AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June
11, 1997, is by and among FOX KIDS WORLDWIDE, INC., a Delaware corporation
("FKWW"), FOX KIDS MERGER CORPORATION, a Delaware corporation and wholly-owned
subsidiary of FKWW ("FKW Sub"), and INTERNATIONAL FAMILY ENTERTAINMENT, INC., a
Delaware corporation (the "Company").
RECITALS
WHEREAS, it is the intention of the parties that FKW Sub merge with and
into the Company, upon the terms and subject to the conditions set forth herein
(the "Merger"), with the Company surviving as a wholly owned subsidiary of FKWW;
WHEREAS,
(a) M.G. "Xxx" Xxxxxxxxx, individually and as trustee of
each of the Xxxxxxxxx Charitable Remainder Unitrust,
u/t/a dated January 22, 1990 (the "PR Charitable
Trust"), the Xxxxxx X. Xxxxxxxxx Irrevocable Trust,
u/t/a dated December 18, 1996, the Xxxxxxxxx X.
Xxxxxxxx Irrevocable Trust, u/t/a dated December 18,
1996, and the Xxx X. Xxxxxxx Irrevocable Trust, u/t/a
dated December 18, 1996 (the Xxxxxx X. Xxxxxxxxx
Irrevocable Trust, the Xxxxxxxxx X. Xxxxxxxx
Irrevocable Trust and the Xxx X. Xxxxxxx Irrevocable
Trust, together, the "Irrevocable Trusts"), Xxxx X.
Xxxxxxxxx and Xxxxxxx X. Xxxxxxxxx ("Xxx Xxxxxxxxx")
as joint tenants, and Xxx Xxxxxxxxx, individually, as
trustee of each of the Xxxxxxx and Xxxx Xxxxxxxxx
Children's Trust, u/t/a dated September 18, 1995 (the
"TR Family Trust") and the Xxxxxxx X. Xxxxxxxxx
Charitable Trust, u/t/a dated December 30, 1996 (the
"TR Charitable Trust"), and as custodian to and for
each of Xxxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxxxx,
Xxxxxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx and
Xxxxxxxx X. Xxxxxxxxx under the Virginia Uniform
Transfers to Minors Act (Xxx Xxxxxxxxx, the PR
Charitable Trust, the Irrevocable Trusts, Xxxx X.
Xxxxxxxxx, Xxx Xxxxxxxxx, the TR Family Trust and the
TR Charitable Trust being sometimes collectively
referred to herein as the "Xxxxxxxxx Sellers"), have
agreed to sell to FKWW, all of the outstanding shares
of Class A Common Stock, par value $0.01 per share,
of the Company (the "Class A Stock"), in the form of
Class B Common Stock, par value $0.01 per share, of
the Company (the "Class B Stock") issuable upon
conversion thereof, and the shares of Class B Stock
owned by them or issuable to them upon exercise of
outstanding stock options, pursuant to that certain
Stock Purchase Agreement, dated of even date
herewith, by and among
FKWW, on the one hand, and each of the Xxxxxxxxx
Sellers, on the other hand (as amended from time to
time in accordance with its terms, the "Xxxxxxxxx
Purchase Agreement");
(b) The Christian Broadcasting Network, Inc., a Virginia
corporation ("CBN"), has agreed to sell to FKWW, all
of the Class B Stock owned by it, pursuant to the
terms of that certain Stock Purchase Agreement, dated
of even date herewith, by and between FKWW and CBN
(as amended from time to time in accordance with its
terms, the "CBN Purchase Agreement");
(c) Regent University, a Virginia corporation ("Regent"),
has agreed to sell to FKWW all of the Class B Stock
owned by it, pursuant to the terms of that certain
Stock Purchase Agreement, dated of even date
herewith, by and between FKWW and Regent (as amended
from time to time in accordance with its terms, the
"Regent Purchase Agreement," and, collectively with
the Xxxxxxxxx Purchase Agreement and the CBN Purchase
Agreement, the "Stock Purchase Agreements");
(d) Liberty IFE, Inc., a Colorado corporation ("LIFE"),
has agreed to contribute to FKWW all of the shares of
Class C Common Stock, par value $0.01 per share, of
the Company (the "Class C Stock," and together with
the Class A Stock and the Class B Stock, the "Company
Stock"), and $23 million principal amount of 6%
Convertible Secured Notes due 2004 of the Company
(the "Convertible Notes"), in exchange for shares of
Series A Preferred Stock, par value $0.01 per share,
of FKWW pursuant to that certain Contribution and
Exchange Agreement, dated of even date herewith, by
and among LIFE, Liberty Media Corporation, a Delaware
corporation, and FKWW (as amended from time to time
in accordance with its terms, the "Contribution
Agreement," and together with the Stock Purchase
Agreements, the "Other Transaction Agreements"); and
WHEREAS, the respective Boards of Directors of FKWW, FKW Sub and the
Company have each unanimously approved the Merger, in accordance with the
General Corporation Law of the State of Delaware (the "DGCL"), and the Board of
Directors of the Company has recommended the Merger to the Company's
stockholders;
WHEREAS, this Agreement and the Merger shall be approved by the
stockholders of the Company for purposes of the DGCL at such time as the Company
is in receipt of written consents approving this Agreement and the Merger
executed by the holders of that number of shares of Class A Stock and Class B
Stock (voting as a single class) representing the right to cast a majority of
the votes entitled to be cast at a meeting to consider the Agreement and the
Merger;
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WHEREAS, immediately following execution of this Agreement by the
Company and concurrently with the execution of this Agreement by FKWW and FKW
Sub, the Xxxxxxxxx Sellers, CBN and Regent (which holders hold of record a
number of shares of Class A Stock and Class B Stock representing a majority of
the votes entitled to be cast at a meeting to consider the Agreement and the
Merger) are delivering their written consent (the "Consent") approving this
Agreement and the Merger (a copy of which is being provided to FKWW and FKW
Sub), which consent constitutes the only action necessary by stockholders of the
Company required in order to authorize this Agreement and the Merger under the
Company's Amended and Restated Certificate of Incorporation and the DGCL; and
WHEREAS, The News Corporation Limited ("Guarantor") has guaranteed the
obligations of FKWW and FKW Sub under each of this Agreement and the Stock
Purchase Agreements by separate Guaranty Agreements (the Guaranty Agreement
delivered in connection with this Agreement, being referred to herein as the
"Guaranty") delivered to the Company, the Xxxxxxxxx Sellers, CBN and Regent.
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties and covenants herein contained, and for other good
and valuable consideration the receipt and adequacy of which is hereby
acknowledged, FKWW, FKW Sub and the Company hereby agree as set forth below. An
index of defined terms used throughout this Agreement appears at Section 9.16
hereof.
ARTICLE I
THE MERGER
1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time (as defined in Section 1.3 hereof), in
accordance with this Agreement and the DGCL, FKW Sub shall be merged with and
into the Company, the separate existence of FKW Sub shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation"). The
Company and FKW Sub are sometimes referred to herein as the "Constituent
Corporations."
1.2 Effect of the Merger. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all of the properties, rights,
privileges, powers and franchises of the Company and FKW Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
FKW Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.3 Consummation of the Merger. On the later of (i) two
business days after the satisfaction or waiver of the conditions set forth in
Article VII hereof or (ii) the 20th calendar day after the Information Statement
is first sent or given to the Company's stockholders, the parties hereto shall
cause the Merger to be consummated by filing with the Secretary of State of the
State of Delaware a certificate of merger in such form as required by, and
executed in accordance with, the relevant provisions of the DGCL and take all
such further actions as may be required by law to make the Merger effective (the
"Merger Filing"). The
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Merger shall become effective at the time of day on the date that the
certificate of merger is filed with the Secretary of State of the State of
Delaware or such later time as may be mutually agreed to by the parties hereto
and specified in the Merger Filing (the "Effective Time").
1.4 Certificate of Incorporation and Bylaws. The Amended and
Restated Certificate of Incorporation of the Company in effect immediately prior
to the Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation. The By-Laws of FKW Sub in effect immediately prior to the Effective
Time shall be the By-Laws of the Surviving Corporation.
1.5 Directors and Officers. The directors of the Company
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, and the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, in
each case until their successors are duly elected and qualified.
1.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of FKW Sub, the Company, the
Surviving Corporation or the holder of any outstanding share of the Class A
Stock, Class B Stock or Class C Stock (each, a "Share" and collectively, the
"Shares"):
(a) Each Share which is issued and outstanding
immediately prior to the Effective Time (other than Shares held by FKWW, FKW Sub
or the Company or by any Subsidiary of FKWW, FKW Sub or the Company) shall be
canceled and extinguished and be converted into and become a right to receive
(i) in the case of all such Shares other than Dissenting Shares, a cash payment
equal to $35.00 per Share (subject to adjustment as provided for in Section
1.6(d) below), without interest (the "Merger Consideration"), and (ii) in the
case of Dissenting Shares, the consideration set forth in Section 1.7 hereof;
(b) Each Share which is issued and outstanding
immediately prior to the Effective Time and held by FKWW, FKW Sub, or the
Company or by any Subsidiary of FKWW, FKW Sub, or the Company shall be canceled
and extinguished and no consideration shall be paid therefor;
(c) Each share of capital stock of FKW Sub, par
value $0.001 per share, outstanding immediately prior to the Effective Time
shall be converted into and become one share of Class B Common Stock, par value
$0.001 per share, of the Surviving Corporation; and
(d) The Merger Consideration shall be increased
to an amount which equals (if greater than the Merger Consideration provided for
herein) the per share amount actually paid, directly or indirectly, by FKWW or
any of its Affiliates, with respect to the purchase of, or agreement to
purchase, Company Stock, or securities convertible into Company Stock, which
purchase is effected or agreement is entered into after the date hereof and
through the Effective Time (x) from (i) any of the Xxxxxxxxx Sellers, (ii) LIFE,
(iii) CBN, (iv) Regent, (v) any holder or "group" (within the meaning of Rule
13d-5(b)(1) under the Exchange Act) that owns, or has the right to dispose of,
or to direct the disposition of, 2-1/2% or more of any class
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of common stock of the Company, (vi) any of the Affiliates of the entities
referred to in clauses (i), (ii), (iii), (iv) or (v) above, or (y) in any
transaction, or series of related or unrelated transactions (excluding for
purposes of this clause (y), any transaction referred to in clauses (x)(i),
(ii), (iii), (iv) and (vi)), after the date hereof and through the Effective
Time, involving, in the aggregate, 5% or more of the outstanding shares of any
class of common stock of the Company. For these purposes, it is acknowledged and
agreed that (x) the $3.5 million to be paid to LIFE under the Contribution
Agreement with respect to forfeited interest income on the Convertible Notes,
and (y) amounts to be paid with respect to any "tax gross up" with respect to
the Exchange Rights under the Contribution Agreement, shall not constitute an
amount paid, directly or indirectly, with respect to the purchase of Company
Stock. Further, the Merger Consideration shall not be adjusted as a result of
the provisions of the preceding sentence with respect to any purchase effected
under any of the Contribution Agreement, the Xxxxxxxxx Purchase Agreement, CBN
Purchase Agreement or the Regent Purchase Agreement unless the applicable
agreement has been amended after the date hereof so as to increase the
consideration to be paid by FKWW or any of its Affiliates, directly or
indirectly, with respect to the Company Stock or securities convertible into
Company Stock. FKWW shall promptly provide notice to the Company of any
agreement or amendment to an existing agreement entered into by FKWW or any of
its Affiliates with a Xxxxxxxxx Seller, CBN or Regent, or any amendment to an
Other Transaction Agreement to which LIFE or any of its Affiliates is a party,
from and after the date hereof and through the Effective Time.
1.7 Dissenting Shares.
(a) Notwithstanding anything in this Agreement
to the contrary, Shares which are issued and outstanding immediately prior to
the Effective Time and which are held by stockholders who have not voted such
Shares in favor of the Merger or consented thereto in writing, who shall have
delivered a written demand for appraisal of such Shares in the manner provided
in the DGCL and who, as of the Effective Time, shall not have effectively
withdrawn or lost such right to appraisal ("Dissenting Shares") shall not be
converted into or represent a right to receive the Merger Consideration pursuant
to Section 1.6 hereof, but the holders thereof shall be entitled only to such
rights as are granted by Section 262 of the DGCL. Each holder of Dissenting
Shares who becomes entitled to payment for such Shares pursuant to Section 262
of the DGCL shall receive payment therefor from the Surviving Corporation in
accordance with the DGCL; provided, however, that (i) if any such holder of
Dissenting Shares shall have failed to establish his entitlement to appraisal
rights as provided in Section 262 of the DGCL, or (ii) if any such holder of
Dissenting Shares shall have effectively withdrawn his demand for appraisal of
such Shares or lost his right to appraisal and payment of his Shares under
Section 262 of the DGCL, or (iii) if neither any holder of Dissenting Shares nor
the Surviving Corporation shall have filed a petition demanding a determination
of the value of all Dissenting Shares within the time provided in Section 262 of
the DGCL, such holder or holders (as the case may be) shall forfeit the right to
appraisal of such Shares, and each such Share shall thereupon be deemed to have
been converted, as of the Effective Time, into and represent the right to
receive payment from the Surviving Corporation of the Merger Consideration,
without interest thereon, as provided in Section 1.6 hereof.
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(b) Prior to the Effective Time, the Company
shall give FKW Sub (i) prompt notice of any written demands for appraisal,
withdrawals of demands for appraisal and any petitions served pursuant to
Section 262 of the DGCL received by the Company, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under Section 262 of the DGCL. The Company shall not, except with the prior
written consent of FKW Sub, voluntarily make any payment with respect to any
demands for appraisal or offers to settle or settle any such demands.
1.8 Stock Options and Other Plans.
(a) Prior to the Effective Time, the Board of
Directors of the Company (or, if appropriate, any committee thereof) shall adopt
appropriate resolutions and use its reasonable good faith efforts to take all
other actions necessary to provide for the cancellation, effective at the
Effective Time, subject to the payment provided for in the next sentence being
made, of all the outstanding stock options, warrants or rights to purchase
Shares heretofore granted (collectively, the "Options") under any outstanding
stock option plan or pursuant to any outstanding warrant agreement or any other
outstanding plan, program or arrangement of the Company providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any Subsidiary of the Company (collectively, the "Stock Plans") such
that, immediately prior to the Effective Time, (i) each Option, whether or not
then vested or exercisable, shall no longer be exercisable for the purchase of
Shares, but shall entitle each holder thereof, in cancellation and settlement
therefor, to payments in cash (subject to any applicable withholding taxes, the
"Cash Payment"), at the Effective Time, equal to the product of (x) the total
number of Shares subject to such Option, whether or not then vested or
exercisable, and (y) the excess of the Merger Consideration over the exercise
price per Share subject to such Option, each such Cash Payment to be paid to
each holder of an outstanding Option at the Effective Time; provided, however,
that with respect to any Person subject to Section 16 of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the "Exchange
Act"), any such amount shall be paid, without interest, as soon as practicable
after the first date payment can be made without liability to such Person under
Section 16(b) of the Exchange Act, and (ii) each Share previously issued in the
form of grants of restricted stock or grants of contingent shares shall fully
vest in accordance with their respective terms. Any then outstanding stock
appreciation rights or limited stock appreciation rights shall be canceled
immediately prior to the Effective Time without any payment therefor. The
Company will use its reasonable good faith efforts to ensure that, at the
Effective Time, neither the Company nor any of its Subsidiaries is or will be
bound by any Options or Stock Plans which would entitle any Person to acquire or
hold any capital stock of the Surviving Corporation or any of its Subsidiaries
or to receive any payment in respect thereof other than as set forth in this
Agreement or the MTM Stock Plan, providing for the issuance to employees of MTM
Entertainment, Inc., a Delaware corporation ("MTM"), a wholly owned Subsidiary
of the Company, of shares of common stock of MTM, all as, and other than as,
disclosed in the Company Disclosure Letter, including using its reasonable good
faith efforts to obtain all necessary consents and releases to ensure that after
the Effective Time, the only rights of the holders of Options will be to receive
the Cash Payment in cancellation and settlement thereof. Notwithstanding any
other provision of this Section 1.8 to the contrary, the Cash Payment may be
withheld with respect to any Option until necessary consents and releases are
obtained.
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(b) All provisions in any Stock Plan providing
for the future issuance or grant of any capital stock of the Company or any
interest in respect of any capital stock of the Company shall terminate or be
amended as of the Effective Time to provide no continuing rights to acquire or
be issued or granted any capital stock or any interest in any capital stock
(including, but not limited to Options) of the Company or the Surviving
Corporation (other than in respect of capital stock or interests in capital
stock (including, but not limited to, Options) granted prior to the Effective
Time, which are governed by the provisions of Section 1.8(a) above).
1.9 Exchange of Certificates.
(a) From and after the Effective Time, a bank or
trust company to be designated by FKW Sub and reasonably acceptable to the
Company (the "Exchange Agent") shall act as exchange agent in effecting the
exchange of the Merger Consideration for certificates representing Shares
entitled to payment pursuant to Section 1.6 (the "Certificates"). At or prior to
the Effective Time, FKW Sub shall deposit with the Exchange Agent the amount
necessary to enable the Exchange Agent to exchange the Merger Consideration for
Certificates received by the Exchange Agent.
(b) Promptly after the Effective Time, the
Exchange Agent shall mail to each record holder of Certificates a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent) and instructions for use in surrendering
Certificates and receiving the Merger Consideration therefor. Upon the surrender
of each Certificate, together with such letter of transmittal duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor an amount equal to
the Merger Consideration multiplied by the number of Shares represented by such
Certificate, and such Certificate shall be canceled. Until so surrendered and
exchanged, each such Certificate shall represent solely the right to receive an
amount equal to the Merger Consideration multiplied by the number of Shares
represented by such Certificate. No interest shall be paid or accrue on the
Merger Consideration payable upon the surrender of the Certificates. If any
Merger Consideration is to be paid to a Person other than the Person in whose
name the Certificate surrendered in exchange therefor is registered, such
Certificate shall be accompanied by all documents required to evidence and
effect such transfer, and it shall be a condition to such exchange that the
Person requesting such exchange shall pay to the Exchange Agent any transfer or
other taxes required by reason of the payment of such Merger Consideration to a
Person other than the registered holder of the Certificate surrendered, or such
Person shall establish to the satisfaction of the Exchange Agent that such tax
has been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Shares for
any Merger Consideration delivered to a public official pursuant to applicable
abandoned property, escheat and similar laws.
(c) Promptly following the date which is 180
days after the Effective Time, the Exchange Agent's duties shall terminate, and
any funds deposited with the Exchange Agent that remain unclaimed by holders of
Certificates shall be paid to the Surviving Corporation upon demand. Thereafter,
each holder of a Certificate may surrender such
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Certificate to the Surviving Corporation along with the applicable letter of
transmittal and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor an amount equal to the Merger Consideration
multiplied by the number of Shares represented by such Certificate, without any
interest thereon, but shall have no greater rights against the Surviving
Corporation than may be accorded to general creditors of the Surviving
Corporation.
(d) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving Corporation of any
Shares. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent, they shall be canceled and
exchanged for the applicable Merger Consideration, as provided in this Article
I, subject to applicable law in the case of Dissenting Shares.
1.10 Taking of Necessary Action; Further Action. If, at any
time after the Effective Time, any reasonable and lawful further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of either of the Constituent
Corporations, the officers and directors of such corporations are fully
authorized in the name of their corporation or otherwise to take, and shall
take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FKWW
As an inducement to the Company to enter into this Agreement,
FKWW hereby makes the following representations and warranties:
2.1 Organization, Etc. of FKWW. FKWW is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as now conducted. FKWW is
duly qualified and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the businesses conducted by it
makes such qualification necessary and where the failure to be so qualified
would be reasonably expected to have a material adverse effect on the business,
results of operations or financial condition of FKWW and its Subsidiaries taken
as a whole. FKWW has obtained from appropriate governmental regulatory
authorities, domestic or foreign (each a "Governmental Entity") all approvals,
permits and licenses necessary for the conduct of its business and operations as
currently conducted, which approvals, permits and licenses are valid and in full
force and effect, except where the failure to have obtained such approvals,
permits or licenses or the failure of such approvals, permits or licenses to be
valid and in full force and effect would not be reasonably expected to have a
material adverse effect on the business, results of operations or financial
condition of FKWW and its Subsidiaries taken as a whole. Other than FKW Sub,
FKWW has no Subsidiaries. As used in this Agreement, "Subsidiary" of a specified
Person means (i) any corporation of which equity securities possessing a
majority of the ordinary voting power in electing the board of directors are, at
the time as of which such determination is being made, owned or controlled by
such specified Person either directly or indirectly or in
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combination with one or more Subsidiaries of such specified Person, or (ii) any
Person (other than a corporation) in which such specified Person either directly
or indirectly through or in combination with one or more Subsidiaries, at the
time as of which such determination is being made, (x) is a general partner, or
(y) owns or controls more than a 50% ownership interest and has the right to
elect a majority of the members of the governing authority of such specified
Person.
2.2 Organization, Etc. of the Guarantor. The Guarantor is a
corporation organized and existing under the laws of South Australia, Australia,
with adequate corporate power and authority to own its properties and carry on
its business as presently conducted. The Guarantor has the corporate power and
authority to enter into, execute and deliver the Guaranty and to guarantee the
obligations of FKWW hereunder pursuant to such Guaranty.
2.3 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been unanimously approved by the Board of
Directors of FKWW and have been duly authorized by all other necessary corporate
action on the part of FKWW. This Agreement has been duly executed and delivered
by a duly authorized officer of FKWW and (assuming the same to be valid and
binding obligations of the other parties hereto) constitutes the valid and
binding agreement of FKWW, enforceable against FKWW in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general application which
may affect the enforcement of creditors' rights generally and by general
equitable principles. FKWW has delivered to the Company true and correct copies
of resolutions adopted by the Board of Directors of FKWW approving this
Agreement.
2.4 Execution, Delivery and Performance by the Guarantor. The
execution, delivery and performance of the Guaranty and the consummation of the
transactions contemplated thereby have been duly authorized by the Board of
Directors of the Guarantor, and the Guarantor has taken all other actions
required by law and its organizational documents in order to consummate the
transactions contemplated by the Guaranty. The Guaranty constitutes the valid
and binding obligations of the Guarantor and is enforceable in accordance with
its terms, except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally.
2.5 No Consents. The execution and delivery of this Agreement
by FKWW or by the Guarantor of the Guaranty, do not, and the performance of
FKWW's obligations under this Agreement and the Guarantor of its obligations
under the Guaranty, and the consummation of the transactions contemplated hereby
or thereby by FKWW and the Guarantor, respectively, will not require any
consent, approval, authorization or permit of, or filing with or notification to
any Governmental Entity, except (i) for (A) applicable requirements of the
Exchange Act, the Securities Act of 1933, as amended and the rules and
regulations thereunder (the "Securities Act"), and state securities or "blue
sky" laws or state anti-takeover laws ("Blue Sky Laws"), (B) the pre-merger
notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended and the rules and regulations thereunder (the "HSR Act"), and
(C) the Merger Filing, and (ii) where the failure to obtain such consents,
approvals, authorizations or
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permits, or to make such filings or notifications, (x) would not, individually
or in the aggregate, reasonably be expected to prevent consummation of the
Merger, or otherwise prevent FKWW or the Guarantor from performing their
respective obligations under this Agreement or the Guaranty in any material
respect, and (y) would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, results of
operations or financial condition of FKWW and its Subsidiaries taken as a whole.
2.6 Brokers and Finders. FKWW has not employed any investment
banker, broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission payable
after the date hereof in connection with this Agreement or the Merger.
2.7 Compliance with Other Instruments, Etc. As of the date
hereof, FKWW is not in violation of any term of (a) its charter, by-laws or
other organizational documents, (b) any material agreement or instrument
including any such related to Indebtedness, (c) any applicable law, ordinance,
rule or regulation of any Governmental Entity, or (d) any applicable order,
judgement or decree of any court, arbitrator or Governmental Entity, the
consequences of which violation, whether individually or in the aggregate, would
be reasonably expected to have a material adverse effect on (i) the business,
results of operations or financial condition of FKWW or (ii) the ability of FKWW
to perform its obligations under this Agreement. The execution, delivery and
performance of this Agreement by FKWW will not result in any violation of or
conflict with, constitute a default under, or require any consent under any term
of the charter, bylaws or other organizational document of FKWW or any such
agreement, instrument, law, ordinance, rule, regulation, order, judgement or
decree or result in the creation of (or impose any obligation on FKWW to create)
any Lien upon any of the properties or assets of FKWW pursuant to any such term,
except where such violation, conflict or default, or the failure to obtain such
consent, individually or in the aggregate, would not be reasonably expected to
have a material adverse effect on (i) the business, results of operations or
financial condition of FKWW and its Subsidiaries taken as a whole or (ii) the
ability of FKWW to perform its obligations under this Agreement. For purposes of
this Agreement, "Lien" means any mortgage. pledge, lien, security interest or
other encumbrance of any kind or nature.
2.8 Litigation. As of the date hereof, there are no actions,
suits, investigations or proceedings (adjudicatory or rulemaking) pending or, to
the knowledge of FKWW, threatened against FKWW or any of its respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental Entity, except actions, suits, investigations or proceedings which,
in the aggregate, would not be reasonably expected to have a material adverse
effect on the ability of FKWW to perform its obligations under this Agreement.
2.9 Information True and Correct. None of the information
supplied or to be supplied by FKWW for inclusion in the Information Statement
will, at the date the definitive Information Statement is first sent or given to
the stockholders of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. No representation is made by FKWW with respect to
any
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information supplied by the Company or any of its Affiliates for inclusion in
the Information Statement.
2.10 Transaction Agreements. This Agreement, the Other
Transaction Agreements and the other agreements listed in the recitals above,
are the only agreements existing as of the date hereof between FKWW, on the one
hand, and the respective counterparties to such agreements and any Affiliates of
such parties, on the other hand, with respect to the acquisition of Class A
Stock, Class B Stock, Class C Stock or Convertible Notes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FKW SUB
As an inducement to the Company to enter into this Agreement,
FKW Sub hereby makes the following representations and warranties:
3.1 Organization, Etc. FKW Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as now conducted. FKW Sub
is duly qualified and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the businesses
conducted by it makes such qualification necessary and where the failure to be
so qualified would be reasonably expected to have a material adverse effect on
the business, results of operations or financial condition of FKW Sub and its
Subsidiaries taken as a whole. FKW Sub has obtained from the appropriate
Government Entities all approvals, permits and licenses necessary for the
conduct of its business and operations as currently conducted, which approvals,
permits and licenses are valid and in full force and effect, except where the
failure to have obtained such approvals, permits or licenses or the failure of
such approvals, permits or licenses to be valid and in full force and effect
would not be reasonably expected to have a material adverse effect on the
business, results of operations or financial condition of FKW Sub and its
Subsidiaries taken as a whole. At the date of this Agreement, FKW Sub has no
Subsidiaries.
3.2 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been unanimously approved by the Board of
Directors of FKW Sub and have been duly authorized by all other necessary
corporate action on the part of FKW Sub. This Agreement has been duly executed
and delivered by a duly authorized officer of FKW Sub and (assuming the same to
be valid and binding obligations of the other parties hereto) constitutes the
valid and binding agreement of FKW Sub, enforceable against FKW Sub in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors' rights generally and
by general equitable principles.
3.3 No Consents. The execution and delivery of this Agreement
by FKW Sub do not, and the performance of its obligations under this Agreement
and the consummation of the transactions contemplated hereby by FKW Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to any Governmental Entity, except (i)
11
for (A) applicable requirements of the Exchange Act, the Securities Act, and the
Blue Sky Laws, (B) the pre-merger notification requirements of the HSR Act, and
(C) the Merger Filing, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
(x) would not, individually or in the aggregate, be reasonably expected to
prevent consummation of the Merger, or otherwise prevent FKW Sub from performing
its obligations under this Agreement in any material respect, and (y) would not,
individually or in the aggregate, be reasonably expected to have a material
adverse effect on the business, results of operations or financial condition of
FKWW and its Subsidiaries taken as a whole.
3.4 Brokers and Finders. FKW Sub has not employed any
investment banker, broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission payable
after the date hereof in connection with the Merger.
3.5 Compliance with Other Instruments, Etc. As of the date
hereof, FKW Sub is not in violation of any term of (a) its charter, by-laws or
other organizational documents, (b) any material agreement or instrument
including any such related to Indebtedness, (c) any applicable law, ordinance,
rule or regulation of any Governmental Entity, or (d) any applicable order,
judgement or decree of any court, arbitrator or Governmental Entity, the
consequences of which violation, whether individually or in the aggregate, would
be reasonably expected to have a material adverse effect on (i) the business,
results of operations or financial condition of FKWW and its Subsidiaries taken
as a whole, or (ii) the ability of FKW Sub to perform its obligations under this
Agreement. The execution, delivery and performance of this Agreement by FKW Sub
will not result in any violation of or conflict with, constitute a default
under, or require any consent under any term of the charter, bylaws or other
organizational document of FKW Sub or any such agreement, instrument, law,
ordinance, rule, regulation, order, judgement or decree or result in the
creation of (or impose any obligation on FKW Sub to create) any Lien upon any of
the properties or assets of FKW Sub pursuant to any such term, except where such
violation, conflict or default, or the failure to obtain such consent,
individually or in the aggregate, would not be reasonably expected to have a
material adverse effect on (i) the business, results of operations or financial
condition of FKWW and its Subsidiaries taken as a whole, or (ii) the ability of
FKW Sub to perform its obligations under this Agreement.
3.6 Litigation. As of the date hereof, there are no actions,
suits, investigations or proceedings (adjudicatory or rulemaking) pending or, to
the knowledge of FKW Sub, threatened against FKW Sub or any of its respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental Entity, except actions, suits, investigations or proceedings which,
in the aggregate, would not be reasonably expected to have a material adverse
effect on the ability of FKW Sub to perform its obligations under this
Agreement.
3.7 Information True and Correct. None of the information
supplied or to be supplied by FKW Sub for inclusion in the Information Statement
will, at the date the definitive Information Statement is first sent or given to
the stockholders of the Company, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
12
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. No representation is
made by FKW Sub with respect to any information supplied by the Company or any
of its Affiliates for inclusion in the Information Statement.
3.8 Fraudulent Transfer Laws. Assuming the Company is not
Insolvent immediately prior to the Effective Time, and further assuming the
representations and warranties of the Company contained in this Agreement are
true and accurate in all material respects immediately prior to the Effective
Time, the Surviving Corporation will not be Insolvent immediately after the
Effective Time (taking into account changes in assets and liabilities of the
Surviving Corporation as a result of the Merger). For purposes hereof, an entity
will be deemed to be Insolvent if (i) such entity's financial condition is such
that either the sum of its debts is greater than the fair value of its assets or
the fair saleable value of its assets is less than the amount required to pay
its probable liability on existing debts as they mature, (ii) such entity has
unreasonably small capital with which to engage in its business or (iii) such
entity has incurred liabilities beyond its ability to pay as they become due.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to FKWW and FKW Sub to enter into this
Agreement, the Company hereby makes the following representations and
warranties. Whether or not specifically referred to therein, such
representations and warranties contain exceptions set forth in a written
disclosure letter (the "Company Disclosure Letter") delivered to FKWW and FKW
Sub concurrently with the execution hereof, which is numbered to correspond to
the various sections of this Agreement and which also sets forth certain other
information called for by this Agreement.
4.1 Organization, Etc., of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as now
conducted. The Company is duly qualified and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the businesses conducted by it makes such qualification necessary and where
the failure to be so qualified would be reasonably expected to have a material
adverse effect on the business, results of operations or financial condition of
the Company and its Subsidiaries taken as a whole. As of the date hereof, the
Company has obtained from the appropriate Government Entities all approvals,
permits and licenses necessary for the conduct of its business and operations as
currently conducted, which approvals, permits and licenses are, as of the date
hereof, valid and in full force and effect, except where the failure to have
obtained such approvals, permits or licenses or the failure of such approvals,
permits or licenses to be valid and in full force and effect would not be
reasonably expected to have a material adverse effect on the business, results
of operations or financial condition of the Company and its Subsidiaries taken
as a whole.
13
4.2 Operations of Subsidiaries. Each Subsidiary of the Company
(a) is a corporation or other legal entity duly organized, validly existing and
(if applicable) in good standing under the laws of the jurisdiction of its
organization and has the requisite corporate or other organizational power and
authority to own its properties and assets and conduct its business and
operations as currently conducted, except where the failure to be duly
organized, validly existing and in good standing would not be reasonably
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole, (b) is duly qualified and in good standing in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except where the failure to
be so qualified or in good standing would not reasonably be expected to have a
material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole, and (c) has, as
of the date hereof, obtained from the appropriate Government Entities all
approvals, permits and licenses necessary for the conduct of its business and
operations, as currently conducted, which approvals, permits and licenses are,
as of the date hereof, valid and remain in full force and effect, except where
the failure to have obtained such approvals, permits and licenses or the failure
of such approvals, permits or licenses to be valid and in full force and effect
would not be reasonably expected to have a material adverse effect on the
business, results of operations or financial condition of the Company and its
Subsidiaries taken as a whole. The Company Disclosure Letter sets forth a true
and correct list of each Subsidiary of the Company as of the date hereof. All of
the outstanding capital stock of each such Subsidiary is owned entirely by the
Company or by a Subsidiary of the Company, as the case may be, as of the date
hereof, free and clear of all Liens and Restrictions, except for such
restrictions on transfer as are imposed by state and federal securities laws and
except for Liens and Restriction as will not reasonably be expected to have a
material adverse effect on the business, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole. For purposes of
this Agreement, "Restriction," means, when used with respect to any specified
security, any shareholders or other trust agreement, option, warrant, escrow,
proxy, buy-sell agreement, power of attorney or other contract, agreement or
arrangement which (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to sell or otherwise dispose of, such specified
security or any interest therein, or (ii) restricts the transfer of, or the
exercise of any rights or the enjoyment of any benefits arising by reason of,
the ownership of such specified security. All such shares of capital stock have
been duly authorized and validly issued and are fully paid and nonassessable.
There are no agreements, understandings or undertakings governing the rights and
duties of the Company or any Subsidiary of the Company as a stockholder of any
Subsidiary (other than a Subsidiary wholly owned by the Company or by a direct
or indirect wholly owned Subsidiary of the Company) under which the Company or
any Subsidiary is or may become obligated, directly or indirectly, to acquire or
dispose of any equity interest in, make any capital contribution or extend
credit to, or act as guarantor, surety or indemnitor for any liability of any
Subsidiary (other than a Subsidiary wholly owned by the Company or by a direct
or indirect wholly owned Subsidiary of the Company). Other than Subsidiaries of
the Company, the Company has no interest in any corporation, joint venture,
limited liability company, limited liability partnership, or other business
enterprise of any nature, other than investments in marketable securities
acquired in the ordinary course of business.
14
4.3 Authorization. This Agreement and the consummation of the
transactions contemplated hereby have been approved by the Board of Directors of
the Company and upon execution of the Consent, this Agreement and the Merger
shall have been duly authorized by all other necessary corporate action on the
part of the Company, including any required stockholder action. This Agreement,
upon execution and delivery thereof, will be duly executed and delivered by a
duly authorized officer of the Company and (assuming the same to be valid and
binding obligations of the other parties hereto) this Agreement constitutes the
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application which may affect the enforcement of creditors' rights generally and
by general equitable principles. The Company has delivered to FKWW and FKW Sub
true and correct copies of resolutions adopted by the Board of Directors.
4.4 Fairness Opinion; Approval by Board of Directors. On or
prior to the date hereof, the Board of Directors of the Company (i) approved the
terms of this Agreement and the Merger, (ii) determined that the Merger is fair
to and in the best interests of the holders of the Shares (other than FKWW, FKW
Sub, the Company, and their respective Affiliates), and (iii) has recommended
this Agreement and the Merger to the Company's stockholders. The Board of
Directors of the Company has received an oral opinion, as of the date hereof, of
(x) Bear, Xxxxxxx & Co. Inc. to the effect that the consideration to be received
by the holders of the Shares (other than FKWW, FKW Sub, the Company, and their
respective Affiliates) pursuant to this Agreement is fair to such holders from a
financial point of view, and (y) Xxxxxxx Xxxxx & Co. to the effect that the
consideration to be received by the holders of the Shares (other than FKWW, FKW
Sub, the Company and their respective Affiliates) pursuant to this Agreement is
fair to such holders. At the date hereof, such opinions (which, when confirmed
in writing, will be provided to FKWW and FKW Sub) have not been withdrawn,
revoked or modified. It is agreed and understood that such opinions are for the
use of the Board of Directors of the Company in considering this Agreement and
the Merger and may not be relied upon by FKWW or FKW Sub. Based on such
opinions, and such other factors as it deemed relevant, the Board of Directors
of the Company has taken all of the actions set forth in clauses (i) and (ii)
above and has directed that this Agreement be submitted to the stockholders of
the Company for their approval.
4.5 Capital Stock.
(a) The authorized capital stock of the Company
consists of (i) 10,000,000 shares of Class A Stock, of which 5,000,000 shares
are outstanding as of the date hereof, (ii) 100,000,000 shares of Class B Stock,
of which 32,781,795 shares are outstanding as of the date hereof, (iii)
20,000,000 shares of Class C Stock, of which 7,088,732 shares are outstanding as
of the date hereof, and (iv) 400,000 shares of 10% Convertible Cumulative
Preferred Stock, par value $0.001 per share, of which none are issued and
outstanding as of the date hereof. All outstanding Shares are duly authorized,
validly issued, fully paid and nonassessable.
(b) As of the date hereof, there are (i) no
options, warrants, calls, subscriptions, convertible securities or other rights
(including preemptive rights), agreements,
15
understandings, arrangements or commitments of any character obligating the
Company now or at any time in the future to issue or sell any of its capital
stock or other equity interests in the Company or any of its Subsidiaries, (ii)
there are no obligations, contingent or otherwise, of the Company or any of its
Subsidiaries, to repurchase, redeem or otherwise acquire any shares of capital
stock or other equity interests of the Company or any of its Subsidiaries, (iii)
there are no outstanding bonds, debentures, notes or other obligations of the
Company or any of its Subsidiaries, the holders of which have the right to vote
(or which are convertible into or exercisable for securities having the right to
vote) with the holders of the Class A Stock and the Class B Stock on any matter,
(iv) there are no obligations, contingent or otherwise, guaranteeing the value
of any of the Shares or the capital stock of any of its Subsidiaries either now
or at any time in the future, and (v) there are no voting trusts, proxies or
other agreements or understandings to which the Company is a party or is bound
with respect to the voting of any capital stock or other equity interests of the
Company or any of its Subsidiaries. None of the Shares or any other equity
interest of the Company or any other securities convertible into or exchangeable
for Shares or any other equity interests of the Company, or options to acquire
Shares or securities convertible into Shares or equity interests of the Company
are held by any of the Company's Subsidiaries.
4.6 Consents. The execution and delivery of this Agreement by
the Company do not, and the performance of its obligations under this Agreement
and the consummation of the Merger by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to any
Governmental Entity, except (i) for (A) applicable requirements of the Exchange
Act, the Securities Act, and the Blue Sky Laws, (B) the premerger notification
requirements of the HSR Act, and (C) the Merger Filing, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, (x) would not, individually or in the
aggregate, be reasonably expected to prevent the consummation of the Merger, or
otherwise prevent the Company from performing its obligations under this
Agreement in any material respect, and (y) with respect to any such requirement
in effect on the date hereof, would not, individually or in the aggregate, be
reasonably expected to have a material adverse effect on the business, results
of operations or financial condition of the Company and its Subsidiaries taken
as a whole.
4.7 SEC Reports and Financial Statements. Since January 1,
1994 up to and including the date hereof, the Company has filed with the SEC all
forms, reports, schedules, registration statements, proxy statements and other
documents (collectively, "Company SEC Reports") required to be filed by the
Company with the Securities and Exchange Commission (the "SEC") under the
Securities Act, Exchange Act, and the rules and regulations thereunder. As of
their respective dates, or in the case of registration statements, as of their
respective effective dates, all of the Company SEC Reports, including all
exhibits and schedules thereto and all documents incorporated by reference
therein, (i) complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act applicable thereto, and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except for such statements, if any, as have been modified or
superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of the Company and its Subsidiaries included in such
reports
16
complied as of the respective dates thereof as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
United States generally accepted accounting principles ("GAAP") as in effect on
their respective dates applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-Q of the SEC)
and fairly presented (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated financial
position of the Company and its Subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, and up to and including the date hereof, neither
the Company nor any of its Subsidiaries has incurred any liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise and whether due or to become due) of any nature, which
would be required by GAAP, as of the date hereof, to be set forth on a
consolidated balance sheet of the Company and its Subsidiaries or in the notes
thereto except liabilities, obligations or contingencies (a) which are
disclosed, reflected or reserved for on the unaudited balance sheets of the
Company and its Subsidiaries as of March 31, 1997 (including the notes thereto)
or in this Agreement or the Company Disclosure Letter or (b) which (i) were
incurred in the ordinary course of business after December 31, 1996, and
consistent with past practices, or (ii) are disclosed or reflected or reserved
for in the Company SEC Reports filed after December 31, 1996, or (iii) would not
reasonably be expected to, individually or in the aggregate, have a material
adverse effect on the business, results of operations or financial condition of
the Company and its Subsidiaries taken as a whole, or (c) which were incurred as
a result of actions taken or refrained from being taken (i) in furtherance of
the transactions contemplated by this Agreement, or (ii) at the request of FKWW
and FKW Sub. Since December 31, 1996, there has been no change in any of the
significant accounting (including tax accounting) policies, practices or
procedures of the Company or any of its Subsidiaries except as required by GAAP
or applicable law.
4.8 Absence of Certain Changes or Events. Since December 31,
1996 and up to and including the date hereof, except as disclosed in the Company
Disclosure Letter or the Company SEC Reports, (A) the Company has not declared
or paid any dividend or made any distribution on or with respect to its capital
stock; redeemed, purchased or otherwise acquired any of its capital stock;
granted any options, warrants or other rights to purchase shares of, or any
other securities which may be convertible into or exchangeable for, its capital
stock; or issued any shares of its capital stock; (B) there has been no increase
in the compensation or benefits (including but not limited to any bonus,
severance or option plan, program, arrangements or understanding) payable or to
become payable to any officer or director of the Company or any of the 25 most
highly compensated (based on cash compensation paid in or with respect to
services rendered in calendar 1996) employees of the Company and its
Subsidiaries (including officers and directors of the Company, as applicable)
(collectively, including officers and directors of the Company, "Highly
Compensated Persons"), other than increases in the ordinary course of business
and consistent with past practice; (C) there has been no pledge, disposition,
encumbrance, hypothecation, sale or other transfer of any material portion of
the properties or assets of the Company and its Subsidiaries taken as a whole
(whether tangible or intangible), except in the ordinary course of business and
consistent with past practice; and (D) there has been no agreement binding upon
the Company or any of its Subsidiaries to do any of
17
the foregoing. Since December 31, 1996 and up to and including the date of this
Agreement, other than as disclosed in the Company Disclosure Letter or the
Company SEC Reports or as contemplated by this Agreement, the Company and each
of its Subsidiaries have conducted their respective businesses in the ordinary
course and there has been no change in the condition (financial or otherwise),
business, properties, assets or liabilities of the Company and its Subsidiaries
taken as a whole, except such failures to so conduct their businesses and such
changes, which, when considered as a whole, have not had a material adverse
effect on the business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole.
4.9 Service Xxxx. The Company and its Subsidiaries own
or have adequate rights, including the underlying intellectual property rights,
with respect to the xxxx, "The Family Channel," in the United States.
4.10 DGCL Section 203. The Company is not subject to the
provisions of Section 203 of the DGCL.
4.11 Material Contracts and Commitments. None of M.G.
"Xxx" Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxxxx, Xxxxxxx X.
Xxxxxxxxx, X.X. "Xxx" Xxxxx, Xxxxxxx X. Xxxxx, or Xxxxx X. Xxxxxxx
(collectively, the "Responsible Officers") has, as of the date hereof, Actual
Knowledge that the Company or any other party to any of the Company's contracts
or agreements is in breach of any of their respective obligations under such
contracts or agreements other than breaches which, individually or in the
aggregate, would not reasonably be expected to have a material adverse affect on
the business, results of operations or financial condition of the Company and
its Subsidiaries taken as a whole.
4.12 Agreements with Related Parties. Other than as set forth
in the Company SEC Reports or the Company Disclosure Letter, as of the date
hereof, none of Xxx Xxxxxxxxx, Xxx Xxxxxxxxx, the officers and directors of the
Company, LIFE, CBN, Regent or their respective Affiliates (except Affiliates
controlled by the Company) (collectively, "Related Parties") is a party to any
agreement with the Company or any of its Subsidiaries providing for the payment
of an amount or amounts in excess of $250,000 in the aggregate, or has any
interest in any property (real, personal or mixed, tangible or intangible) used
in or pertaining to the business of the Company or any of its Subsidiaries which
is material to the Company and its Subsidiaries taken as a whole, except this
Agreement (the "Related Party Agreements"). No Person shall be deemed to have
any agreement or interest referred to in this Section 4.12 solely because such
Person holds an equity interest in a Person (who is not an Affiliate of such
Person) which is party to such agreement or has such interest. None of the
Related Party Agreements, in the form previously delivered to FKWW, has been
modified or amended in any material respect through the date hereof except as
contemplated by this Agreement, the Stock Purchase Agreements or the
Contribution Agreement.
4.13 Affiliation Agreements. The Company Disclosure Letter
includes a true and complete list as of the date hereof of the contracts between
the Company and the top 25 cable carriers relating to carriage of The Family
Channel (determined by reference to subscriber count as of the most recent
practicable dates) (the "Affiliation Agreements"). At the date hereof,
18
to the Actual Knowledge of the Responsible Officers, the Company has not
received any notice (written or oral) that any such cable carrier (a) has
canceled or terminated, or has a specific intention to cancel or terminate, any
Affiliation Agreement, which cancellations or terminations would involve, in the
aggregate, the loss of more than 1,000,000 subscribers, or (b) has a specific
intention to effect a planned reduction in the number of subscribers covered by
such Affiliation Agreement other than reductions which would not reasonably be
expected to have a material adverse effect on the business, results of
operations or financial condition of the Company and its Subsidiaries taken as a
whole.
4.14 Brokers and Finders. Except for the fees and expenses
payable to Xxxxxxx, Sachs & Co. and Bear, Xxxxxxx & Co. Inc., which fees shall
be paid by the Surviving Corporation, the Company has not employed any
investment banker, broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement which would be entitled to any
investment banking, brokerage, finder's or similar fee or commission payable
after the date hereof in connection with this Agreement or the Merger
contemplated hereby.
4.15 Information Statement. None of the information supplied
or to be supplied by the Company for inclusion in the definitive Information
Statement to be filed with the SEC relating to the Merger as required by the
Exchange Act (the "Information Statement"), will, at the date such Information
Statement is first sent or given to stockholders of the Company, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Information Statement will, when first sent or given to stockholders of the
Company, comply as to form in all material respects with the requirements of the
Exchange Act. No representation is made by Company with respect to any
information supplied by FKWW or FKW Sub expressly for inclusion in the
Information Statement.
ARTICLE V
CONDUCT OF BUSINESS
5.1 Conduct of Business of the Company. Prior to the earlier
of the Effective Time of the Merger or the termination of this Agreement
pursuant to its terms, unless FKWW and FKW Sub shall otherwise consent in
writing or unless otherwise set forth in the Company Disclosure Letter:
(i) except as otherwise contemplated by this
Agreement, the Company shall, and shall cause its Subsidiaries to,
carry on their respective businesses in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(ii) except as required or permitted by this
Agreement and except as required by any existing agreement of the
Company or any of its Subsidiaries or in order to comply with the legal
requirements of the jurisdiction of incorporation of any Subsidiary,
the Company shall not and shall not propose to, nor shall it permit any
of its Subsidiaries to or propose to (A) sell or pledge or agree to
sell or pledge any capital
19
stock owned by it (or any of its Subsidiaries) in any of its
Subsidiaries, (B) amend its Certificate of Incorporation or By-Laws,
(C) split, combine, reclassify or amend the terms of its outstanding
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of, or in substitution for,
shares of capital stock of the Company, or declare, set aside or make
any dividend or other distribution payable in cash, stock or property,
or (D) directly or indirectly redeem, purchase or otherwise acquire or
agree to redeem, purchase or otherwise acquire any shares of the
capital stock of the Company or any options or rights to purchase any
shares of capital stock except as required by this Agreement;
(iii) except as required by any existing agreement of
the Company or any Subsidiary or in order to comply with the legal
requirements of the jurisdiction of incorporation of any Subsidiary,
the Company shall not, nor shall it permit any of its Subsidiaries to,
except as required by this Agreement, authorize, issue, deliver,
pledge, encumber or sell or agree to authorize, issue, deliver, pledge,
encumber or sell any additional shares of, or rights of any kind to
acquire any shares of, its capital stock of any class, or any option,
rights or warrants to acquire, or securities convertible into, shares
of capital stock;
(iv) except as otherwise contemplated by this
Agreement, the Company shall not, and shall cause its Subsidiaries not
to: (A) adopt any material employee benefit plan or (B) amend any
material employee benefit plan in a manner that significantly increases
the benefits thereunder or (C) adopt, extend or amend any employment
agreement (including any severance agreement) for senior management
employees of the Company or (D) make any increase in the compensation
of any Highly Compensated Person, whether now or hereafter payable,
other than in the ordinary course of business consistent with past
practice (except that no such increase shall be effected pursuant to
any option, stock purchase, or other plan, arrangement, contract or
commitment providing for the issuance of capital stock of the Company
or any option or other right to acquire capital stock of the Company),
or (E) hire any new employee of the Company or any Subsidiary at a cash
compensation (including salary and anticipated bonus) in excess of
$100,000 per annum other than any replacement for a departing employee
pursuant to substantially equivalent compensation arrangements, which
replacements shall be made, if at all, only after consulting with FKWW;
(v) the Company shall not and shall cause its
Subsidiaries to not, take or agree to take any action with the intent
and knowledge that such action would cause a breach of any of the
representations or warranties of the Company contained in this
Agreement in any material respect or prevent the Company from
performing or cause the Company not to perform any of its covenants
hereunder in any material respect;
(vi) the Company shall not submit any matters to the
stockholders of the Company for a vote prior to the Effective Date
other than the Merger;
(vii) the Company shall not, and shall cause its
Subsidiaries to not, sell, pledge, dispose of, encumber or hypothecate
any material portion of the assets of the
20
Company and its Subsidiaries taken as a whole, except in the ordinary
course of business and consistent with past practice;
(viii) the Company shall not, and shall cause its
Subsidiaries to not, acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or any other business
organization or division thereof, or any material interest therein
other than marketable securities purchased in the ordinary course of
business consistent with past practice;
(ix) the Company shall not, and shall cause its
Subsidiaries to not, incur any liability in respect of (i) borrowed
money, (ii) capitalized lease obligations, (iii) the deferred purchase
price of property or services (other than trade payables in the
ordinary course of business), (iv) reimbursement obligations in respect
of letters of credit and (v) guarantees of any of the foregoing
incurred by any Person other than the Company and its direct or
indirect wholly owned Subsidiaries (collectively, "Indebtedness")
except (x) to the extent of such liabilities as of the date hereof,
including any replacements, refinancings or renewals thereof on terms
not materially more onerous to the Company, or (y) under revolving
credit facilities existing on the date hereof or (z) other obligations
which do not exceed $1 million individually or in the aggregate;
(x) the Company shall not, and shall cause its
Subsidiaries to not, authorize any capital expenditures or the purchase
of any fixed assets other than (i) expenditures or purchases which are
included in the capital budget of the Company previously delivered by
the Company to FKWW and FKW Sub or, if not included in such capital
budget, do not exceed $10 million individually or in the aggregate, or
(ii) expenditures necessary to continue to operate the technical
facility of the Company following the occurrence of any emergency in
order to continue to telecast the Family Channel (subject in the case
of (ii) above, to the receipt of approval of FKWW, which approval shall
not be unreasonably withheld and shall be deemed given, if not
previously given or reasonably withheld, upon the expiration of 24
hours following confirmed, actual delivery of notice, however
delivered, to any of Xxxxx Xxxxx, Xxx Xxxxxxxxx, Xxxxx Xxxxxxxx, Xxxx
Xxxxx, Xxxxxxxx Xxxxxx or Xxx Xxxxx, which notice identifies the
emergency, provides an estimate of the expenditures to be incurred and
expressly refers to the requirement that notice of approval or the
withholding of approval be delivered to the Company within 24 hours.
The provisions of Section 9.2 hereof expressly do not apply to this
Section 5.1(x);
(xi) the Company shall not, and shall cause its
Subsidiaries to not, authorize any expenditure for television or motion
picture productions or programming other than expenditures or purchases
which are included in the programming budget of the Company previously
delivered by the Company to FKWW and FKW Sub or, if not included in
such capital budget, do not exceed $10 million individually or in the
aggregate;
(xii) the Company shall not, and shall cause its
Subsidiaries to not, enter into any transaction or incur or make any
payment to any Related Party of the Company
21
except for goods or services provided in the ordinary course of
business consistent with past practice and except for payments incurred
or made or other transactions effected pursuant to any agreements
existing on the date hereof;
(xiii) the Company shall not, and shall cause its
Subsidiaries to not, take any action to change any of the significant
accounting (including tax accounting) policies, practices or procedures
of the Company or any of its Subsidiaries other than as required in
order to comply with GAAP or applicable law;
(xiv) the Company shall not, and shall cause its
Subsidiaries to not, enter into any agreement with any Person other
than FKWW or FKW Sub granting such other Person the right to program
any block of time on The Family Channel other than arrangements which
(i) terminate on or prior to September 1, 1998, or (ii) which are
terminable by the Company on not more than 30 days notice without any
payment with respect thereto other than reimbursement of any advance
payments;
(xv) the Company shall not, and shall cause its
Subsidiaries to not, to launch a new cable channel without first
consulting with FKWW;
(xvi) the Company shall not and shall cause its
Subsidiaries to not, cancel, revoke or fail to renew any of the
Affiliation Agreements or take any action with the intent and knowledge
that such action would cause a material breach or violation of any
Affiliation Agreement; and
(xvii) the Company shall not, and shall cause its
Subsidiaries to not enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing subsections.
5.2 Conduct of Business of FKW Sub. Prior to the earlier of
the Effective Time of the Merger or the termination of this Agreement pursuant
to its terms, FKW Sub shall not engage in any activities of any nature except as
provided in or contemplated by this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Preparation of Information Statement. The Company shall,
as promptly as practicable, prepare and file a preliminary Information Statement
with the SEC and shall use its reasonable good faith efforts to respond to any
comments of the SEC and to cause the Information Statement to be mailed to the
Company's stockholders at the earliest practicable time. Each of the parties
hereto shall supply such information reasonably requested by the Company (or in
the case of the Company, as is necessary) in its possession for inclusion in the
Information Statement. The Company will notify FKWW and FKW Sub promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Information Statement or for
additional information and will supply FKWW and FKW Sub with copies of all
correspondence between the Company or any
22
of its representatives, on the one hand, and the SEC or its staff, on the other
hand, with respect to the Information Statement or the Merger.
6.2 Filings and Other Actions. As promptly as practicable
after the execution of this Agreement, but in any event within 5 business days,
FKWW, FKW Sub and the Company shall file notification reports under the HSR Act
and shall request early termination of the waiting period under the HSR Act and
use their reasonable good faith efforts to obtain clearance or authorization
under the HSR Act of the Merger and the other transactions contemplated by this
Agreement at the earliest practicable time.
6.3 Fees and Expenses. Except as set forth in Section 9.11,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses.
6.4 Further Assurances.
(a) Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable good faith
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
as promptly as practicable the transactions contemplated by this Agreement, and
to cooperate with each other in connection with the foregoing, including, but
not limited to, using reasonable good faith efforts (a) to obtain all necessary
waivers, consents and approvals from other parties to material loan agreements,
leases and other contracts; (b) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal, state or
foreign law or regulation; (c) to defend all lawsuits or other legal proceedings
challenging this Agreement or the transactions contemplated hereby; (d) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby; (e) to effect all necessary filings with respect to the transactions
contemplated hereby, including, but not limited to, filings under the HSR Act
and submissions of information requested by Government Entities; and (f) to
fulfill all conditions to this Agreement. Notwithstanding the foregoing, nothing
contained herein shall require any party to waive any of the conditions to the
Merger or other transactions contemplated by this Agreement.
(b) FKWW and FKW Sub hereby agree, while this
Agreement is in effect, and except as contemplated hereby, not to take any
action with the intention and knowledge that such action would make any of their
representations or warranties contained herein untrue or incorrect in any
material respect or have the effect of preventing or disabling them from
performing their obligations under this Agreement. FKWW and FKW Sub shall not
enter into, permit or give any consent to, any amendment, supplement or other
modification of, or give any consent or waiver or otherwise take any action
(including agreeing to a delayed closing date) under, any of the Other
Transaction Agreements (or any of the agreements related thereto) (collectively,
a "Modification") which could reasonably be expected to delay the Effective
Time, and shall not in any event waive, amend, modify or terminate the condition
set forth in Section 8.6 of the Contribution Agreement, or terminate any of the
Other Transaction Agreements (or any of the agreements related thereto), without
the prior written consent of the Company (subject
23
to Section 6.8, if applicable). Notwithstanding the foregoing, FKWW and FKW Sub
may effect any Modification to the Other Transaction Agreements (or any of the
agreements related thereto) which they determine in good faith to be reasonably
necessary to effect the transactions contemplated thereby, provided they use
their reasonable good faith efforts to cause the closing thereunder to occur as
soon as practicable and provided further that such Modification will not delay
the Effective Time beyond November 30, 1997.
6.5 Notification of Certain Matters. The Company shall use
reasonable good faith efforts to promptly give written notice to FKWW and FKW
Sub, and FKWW and FKW Sub shall use reasonable good faith efforts to promptly
give written notice to the Company, upon becoming aware of the occurrence or, to
its knowledge, impending or threatened occurrence, of any event which would
cause or constitute a breach of any of its representations, warranties or
covenants contained or referenced in this Agreement and use its reasonable good
faith efforts to prevent or promptly remedy the same.
6.6 Access and Information. From the date hereof to the
Effective Time, the Company shall, and shall cause its Subsidiaries and its and
their respective officers, directors, employees and agents to, afford the
officers, employees and agents of FKWW and FKW Sub and their respective
affiliates reasonable access during normal business hours (or at such other
times as FKWW or FKW Sub and the Company may mutually agree) to its properties,
books, contracts, commitments and records and shall furnish FKWW and FKW Sub and
their respective affiliates all financial, operating and other data and
information as FKWW or FKW Sub or any of their respective affiliates, through
their respective officers, employees or agents, may reasonably request. All
information disclosed pursuant to this Section 6.6, shall be subject to those
certain Confidentiality Agreements entered into by and between FKWW and the
Company as of May 2, 1996, December 17, 1996, and December 31, 1996 (the
"Confidentiality Agreements").
6.7 Acquisition Proposals. Prior to the Effective Time, the
Company agrees (a) that neither it nor any of its Subsidiaries shall authorize
or permit any of its officers, directors, employees, agents and representatives
(including, without limitation, any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) to initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of any
proposal or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, consolidation or similar
transaction involving, or any purchase of all or any significant portion of the
assets or any equity securities of, the Company or any of its Subsidiaries (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; (b) that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 6.7; and (c) that it will notify FKWW
and FKW Sub immediately if any such inquiries or proposals are received by, any
such information is received from, or any such negotiations or discussions are
sought to be initiated or continued with, it; provided,
24
however, that nothing contained in this Section 6.7 shall prohibit the Board of
Directors of the Company from (i) furnishing information to or entering into
discussions or negotiations with, any Person or entity that makes an unsolicited
bona fide proposal to acquire the Company pursuant to a merger, consolidation,
share exchange, purchase of a substantial portion of the assets, business
combination or other similar transaction, if, and only to the extent that (A)
the Board of Directors determines in good faith, based as to legal matters on
advice of outside legal counsel, that the failure to take such action would
involve a substantial risk of breach of fiduciary duty to the Company's
shareholders imposed by applicable law, (B) prior to furnishing such information
to, or entering into discussions or negotiations with, such Person or entity,
the Company provides notice to FKWW and FKW Sub to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person or entity, and (C) subject to any confidentiality agreement with
such Person or entity (which the Company executed after determining in good
faith, based as to legal matters on advice of outside counsel, that the failure
to take such action would involve a substantial risk of breach of the Board of
Directors' fiduciary duty to stockholders imposed by applicable law), the
Company keeps FKWW and FKW Sub informed of the status (not the terms) of any
such discussions or negotiations; and (ii) to the extent applicable, complying
with Rule 14d-9 and 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal. Nothing in this Section 6.7 shall (x) permit any party to
terminate this Agreement (except as specifically provided in Section 8.1
hereof), (y) permit any party to enter into any agreement with respect to an
Acquisition Proposal during the term of this Agreement (it being agreed that
during the term of this Agreement, no party shall enter into any agreement with
any Person that provides for, or in any way facilitates, an Acquisition Proposal
(other than a confidentiality agreement in customary form)), or (z) affect any
other obligation of any party under this Agreement.
6.8 Board of Directors. In the event FKWW and the other
parties thereto consummate the purchase of the Company Stock from the Xxxxxxxxx
Sellers pursuant to the Xxxxxxxxx Purchase Agreement prior to the Closing of the
Merger, FKWW shall, from and after such closing, be entitled to designate, at
its option, upon notice to the Company, up to that number of directors, rounded
to the nearest whole number, of the Company's Board of Directors, subject to
compliance with Section 14(f) of the Exchange Act, as will make the percentage
of the Company's directors designated by FKWW equal to the aggregate voting
power of the Shares of Company Stock held by FKWW or any of its Subsidiaries
(after giving effect to the conversion of the Class A Stock to Class B Stock and
the conversion of any Class C Stock and any Convertible Notes then held by FKWW
or its Subsidiaries into Class B Stock); provided, however, that the Company
shall not be obligated and need not appoint any designee or designees to the
Board of Directors of the Company who, in the Board's good faith judgment, are
not fit to be Directors of the Company; and provided, further, that in the event
that FKWW designees are elected to the Board of Directors of the Company, such
Board of Directors shall have, until the Effective Time, at least two directors
who are Class B Directors on the date of this Agreement (the "Continuing
Directors"), and provided, further that, in such event, if the number of
Continuing Directors shall be reduced below two for any reason whatsoever, the
remaining Continuing Directors shall be permitted to designate an individual to
fill such vacancy who would be an "independent director" under the rules of the
New York Stock Exchange (such designee to be deemed to be a Continuing Director
for purposes of this Agreement) or, if no Continuing Directors then remain, the
other directors shall designate two individuals to fill such
25
vacancies who shall not be officers, directors, employees or Affiliates of FKWW
or any of its Affiliates and shall otherwise be "independent directors" under
the rules of the New York Stock Exchange (each designee to be deemed to be a
Continuing Director for purposes of this Agreement). To the fullest extent
permitted by applicable law, the Company shall take all actions requested by
FKWW which are reasonably necessary to effect the election of any such designee
or designees, including the inclusion in the Information Statement, or a
separate mailing, of the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and the making of such mailing as
part of the Information Statement or otherwise, as requested by FKWW (provided
that FKWW shall have provided to the Company on a timely basis all information
required to be included with respect to FKWW designees). In connection with the
foregoing, the Company will promptly either increase the size of the Company's
Board of Directors and/or obtain the resignation of such number of its current
directors as is necessary to enable FKWW designees to be elected or appointed to
the Company's Board of Directors as provided above. Following the election or
appointment of FKWW's designees pursuant to this Section 6.8 and prior to the
Effective Time, any amendment, or waiver of any term or condition, of this
Agreement or the Amended and Restated Certificate of Incorporation or Restated
By-Laws of the Company, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of FKWW or FKW Sub or waiver or assertion of any of
the Company's rights hereunder, or any other consents or actions by the Board of
Directors with respect to this Agreement or the Guaranty, will require, and will
require only, the concurrence of a majority of the Continuing Directors, except
to the extent that applicable law requires that such action be acted upon by the
full Board of Directors, in which case such action will require the concurrence
of a majority of the Directors, which majority shall include each of the
Continuing Directors, and no other action by the Company shall be required for
purposes of this Agreement. After the date of this Agreement, until the earlier
of (i) the Effective Time, and (ii) the termination of this Agreement, FKWW will
not exercise any rights it may have as a stockholder of the Company to effect a
change in the composition of the Board of Directors of the Company, except as
provided for in this Section 6.8.
6.9 Indemnification and Insurance. FKWW shall cause all rights
to indemnification or exculpation now existing in favor of the past and present
directors or officers of the Company as provided in the Company's Amended and
Restated Certificate of Incorporation or Restated By-Laws with respect to claims
arising from service as officers or directors prior to the Effective Time to
survive the merger and continue in full force and effect for a period of not
less than six years from the Effective Time (or with respect to claims arising
from service as officers or directors prior to the Effective Time which have not
been resolved prior to such sixth anniversary, until the time such matters are
finally resolved). FKWW shall cause the Surviving Corporation to maintain in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance maintained by the Company as
of the date hereof (provided that the Surviving Corporation may substitute
therefor policies of at least the same amount of coverage (covering known or
unknown claims as of the Effective Time) containing terms and conditions which
are not less advantageous), copies of which has been previously made available
to FKWW, with respect to matters occurring prior to the Effective Time, to the
extent available; provided, however, that the Surviving Corporation shall not be
required to maintain such insurance to the extent the annual premium
26
therefor exceeds 200% of the annual premiums currently paid by the Company in
respect of the current policy or policies (the "Maximum Amount") but in such
case shall purchase as much comparable coverage as available for the Maximum
Amount.
6.10 Officer's Certificate. The Company, at the request of
FKWW, shall deliver a certificate to FKWW executed by an executive officer of
the Company in the form and with respect to the matters referred to in the
attached Exhibit A, dated as of the date of the closing of the purchase of the
Control Stock (as defined in the Xxxxxxxxx Purchase Agreement) by FKWW pursuant
to terms of the Xxxxxxxxx Purchase Agreement, or, alternatively, inform FKWW
that it is unable to give such certificate because of the inaccuracy of any of
the matters referred to therein.
ARTICLE VII
CONDITIONS
7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment or waiver at or prior to the Effective Time of the
following conditions:
(a) no temporary or permanent order, injunction
or decree shall be entered or enforced by or before any court, arbitrator or
Governmental Entity that would prohibit the consummation of the Merger;
(b) there shall not have occurred and be
continuing any declaration of any banking moratorium or suspension of payments
by banks in the United States or any general limitation on the extension of
credit by lending institutions in the United States;
(c) all required waiting periods under the HSR
Act applicable to the transactions contemplated hereunder shall have expired or
terminated;
(d) the Company shall have obtained all consents
and approvals of Governmental Entities which are legally required to be obtained
by the Company prior to consummation of the Merger, which if not obtained would
have a material adverse effect on the business, results of operations or
financial condition of the Company and its Subsidiaries taken as a whole; and
(e) there shall not have been any statute, rule,
regulation or order promulgated, enacted, issued or deemed applicable to the
Merger by any Governmental Entity or court of competent jurisdiction which would
make the consummation of the Merger illegal; provided, however, that upon the
closing of the purchase of the Control Stock pursuant to the Xxxxxxxxx Purchase
Agreement, the conditions in subparagraphs (c) and (d) of this Section 7.1 above
shall, to the extent then applicable, no longer be applicable.
27
7.2 Additional Conditions to the Company's Obligation to
Effect the Merger. The obligation of the Company to effect the Merger is also
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions: (a) the representations and warranties of FKWW and FKW Sub
contained in this Agreement shall be true and correct in all material respects
on and as of the Effective Time as though made on and as of such time (except
for those made as of a specified date (including "as of the date hereof") which
shall be true and correct as of such date), and (b) FKWW and FKW Sub shall have
performed in all material respects their respective obligations hereunder
required to be performed on or before the Effective Time; provided, however,
upon the closing of the purchase of the Control Stock pursuant to the terms of
the Xxxxxxxxx Purchase Agreement, the conditions set forth in clause (a) of this
Section 7.2 shall no longer be applicable.
7.3 Additional Conditions to FKW Sub's Obligation to Effect
the Merger. The obligation of FKW Sub to effect the Merger is also subject to
the satisfaction or waiver at or prior to the Effective Time of the following
conditions: (a) the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects on and as of
the Effective Time as though made on and as of such time (except for those made
as of a specified date (including "as of the date hereof"), which shall be true
and correct as of such date), except (i) for changes in circumstances expressly
permitted or contemplated by this Agreement or (ii) where the failure would not
be reasonably expected to have a material adverse effect on the business,
results of operations or financial condition of the Company and its Subsidiaries
taken as a whole, (b) the Company shall have performed in all material respects
its obligations hereunder required to be performed on or before the Effective
Time, and (c) except as set forth in the Company Disclosure Letter or as
expressly provided for herein, (x) immediately prior to the Effective Time, the
representation and warranty contained in Section 4.5 (a) hereof shall be true
and correct (other than such changes resulting from the exercise of Options or
the conversions of convertible securities which are outstanding as of the date
hereof and disclosed in the Company Disclosure Letter), and (y) immediately
following the Effective Time, other than as provided for in the Company
Disclosure Letter, neither the Company nor any of its Subsidiaries is or will be
bound by any options, warrants, rights or agreements which would entitle any
Person, other than FKWW or its Subsidiaries, to own any capital stock of the
Surviving Corporation or to receive any payment in respect thereof; provided,
however, upon the closing of the purchase of the Control Stock pursuant to the
provisions of the Xxxxxxxxx Purchase Agreement, the conditions set forth in
clauses (a) and (b) of this Section 7.3 shall no longer be applicable.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND LIABILITY
8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether prior to or after approval of the
Merger by the stockholders of the Company:
28
(a) by mutual written consent of FKW Sub, FKWW
and the Company, or
(b) by FKW Sub or FKWW, if the Effective Time
shall not have occurred on or prior to November 30, 1997, due to a failure of
any of the conditions to the obligations of FKW Sub to effect the Merger, to the
extent then applicable, set forth in Sections 7.1 or 7.3, or
(c) by the Company, if the Effective Time shall
not have occurred on or prior to November 30, 1997, due to a failure of any of
the conditions to the obligations of the Company to effect the Merger, to the
extent then applicable, set forth in Sections 7.1 or 7.2, or
(d) by the Company, if after the date hereof and
before the Effective Time, the Guarantor attempts or purports to revoke or
withdraw the Guaranty or a court of competent jurisdiction finally determines
that the Guaranty is unenforceable or invalid; provided that any action by the
Company shall be subject to Section 6.8 if then applicable; and provided,
further, that the November 30, 1997 date shall be extended for (i) any period
that a party is subject to a non-final order, injunction or decree prohibiting
consummation of the Merger and (ii) the continuation of any event set forth in
Section 7.1(b).
8.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 8.1, this Agreement shall forthwith become
void and there shall be no liability or obligation on the part of the Company or
FKW Sub or FKWW or any of their Affiliates except as set forth in Sections 6.3
and 9.11 (with respect to fees and expenses) or Section 6.6 (with respect to
confidentiality). In the event of a termination of this Agreement as provided in
Section 8.1, the parties will not be excused for any liability owing the others
for a prior breach of this Agreement, subject to the provisions of Sections 8.5
and 9.3.
8.3 Amendment. This Agreement may not be amended except by
action of the Board of Directors of each of the parties hereto (and subject, in
the case of the Company, to Section 6.8), which Amendment is set forth in an
instrument in writing signed on behalf of each of the parties hereto. No
amendment following approval of the stockholders shall require the approval of
the stockholders unless specifically required by the DGCL.
8.4 Waiver. At any time prior to the Effective Time, whether
before or after the stockholder approval, any party hereto, by action taken by
its Board of Directors (and subject, in the case of the Company, to Section
6.8), may (i) extend the time for the performance of any of the obligations or
other acts of any other party hereto or (ii) subject to the second sentence of
Section 8.3, waive compliance with any of the agreements of any other party or
with any conditions to its own obligations. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by a duly authorized
officer.
29
8.5 Limitation on Liability. The liability of the Company for
any breach by the Company of this Agreement shall be limited to the actual
damages suffered by FKWW and FKW Sub under this Agreement and the Company shall
not be liable for any consequential or other damages of FKWW or FKW Sub,
including any damages arising in connection with any Other Transaction
Agreement.
ARTICLE IX
GENERAL PROVISIONS
9.1 Publicity. The initial press release relating to this
Agreement shall be a joint press release in the form attached hereto as Exhibit
B, and FKWW and the Company shall, subject to their respective legal obligations
of public companies, use reasonable good faith efforts to agree upon the text of
any other press release before issuing any such press release or otherwise
making public statements with respect to the transactions contemplated hereby
and in making any filings with any federal or state governmental or regulatory
agency or with any national securities exchange with respect thereto.
9.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by certified or registered mail, return receipt requested and postage
prepaid, or transmitted by facsimile to the parties at the following addresses
or at such other addresses as shall be specified by the parties by like notice:
(a) If to FKWW or FKW Sub:
Fox Kids Worldwide, Inc. or
Fox Kids Merger Corporation
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxx Xxxxx
Fax: 000-000-0000
with a copy to:
Fox, Inc.
00000 Xxxx Xxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: President
Fax: 000-000-0000
30
and a copy to:
The News Corporation Limited
c/o News America Publishing Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
and a copy to:
Troop Xxxxxxxxx Xxxxxxx & Xxxxxx, LLP
00000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: C.N. Xxxxxxxx Xxxxxxx, III, Esq.
Fax: 000-000-0000
and a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
(b) If to the Company:
International Family Entertainment, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxxxxxx
Fax: 000-000-0000
with a copy to:
International Family Entertainment, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
31
and a copy to:
Xxxxxx & Xxxxxxx
53rd at Third, Suite 1000
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxxxx, Esq.
Fax: 000-000-0000
and a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
1285 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
and shall for all purposes of this Agreement be treated as being effective or
having been given when delivered if delivered personally, or, if sent by mail or
facsimile, upon receipt.
9.3 Representations and Warranties. The respective
representations and warranties of the Company, FKWW and FKW Sub contained herein
shall expire with, and be terminated and extinguished at the Effective Time.
Neither the Company, FKWW nor FKW Sub shall be under any monetary or other
liability whatsoever with respect to any breach of a representation or warranty
contained herein or in or with respect to any certificate or other document
delivered pursuant hereto, and the sole consequence of any such breach shall be
limited to the failure to satisfy a condition set forth in Section 7.2 or 7.3
hereof, as applicable, and the termination right provided for in Section 8.1
hereof, in each case to the extent applicable according to such Section's
express terms.
9.4 Titles and Gender. The titles of the Sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement. Whenever used herein, the
singular member includes the plural, the plural includes the singular, and the
use of either gender shall include both genders.
9.5 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, that no party hereto shall
assign any of its rights, interests or obligations hereunder without the prior
written consent of the other parties.
9.6 Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective successors and permitted assigns, and other than as
expressly provided for in Section 6.8 and 6.9 hereof, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
32
9.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
9.8 Severability. Should any Section or any part of a Section
of this Agreement be rendered void, invalid or unenforceable by any court of law
for any reason, such invalidity or unenforceability shall not void or render
invalid or unenforceable any other Section or part of a Section of this
Agreement.
9.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED BOTH AS TO VALIDITY AND PERFORMANCE AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAW PRINCIPLES THEREOF.
9.10 No Adverse Construction. The rule that a contract is
to be construed against the party drafting the contract is hereby waived, and
shall have no applicability in construing this Agreement or any provisions
hereof.
9.11 Costs and Attorneys' Fees. In the event that any action,
suit, or other proceeding is brought or instituted, to enforce or to seek
damages for breach of this Agreement, the prevailing party shall recover all of
such party's costs, and reasonable attorneys' fees incurred in each and every
such action, suit, or other proceeding, including any and all appeals or
petitions therefrom.
9.12 Entire Agreement. This Agreement, the attached Exhibits
and Company Disclosure Letter, the Confidentiality Agreements and the Guaranty
contain the entire understanding of the parties and there are no further or
other agreements or understandings, written or oral, in effect between the
parties relating to the subject matter hereof unless expressly referred to
herein.
9.13 Jurisdiction; Consent to Service of Process; No Jury
Trial. (a) Except as provided in the next paragraph, the parties hereto agree
that any dispute between or among them arising out of, connected with, related
to, or incidental to the relationship established among them pursuant to this
Agreement, and whether arising in contract, tort, equity, or otherwise, may be
resolved by state or federal courts located in Delaware. Each of the parties
hereto waives in any such dispute any objection that it may have to such
Delaware courts considering the dispute including, without limitation, any
objection to the laying of venue or based on the ground of forum non conveniens.
(b) Each of the parties hereto agrees that the
other parties to this Agreement shall have the right, to the extent permitted by
applicable law, to proceed against it or its property in a court in any location
reasonably selected in good faith to enable such other parties to realize on
such property, or to enforce a judgment or other court order entered in favor of
any such other party. Each of the parties hereto waives any objection that it
may have to the location of the court in which any other party to this Agreement
has commenced a proceeding described in this paragraph including, without
limitation, any objection to the laying of venue or based on the ground of forum
non conveniens.
33
(c) The parties hereto each waives any right to
have a jury participate in resolving any dispute whether sounding in contract,
tort, or otherwise arising out of, connected with, related to or incidental to
the relationship established between them pursuant to this Agreement. Instead,
any disputes resolved in court will be resolved in a bench trial without a jury.
(d) Each party hereto hereby irrevocably
designates CT Corporation System as its designee, appointee and agent to
receive, for and on behalf of it, service of process in such respective
jurisdictions in any legal action or proceeding with respect to this Agreement
or any document related thereto. It is understood that a copy of such process
serviced on such agent will be promptly forwarded by mail to it at its address
set forth in Section 9.2 hereof, but the failure to receive such copy shall not
affect in any way the service of such process. Each of the parties hereto
further irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its said
address, such service to become effective upon confirmed delivery.
(e) Nothing herein shall affect the right of any
party to this Agreement to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any other party in
any other jurisdiction.
9.14 Affiliate; Control, Controlled By and Under Common
Control With; Person; Actual Knowledge. For purposes of this Agreement:
(a) "Affiliate" shall mean, when used with
reference to a specified Person, any Person that directly or indirectly through
one or more intermediaries controls or is controlled by, or is under common
control with, such specified Person and, in the case of individuals, a Person's
spouse, parents, children, siblings, mothers and fathers in law, sons and
daughters in law, and brothers and sisters in law. For purposes of this
definition, control (including controlled by and under common control with), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. For purposes of this Agreement, (i) neither the Company
nor any of its Subsidiaries shall be deemed to be an Affiliate of FKWW, FKW Sub
or any of their respective Affiliates, (ii) each of the holders of the Class A
Stock, Liberty, CBN, Regent and their respective Affiliates shall be deemed to
be an Affiliate of the Company, and (iii) the Guarantor, Fox, Inc. and Saban
Entertainment, Inc., and their respective Affiliates, shall each be deemed to be
an Affiliate of FKWW and FKW Sub.
(b) "Person" means any individual, corporation,
general or limited partnership, limited liability company, limited liability
partnership, trust, joint venture, association or unincorporated entity of any
kind.
(c) "Actual Knowledge" of a specified Person
means the actual knowledge of such Person without independent investigation or
inquiry.
34
9.15 Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other parties to sustain damages for
which they would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party or parties shall, without the posting of bond or other
security, be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief, in addition to any
other remedy to which it or they may be entitled, at law or in equity.
9.16 Definitions. The following terms are defined on the
page numbers indicated below:
Definition Section
Acquisition Proposal...............................6.7
Actual Knowledge..................................9.14
Affiliate.........................................9.14
Affiliation Agreements............................4.13
Agreement.....................................Preamble
Blue Sky Laws......................................2.3
Cash Payment.......................................1.8
CBN...........................................Recitals
CBN Purchase Agreement........................Recitals
Certificates.......................................1.9
Class A Stock.................................Recitals
Class B Stock.................................Recitals
Class C Stock.................................Recitals
Company.......................................Recitals
Company Disclosure Letter...................Article IV
Company SEC Reports................................4.7
Company Stock.................................Recitals
Confidentiality Agreements.........................6.6
Consent.......................................Recitals
Constituent Corporations...........................1.1
Continuing Directors...............................6.8
Contribution Agreement........................Recitals
Convertible Notes.............................Recitals
DGCL..........................................Recitals
Dissenting Shares..................................1.7
Effective Time.....................................1.3
Exchange Act.......................................1.8
Exchange Agent.....................................1.9
FKW Sub.......................................Recitals
FKWW..........................................Recitals
GAAP...............................................4.7
Governmental Entity................................2.1
35
Guarantor.....................................Recitals
Guaranty......................................Recitals
Highly Compensated Persons.........................4.8
HSR ACT............................................2.3
Information Statement.............................4.15
Irrevocable Trusts............................Recitals
Lien...............................................2.5
LIFE..........................................Recitals
Maximum Amount.....................................6.9
Merger........................................Recitals
Merger Consideration...............................1.6
Merger Filing......................................1.3
Modification.......................................6.4
MTM................................................1.8
Options............................................1.8
Other Transaction Agreements..................Recitals
Person............................................9.14
PR Charitable Trust...........................Recitals
Regent........................................Recitals
Regent Purchase Agreement.....................Recitals
Related Parties...................................4.12
Related Party Agreements..........................4.12
Responsible Officers..............................4.11
Restriction........................................4.2
Xxxxxxxxx Purchase Agreement..................Recitals
The Xxxxxxxxx Sellers.........................Recitals
SEC................................................4.7
Securities Act.....................................2.3
Share..............................................1.6
Stock Plans........................................1.8
Stock Purchase Agreements.....................Recitals
Subsidiary.........................................2.1
Surviving Corporation.............................1.11
The Family Channel.................................4.9
Xxx Xxxxxxxxx.................................Recitals
TR Charitable Trust...........................Recitals
TR Family Trust...............................Recitals
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
36
IN WITNESS WHEREOF, FKWW, FKW Sub and the Company have caused this
Agreement to be executed as of the date first written above by their duly
authorized respective officers.
FOX KIDS WORLDWIDE, INC.
By:
-----------------------------
Name:
Title:
FOX KIDS MERGER CORPORATION
By:
-----------------------------
Name:
Title:
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
By:
-----------------------------
Name:
Title:
EXHIBITS
Exhibit A --- Officer's Certificates
Exhibit B --- Press Release
