Exhibit 4
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;
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 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 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.
(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.
(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 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 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 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 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) 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 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.
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.
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, 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 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 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 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 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, 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 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
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 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 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 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, 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 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 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.
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:
(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.
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
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
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.
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.
(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.
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
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]
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: s/Xxx Xxxxx
---------------------
Name: s/ Xxx Xxxxx
Title: President
FOX KIDS MERGER CORPORATION
By: s/Xxx Xxxxx
---------------------
Name: Xxx Xxxxx
Title: President
INTERNATIONAL FAMILY ENTERTAINMENT, INC.
By: s/X. X. Xxxxxxxxx
---------------------
Name: X.X. Xxxxxxxxx
Title: Chairman of the Board
EXHIBITS
Exhibit A --- Officer's Certificates
Exhibit B --- Press Release
