CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
By and Among
THE X. X. XXXXXXX COMPANY,
SCRIPPS XXXXXX, INC.,
and
COMCAST CORPORATION
October 28, 1995
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER
1.01 THE MERGER................................................... 1
1.02 EFFECT OF THE MERGER ON CAPITAL STOCK; ADJUSTMENTS........... 2
1.03 EFFECTIVE TIME OF THE MERGER................................. 4
1.04 EXCHANGE OF CERTIFICATES..................................... 5
1.05 DISTRIBUTION WITH RESPECT TO SHARES REPRESENTED BY UNEXCHANGED
CERTIFICATES................................................. 6
1.06 NO FRACTIONAL SHARES......................................... 6
1.07 NO LIABILITY................................................. 7
1.08 LOST CERTIFICATES............................................ 7
ARTICLE II
CERTAIN PRE-MERGER TRANSACTIONS
2.01 INTERNAL SPINOFFS; AMENDMENTS TO CHARTERS.................... 7
2.02 CONTRIBUTION OF ASSETS TO AND ASSUMPTION OF LIABILITIES
BY SHI.........................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANY AND SHI
3.01 ORGANIZATION AND AUTHORITY................................... 9
3.02 NO BREACH.................................................... 10
3.03 CONSENTS AND APPROVALS....................................... 10
3.04 APPROVALS OF THE BOARDS; FAIRNESS OPINION; VOTE REQUIRED..... 11
3.05 CAPITALIZATION............................................... 11
3.06 SEC REPORTS.................................................. 12
3.07 FINANCIAL STATEMENTS......................................... 12
3.08 ABSENCE OF CERTAIN CHANGES................................... 12
3.09 ABSENCE OF UNDISCLOSED LIABILITIES........................... 13
3.10 COMPLIANCE WITH LAW.......................................... 13
3.11 TAXES........................................................ 13
3.12 LITIGATION................................................... 14
3.13 BROKERS AND FINDERS.......................................... 14
3.14 EMPLOYEE BENEFIT PLAN MATTERS................................ 14
3.15 COMPANY CONTRACTS............................................ 14
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3.16 ENVIRONMENTAL MATTERS........................................ 14
3.17 FULL DISCLOSURE.............................................. 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING CABLE
4.01 ORGANIZATION AND AUTHORITY................................... 15
4.02 NO BREACH.................................................... 15
4.03 CAPITALIZATION............................................... 16
4.04 FINANCIAL STATEMENTS......................................... 16
4.05 ABSENCE OF CERTAIN CHANGES................................... 16
4.06 ABSENCE OF UNDISCLOSED LIABILITIES. ........................ 17
4.07 COMPLIANCE WITH LAW.......................................... 17
4.08 FRANCHISES AND MATERIAL AGREEMENTS........................... 17
4.09 TITLE TO PROPERTIES; ENCUMBRANCES............................ 21
4.10 LITIGATION................................................... 21
4.11 EMPLOYEE BENEFIT PLAN MATTERS................................ 21
4.12 LABOR MATTERS................................................ 24
4.13 MID-TENNESSEE ACQUISITION.................................... 25
4.14 ENVIRONMENTAL MATTERS........................................ 25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
5.01 ORGANIZATION AND AUTHORITY................................... 25
5.02 NO BREACH.................................................... 26
5.03 CONSENTS AND APPROVALS....................................... 26
5.04 APPROVAL OF THE BOARD........................................ 27
5.05 CAPITALIZATION............................................... 27
5.06 SEC REPORTS.................................................. 27
5.07 FINANCIAL STATEMENTS......................................... 28
5.08 ABSENCE OF CERTAIN CHANGES................................... 28
5.09 BROKERS AND FINDERS.......................................... 28
5.10 FULL DISCLOSURE.............................................. 28
5.11 CERTAIN TAX MATTERS.......................................... 28
ARTICLE VI
OTHER AGREEMENTS
6.01 NO SOLICITATION.............................................. 29
6.02 CONDUCT OF BUSINESS OF THE COMPANY........................... 30
6.03 CONDUCT OF BUSINESS OF CABLE................................. 31
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6.04 CONDUCT OF BUSINESS OF ACQUIROR.............................. 32
6.05 ACCESS TO INFORMATION........................................ 32
6.06 SEC FILINGS.................................................. 33
6.07 REASONABLE BEST EFFORTS...................................... 36
6.08 PUBLIC ANNOUNCEMENTS......................................... 36
6.09 BOARD RECOMMENDATIONS........................................ 36
6.10 TAX MATTERS.................................................. 37
6.11 NOTIFICATION................................................. 43
6.12 EMPLOYEE BENEFITS............................................ 43
6.13 EMPLOYEE STOCK OPTIONS....................................... 44
6.14 MEETINGS OF STOCKHOLDERS..................................... 45
6.15 REGULATORY AND OTHER AUTHORIZATIONS.......................... 45
6.16 FURTHER ASSURANCES........................................... 46
6.17 INTERNAL REVENUE SERVICE RULING.............................. 47
6.18 RECORDS RETENTION............................................ 47
6.19 STOCK EXCHANGE LISTING....................................... 47
6.20 COMPANY NAMES................................................ 47
6.21 OTHER AGREEMENTS............................................. 48
6.22 FORM 8-K; PROVISION OF FINANCIAL STATEMENTS; SCHEDULE OF
CONTRACTS.................................................... 48
6.23 DETERMINATION OF ESTIMATED AMOUNTS........................... 48
6.24 CAPITAL EXPENDITURES......................................... 49
6.25 EXCESS CASH.................................................. 50
6.26 ACQUISITION OF MID-TENNESSEE BUSINESS; REDUCTION OF AGGREGATE
CONSIDERATION; INDEMNITY..................................... 50
6.27 INDEMNITY RELATING TO CERTAIN LITIGATION..................... 50
6.28 RIVER CITY INTEREST.......................................... 51
6.29 PROPOSED HYPERION JOINT VENTURE.............................. 51
6.30 CANCELLATION OF INTERCOMPANY ARRANGEMENTS.................... 51
ARTICLE VII
CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01 CLOSING AND CLOSING DATE..................................... 52
7.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, SHI AND
ACQUIROR..................................................... 52
7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND SHI......... 53
7.04 CONDITIONS TO OBLIGATIONS OF ACQUIROR........................ 54
7.05 EXCEPTION TO CONDITIONS TO OBLIGATIONS TO THE COMPANY
AND SHI...................................................... 55
7.06 EXCEPTION TO CONDITIONS TO OBLIGATIONS OF ACQUIROR........... 55
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ARTICLE VIII
TERMINATION
8.01 TERMINATION.................................................. 55
8.02 EFFECT OF TERMINATION........................................ 56
8.03 FEES AND EXPENSES............................................ 57
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................... 57
9.02 ENTIRE AGREEMENT............................................. 58
9.03 NOTICES...................................................... 58
9.04 GOVERNING LAW................................................ 59
9.05 DESCRIPTIVE HEADINGS......................................... 59
9.06 PARTIES IN INTEREST.......................................... 59
9.07 COUNTERPARTS................................................. 59
9.08 EXPENSES..................................................... 59
9.09 PERSONAL LIABILITY........................................... 59
9.10 BINDING EFFECT; ASSIGNMENT................................... 59
9.11 AMENDMENT.................................................... 60
9.12 EXTENSION; WAIVER............................................ 60
9.13 LEGAL FEES; COSTS............................................ 60
ARTICLE X
DEFINITIONS
EXHIBITS AND SCHEDULES
Exhibit A Form of Amendment to Certificate of Incorporation of the
Company
Exhibit B Form of Restated Articles of Incorporation of SHI
Exhibit C Form of Contribution and Assumption Agreement
Exhibit D Form of Noncompetition Agreement
Exhibit E Form of Voting Agreement
Exhibit F Form of Registration Rights Agreement
Exhibit G Form of Board Representation Agreement
Schedule 3.09 Liabilities of the Company
Schedule 3.11(b) Material Claims and Investigations for Taxes of Company
Schedule 3.15 Company Contracts
Schedule 4.07(a)(i) Material Licenses and Authorizations held by Cable
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Schedule 4.08(a)(i) Material Franchises of Cable
Schedule 4.08(b) Rights of Others to Acquire Assets of Cable
Schedule 4.08(f) Signals Carried by Cable Without Retransmission
Consent Agreements
Schedule 4.08(g) FCC Rate Complaints and Letters of Inquiry
Schedule 4.11(a) Cable Employee Plans and Cable Benefit Arrangements
Schedule 4.11(d) Welfare Benefit Plans Covering Cable Retirees
Schedule 4.12(a) Labor or Collective Bargaining Agreements of Cable
Schedule 4.12(b) Employees of Cable Represented by Labor Organizations;
Representation or Certification Proceedings
Schedule 5.05(a) Existing Options, Warrants, Etc. of Acquiror
Schedule 6.04 Permitted Amendments
Schedule 6.22(c) Cable Contracts
Schedule 6.27 Certain Litigation of Cable
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement"), dated as of October
28, 1995, is made by and among The X.X. Xxxxxxx Company, a Delaware corporation
(the "Company"), Scripps Xxxxxx, Inc., an Ohio corporation and wholly owned
subsidiary of the Company ("SHI"), and Comcast Corporation, a Pennsylvania
corporation ("Acquiror").
RECITALS
WHEREAS, the Boards of Directors of the Company, SHI and Acquiror each
have determined that it is in the best interests of their respective
stockholders to enter into this Agreement which, among other things, provides
for (i) the Company to contribute to SHI substantially all of the assets of the
Company (other than those assets described in the Contribution Agreement as
being retained by the Company) and to distribute to its stockholders the
outstanding shares of capital stock of SHI so that the stockholders of the
Company will become the stockholders of SHI; and (ii) the Company (immediately
following such contribution and distribution) to merge with and into Acquiror,
as a result of which the stockholders of the Company immediately prior to such
merger will become stockholders of Acquiror; and
WHEREAS, for federal income tax purposes, it is intended that such
transactions will qualify as a tax-free reorganization within the meaning of
Sections 368(a)(1)(D), 355, and 368(a)(1)(A) of the Internal Revenue Code.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties and agreements set forth below, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 THE MERGER. Subject to the terms and conditions hereof, at the
Effective Time: (i) the Company shall be merged with and into Acquiror (the
"Merger") and the separate existence of the Company shall cease and Acquiror
shall continue as the surviving corporation in the Merger (the "Surviving
Corporation"); (ii) the Articles of Incorporation of Acquiror, as in effect
immediately prior to the Effective Time, shall continue as the Articles of
Incorporation of the Surviving Corporation; (iii) the Bylaws of Acquiror, as in
effect immediately prior to the Effective Time, shall continue as the Bylaws of
the Surviving Corporation; (iv) the directors of Acquiror shall be the directors
of the Surviving Corporation; and (v) the officers of Acquiror immediately prior
to the Effective Time shall continue as the officers of the Surviving
Corporation. From and after the Effective Time, the Merger will have all the
effects provided by applicable law.
1.02 EFFECT OF THE MERGER ON CAPITAL STOCK; ADJUSTMENTS. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder of any shares of capital stock:
(a) Subject to Sections 1.02(b) and 1.02(e) hereof, each share of
Company Common Stock issued and outstanding immediately prior to the
Merger shall be converted into and shall become that number of fully paid
and nonassessable shares of Acquiror Common Stock equal to the Common
Stock Conversion Number.
(b) Each share of Company Common Stock issued and outstanding
immediately prior to the Merger and owned directly or indirectly by the
Company as treasury stock, by SHI or by any of the Company's or SHI's
respective Subsidiaries shall be cancelled, and no consideration shall be
delivered in exchange therefor.
(c) Each share of the capital stock of Acquiror issued and
outstanding immediately prior to the Merger shall remain outstanding.
(d) "Common Stock Conversion Number" shall mean the quotient
obtained by dividing (i) the aggregate number of shares of Acquiror Common
Stock into which Company Common Stock shall be converted (the "Aggregate
Shares Delivered") by (ii) the number of shares of Company Common Stock
outstanding at the Closing Date (the "Outstanding Company Common Stock").
For purposes hereof, the Aggregate Shares Delivered shall equal the
sum of (i) the Closing Price Share Number and (ii) the Top-up Share
Number, if any. For purposes hereof, the "Closing Price Share Number"
shall equal the quotient obtained by dividing the Aggregate Consideration
by the Collar Price. The "Collar Price" shall be whichever of the
following applies:
(i) 115% of the Execution Price, if the Closing Price is
greater than 115% of the Execution Price; or
(ii) the Closing Price, if the Closing Price is greater than
or equal to 85% but less than or equal to 115% of the Execution
Price; or
(iii) 85% of the Execution Price, if the Closing Price is
less than 85% of the Execution Price.
If the Closing Price is less than 85% of the Execution Price, the
Company shall have the right to give notice to Acquiror (the "Termination
Intent Notice") that the Company intends to terminate this Agreement. The
Termination Intent Notice shall be delivered to Acquiror in person at the
location where the Closing is to take place no later than 2:00 p.m. New
York time on the business day prior to the Closing Date (the "Pre-Closing
Date"). If the Company delivers a Termination Intent Notice, Acquiror
shall have the right to give notice to the Company (the "Top-up Notice")
that Acquiror elects
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to increase the number of shares of Acquiror Common Stock to be delivered
in the Merger to that number of shares (the "Maximum Number") of Acquiror
Common Stock equal to the Aggregate Consideration divided by the Closing
Price. The excess of the Maximum Number over the number obtained by
dividing the Aggregate Consideration by the Collar Price is referred to
herein as the "Collar Deficiency Number". The Top-up Notice shall be
delivered in person to the Company at the location where the Closing is to
take place no later than 8:00 p.m. New York time on the Pre-Closing Date.
If Acquiror has not delivered a Top-up Notice by the above deadline, and
the Company and Acquiror have not otherwise reached an agreement regarding
the number of shares of Acquiror Common Stock to be delivered by such
deadline, this Agreement shall terminate. If Acquiror does deliver a
Top-up Notice, or if the Company and Acquiror otherwise agree, the number
of shares of Acquiror Common Stock to be delivered in the Merger shall be
increased by the Collar Deficiency Number or such other number as the
Company and Acquiror may agree. The Collar Deficiency Number or such
other number is hereinafter referred to as "Top-up Share Number".
For purposes hereof, the "Aggregate Consideration" shall be
$1,575,000,000 (the "Base Consideration");
(i) increased by the Estimated Capital Expenditure Amount
(as defined in Section 6.23);
(ii) reduced by the Estimated Cable Net Liabilities Amount
(as defined in Section 6.23);
(iii) increased by the River City Purchase Amount (as defined
in Section 6.28), if any; and
(iv) reduced by the Mid-Tennessee Amount (as defined in
Section 6.26), if any.
For purposes hereof, (i) the "Execution Price" shall be $20.075;
(ii) the average closing price of Acquiror Common Stock on the NASDAQ
National Market for the Random Trading Days shall be the "Closing Price";
and (iii) the "Random Trading Days" shall be the 15 trading days selected
by lot from the 40 trading days ending on and including the second trading
day prior to the Closing Date. The Random Trading Days shall be selected
by lot by the Company and the Acquiror at 5:00 p.m. New York time on the
second trading day prior to the Closing Date.
If between the date hereof and the Effective Time the outstanding
shares of Acquiror Common Stock shall have been changed into a different
number of shares or a different class, by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchanges of shares, or if any extraordinary dividend or distribution is
made with respect to the Acquiror Common Stock, then the Aggregate Shares
delivered shall be correspondingly adjusted to reflect such stock
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dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares or extraordinary dividend or
distribution.
(e) The holder of any shares ("Dissenting Shares") of Company
Common Stock outstanding immediately prior to the Merger that has validly
exercised such holder's dissenters' rights, if any, under the Delaware
General Corporation Law (the "DGCL") shall not be entitled to receive, in
respect of the shares of Company Common Stock as to which such holder has
validly exercised dissenters' rights, shares of Acquiror Common Stock and
shall not be entitled to receive shares of SHI Common Voting Shares or SHI
Class A Common Shares pursuant to the Distribution unless and until such
holder shall have failed to perfect, or shall have effectively withdrawn
or lost, such holder's right to payment for such holder's shares of
Company Common Stock under the DGCL. In such event, such holder shall be
entitled to receive the Acquiror Common Stock, SHI Common Voting Stock and
SHI Class A Common Stock such holder would have been entitled to receive
had such holder not exercised dissenters' rights. The Company shall give
Acquiror prompt notice upon receipt by the Company (i) prior to or at the
meeting of stockholders at which the Merger and other transactions
contemplated hereby are voted upon, of any written objection to such
transactions (any stockholder duly making such objection being hereinafter
called a "Dissenting Stockholder") and (ii) any other notices or
communications made after such time by a Dissenting Stockholder which
pertains to dissenters' rights. The Company agrees that, prior to the
Effective Time, except with the written consent of Acquiror, it will not
voluntarily make any payment with respect to, or settle or offer to
settle, any such demand. Each Dissenting Stockholder who becomes entitled
under the DGCL to payment for such holder's shares of Company Common Stock
shall receive payment therefor after the Effective Time from the Surviving
Corporation, and SHI shall reimburse the Surviving Corporation for the
excess, if any, of (x) the amount paid to such Dissenting Stockholders by
the Acquiror over (y) the product of (a) the quotient of the Aggregate
Consideration divided by the Aggregate Shares Delivered times (b) the
number of Dissenting Shares held by such Dissenting Stockholders; provided
that the amount paid to Dissenting Shareholders shall have been agreed
upon by the Surviving Corporation, SHI and the Dissenting Stockholders or
finally determined pursuant to the DGCL.
1.03 EFFECTIVE TIME OF THE MERGER. Subject to the terms and conditions
set forth in this Agreement, a certificate of merger shall be duly prepared,
executed and acknowledged by Acquiror and the Company and thereafter delivered
to the Secretary of State of Delaware and articles or a certificate of merger
shall be duly prepared, executed and acknowledged by Acquiror and the Company
and thereafter delivered to the Secretary of State of Pennsylvania (together,
the "Certificate of Merger") for filing pursuant to the Delaware General
Corporation Law and the Pennsylvania Business Corporations Law (the "PBCL"),
respectively, on the Closing Date. The Merger shall become effective upon the
filing of the Certificate of Merger with such Secretaries of State on the
Closing Date (the "Effective Time").
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1.04 EXCHANGE OF CERTIFICATES.
(a) Prior to the Closing Date, the Company shall retain a bank or
trust company reasonably acceptable to Acquiror to act as exchange agent (the
"Exchange Agent") in connection with the surrender of certificates evidencing
shares of Company Common Stock converted into shares of Acquiror Common Stock
pursuant to the Merger. Prior to the Effective Time, Acquiror shall deposit
with the Exchange Agent the shares of Acquiror Common Stock to be issued in the
Merger, which shares (the "Merger Stock") shall be deemed to be issued at the
Effective Time. At and following the Effective Time, the Surviving Corporation
shall deliver to the Exchange Agent such cash as may be required from time to
time to make payment of cash in lieu of fractional shares in accordance with
Section 1.06 hereof.
(b) As soon as practicable after the Effective Time, the Exchange
Agent shall mail to each person who was, at the Effective Time, a holder of
record of a certificate or certificates that immediately prior to the Effective
Time evidenced Outstanding Company Common Stock (the "Certificates"), other than
the Company, SHI or any of their respective Subsidiaries, (i) a letter of
transmittal (which shall specify that delivery of the Certificates shall be
effective, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and which shall be in such
form and shall have such other provisions as Acquiror and SHI shall reasonably
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for certificates representing the Merger Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and such other documents as may be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor certificates representing the shares of Merger
Stock that such holder has the right to receive pursuant to the terms hereof
(together with any dividend or distribution with respect thereto made after the
Effective Time and any cash paid in lieu of fractional shares pursuant to
Section 1.06), and the Certificate so surrendered shall be canceled. In the
event of a transfer of ownership of Company Common Stock that is not registered
in the stock transfer records of the Company, a certificate representing the
proper number of shares of Merger Stock may be issued to a transferee if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence reasonably satisfactory to Acquiror and SHI that any
applicable stock transfer tax has been paid.
(c) After the Effective Time, each outstanding Certificate which
theretofore represented shares of Company Common Stock shall, until surrendered
for exchange in accordance with this Section 1.04, be deemed for all purposes to
evidence the right to receive the number of shares of Merger Stock into which
the shares of Company Common Stock (which, prior to the Effective Time, were
represented thereby) shall have been so converted.
(d) Except as otherwise expressly provided herein, the Surviving
Corporation shall pay all charges and expenses, including those of the Exchange
Agent, in connection with the exchange of shares of Merger Stock for shares of
Company Common Stock. Any Merger Stock deposited with the Exchange Agent that
remains unclaimed by the former stockholders of the Company after six months
following the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any former stockholders of the Company who have not then
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complied with the instructions for exchanging their Certificates shall
thereafter look only to the Surviving Corporation for exchange of Certificates.
(e) Effective upon the Closing Date, the stock transfer books of
the Company shall be closed, and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
(f) All Merger Stock issued upon conversion of shares of Company
Common Stock and all SHI Common Shares distributed pursuant to Article II
hereof, each in accordance with the terms hereof, shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of Company
Common Stock.
1.05 DISTRIBUTION WITH RESPECT TO SHARES REPRESENTED BY UNEXCHANGED
CERTIFICATES. No dividend or other distribution declared or made after the
Effective Time with respect to the Merger Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Merger Stock issuable upon surrender of a Certificate
until the holder of such Certificate shall surrender such Certificate in
accordance with Section 1.04. Subject to the effect of applicable law,
following surrender of any such Certificate the Surviving Corporation shall pay,
without interest, to the record holder of certificates representing shares of
Merger Stock issued in exchange therefor (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such shares of Merger Stock, 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
of such Certificate and a payment date subsequent to such surrender payable with
respect to such shares of Merger Stock. No interest shall be paid on any of the
Merger Stock or any SHI Class A Common Shares or on SHI Common Voting Shares
distributed pursuant to Article II hereof.
1.06 NO FRACTIONAL SHARES.
(a) No certificates or scrip representing fractional shares of
Acquiror Common Stock shall be issued upon the surrender of Certificates
pursuant to Section 1.04. Such fractional share interests shall not entitle the
owner thereof to any rights as a security holder of Acquiror. In lieu of any
such fractional shares of Acquiror Common Stock, each holder of Company Common
Stock entitled to receive shares of Acquiror Common Stock in the Merger, upon
surrender of a Certificate for exchange pursuant to Section 1.04, shall be
entitled to receive an amount in cash (without interest), rounded to the nearest
cent, determined by multiplying the fractional interest in Acquiror Common Stock
to which such holder would otherwise be entitled (after taking into account all
shares of Company Common Stock then held of record by such holder) by the
closing sale price of a share of Acquiror Common Stock as reported on the NASDAQ
National Market on the Closing Date.
(b) As soon as practicable after the determination of the amount
of cash, if any, to be paid to holders of Company Common Stock in lieu of any
fractional share interests, Acquiror shall promptly deposit with the Exchange
Agent cash in the required amounts and the Exchange Agent will mail such amounts
without interest to such holders; PROVIDED, HOWEVER, that
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no such amount will be paid to any holder of Certificates which formerly
represented Company Common Stock prior to the surrender by such holder of the
Certificates formerly representing such holder's Company Common Stock. Any such
amounts that remain unclaimed by the former stockholders of the Company after
six months following the Effective Time shall be delivered to the Surviving
Corporation by the Exchange Agent upon demand and any former stockholders of the
Company who have not then surrendered their Certificates shall thereafter look
only to the Surviving Corporation for payment in lieu of any fractional
interests.
1.07 NO LIABILITY. Any amounts remaining unclaimed by holders of
shares on the day immediately prior to such time as such amounts would otherwise
escheat to or become property of any governmental entity shall, to the extent
permitted by applicable law, become the property of Acquiror free and clear of
any claims or interest of any holder previously entitled thereto. None of
Acquiror, SHI, the Company or the Exchange Agent will be liable to any holder of
shares of Company Common Stock for any shares of Merger Stock or any SHI Common
Shares, dividends or distributions with respect thereto or cash payable in lieu
of fractional shares delivered to a state abandoned property administrator or
other public official pursuant to any applicable abandoned property, escheat or
similar law.
1.08 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, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the shares
of Merger Stock (and any dividend or distribution with respect thereto made
after the Effective Time and prior to such issuance and any cash payable in lieu
of fractional shares pursuant to Section 1.06) deliverable in respect thereof as
determined in accordance with the terms hereof. When authorizing such payment
in exchange for any lost, stolen or destroyed Certificate, the person to whom
the Merger Stock is to be issued, as a condition precedent to the issuance
thereof, shall give the Surviving Corporation a bond satisfactory to the
Surviving Corporation against any claim that may be made against the Surviving
Corporation with respect to the Certificate alleged to have been lost, stolen or
destroyed.
ARTICLE II
CERTAIN PRE-MERGER TRANSACTIONS
The following transactions shall occur prior to the Effective Time:
2.01 INTERNAL SPINOFFS; AMENDMENTS TO CHARTERS.
(a) Prior to the Contribution, the Distribution and the Effective
Time, and in transactions intended to qualify under Section 355 of the
Internal Revenue Code as tax-free spinoffs, Scripps Xxxxxx Broadcasting
Company, an Ohio corporation and a wholly-owned Subsidiary of SHI
("Broadcasting"), will distribute all of the outstanding capital stock of
Scripps Xxxxxx Xxxxx Company of Sacramento, a Delaware corporation
("Sacramento Cable"), and Scripps Xxxxxx Xxxxx Company, a Colorado
corporation
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("SH Cable"), each of which is a wholly-owned Subsidiary of Broadcasting,
to SHI, and SHI will then distribute to the Company all of the outstanding
capital stock of Sacramento Cable, SH Cable, L-R Cable, Inc., a Colorado
corporation and wholly-owned Subsidiary of SHI ("L-R Cable"), and EWS
Cable, Inc., a Colorado corporation and wholly-owned Subsidiary of SHI
("EWS Cable"), whereupon Sacramento Cable, SH Cable, L-R Cable, and EWS
Cable (collectively, the "Cable Subsidiaries") will become direct
wholly-owned Subsidiaries of the Company.
(b) Prior to the Contribution, the Distribution and the Effective
Time, the Company shall amend its Certificate of Incorporation as set
forth in Exhibit A hereto (the "Charter Amendment") and SHI shall amend
and restate its Articles of Incorporation as set forth in Exhibit B hereto
(the "Restated Articles").
2.02 CONTRIBUTION OF ASSETS TO AND ASSUMPTION OF LIABILITIES BY SHI.
(a) Prior to the Effective Time and pursuant to the terms of the
Contribution and Assumption Agreement to be entered into by the Company
and SHI in the form attached hereto as EXHIBIT C (the "Contribution
Agreement"), the Company shall contribute and transfer (together with the
transactions described in Section 2.02(b) below, the "Contribution") to
SHI all of the Company's right, title and interest in and to any and all
assets of the Company, whether tangible or intangible and whether fixed,
contingent or otherwise; PROVIDED, HOWEVER, that the Company shall not
contribute to SHI (i) the issued and outstanding capital stock of, and its
right, title and interest in any advances to, any Cable Subsidiary; (ii)
the Company's rights created pursuant to this Agreement and the
Contribution Agreement; and (iii) cash sufficient to pay all expenses
relating to the transactions described in this Agreement that are the
responsibility of the Company hereunder including the fees and expenses of
Xxxxxxx Xxxxx in connection with such transactions.
(b) In consideration for the transactions described in Section
2.02(a) above, concurrently therewith and pursuant to the Contribution
Agreement, SHI shall (A) assume any and all liabilities of the Company of
every kind whatsoever, whether absolute, known, unknown, fixed, contingent
or otherwise; PROVIDED, HOWEVER, that SHI will not assume, and will have
no liability with respect to, (i) any liabilities associated with the
cable television business operations of the Cable Subsidiaries or Cable
Partnerships except as otherwise provided herein, including Sections
1.02(e), 6.06(g), 6.10, 6.12, 6.13, 6.27, 7.06 and 9.01 and (ii) the
Company's obligations created pursuant to this Agreement and the
Contribution Agreement and (B) issue and deliver to the Company shares of
common stock of SHI as set forth in the Contribution Agreement.
Concurrently with the transactions described in Section 2.02(a) above, SHI
will cause the Company and the Cable Subsidiaries to be released by all
applicable third parties from any liability of SHI or any of its
Subsidiaries other than Cable or any liability assumed by SHI pursuant to
this Section 2.02(b) that is (A) debt for borrowed money and similar
monetary obligations evidenced by bonds, notes, debentures or other
instruments, or (B) guaranties, endorsements, and other contingent
obligations, whether direct or indirect, in respect of liabilities of
others of any of the types described in clause (A). Each of the
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Company Contracts, other than the SHI Note Indenture will be terminated,
or the Company will otherwise be released from all obligations thereunder,
prior to the Effective Time. Prior to the Effective Time, either SHI
shall purchase and retire all of its outstanding 7-3/8% Notes due December
15, 1998 (the "SHI Notes"), or, if and to the extent the SHI Notes have
not been repurchased at the Effective Time, SHI shall defease the SHI
Notes in accordance with Section 401 of the SHI Note Indenture and shall
indemnify the Company in respect of any Loss it may suffer in respect
thereof. Prior to the Effective Time, SHI and the Company shall enter
into the Non-Competition Agreement as set forth in Exhibit D hereto. SHI
acknowledges that the liabilities to be assumed pursuant to the first
sentence of this Section 2.02(b) include any and all liabilities
associated with any claim, action or proceeding brought by or on behalf of
the holders of Company Common Stock in connection with the transactions
contemplated hereby.
(c) Following the Contribution and prior to the Effective Time,
the Company shall distribute (the "Distribution") one fully paid and
nonassessable SHI Class A Common Share to the holder of each share of
Company Class A Common Stock outstanding immediately prior to the
Distribution and one fully paid and nonassessable SHI Common Voting Share
to the holder of each share of Company Common Voting Stock outstanding
immediately prior to the Distribution. Each share of the capital stock of
SHI issued and outstanding immediately prior to the Distribution and owned
directly or indirectly by the Company or any of its Subsidiaries (other
than those to be distributed in accordance with the first sentence of this
paragraph) shall be cancelled at the time of the Distribution.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING THE
COMPANY AND SHI
The Company and SHI jointly and severally represent and warrant to
Acquiror as follows:
3.01 ORGANIZATION AND AUTHORITY. Each of the Company and SHI is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Each of the Company and SHI has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. Subject to the items
referred to in Section 3.03, all necessary action, corporate or otherwise,
required to have been taken by or on behalf of the Company and SHI by applicable
law, their respective charter documents or otherwise to authorize (i) the
approval, execution and delivery on behalf of the Company and SHI of this
Agreement and (ii) the performance by the Company and SHI of their respective
obligations under this Agreement and the consummation of the transactions
contemplated hereby has been taken, except that this Agreement, the Charter
Amendment and the transactions described in Section 6.13 must be approved by the
stockholders of the Company. This Agreement and each other agreement
contemplated hereby (each a "Transaction
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Agreement") to which the Company or SHI is or will be a party constitutes or
will constitute, as the case may be, a valid and binding agreement of each of
the Company and SHI, as the case may be, enforceable against each of them in
accordance with its terms, except (x) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, and (y) for the limitations imposed by general
principles of equity. The foregoing exceptions are hereinafter referred to as
the "Enforceability Exceptions." The Company has heretofore delivered to
Acquiror true and complete copies of the Certificate or Articles of
Incorporation and Bylaws or Code of Regulations of the Company and SHI as in
effect on the date hereof.
3.02 NO BREACH. The execution and delivery of this Agreement by each
of the Company and SHI do not, and the consummation of the transactions
contemplated hereby by each of the Company and SHI will not, (i) violate or
conflict with the Certificate or Articles of Incorporation or Bylaws or Code of
Regulations of the Company or SHI, or (ii) constitute a breach or default (or an
event that with notice or lapse of time or both would become a breach or
default) of, or give rise to any third-party right of termination, cancellation,
modification or acceleration under, or otherwise require notice or approval
under, any agreement, understanding or undertaking to which the Company or SHI
or any of their respective Subsidiaries is a party or by which any of them is
bound, or give rise to any Lien on any of their properties, except where such
breach, default, Lien, third-party right, cancellation, modification or
acceleration would not have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or materially interfere with or delay the
transactions contemplated hereby, or (iii) subject to obtaining the approvals
and making the filings described in Section 3.03 hereof, constitute a violation
of any statute, law, ordinance, rule, regulation, judgment, decree, order or
writ of any judicial, arbitral, public, or governmental authority having
jurisdiction over the Company or any of its Subsidiaries or SHI or any of its
Subsidiaries or any of their respective properties or assets except as would not
have a Material Adverse Effect on Cable or on the Company and its Subsidiaries
taken as a whole or materially interfere with or delay the transactions
contemplated hereby.
3.03 CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by the Company and SHI nor the consummation of the transactions
contemplated hereby will require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
except (i) for filings required under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the "Securities Act"), (ii) for
filings required under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder (the "Exchange Act"), (iii) for filings under
state securities or "blue sky" laws, (iv) for notification pursuant to, and
expiration or termination of the waiting period under, the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act"), (v) for the filing of the Certificate of Merger as
set forth in Article I hereof, (vi) for the filing of the Charter Amendment with
the Secretary of State of Delaware, the Restated Articles with the Secretary of
State of Ohio, and appropriate documents with the relevant authorities of other
states in which the Company and its Subsidiaries are qualified to do business,
(vii) for consents or waivers from the relevant governmental entities necessary
to transfer ownership of Cable's franchise agreements and Federal Communications
Commission
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("FCC") licenses, and (viii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent the Company or SHI from performing its respective obligations
under this Agreement or the Contribution Agreement without having a Material
Adverse Effect on the Company or Cable or materially interfere with or delay the
transactions contemplated hereby.
3.04 APPROVALS OF THE BOARDS; FAIRNESS OPINION; VOTE REQUIRED. The
Boards of Directors of the Company and SHI have each, by resolutions duly
adopted at meetings duly called and held, unanimously approved and adopted this
Agreement, the Merger, the Contribution and the Distribution, and the other
transactions contemplated hereby on the material terms and conditions set forth
herein. The Board of Directors of the Company has received the opinion as of
the date of this Agreement of Xxxxxxx Xxxxx & Co. ("Xxxxxxx Xxxxx"), as
financial advisor to the Company, that the consideration to be paid to the
Company's stockholders in the Merger is fair to such stockholders from a
financial point of view. The affirmative votes or actions by written consent of
a majority of the votes that holders of the outstanding shares of Company Common
Voting Stock are entitled to cast are the only votes of the holders of any class
or series of the capital stock of the Company necessary to approve the Merger
and the Charter Amendment under applicable law and the Company's Certificate of
Incorporation and By-Laws.
3.05 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of (i)
120 million shares of Company Class A Common Stock, (ii) 30 million shares of
Company Common Voting Stock, and (iii) 25 million shares of serial preferred
stock, par value $.01 per share (the "Company Preferred Stock"). As of
September 30, 1995, there were issued and outstanding 60,028,980 shares of
Company Class A Common Stock and 19,990,833 shares of Company Common Voting
Stock. All such outstanding shares are duly authorized, validly issued and
fully paid and nonassessable. Since September 30, 1995 no shares of Company
Common Stock have been issued except upon exercise of options, restricted stock
or other awards issued pursuant to the Incentive Plan or the Directors Plan.
There are no shares of Company Preferred Stock issued and outstanding. There
are no preemptive or other similar rights available to the existing holders of
the capital stock of the Company. Other than options, restricted stock, and
other awards outstanding or issuable pursuant to the Incentive Plan or the
Directors Plan, and other than in connection with the transactions contemplated
by this Agreement, there are no outstanding options, warrants, rights, puts,
calls, commitments, or other contracts, arrangements, or understandings issued
by or binding upon the Company or any of its Subsidiaries requiring or providing
for, and there are no outstanding debt or equity securities of the Company or
its Subsidiaries which upon the conversion, exchange or exercise thereof would
require or provide for, the issuance, transfer or sale by the Company or any of
its Subsidiaries of any new or additional equity interests in the Company (or
any other securities of the Company which, with notice, lapse of time or payment
of monies, are or would be convertible into or exercisable or exchangeable for
equity interests in the Company). Except for the Scripps Family Agreement dated
October 15, 1992 (the voting provisions of which become effective only upon
termination of The Xxxxxx X. Scripps Trust (the "Trust")), there
-11-
are no voting trusts or other agreements or understandings to which the Company
is a party with respect to the voting of capital stock of the Company.
(b) As of the date hereof, the authorized capital stock of SHI
consists of 750 Common Shares, without par value (the "SHI Common Shares").
Upon the filing of its Amended and Restated Articles of Incorporation with the
Secretary of State of the State of Ohio, the authorized capital stock of SHI
will consist of (i) 120 million SHI Class A Common Shares, $.01 par value; (ii)
30 million SHI Common Voting Shares, $.01 par value; and (iii) 25 million SHI
Preferred Shares, $.01 par value. As of the date hereof, there are issued and
outstanding 750 SHI Common Shares, all of which are owned by the Company, and no
other shares of capital stock of SHI.
3.06 SEC REPORTS. The Company has filed all required forms, reports
and documents with the Securities and Exchange Commission (the "SEC") since
January 1, 1993 (collectively, the "Company's SEC Reports"). The Company's SEC
Reports have complied in all material respects with all applicable requirements
of the Securities Act and the Exchange Act. As of their respective dates, none
of the Company's SEC Reports, including, without limitation, any financial
statements or schedules included or incorporated by reference therein, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated or incorporated by reference therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The Company has heretofore made available or
delivered to Acquiror, in the form filed with the SEC, all of the Company's SEC
Reports.
3.07 FINANCIAL STATEMENTS. The (i) audited consolidated financial
statements of the Company contained in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994, and (ii) unaudited condensed consolidated
financial statements of the Company contained in the Company's Quarterly Report
on Form 10-Q for the six months ended June 30, 1995 (the "Company 10-Q"), were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis ("GAAP") and present fairly in all material respects the
Company's consolidated financial position and the results of its consolidated
operations and its consolidated cash flows as of the relevant dates thereof and
for the periods covered thereby (subject to normal year-end adjustments in the
case of the unaudited interim financial statements).
3.08 ABSENCE OF CERTAIN CHANGES. Except as otherwise disclosed in the
Company 10-Q, since June 30, 1995, there has not been any (i) material adverse
change in the financial position, liabilities, assets or business of the Company
and its Subsidiaries taken as a whole except for material adverse changes due to
general economic or industry-wide conditions, or (ii) other events or conditions
of any character that, individually or in the aggregate, have or would
reasonably be expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Company and SHI to
perform their respective material obligations under this Agreement and the
Transaction Agreements to which they are or will be a party.
-12-
3.09 ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities of
the Company of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, and there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a liability, other than (i) liabilities provided for in the balance
sheet included in the Company 10-Q or disclosed in the notes thereto and (ii)
other undisclosed liabilities which, individually or in the aggregate, are not
material to the Company and its Subsidiaries taken as a whole.
The Company has served only as a holding company for its
Subsidiaries and has not engaged in any active business operation. The
aggregate amount of liabilities of the Company which SHI will assume pursuant to
Section 2.02(b) would not reasonably be expected to exceed $50,000,000.
3.10 COMPLIANCE WITH LAW. The Company holds all licenses, franchises,
certificates, consents, permits, qualifications and authorizations from all
governmental authorities necessary for the lawful conduct of its business,
except where the failure to hold any of the foregoing would not have a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole. To the
Company's knowledge, the Company has not violated, and is not in violation of,
any such licenses, franchises, certificates, consents, permits, qualifications
or authorizations or any applicable statutes, laws, ordinances, rules and
regulations (including, without limitation, any of the foregoing related to
occupational safety, storage, disposal, discharge into the environment of
hazardous wastes, environmental protection, conservation, unfair competition,
labor practices or corrupt practices) of any governmental authorities, except
where such violations do not, and in so far as reasonably can be foreseen will
not, have a Material Adverse Effect on the Company and its Subsidiaries taken as
a whole, and the Company has not received any notice from a governmental or
regulatory authority within three years of the date hereof of any such
violation.
3.11 TAXES.
(a) All Company Consolidated Income Tax Returns and Cable Tax
Returns (as defined in Section 6.10(h)), required to be filed on or before the
date hereof have been filed with the appropriate governmental agencies in all
jurisdictions in which such Tax Returns are required to be filed; all of the
foregoing Tax Returns are true, correct and complete in all material respects;
and all Taxes required to have been paid in connection with such Tax Returns
have been paid. All material Taxes payable by or with respect to the Company
and its Subsidiaries but not reflected on any Tax Return required to be filed
prior to the date of the most recent balance sheet included in the Company 10-Q,
have been fully paid or adequate provision therefor has been made and reflected
on such balance sheet.
(b) Except as set forth on Schedule 3.11(b) hereto, there is no
claim or investigation involving an amount greater than $250,000 pending or
threatened against the Company or Cable for past Taxes, and adequate provision
for the claims or investigations set forth on Schedule 3.11(b) has been made as
reflected on the Company's financial statements.
(c) The Company is not, and on the Closing Date will not be, an
investment Company within the meaning of Section 368(a)(2)(F)(iii) and (iv) of
the Internal Revenue Code.
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(d) As of the Closing Date there will be no deferred intercompany
gains between the Company and the Cable Subsidiaries or between the Cable
Subsidiaries themselves in excess of $250,000 (in the aggregate).
3.12 LITIGATION. There is no suit, action, proceeding or investigation
pending against or, to the knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or any of their respective
properties that, individually or in the aggregate, would reasonably be expected
to prevent, hinder, or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement or otherwise be material to the
Company and its Subsidiaries taken as a whole, nor is there any judgment,
decree, inquiry, rule or order outstanding against the Company or any of its
Subsidiaries which, insofar as can reasonably be foreseen, would prevent, hinder
or materially delay such ability or otherwise be material to the Company.
3.13 BROKERS AND FINDERS. Neither the Company, SHI nor any officer,
director or employee of the Company or SHI has employed any investment banker,
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated herein, except
that the Company has employed Xxxxxxx Xxxxx as its financial advisor and for
whose fees and expenses the Company is responsible.
3.14 EMPLOYEE BENEFIT PLAN MATTERS.
(a) COMPANY EMPLOYEE PLANS AND COMPANY BENEFIT ARRANGEMENTS.
Acquiror shall have no liability whatsoever under any Company Employee Plans or
Company Benefit Arrangements or under any laws applicable to any Company
Employee Plans or Company Benefit Arrangements.
(b) COBRA. The Company, SHI and their ERISA Affiliates have
complied in all material respects with the continuation coverage requirements of
COBRA with respect to any loss of coverage occurring through the date of this
Agreement under a Group Health Plan sponsored by the Company, SHI or any of
their ERISA Affiliates.
3.15 COMPANY CONTRACTS. (a) Except as set forth on Schedule 3.15, the
Company is not a party to or bound by any contract, agreement or commitment.
The contracts, agreements and commitments to which the Company is a party or by
which it is otherwise bound are referred to herein as the "Company Contracts".
The Company has heretofore delivered to Acquiror all Company Contracts.
3.16 ENVIRONMENTAL MATTERS. (a) Except as set forth in the Schedule
3.16, there are no Environmental Liabilities of the Company and its Subsidiaries
that have had or may reasonably be expected to have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole.
(b) There has been no environmental assessment, investigation,
study, audit, test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the Company or its
Subsidiaries or any property or facility now or
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previously owned or leased by the Company or its Subsidiaries which has not been
delivered to Acquiror prior to the date hereof.
3.17 FULL DISCLOSURE. All of the statements made by the Company and
SHI in this Agreement (including, without limitation, the representations and
warranties made by the Company and SHI herein and in the schedules and exhibits
hereto which are incorporated by reference herein and which constitute an
integral part of this Agreement) do not (and on the Closing Date will not)
include or contain any untrue statement of a material fact, and do not (and on
the Closing Date will not) omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING CABLE
The Company and SHI jointly and severally represent and warrant to
Acquiror as follows:
4.01 ORGANIZATION AND AUTHORITY. Each of the Cable Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation. Each Cable Partnership is a partnership duly
formed and validly existing under the laws of its jurisdiction of formation.
Each of the Cable Subsidiaries and the Cable Partnerships is qualified to do
business as a foreign corporation or partnership and is, where applicable, in
good standing, in each jurisdiction where such qualification is necessary except
where the failure to so qualify would not reasonably be expected to have a
Material Adverse Effect on Cable. Each of the Cable Subsidiaries and the Cable
Partnerships has all requisite corporate or partnership, as appropriate, power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to have such power or
authority would not have a Material Adverse Effect on Cable. The Company has
heretofore delivered to Acquiror true and complete copies of the certificate of
incorporation, bylaws and partnership agreements of Cable as currently in
effect.
4.02 NO BREACH. The execution and delivery of this Agreement by each
of the Company and SHI do not, and the consummation of the transactions
contemplated hereby by each of the Company and SHI will not constitute a breach
or default (or an event that with notice or lapse of time or both would become a
breach or default) or give rise to any third-party right of termination,
cancellation, modification or acceleration under, or otherwise require notice or
approval under, any agreement, understanding or undertaking to which the Company
or any of the Cable Subsidiaries or Cable Partnerships is a party or by which
any of them is bound, or give rise to any Lien on any of their properties,
except where such breach, default, Lien, third-party right, cancellation,
modification, or acceleration would not have a Material Adverse Effect on Cable
or materially interfere with or delay the transactions contemplated hereby.
Neither the Company nor any of the Cable Subsidiaries or Cable Partnerships is a
party to or bound by any agreement that restricts or purports to restrict the
ability of any of them or any affiliate of any
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of them to engage in any location in the business of cable television, except
for such restrictions that would not have a Material Adverse Effect on Cable.
4.03 CAPITALIZATION. All of the issued and outstanding shares of
capital stock of the Cable Subsidiaries are owned by SHI or Broadcasting (as set
forth below) and are duly authorized, validly issued and fully paid and
nonassessable. As of the date hereof, SH Cable and Sacramento Cable are
wholly-owned Subsidiaries of Broadcasting. As of the date hereof, EWS Cable and
L-R Cable are wholly owned Subsidiaries of SHI. Immediately prior to the
Effective Time, SH Cable, Sacramento Cable, EWS Cable and L-R Cable will be
wholly-owned subsidiaries of the Company. EWS Cable owns a 98% interest in, and
L-R Cable owns a 2% interest in, TeleScripps Cable Company, a Colorado
partnership ("TCC"). Sacramento Cable owns a 95% interest in Sacramento Cable
Television, a California partnership ("SCT"). River City Cablevision, Inc., a
California corporation, owns a 5% interest in SCT (the "River City Interest")
and is not affiliated with the Company. TCC and SCT are collectively referred
to herein as the "Cable Partnerships." With respect to TCC's cable systems in
the cities of Chamblee and Doraville, Georgia, and in the County of Dekalb,
Georgia, certain third parties have certain contractual rights (and obligations)
which in the case of each system are not material in the aggregate to such
system. Other than in connection with the transactions contemplated by this
Agreement, there are no outstanding options, warrants, rights, puts, calls,
commitments, or other contracts, arrangements, or understandings issued by or
binding upon any Cable Subsidiary or Cable Partnership requiring or providing
for, and there are no outstanding debt or equity securities of any Cable
Subsidiary or Cable Partnership which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance, transfer or sale by any
Cable Subsidiary or Cable Partnership of any new or additional equity interests
in the Cable Subsidiaries or the Cable Partnerships (or any other securities of
any Cable Subsidiary or Cable Partnership which, with notice, lapse of time or
payment of monies, are or would be convertible into or exercisable or
exchangeable for equity interests in such Cable Subsidiary or Cable
Partnership). There are no voting trusts or other agreements or understandings
to which the Company or any of the Cable Subsidiaries or Cable Partnerships is a
party with respect to the voting of the capital stock of the Cable Subsidiaries
or the partnership interests of the Cable Partnerships. The Cable Subsidiaries
and the Cable Partnerships have not engaged in any businesses or other
activities except for the ownership and operation of cable television systems
and other activities incidental thereto.
4.04 FINANCIAL STATEMENTS. The (i) unaudited combined balance sheets
of Cable as of December 31, 1994 and 1993 (the "Cable Balance Sheets"), and the
related unaudited combined statements of income and cash flows for Cable for the
year ended December 31, 1993 and 1994, and (ii) unaudited combined balance sheet
of Cable as of September 30, 1995 and the related unaudited combined statements
of income and cash flows for Cable for the period ended September 30, 1995, were
prepared on a consistent basis and present fairly, in all material respects, the
combined financial position of Cable as of the dates thereof and their combined
results of operations and cash flows for the periods covered thereby (subject to
normal year-end adjustments in the case of the unaudited interim financial
statements).
4.05 ABSENCE OF CERTAIN CHANGES. Since December 31, 1994, Cable has
conducted its business in the ordinary course consistent with past practice and
there has not been any (i)
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material adverse change in the financial position, liabilities, assets or
business of Cable except for material adverse changes due to general economic or
industry-wide conditions, (ii) other events or conditions of any character that,
individually or in the aggregate, have or would reasonably be expected to have a
Material Adverse Effect on Cable or (iii) change by Cable in any method of
accounting or accounting practice.
4.06 ABSENCE OF UNDISCLOSED LIABILITIES. There are no liabilities of
Cable of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances which could reasonably be expected to result in such a
liability, other than: (i) liabilities provided for in the Cable Balance Sheets
or disclosed in the notes thereto and (ii) other liabilities which, individually
or in the aggregate, are not material to Cable.
4.07 COMPLIANCE WITH LAW.
(a) The Cable Subsidiaries and Cable Partnerships hold all
licenses, franchises, certificates, consents, permits, qualifications and
authorizations from all governmental authorities necessary for the lawful
conduct of Cable's business, except where the failure to hold any of the
foregoing would not have a Material Adverse Effect on Cable. To the Company's
best knowledge, none of the Cable Subsidiaries or Cable Partnerships has
violated, or is in violation of, any such licenses, franchises, certificates,
consents, permits, qualifications or authorizations or any applicable statutes,
laws, ordinances, rules and regulations (including, without limitation, any of
the foregoing related to occupational safety, storage, disposal, discharge into
the environment of hazardous waste, environmental protection, conservation,
unfair competition, labor practices or corrupt practices) of any governmental
authorities, except where such violations do not, and in so far as reasonably
can be foreseen will not, have a Material Adverse Effect on Cable, and none of
the Cable Subsidiaries or Cable Partnerships has received any notice from a
governmental or regulatory authority within three years of the date hereof of
any such violation.
(b) The Cable Subsidiaries and Cable Partnerships have made all
submissions (including, without limitation, registration statements) required
under the Communications Act of 1934, as amended, the Cable Communications
Policy Act of 1984, as amended, and the Cable Television Consumer Protection and
Competition Act of 1992 (collectively, the "Communications Act"), and the
applicable rules and regulations thereunder (the "Rules and Regulations"), and,
to the Company's best knowledge, have obtained all necessary FCC and FAA
authorizations, licenses, registrations, permits and tower approvals. The Cable
Subsidiaries and Cable Partnerships have complied and are in compliance in all
material respects with the Communications Act and the Rules and Regulations.
4.08 FRANCHISES AND MATERIAL AGREEMENTS.
(a) As of June 30, 1995, the cable television systems owned by
Cable (i) had approximately 750,390 Basic Subscribers and 655,516 premium
subscriptions, (ii) passed approximately 1,181,767 residential dwelling units
and (iii) included 4,313 underground plant miles and 15,737 aerial plant miles.
On average, for the three months ended September 30,
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1995, the Average Revenue Per Basic Subscriber was $31.44 per month. Each cable
system owned by Cable operates pursuant to a Franchise except where the failure
to have such a franchise would not have a Material Adverse Effect on Cable.
Each Franchise of Cable and each Material Cable Agreement is the validly
existing, legally enforceable obligation of each Cable Subsidiary or Cable
Partnership party thereto and, to the knowledge of the Company, of the other
parties thereto, subject to the Enforceability Exceptions. Each Cable
Subsidiary and Cable Partnership is validly and lawfully operating under its
Franchises and the Material Cable Agreements to which it is a party, and each
Cable Subsidiary and Cable Partnership has duly complied in all material
respects with all of the terms and conditions of each of its Franchises and each
Material Cable Agreement to which it is a party. The Company is not aware of
any third party breach or default (or other act or omission that with notice,
passage of time or both would constitute a default) under any Material Cable
Agreement. Schedule 4.08(a)(i) sets forth a complete list of all material
Franchises of Cable.
Except for contracts and agreements entered into in accordance with
the terms of this Agreement, and except for the Material Cable Agreements, no
Cable Subsidiary or Cable Partnership and none of their respective properties is
a party to or bound by:
(i) any lease (whether of real or personal property) providing for
annual rentals of $250,000 or more, any lease with a term of more than 5
years or any lease relating to headends or any intermediate transmission
points;
(ii) any affiliation or retransmission Contract with a programming
service or a distributor thereof that is material to the relevant cable
system;
(iii) any Contract providing for the purchase or sale by Cable of
goods, services, equipment or assets with an aggregate purchase price of
$250,000 or more or with a duration in excess of 5 years except any such
Contract that may be terminated by Cable within six months of the date of
this Agreement without penalty (upon written request by Aquiror (which
notice must be given, if at all, within one month following the date on
which the Contract is delivered to Acquiror), Cable shall terminate any
such Contract effective as of the Closing);
(iv) any partnership, joint venture or other similar Contract or
any guarantee of the obligations of any Person except any such Contract or
guarantee that could not reasonably be expected to involve obligations
exceeding $250,000 or otherwise be material to Cable;
(v) any Contract relating to indebtedness for borrowed money or any
installment purchase agreement, conditional sale contract or other like
financing arrangement, except any such Contract or arrangement:
A. with an aggregate outstanding principal amount not
exceeding $150,000, and
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B. which may be prepaid on not more than 30 days' notice
without the payment of any penalty;
(vi) any Contract with the Company or SHI or any of their
respective Subsidiaries other than another Cable Subsidiary or Cable
Partnership;
(vii) any Contract which has or could reasonably be expected to
have the effect of prohibiting or restricting any business practice of, or
the conduct of business by, any Cable Subsidiary or Cable Partnership; or
(viii) any other Contract that is material to Cable.
The Contracts listed on Schedule 4.08(a)(ii) are referred to herein as the
"Material Cable Agreements". No payments were made by Cable in connection with
the obtaining of any retransmission agreement with a programming service or
distributor thereof.
(b) Except as set forth on Schedule 4.08(b), no Person (including
any governmental authority) has any right to acquire any interest in any cable
television system or assets of Cable (including any right of first refusal or
similar right) upon an assignment or transfer of control of a Franchise, other
than rights of condemnation or eminent domain afforded by law and, to the
knowledge of the Company, no other Person (i) has been granted or has applied
for the consent or approval of any governmental authority for the installation,
construction, development, ownership, or operation of a cable television system
(as defined in the Cable Communications Policy Act of 1984, as amended) within
all or part of the geographic area served by any cable television system of
Cable or (ii) operates, or has commenced the construction, installation or
development of, any cable television system (as defined in the Cable
Communications Policy Act of 1984, as amended) within all or part of the
geographic area served by any cable television system of Cable, regardless of
whether the consent or approval of any governmental authority is required or has
been obtained.
(c) Neither the Company nor any of the Cable Subsidiaries or Cable
Partnerships has made or is bound by any material commitments to any state,
municipal, local or other governmental commission, agency or body with respect
to the operation and construction of their respective systems which are not
fully reflected in the Franchises or any Material Cable Agreement. Neither the
Company nor any of the Cable Subsidiaries or Cable Partnerships has entered into
or is bound by any agreements with community groups or similar third parties
restricting or limiting the types of programming that may be shown on such
systems.
(d) No Franchising Authority has advised the Company or any Cable
Subsidiary or Cable Partnership, or otherwise notified the Company or any Cable
Subsidiary or Cable Partnership in accordance with the terms of the applicable
Franchise, of its intention to deny renewal of an existing Franchise. The
Company and the Cable Subsidiaries and Cable Partnerships have timely filed
notices of renewal in accordance with the Communications Act with all
Franchising Authorities with respect to each Franchise expiring within 36 months
after the date of this Agreement. Such notices of renewal have been filed
pursuant to the formal
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renewal procedures established by Section 626(a) of the Communications Act. As
of the Closing Date, (i) the Company will have maintained a controlling
ownership in each system in its entirety for at least 36 consecutive months
following the initial construction or acquisition of each such system by the
Company or a Cable Subsidiary or Cable Partnership, or (ii) the consummation of
the transactions contemplated by this Agreement (including acquisition of the
assets related to the Mid-Tennessee Business as described in Section 4.13
hereof) will not violate the three-year holding period requirement set forth in
Section 617 of the Communications Act and the FCC rules and regulations
promulgated thereunder.
(e) The Company and the Cable Subsidiaries and Cable Partnerships
are operating the systems in compliance in all material respects with the
provisions of the Communications Act and the rules and regulations of the FCC
relating to carriage of signals, syndicated exclusivity, network
non-duplication, and retransmission consent except where the failure to comply,
individually or in the aggregate, would not result in a Material Adverse Effect
on Cable. No notices or demands have been received from any television station
or from any other Person claiming to have a right, or objecting to or
challenging the right of the systems, to carry any signal or deliver the same,
or challenging the channel position on which any television station is carried.
(f) Schedule 4.08(f) indicates which television signals carried by
the systems are carried without retransmission consent agreements (other than
stations which have elected must-carry status). The Company has delivered to
Acquiror full and complete copies of all retransmission consent agreements.
There are no obligations regarding unconstructed fiber interconnect commitments.
For each commercial television signal on each system that has elected must-carry
status, but that is not being carried because of signal quality problems or
potential copyright liability, Schedule 4.08(f) lists the signal and the reason
for non-carriage.
(g) The Company has delivered to Acquiror true, correct, and
complete specimen copies of (i) all FCC Forms 393, 1200, 1205, 1210, 1215 and
1220s that have been prepared with respect to the systems, (ii) all material
correspondence with any governmental body, subscriber, or other interested party
relating to rate regulation generally or specific rates charged to subscribers
of the systems, including, without limitation, any complaints filed with the FCC
with respect to any rates charged to subscribers of the systems, and (iii) any
documentation supporting an exemption from the rate regulation provisions of the
Communications Act claimed by the Company or a Cable Subsidiary or Cable
Partnership with respect to the systems. Schedule 4.08(g) sets forth (i) a list
of all rate complaints filed pursuant to the Communications Act and received by
the Company or any Cable Subsidiary or Cable Partnership which have not been
deemed invalid by the FCC, and further sets forth those Franchises that have
been certified or, to the Company's knowledge, filed for certification under the
Communications Act with respect to rate regulation and (ii) a list of all
letters of inquiry from the FCC received by the Company or any Cable Subsidiary
or Cable Partnership since September 1, 1993 with regard to rate restructuring.
(h) Beginning with the first accounting period of 1992, the Cable
Subsidiaries and Cable Partnerships have filed all material copyright notices
and reports required to be filed by Section 111 of the Copyright Act of 1976, as
amended (the "Copyright Act"), and have paid
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all material fees required to be paid pursuant to Section 111 of the Copyright
Act and the rules and regulations of the United States Copyright Office with
respect to the operation of each cable television system owned or operated by
them. None of the Company, SHI, any Cable Subsidiary or any Cable Partnership
has received any written notice from the United States Copyright Office, or any
other Person, either challenging any copyright filing or payment made by such
party or alleging a failure by such party to make any copyright filing or
payment, or threatening to bring suit for copyright infringement.
4.09 TITLE TO PROPERTIES; ENCUMBRANCES. The Cable Subsidiaries and the
Cable Partnerships are the exclusive holders of all rights in or to all real and
personal, tangible and intangible property and assets of the Company or its
Subsidiaries (other than any such assets held by the Company or its Subsidiaries
pursuant to leases or licenses with a Person other than the Company or another
of its Subsidiaries) used or useful in the ownership and operation of the cable
television systems owned or operated by Cable, and (b) each Cable Subsidiary or
Cable Partnership has good and valid title to its respective assets, free and
clear of all defects and Liens except: (i) materialmen's, mechanics',
carriers', workmen's, warehousemen's, repairmen's, or other like Liens arising
in the ordinary course of business, or deposits to obtain the release of such
Liens; (ii) Liens for current taxes not yet due and payable, and (iii) Liens or
minor imperfections of title that do not interfere with the use or detract from
the value of such property and taken in the aggregate do not have a Material
Adverse Effect on Cable. Except as would not result in any Material Adverse
Effect on Cable, each Cable Subsidiary and Cable Partnership owns or has the
lawful right to use all assets, properties, operating rights, easements,
contracts, leases, and other instruments necessary to operate its business
lawfully and to maintain the same as presently conducted.
4.10 LITIGATION. There is no suit, action, proceeding or investigation
pending against or, to the knowledge of the Company, threatened against or
affecting any Cable Subsidiary or Cable Partnership (except for proceedings or
investigations affecting the cable television industry generally) that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Cable; nor is there any judgment, decree, inquiry,
rule or order outstanding against any Cable Subsidiary or Cable Partnership
which, individually or in the aggregate, have had any such effect or insofar as
can reasonably be foreseen, would have any such effect in the future.
4.11 EMPLOYEE BENEFIT PLAN MATTERS.
(a) CABLE EMPLOYEE PLANS AND CABLE BENEFIT ARRANGEMENTS.
Schedule 4.11(a) lists each Cable Employee Plan and Cable Benefit Arrangement.
The Company has delivered to Acquiror with respect to each Cable Employee Plan
and Cable Benefit Arrangement sponsored by the Company, SHI or any of their
ERISA Affiliates true and complete copies of (i) all written documents
comprising such plans and arrangements (including amendments and individual,
trust or insurance agreements relating thereto); (ii) the most recent Federal
Form 5500 series (including all schedules thereto) filed with respect to each
Cable Employee Plan; (iii) the most recent financial statements and actuarial
reports, if any, pertaining to each such plan or arrangement; and (iv) the
summary plan description currently in effect and all material
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modifications thereto, if any, for each such Cable Employee Plan. No Cable
Employee Plan is a Multiemployer Plan.
(b) MULTIEMPLOYER PLANS.
(i) Neither the Company, SHI nor any of their ERISA
Affiliates has incurred any unsatisfied withdrawal liability, within the
meaning of Section 4201 of ERISA, with respect to any Multiemployer Plan
to which the Company, SHI or any of their ERISA Affiliates is required to
make or accrue a contribution (or has within the six year period preceding
the Closing Date been required to make or accrue a contribution), nor is
the Company, SHI or any of their ERISA Affiliates reasonably expected to
incur any withdrawal liability with respect to any Multiemployer Plan.
(ii) Neither the Company, SHI nor any of their ERISA
Affiliates has been notified by the sponsor of any Multiemployer Plan to
which the Company, SHI or any of their ERISA Affiliates is required to
make or accrue a contribution (or has within the six year period preceding
the Closing Date been required to make or accrue a contribution) that such
Multiemployer Plan is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and to the best knowledge of the Company and
SHI, no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA.
(iii) None of the Company, SHI or any ERISA Affiliate of any
of them has engaged in or is a successor or parent corporation to an
entity that has engaged in a transaction described in Section 4212(c) of
ERISA. If a "complete withdrawal" by the Company, SHI and all of their
ERISA Affiliates were to occur as of the Effective Time with respect to
all of the Multiemployer Plans to which the Company, SHI or any of their
ERISA Affiliates is required to make or accrue a contribution, none of the
Company, SHI or any ERISA Affiliate of any of them would incur any
material withdrawal liability under Title IV of ERISA.
(c) UNION WELFARE FUNDS. Neither the Company, SHI nor any of
their ERISA Affiliates has incurred any unsatisfied liability based on
withdrawal from any union-sponsored multiemployer welfare benefit fund
maintained pursuant to any Welfare Plan to which the Company, SHI or any of
their ERISA Affiliates contributes pursuant to the terms of a collective
bargaining agreement.
(d) RETIREE WELFARE BENEFITS PLANS. Except as set forth in
Schedule 4.11(d) and pursuant to the provisions of COBRA, neither the Company,
SHI nor any of their ERISA Affiliates maintains any Cable Employee Plan or
Company Employee Plan that provides benefits described in Section 3(l) of ERISA
to any former employees or retirees of Cable. Any disclosure in Schedule
4.11(d) shall indicate the present value of accumulated plan liabilities
calculated in a manner consistent with FAS 106 and actual annual expense for
such benefits for each of the last two years.
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(e) PENSION PLANS. All Company Employee Plans that are Pension
Plans intended to be qualified under Section 401 of the Code are so qualified
and have been so qualified during the period since their adoption; each trust
created under any such Plan is exempt from tax under Section 501(a) of the Code
and has been so exempt since its creation. A true and correct copy of the most
recent determination letter from the Internal Revenue Service (the "IRS")
regarding such qualified status for each such Plan has been, or within five days
following the date of this Agreement will be, delivered to Acquiror.
(f) PROHIBITED TRANSACTIONS AND FIDUCIARY RESPONSIBILITY.
Except with respect to any Prohibited Transaction relating to any Multiemployer
Plan where such Prohibited Transaction has no relation to the Company, SHI or
any of their Subsidiaries, none of the Company Employee Plans has participated
in, engaged in or been a party to any Prohibited Transaction which could result
in the imposition of a material liability upon the Company, SHI or any of their
Subsidiaries. To the knowledge of the Company and SHI, no officer, director or
employee of the Company, SHI or any of their Subsidiaries has committed a
material breach of any responsibility or obligation imposed upon fiduciaries by
Title I of ERISA with respect to any Company Employee Plan.
(g) REPORTING AND DISCLOSURE. Except with respect to any
violation relating to any Multiemployer Plan where such violation has no
relation to the Company, SHI or any of their ERISA Affiliates, there are no
material violations of any reporting or disclosure requirements under ERISA with
respect to any Company Employee Plan.
(h) FUNDING OBLIGATIONS. No Company Employee Plan that is a
Pension Plan subject to Title IV of ERISA (other than any Multiemployer Plan)
has (i) incurred an Accumulated Funding Deficiency, whether or not waived, (ii)
an accrued benefit obligation that exceeds the assets of the plan by more than
$50,000, determined as of the last applicable annual valuation date, using the
actuarial methods, factors and assumptions used for the most recent actuarial
report with respect to such plan, (iii) been a plan with respect to which a
Reportable Event has occurred other than a Reportable Event that would not have
a Material Adverse Effect, or (iv) been a plan with respect to which any
termination liability to the PBGC has been or is reasonably expected to be
incurred or with respect to which there exist conditions or events which have
occurred presenting a significant risk of termination by the PBGC. Neither the
Company, SHI or any ERISA Affiliate of either of them has engaged in, or is a
successor or parent corporation to an entity that has engaged in a transaction
described in Section 4069 of ERISA.
(i) LIENS AND PENALTIES. Neither the Company, SHI nor any of
their ERISA Affiliates has any liability with respect to any Company Employee
Plan (i) for the termination of any Company Employee Plan that is a single
employer plan under ERISA Section 4062 or a multiple employer plan under ERISA
Section 4063, (ii) for any lien imposed under Section 302(f) of ERISA or Section
412(n) of the Code, (iii) for any interest payments required under Section
302(e) of ERISA or Section 412(m) of the Code, (iv) for any excise tax imposed
by Sections 4971, 4972, 4974, 4975, 4976, 4977, 4978, 4978B, 4979, 4979A, 4980
or 4980B of the Code, or (v) for any failure to make any minimum funding
contributions under Section 302 (c)(11) of ERISA or Section 412(c)(11) of the
Code. None of the Company, SHI or any ERISA
-23-
Affiliate of either of them has incurred, or reasonably expects to incur prior
to the Effective Time any liability under Title IV of ERISA arising in
connection with the termination of any plan covered or previously covered by
Title IV of ERISA.
(j) COBRA. The Company, SHI and their ERISA Affiliates have
complied in all material respects with the provisions of COBRA with respect to
all Cable Employee Plans that are Group Health Plans.
(k) ADDITIONAL BENEFITS. No Cable Employee shall accrue or
receive additional benefits, service or accelerated rights to payments of
benefits under any Company Plan, including the right to receive any parachute
payment, as defined in Section 280G of the Code, or become entitled to
severance, termination allowance or similar payments as a result of the
transactions contemplated by this Agreement. No Cable Employee is covered by
any severance, termination, allowance or similar plan or program (whether or not
written).
(l) CLAIMS. Other than claims for benefits in the ordinary
course, there is no claim pending, or to the knowledge of the Company or SHI
threatened, involving any Company Plan by any person against such plan or the
Company, SHI or any of their Subsidiaries. There is no pending, or to the
knowledge of the Company or SHI threatened, proceeding involving any Company
Employee Plan before the IRS, the United States Department of Labor or any other
governmental authority.
(m) COMPLIANCE WITH LAWS; CONTRIBUTIONS. Each Company Plan and
Company Benefit Arrangement has at all times prior hereto been maintained in all
material respects, by its terms and in operation, in accordance with all
applicable laws. The Company, SHI and their ERISA Affiliates have made full and
timely payment of all amounts required to be contributed under the terms of each
Company Plan and applicable law or required to be paid as expenses under such
Company Plan, and the Company, SHI and their ERISA Affiliates shall continue to
do so through the Closing, except as the Company, SHI and Acquiror may otherwise
agree.
4.12 LABOR MATTERS.
(a) Except as set forth on Schedule 4.12(a), no Cable Subsidiary
or Cable Partnership is party to any employment contract with any employee or
any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of any Cable
Subsidiary or Cable Partnership. All employees of Cable serve at will.
(b) Except as set forth on Schedule 4.12(b), (i) no employees of
any of the Cable Subsidiaries or Cable Partnerships are represented by any labor
organization and (ii) as of the date hereof, no labor organization or group of
employees of any of the Cable Subsidiaries or Cable Partnerships has made a
pending demand for recognition or certification, and there are no representation
or certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be brought
or filed, with the NLRB or any other labor relations tribunal or authority. To
the knowledge of the Company,
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there are no formal organizing activities involving a material number of
employees of the Cable Subsidiaries or Cable Partnerships pending with, or
threatened by, any labor organization.
(c) Except as would not result in a Material Adverse Effect on
Cable, (i) there are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations or material grievances or other material labor disputes pending or,
to the knowledge of the Company, threatened against or involving any of the
Cable Subsidiaries or Cable Partnerships and (ii) there are no unfair labor
practice charges, grievances or complaints pending or, to the knowledge of the
Company, threatened by or on behalf of any employee or group of employees of any
of the Cable Subsidiaries or Cable Partnerships.
4.13 MID-TENNESSEE ACQUISITION. Broadcasting has entered into the
Mid-Tennessee Agreement with Mid-Tennessee Cable Limited Partnership, a
Tennessee limited partnership ("Mid-Tennessee"), pursuant to which Broadcasting
has agreed, on the terms and subject to the conditions set forth therein, to
acquire the assets of Mid-Tennessee used in Mid-Tennessee's Athens, Tennessee
cable cluster, its Greenbrier, Tennessee cable cluster and its Xxxxxxxx,
Tennessee cable cluster (collectively, the "Mid-Tennessee Business"). To the
knowledge of the Company and SHI based solely on information provided to the
Company and SHI to date by Mid-Tennessee, the Franchises comprising the
Mid-Tennessee Business have an aggregate of approximately 33,850 Basic
Subscribers. The Company has delivered to Acquiror a draft of the Mid-Tennessee
Agreement which is not different than the Mid-Tennessee Agreement in any
material respect.
4.14 ENVIRONMENTAL MATTERS. (a) There are no Environmental Liabilities
of Cable that have had or may reasonably be expected to have a Material Adverse
Effect on Cable.
(b) There has been no environmental assessment investigation,
study, audit, test, review or other analysis conducted of which the Company has
knowledge in relation to the current or prior business of the Cable Subsidiaries
or Cable Partnerships or any property or facility now or previously owned or
leased by the Cable Subsidiaries or Cable Partnerships which has not been
delivered to Acquiror prior to the date hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
Acquiror represents and warrants to the Company and SHI as follows:
5.01 ORGANIZATION AND AUTHORITY. Acquiror is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation. Acquiror has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to have such power or authority would not
have a Material Adverse Effect on Acquiror and its Subsidiaries taken as a
whole. Acquiror has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
Subject to the items referred to in
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Section 5.03, all necessary action, corporate or otherwise, required to have
been taken by or on behalf of Acquiror by applicable law, its charter
documents or otherwise to authorize (i) the approval, execution and delivery
on behalf of it of this Agreement and (ii) the performance by it of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby has been taken, except that this Agreement must be
approved by the stockholders of Acquiror and the Board of Directors of
Acquiror must increase the size of such Board and elect the designee(s) of the
Trust to fill the vacancy or vacancies so created. This Agreement and each
other Transaction Agreement to which Acquiror is or will be a party
constitutes or will constitute, as the case may be, a valid and binding
agreement of Acquiror, enforceable against it in accordance with its terms,
subject to (i) the Enforceability Exceptions and (ii) in the case of the Board
Representation Agreement, to the Rules and Regulations regarding
cross-ownership of cable television systems and television stations, to the
extent that such Rules and Regulations may prohibit the Trust from designating
a director or observer on the Comcast Board of Directors. Acquiror has
delivered to the Company true and complete copies of its Articles of
Incorporation and Bylaws as in effect on the date hereof.
5.02 NO BREACH. The execution and delivery of this Agreement by
Acquiror do not and the consummation of the transactions contemplated hereby by
Acquiror will not (i) violate or conflict with its Articles of Incorporation or
Bylaws or (ii) constitute a breach or default (or an event which with notice or
lapse of time or both would become a breach or default) of, or give rise to any
third-party right of termination, cancellation, modification or acceleration
under, or otherwise require notice or approval under, any agreement,
understanding or undertaking to which Acquiror or any of its Subsidiaries is a
party or by which any of them is bound, or give rise to any Lien on any of their
properties, except where such breach, default, Lien, third-party right,
cancellation, modification or acceleration would not have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a whole or materially interfere
with or delay the transactions contemplated hereby, or (iii) subject to
obtaining the approvals and making the filings described in Section 5.03 hereof,
constitute a violation of any statute, law, ordinance, rule, regulation,
judgment, decree, order or writ of any judicial, arbitral, public, or
governmental authority having jurisdiction over Acquiror or any of its
Subsidiaries or any of their respective properties or assets, except as would
not have a Material Adverse Effect on Acquiror and its Subsidiaries taken as a
whole. Neither Acquiror nor any of its Subsidiaries is a party to or bound by
any agreement that restricts or purports to restrict the ability of any of them
or any affiliate of them to engage in any location in the business of cable
television, except for such restrictions that would not have a Material Adverse
Effect on Acquiror and its Subsidiaries taken as a whole or materially interfere
with or delay the transactions contemplated hereby.
5.03 CONSENTS AND APPROVALS. Neither the execution and delivery of
this Agreement by Acquiror nor the consummation of the transactions contemplated
hereby by Acquiror will require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory authority,
except (i) for filings required under the Securities Act, (ii) for filings
required under the Exchange Act, (iii) for filings required under state
securities or "blue sky" laws, (iv) for notification pursuant to the HSR Act and
expiration or termination of the waiting period thereunder, (v) for the filing
of the Certificate of Merger as set forth in Article I hereof, (vi) for any
waiver, consent or declaratory ruling by the FCC with respect to
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the Rules and Regulations regarding cross-ownership of cable television
systems and television stations, to the extent that such Rules and Regulations
may prohibit (A) the Trust from designating a director or observer on the
Comcast Board of Directors or (B) Xxxxx Xxxxxxx from serving on the Board of
Directors of Xxxxxx Broadcasting Company and (vii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not have a Material Adverse Effect on Acquiror and its
Subsidiaries taken as a whole or prevent Acquiror from performing its
obligations under this Agreement without having a Material Adverse Effect on
Acquiror and its Subsidiaries taken as a whole or materially interfere with or
delay the transactions contemplated hereby.
5.04 APPROVAL OF THE BOARD; VOTE REQUIRED. The Board of Directors of
Acquiror has, by resolutions duly adopted at a meeting duly called and held,
unanimously approved and adopted this Agreement, the Merger and the other
transactions contemplated hereby on the material terms and conditions set forth
herein. The affirmative vote or action by written consent of a majority of the
votes that holders of the outstanding shares of Acquiror A Stock, Acquiror B
Stock and Acquiror Common Stock are entitled to cast voting as a single class is
the only vote of the holders of any class or series of the capital stock of
Acquiror necessary to approve this Agreement and the Merger under applicable law
and the Articles of Incorporation of Acquiror or the By-Laws of Acquiror.
5.05 CAPITALIZATION.
(a) As of the date hereof, the authorized capital stock of
Acquiror consists of: 200,000,000 shares of Class A Common Stock, par value
$1.00 per share ("Acquiror A Stock"), 500,000,000 Shares of Class A Special
Common Stock, par value $1.00 per share ("Acquiror Common Stock"), 50,000,000
Shares of Class B Common Stock, par value $1.00 per share ("Acquiror B Stock"),
and 20,000,000 Shares of Preferred Stock ("Acquiror Preferred Stock"). As of
September 30, 1995, there were issued and outstanding the following shares of
such stock: 39,103,350 shares of Acquiror A Stock, 192,028,651 shares of
Acquiror Common Stock and 8,786,250 shares of Acquiror B Stock. All such
outstanding shares are duly authorized, validly issued and fully paid and
nonassessable. There are no preemptive or other similar rights available to the
existing holders of the capital stock of Acquiror. As of the date hereof, and
other than as set forth on Schedule 5.05(a) and in connection with the
transactions contemplated by this Agreement, there are no outstanding options,
warrants, rights, puts, calls, commitments, or other contracts, arrangements, or
understandings issued by or binding upon Acquiror or any of its Subsidiaries
requiring, and there are no outstanding debt or equity securities of Acquiror or
any of its Subsidiaries which upon the conversion, exchange or exercise thereof
would require the issuance, sale or transfer by Acquiror of any new or
additional equity interests in Acquiror (or any other securities of Acquiror or
any of its Subsidiaries which, with notice, lapse of time or payment of monies,
are or would be convertible into or exercisable or exchangeable for equity
interests in Acquiror). Except as described on Schedule 5.05(a), there are no
voting trusts or other agreements or understandings to which Acquiror or any of
its Subsidiaries is a party with respect to the voting of capital stock of
Acquiror.
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(b) The shares of Acquiror Common Stock to be issued in the
Merger, upon their issuance in accordance with the terms hereof, will be duly
authorized, validly issued, fully paid and nonassessable.
5.06 SEC REPORTS. Acquiror has filed all required forms, reports and
documents with the SEC since January 1, 1993 (collectively, "Acquiror's SEC
Reports") and delivered or made available to the Company copies thereof.
Acquiror's SEC Reports have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. As of
their respective dates, none of the Acquiror's SEC Reports, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated or incorporated by
reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.07 FINANCIAL STATEMENTS. The (i) audited consolidated financial
statements of Acquiror contained in Acquiror's Annual Report on Form 10-K for
the year ended December 31, 1994, and (ii) unaudited condensed consolidated
financial statements of Acquiror contained in Acquiror's Quarterly Report on
Form 10-Q for the six months ended June 30, 1995 ("Acquiror's Form 10-Q"), were
prepared in accordance with GAAP and present fairly in all material respects
Acquiror's consolidated financial position and the results of its consolidated
operations and its consolidated cash flows as of the relevant dates thereof and
for the periods covered thereby (subject to normal year-end adjustments in the
case of the unaudited interim financial statements).
5.08 ABSENCE OF CERTAIN CHANGES. Since the date of the balance sheet
of Acquiror included in Acquiror's Form 10-Q, there has not been any (i)
material adverse change in the financial position, liabilities, assets or
business of Acquiror and its Subsidiaries taken as a whole except for material
adverse changes due to general economic or industry-wide conditions, or (ii)
other events or conditions of any character that, individually or in the
aggregate, have or would reasonably be expected to have a Material Adverse
Effect on the financial position, liabilities, assets or business of Acquiror
and its Subsidiaries taken as a whole or on the ability of Acquiror to perform
its material obligations under this Agreement and the Transaction Agreements to
which it is or will be a party.
5.09 BROKERS AND FINDERS. Neither Acquiror nor any of its officers,
directors, employees or affiliates has employed any investment banker, broker or
finder or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated herein, except that
Acquiror has employed Xxxxxx Brothers Inc. as its financial advisor in
connection with the transactions contemplated hereby and for whose fees and
expenses Acquiror is responsible.
5.10 FULL DISCLOSURE. All of the statements made by Acquiror in this
Agreement (including, without limitation, the representations and warranties
made by Acquiror herein and in the schedules and exhibits hereto which are
incorporated by reference herein and which constitute an integral part of this
Agreement) do not (and on the Closing Date will not) include or contain any
untrue statement of a material fact, and do not (and on the Closing Date will
not)
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omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
5.11 CERTAIN TAX MATTERS. Acquiror is not, and on the Closing Date
will not be, an investment company within the meaning of Section
368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
ARTICLE VI
OTHER AGREEMENTS
6.01 NO SOLICITATION.
(a) Neither the Company nor any of its Subsidiaries, nor any of
its or their officers, directors, representatives or agents shall, directly or
indirectly, knowingly encourage, solicit, initiate or, except as otherwise
provided in this Section 6.01(a), participate in any way in discussions or
negotiations with or knowingly provide any confidential information to, any
corporation, partnership, person or other entity or group (other than Acquiror
or any affiliate or associate of Acquiror and their respective directors,
officers, employees, representatives and agents) concerning any merger of the
Company or Cable, the sale of any substantial part of the assets of Cable, the
sale of shares of the capital stock of the Company, the capital stock of the
Cable Subsidiaries or the interests in the Cable Partnership or similar
transactions involving Cable; PROVIDED, HOWEVER, that nothing contained in
this Section 6.01(a) shall prohibit the Board of Directors of the Company from
(i) taking and disclosing to the Company's stockholders a position with respect
to a tender offer for Company Common Stock by a third party pursuant to Rules
14d-9 and 14e-2 promulgated under the Exchange Act, (ii) making such disclosure
to the Company's stockholders as, in the judgment of the Board of Directors of
the Company, with the advice of outside counsel, may be required under
applicable law, or (iii) responding to any unsolicited proposal or inquiry by
advising the person making such proposal or inquiry of the terms of this Section
6.01(a). The Company will promptly communicate to Acquiror its receipt of any
proposal or inquiry in respect of any such transaction or its receipt of any
request to provide any such information or hold any such negotiations or
discussions, and will furnish Acquiror with a true and complete copy of any
proposal that the Board of Directors of the Company has determined is a Superior
Proposal and will keep Acquiror informed on a timely basis as to the status of
and details regarding negotiations, and the Company's intentions, with respect
thereto. Notwithstanding anything to the contrary set forth herein, the Board
of Directors of the Company may respond to any Superior Proposal and may provide
information to, and negotiate with, any person, group or entity in connection
therewith if the Board of Directors of the Company determines, with the advice
of outside counsel, that it may be required to do so in the exercise of its
fiduciary duties. For purposes hereof, "Superior Proposal" means a BONA FIDE,
written, unsolicited proposal relating to a possible transaction described in
this Section 6.01(a) by any person other than Acquiror that, in the reasonable
good faith judgment of the Board of Directors of the Company, with the advice of
outside financial advisers, is reasonably likely to be consummated and is more
favorable to the stockholders of the Company than the terms of the transactions
contemplated by this Agreement.
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(b) Acquiror will promptly notify the Company and provide it
with pertinent information in the event that Acquiror or any of its
Subsidiaries, or any of its or their officers, directors, representatives or
agents (i) solicits, initiates or participates in any way in discussions or
negotiations with, or provides any confidential information to, any
corporation, partnership, person or other entity or group (other than the
Company or any affiliate or associate of the Company and their respective
directors, officers, employees, representatives and agents) concerning any
merger, sale of substantially all of the assets, or sale of shares of the
capital stock of Acquiror, or similar transaction involving Acquiror, or (ii)
receives any proposal or inquiry in respect of any such transaction or any
request to provide any such information or hold any such negotiations or
discussions.
6.02 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by
this Agreement, during the period from the date hereof to the Closing Date, the
Company shall conduct its operations in the ordinary course of business
consistent with past practices and shall not without the prior written consent
of Acquiror:
(a) amend its Certificate of Incorporation or Bylaws;
(b) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, except for dividends declared and paid consistent
with the Company's past practice (except that (i) any Subsidiary of the
Company other than a Cable Subsidiary or a Cable Partnership may declare
and pay dividends that are payable to the Company or to any other
Subsidiary of the Company and (ii) any Cable Subsidiary or Cable
Partnership may declare and pay dividends in cash and cash equivalents
that are payable to the Company or to any other Subsidiary of the
Company), or redeem or otherwise acquire any of its securities;
(c) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu
of or in substitution of any shares of its capital stock;
(d) (i) create, incur or assume any indebtedness not currently
outstanding (including obligations in respect of capital leases), (ii)
assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person except to the extent the Company is released therefrom as
described in Section 2.02 or (iii) make any loans, advances or capital
contributions to, or investments in, any person other than a Subsidiary;
(e) except pursuant to the Incentive Plan and the Directors Plan,
or options or awards outstanding thereunder, issue, sell, deliver or agree
or commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any stock of any class or any other securities or
amend any of the terms of any securities outstanding on the date hereof;
or
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(f) terminate, amend, modify or waive compliance with any of the
terms or conditions of the Contribution Agreement directly or indirectly
respecting the Retained Assets or the Retained Liabilities or affecting
the rights or obligations of the Company thereunder from and after the
Effective Time.
(g) take, or agree in writing or otherwise to take, any of the
foregoing actions or any actions that would (i) subject to Section 7.06
hereof, make any representation or warranty of the Company or SHI
contained in this Agreement materially untrue or incorrect as of the date
when made or as of the Closing Date, (ii) result in any of the conditions
to Closing in Article VII of this Agreement not being satisfied or (iii)
subject to Section 7.06 hereof, be materially inconsistent with the terms
of this Agreement or the transactions contemplated hereby.
6.03 CONDUCT OF BUSINESS OF CABLE. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing Date, the
Company shall cause the Cable Subsidiaries and Cable Partnerships to conduct
their operations according to the ordinary and usual course of business
consistent with past practices. Without limiting the generality of the
foregoing, except as otherwise contemplated by this Agreement, without the prior
written consent of Acquiror, the Company shall not permit any of the Cable
Subsidiaries or Cable Partnerships to:
(a) amend its charter or bylaws or partnership agreement;
(b) issue, sell, deliver or agree or commit to issue, sell or
deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of
any class or any other securities or partnership interests or amend any of
the terms of any securities outstanding on the date hereof;
(c) acquire, sell, lease or dispose of any assets material to
Cable, other than (i) sales of inventory and equipment in the ordinary and
usual course of business consistent with past practice, (ii) the
acquisition of assets related to the Mid-Tennessee Business in accordance
with Section 6.26, (iii) in connection with the proposed joint venture
with Hyperion Telecommunications of Tennessee, Inc., a Delaware
corporation in accordance with Section 6.29 and (iv) the acquisition of
the River City Interest in accordance with Section 6.28;
(d) mortgage, pledge or subject to any lien, lease, security
interest or other charge or encumbrance, any of its properties or assets,
tangible or intangible, material to Cable;
(e) fail to make Ordinary Course Expenditures on property, plant
and equipment;
(f) without the consent of Acquiror, which shall not be withheld
or delayed unreasonably, (i) except as required by applicable law or as
disclosed in
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writing to Acquiror prior to the date hereof, implement any rate change,
retiering or repackaging of cable television programming offered by Cable,
(ii) except as disclosed in writing to Acquiror prior to the date hereof,
make any cost-of-service or hardship election under the Rules and
Regulations adopted under the Cable Television Consumer Protection and
Competition Act of 1992, or (iii) amend any Franchise or make or agree to
make any payments or commitments, including commitments to make future
capital improvements or provide future services, in connection with
obtaining any authorization, consent, order or approval of any
governmental authority necessary for the transfer of control of any
Franchise;
(g) increase the amount of any cash compensation payable to any
employee if such increase would be inconsistent with past practices or
would cause the aggregate cash compensation payable to all employees on an
annualized basis to exceed by more than 5% percent the cash compensation
payable by Cable to all employees on an annualized basis as of June 30,
1995 (provided that this Section 6.03(g) shall not apply with respect to
stay bonuses paid to Cable employees prior to Closing);
(h) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, or redeem or otherwise acquire any of its
securities, except as provided in Section 6.25;
(i) fail to maintain inventory at customary levels; or
(j) take, or agree in writing or otherwise to take, any of the
foregoing actions or any actions that would (i) subject to Section 7.06
hereof, make any representation or warranty of the Company or SHI
contained in this Agreement materially untrue or incorrect as of the date
when made or as of the Closing Date, (ii) result in any of the conditions
to Closing in Article VII of this Agreement not being satisfied or (iii)
subject to Section 7.06 hereof, be materially inconsistent with the terms
of this Agreement or the transactions contemplated hereby.
6.04 CONDUCT OF BUSINESS OF ACQUIROR. Except as contemplated by this
Agreement, during the period from the date hereof to the Closing Date, (a)
Acquiror will not amend its Articles of Incorporation in any manner that
requires a class vote of the Acquiror Common Stock except that Acquiror may
amend its Articles of Incorporation as provided in Schedule 6.04 (the "Permitted
Amendments") and (b) neither Acquiror nor any of its Subsidiaries will, without
the prior written consent of the Company, take, or agree in writing or otherwise
to take, any actions that would (i) subject to Section 7.05, make any
representation or warranty of Acquiror contained in this Agreement materially
untrue or incorrect as of the date when made or as of the Closing Date, (ii)
result in any of the conditions to Closing in Article VII of this Agreement not
being satisfied or (iii) subject to Section 7.05, be materially inconsistent
with the terms of this Agreement or the transactions contemplated hereby.
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6.05 ACCESS TO INFORMATION. Between the date of this Agreement and the
Effective Time, (a) the Company will (i) give Acquiror and its authorized
representatives reasonable access, during regular business hours upon
reasonable notice, to all offices, warehouses and other facilities of the
Company and its Subsidiaries and to all books and records of the Company and
its Subsidiaries, (ii) permit Acquiror to make such reasonable inspections of
the offices, warehouses, facilities, books and records described in clause (i)
as it may require, (iii) cause its officers and those of its Subsidiaries to
furnish Acquiror with such financial and operating data and other information
with respect to the business and properties of the Company and Cable as
Acquiror may from time to time reasonably request and (iv) permit Acquiror to
conduct, at Acquiror's expense environmental tests and assessments and (b)
Acquiror will keep the Company informed as to material developments affecting
Acquiror and its Subsidiaries. All such access and information obtained by
Acquiror and its authorized representatives shall be subject to the terms and
conditions of the letter agreement between the Company and Acquiror dated July
19, 1995 (the "Confidentiality Agreement"). All such information obtained by
the Company and its authorized representatives, and, after the Closing, all
other information regarding Cable which SHI or any of its Subsidiaries
possesses or has access to (including pursuant to Section 6.18), shall be
treated in accordance with the terms of the Confidentiality Agreement as if
such agreement obligated such Persons to hold such information confidential on
the same basis as set forth therein MUTATIS MUTANDIS and Acquiror were a
beneficiary of such obligations.
6.06 SEC FILINGS.
(a) The Company, SHI and Acquiror shall prepare jointly and as
soon as practicable after the date of this Agreement file with the SEC a joint
proxy statement/registration statement (the "Preliminary Joint Proxy
Statement/Prospectus") comprising preliminary proxy materials of the Company and
Acquiror under the Exchange Act with respect to the Merger and Registration
Statements on Form S-4 and preliminary prospectuses of SHI and Acquiror under
the Securities Act with respect to the Acquiror Common Stock to be issued in the
Merger and the SHI Common Voting Shares and the SHI Class A Common Shares to be
issued in connection with the Contribution and the Distribution, and will
thereafter use their respective best efforts to respond to any comments of the
SEC with respect thereto and to cause a definitive joint proxy
statement/registration statement (including all supplements and amendments
thereto, the "Joint Proxy Statement/Prospectus") and proxy to be mailed to the
Company's and Acquiror's stockholders as promptly as practicable.
(b) As soon as practicable after the date hereof, the Company, SHI
and Acquiror shall prepare and file any other filings required to be filed by
each under the Exchange Act or any other federal or state laws relating to the
Merger, the Contribution and the Distribution, and the other transactions
contemplated hereby (collectively "Other Filings"), including, without
limitation, in the case of SHI, a registration statement on Form 8-A under the
Exchange Act with respect to the SHI Common Shares, and will use their best
efforts to respond to any comments of the SEC or any other appropriate
government official with respect thereto.
(c) The Company and SHI, on the one hand and Acquiror, on the
other, shall cooperate with each other and provide to each other all information
necessary in order to prepare the Preliminary Joint Proxy Statement/Prospectus,
the Joint Proxy Statement/Prospectus and the
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Other Filings (collectively "SEC Filings") and shall provide promptly to the
other party any information that such party may obtain that could necessitate
amending any such document.
(d) The Company and Acquiror will notify the other party promptly
of the receipt of any comments from the SEC or its staff or any other government
official and of any requests by the SEC or its staff or any other government
official for amendments or supplements to any of the SEC Filings or for
additional information and will supply the other party with copies of all
correspondence between the Company or any of its representatives, SHI or any of
its representatives, or Acquiror and any of its representatives, as the case may
be, on the one hand, and the SEC or its staff or any other government official,
on the other hand, with respect thereto. If at any time prior to the Effective
Time, any event shall occur that should be set forth in an amendment of, or a
supplement to, any of the SEC Filings, the Company, SHI and Acquiror agree
promptly to prepare and file such amendment or supplement and to distribute such
amendment or supplement as required by applicable law, including, in the case of
an amendment or supplement to the Joint Proxy Statement/Prospectus, mailing such
supplement or amendment to the Company's and Acquiror's stockholders.
(e) The information provided and to be provided by the Company,
SHI and Acquiror for use in SEC Filings shall at all times prior to the
Effective Time be true and correct in all material respects and shall not omit
to state any material fact required to be stated therein or necessary in order
to make such information not false or misleading, and the Company, SHI and
Acquiror each agree to correct any such information provided by it for use in
the SEC Filings that shall have become false or misleading. Each SEC Filing,
when filed with the SEC or any government official, shall comply in all material
respects with all applicable requirements of law.
(f) Acquiror shall indemnify, defend and hold harmless the Company
and SHI, each of their officers and directors and each other person, if any, who
controls any of the foregoing within the meaning of the Exchange Act, against
any losses, claims, damages or liabilities, joint or several, to which any of
the foregoing may become subject under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) an untrue statement or
alleged untrue statement of a material fact contained in any SEC Filing or (ii)
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, PROVIDED that
Acquiror was responsible for such misstatement or omission, and upon request
from time to time Acquiror shall reimburse the Company, SHI and each such
officer, director and controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action or enforcing this indemnity.
(g) SHI (and, if this Agreement is terminated prior to the
consummation of the Merger, the Company, jointly and severally with SHI) shall
indemnify, defend and hold harmless Acquiror, each of its officers and directors
and each other person, if any, who controls any of the foregoing within the
meaning of the Exchange Act, against any losses, claims, damages or liabilities,
joint or several, to which any of the foregoing may become subject under
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the Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) an untrue statement or alleged untrue statement of a
material fact contained in any SEC Filing or (ii) the omission or alleged
omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, PROVIDED that the Company or SHI was responsible
for such misstatement or omission, and upon request from time to time SHI
(and, if this Agreement is terminated prior to the consummation of the Merger,
the Company) shall reimburse Acquiror and each such officer, director and
controlling person for any legal or any other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss,
claim, damage, liability or action or enforcing this indemnity.
(h) For the purpose of this Section 6.06, the term "Indemnifying
Party" shall mean the party having an obligation hereunder to indemnify the
other party pursuant to this Section 6.06, and the term "Indemnified Party"
shall mean the party having the right to be indemnified pursuant to this Section
6.06. Whenever any claim shall arise for indemnification under this Section
6.06, the Indemnified Party shall promptly notify the Indemnifying Party in
writing of such claim and, when known, the facts constituting the basis for such
claim (in reasonable detail). Failure by the Indemnified Party to so notify the
Indemnifying Party shall not relieve the Indemnifying Party of any liability
hereunder except to the extent that such failure prejudices the Indemnifying
Party.
(i) After such notice, if the Indemnifying Party undertakes to
defend any such claim, then the Indemnifying Party shall be entitled, if it so
elects, to take control of the defense and investigation with respect to such
claim and to employ and engage attorneys of its own choice and reasonably
acceptable to the Indemnified Party to handle and defend the same, at the
Indemnifying Party's cost, risk and expense, upon written notice to the
Indemnified Party of such election, which notice acknowledges the Indemnifying
Party's obligation to provide indemnification hereunder. The Indemnifying Party
shall not settle any third-party claim that is the subject of indemnification
without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld; PROVIDED, HOWEVER, that the Indemnifying Party may
settle a claim without the Indemnified Party's consent if such settlement (i)
makes no admission or acknowledgment of liability or culpability with respect to
the Indemnified Party, (ii) includes a complete release of the Indemnified Party
and (iii) does not require the Indemnified Party to make any payment or forego
or take any action or otherwise materially adversely affect the Indemnified
Party. The Indemnified Party shall cooperate in all reasonable respects with
the Indemnifying Party and its attorneys in the investigation, trial and defense
of any lawsuit or action with respect to such claim and any appeal arising
therefrom (including the filing in the Indemnified Party's name of appropriate
cross claims and counterclaims). The Indemnified Party may, at its own cost,
participate in any investigation, trial and defense of such lawsuit or action
controlled by the Indemnifying Party and any appeal arising therefrom. If,
after receipt of a notice of claim pursuant to Section 6.06(i), the Indemnifying
Party does not undertake to defend any such claim the Indemnified Party may, but
shall have no obligation to, contest any lawsuit or action with respect to such
claim and the Indemnifying Party shall be bound by the result obtained with
respect thereto by the Indemnified Party (including, without limitation, the
settlement thereof without the consent of the Indemnifying Party). If there are
one or more legal
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defenses available to the Indemnified Party that conflict with those available
to the Indemnifying Party or there is otherwise an actual or potential
conflict of interest, the Indemnified Party shall have the right, at the
expense of the Indemnifying Party, to assume the defense of the lawsuit or
action; PROVIDED, HOWEVER, that the Indemnified Party may not settle such
lawsuit or action without the consent of the Indemnifying Party, which consent
shall not be unreasonably withheld.
(j) If the indemnification provided for in this Section 6.06 shall
for any reason be unavailable to the Indemnified Party in respect of any loss,
claim, damage or liability, or action referred to herein, then the Indemnifying
Party shall, in lieu of indemnifying the Indemnified Party, contribute to the
amount paid or payable by the Indemnified Party as a result of such loss, claim,
damage or liability, or action in respect thereof, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and the Indemnified Party on the other with respect to the statements or
omissions that resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to whether the untrue or alleged
untrue statement or omission of a material fact related to information supplied
by the Indemnifying Party on the one hand or the Indemnified Party on the other,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by the Indemnified Party as a result of the loss, claim, damage
or liability, or action in respect thereof, referred to above in this paragraph
shall be deemed to include, for purposes of this paragraph, any legal or other
expenses reasonably incurred by the Indemnified Party in connection with
investigating or defending any such action or claim or enforcing this provision.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
6.07 REASONABLE BEST EFFORTS. Subject to the fiduciary duties of the
Board of Directors of the Company, and subject to the other terms and conditions
hereof, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement in the most expeditious manner practicable, including but not
limited to the satisfaction of all conditions to the Merger and seeking to
remove promptly any injunction or other legal barrier that may prevent or delay
such consummation. Each of the parties shall promptly notify the other whenever
a material consent is obtained and shall keep the other informed as to the
progress in obtaining such material consents.
6.08 PUBLIC ANNOUNCEMENTS. No party hereto shall make any public
announcements or otherwise communicate with any news media with respect to this
Agreement or any of the transactions contemplated hereby without such prior
consultation with the other parties as to the timing and contents of any such
announcement as may be reasonable under the circumstances; PROVIDED, HOWEVER,
that nothing contained herein shall prevent any party from promptly making all
filings with governmental authorities as may, in its judgment, be required or
advisable in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
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6.09 BOARD RECOMMENDATIONS. The Joint Proxy Statement/Prospectus shall
include the recommendations of the Boards of Directors of the Company and
Acquiror that their respective stockholders approve the Merger and related
transactions; PROVIDED, HOWEVER, that the Board of Directors of the Company
may modify or withdraw its recommendation if it determines, with the advice of
outside counsel, that it may be required to do so in the exercise of its
fiduciary duties as a result of a Superior Proposal.
6.10 TAX MATTERS.
(a) SHI INDEMNIFICATION OBLIGATIONS.
(i) COMPANY TAXES. SHI shall be liable for, shall pay and
shall indemnify and hold Acquiror and its Subsidiaries harmless, on an
After-Tax Basis, against (A) any Tax of the Company or any Subsidiary of
the Company related to the Tax Indemnification Period and (B) any
Restructuring Tax (including, without limitation, court costs and
reasonable professional fees incurred in the investigation, defense or
settlement of any claims covered by this indemnity). For this purpose,
the income attributable to the Pre-Closing Tax Period shall be determined
based on the permanent books and records maintained for federal income tax
purposes and in the case of any Taxes based upon or related to income, the
Taxes attributable to such period shall be the amount that would be
payable if the relevant period ended on the Closing Date; in the case of
any Taxes other than Taxes based upon or related to income, the amount of
Taxes attributable to the Pre-Closing Tax Period shall be calculated by
reference to the number of days in such period ending on the Closing Date
as compared to the total number of days in the entire Taxable period.
Except as specifically provided in this Section 6.10, any Tax Sharing
Agreement or policy of the Company Group shall be terminated at the
Effective Time, and the Surviving Corporation and Cable shall have no
obligation under such agreements after the Effective Time.
(ii) REFUNDS AND CREDITS OF COMPANY TAXES. SHI shall be
entitled to (and shall indemnify and hold harmless Acquiror and its
Subsidiaries against any subsequent disallowance of) any credits or
refunds of Taxes of the Company or any Subsidiary of the Company payable
with respect to any Pre-Closing Tax Period, except that Acquiror shall be
entitled to any such credits or refunds that are reflected as consolidated
current assets of Cable for purposes of the determination of the Cable Net
Liabilities Amount.
(iii) CONTROL OF TAX PROCEEDINGS.
(A) Except as provided in Section 6.10(a)(iii)(C), the
parties agree that SHI shall be designated as the agent for the
Company Group pursuant to Section 1.1502-77(d) of the Treasury
Regulations. With respect to any similar provisions of applicable
state income or franchise tax laws, to the extent permitted by law
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and as requested by SHI, SHI shall be designated as the agent for
the Company Group only if the relevant Taxable year ends on or
before the Closing Date and does not include a period ending after
the Closing Date; provided, however, that (1) SHI shall provide
Acquiror with instructions regarding the manner in which such
designation is to be effected and (2) such designation shall not be
made if it results in SHI being designated as the agent of Cable or
Acquiror in any Post-Closing Tax Period.
(B) Whenever any taxing authority asserts a claim,
makes an assessment, or otherwise disputes the amount of Company
Taxes for which SHI is or may be liable, in whole or in part, under
this Agreement, Acquiror shall promptly inform SHI. SHI shall
promptly inform Acquiror of any inquiries from the Internal Revenue
Service or any other taxing authority that relate to Cable. SHI
covenants that it shall not, without Acquiror's consent, take any
action, or omit to take any action, that could result in an increase
the Tax liability of Acquiror or Cable in any Post-Closing Tax
Period. SHI shall indemnify and hold Acquiror and Cable harmless
against any breach of the covenants contained in the preceding
sentence.
(C) If a taxing authority asserts a claim, makes an
assessment or otherwise disputes the amount of the Company Taxes
attributable to Cable (a "Cable Dispute"), Acquiror and SHI shall
immediately inform each other of the Cable Dispute. Acquiror, at
its cost and expense, may, by written notice to SHI, (1) participate
in or (2) elect to control (including the determination of whether
and when to settle) any Cable Dispute, which election shall be made
in writing within 60 days after the later of (1) the date of the
notice transmitted by the taxing authority describing the Cable
Dispute, or (2) in the case of a notice transmitted by the taxing
authority to SHI, the date SHI informs Acquiror of such Cable
Dispute, and shall specify whether Acquiror is participating in or
electing to control the relevant Cable Dispute. If Acquiror duly
elects, as provided herein, to control a Cable Dispute, it shall
have the sole responsibility to conduct any resulting proceedings,
and shall be responsible for, and shall indemnify SHI, on an
After-Tax Basis, against any Taxes ultimately imposed with respect
to such Cable Dispute.
(b) TAX RETURNS.
(i) SHI shall be responsible, subject to the review of
Acquiror, for the preparation, filing and signing of all Company
Consolidated Income Tax Returns for all taxable periods that end on or
before the Closing Date, including
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Tax Returns of the Company Group for such periods that are due after the
Closing Date, and of all Cable Tax Returns required to be filed on or
before the Closing Date, and SHI shall be responsible for all Taxes shown
to be due thereon. All such Tax Returns shall be prepared consistently
with past practice of the Company, SHI and Cable and shall not amend
(without Acquiror's consent) any election that relates to Cable (except to
the extent a change is required by law). SHI shall provide Acquiror with
preliminary draft copies of the relevant portions of such Returns that
relate to Cable at least 20 days prior to the due date for filing (taking
into account any applicable extensions). Acquiror shall have the
opportunity to review all such returns (any such review shall not in any
way limit SHI's indemnification obligations hereunder); if Acquiror
objects to any matter relating to Cable reflected in such returns,
Acquiror shall inform SHI within 10 days of receipt of the preliminary
draft return. Acquiror and SHI shall resolve any disputes in good faith.
Within thirty days following the filing of Company Consolidated Income Tax
Returns, SHI shall furnish Acquiror with (i) copies of the relevant
portions of such Tax Returns that relate to Cable and (ii) information
concerning (a) the tax basis of the assets of Cable as of the Closing
Date; (b) the earnings and profits of the Company and the Cable
Subsidiaries as of the Closing Date; (c) the Company's tax basis in the
Cable Subsidiaries and the Subsidiaries' tax basis in the Cable
Partnerships as of the Closing Date; (d) the net operating loss carryover,
investment tax credit carryover, alternative minimum tax carryover and the
capital loss carryover available, if any, to Acquiror and its Subsidiaries
as of the Closing Date; and (e) all elections with respect to Taxes in
effect for Cable as of the Closing Date. The Company shall provide
Acquiror an estimate of the information listed in (a) through (e) of the
preceding sentence as soon as practicable hereafter but prior to Closing.
(ii) Acquiror shall be responsible for the preparation and
filing of all Cable Tax Returns (other than the Company Consolidated Tax
Return) required to be filed after the Closing Date for Tax periods that
end after the Closing Date.
(iii) As soon as practicable after the date hereof and prior
to Closing, the Company shall provide Acquiror with a schedule of any
waivers or extensions of any applicable statute of limitations relating to
the assessment of federal, state or local Taxes relating to the Company or
Cable.
(c) COOPERATION. Acquiror and SHI shall cooperate with each
other in a timely manner in the preparation and filing of any Tax Returns,
payment of any Taxes in accordance with this Agreement, and the conduct of any
audit or other proceeding. Each party shall execute and deliver such powers of
attorney and make available such other documents as are necessary to carry out
the intent of this Section 6.10. Each party agrees to notify the other party of
any audit adjustments that do not result in tax liability but can reasonably be
expected to affect Tax Returns of the other party.
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(d) RETENTION OF RECORDS. Acquiror and SHI shall each, to the
extent potentially relevant to the other party, (i) retain records, documents,
accounting data and other information (including computer data) necessary for
the preparation and filing of all Tax Returns or the audit of such returns and
(ii) give to the other reasonable access to such records, documents,
accounting data and other information (including computer data) and to its
personnel (insuring their cooperation) and premises. If Acquiror elects to
control any Cable Dispute pursuant to the provisions of Section
6.10(a)(iii)(C) above, SHI shall provide Acquiror with copies of all relevant
books and records that are in the possession of SHI or any Subsidiary of SHI.
SHI and Acquiror shall each notify the other party prior to discarding or
destroying any such books and records and shall, upon the other party's
request, provide copies of all such books and records to the other party.
Upon Acquiror's request, SHI shall provide Acquiror with copies of the
relevant portions of any Tax Returns for Pre-Closing Tax Periods to the extent
related to Cable.
(e) PAYMENTS; DISPUTES. Except as otherwise provided in this
Section 6.10, any amounts owed by any party ("Indemnitor") to any other party
("Indemnitee") under this Section 6.10 shall be paid within ten days of notice
from the Indemnitee; provided that if the Indemnitee has not paid such amounts
and such amounts are being contested before the appropriate governmental
authorities in good faith, the Indemnitor shall not be required to make payment
until it is determined finally by an appropriate governmental authority that
payment is due. If Acquiror and SHI cannot agree on any calculation of any
liabilities under this Section 6.10, such calculation shall be made by any
independent public accounting firm acceptable to both such parties. The
decision of such firm shall be final and binding. The fees and expenses
incurred in connection with such calculation shall be borne equally by the
disputing parties.
(f) SURVIVAL. Notwithstanding anything in this Agreement to the
contrary, the provisions of this Section 6.10 shall survive for the full period
of all applicable statutes of limitations (giving effect to any waiver or
extension thereof).
(g) DEFINITIONS.
(i) "After-Tax Basis" means, with respect to any payment, an
amount calculated by taking into account the Tax consequences of the
receipt of such payment, as well as any Tax benefit associated with the
liability giving rise to the payment.
(ii) "Cable Tax Returns" means any Tax Return of any of the
Cable Subsidiaries.
(iii) "Company Consolidated Income Tax Returns" means any Tax
Return of the Company with respect to Company Consolidated Income Taxes.
(iv) "Company Consolidated Income Taxes" means the federal
income tax and all applicable state income or franchise taxes of the
Company Group, together with any interest and any penalty, addition to tax
or additional
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amount imposed by any governmental authority responsible for the
imposition of any such tax.
(v) "Company Group" means the affiliated group of
corporations, within the meaning of Section 1504(a) of the Internal
Revenue Code, of which the Company is the common parent and any member of
such group.
(vi) "Pre-Closing Tax Period" means any Tax period, or
portion thereof, ending on or before the close of business on the Closing
Date.
(vii) "Post-Closing Tax Period" means any Tax Period or
portion thereof, beginning on or after the close of business on the
Closing Date.
(viii) "Restructuring Tax" means any Tax imposed as a result
of the transfer of assets or any other transaction contemplated by this
Agreement, excluding any Tax that is solely the result of Acquiror's
breach of Section 6.10(g).
(ix) "Tax" (including with correlative meaning, the terms
"Taxes" and "Taxable") means (A) any income, gross receipts, ad valorem,
premium, excise, value-added, sales, use, transfer, franchise, license,
severance, stamp, occupation, service, lease, withholding, employment,
payroll premium, property or windfall profits tax, alternative or
add-on-minimum tax, or other tax, fee or assessment, and any payment
required to be made to any state abandoned property administrator or other
public official pursuant to an abandoned property, escheat or similar law,
together with any interest and any penalty, addition to tax or additional
amount imposed by any governmental authority responsible for the
imposition of any such tax or payment (B) any liability of the Company or
any Subsidiary of the Company for the payment of any amounts of the type
described in (A) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or being a party to any agreement
or arrangement whereby the liability of the Company or any Subsidiary of
the Company for payments of such amounts was determined or taken into
account with reference to the liability of any other person (excluding,
however, any liability imposed on the Cable Subsidiaries as a result of
being a partner, beneficiary or member of any flow-through entity, to the
extent such liability relates to income of the Cable Subsidiaries that is
properly allocable to a Post-Closing Tax Period) and (C) liability of the
Company or any Subsidiary of the Company for the payment of any amounts as
a result of being party or subject to any Tax Sharing Agreement.
(ix) "Tax Indemnification Period", means (i) with respect to
any Tax described in clause (A) of the definition of "Tax", any
Pre-Closing Tax Period of the Company or any Subsidiary of the Company,
(ii) with respect to any Tax described in clause (B) of the definition of
"Tax", any Pre-Closing Tax Period of the Company and any Subsidiary of the
Company and the Tax year of any member of a group described in such clause
(B) which includes (but does not end on) the Closing Date, and (iii) with
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respect to any Tax described in clause (C) of the definition of "Tax", the
survival period of the obligation under the applicable contract or
arrangement which was entered into or became effective during the
Pre-Closing Tax Period.
(x) "Tax Return" means any return, report, statement,
information statement and the like required to be filed with any authority
with respect to Taxes.
(xi) "Tax Sharing Agreement" means any Tax sharing agreement
or arrangement (whether or not written) binding on the Company of any
Subsidiary of the Company, and any agreement or arrangement (including any
arrangement required or permitted by law) which (i) requires the Company
or any Subsidiary of the Company to make a payment to or for the account
of any other person, (ii) requires or permits the transfer or assignment
of income, revenues, receipts, or gains to the Company or any Subsidiary
of the Company from any other person, or (iii) otherwise requires the
Company or any Subsidiary of the Company to indemnify any other person in
respect of Taxes.
(g) ADDITIONAL COVENANTS. For a period of two years after the
Closing Date:
(i) Except for actions taken in the ordinary course of
business, Acquiror shall not sell, transfer, distribute or otherwise
dispose of a substantial portion of the operating assets of Cable or any
shares of capital stock of any corporation or partnership interests of any
partnership that was a Subsidiary of the Company immediately prior to the
Merger, whether by merger or otherwise; provided, however, that Acquiror
shall be entitled to enter into any like-kind exchange for other cable
television assets (within the meaning of Section 1031 of the Code) with
respect to any Cable assets;
(ii) Acquiror shall not cause or permit any corporation that
was a Subsidiary of the Company immediately prior to the Merger to sell
any shares of capital stock or any partnership interests of such
Subsidiary to any person if such sale or issuance will prevent Acquiror
from retaining "control" of such Subsidiary (within the meaning of Section
368 of the Code);
(iii) Acquiror shall not adopt a plan of liquidation or
initiate and enter into an agreement of merger or other transaction
pursuant to which the corporate legal existence of Acquiror would
terminate or the outstanding stock of Acquiror would, in a taxable
transaction, be converted into cash, other property or the stock or
securities of any other issuer; and
(iv) Acquiror and its affiliates shall not offer to purchase,
make a tender offer, or otherwise enter into any agreement to acquire any
shares of capital stock of SHI;
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Notwithstanding the above, Acquiror shall be permitted to take any actions
described in clauses (i) through (iii) above if Acquiror first obtains either
(A) a ruling from the Internal Revenue Service; or (B) an opinion of recognized
tax counsel satisfactory to SHI, to the effect that such actions will not result
in the distribution of SHI shares to the Company's shareholders or the Merger
being taxable.
6.11 NOTIFICATION. Each party hereto shall, in the event of, or
promptly after obtaining knowledge of the occurrence or threatened occurrence
of, any fact or circumstance that would cause or constitute a breach of any of
its representations and warranties set forth herein, give notice thereof to the
other parties and shall use its best efforts to prevent or promptly remedy such
breach.
6.12 EMPLOYEE BENEFITS.
(a) As part of the assumption of liabilities of the Company by SHI
pursuant to Section 2.02 and the Contribution Agreement, effective as of the
Effective Time, SHI agrees to accept all liabilities and responsibilities
including without limitation those of a plan sponsor, within the meaning of
Section 3(16)(B) of ERISA, of any Company Employee Plan and to accept all
liabilities and responsibilities including without limitation those of an
employer under any Company Benefit Arrangement except as may otherwise be
provided in this Section 6.12. SHI agrees that Acquiror shall have no liability
and shall be fully indemnified and held harmless by SHI with respect to any such
plans or arrangements after the Effective Time. SHI and Acquiror agree that,
effective from and after the Effective Time, except with respect to benefits
accrued prior to the Effective Time, active Cable Employees shall cease to
participate actively in or be covered by any Company Employee Plan or any
Company Benefit Arrangement, including, without limitation, all Cable Plans.
Transferred Cable Employees, as defined in Section 6.12(b), shall vest at the
Effective Time in any benefit accrued through the date of Effective Time under
any Pension Plan that is a Cable Plan.
(b) Acquiror acknowledges that, as a result of the transactions
contemplated by this Agreement, Acquiror shall become at the Effective Time the
employer of all Cable Employees actively employed by Company as of the Effective
Time, including individuals on approved leaves of absence or short-term
disability leave, but excluding Cable Employees who are receiving long-term
disability income benefits as of the Effective Time and Cable Employees on short
term disability leave at the Effective Time who subsequently receive long term
disability income benefits without returning to active employment for the
Acquiror. Effective from and after the Effective Time, Acquiror agrees to
provide all Cable Employees who become so employed by Acquiror ("Transferred
Cable Employees") with similar compensation and employee benefits which are no
less favorable in the aggregate than the benefits provided to similarly situated
Acquiror employees. Any Employee Benefit Plan of Acquiror shall grant
Transferred Cable Employees credit for prior service with the Company, SHI and
any of their ERISA Affiliates prior to the Effective Time for purposes of
eligibility and vesting. Cable Employees shall not be deemed to be third-party
beneficiaries of any provision of this Section 6.12.
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(c) The Company or SHI, as applicable, agrees to continue existing
health care coverage of Cable Employees and their covered dependents through the
Effective Time for eligible health care expenses and services incurred through
the Effective Time in accordance with the terms of relevant plan documents. For
purposes of the foregoing, an expense or service is deemed to be incurred when
the medical or dental services are performed.
(d) Immediately after the Effective Time, Acquiror agrees to
provide coverage under a group health care plan designed and implemented by
Acquiror to all Transferred Cable Employees, and the covered dependents of such
Transferred Cable Employees, who are still employed by the Company at the
Effective Time, taking into account for eligibility purposes under such plan the
service accrued by any such Transferred Cable Employee while an employee of the
Company or any of its ERISA Affiliates; PROVIDED that no such service for
Transferred Cable Employees need be credited by Acquiror for the purpose of
determining eligibility to receive any retiree medical benefit coverage. The
group health care plan provided in accordance with this Section 6.12(d) shall
provide benefits which are no less favorable than the benefits provided to
similarly situated employees of the Acquiror. The health care plan provided by
Acquiror in accordance with this Section 6.12(d) shall contain no exclusions or
limitations for preexisting conditions applicable to covered Transferred Cable
Employees or the covered dependents of such Transferred Cable Employees.
(e) SHI shall assume and be solely responsible: (i) for the
provision of benefits required under the provisions of COBRA to any Cable
Employees or other qualified beneficiaries, within the meaning of Section
4980B(g) of the Code, with respect to whom a qualifying event, within the
meaning of Section 4980B(f)(3) of the Code, has occurred prior to the Effective
Time; and (ii) for the payment of all long-term disability income benefits to
(x) all Cable Employees who, as of the Effective Time, are receiving long-term
disability benefits or (y) are disabled or on short term disability leave as of
the Effective Time and as a result of such disability have become or, without
returning to active employment become after the Effective Time, eligible for
long-term disability income benefits, as determined in accordance with long term
disability coverage provisions that on or prior to the Effective Time are
applicable to the Cable Employees.
(f) Except as provided in the succeeding sentence, from and after
the date of this Agreement, neither the Company, SHI nor any of their ERISA
Affiliates will change the employment status of any Cable Employee so as to
promise employment with Cable for any specified term. Notwithstanding the
foregoing provision, from and after the date of this Agreement, the Company, SHI
or any of their ERISA Affiliates may enter into employment contracts on behalf
of Cable with any Cable Employee or prospective Cable Employees; PROVIDED,
HOWEVER, that any such action taken must be in accordance with the ordinary and
usual course of business consistent with past practices, as provided in Section
6.03, and provided further that consent of Acquiror must be obtained in all
events.
(g) Acquiror agrees to cooperate, and agrees to use its best
efforts to cause its ERISA Affiliates to cooperate, in a complete, diligent and
timely manner to provide SHI or its ERISA Affiliates with such compensation,
service and other pertinent census data as may be reasonably required by SHI or
any of its ERISA Affiliates for purposes of calculating or
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effecting distribution of benefits to which any Cable Employees may be
entitled under any Employee Benefit Plan established, maintained or
contributed to by SHI or any of its ERISA Affiliates.
6.13 EMPLOYEE STOCK OPTIONS. Effective as of the Effective Time, SHI
shall assume all incentive plans including without limitation the following
plans: (i) The X.X. Xxxxxxx
Company 1987 Long-Term Incentive Plan (the "Incentive Plan") and (ii) The X.X.
Xxxxxxx Company 1994 Non-Employee Directors' Stock Option Plan (the "Directors
Plan"). As of the Effective Time, (1) each stock option outstanding under the
Incentive Plan or the Directors Plan or any other plan of the Company, SHI or
any of their Subsidiaries that is not exercised prior to the Effective Time
shall be assumed by SHI, and all references in any such option to the Company
and to its Class A Common Stock shall be deemed to refer to SHI and its Class A
Common Shares, and (2) each restricted stock award subject to vesting conditions
under the Incentive Plan or any other plan of the Company, SHI or any of their
Subsidiaries shall be assumed by SHI and all references in any such restricted
stock award to the Company and its Class A Common Stock shall be deemed to refer
to SHI and its Class A Common Shares.
6.14 MEETINGS OF STOCKHOLDERS. Each of the Company and Acquiror shall
take all action necessary, in accordance with applicable law and its charter and
bylaws, to duly call, give notice of, convene and hold a meeting of its
stockholders as promptly as practicable to consider and vote upon the adoption
and approval of this Agreement and the transactions contemplated hereby
(collectively, the "Transactions"). The stockholder vote required for the
adoption and approval of the Transactions shall be the vote required: (i) in
the case of the Company, by the DGCL and the Company's Certificate of
Incorporation; and (ii) in the case of Acquiror, by the PBCL and Acquiror's
Articles of Incorporation. The Company (subject, in the case of a Superior
Proposal, to the fiduciary duty of its Board of Directors under the DGCL as
advised by outside counsel) and Acquiror each shall use its best efforts to
solicit from its stockholders proxies in favor of adoption and approval of the
Transactions and to take all other action necessary to secure the vote of such
stockholders required to effect the Transactions. By an agreement dated and
executed as of the date hereof, a copy of which is attached hereto as Exhibit E,
the Trust has agreed to vote, or cause to be voted, all of the shares of Company
Common Voting Stock owned by the Trust (or subject to proxies held by the Trust)
in favor of the Transactions, subject to the fiduciary duties of the trustees of
the Trust, and the holder of a majority of the voting power of Acquiror has
agreed to vote, or cause to be voted, all of the shares of capital stock of
Acquiror that are owned by such holder (or subject to proxies held by them) in
favor of the Transactions at the meeting of stockholders of the Company or
Acquiror, as the case may be, held to approve the Transactions.
6.15 REGULATORY AND OTHER AUTHORIZATIONS.
(a) The Company, SHI and Acquiror agree to use their respective
best efforts to obtain all authorizations, consents, orders and approvals of
federal, state, local and foreign regulatory bodies and officials and
non-governmental third parties that may be or become necessary for performance
of its respective obligations pursuant to this Agreement, and will cooperate
fully with the other parties in promptly seeking to obtain all such
authorizations, consents, orders and approvals. SHI and the Company shall have
primary responsibility for
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obtaining all authorizations, consents, orders and approvals with respect to
Licenses and Franchises of Cable. Without limitation, the Company and
Acquiror shall each make an appropriate filing of a Notification and Report
Form pursuant to the HSR Act no later than thirty days from the date hereof;
and each such filing shall request early termination of the waiting period
imposed by the HSR Act. Acquiror shall not be required to agree to any
consent decree or order in connection with any objections of the Department of
Justice or the Federal Trade Commission (each an "HSR Authority") to the
transactions contemplated by this Agreement. None of the Cable Subsidiaries
or Cable Partnerships shall amend any Franchise or make or agree to make any
payments or commitments, including commitments to make future capital
improvements or provide future services, in connection with obtaining any
authorization, consent, order or approval of any governmental authority
necessary for the transfer of control of any Franchise.
(b) Any application to any governmental authority for any
authorization, consent, order or approval necessary for the transfer of control
of any License or Franchise shall be mutually acceptable to the Company and
Acquiror. Without limiting the obligations of the Company, SHI and Acquiror
under Section 6.15(a), each of the Company, SHI and Acquiror agrees, upon
reasonable prior notice, to make appropriate representatives available for
attendance at meetings and hearings before applicable governmental authorities
in connection with the transfer of control of any License or Franchise. The
Company, SHI and Acquiror each agree to use its reasonable best efforts to
obtain any waiver, consent or declaratory ruling by the FCC with respect to the
Rules and Regulations regarding cross-ownership of cable television systems and
television stations, to the extent that such Rules and Regulations may prohibit
(A) the Trust from designating a director on or observer of the Comcast Board of
Directors or (B) Xxxxx Xxxxxxx from serving on the Board of Directors of Xxxxxx
Broadcasting Company; provided that it shall not be a condition to the Closing
that any such waiver, consent or declaratory ruling shall have been obtained.
(c) Subject to Section 7.04(g), if any authorization, consent,
order or approval of any governmental authority necessary for the transfer of
control of any License or Franchise shall not have been obtained prior to the
Effective Time, SHI and Acquiror shall cooperate with each other and use their
respective best efforts (i) to restructure the ownership and control of such
License or Franchise from and after the Effective Time in such a manner that
prevents any violation of the terms of such License or Franchise that would have
a Material Adverse Effect on Acquiror and its Subsidiaries taken as a whole, on
Cable or on SHI and its Subsidiaries taken as a whole and preserves the intent
of the parties as set forth in this Agreement with respect to the terms and
conditions of the Merger, and (ii) notwithstanding the Closing, to continue to
seek any authorization, consent, order or approval necessary for the transfer of
control of such License or Franchise.
6.16 FURTHER ASSURANCES. Upon the terms and subject to the conditions
hereof, each of the parties hereto shall execute such documents and other
instruments and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and consummate the transactions
contemplated hereby or, at and after the Closing Date, to evidence the
consummation of the transactions contemplated by this Agreement. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
respective reasonable best
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efforts to (i) take or cause to be taken all actions and to do or cause to be
done all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and (ii) obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings.
6.17 INTERNAL REVENUE SERVICE RULING. The Company shall, as promptly
as practicable after the date hereof, prepare and submit to the IRS a request
for an advance letter ruling from the IRS that the transactions contemplated by
this Agreement (other than the Merger), including the internal spinoffs
described in Section 2.01(a) hereto (and the contribution, if any, of the assets
related to the Mid-Tennessee Business) and the Contribution and the Distribution
of SHI Common Shares to the Company's stockholders will qualify as tax-free
spinoffs within the meaning of Sections 368(a)(1)(D) and 355 of the Internal
Revenue Code. Such request shall be true and correct in all material respects,
and all facts material to the ruling shall be disclosed in such request. The
Company shall afford Acquiror with reasonable opportunity to review and comment
on such request prior to its submission to the IRS, and such request as filed
shall be reasonably acceptable to Acquiror. The Company shall provide Acquiror
with copies of all materials submitted to the IRS, and Acquiror shall
participate in all meetings and conferences with IRS personnel, whether
telephonically or in person. Acquiror shall reasonably cooperate in good faith
with the Company in seeking to obtain such ruling.
6.18 RECORDS RETENTION.
(a) For a period of five years after the Closing Date, SHI shall
retain all of its books and records relating to Cable for periods prior to the
Closing Date and Acquiror shall have the right to inspect and copy such books
and records during normal business hours, upon reasonable prior notice, in
connection with the preparation of financial statements, reports and filings and
for any other reasonable purpose.
(b) For a period of five years after the Closing Date, Acquiror
shall retain all of its books and records relating to Cable for periods
subsequent to the Closing Date and SHI shall have the right to inspect and copy
such books and records during normal business hours, upon reasonable prior
notice, in connection with the preparation of financial statements, reports and
filings and for any other reasonable purpose.
6.19 STOCK EXCHANGE LISTING. SHI shall apply to the New York Stock
Exchange for the listing of the SHI Class A Common Shares and shall use its best
efforts to receive approval for the listing of such shares. Acquiror shall
submit a supplement listing application to the NASDAQ National Market for the
listing of the Merger Stock and shall use its best efforts to receive approval
for the listing of such stock.
6.20 COMPANY NAMES.
(a) Acquiror acknowledges that the names "X.X. Xxxxxxx,"
"Scripps," "Scripps Xxxxxx," or any part thereof, and the initials "EWS" or
"SH", whether alone or in combination with one or more other words, are to the
extent owned by the Company or any of its Subsidiaries an asset of the Company
being transferred to SHI in the Contribution. Promptly
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after the Closing Date, Acquiror shall (i) cause the Cable Subsidiaries and
the Cable Partnerships to change their names to delete any reference therein
to the aforesaid names or initials and (ii) reasonably cooperate in assisting
SHI to change its name to "The X.X. Xxxxxxx Company." As promptly as
reasonably practicable after the Closing Date, Acquiror shall cease using the
aforesaid names or initials in connection with the business operations of
Cable.
(b) Between the consummation of the Contribution and the Closing
(and for as long thereafter as is required for Acquiror to comply with Section
6.20(a)), the Company, the Cable Subsidiaries, and the Cable Partnerships shall
have a non-exclusive license to use the names "Scripps" and "Scripps Xxxxxx" and
the initials "EWS."
6.21 OTHER AGREEMENTS. At the Closing, Acquiror and the Trust shall
enter into a Registration Rights Agreement as set forth in Exhibit F and a Board
Representation Agreement as set forth in Exhibit G.
6.22 FORM 8-K; PROVISION OF FINANCIAL STATEMENTS; SCHEDULE OF
CONTRACTS. (a) As soon as practicable after the date hereof, the Company will
prepare and file a Current Report on Form 8-K (the "Form 8-K") which will
include a description of the business of Cable and certain financial and other
information with respect to Cable. The Company covenants that the Form 8-K will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) At the request of Acquiror, the Company agrees to provide (or,
if requested by Acquiror, cooperate with Acquiror in the preparation of) as
promptly as practicable (but in any event within 45 days of the request) such
financial statements (audited or unaudited, as requested by Acquiror) relating
to Cable as the Acquiror may reasonably request in order to comply with the
requirements of the Securities Act or the Exchange Act or in order to secure
financing (including pursuant to a public offering registered under the
Securities Act).
(c) Within six weeks following the date hereof, the Company shall
(A) provide Schedule 6.22(c) to Acquiror, which shall include each of the
following: (i) any affiliation or retransmission Contract between any Cable
Subsidiary or Cable Partnership and a programming service or a distributor
thereof; (ii) any Contract providing for the purchase or sale by Cable of goods,
services, equipment or assets with an aggregate purchase price of $250,000 or
more or with a duration in excess of 5 years; (iii) any partnership, joint
venture or other similar Contract or any guarantee of the obligations of any
Person; (iv) all Franchises of Cable; (v) all licenses, franchises,
certificates, permits, qualifications and authorizations from all governmental
authorities necessary for the lawful conduct of Cable's business and (vi) all
consents and waivers from all relevant governmental authorities necessary to
transfer ownership of Cable's franchise agreements and FCC licenses, and (B)
deliver complete copies of all documents listed on Schedule 6.22(c) other than
those previously delivered or made available to Acquiror.
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6.23 DETERMINATION OF ESTIMATED AMOUNTS.
(a) Two days prior to the Effective Time, the Company shall inform
Acquiror of (i) the Company's best estimate of the Capital Expenditure Amount
(the "Estimated Capital Expenditure Amount"), (ii) the Company's best estimate
of the Cable Net Liabilities Amount (the "Estimated Cable Net Liabilities
Amount") and (iii) the Company's basis for such estimates. The Estimated
Capital Expenditures Amount and the Estimated Cable Net Liabilities Amount shall
be reasonably satisfactory to Acquiror.
(b) As promptly as practicable after the Effective Time, but in
any event within 90 days thereafter, Acquiror shall prepare and deliver to SHI a
schedule (the "Acquiror Schedule") showing Acquiror's determination of the Cable
Net Liabilities Amount and the Capital Expenditure Amount. If SHI disagrees
with either of the determinations set forth in the Acquiror Schedule, SHI shall
give notice thereof to Acquiror within 30 days after delivery of the Acquiror
Schedule to SHI, such notice to include reasonable detail regarding the basis
for the disagreement.
(c) Acquiror and SHI shall attempt to settle any such
disagreement; any such settlement shall be final and binding upon Acquiror and
SHI. If, however, Acquiror and SHI are unable to settle such dispute within 30
days after receipt of such notice of dispute by Acquiror, the dispute shall be
submitted to an independent certified public accounting firm mutually acceptable
to Acquiror and SHI for resolution, and the decision of such firm shall be final
and binding upon Acquiror and SHI. All costs incurred in connection with the
resolution of said dispute by such independent public accountants, including
expenses and fees for services rendered, shall be paid one half by Acquiror and
one half by SHI. Acquiror and SHI shall use reasonable efforts to have the
dispute resolved within 60 days after such dispute is submitted to said
independent public accountants. The final determination of the Cable Net
Liabilities Amount and the Capital Expenditure Amount (whether as a result of
SHI's failing to give notice of SHI's disagreement with Acquiror's determination
within the time period prescribed above, a resolution by Acquiror and SHI of any
such disagreement, or a determination by an accounting firm selected pursuant to
clause (c) above to resolve any disagreement among the parties) may occur on
different dates.
(d) Within 10 Business Days following a final determination of the
Cable Net Liabilities Amount, (i) if the Cable Net Liabilities Amount exceeds
the Estimated Cable Net Liabilities Amount, then SHI will pay to Acquiror in
immediately available funds an amount equal to such excess plus interest at the
Agreed Rate from the Closing Date to the date of payment and (ii) if the
Estimated Cable Net Liabilities Amount exceeds the Cable Net Liabilities Amount,
Acquiror will pay to SHI in immediately available funds an amount equal to such
excess plus interest at the Agreed Rate from the Closing Date to the date of
payment. Any such payments shall be made on an after-tax basis.
(e) Within 10 Business Days following a final determination of the
Capital Expenditure Amount, (i) if the Capital Expenditure Amount exceeds the
Estimated Capital Expenditure Amount, then Acquiror will pay to SHI in
immediately available funds an amount equal to such excess plus interest at the
Agreed Rate from the Closing Date to the date of
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payment and (ii) if the Estimated Capital Expenditure Amount exceeds the
Capital Expenditure Amount, SHI will pay to Acquiror in immediately available
funds an amount equal to such excess plus interest at the Agreed Rate from the
Closing Date to the date of payment. Any such payments shall be made on an
after tax basis.
6.24 CAPITAL EXPENDITURES. The Company agrees to cause Cable to make
capital expenditures in the ordinary course of business including line
extensions (the "Ordinary Course Expenditures"); provided, however, that such
Ordinary Course Expenditures shall not include upgrades or rebuilds. In
addition, Cable is permitted, but not required, to make up to $43,200,000 in
capital expenditures for upgrades and rebuilds to be mutually agreed by the
Company and Acquiror. The amount of capital expenditures made after November
1, 1995 and before the Effective Time by Cable for upgrades and rebuilds in
accordance with the mutual agreement of the Company and Acquiror, subject to
appropriate adjustments for minority interests, if any, is referred to herein
as the "Capital Expenditure Amount" and such amount shall not include any
Ordinary Course Expenditures.
6.25 EXCESS CASH. From time to time, after the date of execution of
this Agreement and until the Effective Time, and subject to applicable law, (i)
the Cable Subsidiaries and the Cable Partnerships may pay cash dividends, or
otherwise make cash distributions, to the Company or any of its Subsidiaries and
(ii) the Company may contribute to SHI cash held by the Company. Immediately
prior to the Contribution, the Cable Subsidiaries and the Cable Partnerships
shall, to the extent permitted by law and by the partnership agreement governing
SCT, pay dividends in cash or cash equivalents, or otherwise make contributions
in cash or cash equivalents, to the Company and its Subsidiaries so that none of
the Cable Subsidiaries and none of the Cable Partnerships owns any cash or cash
equivalents at the Effective Time.
6.26 ACQUISITION OF MID-TENNESSEE BUSINESS; REDUCTION OF AGGREGATE
CONSIDERATION; INDEMNITY. Any acquisition of all or part of the Mid-Tennessee
Business shall be on the terms and conditions of the Mid-Tennessee Agreement.
Broadcasting shall not waive any closing condition in, or agree to any material
modification of, the Mid-Tennessee Agreement without the consent of Acquiror,
which consent shall not be unreasonably withheld or delayed. The amount, if
any, paid by Broadcasting to acquire all or part of the Mid-Tennessee Business
(including amounts paid into escrow by Broadcasting ("Broadcasting Escrow
Amounts") and the principal amount of any promissory notes delivered by
Broadcasting ("Broadcasting Notes")) plus the MTB Net Liabilities Amount with
respect to all or such part of the Mid-Tennessee Business, as the case may be,
that is acquired is referred to herein as the "Mid-Tennessee Purchase Price".
For such purposes, "MTB Net Liabilities Amount" means, with respect to any part
of the Mid-Tennessee Business acquired, the Net Liabilities Amount of such part
of the Mid-Tennessee Business (including the Broadcasting Escrow Amounts and the
Broadcasting Notes to the extent the rights and obligations with respect thereto
are assigned to Cable) as of the date it is transferred to Cable. The amount,
if any, by which $62,500,000 exceeds the Mid-Tennessee Purchase Price is
referred to herein as the "Mid-Tennessee Amount" and shall reduce the Aggregate
Consideration as set forth in Section 1.02(d). Prior to the Effective Time,
Broadcasting shall contribute and assign to a Cable Subsidiary all assets and
liabilities of the Mid-Tennessee Business so acquired and all rights and
obligations it may have, if any, under any Mid-Tennessee Agreement and Acquiror
shall indemnify Broadcasting and its Subsidiaries
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against all Losses in connection with the breach of such agreements by Cable
or Acquiror after the Effective Time. Such indemnification shall be subject
to the procedures set forth in Section 2.04 of the Contribution Agreement.
6.27 INDEMNITY RELATING TO CERTAIN LITIGATION.
(a) SHI shall indemnify from and after the Closing Date (i) Acquiror
and its Subsidiaries, including Cable, against all Losses in connection with
any suit, action, proceeding or investigation pending at or arising after the
Closing Date that relates to Cable prior to the Effective Time and (ii) any
person who was an officer, director, partner or employee of any Cable
Subsidiary or Cable Partnership (or any partner thereof) against all Losses in
connection with any suit, action, proceeding or investigation. The Company
and SHI shall indemnify Acquiror against all Losses arising from or relating
to any claim, action or proceeding brought by or on behalf of the holders of
Company Common Stock in connection with the transactions contemplated hereby.
(b) Acquiror shall indemnify from and after the Closing Date (i) SHI and
its Subsidiaries against all Losses in connection with any suit, action,
proceeding or investigation pending at or arising after the Closing Date that
relates to Cable after the Effective Time and (ii) any person who was an
officer, director, partner or employee of any Cable Subsidiary or Cable
Partnership (or any partner thereof) prior to but not after the Closing Date
against all Losses in connection with any such suit, action, proceeding or
investigation. SHI represents that Schedule 6.27 hereto describes each suit,
action, proceeding or investigation pending at the date hereof that relates to
Cable. Acquiror shall indemnify the Company and SHI against all Losses arising
from or relating to any claim, action or proceeding brought by or on behalf of
the holders of Acquiror A Stock, Acquiror B Stock and Acquiror Common Stock in
connection with the transactions contemplated hereby.
(c) The indemnification arrangements set forth in this Section 6.27 shall
be subject to the procedures set forth in Section 2.04 of the Contribution
Agreement.
6.28 RIVER CITY INTEREST. The Company shall use its reasonable best
efforts to cause Sacramento Cable to acquire prior to the Closing Date the River
City Interest or such lesser portion thereof as may be acquired. Any such
acquisition shall be on terms and conditions reasonably satisfactory to
Acquiror. If Sacramento Cable acquires all or any part of the River City
Interest, then the Aggregate Consideration shall be increased by the River City
Purchase Amount as set forth in Section 1.02(d). For purposes hereof, the term
"River City Purchase Amount" means the sum of (x) the amount paid by Sacramento
Cable to acquire all or any part of the River City Interest and (y) 5% of the
Net Liabilities Amount of SCT as of the date of such acquisition (adjusted
proportionately if less than all of the River City Interest is acquired).
6.29 PROPOSED HYPERION JOINT VENTURE. The terms and conditions of any
joint venture with Hyperion Telecommunications of Tennessee, Inc. and any
material transactions in connection therewith shall be reasonably satisfactory
to Acquiror.
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6.30 CANCELLATION OF INTERCOMPANY ARRANGEMENTS. Prior to the Effective
Time, and except as otherwise provided herein or as otherwise agreed by the
parties hereto, all accounts, payables, receivables, contracts, commitments and
agreements between the Company or Cable, on the one hand, and SHI or any of its
Subsidiaries, on the other hand, will be settled, cancelled or otherwise
terminated.
6.31 MARKET PURCHASE PROGRAM. The Company and SHI acknowledge that (i)
simultaneously with the announcement of the transactions contemplated hereby,
Acquiror intends to announce that it has approved a market repurchase program
(the "Repurchase Program") pursuant to which it may purchase at such times and
on such terms as it determines appropriate up to $500 million of common stock
of Acquiror and (ii) Acquiror has no obligation to make any such purchases.
Acquiror agrees not to make market purchases during the Random Trading Days
and to terminate the Repurchase Program no later than six months after the
Closing Date.
ARTICLE VII
CLOSING AND CLOSING DATE; CONDITIONS TO CLOSING
7.01 CLOSING AND CLOSING DATE. As soon as practicable after the
satisfaction or waiver of the conditions set forth herein (but no later than ten
business days thereafter) and immediately prior to the filing of the Certificate
of Merger, a closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Xxxxx Xxxx & Xxxxxxxx, 450 Lexington Avenue,
New York, New York, or on such other date and at such other location as the
parties may agree in writing. The date on which the Closing occurs is referred
to as the "Closing Date."
7.02 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY, SHI AND ACQUIROR.
The respective obligations of the Company and SHI, on the one hand, and
Acquiror, on the other hand, to consummate the transactions contemplated hereby
are subject to the requirements that:
(a) The Transactions shall have been approved and adopted by the
stockholders of the Company and of the Acquiror, as applicable and as
contemplated hereby;
(b) The transactions contemplated by Article II hereof shall have
been consummated in accordance with the terms hereof and in accordance
with applicable Law and each of the conveyancing and liability assumption
instruments and other instruments, documents and agreements executed in
connection with such transactions shall be in form and substance
reasonably satisfactory to Acquiror and its counsel;
(c) Any waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or
been terminated, and any other governmental or regulatory notices,
authorizations, consents, orders or approvals necessary for the
performance of the parties'
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respective obligations pursuant to this Agreement shall have been either
filed (in the case of notices) or received and be in effect and not
subject to withdrawal or appeal; PROVIDED, HOWEVER, that this condition
shall not apply with respect to any authorization, consent, order or
approval necessary for the transfer of control of any Franchise if the
condition in Section 7.04(g) has been satisfied or waived by Acquiror;
(d) No federal, state or foreign governmental authority or other
agency or commission or court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, or
regulation, or any
permanent injunction or other order (whether temporary, preliminary or
permanent), which remains in effect and which has the effect of making the
transactions contemplated hereby illegal or otherwise prohibiting the
transactions contemplated hereby, or which questions the validity or the
legality of the transactions contemplated hereby and which could
reasonably be expected to have a Material Adverse Effect on Cable or
on Acquiror and its Subsidiaries taken as a whole;
(e) The Joint Proxy Statement/Prospectus shall have been declared
effective under the Securities Act and no stop orders with respect thereto
shall have been issued; and
(f) The Company shall have received (i) from the IRS an advance
letter ruling as contemplated by Section 6.17 hereof reasonably
satisfactory to Acquiror and SHI and (ii) an opinion of Xxxxx & Xxxxxxxxx
to the effect that the Merger constitutes a tax-free reorganization under
Section 368 of the Internal Revenue Code reasonably satisfactory to
Acquiror and SHI.
7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND SHI. The
obligations of the Company and SHI to effect the transactions contemplated
hereby are subject to the satisfaction, on or prior to the Closing Date, of the
following conditions:
(a) Subject to Section 7.05, the representations and warranties of
Acquiror contained in this Agreement or in any other document delivered
pursuant hereto shall be true and correct in all material respects on and
as of the Closing Date with the same effect as if made on and as of the
Closing Date and at the Closing Acquiror shall have delivered to the
Company and SHI a certificate to that effect;
(b) Each of the obligations of Acquiror to be performed on or
before the Closing Date pursuant to the terms of this Agreement shall have
been duly performed in all material respects on or before the Closing Date
and at the Closing Acquiror shall have delivered to the Company a
certificate to that effect;
(c) The Acquiror Common Stock shall have been approved for listing
on the NASDAQ National Market subject to official notice of issuance;
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(d) The Company and SHI shall have received an opinion of counsel
for Acquiror, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company, SHI and their counsel; and
(e) The Company and SHI shall have received all customary closing
documents they may reasonably request relating to the existence of
Acquiror and the authority of Acquiror for this Agreement and the
transactions contemplated hereby, all in form and substance reasonably
satisfactory to the Company and SHI.
7.04 CONDITIONS TO OBLIGATIONS OF ACQUIROR. The obligations of
Acquiror to effect the transactions contemplated hereby are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
(a) Subject to Section 7.06, the representations and warranties of
the Company and SHI contained in this Agreement or in any other document
delivered pursuant hereto shall be true and correct in all material
respects on and as of the Closing Date with the same effect as if made on
and as of the Closing Date and at the Closing the Company and SHI shall
have delivered to Acquiror a certificate to that effect;
(b) Each of the obligations of the Company and SHI to be performed
on or before the Closing Date pursuant to the terms of this Agreement
shall have been duly performed in all material respects on or before the
Closing Date and at the Closing the Company and SHI shall have delivered
to Acquiror a certificate to that effect;
(c) Immediately prior to the Effective Time, the Company shall
have no assets except (i) all of the issued and outstanding capital stock
of, and its right, title and interest in any advances to, the Cable
Subsidiaries, (ii) the contract rights referred to in Section 2.02(a)(ii);
and (iii) the cash referred to in Section 2.02(a)(iii) to the extent such
cash has not previously been used to pay expenses of the Company described
therein;
(d) Immediately prior to the Effective Time, the Company shall
have no liabilities except (i) liabilities associated with the cable
television operations of Cable (including any liabilities assumed in
connection with the acquisition of assets related to the Mid-Tennessee
Business in accordance with Section 6.26) and (ii) the contract
obligations referred to in Section 2.02(b)(ii);
(e) Acquiror shall have received an opinion of Xxxxx & Xxxxxxxxx,
counsel for the Company and SHI, dated as of the Closing Date, in form and
substance reasonably satisfactory to Acquiror and its counsel;
(f) The Company shall have delivered to Acquiror a certificate
signed by the Chief Executive Officer and the Chief Financial Officer of
the Company
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certifying that there are no outstanding options to acquire any capital
stock of the Company and as to the number of shares of capital stock of
the Company outstanding as of the Closing Date, indicating the class and
series of such shares;
(g) All authorizations, consents, orders and approvals from
applicable Franchise Authorities necessary to transfer Franchises in which
at least 95% of the Basic Subscribers of Cable are located (the "Required
Percentage") shall have been obtained, be in effect and not be subject to
withdrawal or appeal; PROVIDED, THAT the condition set forth in this
Section 7.04(g) shall not be deemed to be satisfied until the earlier to
occur of (x) thirty (30) days following the date on which the Required
Percentage is obtained, (y) the date on which the condition set forth in
this Section 7.04(g) would be satisfied if the Required Percentage were
one hundred percent or (z) the Termination Date; and
(h) Acquiror shall have received all customary closing documents
it may reasonably request relating to the existence of the Company, SHI,
the Cable Subsidiaries and the Cable Partnerships and the authority of the
Company and SHI for this Agreement and the transactions contemplated
hereby, all in form and substance reasonably satisfactory to Acquiror.
7.05 EXCEPTION TO CONDITIONS TO OBLIGATIONS TO THE COMPANY AND SHI.
The condition to the Company's and SHI's obligation to effect the Merger
contained in Section 7.03(a) shall be deemed satisfied notwithstanding any
failure of any representation or warranty of Acquiror to the true and correct as
of the Closing Date if (i) the aggregate amount of Losses that the holders of
Merger Stock could reasonably be expected to suffer as a result of the failures
of such representations and warranties to be true and correct as of the Closing
Date would not exceed $50,000,000 and (ii) Acquiror indemnifies SHI against any
such Losses; PROVIDED, HOWEVER, that Acquiror will have liability under this
Section 7.05 only with respect to those Losses that exceed, in the aggregate,
$5,000,000. The foregoing indemnification shall be subject to the procedures
set forth in Section 2.04 of the Contribution Agreement.
7.06 EXCEPTION TO CONDITIONS TO OBLIGATIONS OF ACQUIROR. The condition
to Acquiror's obligation to effect the Merger contained in Section 7.04(a) shall
be deemed satisfied notwithstanding any failure of any representation or
warranty of the Company or SHI to be true and correct as of the Closing Date if
(i) the aggregate amount of Losses that Acquiror or its Subsidiaries could
reasonably be expected to suffer as a result of the failures of such
representations and warranties to be true and correct as of the Closing Date
would not exceed $50,000,000 and (ii) SHI indemnifies Acquiror against any such
Losses; PROVIDED, HOWEVER, that SHI will have liability under this Section
7.06 only with respect to those Losses that exceed, in the aggregate,
$5,000,000. The foregoing indemnification shall be subject to the procedures
set forth in Section 2.04 of the Contribution Agreement.
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ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual written consent duly authorized by the Boards of
Directors of the Company, SHI and Acquiror;
(b) by either the Company or Acquiror (i) if, at the stockholders'
meetings referred to in Section 6.14 (including any postponement or
adjournment thereof), the Merger and the other transactions contemplated
hereby that require such approval shall fail to be approved and adopted by
the affirmative vote specified herein, or (ii) so long as the terminating
party is not then in breach of any of its obligations hereunder, after
December 31, 1996 (the "Termination Date") if the Merger shall not have
been consummated on or before such date;
(c) by the Company, provided neither it nor SHI is then in breach
of any of its obligations hereunder, if either (i) Acquiror fails to
perform any covenant in this Agreement when performance thereof is due and
does not cure the failure within twenty business days after the Company
delivers written notice thereof, or (ii) any other condition in Section
7.02 or Section 7.03 has not been satisfied and is not capable of being
satisfied prior to the Termination Date;
(d) by the Company, whether or not the conditions set forth in
Section 7.02 have been satisfied, if the Board of Directors of the Company
determines, with the advice of outside counsel, that it may be required to
do so in the exercise of its fiduciary duties;
(e) by Acquiror, provided it is not then in breach of any of its
obligations hereunder, if either (i) the Company or SHI fails to perform
any covenant in this Agreement when performance thereof is due and does
not cure the failure within twenty business days after notice by Acquiror
thereof, (ii) any condition in Section 7.02 or Section 7.04 has not been
satisfied and is not capable of being satisfied prior to the Termination
Date or (iii) the Board of Directors of the Company materially modifies or
withdraws the approval, determination or recommendation referred to in
Section 6.09;
(f) by the Company and Acquiror in accordance with and subject to
Section 1.02(d); or
(g) by Acquiror if it has received any communication from an HSR
Authority (such communication to be confirmed by such HSR Authority to the
Company) indicating that an HSR Authority has authorized the institution
of litigation challenging the transactions contemplated by this Agreement
under the U.S. antitrust laws, which
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litigation will include a motion seeking an order or injunction
prohibiting the consummation of any of the transactions contemplated by
this Agreement.
8.02 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 8.01 hereof, this Agreement, except for the
provisions of Section 6.06(f)-(j), Section 8.03, Section 9.08 and Section 9.13
and the confidentiality provisions of Section 6.05, shall forthwith become null
and void and have no effect, without any liability on the part of any party or
its directors, officers or stockholders. Nothing in this Section 8.02 shall
relieve any party to this Agreement of liability for breach of this Agreement.
8.03 FEES AND EXPENSES.
(a) In order to induce Acquiror to, among other things, enter into
this Agreement, the Company agrees as follows: If this Agreement is terminated
(A) by the Company pursuant to Section 8.01(d) hereof, (B) by Acquiror pursuant
to Section 8.01(e)(i) or Section 8.01(e)(iii) hereof, or (C) by the Company or
Acquiror pursuant to Section 8.01(b)(i) hereof and, in the case of this
subsection (C), either (x) the Trust shall have failed to vote in favor of the
adoption and approval of the Transactions or (y) the Board of Directors of the
Company shall have materially modified or withdrawn the approval, determination
or recommendation referred to in Section 6.09, then the Company shall promptly
pay to Acquiror a fee equal to 3% of the Base Consideration. If this Agreement
is terminated by Acquiror pursuant to Section 8.01(e)(ii) hereof, other than as
a result of any condition in Section 7.02 or the condition in Section 7.04(g)
not being satisfied and not being capable of being satisfied prior to the
Termination Date, then the Company shall promptly pay to Acquiror an amount
equal to the actual reasonable fees and expenses paid or payable by or on behalf
of Acquiror to its attorneys, accountants, environmental consultants, management
consultants, and other consultants and advisors in connection with the
negotiation, execution and delivery of this Agreement and the transactions
contemplated hereby ("Expense Reimbursement"), PROVIDED, HOWEVER, that the
Expense Reimbursement shall in no event exceed $5,000,000. The payment
described in the first sentence of this Section 8.03 (a) shall be made in same
day funds no later than five business days after the termination of this
Agreement; the Expense Reimbursement shall be made in same day funds no later
than five business days after receipt by the Company of detailed written
statements describing the fees and expenses.
(b) In order to induce the Company and SHI to, among other things,
enter into this Agreement, Acquiror agrees as follows: If this Agreement is
terminated (A) by the Company pursuant to Section 8.01(c), other than as a
result of any condition in Section 7.02 not being satisfied and not being
capable of being satisfied prior to the Termination Date or (B) by the Company
pursuant to Section 8.01(b)(i) and the shareholder of Acquiror that is a party
to the Voting Agreement referred to in Section 6.14 shall have failed to vote in
favor of the adoption and approval of the Transactions, then Acquiror shall pay
promptly to the Company an amount equal to the actual reasonable fees and
expenses paid or payable by or on behalf of the Company and SHI to their
attorneys, accountants, environmental consultants, management consultants, and
other consultants and advisors in connection with the negotiation, execution and
delivery of this Agreement; PROVIDED, HOWEVER, that such payment shall in no
event exceed the
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sum of $5,000,000. Such payment shall be made in same day funds no later than
five business days after receipt by Acquiror of detailed written statements
describing the fees and expenses.
ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained herein shall not survive beyond the Closing Date
except that the representations and warranties of SHI in Sections 3.05 and
4.03 and the certification of SHI delivered pursuant to Section 7.04(f) shall
survive indefinitely and SHI shall indemnify the Acquiror and its
Subsidiaries, including Cable, in respect of any diminution in value or Losses
incurred as a result of any breach thereof. This Section 9.01 shall not limit
any covenant or agreement of the parties hereto which by its terms requires
performance after the Closing Date. The indemnity set forth in the first
sentence of this Section 9.01 shall be subject to the procedures set forth in
Section 2.04 of the Contribution Agreement, and SHI shall not seek
contribution from the Company or any of its Subsidiaries or any of its or
their respective officers or directors in respect thereof.
9.02 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior written and oral and all contemporaneous oral agreements and
understandings with respect to the subject matter hereof.
9.03 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
by telecopy, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Acquiror:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx Xxxx, Esq.
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
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if to the Company or SHI:
The X.X. Xxxxxxx Company
Scripps Xxxxxx, Inc.
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxx
Attention: M. Xxxxxx Xxxxxxxxx, Secretary
with a copy to:
Xxxxx & Xxxxxxxxx
3200 National City Center
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Any notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy shall be deemed
effective on the first business day at the place at which such notice or
communication was received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the fifth business day at the place
from which such notice or communication was mailed following the day on which
such notice or communication was mailed.
9.04 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware regardless of the laws that
might otherwise govern under principles of conflicts of laws applicable thereto,
except that the laws of the Commonwealth of Pennsylvania shall govern the effect
of the Merger on Acquiror.
9.05 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
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 confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement, except
for Sections 6.06(f)-(j), 6.27 and 9.09 (which are intended to be for the
benefit of the persons provided for therein and may be enforced by such
persons).
9.07 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which shall
constitute one and the same agreement.
9.08 EXPENSES. Except as otherwise provided herein, all costs and
expenses incurred in connection with the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses. Prior to the
Contribution, the Company shall pay, or make adequate
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provision for the payment of, all costs and expenses required to be paid by
the Company under this Agreement in connection with the transactions
contemplated by this Agreement.
9.09 PERSONAL LIABILITY. This Agreement shall not create or be deemed
to create or permit any personal liability or obligation on the part of any
direct or indirect stockholder of any party hereto or any officer, director,
employee, agent, representative or investor of any party hereto.
9.10 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives and successors. This Agreement may not be assigned by any party
hereto.
9.11 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties. Any amendment to
this Agreement after the meetings of the stockholders of the Company and the
Acquiror referred to in Section 6.14 may, subject to applicable law, be made
without seeking the approval of such stockholders.
9.12 EXTENSION; WAIVER. All parties hereto affected thereby may (i)
extend the time for the performance of any of the obligations or other acts of
any other party hereto, (ii) waive any inaccuracies in the representations and
warranties of any other party contained herein or in any document, certificate
or writing delivered pursuant hereto by any other party, or (iii) waive
compliance with any of the agreements or conditions contained herein or any
breach thereof. Any agreement on the part of any party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
9.13 LEGAL FEES; COSTS. If any party hereto institutes any action or
proceeding, whether before a court or arbitrator, to enforce any provision of
this Agreement, the prevailing party therein shall be entitled to receive from
the losing party reasonable attorneys' fees and costs incurred in such action or
proceeding, whether or not such action or proceeding is prosecuted to judgment.
ARTICLE X
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings indicated.
"Accumulated Funding Deficiency" means an accumulated funding
deficiency, as defined in Section 302 of ERISA and Section 412 of the Code.
"Acquiror" has the meaning set forth in the first paragraph of this
Agreement.
"Acquiror A Stock" has the meaning set forth in Section 5.05(a).
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"Acquiror B Stock" has the meaning set forth in Section 5.05(a).
"Acquiror Common Stock" means the Class A Special Common Stock, par
value $1.00 per share, of Acquiror.
"Acquiror Employee Plan" means any Employee Benefit Plan that is
sponsored or contributed to by Acquiror or any of its ERISA Affiliates covering
any employees or former employees of Acquiror or its ERISA Affiliates.
"Acquiror Preferred Stock" has the meaning set forth in Section
5.05(a).
"Acquiror Schedule" has the meaning set forth in Section 6.23(b).
"Acquiror's Form 10-Q" has the meaning set forth in Section 5.07.
"Acquiror's SEC Reports" has the meaning set forth in Section 5.06.
"Aggregate Consideration" has the meaning set forth in Section
1.02(d).
"Aggregate Shares Delivered" has the meaning set forth in Section
1.02(d).
"Agreed Rate" means the annual rate of interest quoted from time to
time by Citibank, N.A. in New York City as its prime rate of interest for the
purpose of determining the interest rates charged by it for United States dollar
commercial loans made in the United States.
"Agreement" has the meaning set forth in the first paragraph of this
Agreement.
"Average Revenue Per Basic Subscriber" shall mean the amount of
total revenue received from Basic Subscribers during the calendar month in
question for recurring service (which shall include, without limitation, basic
cable service, pay cable service, additional outlets, equipment rental fees and
program guides, including installation charges and advertising revenues);
divided by one-half of the sum of (i) the number of Basic Subscribers on the
first day of the calendar month in question and (ii) the number of Basic
Subscribers on the last day of the calendar month in question.
"Basic Subscriber" means a Person (i) who subscribes to Basic
Service, (ii) who pays the full rate for such service charged by the Company,
any Cable Subsidiary or Cable Partnership, Acquiror or any Subsidiary of
Acquiror (as the case may be) for detached single family homes, and (iii) whose
accounts receivable owed for such service are not more than 60 days past due
from the date of invoice; provided, that a hotel, motel, or other multi-living
unit customer which pays less per living unit than the rates charged for
detached single family homes shall be considered to be that number of Basic
Subscribers which is equal to revenues from Basic Service provided to such
hotel, motel, or other customer for the month immediately preceding the month in
which this Agreement is executed and delivered (without regard to nonrecurring
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revenues from ancillary services such as installation fees) divided by the full
rate charged for detached single family homes for such service.
"Base Consideration" has the meaning set forth in Section 1.02(d).
"Benefit Arrangement" means any material benefit arrangement
(whether or not written) that is not an Employee Benefit Plan, including (i)
any employment or consulting agreement, (ii) any arrangement providing for
insurance coverage or workers' compensation benefits, (iii) any incentive
bonus or deferred bonus arrangement, (iv) any arrangement providing
termination allowance, severance or similar benefits, (v) any equity
compensation plan, (vi) any deferred compensation plan and (vii) any
compensation policy and practice.
"Broadcasting" has the meaning set forth in Section 2.01(a).
"Cable" means, collectively, the Cable Subsidiaries and the Cable
Partnerships.
"Cable Balance Sheets" has the meaning set forth in Section 4.04.
"Cable Benefit Arrangement" means any Benefit Arrangement covering
any Cable Employees, directors and former directors of Cable and the
beneficiaries of any of them.
"Cable Dispute" has the meaning set forth in Section
6.10(a)(iii)(C).
"Cable Employee Plan" means any Employee Benefit Plan that is
sponsored or contributed to by the Company, SHI or any of their ERISA Affiliates
covering any Cable Employees.
"Cable Employee" means any employee or former employee of Cable.
"Cable Net Liabilities Amount" means the Net Liabilities Amount of
Cable immediately prior to the Effective Time and after giving effect to the
Distribution, appropriately adjusted for any minority interests. The Cable Net
Liabilities Amount does not include any assets or liabilities of the Company.
"Cable Plan" means any Cable Employee Plan or Cable Benefit
Arrangement.
"Cable Partnerships" has the meaning set forth in Section 4.03.
"Cable Subsidiaries" has the meaning set forth in Section 2.01(a).
"Cable Tax Returns" has the meaning set forth in Section 6.10(f)(i).
"Capital Expenditure Amount" has the meaning set forth in Section
6.24.
"Certificate of Merger" has the meaning set forth in Section 1.03.
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"Certificates" has the meaning set forth in Section 1.04(b).
"Charter Amendment" has the meaning set forth in Section 2.01(b).
"Closing" and "Closing Date" have the meanings set forth in Section
7.01.
"Closing Price" has the meaning set forth in Section 1.02(d).
"Closing Price Share Number" has the meaning set forth in Section
1.02(d).
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, as set forth in Section 4980B of the Code and Part 6 of Title
I of ERISA.
"Code" means Internal Revenue Code of 1986, as amended.
"Collar Price" has the meaning set forth in Section 1.02(d).
"Common Stock Conversion Number" has the meaning set forth in
Section 1.02(d).
"Communications Act" has the meaning set forth in Section 4.07(b).
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Benefit Arrangement" means any Benefit Arrangement
maintained by the Company, SHI or any of their ERISA Affiliates covering any
employees, former employees, directors or former directors of the Company, SHI
or any of their ERISA Affiliates, and the beneficiaries of any of them.
"Company Class A Common Stock" means the Company's Class A Common
Stock, $.01 par value per share.
"Company Common Stock" means, collectively, the Company Class A
Common Stock and the Company Common Voting Stock.
"Company Common Voting Stock" means the Company's Common Voting
Stock, $.01 par value per share.
"Company Consolidated Income Taxes" has the meaning set forth in
Section 6.10(f)(iii).
"Company Consolidated Income Tax Returns" has the meaning set forth
in Section 6.10(f)(ii).
"Company Contracts" has the meaning set forth in Section 3.15.
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"Company Employee Plan" means any Employee Benefit Plan that is
sponsored or contributed to by the Company, SHI or any of their ERISA Affiliates
covering the employees or former employees of the Company, SHI or any of their
ERISA Affiliates.
"Company Group" has the meaning set forth in Section 6.10(f)(iv).
"Company Plan" means any Company Employee Benefit Plan or Company
Benefit Arrangement.
"Company Preferred Stock" has the meaning set forth in Section
3.05(a).
"Company's SEC Reports" has the meaning set forth in Section 3.06.
"Company 10-Q" has the meaning set forth in Section 3.07.
"Confidentiality Agreement" has the meaning set forth in Section
6.05.
"Contract" means any contract, agreement or understanding.
"Contribution" has the meaning set forth in Section 2.02(a).
"Contribution Agreement" has the meaning set forth in Section
2.02(a).
"Directors Plan" has the meaning set forth in Section 6.13.
"DGCL" has the meaning set forth in Section 1.02(e).
"Dissenting Shares" has the meaning set forth in Section 1.02(e).
"Dissenting Stockholder" has the meaning set forth in Section
1.02(e).
"Distribution" has the meaning set forth in Section 2.02(c).
"Effective Time" has the meaning set forth in Section 1.03.
"Employee Benefit Plan" means any employee benefit plan, as defined
in Section 3(3) of ERISA.
"Enforceability Exceptions" has the meaning set forth in Section
3.01.
"Environmental Laws" means any federal, state, and local laws,
judicial decisions, regulations, rules, judgments, orders, decrees, permits,
licenses, agreements and governmental restrictions, relating to human health,
the environment or to emissions, discharges or releases of pollutants,
contaminants or other hazardous substances or wastes into the environment,
including without limitation ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport
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or handling of pollutants, contaminants or other hazardous substances or
wastes or the clean-up or other remediation thereof.
"Environmental Liabilities" means any and all liabilities of or
relating to the named entity, whether contingent or fixed, actual or potential,
known or unknown, which (i) arise under or relate to matters covered by
Environmental Laws and (ii) relate to actions occurring or conditions existing
on or prior to the Effective Time.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means a Person and/or such Person's Subsidiary or
any trade or business (whether or not incorporated) which is under common
control with such entity or such entity's Subsidiaries or which is treated as a
single employer with such Person or any Subsidiary of such Person under Section
414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA.
"Estimated Capital Expenditure Amount" has the meaning set forth in
Section 6.23(a).
"Estimated Cable Net Liabilities Amount" has the meaning set forth
in Section 6.23(a).
"EWS Cable" has the meaning set forth in Section 2.01(a).
"Exchange Act" has the meaning set forth in Section 3.03.
"Exchange Agent" has the meaning set forth in Section 1.04(a).
"Execution Price" has the meaning set forth in Section 1.02(d).
"Expense Reimbursement" has the meaning set forth in Section
8.03(a).
"FAS 106" means Financial Accounting Standard 106.
"FCC" has the meaning set forth in Section 3.03.
"Form 8-K" has the meaning set forth in Section 6.22.
"Franchise" means written "franchise" within the meaning of Section
602(8) of the Cable Communications Policy Act of 1984 (47 U.S.C. (S)522(9)).
"Franchising Authority" has the meaning that term is given by
Section 602(9) of the Cable Communications Policy Act of 1984 (47 U.S.C.
(S)522(10)).
"GAAP" has the meaning set forth in Section 3.07.
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"Group Health Plan" means any group health plan, as defined in
Section 5000(b)(1) of the Code.
"HSR Act" has the meaning set forth in Section 3.03.
"HSR Authority" has the meaning set forth in Section 6.15(a).
"Incentive Plan" has the meaning set forth in Section 6.13.
"Indemnifying Party" has the meaning set forth in Section 6.06(h).
"Indemnified Party" has the meaning set forth in Section 6.06(h).
"Indemnitee" has the meaning set forth in Section 6.10(e).
"Indemnitor" has the meaning set forth in Section 6.10(e).
"IRS" means the Internal Revenue Service.
"Joint Proxy Statement/Prospectus" has the meaning set forth in
6.06(a).
"Licenses" means approvals, consents, rights, certificates, orders,
franchises, determinations, permissions, licenses, authorities or grants issued,
declared, designated or adopted by any nation or government, any federal, state,
municipal or other political subdivision thereof or any department, commission,
board, bureau, agency or instrumentality exercising executive, legislative,
judicial, regulatory or administrative functions pertaining to government,
excluding, however, the Franchises.
"Liens" means any lien, claim, charge, restriction, pledge,
mortgage, security interest or other encumbrance.
"Losses" means all losses, claims, damages, liabilities or actions,
including any legal or other expenses reasonably incurred in connection with
investigating or defending any such loss, claim, damage or liability or action
or enforcing any indemnity with respect thereto.
"L-R Cable" has the meaning set forth in Section 2.01(a).
"Material Adverse Effect" means a material adverse effect on the
business, condition (financial or otherwise) or assets of the named entity or
the named entities taken as a whole. When the term "Material Adverse Effect" or
material is used with respect to more than one act, occurrence, item or
circumstance, all such acts, occurrences, items and circumstances shall be
considered individually and in the aggregate.
"Material Cable Agreements" has the meaning set forth in Section
4.08(a).
"Merger" has the meaning set forth in Section 1.01.
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"Merger Stock" has the meaning set forth in Section 1.04(a).
"Xxxxxxx Xxxxx" has the meaning set forth in Section 3.04.
"Mid-Tennessee" has the meaning set forth in Section 4.13.
"Mid-Tennessee Agreement" means the Asset Sale Agreement dated
October 26, 1995 between Mid-Tennessee Cable Limited Partnership and
Broadcasting.
"Mid-Tennessee Amount" has the meaning set forth in Section 6.26.
"Mid-Tennessee Business" has the meaning set forth in Section 4.13.
"Mid-Tennessee Purchase Price" has the meaning set forth in Section
6.26.
"MTB Net Liabilities Amount" has the meaning set forth in Section
6.26.
"Multiemployer Plan" means a multiemployer plan, as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"NLRB" means the National Labor Relations Board.
"Net Liabilities Amount" means, with respect to any person at any
time, (i) the consolidated liabilities (whether long-term or current, and
including, without limitation, any and all accrued and unpaid taxes) of such
Person and its consolidated Subsidiaries at such time minus (ii) the
consolidated current assets (other than inventory) of such Person and its
consolidated Subsidiaries at such time, determined in each case in accordance
with GAAP.
"Ordinary Course Expenditures" has the meaning set forth in Section
6.24.
"Other Filings" has the meaning set forth in Section 6.06(b).
"Outstanding Company Common Stock" has the meaning set forth in
Section 1.02(d).
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any employer pension benefit plan, as defined
in Section 3(2) of ERISA.
"Person" means any individual, general partnership, limited
partnership, corporation, limited liability company, joint venture, trust,
business trust, cooperative or association, and the heirs, executors,
administrators, legal representatives, successors, and assigns of such Person
where the context so requires.
"Pre-Closing Date" has the meaning set forth in Section 1.02(d).
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"Preliminary Joint Proxy Statement/Prospectus" has the meaning set
forth in section 6.06(a).
"Prohibited Transaction" means a transaction that is prohibited
under 4975 of the Code or Section 406 of ERISA and not exempt under Section 4975
of the Code or Section 408 of ERISA, respectively.
"Random Trading Days" has the meaning set forth in Section 1.02(d).
"Reportable Event" means a "reportable event," as defined in Section
4043 of ERISA, to the extent that the reporting of such event to the PBGC has
not been waived.
"Required Percentage" has the meaning set forth in Section 7.04(g).
"Restated Articles" has the meaning set forth in Section 2.01(b).
"Retained Assets" has the meaning set forth in the Contribution
Agreement.
"Retained Liabilities" has the meaning set forth in the Contribution
Agreement.
"River City Interest" has the meaning set forth in Section 4.03.
"River City Purchase Amount" has the meaning set forth in Section
6.28.
"Rules and Regulations" has the meaning set forth in Section
4.07(b).
"Sacramento Cable" has the meaning set forth in Section 2.01(a).
"SCT" has the meaning set forth in Section 4.03.
"SEC" has the meaning set forth in Section 3.06.
"SEC Filings" has the meaning set forth in Section 6.06(c).
"Securities Act" has the meaning set forth in Section 3.03.
"Share Deficiency Number" has the meaning set forth in Section
1.02(d).
"SH Cable" has the meaning set forth in Section 2.01(a).
"SHI" has the meaning set forth in the first paragraph of this
Agreement.
"SHI Class A Common Shares" means SHI's Class A Common Shares, $.01
par value.
"SHI Common Shares" has the meaning set forth in Section 3.05(b).
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"SHI Common Voting Shares" means SHI's Common Voting Shares, $.01
par value.
"SHI Notes" has the meaning set forth in Section 2.02(b).
"SHI Note Indenture" means the Indenture dated December 15, 1991
relating to the 7-3/8% Notes of SHI due December 15, 1998.
"Subsidiary" as to any Person means (i) any corporation of which
such Person owns, either directly or through its Subsidiaries, 50% or more of
the total combined voting power of all classes of voting securities of such
corporation and (ii) any partnership, association, joint venture or other form
of business organization, whether or not it constitutes a legal entity, in which
such Person directly or indirectly through its Subsidiaries owns 50% or more of
the total equity interests.
"Superior Proposal" has the meaning set forth in Section 6.01(a).
"Surviving Corporation" has the meaning set forth in Section 1.01.
"Tax" has the meaning set forth in Section 6.10(f)(viii).
"Tax Return" has the meaning set forth in Section 6.10(f)(x).
"TCC" has the meaning set forth in Section 4.03.
"Termination Date" has the meaning set forth in Section 8.01(b).
"Termination Intent Notice" has the meaning set forth in Section
1.02(d).
"Top-up Notice" has the meaning set forth in Section 1.02(d).
"Top-up Share Number" has the meaning set forth in Section 1.02(d).
"Transaction Agreement" has the meaning set forth in Section 3.01.
"Transactions" has the meaning set forth in Section 6.14.
"Trust" has the meaning set forth in Section 6.14.
"Voting Agreement" means the Voting Agreement dated as of the date
hereof by and among Acquiror, the Company, the Trust and Sural Corporation.
"Welfare Plan" means any employee welfare benefit plan, as defined
in Section 3(1) of ERISA.
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
THE X.X. XXXXXXX COMPANY
By /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
SCRIPPS XXXXXX, INC.
By /s/ Xxxxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman, President and
Chief Executive Officer
COMCAST CORPORATION
By /s/ Xxxxxx X. Pick
----------------------------------
Name: Xxxxxx X. Pick
Title: Vice President
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CONFORMED COPY
VOTING AGREEMENT
This Voting Agreement dated as of October 28, 1995 (this "Agreement"), is
by and among Comcast Corporation, a Pennsylvania corporation ("Acquiror"), The
X.X. Xxxxxxx Company, a Delaware corporation (the "Company"), Sural Corporation,
a Delaware corporation (the "Acquiror Stockholder"), and The Xxxxxx X. Scripps
Trust (the "Trust").
WHEREAS, the Acquiror Stockholder owns 1,845,037 shares of Acquiror's Class
A Common Stock, par value $1.00 per share, 5,315,772 shares of Acquiror's Class
A Special Common Stock, par value $1.00 per share, and 8,786,250 shares of
Acquiror's Class B Common Stock, par value $1.00 per share (all shares of such
stock now owned and which may hereafter be acquired by the Acquiror Stockholder
prior to the termination of this Agreement shall be referred to herein as the
"Acquiror Shares");
WHEREAS, the Trust owns 16,040,000 shares of the Company's Common Voting
Stock, $.01 par value per share ("Company Common Voting Stock"), and 32,610,000
shares of the Company's Class A Common Stock, $.01 par value per share ("Company
Class A Common Stock") (all shares of Company Common Voting Stock and Company
Class A Common Stock now owned and which may hereafter be acquired by the Trust
prior to the termination of this Agreement shall be referred to herein as the
"Company Shares");
WHEREAS, the Company, Scripps Xxxxxx, Inc., an Ohio corporation and an
affiliate of the Company ("SHI"), and Acquiror propose to enter into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, that the Company will merge
with and into Acquiror pursuant to the Merger (this and other capitalized terms
used and not defined herein shall have the meanings given to such terms in the
Merger Agreement);
WHEREAS, it is a condition to the willingness of Acquiror to enter into the
Merger Agreement that the Trust agree, and in order to induce Acquiror to enter
into the Merger Agreement, the Trust has agreed, to enter into this Agreement;
and
WHEREAS, it is a condition to the willingness of the Company to enter into
the Merger Agreement that the Acquiror Stockholder agree, and in order to induce
the Company to enter into the Merger Agreement, the Acquiror Stockholder has
agreed, to enter into this Agreement;
Now, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1
VOTING OF COMPANY SHARES AND ACQUIROR SHARES
SECTION 1.1. VOTING AGREEMENT. (a) The Trust hereby agrees that during
the time this Agreement is in effect, at any meeting of the stockholders of the
Company, however called, and in any action by consent of the stockholders of the
Company, the Trust, subject to the last sentence of this Section 1.1, shall vote
its Company Shares: (i) in favor of the Merger, the Merger Agreement (as
amended from time to time) and the other Transactions with respect to which the
Trust may be entitled to vote, (ii) against any proposal for any
recapitalization, merger, sale of assets or other business combinations between
the Company, SHI or any of the Cable Subsidiaries and any person or entity other
than Acquiror, or any other action or agreement, that would result in a breach
of any covenant, representation or warranty or any other obligation or agreement
of the Company under the Merger Agreement or that would result in any of the
conditions to the obligations of the Company under the Merger Agreement not
being fulfilled, and (iii) in favor of any other matter relating to the
consummation of the Transactions with respect to which the Trust may be entitled
to vote. The Trust acknowledges receipt and review of a copy of the Merger
Agreement. Notwithstanding anything to the contrary set forth herein, the Trust
shall not be required to vote its Company Shares in accordance with this Section
1.1 if the Board of Trustees of the Trust determines, with the advice of outside
counsel, that it may be required, in the exercise of its fiduciary duties, to
vote such shares other than in accordance with such Section.
(b) The Acquiror Stockholder hereby agrees that during the time this
Agreement is in effect, at any meeting of the stockholders of Acquiror, however
called, and in any action by consent of the stockholders of Acquiror, the
Acquiror Stockholder shall vote its Acquiror Shares: (i) in favor of the
Merger, the Merger Agreement (as amended from time to time) and the other
Transactions with respect to which such Acquiror Stockholder may be entitled to
vote, (ii) against any action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of
Acquiror under the Merger Agreement or that would result in any of the
conditions to the obligations of Acquiror under the Merger Agreement not being
fulfilled and (iii) in favor of any other matter relating to the consummation of
the Transactions with respect to which the Acquiror Stockholders may be entitled
to vote. The Acquiror
2
Stockholder acknowledges receipt and review of a copy of the Merger Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust hereby represents and warrants to Acquiror as follows:
SECTION 2.1. AUTHORITY RELATIVE TO THIS AGREEMENT. The Trust has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Trust and the
consummation by the Trust of the transactions contemplated hereby have been duly
and validly authorized by the Trust (including any approvals required to be
given by the trustees of the Trust), and no other proceedings on the part of the
Trust are necessary to authorize the execution and delivery of this Agreement or
to consummate such transactions. This Agreement has been duly and validly
executed and delivered by the Trust and, assuming the due authorization,
execution and delivery hereof by each other party hereto, constitutes a legal,
valid and binding obligation of the Trust (and the trustees of Trust in their
capacities as such), enforceable against the Trust in accordance with its terms,
except (x) as the same may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws of general application relating to or affecting
creditors' rights, including without limitation, the effect of statutory or
other laws regarding fraudulent conveyance and preferential transfers, and (y)
for the limitations imposed by general principles of equity. The Trust has
allowed Acquiror to review a complete copy of the trust agreement establishing
the Trust and evidence of its authority to enter into this Agreement. Acquiror
agrees to hold the contents of such trust agreement in complete confidence.
SECTION 2.2. NO CONFLICT.
(a) The execution and delivery of this Agreement by the Trust do not, and
the performance of this Agreement by the Trust will not, (i) conflict with or
violate the trust agreement establishing the Trust, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Trust or by which the Trust's Company Shares are 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 result in
the creation of a lien or
3
encumbrance on any of the Trust's Company Shares pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Trust is a party or by which the
Trust or the Trust's Company Shares are bound or affected, except, in the case
of clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or delay the performance
by the Trust of the Trust's obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Trust do not, and
the performance of this Agreement by the Trust will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
federal, state, local or foreign regulatory body, except (i) filings with the
SEC under the Exchange Act and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay the performance by the Trust of the Trust's
obligations under this Agreement.
SECTION 2.3. TITLE TO THE COMPANY SHARES. The Trust is the owner of the
Company Shares, free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on voting
rights, charges and other encumbrances (collectively, "Liens") of any nature
whatsoever. The Trust has not appointed or granted any proxy, which appointment
or grant is still effective, with respect to the Company Shares. The Trust has
sole voting power with respect to the Company Shares, and the person executing
this Agreement on behalf of the Trust has the power to direct the voting of the
Company Shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR STOCKHOLDER
The Acquiror Stockholder hereby represents and warrants to the Company as
follows:
SECTION 3.1. AUTHORITY RELATIVE TO THIS AGREEMENT. The Acquiror
Stockholder has all necessary power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Acquiror Stockholder and the consummation by the Acquiror Stockholder of
the transactions contemplated hereby have been duly and validly authorized by
the Acquiror Stockholder, and no other proceedings on the part of the Acquiror
Stockholder are necessary to authorize the execution and delivery of this
Agreement or to consummate such transactions. This Agreement has been duly and
validly executed and delivered by the
4
Acquiror Stockholder and, assuming the due authorization, execution and delivery
hereof by each other party hereto, constitutes a legal, valid and binding
obligation of such Acquiror Stockholder enforceable against the Acquiror
Stockholder in accordance with its terms, except (x) as the same may be limited
by applicable bankruptcy, insolvency, moratorium or similar laws of general
application relating to or affecting creditors' rights, including without
limitation, the effect of statutory or other laws regarding fraudulent
conveyance and preferential transfers, and (y) for the limitations imposed by
general principles of equity. The Acquiror Stockholder has provided the Company
with complete copies of its Certificate of Incorporation and Bylaws and evidence
of its authority to enter into this Agreement.
SECTION 3.2. NO CONFLICT.
(a) The execution and delivery of this Agreement by the Acquiror
Stockholder do not, and the performance of this Agreement by the Acquiror
Stockholder shall not, (i) conflict with or violate the charter or by-laws of
the Acquiror Stockholder, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Acquiror Stockholder or
by which the Acquiror Shares are 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 result in the creation of a lien
or encumbrance on any of Acquiror Shares pursuant to, any note, bond, mortgage,
indenture contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Acquiror Stockholder is a party or by
which the Acquiror Stockholder or by which Acquiror Shares are bound or
affected, except, in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
delay the performance by such Acquiror Stockholder of such Acquiror
Stockholder's obligations under this Agreement.
(b) The execution and delivery of this Agreement by the Acquiror
Stockholder do not, and the performance of this Agreement by the Acquiror
Stockholder will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any federal, state, local or foreign
regulatory body, except (i) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay the performance by the Acquiror Stockholder of its
obligations under this Agreement or (ii) filings with the SEC under the Exchange
Act.
5
SECTION 3.3. TITLE TO THE ACQUIROR SHARES. The Acquiror Stockholder is the
owner of the Acquiror Shares free and clear of all Liens whatsoever, except that
1,000,000 shares of Class A Common Stock (the "Pledged Stock") are pledged to
PNC Bank, N.A. pursuant to a loan agreement dated April 23, 1992 and a
collateral pledge agreement dated as of the same date (together, the "Loan
Agreements"). PNC Bank, N.A. has the right to vote the Pledged Stock upon the
occurrence of an event of default under the Loan Agreements. The Acquiror
Stockholder has sole voting power with respect to the Acquiror Shares or has the
power to direct the voting of the Acquiror Shares. The Acquiror Stockholder has
not appointed or granted any proxy, which appointment or grant is still
effective, with respect to the Acquiror Shares. The Acquiror Stockholder has
sole voting power with respect to the Acquiror Shares, and the person executing
this Agreement on behalf of the Acquiror Stockholder has the power to direct the
voting of the Acquiror Shares.
ARTICLE 4
COVENANTS OF THE TRUST
SECTION 4.1. NO INCONSISTENT AGREEMENT. The Trust hereby covenants and
agrees that, except as otherwise contemplated by this Agreement, the Trust shall
not enter into any voting agreement or grant a proxy or power of attorney with
respect to the Trust's Company Shares which is inconsistent with this Agreement.
SECTION 4.2. TRANSFER OF TITLE. The Trust hereby covenants and agrees
that the Trust shall not transfer ownership of any of its Company Shares unless
(i) the transferee agrees in writing to be bound by the terms and conditions of
this Agreement or (ii) such transfer of ownership will not affect the Trust's
ability to approve of the Merger and the other Transactions with respect to
which the Trust may be entitled to vote without regard to the vote of the other
stockholders of the Company. Nothing else contained in this Agreement shall be
construed to prohibit any transfer permitted by this Section 4.2.
ARTICLE 5
COVENANTS OF THE ACQUIROR STOCKHOLDER
SECTION 5.1. NO INCONSISTENT AGREEMENT. The Acquiror Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement, such Ac-
quiror Stockholder shall not enter into any voting agreement or grant a proxy or
6
power of attorney with respect to the Acquiror Shares which is inconsistent
with this Agreement.
SECTION 5.2. TRANSFER OF TITLE. The Acquiror Stockholder hereby
covenants and agrees that (i) such Acquiror Stockholder shall not transfer
ownership of any of the Acquiror Shares unless the transferee agrees in writing
to be bound by the terms and conditions of this Agreement or (ii) such transfer
of ownership will not affect Acquiror Stockholder's ability to approve of the
Merger and the other Transactions with respect to which the Acquiror Stockholder
may be entitled to vote without regard to the vote of the other stockholders of
Acquiror. Nothing else contained in this Agreement shall be construed to
prohibit any transfer permitted by this Section 5.2.
ARTICLE 6
MISCELLANEOUS
SECTION 6.1. TERMINATION. This Agreement shall terminate on the earliest
to occur of (i) the date of consummation of the Merger, (ii) the date which is
two years from the date hereof, and (iii) the date of the termination of the
Merger Agreement.
SECTION 6.2. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 6.3. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
SECTION 6.4. AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 6.5. SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced,
7
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 6.6. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of (i) in the case of the Trust's
Obligations, the State of Delaware, and (ii) in the case of the Acquiror
Stockholder's obligations, the State of Pennsylvania, regardless of the laws
that might otherwise govern under principles of conflicts of law applicable
hereto.
SECTION 6.7. DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 6.8. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 6.9. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given when delivered
in person, by telecopy with answerback, by express or overnight mail delivered
by a nationally recognized air courier (delivery charges prepaid) or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows: (a) if to the Trust, to it at 000 Xxxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxxxxx, Xxxx, attention: Xxxxxx X. Xxxxxxx, Secretary-
Treasurer, (b) if to the Acquiror Stockholder, to it at 00 Xxxxx Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx, 00000, with a copy to Xxxxx Xxxx & Xxxxxxxx,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxxxxx X. Xxxxxx,
Esq., (c) if to Acquiror, to it at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx, 00000, attention: Xxxxxxx Xxxx, Esq., with a copy to Xxxxx Xxxx &
Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention: Xxxxxxx X.
Xxxxxx, Esq., and (d) if to the Company, to it at 000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, Xxxx, attention: M. Xxxxxx Xxxxxxxxx, Secretary, or to such other
address as the party to whom notice is given may have previously furnished to
the others in writing in the manner set forth above. Any notice or
communication delivered in person shall be deemed effective on delivery. Any
notice or communication sent by telecopy or by air courier shall be deemed
effective on the first business day at the place at which such notice or
communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the
8
fifth business day at the place from which such notice or communication was
mailed following the day on which such notice or communication was mailed.
SECTION 6.10. ASSIGNMENTS. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 6.11. PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
9
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
COMCAST CORPORATION
By: /s/ Xxxxxx X. Pick
-------------------------------
Name: Xxxxxx X. Pick
Title: Vice President
THE X.X. XXXXXXX COMPANY
By: /s/ Xxxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxxx X. Xxxxx
Title: Chairman and
Chief Executive Officer
SURAL CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
THE XXXXXX X. SCRIPPS TRUST
By: /s/ Xxxxxx X. Scripps
-------------------------------
Name: Xxxxxx X. Scripps
Title: Trustee
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of
____________________, is made by and between Comcast Corporation, a Pennsylvania
corporation (the "Company"), and The Xxxxxx X. Scripps Trust (the "Trust").
WHEREAS, this Agreement is being entered into pursuant to the
Agreement and Plan of Merger, dated as of October 28, 1995, among The X.X.
Xxxxxxx Company, Scripps Xxxxxx, Inc., and the Company (the "Merger Agreement");
WHEREAS, it is intended by the Company and the Trust that this
Agreement shall become effective immediately upon the issuance of the Common
Stock of the Company to be issued pursuant to Article I of the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. As used in this Agreement:
a. "Commission" means the Securities and Exchange Commission.
b. "Common Stock" means the Class A Special Common Stock, par
value $1.00 per share, of the Company.
c. "Person" means a natural person, a partnership, a
corporation, an association, a joint stock company, a trust, an estate, a joint
venture, an unincorporated organization or other entity or a governmental entity
or any department, agency or political subdivision thereof.
d. "Registrable Shares" means, at any particular time at which
notice has been given pursuant to Section 2 or 3 hereunder, any of the following
which are held by the Trust: (i) shares of Common Stock issued pursuant to the
Merger; (ii) shares of Common Stock issued in lieu of cash dividends on other
Registrable Shares pursuant to a dividend reinvestment plan adopted by the
Company; (iii) shares of Common Stock then outstanding which were issued as, or
upon the conversion or exercise of other securities issued as, a dividend or
other distribution with respect to or in replacement of other Registrable
Shares; (iv) shares of Common Stock then issuable upon conversion or exercise of
other securities which were issued as a dividend or other distribution with
respect to or in replacement of other Registrable Shares, and (v) any equity
securities of the Company issued or issuable with respect to the securities
referred to in clauses (i) through (iv)
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, the Trust will be deemed to be a holder of
Registrable Shares whenever it has the unqualified right to acquire such
Registrable Shares (by conversion or otherwise, but disregarding any legal
restrictions upon the exercise of such right), whether or not such acquisition
has actually been effected.
e. "Registration Expenses" has the meaning ascribed to it in
Section 6 of this Agreement.
f. "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
2. DEMAND REGISTRATIONS.
a. REQUESTS FOR REGISTRATION. From and after the date hereof,
the Trust may make a written request from time to time for registration under
the Securities Act of all or part of its Registrable Shares. Each such request
will specify the number of Registrable Shares to be registered and the intended
method of distribution thereof. All registrations requested pursuant to this
Section 2(a) are referred to herein as "Demand Registrations." Demand
Registrations shall be on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and available for the sale
of the Registrable Shares to be registered thereunder in accordance with the
intended method of distribution thereof; provided that the Company will include
in any short-form registration such additional customary information as the
Trust may reasonably request after consultation with the managing underwriter,
in the case of any underwritten public offering, or with the investment banker,
in the case of any non-underwritten offering, in order to facilitate the sale of
such securities; and provided further that the Company shall not be required to
file any such registration as a shelf registration under Rule 415 of the
Securities Act.
b. REGISTRATIONS. A maximum of three Demand Registrations may
be requested by the Trust. A registration will not count as one of the Demand
Registrations requested by the Trust until it has become effective and unless
either (i) the Trust has registered and sold at least 90% of the Registrable
Shares it requests be included in such registration or (ii) the registration has
remained effective for at least 30 days. The Company will pay all Registration
Expenses in connection with any registration initiated as a Demand Registration
requested hereunder. Should a Demand Registration not become effective due to
the failure of the Trust to perform its obligations under this Agreement or the
inability of the Trust to reach agreement with the underwriters on price or
other customary terms for such transaction (provided that if the registration
does not become effective because of such
-2-
inability then, on one occasion at the election of the Trust, it shall not count
as a Demand if the Trust pays the Company for all of the Registration Expenses
in respect thereof), or in the event the Trust withdraws or does not pursue the
request for the Demand Registration (in each of the foregoing cases, provided
that at such time the Company is in compliance in all material respects with its
obligations under this Agreement), then such Demand Registration shall be deemed
to have been effected. Each Demand Registration must be in respect of
Registrable Shares with a fair market value in excess of $100,000,000.
c. PRE-EMPTION. The Company will have the right to pre-empt
any Demand Registration with a primary registration by delivering written notice
of such intention to the Trust indicating that the Company has identified a
specific business need and use for the proceeds of the sale of such securities
within five business days after the Company has received from the Trust a
request for such Demand Registration. In the ensuing primary registration, the
Trust will have such piggyback registration rights as are set forth in Section 3
hereof. Upon the Company's pre-emption of a requested Demand Registration, such
requested registration will not count as one of the Demand Registrations.
d. PRIORITY ON DEMAND REGISTRATIONS. If a Demand Registration
is an underwritten public offering and the managing underwriters advise the
Company in writing that in their opinion the number of Registrable Shares and
other securities requested to be included in such offering would materially and
adversely affect the success of the offering, the Company will include in such
registration, prior to the inclusion of any securities which are not owned by
the Trust, the number of Registrable Shares requested to be included which in
the opinion of such underwriters can be sold without materially and adversely
affecting the success of the offering. Whenever a registration requested
pursuant to this Section is for an underwritten offering, only securities which
are to be distributed by the underwriters may be included in the registration.
e. RESTRICTIONS ON REGISTRATIONS. The Company will not be
obligated to effect any Demand Registration within twelve months after the
effective date of a previous Demand Registration. The Company may postpone for
up to 150 days the filing or effectiveness of a registration statement for a
Demand Registration if the Company reasonably believes that it would be
detrimental or otherwise disadvantageous to the Company or its shareholders for
such a registration statement to be filed as expeditiously as possible;
provided, however, the Company cannot exercise its right to postpone the filing
or effectiveness of a registration statement for a Demand Registration more than
once during any twelve-month period.
-3-
f. SELECTION OF UNDERWRITERS. The Trust shall have the right
to select the investment banker(s) and manager(s) to administer any public
offering of equity securities of the Company pursuant to a Demand Registration,
subject to the Company's approval, which approval shall not be unreasonably
withheld.
3. PIGGYBACK REGISTRATIONS.
a. RIGHT TO PIGGYBACK. Subject to the remaining provisions of
this Section 3, whenever the Company proposes to register its Common Stock under
the Securities Act for its own account (other than a registration on Form S-4 or
S-8 or any substitute or successor form that may be adopted by the Commission)
or for the account of any of holders of its Common Stock, the Company will give
written notice to the Trust of its intention to effect such a registration and
will include in such registration, on the same terms and conditions as apply to
the Company's or such holder's Common Stock, all Registrable Shares that the
Trust requests be included within 15 days after the receipt of the Company's
notice (a "Piggyback Registration"). The Company is required to include
Registrable Shares requested by the Trust in an unlimited number of Piggyback
Registrations. If the Company shall determine in its sole discretion not to
register or to delay the registration of such Common Stock, the Company may, at
its election, provide written notice of such determination to the Trust and (i)
in the case of a determination not to effect a registration, shall thereupon be
relieved of the obligation to register such Registrable Shares, and (ii) in the
case of a determination to delay a registration, shall thereupon be permitted to
delay registering any Registrable Shares for the same period as the delay in
respect of Common Stock being registered for the Company's own account.
b. PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback
Registration is an underwritten primary offering on behalf of the Company, and
the managing underwriters for the Offering advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration would materially and adversely affect the success of the offering,
the Company will include in such registration (i) FIRST, the securities the
Company proposes to sell, and (ii) SECOND, Registrable Shares and other
securities such that the included amount of each shall be in proportion to the
amount of Registrable Shares and other securities requested to be included in
such registration.
c. PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback
Registration is an underwritten secondary offering on behalf of holders of the
Company's securities other than holders of Registrable Shares, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration would materially and
-4-
adversely affect the success of the offering, the Company will include in such
registration (i) FIRST, the securities included therein held by the holders
other than the Trust, and (ii) SECOND, Registrable Shares and other securities
such that the included amount of each shall be in proportion to the amount of
Registrable Shares and other securities requested to be included in such
registration.
d. SELECTION OF UNDERWRITERS. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the Trust
elects to register and sell Registrable Shares in such registration, the Company
will have the right to select the investment banker(s) and manager(s) to
administer the offering.
4. HOLDBACK AGREEMENTS.
a. The Trust agrees not to offer, sell, contract to sell or
otherwise dispose of any equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the
15-day period prior to, and the 120-day period beginning on the effective date
of, any underwritten registration (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree. In order to ensure compliance with the provisions of this
Section 4(a), the Company hereby agrees to notify the Trust as to the status and
proposed effective date of any registration statement of the Company which is
filed with the Commission.
b. The Company hereby agrees not to effect, except pursuant to
employee benefit plans and registrations on Form S-4, any public sale or
distribution of any securities of the same class as (or otherwise similar to)
the Registrable Shares, or any securities which, with notice, lapse of time
and/or payment of monies, are exchangeable or exercisable for or convertible
into any such securities during the 15-day period prior to, and during the 90-
day period commencing on, the effective date of a registration statement filed
with the Commission in connection with an underwritten offering effected
pursuant to Section 2 of this Agreement (except as part of such underwritten
offering). The Company agrees to use its reasonable efforts to cause each
holder of five percent or more of the outstanding shares of any equity security
(or any security convertible into or exchangeable or exercisable for any equity
security) of the Company, and each holder of any equity security (or any
security convertible into or exchangeable or exercisable for any equity
security) of the Company purchased from the Company at any time other than in a
public offering, to enter into a similar agreement with the Company.
5. REGISTRATION PROCEDURES. Whenever the Trust has requested that
any Registrable Shares be registered pursuant to
-5-
this Agreement, the Company will use its reasonable best efforts to effect the
registration of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as possible:
a. Prepare and file with the Commission a registration
statement with respect to such Registrable Shares and cause such registration
statement to become and remain effective for such period, not to exceed 60 days,
as may be reasonably necessary to effect the sale of such securities and to
include in any such registration statement all information which, in the opinion
of counsel to the Trust and counsel to the Company, is reasonably required to be
included therein under the Securities Act or which the managing underwriter, in
the case of an underwritten public offering, or the investment banker, in the
case of a non-underwritten offering, reasonably requests be included therein to
facilitate the sale of such securities and which, in the opinion of counsel to
the Company and counsel to the Trust, is customary and may appropriately be
included therein under the Securities Act; provided, however, if (i) the
effective date of any registration statement filed pursuant to a Demand
Registration would otherwise be at least 45 calendar days, but fewer than 90
calendar days, after the end of the Company's fiscal year, and (ii) the
Securities Act requires the Company to include audited financials as of the end
of such fiscal year or the Securities Act permits the use of, and the Trust has
requested that such registration statement include, audited financials as of the
end of such fiscal year, the Company may delay the filing of such registration
statement for such period as is reasonably necessary to include therein its
audited financial statements for such fiscal year;
b. Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period of not less than 60 days and comply with the provisions of the
Securities Act applicable to the Company with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition set forth in such
registration statement;
c. Furnish to the Trust and the underwriters such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) as they may reasonably request in order to facilitate
the disposition of the Registrable Shares;
d. Use reasonable best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the Trust reasonably requests and do any and all other acts and
things which may be reasonably
-6-
necessary or advisable to enable the Trust to consummate the disposition in such
jurisdictions of the Registrable Shares (provided, however, that the Company
will not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 4(d),
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent to
general service of process in any such jurisdiction);
e. Otherwise use its best efforts in connection with each
registered offering of Registrable Shares hereunder to comply with all
applicable rules and regulations of the Commission, as the same may hereafter be
amended, including section 11(a) of the Securities Act and Rule 158 thereunder.
f. Use its best efforts to cause all such Registrable Shares to
be listed on each securities exchange or market trading system on which similar
securities issued by the Company are then listed;
g. Enter into such customary agreements (including underwriting
agreements that contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in agreements of
this type, including, but not limited to, indemnities to the effect and to the
extent provided in Section 7, provisions for the delivery of officers'
certificates, opinions of counsel and accountants' "comfort" letters and
holdback arrangements) and take all such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Shares;
h. Subject to confidentiality restrictions reasonably required
by the Company, and subject to the reasonableness of the request therefor, make
available at reasonable times for inspection by the Trust, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Trust or any such
underwriter, all pertinent financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by the Trust or any such underwriter, attorney, accountant
or agent in connection with such registration statement;
i. Notify the Trust promptly after it shall receive notice
thereof, of the time when such registration statement or amendment thereto has
become effective or a prospectus or supplement to any prospectus forming a part
of such registration statement has been filed;
j. Notify the Trust of any request by the Commission for the
amending or supplementing of such registration statement or prospectus or for
supplemental information;
-7-
k. Prepare and file with the Commission, promptly upon the
request of the Trust, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel selected by the Trust
and counsel to the Company, is reasonably required under the Securities Act or
the rules and regulations thereunder in connection with the distribution of
Registrable Shares by the Trust;
l. Notify the Trust of the occurrence of any event during any
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were made,
not misleading, and in such event, prepare and promptly file with the Commission
and promptly notify the Trust of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to correct any
such statements or omissions. The Trust agrees that, upon receipt of any notice
from the Company of the occurrence of any event of the kind described in the
preceding sentence, the Trust will forthwith discontinue the offer and sale of
Registrable Shares pursuant to the registration statement covering such
Registrable Shares until receipt by the Trust and the Underwriters of the copies
of such supplemented or amended prospectus and, if so directed by the Company,
the Trust will deliver to the Company all copies, other than permanent file
copies then in the Trust's possession, of the most recent prospectus covering
such Registrable Shares at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the 60 day period
during which such registration statement shall be maintained effective as
provided in Section 5(a) hereof by the number of days during the period from and
including the date of the giving of such notice to the date when the Company
shall make available to the Trust such supplemented or amended prospectus;
m. Advise the Trust, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission or
any state authority or agency suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such purpose
and promptly use all reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued;
n. At the request of any underwriter in connection with an
underwritten offering, furnish on the date or dates provided for in the
underwriting agreement: (i) an opinion of counsel, addressed to the
underwriters, covering such customary matters as such underwriters may
reasonably request; and (ii) a comfort letter or letters from the independent
certified public
-8-
accountants of the Company addressed to the underwriters, covering such
customary matters as such underwriters and sellers may reasonably request, in
which letters such accountants shall state, without limiting the generality of
the foregoing, that they are independent certified public accountants within the
meaning of the Securities Act and that in the opinion of such accountants the
financial statements and other financial data of the Company included in the
registration statement, the prospectus, or any amendment or supplement thereto
comply in all material respects with the applicable accounting requirements of
the Commission;
o. Subject to confidentiality restrictions reasonably required
by the Company, at reasonable times and upon reasonable notice, and as necessary
to permit a reasonable investigation with respect to the Company and its
business in connection with the preparation and filing of such registration
statement, make available for inspection by the Trust, by any managing
underwriter or other underwriters participating in any disposition of
Registrable Shares, and by any attorney, accountant or other agent,
representative or advisor retained by the Trust or any such underwriters, all
pertinent financial and other records and corporate documents of the Company;
and to the extent reasonably required, cause the Company's officers, directors
and employees to discuss pertinent aspects of the Company's business with the
Trust and any such underwriter, accountant, agent, representative or advisor in
connection with such registration statement;
p. Permit the Trust, to the extent the Trust, in the judgment
of its counsel, might be deemed to be a "control person" of the Company (within
the meaning of section 15 of the Securities Act or section 20 of the Exchange
Act), to participate in the preparation of such registration statement and
include therein material, furnished to the Company in writing which, in the
reasonable judgment of the Trust and its counsel, and counsel to the Company, is
required to be included therein; and
q. If any registration statement refers to the Trust by name or
otherwise as the holder of any securities of the Company, and if the Trust
reasonably believes it is or may be deemed to be a control person in relation
to, or an Affiliate of, the Company, then the Trust shall have the right to
require (i) insertion in such registration statement of language, in form and
substance reasonably satisfactory to the Trust, to the effect that the ownership
by the Trust of such securities is not to be construed as and is not intended to
be a recommendation by the Trust of the investment quality of, or the relative
merits and risks attendant to the purchase of, the Company's securities covered
thereby, and that such ownership does not imply that the Trust will assist in
meeting any future financial or operating requirements of the Company, or (ii)
in the case where the reference to the Trust by name or otherwise is not
required by the
-9-
Securities Act or any similar federal or state statute then in effect, the
deletion of the reference to the Trust.
r. Cooperate in the marketing efforts of the underwriters and
the Trust, including, without limitation, by making available, as reasonably
requested by the underwriters and the Trust, the senior executive officers of
the Company for attendance at, and active participation with the underwriters
in, informational or so-called "roadshow" meetings with prospective purchasers
of the Registrable Shares being offered, including meeting with groups of such
purchasers or with individual purchasers, providing information and answering
questions about the Company at such meetings, and traveling to locations in the
United States and abroad as reasonably selected by the underwriters.
6. REGISTRATION EXPENSES.
All expenses of the Company incident to the Company's performance
of or compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, all fees and expenses associated with listing securities on
exchanges or Nasdaq, all fees and other expenses associated with filings with
the NASD (including, if required, the fees and expenses of any "qualified
independent underwriter" and its counsel) printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Company and its
independent certified public accountants (and the expenses of any special audits
or reviews performed by such accountants required by or incidental to such
performance and compliance), underwriters (excluding discounts and commissions
attributable to the securities included in such registration) and other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company. In addition, the Company will pay its
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expense
of any annual audit or quarterly review, and the expense of any liability
insurance obtained by the Company.
7. INDEMNIFICATION AND CONTRIBUTION.
a. The Company agrees to indemnify the Trust, its officers and
trustees against all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable attorneys' fees except as limited by
Section 7(c)) caused by any untrue or alleged untrue statement of a material
fact contained in any registration statement, prospectus or preliminary
prospectus relating to the Registrable Shares or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same
-10-
are caused by or contained in or based upon any information furnished in writing
to the Company by the Trust or any underwriter expressly for use therein or by
the Trust's or underwriter's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished the Trust or underwriter with a sufficient number of
copies of the same. In connection with an underwritten offering, the Company
will indemnify such underwriters, their officers and directors and each Person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the Trust.
In connection with an underwritten offering, the underwriters shall be required
to agree to indemnify the Trust, its officers and trustees, and the Company, its
officers and directors and each Person who controls the Company (within the
meaning of the Securities Act) to the same extent as the Company agrees to
indemnify such underwriters in this Section 7(a), but only as to statements
contained in or omitted from any registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto in
reliance upon written information furnished to the Company by such underwriters
for use in the preparation thereof. The reimbursements required by this Section
7(a) will be made by periodic payments during the course of the investigation or
defense, as and when bills are received or expenses incurred.
b. In connection with any registration statement in which the
Trust is participating, it will furnish to the Company in writing such
information, questionnaires and affidavits as the Company reasonably requests
for use in connection with any such registration statement or prospectus and
will indemnify the Company, its directors and officers and each Person who
controls the Company (within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act) against any losses, claims, damages,
liabilities and expenses (including, without limitation, attorneys' fees except
as limited by Section 7(c)) caused by any untrue or alleged untrue statement of
a material fact contained in any registration statement, prospectus or
preliminary prospectus relating to the Registrable Shares or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by or on
behalf of the Trust. The Trust also agrees to indemnify and hold harmless any
underwriters of the Registrable Shares, their officers and directors and each
person who controls such underwriters on substantially the same basis as that of
the indemnification of the Company provided in this Section 7(b).
c. Any Person entitled to indemnification hereunder will (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification
-11-
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim.
d. The indemnification provided for under this Agreement will
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and will survive the transfer of securities. The
Company also agrees to make such provisions as are reasonably requested by any
indemnified party for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
e. If the indemnification from the indemnifying party as
provided in this Section 7 is unavailable or is otherwise insufficient to hold
harmless any Person entitled to indemnification in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then the
indemnifying party shall, to the fullest extent permitted by law, contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and the Person entitled to
indemnification in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party shall
be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made, or relates
to information supplied by such indemnifying party, and the parties, relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include any legal or other fees or expenses reasonably incurred by such party in
connection with any investigation or preceding. The parties hereto agree that
it would not be just and equitable if contribution pursuant to this Section 7(e)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 7(e). No person guilty of fraudulent misrepresentation (within the
meaning of Section
-12-
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
8. COMPLIANCE WITH RULE 144. At the request of the Trust, the
Company will (i) forthwith furnish a written statement of its compliance with
the filing requirements of the Commission as set forth in Rule 144 or any
similar rules or regulations hereafter adopted by the Commission as such may be
amended from time to time, (ii) make available to the public and the Trust such
information and (iii) take such further actions as the Trust shall reasonably
request as will enable the Trust to be permitted to make sales pursuant to Rule
144 or such similar rules and regulations. All sales of Registrable Shares by
the Trust must be effected in compliance with applicable law.
9. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Trust may not
participate in any registration hereunder which is underwritten unless it (a)
agrees to sell Registrable Shares on the basis provided in any underwriting
arrangements approved by the Person or Persons entitled hereunder to approve
such arrangements, (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements, and (c)
furnishes in writing to the Company such information regarding the Trust, the
plan of distribution of the Registrable Shares and other information as the
Company may from time to time reasonably request or as may be legally required
in connection with such registration. The Trust will have the right to select
the managing underwriters to administer any Demand Registration, subject to the
approval of the Company, which approval will not be unreasonably withheld.
10. PROHIBITION ON TRANSFER.
(a) The Trust hereby agrees that it will not, during the period
commencing on the date hereof and ending one year after the date hereof, offer,
pledge, encumber, sell, contract to sell, sell any option or contract to
purchase, purchase any option to sell or otherwise dispose of, directly or
indirectly, an amount of Registrable Shares such that the total Registrable
Shares owned by the Trust at any time during such one year period falls below
the Continuity Amount. For purposes hereof, "Continuity Amount" means the
amount of shares of Common Stock issued pursuant to the Merger representing 50%
of the aggregate value of the consideration issued in the Merger (including, for
this purpose, any shares of Common Stock issued in the Merger, any payments to
holders of Dissenting Shares and any payments in lieu of fractional shares).
(b) From time to time, if the Company intends to purchase shares
of Common Stock in the open market pursuant to the share repurchase program
referred to in Section 6.31 (the "Program") of the Merger Agreement, the Company
may deliver a
-13-
notice (a "Black-Out Notice") to the Trust setting forth the period during which
the Company anticipates making such purchases (a "Black-Out Period"). The Trust
agrees that it will not sell any Registrable Shares in the open market during a
Black-Out Period. In order to be effective, the Company must deliver a Black-Out
Notice by facsimile to [ ] at [ ], to be confirmed by telephone at [ ] by no
later than 4:00 p.m. the day prior to the commencement of the Black-Out Period.
Each trading day within a Black-Out Period is referred to herein as a "Black-Out
Day". In no event shall the Company cause more than 10 trading days in any one
calendar month to be Black-Out Days. The Company will promptly inform the Trust
of any early termination of a Black-Out Period. The Trust agrees to hold
information regarding Black-Out Periods in confidence. The Company represents
that the Program will be terminated no later than six months from the date
hereof.
11. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
otherwise materially interferes with the rights granted to the Trust in this
Agreement.
12. REMEDIES. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement, and
to exercise all other rights granted by law.
13. AMENDMENTS AND WAIVERS. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived at any time
only by the written agreement of the Company and the Trust.
14. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto will bind and inure to the benefit of the
respective successors and assigns of the parties hereto, whether so expressed or
not.
15. FINAL AGREEMENT. This Agreement constitutes the final agreement
of the parties concerning the matters referred to herein, and supersedes all
prior agreements and understandings.
16. SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
17. DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience of reference only and
-14-
do not constitute a part of and shall not be utilized in interpreting this
Agreement.
18. NOTICES. Except as provided in Section 10(b), any notices
required or permitted to be sent hereunder shall be delivered personally or
mailed, certified mail, return receipt requested, or delivered by overnight
courier service to the following addresses, or such other addresses as shall be
given by notice delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, three business days after mailing, if mailed,
or one business day after delivery to the courier, if delivered by overnight
courier service:
IF TO THE TRUST, at its address set forth on the stock record books of
the Company;
with a copy to:
Xxxx X. Xxxxxxxxxx, Esq.
Xxxxx & Xxxxxxxxx
3200 National City Center
0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
If to the Company, to:
Comcast Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx Xxxx, Esq.
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
19. GOVERNING LAW. The validity, meaning and effect of this
Agreement shall be determined in accordance with the laws of the State of New
York applicable to contracts made and to be performed in that state without
giving effect to the principles of conflicts of laws thereof.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute one instrument. Each
party shall receive a duplicate original of the counterpart copy or copies
executed by it and the Company.
-15-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their respective behalf, by their respective officers
thereunto duly authorized, as of the day and year first set forth above.
THE XXXXXX X. SCRIPPS TRUST
By:________________________________
COMCAST CORPORATION
By:________________________________
-00-
XXXXXXX X
XXXXX XXXXXXXXXXXXXX AGREEMENT
This Board Representation Agreement, dated as of ____, 1995 (this
"Agreement") is by and among Comcast Corporation, a Pennsylvania corporation
("Acquiror"), Sural Corporation, a Delaware corporation, (the "Acquiror
Stockholder") and The Xxxxxx X. Scripps Trust (the "Trust").
WHEREAS, the Acquiror Stockholder owns 1,845,037 shares of Acquiror's Class
A Common Stock, par value $1.00 per share, 5,315,772 shares of Acquiror's Class
A Special Common Stock, par value $1.00 per share, and 8,786,250 shares of
Acquiror's Class B Common Stock, par value $1.00 per share (all shares of such
stock now owned and which may hereafter be acquired by the Acquiror Stockholder
prior to the termination of this Agreement are referred to herein as the
"Acquiror Shares");
WHEREAS, The X.X. Xxxxxxx Company, a Delaware corporation (the "Company"),
Scripps Xxxxxx, Inc., an Ohio corporation ("SHI") and wholly owned subsidiary of
the Company, and Acquiror have entered into a Merger Agreement dated October 28,
1995 (the "Merger Agreement"), which provides, among other things, that the
Company will merge with and into Acquiror (the "Merger") (this and other
capitalized terms used and not defined herein shall have the meanings given to
such terms in the Merger Agreement);
WHEREAS, in connection with the Merger, the Trust will be entitled to
receive shares of Class A Special Common Stock, $1.00 par value per share, of
Acquiror (all such shares received by the Trust in the Merger, the "Trust
Shares"), and it is the desire of the Trust that it have the right to designate
certain persons for election as members of the board of directors of Acquiror
(the "Acquiror Board") following the consummation of the Merger;
WHEREAS, pursuant to the Merger Agreement, Acquiror has agreed to cause
___________________ (the "Initial Trust Designee") to be elected to the Acquiror
Board as set forth herein following consummation of the Merger; and
WHEREAS, it is a condition to the Company's and SHI's obligation to
consummate the Merger that the parties hereto enter into this Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
1. REPRESENTATION ON ACQUIROR BOARD. To the extent permitted under
applicable law the Trust shall be entitled to representation on the Acquiror
Board as follows: the Initial Trust Designee shall be proposed for election to
the Acquiror Board either: (i) if following the consummation of the Merger
there are one or more vacancies on such Board or the members of such Board have
the power to create new directorships, at the first meeting of the Acquiror
Board following consummation of the Merger, at which the Initial Trust Designee
shall be elected or (ii) if there are no such vacancies or power to create new
directorships, at the first meeting of stockholders of Acquiror held after
consummation of the Merger. Following such election of the Initial Trust
Designee, in each instance in which individuals are nominated for election to
the Acquiror Board, Acquiror shall cause to be nominated for election to the
Acquiror Board that number of individuals designated by the Trust (the "Trust
Designee(s)") equal to the Appointment Number (as defined below) as of the date
of nomination, in the manner and subject to the conditions set forth in this
Section 1. Acquiror shall cause such Trust Designee(s) to be validly and timely
nominated for election to the Acquiror Board in the same manner as other
proposed directors are nominated, shall recommend to its stockholders the
election to the Acquiror Board of the Trust Designee(s) and shall not revoke or
qualify such recommendation. Acquiror shall use its best efforts to solicit
from its stockholders proxies in favor of the election of all the Trust
Designee(s), and shall take such other action as may be reasonably necessary to
cause such Trust Designee(s) to be so elected. If any Initial Trust Designee or
Trust Designee who serves on the Acquiror Board ceases, for any reason, to serve
on the Acquiror Board (other than as a result of the expiration of the specified
term of such Initial Trust Designee or Trust Designee), Acquiror shall take all
actions reasonably necessary to cause the vacancy to be filled, as soon as
practicable, by an individual designated by the Trust (a "Replacement Trust
Designee"), but in any event no later than the first meeting of the Acquiror
Board following cessation of service by such Designee. Each Initial Trust
Designee, Trust Designee or Replacement Trust Designee shall be reasonably
acceptable to Acquiror and shall be eligible to serve on the Acquiror Board
under applicable law.
For purposes hereof, "Appointment Number" means one, provided that the
Appointment Number shall be two if the product of (i) the total number of
directors constituting the Acquiror Board less the director position(s) held by
the designee(s) of the Trust and (ii) the quotient equal to (A) the number of
Long-term Shares held by the Trust at the time of nomination divided by (B) the
aggregate number of Acquiror
2
Common Shares outstanding at such time on a fully diluted basis shall be equal
to or greater than 1.75. For purposes hereof, (i) "Acquiror Common Shares"
means shares of any class of common stock of Acquiror and (ii) "Long-term
Shares" means, as of any date, Acquiror Common Shares that have been owned for
not less than one year.
From time to time upon the reasonable written request by Acquiror, the
Trust will provide Acquiror with an opinion of counsel (the "Opinion")
reasonably acceptable to Acquiror, which opinion shall state that the nomination
and appointment of a proposed Initial Trust Designee, Trust Designee or
Replacement Trust Designee, as the case may be, to the Acquiror Board is
permitted under applicable law. Except as provided in the following paragraph,
all obligations on the part of Acquiror and the Acquiror Stockholder under this
Agreement shall be suspended until the Opinion shall have been received by it.
If the Trust shall not be permitted under applicable law to representation
on the Acquiror Board as described herein, or if the Trust should elect from
time to time observer status in lieu of a seat on the Board by written notice to
Acquiror, then to the extent permitted by law, the Trust shall for the period of
this Agreement be entitled to designate an observer who shall be entitled to
notice of and to attend all meetings of the Acquiror Board and to receive or
review, as the case may be, copies of all documents provided to members of the
Acquiror Board. Such observer shall enter into customary confidentiality
arrangements with the Company.
2. TERMINATION OF RIGHTS. The rights of the Trust under Section 1 hereof
shall terminate upon the earliest of (i) the date on which the Trust ceases to
own at least 50% of the Trust Shares (as equitably adjusted for stock splits,
combinations, dividends, corporate reorganizations and similar events), (ii) the
date on which the fourth annual meeting of Acquiror's Board is convened after
the date hereof and (iii) the date on which the Trust elects to terminate
Section 1 of this Agreement by notice to the other parties hereto.
3. AGREEMENTS OF ACQUIROR STOCKHOLDER. To the extent permitted under
applicable law: the Acquiror Stockholder hereby agrees that, until such time as
the rights of the Trust terminate pursuant to Section 2 hereof, at any meeting
of the stockholders of Acquiror, however called, and in any action by consent of
the stockholders of Acquiror, for the election of directors, the Aquiror
Stockholder shall vote its Acquiror Shares in favor of the election to the
Acquiror Board of each Trust Designee and Replacement Trust Designee, as the
case may be.
3
4. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and
warrants to the Trust that:
(a) Acquiror has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by Acquiror and the performance of its
obligations hereunder have been duly and validly authorized by Acquiror, and no
other proceedings on the part of Acquiror are necessary to authorize the
execution and delivery of this Agreement or to perform such obligations except
approval of Acquiror Board of a resolution increasing the size of Acquiror Board
as provided herein and election of the designees of the Trust as provided
herein. This Agreement has been duly and validly executed and delivered by
Acquiror and, assuming the due authorization, execution and delivery hereof by
each other party hereto, constitutes a legal, valid and binding obligation of
Acquiror enforceable against Acquiror in accordance with its terms, except (x)
as the same may be limited by applicable bankruptcy, insolvency, moratorium or
similar laws of general application relating to or affecting creditors' rights,
including without limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers, (y) for the limitations
imposed by general principles of equity and (z) as the same may be limited under
the Rules and Regulations regarding cross-ownership of cable television systems
and television stations.
(b) The execution and delivery of this Agreement by Acquiror do not, and
the performance of this Agreement by Acquiror will not, (i) conflict with or
violate the Articles of Incorporation or By-laws of Acquiror, (ii) except as
described in Section 4(c), conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Acquiror or by which any of Acquiror's
property may be bound or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the Acquiror's properties pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Acquiror is a party or by which Acquiror or Acquiror's
properties are bound or affected, except, in the case of clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
which would not prevent or delay the performance by Acquiror of its obligations
under this Agreement.
(c) The execution and delivery of this Agreement by Acquiror do not, and
the performance of this Agreement by Acquiror will not, require any consent,
approval,
4
authorization or permit of, or filing with or notification to, any federal,
state, local or foreign regulatory body, except (i) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by Acquiror of
Acquiror's obligations under this Agreement, (ii) filings with the SEC under the
Exchange Act and (iii) any waiver, consent or declaratory ruling by the FCC with
respect to the Rules and Regulations regarding cross-ownership of cable
television systems and television stations, to the extent that such Rules and
Regulations may prohibit the performance of the Acquiror's obligations
hereunder.
5. REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR STOCKHOLDER. The
Acquiror Stockholder represents and warrants to the Trust as follows:
(a) The Acquiror Stockholder has all necessary power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement by the Acquiror Stockholder and the
performance of the Acquiror Stockholder's obligations hereunder have been duly
and validly authorized by the Acquiror Stockholder, and no other corporate
proceedings on the part of the Acquiror Stockholder are necessary to authorize
the execution and delivery of this Agreement or to perform such obligations.
This Agreement has been duly and validly executed and delivered by the Acquiror
Stockholder and, assuming the due authorization, execution and delivery hereof
by each other party hereto, constitutes a legal, valid and binding obligation of
the Acquiror Stockholder enforceable against the Acquiror Stockholder in
accordance with its terms, except (x) as the same may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws of general application
relating to or affecting creditors' rights, including without limitation, the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers, (y) for the limitations imposed by general principles of
equity and (z) as the same may be limited under the Rules and Regulations
regarding cross-ownership of cable television systems and television stations.
(b) The execution and delivery of this Agreement by the Acquiror
Stockholder do not, and the performance of this Agreement by the Acquiror
Stockholder will not, (i) conflict with or violate the charter or by-laws of the
Acquiror Stockholder, (ii) except as described in Section 5(c) below, conflict
with or violate any law, rule, regulation, order, judgment or decree applicable
to such Acquiror Stockholder or by which the Acquiror Shares are 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,
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amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any Acquiror Shares pursuant to, any note, bond, mortgage,
indenture contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Acquiror Stockholder is a party or by
which the Acquiror Shares are bound or affected, except, in the case of clauses
(ii) and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or delay the performance by the Acquiror
Stockholder of its obligations under this Agreement.
(c) The execution and delivery of this Agreement by the Acquiror
Stockholder do not, and the performance of this Agreement by such Acquiror
Stockholder will not, require any consent, approval, authorization or permit of,
or filing with or notification to, any federal, state, local or foreign
regulatory body, except (i) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay the performance by the Acquiror Stockholder of its
obligations under this Agreement, (ii) filings with the SEC under the Exchange
Act and (iii) any waiver, consent or declaratory ruling by the FCC with respect
to the Rules and Regulations regarding cross-ownership of cable television
systems and television stations, to the extent that such Rules and Regulations
may prohibit the performance of the Acquiror Stockholder's obligations
hereunder.
(d) The Acquiror Stockholder is the owner of the Acquiror Shares free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever, except that 1,000,000 shares of Class A
Common Stock (the "Pledged Stock") are pledged to PNC Bank, N.A. pursuant to
loan agreement dated April 23, 1992 and a collateral pledge agreement dated as
of the same date (together, the "Loan Agreements"). PNC Bank, N.A. has the
right to vote the Pledged Stock upon the occurrence of an event of default under
the Loan Agreements. The Acquiror Stockholder has sole voting power with respect
to the Acquiror Shares or has the power to direct the voting of the Acquiror
Shares. The Acquiror Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Acquiror Shares,
other than pursuant to the Voting Agreement dated October 28, 1995 among the
parties hereto and the Company. The Acquiror Stockholder has sole voting power
with respect to the Acquiror Shares, and the person executing this Agreement on
behalf of the Acquiror Stockholder has the power to direct the voting of such
Acquiror Shares.
6. NO PROHIBITION ON TRANSFERS. Nothing in this Agreement shall prevent
the Acquiror Stockholder from
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offering, selling, transferring, pledging or in any other way disposing of or
placing encumbrances upon the Acquiror Shares.
7. COMPENSATION, EXPENSES, INSURANCE. The Initial Trust Designee, Trust
Designees and Replacement Trust Designees serving on the Acquiror Board shall be
entitled to fees and other compensation, participation in option, stock or other
benefit plans for which directors are eligible, reimbursement of expenses, and
directors and officers liability insurance on an equal basis with other non-
employee members of the Acquiror Board.
8. VOTING FOR PERMITTED AMENDMENTS.
(a) If from time to time any of the Permitted Amendments (as defined in
the Merger Agreement) is proposed for approval by the shareholders of Acquiror,
the Trust shall (i) be present, in person or represented by proxy, at the
stockholder meetings of Acquiror so that all shares of Acquiror Common Stock
beneficially owned by the Trust ("Trust Common Shares") shall be counted for the
purpose of determining the presence of a quorum at such meetings and (ii) vote
or cause to be voted, or consent with respect to, all Trust Common Shares in
favor of the approval of such Permitted Amendment. The Trust will not enter
into any agreement, commitment or understanding that limits, directs or
restricts the rights of the Trust to vote any Trust Common Shares so long as
such Trust Shares are owned by the Trust. The provisions of this subsection (a)
shall terminate two years from the date hereof.
(b) In connection with any shareholder vote regarding the approval of a
Permitted Amendment, the Trust will not, singly or as part of a partnership,
limited partnership or other group (as such terms are used in Section 13(d)(3)
of the Exchange Act), directly or indirectly make, or in any way participate in
any "solicitation" of "proxies" to vote (as such terms are defined in Rule 14a-1
under the Exchange Act), solicit any consent or communicate with or seek to
advise or influence any person or entity with respect to the voting of any
Acquiror Common Securities or become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to Acquiror.
(c) The Trust acknowledges that it has reviewed Acquiror's Articles of
Incorporation and Proxy Statement dated May 19, 1995.
9. PROVISIONS SPECIFICALLY ENFORCEABLE.
(a) The obligations of Acquiror and the Acquiror Stockholder under this
Agreement are unique. Acquiror and the Acquiror Stockholder acknowledge that it
would be extremely difficult or impracticable to measure the resulting damages
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caused by any breach of this Agreement. Acquiror and the Acquiror Stockholder
agree that, in the event of a breach of this Agreement by Acquiror or the
Acquiror Stockholder, the Trust, in addition to any other available rights or
remedies, shall be entitled to specific performance of the obligations of
Acquiror and the Acquiror Stockholder under this Agreement, and Aquiror and the
Acquiror Stockholder expressly agree that a remedy in damages will not be
adequate.
(b) The remedies provided in this Section 8 are cumulative and are in
addition to any other remedies in law or equity which may be available to the
Trust. The election of one or more remedies shall not bar the use of other
remedies unless circumstances make the remedies incompatible.
10. CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Pennsylvania regardless of the laws
that might otherwise govern under principles of conflicts of law applicable
hereto.
11. ATTORNEY'S FEES. In any action to enforce the terms of this
Agreement, the prevailing party shall be entitled to recover its attorneys' fees
and court costs and other nonreimbursable litigation expenses, such as expert
witness fees and investigation expenses.
12. MERGER AND MODIFICATION. This Agreement sets forth the entire
agreement between the parties relating to the subject matter hereof, and
supersedes all other oral or written provisions. This Agreement may be modified
or terminated only in a writing signed by all parties.
13. BINDING ON SUCCESSORS. This Agreement shall be binding upon Acquiror,
the Acquiror Stockholder and their respective successors and assigns.
14. RULES OF CONSTRUCTION. All section captions are for reference only,
and shall not be considered in construing this Agreement.
15. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person, by
telecopy with answerback, by express or overnight mail delivered by a nationally
recognized air courier (delivery charges prepaid) or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties as
follows: (a) if to the Trust, to it at 000 Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxxxxxx, Xxxx, attention: Xxxxxx X. Xxxxxxx, Secretary-Treasurer, (b) if to
the Acquiror Stockholder, to it at 00 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx, 00000, with a copy to Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, attention: Xxxxxxx X. Xxxxxx, Esq.,
8
(c) if to Acquiror, to it at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx,
00000, attention: Xxxxxxx Xxxx, Esq., with a copy to Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, attention: Xxxxxxx X. Xxxxxx, Esq.,
and (d) if to the Company, to it in care of Acquiror at the address set forth
above, or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Any notice or communication delivered in person shall be deemed effective on
delivery. Any notice or communication sent by telecopy or by air courier shall
be deemed effective on the first business day at the place at which such notice
or communication is received following the day on which such notice or
communication was sent. Any notice or communication sent by registered or
certified mail shall be deemed effective on the fifth business day at the place
from which such notice or communication was mailed following the day on which
such notice or communication was mailed.
16. COUNTERPARTS. This Agreement may be executed contemporaneously in two
or more counterparts, each of which shall be deemed to constitute an original,
but all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
COMCAST CORPORATION
By:_________________________
Name:
Title:
SURAL CORPORATION
By:_________________________
Name:
Title:
THE XXXXXX X. SCRIPPS TRUST
By:_________________________
Name:
Title: Trustee
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