 4.07. Absence of Litigation. Except as disclosed in
the Parent SEC Reports filed prior to the date hereof, there are no suits,
arbitrations, mediations, complaints, claims, actions, proceedings or
investigations pending or, to the knowledge of Parent, threatened, against
Parent or any of its subsidiaries, before any Governmental Entity that (a)
individually or in the aggregate, would reasonably be expected to have a Parent
Material Adverse Effect or (b) seek to delay or prevent the consummation of the
Merger. Neither Parent nor any of its subsidiaries nor any of their material
properties or assets is subject to any order, writ, judgment, injunction,
decree, determination or award that would, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.08. Compliance. Neither Parent nor any of its
subsidiaries is in conflict with, or in default or violation of, (a) any Law
applicable to Parent or any of its subsidiaries or by which any property or
asset of Parent or any of its subsidiaries is bound or affected or (b) any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries is bound
or affected, except for any such conflicts, defaults or violations that would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
SECTION 4.09. Intellectual Property Rights. Except as would
not individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect, Parent and its
16
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 xxxx rights, trade
secrets, applications to register, and registrations for, the foregoing
trademarks, know-how and other proprietary rights and information, including all
contracts, agreements and licenses relating thereto, used in connection with the
business of Parent 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, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect. To the knowledge of Parent, the
conduct of the business of Parent 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 xxxx or copyright of any
third party, except for such conflicts which would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
SECTION 4.10. Tax Matters. To the knowledge of Parent, neither
Parent nor any of its subsidiaries has taken or agreed to take any action that
would prevent the Merger from constituting a reorganization qualifying under
Section 368(a) of the Code. Parent is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying under Section 368(a)
of the Code.
SECTION 4.11. Brokers. No broker, finder or investment banker
(other than Xxxxxxx Xxxxx & Co., the fees and expenses of which will be paid by
Parent) 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
Parent.
SECTION 4.12. Operations of Merger Sub. Merger Sub is a direct
wholly owned subsidiary of Parent, was formed solely for the purpose of engaging
in the transactions contemplated by this Agreement and has engaged in no
business activities other than in connection with the performance of its
obligations hereunder.
ARTICLE V
CONDUCT OF BUSINESSES PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the
Merger. The Company hereby covenants and agrees that, prior to the Effective
Time, unless otherwise expressly contemplated by this Agreement or consented to
in writing by Parent, which consent shall not be unreasonably withheld or
delayed, and except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, the Company will and will
cause its subsidiaries to (a) operate its business in the usual and ordinary
course consistent with past practices, (b) use its reasonable best efforts to
preserve substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective principal officers and key
employees and maintain its relationships with its respective principal
customers, suppliers and other persons with which it or any of its subsidiaries
has significant business relations, (c) use its reasonable best efforts to
maintain and keep its properties and assets in as good repair and condition as
at present, ordinary wear and tear excepted, and (d) take
17
no action with respect to the Company Stock Options that would result in an
acceleration of vesting of the Company Stock Options in connection with the
execution and delivery of this Agreement or the consummation of any transactions
contemplated hereby or otherwise.
SECTION 5.02. Conduct of Business by Parent Pending the
Merger. Parent hereby covenants and agrees that, prior to the Effective Time,
unless otherwise expressly contemplated by this Agreement or consented to in
writing by the Company, which consent shall not be unreasonably withheld or
delayed, and except as would not, individually or in the aggregate, reasonably
be expected to have a Parent Material Adverse Effect, Parent will and will cause
its subsidiaries to (a) operate its business in the usual and ordinary course
consistent with past practices, (b) use its reasonable best efforts to preserve
substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective principal officers and key
employees and maintain its relationships with its respective principal
customers, suppliers and other persons with which it or any of its subsidiaries
has significant business relations and (c) use its reasonable best efforts to
maintain and keep its properties and assets in as good repair and condition as
at present, ordinary wear and tear excepted.
SECTION 5.03. Notification of Certain Matters. (a) Parent
shall give prompt notice to the Company, and the Company shall give prompt
notice to Parent, of (i) the occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be likely to cause (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (B) any material covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any material failure of Parent or the Company, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.03 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
(b) The Company shall give prompt written notice to Parent of
any proposal, offer or other communication from any person (i) relating to any
acquisition or purchase of all or any material portion of the capital stock of
the Company or any of its subsidiaries or a material portion of the assets of
the Company or any of its subsidiaries, (ii) to enter into any business
combination with the Company or any of its subsidiaries or (iii) to enter into
any other extraordinary business transaction involving or otherwise relating to
the Company or any of its subsidiaries. The Company shall notify Parent promptly
if any such proposal or offer, or any inquiry or other contact with any person
with respect thereto, is made and shall, in any such notice to Parent, indicate
in reasonable detail the identity of the person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer, inquiry
or other contact.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Company Stockholder Approval. In accordance with
Delaware Law and the Company's Restated Certificate of Incorporation and
Restated By-laws, the
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Company shall, promptly after the date of this Agreement and subject to Section
6.02(b), take all action necessary to seek approval of the Merger and adoption
of this Agreement by the requisite vote of the stockholders of the Company as
provided in this Section 6.01. The Company shall (i) use its reasonable best
efforts to obtain the approval of the NYSE to allow CBSBI to approve the Merger
and adopt this Agreement by written consent (in lieu of seeking such approval
and adoption by means of a consent solicitation directed to the stockholders of
the Company generally or at a meeting of the Company's stockholders generally)
and (ii) in the event that the approval of the NYSE referenced in clause (i)
above shall not be obtained, the Company shall use its reasonable best efforts
to obtain the approval of the NYSE to allow the Company's stockholders,
including CBSBI, to approve the Merger and adopt this Agreement by written
consent (in lieu of seeking such approval and adoption at a meeting of the
Company's stockholders). If the approval referenced in either clause (i) or
clause (ii) immediately above shall be obtained, then, in either case, Parent
shall grant, or shall cause to be granted, written consent with respect to all
of the Shares beneficially owned by it in favor of the approval of the Merger
and adoption of this Agreement. In the event that the approval of the NYSE
referenced above shall not be obtained, then the Company shall take all action
reasonably necessary to call a meeting of its stockholders, which meeting shall
be held as soon as is reasonably practicable after the date hereof, for the
purpose of considering and voting upon the approval of the Merger and the
adoption of this Agreement. Parent shall vote, or shall cause to be voted, all
of the Shares beneficially owned by it in favor of the approval of the Merger
and adoption of this Agreement at any annual or special meeting of the Company's
stockholders at which a proposal relating to such approval and adoption shall be
submitted to a vote of the Company's stockholders.
SECTION 6.02. Registration Statement; Disclosure Document.
(a) As promptly as practicable after the execution of this Agreement, (i) Parent
and the Company shall cooperate in preparing, and the Company shall cause to be
filed with the SEC, either (A) in the event that the approval of the NYSE
referenced in clause (i) of Section 6.01 shall be obtained, an information
statement (together with any amendments thereof or supplements thereto, the
"Information Statement") to notify the stockholders of the Company of the
approval of the Merger and adoption of this Agreement by written consent of
CBSBI; (B) in the event that the approval of the NYSE referenced in clause (ii)
of Section 6.01 shall be obtained (but not the approval referenced in clause (i)
thereof), a consent solicitation statement (together with any amendments thereof
or supplements thereto, the "Consent Solicitation Statement") to solicit written
consents from the stockholders of the Company, including CBSBI, in favor of the
approval of the Merger and adoption of this Agreement; or (C) if neither of the
approvals of the NYSE referenced in clauses (i) and (ii) of Section 6.01 shall
be obtained, a proxy statement (together with any amendments thereof or
supplements thereto, the "Proxy Statement" and, collectively with the
Information Statement and the Consent Solicitation Statement, the "Disclosure
Document") to solicit proxies from the stockholders of the Company, including
CBSBI, in favor of the approval of the Merger and adoption of this Agreement;
and (ii) Parent 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 Disclosure Document shall be included as a prospectus, in connection
with the registration under the Securities Act of the Parent Class B Common
Shares to be issued to the stockholders of the Company pursuant to the Merger.
Each of Parent and the Company 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 Parent shall
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take all or any action required under any applicable federal or state securities
Laws in connection with the issuance of Parent Class B Common Shares pursuant to
the Merger. Each of Parent and the Company shall furnish all information
concerning Parent or the Company as the other party may reasonably request in
connection with such actions and the preparation of the Registration Statement
and the Disclosure Document. As promptly as practicable after the Registration
Statement shall have become effective, the Company shall mail the Disclosure
Document to its stockholders.
(b) The Disclosure Document shall include the unanimous
recommendation of the Special Committee to the Board of Directors of the Company
to approve and declare the advisability of this Agreement and the Merger and the
recommendation of the Board of Directors of the Company to the stockholders of
the Company to approve the Merger and adopt this Agreement; provided, however,
that the Special Committee and the Board of Directors of the Company may, at any
time prior to the Effective Time, withdraw, modify or change any such
recommendation to the extent that the Special Committee or the Board of
Directors of the Company determines in good faith, after consultation with
independent legal counsel (who may be the Company's regularly engaged legal
counsel), that such recommendation would be inconsistent with its fiduciary
duties to the Company's stockholders under applicable law; provided further that
nothing in this Section 6.02(b) shall affect the Company's obligation to seek
the consent of its stockholders as contemplated by Section 6.01 (regardless of
whether the recommendation of the Special Committee or the Board of Directors of
the Company shall have been withdrawn, modified or changed).
(c) No amendment or supplement to the Disclosure Document or
the Registration Statement will be made by the Company or Parent without the
approval of the other party (such approval not to be unreasonably withheld or
delayed). Each of Parent and the Company will advise the other, promptly after
it receives notice thereof, of the time at which the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order, of the suspension of the qualification of the Parent Class B
Common Shares issuable in connection with the Merger for offering or sale in any
jurisdiction, or of any request by the SEC for amendment of the Disclosure
Document or the Registration Statement or comments thereon and responses thereto
or requests by the SEC for additional information.
(d) The information supplied by the Company for inclusion in
the Registration Statement and the Disclosure Document shall not, at (i) the
time the Registration Statement is declared effective, (ii) the time the
Disclosure Document is first mailed to the stockholders of the Company and (iii)
the Effective Time, contain any untrue statement of a material fact or fail to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. If, at any time prior to the Effective Time, any
event or circumstance relating to the Company or any of its subsidiaries, or
their respective officers or directors, should be discovered by the Company
which, pursuant to the Securities Act or the Exchange Act, should be set forth
in an amendment or a supplement to the Registration Statement or Disclosure
Document, the Company shall promptly inform Parent thereof. All documents that
the Company is responsible for filing with the SEC in connection with the Merger
will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the Exchange Act.
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(e) The information supplied by Parent for inclusion in the
Registration Statement and the Disclosure Document shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Disclosure
Document is first mailed to the stockholders of the Company and (iii) the
Effective Time, contain any untrue statement of a material fact or fail to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to Parent or any of its subsidiaries, or their respective
officers or directors, should be discovered by Parent which, pursuant to the
Securities Act or the Exchange Act, should be set forth in an amendment or a
supplement to the Registration Statement or Disclosure Document, Parent shall
promptly inform the Company thereof. All documents that Parent is responsible
for filing with the SEC in connection with the Merger will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
SECTION 6.03. Access to Information; Confidentiality. (a) As
permitted by applicable Law, from the date of this Agreement to the Effective
Time, each of Parent and the Company shall: (i) provide to the other (and to the
other's officers, directors, employees, accountants, consultants, legal counsel,
agents and other representatives (collectively, "Representatives")) access at
reasonable times upon prior notice to its officers, employees, agents,
properties, offices and other facilities and to its books and records and (ii)
furnish promptly such information concerning its business, properties,
contracts, assets, liabilities and personnel as the other party or its
Representatives may reasonably request.
(b) Each party agrees to, and shall cause its Representatives
to: (i) treat and hold as confidential all information relating to the other
party and its Subsidiaries, (ii) in the event that a party or any of its
Representatives becomes legally compelled to disclose any such information,
provide the other party with prompt written notice of such requirement so that
such other party may seek a protective order or other remedy or waive compliance
with this Section 6.03(b), and (iii) in the event that such protective order or
other remedy is not obtained, or such other party waives compliance with this
Section 6.03(b), furnish only that portion of such confidential information
which is legally required to be provided and exercise its reasonable best
efforts to obtain assurances that confidential treatment will be accorded such
information, provided, however, that this sentence shall not apply to any
information that, at the time of disclosure, is available publicly and was not
disclosed in breach of this Agreement by a party or any of its Representatives.
The parties agree and acknowledge that remedies at law for any breach of their
obligations under this Section 6.03 are inadequate and that in addition thereto
such parties shall be entitled to seek equitable relief, including injunction
and specific performance, in the event of any such breach.
(c) No investigation pursuant to this Section 6.03 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
SECTION 6.04. Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation and By-laws of the Surviving
Corporation, and the certificate of incorporation and by-laws or comparable
organizational documents of each subsidiary of the Surviving Corporation, shall
contain provisions with respect to indemnification that are no less
21
favorable than those set forth in the Restated Certificate of Incorporation and
Restated By-laws of the Company, or the certificate of incorporation and by-laws
or comparable organizational documents of such subsidiary of the Surviving
Corporation, as the case may be, in each case on the date of this Agreement,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years from the Effective Time in any manner that would affect
adversely the rights thereunder of individuals who at the Effective Time were
directors or officers of the Company, or any subsidiary of the Company, in
respect of actions or omissions occurring at or prior to the Effective Time,
unless such modification shall be required by Law.
(b) From and after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted under Delaware Law, indemnify
and hold harmless each present and former director and officer of the Company
(collectively, the "Indemnified Parties") against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the Effective
Time), based on the fact that such person is or was a director or officer of the
Company or any subsidiary of the Company and arising out of or pertaining to any
action or omission occurring at or before the Effective Time (and shall pay any
expenses in advance of the final disposition of such action or proceeding to
each Indemnified Party to the fullest extent permitted under Delaware Law, upon
receipt from the Indemnified Party to whom expenses are advanced of an
undertaking to repay such advances if required under Delaware Law). In the event
of any such claim, action, suit, proceeding or investigation, (i) the Surviving
Corporation shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to the
Surviving Corporation, promptly after statements therefor are received and (ii)
the Surviving Corporation shall cooperate in the defense of any such matter;
provided, however, that the Surviving Corporation shall not be liable for any
settlement effected without its written consent (which consent shall not be
unreasonably withheld or delayed); and provided further that the Surviving
Corporation shall not be obligated pursuant to this Section 6.04(b) to pay the
fees and expenses of more than one counsel (plus appropriate local counsel) for
all Indemnified Parties in any single action except to the extent, as determined
by counsel to the Indemnified Parties, that two or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action, in which
case such additional counsel (including local counsel) as may be required to
avoid any such conflict or likely conflict may be retained by the Indemnified
Parties at the expense of the Surviving Corporation.
(c) The Surviving Corporation shall use its reasonable best
efforts to maintain in effect for a period of six years from and after the
Effective Time directors' and officers' liability insurance covering those
persons who are currently covered by the Company'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 6.04(c) more than an amount per year
equal to 250% of current annual premiums paid by the Company for such insurance.
(d) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
22
provision shall be made so that the successors and assigns of the Surviving
Corporation or, at Parent's option, Parent, shall assume the obligations set
forth in this Section 6.04.
(e) From and after the Effective Time, Parent irrevocably and
unconditionally guarantees the prompt payment and performance of all obligations
of the Surviving Corporation pursuant to this Section 6.04, when and as due by
the Surviving Corporation. Parent hereby acknowledges that its obligations under
this Section 6.04(e) constitute a guaranty of payment of amounts that are
payable by the Surviving Corporation under this Section 6.04(e) and not merely a
guaranty of collectability, and Parent hereby waives any requirement that any
Indemnified Party exhaust any right to take any action against the Surviving
Corporation or any other person prior to or contemporaneously with proceeding to
exercise any right against Parent hereunder.
SECTION 6.05. Affiliates. No later than 20 days after the
date of this Agreement, the Company will deliver to Parent a letter identifying
all persons who may be deemed affiliates of the Company under Rule 145 of the
Securities Act, including, without limitation, all directors and executive
officers of the Company, and the Company represents and warrants to Parent that
the Company has advised the persons identified in such letter of the resale
restrictions imposed by applicable securities laws. The Company shall use its
reasonable best efforts to obtain from each person identified in such letter a
written agreement, substantially in the form of Exhibit 6.05. The Company 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 the Company after the Company's
delivery of the letter referred to above and prior to the Effective Time, a
written agreement substantially in the form of Exhibit 6.05.
SECTION 6.06. Tax Treatment. (a) This 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 Parent nor the Company nor any of their respective 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 efforts to cause
the opinions described in such Sections to be provided, and to cause such
opinions as may be required by the SEC to be provided on the date of filing of
the Registration Statement.
(c) None of Parent, Merger Sub or the Company 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
Merger.
SECTION 6.07. Further Action; Consents; Filings. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to (a) take, or cause to be taken, all appropriate
action and do, or cause to be done, all things necessary, proper or advisable
under applicable Law or otherwise to consummate and make effective the Merger
and the other transactions contemplated by this Agreement as soon as
practicable, (b) obtain from Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations
23
or orders required to be obtained or made by Parent or the Company or any of
their subsidiaries in connection with the authorization, execution and delivery
of this Agreement and the consummation of the Merger and (c) make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement, the Merger and the other transactions contemplated by this
Agreement that are required under the Exchange Act and the Securities Act and
any other applicable federal or state securities laws, and any other applicable
Law. The parties hereto shall cooperate with each other in connection with the
making of all such filings, including by providing copies of all such documents
to the nonfiling party and its advisors prior to filing and, if requested, by
accepting all reasonable additions, deletions or changes suggested in connection
therewith.
SECTION 6.08. Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger 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 Parent or the Company is a party. The parties have agreed on the
text of a joint press release by which Parent and the Company will announce the
execution of this Agreement.
SECTION 6.09. NYSE Listing. Parent shall as promptly as
reasonably practicable after the date of this Agreement prepare and submit to
the NYSE a listing application covering the Parent Class B Common Shares to be
issued in the Merger and the Parent Class B Common Shares underlying the
Substituted Options and shall use its reasonable best efforts to obtain, prior
to the Effective Time, approval for the listing of such Parent Class B Common
Shares, subject to official notice to the NYSE of issuance, and the Company
shall cooperate with Parent with respect to such listing, which cooperation
shall include, but not be limited to, taking all necessary actions to delist the
Shares from the NYSE after the Effective Time.
SECTION 6.10. Permitted Transfers. The Company shall take all
action reasonably necessary to cause to be transferred to Infinity Media
Corporation, prior to the Effective Time, (a) the assets of WCCO-AM, Minneapolis
and/or WLTE-FM, Minneapolis and (b) the capital stock of Infinity Radio Inc.
(formerly known as CBS Radio Inc.), Infinity Technical Services Inc. (formerly
known as Infinity Radio, Inc.), Infinity Outdoor, Inc. and Spark Network
Services, Inc. The Company shall take all other action reasonably necessary to
transfer to Infinity Media Corporation or another subsidiary of the Company
designated by Parent, prior to the Effective Time, the assets or capital stock
of any other subsidiaries of the Company designated by Parent, as may reasonably
be requested by Parent.
SECTION 6.11. Obligations of Merger Sub. Parent shall take all
action necessary to cause Merger Sub to perform its obligations under this
Agreement and to consummate the Merger on the terms and subject to the
conditions set forth in this Agreement.
SECTION 6.12. Reasonable Best Efforts and Further Assurances.
Subject to the terms and conditions hereof, each of the parties to this
Agreement shall use reasonable best efforts to effect the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
the Merger under this Agreement. Subject to the terms and conditions hereof,
each
24
party hereto, at the reasonable request of another party hereto, shall execute
and deliver such other instruments and do and perform such other acts and things
as may be necessary or desirable for effecting completely the consummation of
this Agreement and the transactions contemplated hereby. Without limiting the
foregoing, Merger Sub shall, as of the Effective Time, expressly assume the
obligations of the Company under the Company's credit agreements as and to the
extent required by such credit agreements.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party.
The obligations of the Company, Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver (where permissible) of the following
conditions:
(a) Registration Statement Effective. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for that
purpose shall be pending before or threatened by the SEC.
(b) Stockholder Approval. The Merger and this Agreement shall
have been approved and adopted by the requisite affirmative vote of the
stockholders of the Company in accordance with Delaware Law and the
Company's Restated Certificate of Incorporation.
(c) No Order. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Law, executive order or
award (whether temporary, preliminary or permanent) (an "Order") that
is then in effect and has the effect of making the Merger illegal or
otherwise prohibiting consummation of the Merger; provided, however,
that each of the parties to this Agreement shall use its reasonable
best efforts to cause any such Order to be vacated or lifted.
(d) NYSE Listing. The Parent Class B Common Shares to be
issued in the Merger shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
(e) FCC Approval. All authorizations, consents, waivers,
orders or approvals required to be obtained from the Federal
Communications Commission in connection with the Merger shall have been
obtained.
SECTION 7.02. Conditions to the Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction or waiver (where permissible) of the following
additional conditions:
25
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement that is qualified by reference to a Company Material Adverse
Effect shall be true and correct as of the Effective Time, as though
made on and as of the Effective Time, except that those such
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date. Each of
the representations and warranties of the Company contained in this
Agreement that is not qualified by reference to a Company Material
Adverse Effect shall be true and correct as of the Effective Time, as
though made on and as of the Effective Time, except that those such
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date, except
in each case where the failure to be so true and correct would not have
a Company Material Adverse Effect. Parent shall have received a
certificate of an officer of the Company to these effects.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Effective Time, and Parent shall have received a
certificate of an officer of the Company to that effect.
(c) Tax Opinions. Parent shall have received the opinion of
Weil, Gotshal & Xxxxxx LLP, in form and substance reasonably
satisfactory to Parent, 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 that each of Parent,
Merger Sub and the Company will 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 the Company, Parent, Merger Sub and CBSBI,
as the case may be.
SECTION 7.03. Conditions to the Obligations of the Company.
The obligations of the Company to consummate the Merger are subject to the
satisfaction or waiver (where permissible) of the following additional
conditions:
(a) Representations and Warranties. Each of the
representations and warranties of Parent and Merger Sub contained in
this Agreement that is qualified by reference to a Parent Material
Adverse Effect shall be true and correct as of the Effective Time, as
though made on and as of the Effective Time, except that those such
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date. Each of
the representations and warranties of Parent and Merger Sub contained
in this Agreement that is not qualified by reference to a Parent
Material Adverse Effect shall be true and correct as of the Effective
Time, as though made on and as of the Effective Time, except that those
such representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date, except
in each case where the failure to be so true and correct would not have
a Parent Material Adverse Effect. The Company shall have received a
certificate of an officer of Parent to these effects.
26
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time, and the Company shall have
received a certificate of an officer of Parent to that effect.
(c) Tax Opinion. The Company shall have received the opinion
of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, in form and substance
reasonably satisfactory to the Company, 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 that
each of Parent, Merger Sub and the Company will 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 Parent, Merger
Sub, CBSBI and the Company, as the case may be.
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 and the
Merger by the stockholders of the Company, as follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Parent, Merger Sub and the Company, if such
termination is also approved by the Special Committee;
(b) by Parent, Merger Sub or the Company if the Effective Time
shall not have occurred on or before April 30, 2001, 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 Parent, Merger Sub or the Company if any Governmental
Entity shall have enacted, issued, promulgated, enforced or entered any
Order or taken any other action restraining, enjoining or otherwise
prohibiting the consummation of the Merger and such Order or other
action shall have become final and nonappealable;
(d) by Parent if the Special Committee or the Board of
Directors of the Company withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to
Parent or Merger Sub or shall have resolved to do any of the foregoing;
(e) by Parent upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth
either in Section 7.02(a) or (b) would not be satisfied
27
("Terminating Company Breach"); provided that, if, in the reasonable
opinion of Parent, such Terminating Company Breach is curable by the
Company through the exercise of its reasonable efforts and for as long
as the Company continues to exercise such reasonable efforts, Parent
may not terminate this Agreement under this Section 8.01(e); or
(f) by the Company upon a breach of any representation,
warranty, covenant or agreement on the part of Parent or Merger Sub set
forth in this Agreement, or if any representation or warranty of Parent
or Merger Sub shall have become untrue, in either case such that the
conditions set forth either in Section 7.03(a) or (b) would not be
satisfied ("Terminating Parent Breach"); provided that, if, in the
reasonable opinion of the Company, such Terminating Parent Breach is
curable by Parent or Merger Sub through the exercise of its reasonable
efforts and for as long as Parent or Merger Sub continues to exercise
such reasonable efforts, the Company may not terminate this Agreement
under this Section 8.01(f).
The right of any party hereto to terminate this Agreement
pursuant to this Section 8.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto,
any person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.
SECTION 8.02. Effect of Termination. Except as provided in
Section 9.01, 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 Parent, Merger Sub or the Company 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 and the Merger by the
stockholders of the Company, no amendment may be made which would alter or
change the amount or kind of consideration into which each Share shall be
converted upon consummation of the Merger or which otherwise cannot be made
subsequent to such stockholder approval under Delaware Law; and provided further
that all amendments must also be approved by the Special Committee. 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, each of Parent and the Company may (a) extend the time for the performance
of any obligation or other act of the other party, (b) waive any inaccuracy in
the representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of the other party or condition to its own obligations contained herein;
provided, however, that, if the Company seeks to make such extension or waiver
as provided in clause (a), (b) or (c) above, it must first obtain the approval
of the Special Committee. 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.
28
SECTION 8.05. Expenses. 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 the Company
and Parent each shall pay one-half of all Expenses relating to printing, filing
and mailing the Registration Statement and the Information Statement and all SEC
and other regulatory filing fees incurred in connection with the Registration
Statement and the Information Statement. "Expenses" as used in this Agreement
shall include all reasonable out-of-pocket expenses (including, without
limitation, all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) 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
Information Statement, the solicitation of stockholder approvals and all other
matters related to the closing of the Merger and the other transactions
contemplated by this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
in any certificate delivered pursuant hereto 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.
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 Parent or Merger Sub:
Viacom Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
29
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxxx O'X. Xxxxxx, Esq.
if to the Company:
Infinity Broadcasting Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxx Xxxxx Xxxxxx, Esq.
Xxxx X. Xxxxxxx, Esq.
SECTION 9.03. Certain Definitions. 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,
provided, however, that as used in this Agreement with respect to the
Company, the term "affiliate" shall only include the subsidiaries of
the Company; provided further that as used in this Agreement with
respect to Parent, the term "affiliate" shall not include any of the
Company or any of the subsidiaries of the Company;
(b) "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;
(c) "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;
(d) "person" means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation,
a "person" as defined in
30
section 13(d)(3) of the Exchange Act), trust, association or entity or
government, political subdivision, agency or instrumentality of a
government; and
(e) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either alone 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; provided, however, that for
purposes of the representations and the warranties of Parent in Article
IV, and the covenants and other agreements of Parent in Articles V and
VI, except as otherwise specifically provided therein, the
"subsidiaries" of Parent shall not include the Company or any
subsidiaries of the Company.
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 as 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.
SECTION 9.05. Entire Agreement; Assignment. This Agreement
(including the Exhibit, the Company Disclosure Schedule and the Parent
Disclosure Schedule) constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, between the parties, with respect to the
subject matter hereof. This Agreement shall not be assigned by operation of law
or otherwise, except that Parent and Merger Sub may assign all or any of their
rights and obligations hereunder to any direct wholly owned subsidiary of
Parent, provided that no such assignment shall relieve the assigning party of
its obligations hereunder.
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 Section 6.04 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 9.07. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware (without
giving effect to conflicts of law principles) as to all matters, including
validity, construction, effect, performance and remedies.
SECTION 9.08. Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
31
SECTION 9.09. Counterparts. This Agreement may be executed
and delivered (including by facsimile transmission) in one or more counterparts,
and by each party 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 9.10. Consent to Jurisdiction. (a) Each of Parent,
Merger Sub and the Company hereby irrevocably submits to the exclusive
jurisdiction of the courts of the State of Delaware sitting in the County of New
Castle and the United States District Court for the State of Delaware, and the
appellate courts having jurisdiction of appeals in such courts, for the purpose
of any action or proceeding arising out of or relating to this Agreement and
each of Parent, Merger Sub and the Company hereby irrevocably agrees that all
claims in respect to such action or proceeding may be heard and determined
exclusively in any such court. Each of Parent, Merger Sub and the Company 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 Parent, Merger Sub and the Company 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 9.10 shall affect the
right of either party to serve legal process in any other manner permitted by
law.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER
SUB AND THE COMPANY 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
PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
32
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by its respective
officers thereunto duly authorized.
VIACOM INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
IBC MERGER CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Chief Financial Officer
and Treasurer
INFINITY BROADCASTING CORPORATION
By: /s/ Xxxxx Xxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxx
Title: Executive Vice President,
Chief Financial Officer
and Treasurer
33
EXHIBIT 6.05
FORM OF AFFILIATE LETTER FOR
AFFILIATES OF THE COMPANY
[_______ __], 200[_]
Viacom Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Infinity Broadcasting Corporation, a Delaware
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 October 30, 2000 (the "Merger
Agreement"), among Viacom Inc., a Delaware corporation ("Parent"), IBC Merger
Corp., a Delaware corporation ("Merger Sub"), and the Company, the Company will
be merged with and into Merger Sub (the "Merger"), and the stockholders of the
Company will receive 0.592 of a share of Class B common stock, par value $.01
per share, of Parent (the "Parent Class B Common Shares") in exchange for each
share of Class A common stock, par value $.01 per share, of the Company (the
"Company Class A Shares") held by such stockholder as of the effective time of
the Merger. Capitalized terms used in this letter agreement without definition
shall have the meanings assigned to them in the Merger Agreement.
As a result of the Merger, I may receive Parent Class B Common
Shares in exchange for Company Class A Shares (or upon exercise of options for
Company Class A Shares) owned by me.
I represent, warrant and covenant to Parent that in the event
that I receive any Parent Class B Common Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of
the Parent Class B Common Shares in violation of the Act or the Rules
and Regulations.
B. I have carefully read this letter and the Merger Agreement
and discussed, to the extent I felt necessary, with my counsel or
counsel for the Company the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or otherwise
dispose of the Parent Class B Common Shares.
C. I have been advised that the issuance to me of the Parent
Class B Common Shares pursuant to the Merger has been registered with
the Commission under the Act on
a Registration Statement on Form S-4. However, I have also been advised
that, because (a) at the time the Merger is submitted for approval by
the stockholders of the Company, I may be deemed to be an affiliate of
the Company and (b) the distribution by me of the Parent Class B Common
Shares has not been registered under the Act, I may not sell, transfer
or otherwise dispose of the Parent Class B Common Shares 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 Parent, such sale, transfer
or other disposition is otherwise exempt from registration under the
Act.
D. I understand that Parent is under no obligation to register
the sale, transfer or other disposition of the Parent Class B Common
Shares by me or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.
E. I understand that stop transfer instructions will be given
to Parent's transfer agent with respect to Parent Class B Common Shares
issued to me and that there will be placed on the certificates for the
Parent Class B Common Shares issued to me, or any substitutions
therefor, a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, APPLIES. THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED [_______
__], 200[_] BETWEEN THE REGISTERED HOLDER HEREOF AND VIACOM
INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF VIACOM INC."
F. I understand that unless a sale or transfer by me of Parent
Class B Shares is made in conformity with the provisions of Rule 145,
or pursuant to a registration statement, Parent reserves the right to
put the following legend on the certificates issued to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND WERE ACQUIRED FROM A PERSON WHO RECEIVED
SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE ACT APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE
HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION
WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
ACT AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT."
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 legends if the undersigned shall have delivered to Parent a copy of
a letter from the staff of the Commission, or an opinion of counsel reasonably
satisfactory to Parent in form and substance reasonable satisfactory to Parent,
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 that 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:
Agreed and accepted this [__] day
of [_______], 200[_], by
VIACOM INC.
By:
------------------------------
Name:
Title:
