EXECUTION COPY
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AMENDED AND RESTATED AGREEMENT
AND PLAN OF MERGER
Between
VIACOM INC.
and
CBS CORPORATION
Dated as of September 6, 1999,
as amended and restated as of October 8, 1999
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TABLE OF CONTENTS
Section Page
ARTICLE I
THE MERGER
1.01. The Merger.......................................................2
1.02. Effective Time; Closing..........................................2
1.03. Effect of the Merger.............................................2
1.04. Certificate of Incorporation and By-Laws.........................2
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
2.01. Conversion of Securities.........................................3
2.02. Exchange of Certificates.........................................3
2.03. Stock Transfer Books.............................................6
2.04. Stock Options and Other Stock Plans..............................6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBS
3.01. Organization and Qualification; Subsidiaries.....................7
3.02. Certificate of Incorporation and By-Laws.........................8
3.03. Capitalization...................................................8
3.04. Authority Relative to Agreement..................................8
3.05. No Conflict; Required Filings and Consents.......................9
3.06. Permits and Licenses; Contracts..................................9
3.07. SEC Filings; Financial Statements...............................10
3.08. Absence of Certain Changes or Events............................11
3.09. Absence of Litigation...........................................11
3.10. Employee Benefit Plans..........................................11
3.11. Labor Matters...................................................13
3.12. Environmental Matters...........................................13
3.13. Trademarks, Patents and Copyrights..............................14
3.14. Taxes...........................................................14
3.15. Tax Matters.....................................................15
3.16. Year 2000 Compliance............................................15
3.17. Opinion of Financial Advisors...................................15
3.18. Vote Required...................................................15
3.19. Brokers.........................................................16
3.20. Pennsylvania Law................................................16
3.21. Rights Agreement................................................16
3.22. ▇▇▇▇▇▇▇.........................................................16
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Section Page
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
4.01. Organization and Qualification; Subsidiaries....................16
4.02. Certificate of Incorporation and By-Laws........................17
4.03. Capitalization..................................................17
4.04. Authority Relative to Agreement.................................18
4.05. No Conflict; Required Filings and Consents......................18
4.06. Permits and Licenses; Contracts.................................19
4.07. SEC Filings; Financial Statements...............................19
4.08. Absence of Certain Changes or Events............................20
4.09. Absence of Litigation...........................................21
4.10. Employee Benefit Plans..........................................21
4.11. Labor Matters...................................................22
4.12. Environmental Matters...........................................22
4.13. Trademarks, Patents and Copyrights..............................23
4.14. Taxes...........................................................23
4.15. Tax Matters.....................................................23
4.16. Year 2000 Compliance............................................24
4.17. Opinion of Financial Advisors...................................24
4.18. Vote Required...................................................24
4.19. Section 203 of Delaware Law.....................................24
4.20. Brokers.........................................................24
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.01. Conduct of Business by CBS Pending the Merger...................24
5.02. Conduct of Business by Viacom Pending the Merger................27
5.03. Other Actions...................................................29
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. Registration Statement; Joint Proxy Statement...................29
6.02. Stockholders' Meetings..........................................32
6.03. Appropriate Action; Consents; Filings...........................32
6.04. Access to Information; Confidentiality..........................33
6.05. No Solicitation of Competing Transactions.......................33
6.06. Directors' and Officers' Indemnification and Insurance..........35
6.07. Notification of Certain Matters.................................35
6.08. Tax Treatment...................................................35
6.09. Stock Exchange Listing..........................................35
6.10. Public Announcements............................................36
6.11. Viacom's Directors..............................................36
6.12. Rights Agreement................................................36
6.13. Assumption of Debt and Leases...................................36
6.14. Affiliates of CBS...............................................36
6.15. Prior Service...................................................37
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Section Page
6.16. Employee Matters................................................37
6.17. ▇▇▇▇▇▇▇.........................................................37
6.18. ▇▇▇▇▇▇▇ Tax Matters.............................................37
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to the Obligations of Each Party.....................37
7.02. Conditions to the Obligations of Viacom.........................38
7.03. Conditions to the Obligations of CBS............................39
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01. Termination.....................................................39
8.02. Effect of Termination...........................................40
8.03. Amendment.......................................................40
8.04. Waiver..........................................................40
8.05. Expenses........................................................41
ARTICLE IX
GENERAL PROVISIONS
9.01. Non-Survival of Representations, Warranties and Agreements......41
9.02. Notices.........................................................42
9.03. Interpretation, Certain Definitions.............................42
9.04. Severability....................................................44
9.05. Entire Agreement; Assignment....................................44
9.06. Parties in Interest.............................................44
9.07. Specific Performance............................................44
9.08. Governing Law...................................................44
9.09. Consent to Jurisdiction.........................................45
9.10. Counterparts....................................................45
9.11. WAIVER OF JURY TRIAL............................................45
EXHIBITS
Exhibit A-1 Restated Certificate of Incorporation
Exhibit A-2 By-laws
Exhibit 6.14 Form of CBS Affiliate Letter
Index of Defined Terms
Defined Term Location of Definition
affiliate..................................................Section 9.03(a)
Agreement..................................................Recitals
Articles of Merger.........................................Section 1.02
beneficial owner...........................................Section 9.03(b)
Blockbuster................................................Section 4.02
Blockbuster Options........................................Section 4.03
Blue Sky Laws..............................................Section 3.05(b)
business day...............................................Section 9.03(c)
CBS........................................................Recitals
CBS Alternative Transaction Fee............................Section 8.05(b)
CBS Benefit Plans..........................................Section 3.10(a)
CBS Common Stock...........................................Section 2.01(a)
CBS Disclosure Schedule....................................Article III
CBS FCC Licenses...........................................Section 3.06(c)
CBS Financial Advisor......................................Section 3.17
CBS Indentures.............................................Section 6.13(a)
CBS Licensed Facilities....................................Section 3.06(c)
CBS Material Adverse Effect................................Section 3.01
CBS Options................................................Section 2.04(a)
CBS Permits................................................Section 3.06(a)
CBS Preferred Stock........................................Section 3.03
CBS Rights Agreement.......................................Section 3.03
CBS SEC Reports............................................Section 3.07(a)
CBS Series B Preferred Stock...............................Section 2.01(a)
CBS Stock Option Plans.....................................Section 2.04(a)
CBS Superior Proposal......................................Section 6.05(c)
CBS Systems................................................Section 3.16(b)
CBS Year 2000 Compliant....................................Section 3.16(b)
CBS Year 2000 Plan.........................................Section 3.16(a)
CERCLA.....................................................Section 3.12(d)
Certificate of Merger......................................Section 1.02
Certificates...............................................Section 2.02(b)
Closing....................................................Section 1.02
Closing Date...............................................Section 1.02
Code.......................................................Recitals
Communications Act.........................................Section 3.05(b)
Competing Transaction......................................Section 6.05(b)
Confidentiality Agreement..................................Section 6.04(c)
Continuing Employees.......................................Section 6.15
control....................................................Section 9.03(d)
controlled by..............................................Section 9.03(d)
Delaware Law...............................................Recitals
Effective Time.............................................Section 1.02
Environmental Laws.........................................Section 3.12(d)
Environmental Permits......................................Section 3.12(d)
ERISA......................................................Section 3.10(a)
Exchange Act...............................................Section 2.04(c)
Exchange Agent.............................................Section 2.02(a)
Exchange Fund..............................................Section 2.02(a)
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Defined Term Location of Definition
Exchange Ratio.............................................Section 2.01(a)
Expenses...................................................Section 8.05(a)
FCC........................................................Section 3.05(b)
▇▇▇▇▇▇▇....................................................Recitals
▇▇▇▇▇▇▇ Agreement..........................................Recitals
▇▇▇▇▇▇▇ Proxy..............................................Section 3.22
Governmental Authority.....................................Section 9.03(e)
Hazardous Materials........................................Section 3.12(d)
HSR Act....................................................Section 3.05(b)
Infinity...................................................Section 3.02
IRS........................................................Section 3.10(a)
King World.................................................Section 3.03
knowledge..................................................Section 9.03(f)
Laws.......................................................Section 3.05(a)
Merger.....................................................Recitals
NYSE.......................................................Section 3.03
Order......................................................Section 6.03(b)
Parent.....................................................Recitals
Parent Stockholder Agreement...............................Recitals
Parent Voting Agreements...................................Recitals
Pending Transactions.......................................Section 5.01
Pennsylvania Law...........................................Recitals
person.....................................................Section 9.03(g)
Preferred Exchange Ratio...................................Section 2.01(a)
Proxy Statement............................................Section 6.01(a)
Registration Statement.....................................Section 6.01(a)
Representatives............................................Section 6.04(a)
Rights.....................................................Section 3.03
SEC........................................................Article III
Securities Act.............................................Section 3.05(b)
Shares.....................................................Section 2.01(a)
Split-off..................................................Section 5.02
Stockholders' Meeting......................................Section 6.02
subsidiaries...............................................Section 9.03(h)
subsidiary.................................................Section 9.03(h)
Substituted Option.........................................Section 2.04(a)
Surviving Corporation......................................Section 1.01
Tax........................................................Section 3.14(a)
Taxes......................................................Section 3.14(a)
Terminating CBS Breach.....................................Section 8.01(f)
Terminating Viacom Breach..................................Section 8.01(e)
under common control with..................................Section 9.03(d)
Viacom.....................................................Recitals
Viacom Benefit Plans.......................................Section 4.10(a)
Viacom Class A Common Stock................................Recitals
Viacom Class B Common Stock................................Section 2.01(a)
Viacom Disclosure Schedule.................................Article IV
Viacom Employee Arrangements...............................Section 6.16(a)
Viacom FCC Licenses........................................Section 4.06(c)
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Defined Term Location of Definition
Viacom Financial Advisor...................................Section 4.17
Viacom Licensed Facilities.................................Section 4.06(c)
Viacom Material Adverse Effect.............................Section 4.01
Viacom Options.............................................Section 4.03
Viacom Permits.............................................Section 4.06(a)
Viacom Preferred Stock.....................................Section 4.03
Viacom Proposal............................................Recitals
Viacom SEC Reports.........................................Section 4.07(a)
Viacom Series C Preferred Stock............................Section 2.01(a)
Viacom Stock Option Plans..................................Section 4.03
Viacom Systems.............................................Section 4.16(b)
Viacom Year 2000 Compliant.................................Section 4.16(b)
Viacom Year 2000 Plan......................................Section 4.16(a)
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of
September 6, 1999, as amended and restated as of October 8, 1999 (this
"Agreement"), between VIACOM INC., a Delaware corporation ("Viacom"), and CBS
CORPORATION, a Pennsylvania corporation ("CBS").
WHEREAS, Viacom and CBS entered into an Agreement and Plan of Merger
dated as of September 6, 1999 (the "Original Merger Agreement"), and they now
desire to amend and restate the Original Merger Agreement (i) to provide,
among other things, for the conversion at the Effective Time (as defined in
Section 1.02), by virtue of the Merger (as defined below) and without any
action on the part of Viacom, CBS or the holders of any securities of CBS or
Viacom, of each outstanding share of CBS Series B Preferred Stock (as defined
in Section 2.01), if any, into the right to receive 1.085 shares of Viacom
Series C Preferred Stock (as defined in Section 2.01) and (ii) to restate
Exhibit A-1 to provide for the creation of the Viacom Series C Preferred Stock
(it being understood that all references herein to this "Agreement" refer to
the Original Merger Agreement as amended and restated hereby and that all
references herein to the date hereof or the date of this Agreement refer to
September 6, 1999);
WHEREAS, ▇▇▇▇▇▇▇ Entertainment Company ("▇▇▇▇▇▇▇") and certain of
its subsidiaries and CBS and certain of its subsidiaries are parties to an
Agreement and Plan of Merger dated as of April 9, 1999, as amended as of
October 8, 1999 (the "▇▇▇▇▇▇▇ Agreement"), pursuant to which ▇▇▇▇▇▇▇ will
receive shares of CBS Series B Preferred Stock;
WHEREAS, the Boards of Directors of CBS and Viacom have determined
that it is in the best interests of their respective companies and
stockholders to combine their respective businesses in a "merger of equals"
transaction to be effected as set forth in this Agreement;
WHEREAS, the Board of Directors of CBS has (i) determined that the
merger of CBS with and into Viacom on the terms set forth in this Agreement
(the "Merger") pursuant to the General Corporation Law of the State of
Delaware ("Delaware Law") and the Business Corporation Law of the Commonwealth
of Pennsylvania ("Pennsylvania Law") is fair to CBS and the holders of Shares
(as defined in Section 2.01) and is in the best interests of CBS and (ii)
approved this Agreement, the Merger and the other transactions contemplated
hereby and has recommended that the shareholders of CBS adopt this Agreement;
WHEREAS, the Board of Directors of Viacom has declared to be
advisable this Agreement, the Merger and the other transactions contemplated
hereby and has recommended that the holders of the Class A Common Stock, par
value $.01 per share, of Viacom (the "Viacom Class A Common Stock") adopt this
Agreement (the "Viacom Proposal");
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to CBS to enter into this Agreement, National Amusements, Inc., a
Maryland corporation and the holder of a majority of the shares of Viacom
Class A Common Stock ("Parent"), and CBS have entered into (i) a Stockholder
Agreement (the "Parent Stockholder Agreement") pursuant to which Parent has
agreed, among other things, to cause the election of eight members of the
Board of Directors of Viacom designated by CBS for a period of three years
following the Merger and (ii) a Voting Agreement (together with the Parent
Stockholder Agreement, the "Parent Voting Agreements") pursuant to which
Parent has agreed, among other things, to vote its shares of Viacom Class A
Common Stock in favor of adoption of this Agreement and the other transactions
contemplated by this Agreement and to take certain other actions in support of
the Merger;
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WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization under the provisions of Section
368(a) of the United States Internal Revenue Code of 1986, as amended (the
"Code");
WHEREAS, as an inducement to Viacom to enter into this Agreement,
concurrently with the execution and delivery of this Agreement, ▇▇▇ ▇▇▇▇▇▇▇▇
is entering into an employment agreement with Viacom, to be effective at the
Effective Time (as defined below);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained and intending to be legally bound
hereby, Viacom and CBS hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. Upon the terms and subject to the
conditions set forth in Article VII, and in accordance with Section 252 of
Delaware Law and Section 1921 of Pennsylvania Law, at the Effective Time CBS
shall be merged with and into Viacom. As a result of the Merger, the separate
corporate existence of CBS shall cease and Viacom shall be the surviving
corporation of the Merger (the "Surviving Corporation").
SECTION 1.02. Effective Time; Closing. The closing of the Merger
(the "Closing") shall take place on the first business day after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII (such date, the "Closing Date"). On the Closing Date, the parties hereto
shall cause the Merger to be consummated by filing (a) a certificate of merger
(the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed and acknowledged in
accordance with, Section 252 of Delaware Law and (b) articles of merger (the
"Articles of Merger") with the Department of State of the Commonwealth of
Pennsylvania, in such form as is required by, and executed in accordance with,
Section 1927 of Pennsylvania Law. The term "Effective Time" means the date and
time of the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware (or such later time as may be agreed by the parties
hereto and specified in the Certificate of Merger). The Closing will be held
at the offices of Shearman & Sterling, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ (or such other place as the parties may agree).
SECTION 1.03. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
Delaware Law and Pennsylvania Law. Without limiting the generality of the
foregoing, at the Effective Time all the property, rights, privileges, powers
and franchises of CBS shall vest in the Surviving Corporation and all debts,
liabilities, obligations, restrictions, disabilities and duties of CBS shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 1.04. Certificate of Incorporation and By-Laws. (a) The
Restated Certificate of Incorporation of Viacom, as in effect immediately
prior to the Effective Time, shall be amended as of the Effective Time to be
and read in its entirety in the form set forth as Exhibit A-1 and, as so
amended, such Restated Certificate of Incorporation shall be the certificate
of incorporation of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
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(b) The By-laws of Viacom, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time so as to read in
their entirety in the form set forth as Exhibit A-2 and, as so amended, such
By-laws shall be the by-laws of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Viacom, CBS or the
holders of any of the following securities:
(a) (i) Each share of Series B Participating Preferred Stock, par
value $1.00 per share, of CBS ("CBS Series B Preferred Stock"), if any,
issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive 1.085 shares (the "Preferred Exchange
Ratio") of Series C Preferred Stock, par value $.01 per share, of Viacom
("Viacom Series C Preferred Stock") and (ii) each share of common stock,
par value $1.00 per share, of CBS ("CBS Common Stock"; all issued and
outstanding shares of CBS Common Stock and all issued and outstanding
shares of CBS Series B Preferred Stock being hereinafter collectively
referred to as the "Shares") issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled or converted
pursuant to Section 2.01(b)) shall be converted, subject to Section
2.02(e), into the right to receive 1.085 shares (the "Exchange Ratio") of
Class B Common Stock, par value $.01 per share, of Viacom (the "Viacom
Class B Common Stock").
(b) Each Share held in the treasury of CBS and each Share owned by
Viacom (in each case, other than Shares held by benefit plans or trusts
(including Rabbi trusts)) immediately prior to the Effective Time shall
be cancelled and extinguished without any conversion thereof and no
payment shall be made with respect thereto, and each Share owned by any
direct or indirect wholly owned subsidiary of Viacom or CBS immediately
prior to the Effective Time shall be converted into the right to receive
a number of shares of Viacom Class B Common Stock equal to the Exchange
Ratio.
(c) If, prior to the Effective Time (and as permitted by Sections
5.01 and/or 5.02), the outstanding shares of CBS Common Stock or shares
of Viacom Class B Common Stock shall have been increased, decreased,
changed into or exchanged for a different number or class of shares or
securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split,
combination or exchange of shares or other similar change in
capitalization, then an appropriate and proportionate adjustment shall be
made to the Exchange Ratio and, in the case of any such adjustments to
the Viacom Class B Common Stock, then an appropriate and proportionate
adjustment shall be made to the Preferred Exchange Ratio.
SECTION 2.02. Exchange of Certificates. (a) Exchange Agent. Viacom
shall deposit, or shall cause to be deposited, with such bank or trust company
designated by Viacom and reasonably acceptable to CBS (the "Exchange Agent"),
for the benefit of the holders of Shares, for exchange in accordance with this
Article II through the Exchange Agent, certificates representing the shares of
Viacom Class B Common Stock and certificates representing the shares of Viacom
Series C Preferred Stock (such certificates for shares of Viacom Class B
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Common Stock and such certificates for shares of Viacom Series C Preferred
Stock, together with any dividends or distributions with respect thereto and
any cash in lieu of fractional shares of Viacom Class B Common Stock or Viacom
Series C Preferred Stock payable pursuant to Section 2.02(e), being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding Shares. The Exchange Agent shall, pursuant to
irrevocable instructions, deliver the Viacom Class B Common Stock and the
Viacom Series C Preferred Stock contemplated to be issued pursuant to Section
2.01 out of the Exchange Fund. Except as contemplated by Section 2.02(f)
hereof, the Exchange Fund shall not be used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Viacom shall cause the Exchange Agent to mail to each holder
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates") (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Exchange Agent, and shall be in customary form) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing whole shares of Viacom Class B Common
Stock or the shares of Viacom Series C Preferred Stock, as the case may be,
together with any dividends or distributions with respect thereto and any cash
in lieu of fractional shares. Upon surrender to the Exchange Agent of a
Certificate for exchange and cancellation, together with such letter of
transmittal, duly executed, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate representing that
number of whole shares of Viacom Class B Common Stock or that number of shares
of Viacom Series C Preferred Stock, as the case may be, which such holder has
the right to receive in respect of the Shares formerly represented by such
Certificate (after taking into account all Shares then held by such holder),
cash in lieu of fractional shares of Viacom Class B Common Stock or Viacom
Series C Preferred Stock to which such holder is entitled pursuant to Section
2.02(e) and any dividends or other distributions to which such holder is
entitled pursuant to Section 2.02(c), and the Certificate so surrendered shall
forthwith be cancelled. In the event of a transfer of ownership of Shares that
is not registered in the transfer records of CBS, a certificate representing
the proper number of shares of Viacom Class B Common Stock or the proper
number of shares of Viacom Series C Preferred Stock, as the case may be, may
be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
certificate representing shares of Viacom Class B Common Stock or the
certificate representing shares of Viacom Series C Preferred Stock, as the
case may be, cash in lieu of any fractional shares of Viacom Class B Common
Stock or Viacom Series C Preferred Stock to which such holder is entitled
pursuant to Section 2.02(e) and any dividends or other distributions to which
such holder is entitled pursuant to Section 2.02(c).
(c) Distributions with Respect to Unexchanged Shares of Viacom Class
B Common Stock and Viacom Series C Preferred Stock. No dividends or other
distributions with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Viacom
Class B Common Stock or Viacom Series C Preferred Stock represented thereby,
and no cash payment in lieu of fractional shares shall be paid to any such
holder pursuant to Section 2.02(e), until the holder of such Certificate shall
surrender such Certificate. Subject to the effect of escheat, Tax (as defined
in Section 3.14) or other applicable Laws (as defined in Section 3.05),
following surrender of any such Certificate, there shall be paid to the record
holder thereof, without interest, (i) promptly, the amount of any cash payable
with
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respect to a fractional share of Viacom Class B Common Stock or Viacom Series
C Preferred Stock to which such holder is entitled pursuant to Section 2.02(e)
and the amount of dividends or other distributions with a record date after
the Effective Time and theretofore paid with respect to such whole shares of
Viacom Class B Common Stock or such shares of Viacom Series C Preferred Stock,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time and a payment date
occurring after surrender, payable with respect to such whole shares of Viacom
Class B Common Stock or such shares of Viacom Series C Preferred Stock.
(d) No Further Rights in CBS Common Stock. All shares of Viacom
Class B Common Stock and all shares of Viacom Series C Preferred Stock issued
upon conversion of the Shares in accordance with the terms hereof (including
any cash paid pursuant to Sections 2.02(c) or (e)) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Shares.
(e) No Fractional Shares. No certificates or scrip representing
fractional shares of Viacom Class B Common Stock or shares of Viacom Series C
Preferred Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Viacom. Each holder
of a fractional share interest shall be paid an amount in cash equal to the
product obtained by multiplying (i) such fractional share interest to which
such holder (determined after taking into account all fractional share
interests then held by such holder) would otherwise be entitled by (ii) (x) in
the case of shares of Viacom Class B common stock, the closing price for a
share of Viacom Class B Common Stock on the Consolidated Tape, Network A, as
reported in The Wall Street Journal (Northeast edition) or any other
authoritative source on the first trading day immediately following the
Effective Time or (y) in the case of shares of Viacom Series C Preferred
Stock, the product of 1000 multiplied by such closing price. From time to time
after the Effective Time, as promptly as practicable after the determination
of the amount of cash, if any, to be paid to any holders of fractional share
interests who have surrendered their Certificates to the Exchange Agent, the
Exchange Agent shall so notify Viacom, and Viacom shall deposit such amount
with the Exchange Agent and shall cause the Exchange Agent to forward payments
to such holder of fractional share interests subject to and in accordance with
the terms of Sections 2.02(b) and (c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Shares for six (6) months after
the Effective Time shall be delivered to Viacom, upon demand, and any holders
of Shares who have not theretofore complied with this Article II shall
thereafter look only to Viacom for the shares of Viacom Class B Common Stock
or the shares of Viacom Series C Preferred Stock, any cash in lieu of
fractional shares of Viacom Class B Common Stock or Viacom Series C Preferred
Stock to which they are entitled pursuant to Section 2.02(e) and any dividends
or other distributions with respect to Viacom Class B Common Stock or Viacom
Series C Preferred Stock to which they are entitled pursuant to Section
2.02(c). Any portion of the Exchange Fund remaining unclaimed by holders of
Shares as of a date which is immediately prior to such time as such amounts
would otherwise escheat to or become property of any government entity shall,
to the extent permitted by applicable Law, become the property of Viacom free
and clear of any claims or interest of any person previously entitled thereto.
(g) No Liability. Neither Viacom nor CBS shall be liable to any
holder of Shares for any such Shares (or dividends or distributions with
respect hereto) or cash delivered to a public official pursuant to any
abandoned property, escheat or similar Law.
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(h) Lost, Stolen or Destroyed Certificates. In the event that any
Certificate has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Viacom, the posting by such person of
a bond in such reasonable amount as Viacom may direct as indemnity against any
claim that may be made against it with respect to such Certificate, Viacom
will, in exchange for such lost, stolen or destroyed Certificate, issue or
cause to be issued the number of whole shares of Viacom Common Stock or shares
of Viacom Series C Preferred Stock, as the case may be, and pay or cause to be
paid the amounts deliverable in respect thereof pursuant to Sections 2.02(e)
and 2.02(c).
(i) Withholding Rights. Viacom shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to any holder of Shares such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax Law. To the extent that amounts are so withheld by
Viacom, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
such deduction and withholding was made by Viacom.
SECTION 2.03. Stock Transfer Books. At the Effective Time, the stock
transfer books of CBS shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of CBS. From and
after the Effective Time, the holders of Certificates shall cease to have any
rights with respect to such Shares except as otherwise provided herein or by
any Laws. On or after the Effective Time, any Certificates presented to the
Exchange Agent or Viacom for any reason shall be converted into shares of
Viacom Class B Common Stock or shares of Viacom Series C Preferred Stock, as
the case may be, any cash in lieu of fractional shares of Viacom Class B
Common Stock or shares of Viacom Series C Preferred Stock to which the holders
thereof are entitled pursuant to Section 2.02(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.02(c).
SECTION 2.04. Stock Options and Other Stock Plans. (a) Prior to the
Effective Time, Viacom and CBS shall take such action as may be necessary to
cause each unexpired and unexercised option or warrant to purchase Shares
which are outstanding immediately prior to the Effective Time (collectively,
"CBS Options"), whether granted under CBS's stock option plans set forth in
Section 2.04 of the CBS Disclosure Schedule (as defined below) or otherwise
(the "CBS Stock Option Plans"), to be automatically converted at the Effective
Time into an option or warrant (collectively, a "Substituted Option") to
purchase a number of shares of Viacom Class B Common Stock equal to the number
of Shares that could have been purchased (assuming full vesting) under such
CBS Option multiplied by the Exchange Ratio (rounded to the nearest whole
number of shares of Viacom Class B Common Stock) at a price per share of
Viacom Class B Common Stock equal to the per-share option exercise price
specified in the CBS Option divided by the Exchange Ratio (rounded down to the
nearest whole cent). Except as otherwise provided in this Agreement, such
Substituted Option shall otherwise be subject to the same terms and conditions
as such CBS Option (except that all vesting periods with respect thereto
shall, to the extent provided by the terms thereof, accelerate, and be subject
to any other rights which arise under the CBS Stock Option Plans or the option
agreements evidencingawards thereunder as a result of the transactions
contemplated by this Agreement). The date of grant of the Substituted Option
shall be the date on which the corresponding CBS Option was granted. At the
Effective Time, (i) all references in the related stock option agreements to
CBS shall be deemed to refer to Viacom and (ii) Viacom shall assume all of
CBS's obligations with respect to CBS Options as so amended. As promptly as
reasonably practicable after the Effective Time, Viacom shall issue to each
holder of an outstanding CBS Option a document evidencing the foregoing
assumption by Viacom. Employee and director deferrals and director common
stock equivalents and all other
7
equity based compensation that references CBS Common Stock will as of and
after the Effective Time, be deemed to refer to Viacom Class B Common Stock
(as adjusted to reflect the Exchange Ratio).
(b) In respect of each CBS Option assumed by Viacom, and the shares
of Viacom Class B Common Stock underlying such CBS Option, Viacom shall, no
later than one Business Day after the Effective Time, file and keep current a
Form S-8 or other appropriate registration statement for as long as any
Substituted Options remain outstanding.
(c) Prior to the Effective Time, Viacom and CBS shall take all steps
reasonably necessary to cause the transactions contemplated hereby and any
other dispositions of equity securities of CBS (including derivative
securities) or acquisitions of Viacom equity securities (including derivative
securities) in connection with this Agreement by each individual who (a) is a
director or officer of Viacom or (b) at the Effective Time, will become a
director or officer of Viacom, to be exempt under Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CBS
Except as disclosed in the report on Form 10-K dated March 24, 1999
for the year ended December 31, 1998, the Reports on Form 10-K/A, Form 10-Q,
Form 10-Q/A and Form 8-K since December 31, 1998 or the proxy statement dated
March 25, 1999, in each case in the form filed by CBS with the United States
Securities and Exchange Commission (the "SEC") or in a separate disclosure
schedule which has been delivered by CBS to Viacom prior to the execution of
this Agreement (the "CBS Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein and such other representations and warranties
or covenants to the extent a matter in such section is disclosed in such a way
as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), CBS hereby
represents and warrants to Viacom:
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of
CBS and its subsidiaries is a corporation or entity duly incorporated or
formed, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation and has the requisite corporate
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to have such power, authority and
governmental approvals would not have a CBS Material Adverse Effect (as
defined below). Each of CBS and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated
by it or the nature of its business makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not have a CBS Material Adverse Effect. The term "CBS
Material Adverse Effect" means any change, effect or circumstance that is or
is reasonably likely to be materially adverse to the business, results of
operations or financial condition of CBS and its subsidiaries taken as a
whole, other than any change, effect or circumstance relating to or resulting
from (i) general changes in the media or entertainment industries or the
advertising markets, (ii) changes in general economic conditions or securities
markets in general or (iii) this Agreement or the transactions contemplated
hereby or the announcement thereof.
8
SECTION 3.02. Certificate of Incorporation and By-Laws. CBS has made
available to Viacom a complete and correct copy of the Articles of
Incorporation and the Bylaws, each as amended to date, of CBS and Infinity
Broadcasting Corporation, a Delaware corporation ("Infinity"). The Articles of
Incorporation and By-laws (or equivalent organizational documents) of CBS and
its subsidiaries are in full force and effect. Except as would not have a CBS
Material Adverse Effect, none of CBS or its subsidiaries is in violation of
any provision of its Articles of Incorporation or By-laws (or equivalent
organizational documents).
SECTION 3.03. Capitalization. The authorized capital stock of CBS
consists of 1,100,000,000 shares of CBS Common Stock and 25,000,000 shares of
preferred stock, par value $1.00 per share (the "CBS Preferred Stock"). As of
August 31, 1999, (a) 705,119,425 shares of CBS Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable,
(b) 40,099,599 shares of CBS Common Stock were held in the treasury of CBS,
(c) 51,007,538 shares of CBS Common Stock were reserved for future issuance
pursuant to outstanding unexercised employee stock options granted pursuant to
the CBS Stock Option Plans or otherwise and (d) 70,365,195 shares of CBS
Common Stock were reserved for future issuance in connection with the merger
of a wholly owned subsidiary of CBS with and into King World Productions, Inc.
("King World") and 9,910,600 shares of CBS Common Stock (or some equivalent
amount of CBS Preferred Stock, if appropriate), measured at the September 3,
1999 New York Stock Exchange (the "NYSE") closing price, were reserved for
future issuance in connection with the acquisition from ▇▇▇▇▇▇▇ of television
station KVTV, Dallas/Fort Worth, Texas. As of the date of this Agreement, no
shares of CBS Preferred Stock are outstanding. As of the date of this
Agreement, except for the issuance of shares of CBS Common Stock pursuant to
the exercise of CBS Options and options to purchase 5,850,555 shares of Class
A Common Stock, par value $0.01 per share, of Infinity, outstanding prior to
August 31, 1999, no shares of capital stock of CBS or any of its subsidiaries
have been issued since August 31, 1999. Except as set forth in this Section
3.03, and except for the Series A participating preferred stock purchase
rights of CBS (the "Rights") issued pursuant to the Rights Agreement, dated as
of December 28, 1995, between CBS and First Chicago Trust Company of New York
(the "CBS Rights Agreement"), as of the date of this Agreement there are no
options, warrants or other rights, agreements (including registration rights
agreements), arrangements or commitments of any character relating to the
issued or unissued capital stock of CBS or any of its subsidiaries or
obligating CBS or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, CBS or any of its
subsidiaries. All shares of capital stock of CBS and its subsidiaries subject
to issuance as aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. As of the date of
this Agreement, there are no outstanding contractual material obligations of
CBS or any subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock of CBS or any of its subsidiaries or to provide material funds
to, or make any material investment (in the form of a loan capital
contribution or otherwise) in, any person.
SECTION 3.04. Authority Relative to Agreement. CBS has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Merger and the other transactions
contemplated hereby. The execution and delivery of this Agreement by CBS and
the consummation by CBS of the Merger and the other transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
and no other corporate proceedings on the part of CBS are necessary to
authorize the execution and delivery of this Agreement or to consummate the
Merger and the other transactions contemplated hereby (other than, with
respect to the Merger, the adoption of this Agreement by the affirmative vote
of a majority of the votes cast by all shareholders entitled to vote at the
CBS Stockholders' Meeting (as defined in Section 6.02) and the filing and
9
recordation of appropriate merger documents as required by Pennsylvania Law).
This Agreement has been duly and validly executed and delivered by CBS and,
assuming the due authorization, execution and delivery by Viacom, this
Agreement constitutes a legal, valid and binding obligation of CBS,
enforceable against CBS in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by CBS does not, and the performance
of this Agreement by CBS will not, (i) conflict with or violate the Articles
of Incorporation or By-laws of (A) CBS or Infinity or (B) any of its other
subsidiaries, (ii) assuming the consents, approvals, authorizations and
waivers specified in Section 3.05(b) have been received and the waiting
periods referred to therein have expired, and any condition precedent to such
consent, approval, authorization, or waiver has been satisfied, conflict with
or violate any domestic (federal, state or local) or foreign law, rule,
regulation, order, judgment or decree (collectively, "Laws") applicable to CBS
or any of its subsidiaries or by which any property or asset of CBS or any of
its subsidiaries is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration, or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of CBS or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or, to CBS's knowledge as of the date of this Agreement, any other
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which CBS or any of its subsidiaries is a party or by which CBS
or any of its subsidiaries or any property or asset of CBS or any of its
subsidiaries is bound or affected, except, in the case of clauses (i)(B), (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
occurrences of the type referred to above which would not have a CBS Material
Adverse Effect or would not prevent or materially delay the consummation of
the Merger; provided, however, that for purposes of this Section 3.05(a), the
definition of CBS Material Adverse Effect shall be read so as not to include
clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by CBS do not, and
the performance of this Agreement by CBS will not, require any consent,
approval, authorization, waiver or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic, foreign or
supranational, except for applicable requirements of the Exchange Act, the
Securities Act of 1933, as amended (the "Securities Act"), state securities or
"blue sky" laws ("Blue Sky Laws"), the pre-merger notification arrangements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), such filings, approvals and
waivers of the Federal Communications Commission or any successor entity (the
"FCC") as may be required under the Communications Act of 1934, as amended,
and the rules and regulations of the FCC thereunder (collectively, the
"Communications Act"), applicable requirements of the Investment Canada Act of
1985 and the Competition Act (Canada), any other non-United States
competition, antitrust and investment law, filing and recordation of
appropriate merger documents as required by Delaware Law and Pennsylvania Law
and the rules of the NYSE and except where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not have a CBS Material Adverse Effect or would not
prevent or materially delay the consummation of the Merger; provided, however,
that for purposes of this Section 3.05(b), the definition of CBS Material
Adverse Effect shall be read so as not to include clause (iii) of the
definition thereof.
SECTION 3.06. Permits and Licenses; Contracts. (a) Each of CBS and
its subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders necessary for CBS or any of its subsidiaries to own,
lease and operate the properties of CBS and its subsidiaries or to carry on
their business as it is now being conducted and contemplated to be conducted
(the "CBS
10
Permits"), and no suspension or cancellation of any of the CBS Permits is
pending or, to the knowledge of CBS, threatened, except where the failure to
have, or the suspension or cancellation of, any of the CBS Permits would not
have a CBS Material Adverse Effect. None of CBS or any of its subsidiaries is
in conflict with, or in default or violation of, (i) any Laws applicable to
CBS or any of its subsidiaries or by which any property or asset of CBS or any
of its subsidiaries is bound or affected, (ii) any of the CBS Permits or (iii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which CBS or any of its
subsidiaries is a party or by which CBS or any of its subsidiaries or any
property or asset of CBS or any of its subsidiaries is bound or affected,
except for any such conflicts, defaults or violations that would not have a
CBS Material Adverse Effect.
(b) Except as would not have a CBS Material Adverse Effect, and to
the knowledge of CBS, except as would not have a material adverse effect on
the Surviving Corporation following the Effective Time, none of CBS or any of
its subsidiaries is a party to any contracts or agreements that limits the
ability of CBS or any of its subsidiaries or, after the Effective Time, Viacom
or any of its subsidiaries, to compete in any line of business or with any
person or engage in any business in any geographic area, in each case except
for competition in businesses that neither CBS nor Viacom are currently
engaged in or will reasonably foreseeably engage in.
(c) CBS and its subsidiaries have operated the radio and television
stations and associated facilities for which CBS or any of its subsidiaries
holds licenses from the FCC, in each case which are owned or operated by CBS
and its subsidiaries (the "CBS Licensed Facilities"), in material compliance
with the terms of the CBS Permits issued by the FCC to CBS and its
subsidiaries ("CBS FCC Licenses"), and in material compliance with the
Communications Act, and CBS and its subsidiaries have timely filed or made all
applications, reports and other disclosures required by the FCC to be filed or
made with respect to the CBS Licensed Facilities and have timely paid all FCC
regulatory fees with respect thereto, in each case except as would not have a
CBS Material Adverse Effect. As of the date hereof, to CBS's knowledge, there
is not now pending or threatened before the FCC any material investigation,
proceeding, notice of violation, order of forfeiture or complaint against CBS
or any of its subsidiaries, relating to any of the CBS Licensed Facilities or
FCC regulated services conducted by CBS that, if adversely decided, would have
a CBS Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) CBS and
Infinity have filed all forms, reports and documents required to be filed by
it with the SEC from December 31, 1996 to the date of this Agreement,
including: (i) Annual Reports on Form 10-K, (ii) Quarterly Reports on Form
10-Q and (iii) proxy statements relating to CBS's and Infinity's meetings of
shareholders (whether annual or special) (the forms, reports and other
documents referred to in clauses (i), (ii), (iii) and all other forms, reports
and other registration statements filed by CBS or Infinity with the SEC as of
the date of this Agreement, including all amendments and supplements thereto
filed with the SEC as of the date of this Agreement, above being referred to
herein, collectively, as the "CBS SEC Reports"). The CBS SEC Reports, as well
as all forms, reports and documents to be filed by CBS or Infinity with the
SEC after the date hereof and prior to the Effective Time, (i) were or will be
prepared in accordance with the requirements of the Securities Act, and the
Exchange Act, as the case may be, and the rules and regulations thereunder,
(ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, and (iii) did not at the time they were filed, or
will not at the time they are filed, omit any documents required to be filed
as exhibits thereto. No CBS subsidiary, except Infinity, is subject to the
periodic reporting requirements of the Exchange Act.
11
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the CBS SEC Reports and each of the financial
statements to be filed by CBS or Infinity with the SEC after the date hereof
and prior to the Effective Time was or will be prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis throughout the periods indicated (except as may be indicated in the
notes thereto) and each fairly presented in all material respects or will
fairly present in all material respects the consolidated financial position,
results of operations and cash flows of CBS and its subsidiaries as at the
respective dates thereof and for the respective periods indicated therein in
accordance with United States generally accepted accounting principles
(subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which were not and are not expected to be material).
(c) Except as and to the extent set forth in the CBS SEC Reports,
CBS and its subsidiaries do not have any liability or obligation of any nature
(whether accrued, absolute, contingent or otherwise) other than liabilities
and obligations which, individually or in the aggregate, would not have a CBS
Material Adverse Effect.
(d) CBS has heretofore furnished to Viacom complete and correct
copies of all material amendments and modifications that have not been filed
by CBS or Infinity with the SEC to all agreements, documents and other
instruments that previously had been filed by CBS or Infinity with the SEC and
are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. (a) Since
December 31, 1998, except as disclosed in any CBS SEC Report or as
contemplated by this Agreement, there has not been any change, event or
circumstance which, when taken individually or together with all other
changes, events or circumstances, has had or would have a CBS Material Adverse
Effect, and (b) since December 31, 1998 to the date of this Agreement, except
as disclosed in any CBS SEC Report (i) each of CBS and its subsidiaries has
conducted its businesses only in the ordinary course and in a manner
consistent with past practice and (ii) there has not been (A) any material
change by CBS or any of its subsidiaries in its material accounting policies,
practices and procedures, (B) any entry by CBS or any of its subsidiaries into
any commitment or transaction material to CBS and its subsidiaries taken as a
whole other than in the ordinary course of business consistent with past
practice, (C) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of CBS or any of its subsidiaries
(other than cash dividends payable by any wholly owned subsidiary to another
subsidiary or CBS), or (D) any increase in the compensation payable or to
become payable to any corporate officers or heads of divisions of CBS or any
of its subsidiaries, except in the ordinary course of business consistent with
past practice.
SECTION 3.09. Absence of Litigation. Except as disclosed in any CBS
SEC Report, there is no claim, action, proceeding or investigation pending or,
to the knowledge of CBS, threatened against CBS or any of its subsidiaries, or
any property or asset of CBS or any of its subsidiaries, before any court,
arbitrator or Governmental Authority, in each case except as would not have a
CBS Material Adverse Effect. As of the date of this Agreement, none of CBS,
any of its subsidiaries nor any property or asset of CBS or any of its
subsidiaries is subject to any order, writ, judgment, injunction, decree,
determination or award imposed by any court, arbitration or Governmental
Authority, in each case except as would not have a CBS Material Adverse
Effect.
SECTION 3.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of the
Employee Retirement Income Security Act of
12
1974, as amended ("ERISA")), maintained or contributed to by CBS or any of its
subsidiaries, or with respect to which CBS or any of its subsidiaries could
incur liability under Section 4069 of ERISA, other than multiemployer plans
within the meaning of Section 3(37) of ERISA (the "CBS Benefit Plans"), CBS
will provide to Viacom within 15 days of the date of this Agreement a true and
correct copy of (i) the most recent annual report (Form 5500) filed with the
Internal Revenue Service (the "IRS"), (ii) such CBS Benefit Plan, (iii) each
trust agreement relating to such CBS Benefit Plan, (iv) the most recent
summary plan description for each CBS Benefit Plan for which a summary plan
description is required, (v) the most recent actuarial report or valuation
relating to a CBS Benefit Plan subject to Title IV of ERISA, if any, and (vi)
the most recent determination letter, if any, issued by the IRS with respect
to any CBS Benefit Plan qualified under Section 401(a) of the Code. CBS will,
promptly following the date of this Agreement, request a copy of each CBS
Benefit Plan that is a multiemployer plan within the meaning of Section 3(37)
of ERISA from the trustees of such multiemployer plan and CBS shall deliver
such copy of the plan to Viacom promptly upon its receipt thereof.
(b) Each CBS Benefit Plan has been administered in accordance with
its terms, and in compliance with applicable laws, except as would not have a
CBS Material Adverse Effect. CBS and its subsidiaries have performed all
obligations required to be performed by them under, are not in any respect in
default under or in violation of, and have no knowledge of any default or
violation by any party to, any CBS Benefit Plans, except as would not have a
CBS Material Adverse Effect. With respect to the CBS Benefit Plans, no event
has occurred and, to the knowledge of CBS, there exists no condition or set of
circumstances, in connection with which CBS or any of its subsidiaries is
reasonably likely to be subject to any liability under the terms of such CBS
Benefit Plans, ERISA, the Code or any other applicable Law except as would
not, individually or in the aggregate, have a CBS Material Adverse Effect.
Neither CBS nor any of its subsidiaries has any actual or contingent liability
under Title IV of ERISA (other than the payment of premiums to the Pension
Benefit Guaranty Corporation), including, without limitation, any liability in
connection with (i) the termination or reorganization of any employee benefit
plan subject to Title IV of ERISA or (ii) the withdrawal from any
multiemployer plan or multiple employer plan, and no fact or event exists
which is reasonably likely to give rise to any such liability, in each case
except as would not, individually or in the aggregate, have a CBS Material
Adverse Effect.
(c) CBS has made available to Viacom: (i) copies of all employment
agreements with the top five most highly compensated executive officers of CBS
and its subsidiaries; (ii) copies of all material severance agreements,
programs and policies of CBS or any of its subsidiaries with or relating to
its or its subsidiaries' employees; and (iii) copies of all material plans,
programs, agreements and other arrangements of CBS or any of its subsidiaries
with or relating to its or its subsidiaries' employees which contain change in
control provisions. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, severance, unemployment
compensation, "golden parachute" or otherwise) becoming due to any director,
officer or employee of CBS or any of its subsidiaries from CBS or any of its
affiliates under any CBS Benefit Plan or otherwise, which payment is material
in relation to the compensation previously provided to such individual (other
than payments resulting from a change in responsibilities or reporting
obligations of individual employees), (ii) materially increase any benefits
otherwise payable under any CBS Benefit Plan, which increase is material in
relation to the benefits previously provided or (iii) result in any
acceleration of the time of payment or vesting of any material benefits.
(d) Each CBS Benefit Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination
13
letter from the IRS covering all of the provisions applicable to the Plan for
which determination letters are currently available that the CBS Benefit Plan
is so qualified and each trust established in connection with any CBS Benefit
Plan which is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that it is
so exempt, and no fact or event has occurred since the date of such
determination letter or letters from the IRS which is reasonably likely to
adversely affect the qualified status of any such CBS Benefit Plan or the
exempt status of any such trust.
SECTION 3.11. Labor Matters. There is no labor dispute, strike or
work stoppage against CBS or any of its subsidiaries pending or, to the
knowledge of CBS, threatened which would reasonably be expected to interfere
with the respective business activities of CBS or any of its subsidiaries,
except for such disputes, strikes or work stoppages which would not have a CBS
Material Adverse Effect. There is no charge or complaint against CBS or any of
its subsidiaries by the National Labor Relations Board or any comparable state
agency pending or threatened in writing, except for such charges or complaints
(or related unfair labor practices) which would not have a CBS Material
Adverse Effect.
SECTION 3.12. Environmental Matters. Except as would not,
individually or in the aggregate, have a CBS Material Adverse Effect:
(a) CBS and its subsidiaries (i) are in compliance with all, and are
not subject to any asserted liability or, to CBS's knowledge, any
liability (including liability with respect to current or former
subsidiaries or operations), in each case with respect to any,
Environmental Laws (as defined below), (ii) hold or have applied for all
Environmental Permits (as defined below) and (iii) are in compliance with
their respective Environmental Permits;
(b) neither CBS nor any CBS subsidiary has received any written
notice, demand, letter, claim or request for information alleging that
CBS or any of its subsidiaries is or may be in violation of, or liable
under, any Environmental Law;
(c) neither CBS nor any of its subsidiaries (i) has entered into or
agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as
defined below) and, to the knowledge of CBS, no investigation, litigation
or other proceeding is pending or threatened in writing with respect
thereto, or (ii) is an indemnitor in connection with any threatened or
asserted claim by any third-party indemnitee for any liability under any
Environmental Law or relating to any Hazardous Materials; and
(d) none of the real property owned or leased by CBS or any of its
subsidiaries is listed or, to the knowledge of CBS, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the
date hereof, or any similar state or foreign list of sites requiring
investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date hereof.
14
"Environmental Laws" means any applicable federal, state, local or
foreign statute, law, ordinance, regulation, rule, code, treaty, writ or
order and any enforceable judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree,
judgment, stipulation, injunction, permit, authorization, policy,
opinion, or agency requirement, in each case having the force and effect
of law, relating to the pollution, protection, investigation or
restoration of the environment, health and safety or natural resources,
including those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or noise, odor, wetlands, pollution, contamination or
any injury or threat of injury to persons or property or to the siting,
construction, operation, closure and post-closure care of waste disposal,
handling and transfer facilities.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any Environmental
Law.
"Hazardous Materials" means (i) any petroleum, petroleum products,
by- products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or other substance defined or regulated as toxic or
hazardous or as a pollutant or contaminant or waste under any
Environmental Law.
SECTION 3.13. Trademarks, Patents and Copyrights. Except as would
not have a CBS Material Adverse Effect, CBS and its subsidiaries own, or
possess adequate licenses or other valid rights to use, all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, service ▇▇▇▇ rights, trade secrets, applications to
register, and registrations for, the foregoing trademarks, know-how and other
proprietary rights and information used in connection with the business of CBS
and its subsidiaries as currently conducted, and no assertion or claim has
been made in writing challenging the validity of any of the foregoing which
would have a CBS Material Adverse Effect. To the knowledge of CBS, the conduct
of the business of CBS and its subsidiaries as currently conducted does not
conflict in any way with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, service ▇▇▇▇ or copyright of
any third party, except for such conflicts which would not have a CBS Material
Adverse Effect.
SECTION 3.14. Taxes. (a) For purposes of this Agreement, "Tax" or
"Taxes" means any and all taxes, fees, levies, duties, tariffs, imposts, and
other charges of any kind (together with any and all interest, penalties,
additions to tax and additional amounts imposed with respect thereto) imposed
by any governmental or taxing authority including, without limitation: taxes
or other charges on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes; license, registration
and documentation fees; and customs' duties, tariffs, and similar charges.
(b) Except as would not have a CBS Material Adverse Effect: (i) each
of CBS and each of its subsidiaries has timely filed all federal, state, local
and foreign tax returns and reports (including extensions) required to be
filed by it and has paid and discharged all Taxes shown as due thereon and has
paid all of such other Taxes as are due, other than such payments as are being
contested in good faith by appropriate proceedings; (ii) neither the IRS nor
any other taxing authority or agency, domestic or foreign, is now asserting
or, to the knowledge of CBS after due inquiry, threatening to assert against
CBS or any of its subsidiaries any deficiency or claim for Taxes; (iii) no
waiver of any statute of limitations with respect to, or any extension of a
15
period for the assessment of, any Tax has been granted by CBS or any of its
subsidiaries; (iv) the accruals and reserves for Taxes reflected in the CBS
balance sheet included in its Annual Report on Form 10-K for fiscal year 1998
and the most recent quarterly financial statements are adequate to cover all
Taxes accruable through the date thereof in accordance with United States
generally accepted accounting principles; (v) no election under Section 341(f)
of the Code has been made by CBS or any of its subsidiaries; (vi) CBS and each
of its subsidiaries has withheld or collected and paid over to the appropriate
governmental authorities or is properly holding for such payment all Taxes
required by law to be withheld or collected; (vii) there are no liens for
Taxes upon the assets of CBS or any of its subsidiaries, other than liens for
Taxes that are being contested in good faith by appropriate proceedings and
(viii) CBS has not constituted a "distributing corporation" (within the
meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock
qualifying for tax-free treatment under Section 355 of the Code in the two
years prior to the date of this Agreement.
SECTION 3.15. Tax Matters. None of CBS or any of its affiliates has
taken or agreed to take any action that would prevent the Merger from
constituting a transaction qualifying under Section 368(a) of the Code. None
of CBS or any of its affiliates or agents is aware of any agreement, plan or
other circumstance that would prevent the Merger from qualifying under Section
368(a) of the Code, that could prevent them from providing representations
required in Sections 7.02(c) or 7.03(c), or that could prevent the opinions
described in such Sections from being given and to the knowledge of CBS, the
Merger will so qualify.
SECTION 3.16. Year 2000 Compliance. (a) CBS has adopted a plan that
it believes will cause CBS Systems (as defined below) to be CBS Year 2000
Compliant (as defined below) (such plan, as it may be amended, modified or
supplemented from time to time being, the "CBS Year 2000 Plan") in all
material respects. CBS has taken, and between the date of this Agreement and
the Effective Time will continue to take, all reasonable steps to implement
the CBS Year 2000 Plan with respect to the CBS Systems. Notwithstanding
anything in this Section 3.16 to the contrary, CBS does not represent or
warrant that CBS Systems (or any other operations, systems, equipment or
software of CBS or its subsidiaries or any of their respective affiliates) are
or will be CBS Year 2000 Compliant at or prior to the Effective Time,
regardless of whether the CBS Year 2000 Plan has or has not been implemented
or complied with.
(b) For purposes of this Section 3.16, (i) "CBS Systems" shall mean
all computer, hardware, software, systems, and equipment (including embedded
microcontrollers in non-computer equipment) embedded within or required to
operate the current products of CBS and its subsidiaries, and/or material to
or necessary for CBS and its subsidiaries to carry on their respective
businesses as currently conducted; and (ii) "CBS Year 2000 Compliant" means
that CBS Systems will (A) manage, accept, process, store and output data
involving dates reasonably expected to be encountered in the foreseeable
future and (B) accurately process date data from, into and between the 20th
and 21st centuries and each date during the years 1999 and 2000.
SECTION 3.17. Opinion of Financial Advisors. CBS has received the
written opinion of Evercore Group Inc. (the "CBS Financial Advisor") on or
prior to the date of this Agreement, to the effect that, as of the date of
such opinion, the Exchange Ratio is fair to the shareholders of CBS from a
financial point of view, and CBS will deliver a copy of such opinion to Viacom
promptly after the date of this Agreement.
SECTION 3.18. Vote Required. The affirmative vote of a majority of
the votes cast by all shareholders entitled to vote at the CBS Stockholders'
Meeting is the only vote of the holders of any class or series of capital
stock of CBS necessary to adopt this Agreement.
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SECTION 3.19. Brokers. No broker, finder or investment banker (other
than the CBS Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of CBS.
SECTION 3.20. Pennsylvania Law. Pursuant to its By-laws, CBS has
opted out of anti-takeover provisions contained in the Pennsylvania Law
relating to (i) "control share acquisitions" (Sections 2561 through 2568 of
the Pennsylvania Law) and (ii) disgorgement of profits by certain controlling
shareholders following attempts to acquire control (Sections 2571 through 2576
of the Pennsylvania Law). Section 2538 of the Pennsylvania Law relating to
"interested shareholder transactions" and Sections 2551 through 2556 of the
Pennsylvania Law relating to "business combinations with interested
shareholders" are not applicable to this Agreement or the transactions
contemplated hereby.
SECTION 3.21. Rights Agreement. As of the date of this Agreement,
the copy of the Rights Agreement, including all amendments and exhibits
thereto, that is set forth as an exhibit to CBS's Form 8-K, filed with the SEC
on January 9, 1996, is a complete and correct copy thereof. Neither the
execution of this Agreement nor the consummation of the Merger will (A) cause
the Rights issued pursuant to the Rights Agreement to become exercisable, (B)
cause Viacom to become an Acquiring Person or a Principal Party (as each term
is defined in the Rights Agreement) or (C) give rise to a Distribution Date
(as such term is defined in the Rights Agreement).
SECTION 3.22. ▇▇▇▇▇▇▇. CBS has entered into the ▇▇▇▇▇▇▇ Agreement
and the ▇▇▇▇▇▇▇ Agreement is in full force and effect. Pursuant to the ▇▇▇▇▇▇▇
Agreement, ▇▇▇▇▇▇▇ has agreed, under certain circumstances, to vote its shares
of CBS Series B Preferred Stock in favor of adopting this Agreement, if
required under applicable law, and has, under certain circumstances,
constituted and appointed CBS as Gaylord's true and lawful proxy (the "▇▇▇▇▇▇▇
Proxy"), with full power of substitution, for and in its name place and stead,
to vote each of Gaylord's shares of CBS Series B Preferred Stock in favor of
the adoption of this Agreement at the CBS Stockholders' Meeting and any
adjournment or postponement thereof. CBS has not waived or transferred to a
third party any of its rights to vote Gaylord's shares under the ▇▇▇▇▇▇▇
Proxy.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VIACOM
Except as disclosed in the report on Form 10-K dated March 31, 1999
for the year ended December 31, 1998, the reports on Form 10-Q and Form 8-K
since December 31, 1998 or the proxy statement dated April 16, 1999, in each
case in the form filed by Viacom with the SEC or in a separate disclosure
schedule which has been delivered by Viacom to CBS prior to the execution of
this Agreement (the "Viacom Disclosure Schedule") (each section of which
qualifies the correspondingly numbered representation and warranty or covenant
to the extent specified therein and such other representations and warranties
or covenants to the extent a matter in such section is disclosed in such a way
as to make its relevance to the information called for by such other
representation and warranty or covenant readily apparent), Viacom hereby
represents and warrants to CBS that:
SECTION 4.01. Organization and Qualification; Subsidiaries. Each of
Viacom and its subsidiaries is a corporation or entity duly incorporated or
formed, validly existing and in good standing, under the laws of its
jurisdiction of incorporation or formation, and has the
17
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to have such
power, authority and governmental approvals would not have a Viacom Material
Adverse Effect (as defined below). Each of Viacom and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not have a Viacom
Material Adverse Effect. The term "Viacom Material Adverse Effect" means any
change, effect or circumstance that is or is reasonably likely to be
materially adverse to the business, results of operations or financial
condition of Viacom and its subsidiaries taken as a whole, other than any
change, effect or circumstance relating to or resulting from (i) general
changes in the media or entertainment industries or the advertising markets,
(ii) changes in general economic conditions or securities markets in general
or (iii) this Agreement or the transactions contemplated hereby or the
announcement thereof.
SECTION 4.02. Certificate of Incorporation and By-Laws. Viacom has
made available to CBS a complete and correct copy of the Certificate of
Incorporation and the Bylaws, each as amended to date, of Viacom and
Blockbuster Corporation ("Blockbuster"). The Certificates of Incorporation and
By-laws (or equivalent organizational documents) of Viacom and its
subsidiaries are in full force and effect. Except as would not have a Viacom
Material Adverse Effect, none of Viacom or its subsidiaries is in violation of
any provision of its Certificate of Incorporation or By-laws (or equivalent
organizational documents).
SECTION 4.03. Capitalization. The authorized capital stock of Viacom
consists of 500,000,000 shares of Viacom Class A Common Stock, 3,000,000,000
shares of Viacom Class B Common Stock and 200,000,000 shares of Preferred
Stock, par value $.01 per share, of Viacom ("Viacom Preferred Stock"). As of
September 3, 1999 (a) 139,923,921 shares of Viacom Class A Common Stock and
605,085,135 shares of Viacom Class B Common Stock were issued and outstanding,
all of which were validly issued, fully paid and nonassessable, (b) 1,356,400
shares of Viacom Class A Common Stock and 47,101,300 shares of Viacom B Common
Stock were held in the treasury of Viacom, (c) no shares of Viacom Class A
Common Stock or Viacom Class B Common Stock were held by subsidiaries of
Viacom and (d) as of September 3, 1999, approximately 1,898,946 shares of
Viacom Class B Common Stock were reserved for future issuance pursuant to
stock options or stock incentive rights (collectively "Viacom Options")
granted pursuant to Viacom's stock option plans and arrangements (the "Viacom
Stock Option Plans"). As of September 3, 1999, no shares of Viacom Preferred
Stock were issued and outstanding. As of the date of this Agreement, except
for the issuance of Viacom Class B Common Stock pursuant to the exercise of
Viacom Options and options to purchase 11,600,000 shares of Class A Common
Stock, par value $.01 per share, of Blockbuster (the "Blockbuster Options")
outstanding prior to September 3, 1999, no shares of capital stock of Viacom
or any of its subsidiaries have been issued since September 3, 1999. Except as
set forth in this Section 4.03, as of the date of this Agreement, there are no
options, warrants or other rights, agreements (including registration rights
agreements), arrangements or commitments of any character relating to the
issued or unissued capital stock of Viacom or any of its subsidiaries or
obligating Viacom or any of its subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, Viacom or any of its
subsidiaries. All shares of capital stock of Viacom and its subsidiaries
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. As of the date of
this Agreement, there are no outstanding contractual material obligations of
Viacom or any subsidiary to repurchase, redeem or otherwise acquire any shares
of capital stock of Viacom or any of its subsidiaries or to provide material
18
funds to, or make any material investment (in the form of a loan capital
contribution or otherwise) in, any person. The Stockholder (as defined in the
Parent Voting Agreements) is the holder of a majority of the issued and
outstanding shares of Viacom Class A Common Stock.
SECTION 4.04. Authority Relative to Agreement. Viacom has all
necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by Viacom and the consummation by Viacom of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Viacom are necessary to authorize the execution and delivery of this Agreement
or to consummate the Merger and the other transactions contemplated hereby
(other than, with respect to the Merger, the approval of the Viacom Proposal
by the holders of a majority of the then outstanding shares of Viacom Class A
Common Stock and the filing and recordation of appropriate merger documents as
required by Delaware Law and Pennsylvania Law). This Agreement has been duly
and validly executed and delivered by Viacom and, assuming the due
authorization, execution and delivery by CBS, this Agreement constitutes a
legal, valid and binding obligation of Viacom, enforceable against Viacom in
accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Viacom does not, and the
performance of this Agreement by Viacom and the performance by Parent of the
Parent Voting Agreements will not, (i) conflict with or violate the
Certificate of Incorporation or By-laws (or similar organization documents) of
(A) Viacom or Blockbuster or (B) any of its other subsidiaries, (ii) assuming
the consents, approvals and authorizations specified in Section 4.05(b) have
been received and the waiting periods referred to therein have expired, and
any condition precedent to such consent, approval, authorization, or waiver
has been satisfied, conflict with or violate any Law applicable to Viacom or
any of its subsidiaries or by which any property or asset of Viacom or any of
its subsidiaries is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of Viacom or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture or credit
agreement, or, to Viacom's knowledge as of the date of this Agreement, any
other, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Viacom or any of its subsidiaries is a party
or by which Viacom or any of its subsidiaries or any property or asset of
Viacom or any of its subsidiaries is bound or affected, except, in the case of
clauses (i)(B), (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences of the type referred to above which would not
have a Viacom Material Adverse Effect or would not prevent or materially delay
the consummation of the Merger; provided, however, that for purposes of this
Section 4.05(a), the definition of Viacom Material Adverse Effect shall be
read so as not to include clause (iii) of the definition thereof.
(b) The execution and delivery of this Agreement by Viacom do not,
the performance of this Agreement by Viacom and the performance by Parent of
the Parent Voting Agreements will not, require any consent, approval,
authorization, waiver or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic, foreign or supranational,
except for applicable requirements of the Exchange Act, the Securities Act,
Blue Sky Laws, the HSR Act, such filings, approvals and waivers as may be
required by the Communications Act, applicable requirements of the Investment
Canada Act of 1985 and the Competition Act (Canada), any other non-United
States competition, antitrust and investment law, filing and recordation of
appropriate merger documents as required by Delaware Law and Pennsylvania Law
and the rules of the NYSE and except where failure to obtain such consents,
19
approvals, authorizations or permits, or to make such filings or
notifications, would not have a Viacom Material Adverse Effect or would not
prevent or materially delay the consummation of the Merger; provided, however,
that for purposes of this Section 4.05(b), the definition of Viacom Material
Adverse Effect shall be read so as not to include clause (iii) of the
definition thereof.
SECTION 4.06. Permits and Licenses; Contracts. (a) Each of Viacom
and its subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders necessary for Viacom or any of its
subsidiaries to own, lease and operate the properties of Viacom and its
subsidiaries or to carry on their business as it is now being conducted and
contemplated to be conducted (the "Viacom Permits"), and no suspension or
cancellation of any of the Viacom Permits is pending or, to the knowledge of
Viacom, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Viacom Permits would not have a Viacom Material
Adverse Effect. None of Viacom or any of its subsidiaries is in conflict with,
or in default or violation of (i) any Laws applicable to Viacom or any of its
subsidiaries or by which any property or asset of Viacom or any of its
subsidiaries is bound or affected, (ii) any of the Viacom Permits, or (iii)
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Viacom or any of
its subsidiaries is a party or by which Viacom or any of its subsidiaries or
any property or asset of Viacom or any of its subsidiaries is bound or
affected, except for any such conflicts, defaults or violations that would not
have a Viacom Material Adverse Effect.
(b) Except as would not have a Viacom Material Adverse Effect, and
to the knowledge of Viacom, except as would not have a material adverse effect
on the Surviving Corporation following the Effective Time, none of Viacom or
any of its subsidiaries is a party to any contracts or agreements that limits
the ability of Viacom or any of its subsidiaries to compete in any line of
business or with any person or engage in any business in any geographic area,
in each case except for competition in businesses that neither CBS nor Viacom
are currently engaged in or will reasonably foreseeably engage in.
(c) Viacom and its subsidiaries have operated the radio and
television stations and associated facilities for which Viacom or any of its
subsidiaries holds licenses from the FCC, in each case which are owned or
operated by Viacom and its subsidiaries (the "Viacom Licensed Facilities"), in
material compliance with the terms of the Viacom Permits issued by the FCC to
Viacom and its subsidiaries ("Viacom FCC Licenses"), and in material
compliance with the Communications Act, and Viacom and its subsidiaries have
timely filed or made all applications, reports and other disclosures required
by the FCC to be filed or made with respect to the Viacom Licensed Facilities
and have timely paid all FCC regulatory fees with respect thereto, in each
case except as would not have a Viacom Material Adverse Effect. As of the date
hereof, to Viacom's knowledge, there is not now pending or threatened before
the FCC any material investigation, proceeding, notice of violation, order of
forfeiture or complaint against Viacom or any of its subsidiaries, relating to
any of the Viacom Licensed Facilities or FCC regulated services conducted by
CBS that, if adversely decided, would have a Viacom Material Adverse Effect.
SECTION 4.07. SEC Filings; Financial Statements. (a) Viacom and
Blockbuster have filed all forms, reports and documents required to be filed
by it with the SEC from December 31, 1996 to the date of this Agreement,
including: (i) Annual Reports on Form 10-K, (ii) Quarterly Reports on Form
10-Q and (iii) proxy statements relating to Viacom's and Blockbuster's
meetings of stockholders (whether annual or special) (the forms, reports and
other documents referred to in clauses (i), (ii), (iii) and all other forms,
reports and other
20
registration statements filed by Viacom or Blockbuster with the SEC as of the
date of this Agreement, including all amendments and supplements thereto filed
with the SEC as of the date of this Agreement, above being referred to herein,
collectively, as the "Viacom SEC Reports"). The Viacom SEC Reports, as well as
all forms, reports and documents to be filed by Viacom or Blockbuster with the
SEC after the date hereof and prior to the Effective Time, (i) were or will be
prepared in accordance with the requirements of the Securities Act, and the
Exchange Act, as the case may be, and the rules and regulations thereunder,
(ii) did not at the time they were filed, or will not at the time they are
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading, and (iii) did not at the time they were filed, or
will not at the time they are filed, omit any documents required to be filed
as exhibits thereto. No Viacom subsidiary, except Blockbuster, is subject to
the periodic reporting requirements of the Exchange Act.
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the Viacom SEC Reports and each of the financial
statements to be filed by Viacom or Blockbuster with the SEC after the date
hereof and prior to the Effective Time was or will be prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presented in all material respects or
will fairly present in all material respects the consolidated financial
position, results of operations and cash flows of Viacom and its subsidiaries
as at the respective dates thereof and for the respective periods indicated
therein in accordance with United States generally accepted accounting
principles (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected to be
material).
(c) Except as and to the extent set forth in the Viacom SEC Reports,
Viacom and its subsidiaries do not have any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) other than
liabilities and obligations which, individually or in the aggregate, would not
have a Viacom Material Adverse Effect.
(d) Viacom has heretofore furnished to CBS complete and correct
copies of all material amendments and modifications that have not been filed
by Viacom or Blockbuster with the SEC to all agreements, documents and other
instruments that previously had been filed by Viacom or Blockbuster with the
SEC and are currently in effect.
SECTION 4.08. Absence of Certain Changes or Events. (a) Since
December 31, 1998, except as disclosed in any Viacom SEC Report or as
contemplated by this Agreement, there has not been any change, event or
circumstance which, when taken individually or together with all other
changes, events or circumstances, has had or would have a Viacom Material
Adverse Effect, and (b) since December 31, 1998 to the date of this Agreement,
except as disclosed in any Viacom SEC Reports (i) each of Viacom and its
subsidiaries has conducted its businesses only in the ordinary course and in a
manner consistent with past practice and (ii) there has not been (A) any
material change by Viacom or any of its subsidiaries in its material
accounting policies, practices and procedures, (B) any entry by Viacom or any
of its subsidiaries into any commitment or transaction material to Viacom and
its subsidiaries taken as a whole other than in the ordinary course of
business consistent with past practice, (C) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of
Viacom or any of its subsidiaries (other than cash dividends payable by any
wholly owned subsidiary to another subsidiary or Viacom), or (D) any increase
in the compensation payable or to become payable to any corporate officers or
heads of divisions of Viacom or any of its subsidiaries, except in the
ordinary course of business consistent with past practice.
21
SECTION 4.09. Absence of Litigation. Except as disclosed in any
Viacom SEC Report, there is no claim, action, proceeding or investigation
pending or, to the knowledge of Viacom, threatened against Viacom or any of
its subsidiaries, or any property or asset of Viacom or any of its
subsidiaries, before any court, arbitrator or Governmental Authority, in each
case except as would not have a Viacom Material Adverse Effect. As of the date
of this Agreement, none of Viacom, any of its subsidiaries nor any property or
asset of Viacom or any of its subsidiaries is subject to any order, writ,
judgment, injunction, decree, determination or award imposed by any court,
arbitration or Governmental Authority, in each case except as would not have a
Viacom Material Adverse Effect.
SECTION 4.10. Employee Benefit Plans. (a) With respect to each
employee benefit plan, program, arrangement and contract (including, without
limitation, any "employee benefit plan", as defined in Section 3(3) of ERISA),
maintained or contributed to by Viacom or any of its subsidiaries, or with
respect to which Viacom or any of its subsidiaries could incur liability under
Section 4069 of ERISA, other than multiemployer plans within the meaning of
Section 3(37) of ERISA (the "Viacom Benefit Plans"), Viacom will provide to
CBS within 15 days of this Agreement a true and correct copy of (i) the most
recent annual report (Form 5500) filed with the IRS, (ii) such Viacom Benefit
Plan, (iii) each trust agreement relating to such Viacom Benefit Plan, (iv)
the most recent summary plan description for each Viacom Benefit Plan for
which a summary plan description is required, (v) the most recent actuarial
report or valuation relating to a Viacom Benefit Plan subject to Title IV of
ERISA, if any, and (vi) the most recent determination letter, if any, issued
by the IRS with respect to any Viacom Benefit Plan qualified under Section
401(a) of the Code. Viacom will promptly following the date of this Agreement
request a copy of each Viacom Benefit Plan that is a multiemployer plan within
the meaning of Section 3(37) of ERISA from the trustees of such multiemployer
plan and Viacom shall deliver such copy of the plan to CBS promptly upon its
receipt thereof.
(b) Each Viacom Benefit Plan has been administered in accordance
with its terms, and in compliance with applicable laws, except as would not
have a Viacom Material Adverse Effect. Viacom and its subsidiaries have
performed all obligations required to be performed by them under, are not in
any respect in default under or in violation of, and have no knowledge of any
default or violation by any party to, any Viacom Benefit Plans, except as
would not have a Viacom Material Adverse Effect. With respect to the Viacom
Benefit Plans, no event has occurred and, to the knowledge of Viacom, there
exists no condition or set of circumstances, in connection with which Viacom
or any of its subsidiaries is reasonably likely to be subject to any liability
under the terms of such Viacom Benefit Plans, ERISA, the Code or any other
applicable Law except as would not have a Viacom Material Adverse Effect.
Neither Viacom nor any of its subsidiaries has any actual or contingent
liability under Title IV of ERISA (other than the payment of premiums to the
Pension Benefit Guaranty Corporation) except as would not have a Viacom
Material Adverse Effect. Neither Viacom nor any of its subsidiaries has any
actual or contingent liability under Title IV of ERISA (other than the payment
of premiums to the Pension Benefit Guaranty Corporation), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any multiemployer plan or multiple employer plan, and
no fact or event exists which is reasonably likely to give rise to any such
liability, except as would not, individually or in the aggregate, have a
Viacom Material Adverse Effect.
(c) Viacom has made available to CBS (i) copies of all employment
agreements with the top five most highly compensated executive officers of
Viacom or any of its subsidiaries; (ii) copies of all material severance
agreements, programs and policies of Viacom or any of its subsidiaries with or
relating to its or its subsidiaries' employees; and (iii) copies of all
22
material plans, programs, agreements and other arrangements of Viacom or any
of its subsidiaries with or relating to its or its subsidiaries' employees
which contain change in control provisions. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment (including, without limitation, severance,
unemployment compensation, "golden parachute" or otherwise) becoming due to
any director, officer or employee of Viacom or any of its subsidiaries from
Viacom or any of its affiliates under any Viacom Benefit Plan or otherwise,
which payment is material in relation to the compensation previously provided
to such individual (other than payments resulting from a change in
responsibilities or reporting obligations of individual employees), (ii)
materially increase any benefits otherwise payable under any Viacom Benefit
Plan, which increase is material in relation to the benefits previously
provided or (iii) result in any acceleration of the time of payment or vesting
of any material benefits.
(d) Each Viacom Benefit Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination letter from the IRS covering all of the provisions
applicable to the Plan for which determination letters are currently available
that the Viacom Benefit Plan is so qualified and each trust established in
connection with any Viacom Benefit Plan which is intended to be exempt from
federal income taxation under Section 501(a) of the Code has received a
determination letter from the IRS that it is so exempt, and no fact or event
has occurred since the date of such determination letter or letters from the
IRS which is reasonably likely to adversely affect the qualified status of any
such Viacom Benefit Plan or the exempt status of any such trust.
SECTION 4.11. Labor Matters. There is no labor dispute, strike or
work stoppage against Viacom or any of its subsidiaries pending or, to the
knowledge of Viacom, threatened which would reasonably be expected to
interfere with the respective business activities of Viacom or any of its
subsidiaries, except for such disputes, strikes or work stoppages which would
not have a Viacom Material Adverse Effect. There is no charge or complaint
against Viacom or any of its subsidiaries by the National Labor Relations
Board or any comparable state agency pending or threatened in writing, except
for such charges or complaints (or related unfair labor practices) which would
not have a Viacom Material Adverse Effect.
SECTION 4.12. Environmental Matters. Except as would not,
individually or in the aggregate, have a Viacom Material Adverse Effect:
(a) Viacom and its subsidiaries (i) are in compliance with all, and
are not subject to any asserted liability or, to Viacom's knowledge, any
liability (including liability with respect to current or former
subsidiaries or operations), in each case with respect to any,
Environmental Laws (as defined below), (ii) hold or have applied for all
Environmental Permits (as defined below) and (iii) are in compliance with
their respective Environmental Permits;
(b) neither Viacom nor any Viacom subsidiary has received any
written notice, demand, letter, claim or request for information alleging
that Viacom or any of its subsidiaries is or may be in violation of, or
liable under, any Environmental Law;
(c) neither Viacom nor any of its subsidiaries (i) has entered into
or agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials (as
defined below) and, to the knowledge of Viacom, no investigation,
litigation or other proceeding is pending or threatened in writing with
respect thereto, or (ii) is an
23
indemnitor in connection with any threatened or asserted claim by any
third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Materials; and
(d) none of the real property owned or leased by Viacom or any of
its subsidiaries is listed or, to the knowledge of Viacom, proposed for
listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
SECTION 4.13. Trademarks, Patents and Copyrights. Except as would
not have a Viacom Material Adverse Effect, Viacom and its subsidiaries own, or
possess adequate licenses or other valid rights to use, all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, service ▇▇▇▇ rights, trade secrets, applications to
register, and registrations for, the foregoing trademarks, service marks,
know-how and other proprietary rights and information used in connection with
the business of Viacom and its subsidiaries as currently conducted, and no
assertion or claim has been made in writing challenging the validity of any of
the foregoing which would have a Viacom Material Adverse Effect. To the
knowledge of Viacom, the conduct of the business of Viacom and its
subsidiaries as currently conducted does not conflict in any way with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service ▇▇▇▇ or copyright of any third party, except for such
conflicts which would not have a Viacom Material Adverse Effect.
SECTION 4.14. Taxes. Except as would not have a Viacom Material
Adverse Effect, (a) each of Viacom and each of its subsidiaries has timely
filed all federal, state, local and foreign tax returns and reports (including
extensions) required to be filed by it and has paid and discharged all Taxes
shown as due thereon and has paid all of such other Taxes as are due, other
than such payments as are being contested in good faith by appropriate
proceedings, (b) neither the IRS nor any other taxing authority or agency,
domestic or foreign, is now asserting or, to the knowledge of Viacom after due
inquiry, threatening to assert against Viacom or any of its subsidiaries any
deficiency or claim for Taxes, (c) no waiver of any statute of limitations
with respect to, or any extension of a period for the assessment of, any Tax
has been granted by Viacom or any of its subsidiaries, (d) the accruals and
reserves for Taxes reflected in the Viacom balance sheet included in its
Annual Report on Form 10-K for fiscal year 1998 and the most recent quarterly
financial statements are adequate to cover all Taxes accruable through the
date thereof in accordance with United States generally accepted accounting
principles, (e) no election under Section 341(f) of the Code has been made by
Viacom or any of its subsidiaries, (f) Viacom and each of its subsidiaries has
withheld or collected and paid over to the appropriate governmental
authorities or is properly holding for such payment all Taxes required by law
to be withheld or collected, (g) there are no liens for Taxes upon the assets
of Viacom or any of its subsidiaries, other than liens for Taxes that are
being contested in good faith by appropriate proceedings and (h) Viacom has
not constituted a "distributing corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in the two years prior to the date of
this Agreement.
SECTION 4.15. Tax Matters. None of Viacom or any of its affiliates
has taken or agreed to take any action that would prevent the Merger from
constituting a transaction qualifying under Section 368(a) of the Code. None
of Viacom or any of its affiliates or agents is aware of any agreement, plan
or other circumstance that would prevent the Merger from qualifying under
Section 368(a) of the Code, that could prevent them from providing
representations required in Sections 7.02(c) or 7.03(c), or that could prevent
the opinions described in such Sections from being given and to the knowledge
of Viacom the Merger will so qualify.
24
SECTION 4.16. Year 2000 Compliance. (a) Viacom has adopted a plan
that it believes will cause Viacom Systems (as defined below) to be Viacom
Year 2000 Compliant (as defined below) (such plan, as it may be amended,
modified or supplemented from time to time being, the "Viacom Year 2000 Plan")
in all material respects. Viacom has taken, and between the date of this
Agreement and the Effective Time will continue to take, all reasonable steps
to implement the Viacom Year 2000 Plan with respect to the Viacom Systems.
Notwithstanding anything in this Section 4.16 to the contrary, Viacom does not
represent or warrant that Viacom Systems (or any other operations, systems,
equipment or software of Viacom or its subsidiaries or any of their respective
affiliates) are or will be Viacom Year 2000 Compliant at or prior to the
Effective Time, regardless of whether the Viacom Year 2000 Plan has or has not
been implemented or complied with.
(b) For purposes of this Section 4.16, (i) "Viacom Systems" shall
mean all computer, hardware, software, systems, and equipment (including
embedded microcontrollers in non-computer equipment) embedded within or
required to operate the current products of Viacom and its subsidiaries,
and/or material to or necessary for Viacom and its subsidiaries to carry on
their respective businesses as currently conducted; and (ii) "Viacom Year 2000
Compliant" means that Viacom Systems will (A) manage, accept, process, store
and output data involving dates reasonably expected to be encountered in the
foreseeable future and (B) accurately process date data from, into and between
the 20th and 21st centuries and each date during the years 1999 and 2000.
SECTION 4.17. Opinion of Financial Advisors. Viacom has received the
written opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ & Co. (the "Viacom Financial
Advisor") on or prior to the date of this Agreement, to the effect that, as of
the date of such opinion, the Exchange Ratio is fair to the stockholders of
Viacom, from a financial point of view, and Viacom will deliver a copy of such
opinion to CBS promptly after the date of this Agreement.
SECTION 4.18. Vote Required. The affirmative vote of the holders of
a majority of the outstanding Viacom Class A Common Stock is the only vote of
the holders of any class or series of capital stock of Viacom necessary to
approve the transactions contemplated by this Agreement.
SECTION 4.19. Section 203 of Delaware Law. The Board of Directors of
Viacom has approved this Agreement and such Viacom approval is sufficient to
render inapplicable to this Agreement, the Parent Voting Agreements and the
transactions contemplated hereby and thereby the provisions of Section 203 of
Delaware Law.
SECTION 4.20. Brokers. No broker, finder or investment banker (other
than the Viacom Financial Advisor) is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger based upon arrangements
made by or on behalf of Viacom.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by CBS Pending the Merger. CBS
covenants and agrees that, between the date of this Agreement and the
Effective Time, except (w) as contemplated by this Agreement or as set forth
in Section 5.01 of the CBS Disclosure Schedule, (x) as Viacom shall otherwise
agree in advance in writing, which agreement shall not be unreasonably
withheld or delayed, (y) for actions taken in connection with the consummation
25
of the acquisitions of King World, Outdoor Systems, Inc. and of the
subsidiaries of ▇▇▇▇▇▇▇ that own KTVT, Dallas, Texas (the "Pending
Transactions") on substantially the same terms that have heretofore been
agreed between such parties or on such other terms and conditions which would
not be reasonably likely to have an impact that is both material and
detrimental to CBS and its subsidiaries, taken as a whole, unless Viacom shall
have consented thereto, such consent not to be unreasonably withheld or
delayed, provided that CBS may not amend or otherwise modify the terms of the
CBS Series B Preferred Stock to be received by Gaylord pursuant to the ▇▇▇▇▇▇▇
Agreement, without the written consent of Viacom, and (z) for the exercise of
options, warrants and similar securities which would otherwise expire prior to
the Effective Time, or the exercise of any put rights, call rights, rights of
first refusal and other similar rights, in each case under agreements in
existence on the date of this Agreement and otherwise in accordance with the
terms of this Agreement, the business of CBS and its subsidiaries shall be
conducted only in, and CBS and its subsidiaries shall not take any action
except in, the ordinary course of business and in a manner consistent with
past practice; and CBS and its subsidiaries shall use their reasonable best
efforts to preserve substantially intact CBS's business organization, to keep
available the services of the current officers, employees and consultants of
CBS and its subsidiaries (provided that the foregoing covenant to use
reasonable best efforts shall not require CBS to offer retention bonuses to
such individuals) and to preserve the current relationships of CBS and its
subsidiaries with customers, distributors, dealers, suppliers and other
persons with which CBS and its subsidiaries have significant business
relations. By way of amplification and not limitation, between the date of
this Agreement and the Effective Time, CBS will not do, and will not permit
any of its subsidiaries to do, directly or indirectly, any of the following
except in compliance with the exceptions listed above:
(a) amend or otherwise change the Articles of Incorporation or
By-laws of CBS or any CBS subsidiary other than Infinity if such
amendment or change would have a CBS Material Adverse Effect;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of its or its subsidiaries' capital stock, or any options,
warrants, convertible securities or other rights of any kind to acquire
any shares of its or its subsidiaries' capital stock or any other
ownership interest (including any phantom interest), of CBS or any of its
subsidiaries (except (A) for the issuance of Shares issuable pursuant to
CBS Options or shares of Infinity common stock pursuant to Infinity stock
options outstanding on the date hereof, (B) for the issuance of options,
and other stock grants of CBS or Shares which (other than as permitted
under any severance arrangement established by CBS in accordance with
Section 6.16 hereof or with respect to 1,200,000 options to be issued to
two senior executives of King World upon its acquisition by CBS) do not
provide for accelerated vesting in connection with the Merger and the
other transactions contemplated by this Agreement, (x) to purchase a
maximum of 5,000,000 Shares, (y) to purchase a maximum of 17,200,000
Shares as set forth in Section 5.01 of the CBS Disclosure Schedule and
(z) to purchase a maximum of 12,500,000 shares of Infinity common stock
as set forth in Section 5.01 of the CBS Disclosure Schedule, in each case
in the ordinary course of business consistent with past practice and
allocated to persons who are officers, employees, directors, independent
contractors and production company writers and talent of CBS or Infinity,
as applicable, or any of their respective subsidiaries (including past
practice of any such subsidiary before its acquisition by CBS) and (C)
the issuance of shares of CBS and Infinity stock in connection with the
Pending Transactions (including the issuance of shares of CBS Series B
Preferred Stock and the issuance of shares of CBS Common Stock upon
conversion of CBS Series B Preferred Stock in accordance with its terms
and the terms and conditions of the ▇▇▇▇▇▇▇ Agreement and other
agreements and documents executed in connection
26
therewith), or (ii) any assets material to CBS and its subsidiaries,
taken as a whole, except for sales in the ordinary course of business and
in a manner consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its or its subsidiaries' capital stock other than cash
dividends payable by any wholly owned CBS subsidiary to another CBS
subsidiary or CBS and other than dividends made or paid by Infinity, so
long as the aggregate amount of such dividends paid by Infinity shall not
exceed $500,000,000;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its or its
subsidiaries' capital stock;
(e) (i) except in connection with the Pending Transactions and in
connection with acquisitions which individually do not exceed
$200,000,000 and in the aggregate do not exceed $1,000,000,000 (A)
acquire (including by merger, consolidation, or acquisition of stock or
assets), or otherwise make any investment in, any corporation,
partnership, limited liability company, other business organization or
any division thereof, or any material amount of assets; or (B) incur any
indebtedness for borrowed money, issue any debt securities, assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, agree to amend or otherwise modify in
any manner any agreement or instrument pursuant to which CBS has incurred
indebtedness, or make any loans or advances, except in the ordinary
course of business and consistent with past practice, except the
refinancing of existing indebtedness, borrowings under commercial paper
programs in the ordinary course of business or borrowings under existing
bank lines of credit in the ordinary course of business, (ii) enter into
any material contract, agreement or transaction, other than (X) in the
ordinary course of business, and (Y) which would not be reasonably likely
to prevent or materially delay the consummation of the Merger, (iii)
authorize any capital expenditures which are, in the aggregate, in excess
of the amounts currently budgeted for the fiscal year 1999 (including the
applicable 1999 capital expenditures of the companies subject to the
Pending Transactions) and, with respect to fiscal year 2000, 10% in
excess of such amount, in each case for CBS and its subsidiaries taken as
a whole or (iv) enter into or amend any contract, agreement, commitment
or arrangement which would require CBS to take any action prohibited by
this subsection (e) and will, or will cause Infinity to, not amend in any
material respect, or waive any material right or condition under or
relating to the definitive agreements relating to the Pending
Transactions, in each case except for any such amendment or waiver the
impact of which would not be reasonably likely to be both material and
detrimental to CBS and its subsidiaries, taken as a whole;
(f) increase the compensation payable or to become payable to its
executive officers or employees, except as set forth in Section 6.16 or
as required by Law or by the terms of any collective bargaining agreement
or other agreement currently in effect between CBS or any subsidiary of
CBS and any executive officer or employee thereof and except for
increases in the ordinary course of business in accordance with past
practices, or grant any severance or termination pay to, or enter into
any employment or severance agreement with, any director or executive
officer of it or any of its subsidiaries, or establish, adopt, enter into
or amend in any material respect or take action to accelerate any rights
or benefits under any collective bargaining, bonus, profit sharing,
thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, executive officer or employee, provided that this clause
shall not prevent any CBS subsidiary from (i) entering into employment
27
contracts with newly-hired or promoted executive officers, or from making
severance payments, on terms substantially consistent with the
contractual arrangements currently existing at such subsidiary or (ii)
providing for the payment of severance to executive officers or employees
on terms substantially consistent with the past practices of such
subsidiary (including past practice preceding such subsidiaries'
acquisition by CBS);
(g) change in any material respect (except as required by the SEC or
changes in United States generally accepted accounting principles which
become effective after the date of this Agreement) any accounting
policies, practices or procedures;
(h) make any tax election that, individually or in the aggregate,
would have a CBS Material Adverse Effect or settle or compromise any
material Tax liability; or
(i) enter into any contract, agreement, lease, license, permit,
franchise or other instrument or obligation which if in existence and
known to CBS prior to the date of this Agreement would have resulted in a
breach of Section 3.05, except to the extent the conflict, violation,
breach, default or occurrence of the type referred to therein giving rise
to such breach would not have a CBS Material Adverse Effect;
provided that Infinity shall not be prohibited from taking any action under
this Section 5.01 which the Board of Directors of Infinity determines is
required to be taken in the exercise of the Board's fiduciary duties to the
stockholders of Infinity (other than CBS).
SECTION 5.02. Conduct of Business by Viacom Pending the Merger.
Viacom covenants and agrees that, between the date of this Agreement and the
Effective Time, except (w) as contemplated by this Agreement or as set forth
in Schedule 5.02 of the Viacom Disclosure Schedule, (x) as CBS shall otherwise
agree in advance in writing, which agreement shall not be unreasonably
withheld or delayed, (y) for the exercise of options, warrants and similar
securities which would otherwise expire prior to the Effective Time, or the
exercise of any put rights, call rights, rights of first refusal and other
similar rights, in each case under agreements in existence on the date of this
Agreement and otherwise in accordance with the terms of this Agreement and (z)
an exchange offer of Blockbuster shares owned by Viacom for shares of Viacom
Class B Common Stock owned by the stockholders of Viacom (the "Split-off") in
accordance with the procedures set forth in Section 5.02 of the Viacom
Disclosure Schedule, the business of Viacom and its subsidiaries shall be
conducted only in, and Viacom and its subsidiaries shall not take any action
except in, the ordinary course of business and in a manner consistent with
past practice; and Viacom and its subsidiaries shall use their reasonable best
efforts to preserve substantially intact Viacom's business organization, to
keep available the services of the current officers, employees and consultants
of Viacom and its subsidiaries (provided that the foregoing covenant to use
reasonable best efforts shall not require Viacom to offer retention bonuses to
such individuals) and to preserve the current relationships of Viacom and its
subsidiaries with customers, distributors, suppliers and other persons with
which Viacom and its subsidiaries have significant business relations. By way
of amplification and not limitation, between the date of this Agreement and
the Effective Time, Viacom will not do, and will not permit any of its
subsidiaries to do, directly or indirectly, any of the following except in
compliance with the exceptions listed above:
(a) amend or otherwise change the Certificate of Incorporation or
By-laws of Viacom or Blockbuster, or any other Viacom subsidiary if such
amendment or change would have a Viacom Material Adverse Effect;
28
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of its or its subsidiaries' capital stock, or any options,
warrants, convertible securities or other rights of any kind to acquire
any shares of its or its subsidiaries' capital stock or any other
ownership interest (including any phantom interest), of Viacom or any of
its subsidiaries (except (A) for the issuance of Shares issuable pursuant
to Viacom Options outstanding on the date hereof and (B) for the issuance
of options, which do not provide for accelerated vesting or other
consequences in connection with the Merger and the other transactions
contemplated by this Agreement, to purchase a maximum of 6,000,000 shares
of Viacom Class B Common Stock in the ordinary course of business
consistent with past practice and allocated to persons who are officers,
employees, directors, independent contractors and production company
writers and talent of Viacom or any of its subsidiaries on a basis
substantially consistent with past practice), or (ii) any assets material
to Viacom and its subsidiaries, taken as a whole, except for sales in the
ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its or its subsidiaries' capital stock other than cash
dividends payable by any wholly owned Viacom subsidiary to another Viacom
subsidiary or Viacom, other than dividends made or paid by Blockbuster,
so long as the aggregate amount of such dividends paid by Blockbuster
shall not exceed $50,000,000;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its or its
subsidiaries' capital stock;
(e) (i) except in connection with acquisitions which individually do
not exceed $200,000,000 and in the aggregate do not exceed $1,000,000,000
(A) acquire (including by merger, consolidation, or acquisition of stock
or assets), or otherwise make any investment in, any corporation,
partnership, limited liability company, other business organization or
any division thereof, or any material amount of assets; or (B) incur any
indebtedness for borrowed money, issue any debt securities, assume,
guarantee or endorse, or otherwise as an accommodation become responsible
for, the obligations of any person, agree to amend or otherwise modify in
any manner any agreement or instrument pursuant to which Viacom has
incurred indebtedness, or make any loans or advances, except in the
ordinary course of business and consistent with past practice, except the
refinancing of existing indebtedness, borrowings under commercial paper
programs in the ordinary course of business or borrowings under existing
bank lines of credit in the ordinary course of business, (ii) enter into
any contract, agreement or transaction, other than (X) in the ordinary
course of business, consistent with past practice and (Y) which would not
be reasonably likely to prevent or materially delay the consummation of
the Merger, (iii) authorize any capital expenditures which are, in the
aggregate, in excess of the amount currently budgeted therefor (and
previously disclosed to CBS) for the fiscal year ending December 31,
1999, and, with respect to fiscal year December 31, 2000, 10% in excess
of such amount, in each case for Viacom and its subsidiaries taken as a
whole or (iv) enter into or amend any contract, agreement, commitment or
arrangement which would require Viacom to take any action prohibited by
this subsection (e);
(f) increase the compensation payable or to become payable to its
executive officers or employees, except as required by Law or by the
terms of any collective bargaining agreement or other agreement currently
in effect between Viacom or any
29
subsidiary of Viacom and any executive officer or employee thereof and
except for increases in the ordinary course of business in accordance
with past practices, or grant any severance or termination pay to, or
enter into any employment or severance agreement with, any director or
executive officer of it or any of its subsidiaries, or establish, adopt,
enter into or amend in any material respect or take action to accelerate
any rights or benefits under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, agreement, trust, fund, policy or arrangement for the benefit
of any director, executive officer or employee, provided that this clause
shall not prevent any Viacom subsidiary from (i) entering into employment
contracts with newly-hired or promoted executive officers on terms
substantially consistent with the contractual arrangements currently
existing at such subsidiary or (ii) providing for the payment of
severance to executive officers or employees on terms substantially
consistent with the past practices of such subsidiary;
(g) change in any material respect (except as required by the SEC or
changes in United States generally accepted accounting principles which
become effective after the date of this Agreement) any accounting
policies, practices or procedures;
(h) make any tax election that, individually or in the aggregate,
would have a Viacom Material Adverse Effect or settle or compromise any
material Tax liability; or
(i) enter into any contract, agreement, lease, license, permit,
franchise or other instrument or obligation which if in existence and
known to Viacom prior to the date of this Agreement would have resulted
in a breach of Section 4.05, except to the extent the conflict, violation
breach, default or occurrence of the type referred to therein giving rise
to such breach would not have a Viacom Material Adverse Effect;
provided that Blockbuster shall not be prohibited from taking any action under
this Section 5.02 which the Board of Directors of Blockbuster determines is
required to be taken in the exercise of the Board's fiduciary duties to the
stockholders of Blockbuster (other than Viacom).
SECTION 5.03. Other Actions. Except as required by Law, CBS and
Viacom shall not, and shall not permit any of their respective subsidiaries
to, take any action that would, or that is reasonably likely to, result in any
of the conditions to the Merger set forth in Article VII not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Registration Statement; Joint Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, (i) Viacom and
CBS shall cooperate in preparing and each shall cause to be filed with the SEC
a joint proxy statement (together with any amendments thereof or supplements
thereto, the "Proxy Statement") relating to the meetings of Viacom's and CBS's
stockholders to be held to consider approval and adoption of this Agreement
and the Viacom Proposal and (ii) Viacom shall prepare and file with the SEC a
registration statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with the registration under the Securities Act of
the shares of Viacom Class B Common Stock
30
(including such shares of Viacom Class B Common Stock into which the Viacom
Series C Preferred Stock is convertible) and the shares of Viacom Series C
Preferred Stock to be issued to the shareholders of CBS pursuant to the
Merger. Each of Viacom and CBS shall use its reasonable best efforts to cause
the Registration Statement to become effective as promptly as practicable,
and, prior to the effective date of the Registration Statement, Viacom shall
use reasonable best efforts to take all or any action required under any
applicable federal or state securities Laws in connection with the issuance of
shares of Viacom Class B Common Stock (including such shares of Viacom Class B
Common Stock into which the Viacom Series C Preferred Stock is convertible)
and the shares of Viacom Series C Preferred Stock pursuant to the Merger. Each
of Viacom and CBS shall furnish all information concerning it as may
reasonably be requested by the other party in connection with such actions and
the preparation of the Registration Statement and Proxy Statement. As promptly
as practicable after the Registration Statement shall have become effective,
each of Viacom and CBS shall mail the Proxy Statement to its stockholders and
to its shareholders, respectively. Each of Viacom and CBS shall also promptly
file, use reasonable best efforts to cause to become effective as promptly as
practicable and, if required, mail to its stockholders and shareholders,
respectively, any amendment to the Registration Statement or Proxy Statement
which may become necessary after the date the Registration Statement is
declared effective.
(b) (i) The Proxy Statement shall include the recommendation of the
Board of Directors of Viacom to the stockholders of Viacom in favor of
approval of the Viacom Proposal; provided, however, that the Board of
Directors of Viacom may take or disclose to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or make any
disclosure required under applicable Law and may, prior to the date of its
Stockholders' Meeting, withdraw, modify, or change any such recommendation to
the extent that the Board of Directors of Viacom determines in good faith that
such withdrawal, modification or change is required in order to comply with
its fiduciary duties to Viacom's stockholders under applicable Law after
receiving advice from independent legal counsel (who may be Viacom's regularly
engaged outside legal counsel).
(ii) The Proxy Statement shall include the recommendation of the
Board of Directors of CBS to the shareholders of CBS in favor of adoption of
this Agreement; provided, however, that the Board of Directors of CBS may take
or disclose to its shareholders a position contemplated by Rule 14e-2(a)
promulgated under the Exchange Act or make any disclosure required under
applicable Law and may, prior to the date of its Stockholders' Meeting,
withdraw, modify, or change any such recommendation to the extent that the
Board of Directors of CBS determines in good faith that such withdrawal,
modification or change is required in order to comply with its fiduciary
duties under applicable Law after receiving advice from independent legal
counsel (who may be CBS's regularly engaged outside legal counsel).
(c) Notwithstanding any withdrawal, modification or change in any
approval or recommendation of the Board of Directors of CBS or Viacom, as the
case may be, each of CBS and Viacom agree to hold their respective
Stockholders Meeting in accordance with the time period specified in Section
6.02.
(d) No amendment or supplement to the Proxy Statement or the
Registration Statement will be made by Viacom or CBS without the approval of
the other party, which shall not be unreasonably withheld or delayed. Each of
Viacom and CBS will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order,
the suspension of the qualification of the Viacom Class B Common Stock or the
Viacom Series C Preferred Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or
31
any request by the SEC for amendment of the Proxy Statement or the
Registration Statement or comments thereon and responses thereto or requests
by the SEC for additional information.
(e) The information supplied by CBS for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders and shareholders of
Viacom and CBS, respectively, (iii) the time of each of the Stockholders'
Meetings (as hereinafter defined), and (iv) the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. If at any time prior to the Effective Time any event
or circumstance relating to CBS or any of its subsidiaries, or their
respective officers or directors, should be discovered by CBS which, pursuant
to the Securities Act or Exchange Act, should be set forth in an amendment or
a supplement to the Registration Statement or Proxy Statement, CBS shall
promptly inform Viacom. All documents that CBS is responsible for filing with
the SEC in connection with the Merger will comply as to form in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act.
(f) The information supplied by Viacom for inclusion in the
Registration Statement and the Proxy Statement (including by incorporation by
reference) shall not, at (i) the time the Registration Statement is declared
effective, (ii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to the stockholders of Viacom and the
shareholders of CBS, (iii) the time of each of the Stockholders' Meetings, and
(iv) the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. If at any time prior to
the Effective Time any event or circumstance relating to Viacom or any of its
subsidiaries, or their respective officers or directors, should be discovered
by Viacom which, pursuant to the Securities Act or Exchange Act, should be set
forth in an amendment or a supplement to the Registration Statement or Proxy
Statement, Viacom shall promptly inform CBS. All documents that Viacom is
responsible for filing with the SEC in connection with the Merger will comply
as to form in all material respects with the applicable requirements of the
Securities Act and the Exchange Act.
(g) Viacom and CBS each hereby (i) consents to the use of its name
and, on behalf of its subsidiaries and affiliates, the names of such
subsidiaries and affiliates and to the inclusion of financial statements and
business information relating to such party and its subsidiaries and
affiliates (in each case, to the extent required by applicable securities
laws) in any registration statement or proxy statement prepared by Viacom, CBS
or any person or entity with which Viacom or CBS, consistent with their
obligations under this Agreement, has entered into, or may prior to the
Effective Time enter into, a definitive acquisition agreement, (ii) agrees to
use its reasonable best efforts to obtain the written consent of any person or
entity retained by it which may be required to be named (as an expert or
otherwise) in such registration statement or proxy statement; provided that
such party shall not be required to make any material payment to such person
or entity in connection with such party's efforts to obtain any such consent,
and (iii) agrees to cooperate, and agrees to use its reasonable best efforts
to cause its subsidiaries and affiliates to cooperate, with any legal counsel,
investment banker, accountant or other agent or representative retained by any
of the parties specified in clause (i) in connection with the preparation of
any and all information required, as determined after consultation with each
party's counsel, to be disclosed by applicable securities laws in any such
registration statement or proxy statement.
32
(h) CBS and Viacom will use their best efforts to complete the pro
forma financial statements with respect to the Merger, in a form suitable for
filing in connection with a registration statement under the Securities Act,
as soon as possible, and in any event within 10 days after the execution of
this Agreement.
(i) CBS shall consult with Viacom, and provide Viacom reasonable
opportunity to review and comment on, and CBS and Viacom will use their
respective reasonable best efforts to agree on, CBS's and Infinity's
accounting for the Pending Transactions.
SECTION 6.02. Stockholders' Meetings. Each of Viacom and CBS shall
call and hold a meeting of its stockholders or shareholders, respectively
(collectively, the "Stockholders' Meetings"), as promptly as practicable for
the purpose of voting upon, in the case of Viacom, the Viacom Proposal, and,
in the case of CBS, the adoption of this Agreement, and CBS and Viacom shall
hold the Stockholders' Meeting as soon as practicable after the date on which
the Registration Statement becomes effective and will use reasonable best
efforts to hold the Stockholders' Meetings on the same day. Each of Viacom and
CBS shall use its reasonable best efforts to solicit from its stockholders
proxies in favor of the adoption of this Agreement, in the case of CBS, and
the Viacom Proposal, in the case of Viacom, and shall take all other action
necessary or advisable to secure the vote of its stockholders and
shareholders, respectively, required by the NYSE, Pennsylvania Law or Delaware
Law, as applicable, to obtain such approvals; provided, however, that Viacom
or CBS, as applicable, shall not be obligated to solicit proxies in favor of
the adoption of this Agreement, in the case of CBS, or in favor of the Viacom
Proposal, in the case of Viacom, at its Stockholders' Meeting to the extent
that the Board of Directors of Viacom or CBS, as applicable, determines in
good faith that such failure to solicit proxies is required in order to comply
with its fiduciary duties under applicable Law after receiving advice to such
effect from independent legal counsel (who may be such party's regularly
engaged outside legal counsel); provided further, however, that
notwithstanding anything to the contrary in the foregoing, each of CBS and
Viacom shall hold its Stockholders Meeting in accordance with the time periods
specified in the first sentence of this Section 6.02.
SECTION 6.03. Appropriate Action; Consents; Filings. (a) Each of the
parties hereto shall (i) make promptly its respective filings, and thereafter
make any other required submissions under the HSR Act with respect to the
transactions contemplated herein and (ii) make promptly filings with or
applications to the FCC with respect to the transactions contemplated herein.
The parties hereto will use their respective best efforts, and will take all
actions necessary, to consummate and make effective the transactions
contemplated herein and to cause the conditions to the Merger set forth in
Article VII to be satisfied, (including using best efforts, and taking all
actions necessary, to obtain all licenses, permits, consents, approvals,
authorizations, waivers, qualifications and orders of Governmental Authorities
as are necessary for the consummation of the transactions contemplated
herein), and will do so in a manner designed to obtain such regulatory
clearance and the satisfaction of such conditions as expeditiously as
possible.
(b) CBS and Viacom each agree to take promptly any and all steps
necessary to avoid or eliminate each and every impediment and obtain all
consents or waivers under any antitrust, competition or communications or
broadcast Law that may be asserted by any U.S. federal, state and local and
non-United States antitrust or competition authority, or by the FCC or similar
authority, so as to enable the parties to close the transactions contemplated
by this Agreement as expeditiously as possible, including committing to or
effecting, by consent decree, hold separate orders, trust, or otherwise, the
sale or disposition of such of its assets or businesses as are required to be
divested in order to obtain the consent of the FCC to or avoid the entry of,
or to effect the dissolution of, any decree, order, judgment, injunction,
temporary restraining
33
order or other order in any suit or proceeding, that would otherwise have the
effect of preventing or materially delaying the consummation of the Merger and
the other transactions contemplated by this Agreement. In addition, each of
CBS and Viacom agree to take promptly any and all steps necessary to obtain
any consent or to vacate or lift any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority (each, an "Order") relating to antitrust or
communications or broadcast matters that would have the effect of making any
of the transactions contemplated by this Agreement illegal or otherwise
prohibiting or materially delaying their consummation. The parties will
expeditiously agree on a complete plan for compliance with applicable FCC
ownership requirements for inclusion in the FCC filings and will expeditiously
make such filings (including such agreed plan) with the FCC following the date
of this Agreement.
(c) Each of Viacom and CBS shall give (or shall cause its respective
subsidiaries to give) any notices to third parties, and Viacom and CBS shall
use, and cause each of its subsidiaries to use, its reasonable best efforts to
obtain any third party consents, necessary, proper or advisable to consummate
the Merger. Each of the parties hereto will furnish to the other such
necessary information and reasonable assistance as the other may request in
connection with the preparation of any required governmental filings or
submissions and will cooperate in responding to any inquiry from a
Governmental Authority, including immediately informing the other party of
such inquiry, consulting in advance before making any presentations or
submissions to a Governmental Authority, and supplying each other with copies
of all material correspondence, filings or communications between either party
and any Governmental Authority with respect to this Agreement.
SECTION 6.04. Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, to the extent permitted by applicable Law
and contracts, Viacom will provide to CBS (and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives, collectively, "Representatives") access to all information
and documents which CBS may reasonably request regarding the business, assets,
liabilities, employees and other aspects of Viacom.
(b) From the date hereof to the Effective Time, to the extent
permitted by applicable Law and contracts, CBS will provide to Viacom and its
Representatives access to all information and documents which Viacom may
reasonably request regarding the business, assets, liabilities, employees and
other aspects of CBS.
(c) The parties shall comply with, and shall cause their respective
Representatives to comply with all of their respective obligations under the
Confidentiality Agreement dated August 27, 1999 (the "Confidentiality
Agreement") between CBS and Viacom.
(d) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Competing Transactions. (a) CBS
shall not, directly or indirectly, through any officer, director, agent or
otherwise, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information), or take any other action knowingly to
facilitate, any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Competing Transaction (as defined
below), or enter into or maintain or continue discussions or negotiate with
any person or entity in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize
any of the officers, directors or employees of CBS or any investment
34
banker, financial advisor, attorney, accountant or other agent or
representative of CBS to take any such action, and CBS shall notify Viacom as
promptly as practicable of all of the relevant material details relating to
all inquiries and proposals which CBS or any such officer, director, employee,
investment banker, financial advisor, attorney, accountant or other agent or
representative may receive relating to any of such matters, provided, however,
that prior to the adoption of this Agreement by the shareholders of CBS,
nothing contained in this Section 6.05 shall prohibit the Board of Directors
of CBS from (i) furnishing information to, or entering into and engaging in
discussions or negotiations with, any person that makes a bona fide
unsolicited written proposal that the Board of Directors of CBS determines in
good faith, after consultation with CBS's financial advisors and independent
legal counsel, can be reasonably expected to result in a CBS Superior
Proposal; provided that prior to furnishing such information to, or entering
into discussions or negotiations with, such person, CBS (1) provides notice to
Viacom to the effect that it is furnishing information to, or entering into
discussions or negotiations with, such person and provides in any such notice
to Viacom in reasonable detail the identity of the person making such proposal
and the material terms and conditions of such proposal, (2) provides Viacom
with all information regarding CBS provided or to be provided to such person
which Viacom has not previously been provided, and provided further that CBS
shall keep Viacom informed, on a prompt basis, of the status and material
terms of any such proposal and the status of any such discussions and
negotiations and (3) receives from such person or entity an executed
confidentiality agreement containing customary terms (which need not contain
"standstill" or similar provisions), (ii) complying with Rule 14e-2
promulgated under the Exchange Act with regard to a tender or exchange offer
or making any disclosure required under applicable Law or (iii) failing to
make or withdrawing or modifying its recommendation referred to in Section
6.01 following the making of a CBS Superior Proposal if, solely in the case of
this clause (iii), the Board of Directors of CBS, after consultation with and
based upon the advice of independent legal counsel, determines in good faith
that such action is necessary for the Board of Directors of CBS to comply with
its fiduciary duties under applicable law.
(b) For purposes of this Agreement, "Competing Transaction" shall
mean any of the following involving CBS: (i) any merger, consolidation, share
exchange, business combination, issuance or purchase of securities or other
similar transaction other than transactions specifically permitted pursuant to
Section 5.01 of this Agreement; (ii) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition of the assets of CBS in a single
transaction or series of related transactions; (iii) any tender offer or
exchange offer for CBS securities or the filing of a registration statement
under the Securities Act in connection with any such exchange offer; in the
case of clauses (i), (ii) or (iii) above, which transaction would result in a
third party (or its shareholders) acquiring more than 35% of the voting power
of the Shares then outstanding or more than 35% of the assets of CBS and its
subsidiaries, taken as a whole; or (iv) any public announcement of an
agreement, proposal, plan or intention to do any of the foregoing, either
during the effectiveness of this Agreement or at any time thereafter.
(c) For purposes of this Agreement, a "CBS Superior Proposal" means
any proposal made by a third party which would result in such party (or in the
case of a parent-to-parent merger, its stockholders) acquiring, directly or
indirectly, including pursuant to a tender offer, exchange offer, merger,
consolidation, share exchange, business combination, share purchase, asset
purchase, recapitalization, liquidation, dissolution, joint venture or similar
transaction, more than 50% of the voting power of the Shares then outstanding
or all or substantially all the assets of CBS and its subsidiaries, taken as a
whole, for consideration which the Board of Directors of CBS determines in its
good faith judgment to be more favorable to CBS's shareholders than the
Merger.
35
SECTION 6.06. Directors' and Officers' Indemnification and
Insurance. (a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-laws of Viacom on the date of
this Agreement, which provisions shall not be amended, repealed or otherwise
modified after the Effective Time in any manner that would adversely affect
the rights thereunder of individuals who at any time prior to the Effective
Time were directors or officers of CBS in respect of actions or omissions
occurring at or prior to the Effective Time (including, without limitation,
the transactions contemplated by this Agreement), unless such modification is
required by law.
(b) The Surviving Corporation shall maintain in effect for six years
from the Effective Time directors' and officers' liability insurance covering
those persons who are currently covered by CBS's directors' and officers'
liability insurance policy on terms comparable to such existing insurance
coverage; provided, however, that in no event shall the Surviving Corporation
be required to expend pursuant to this Section 6.06 more than an amount per
year equal to 300% of current annual premiums paid by CBS for such insurance;
and provided further that if the annual premiums exceed such amount, Viacom
shall be obligated to obtain a policy with the greatest coverage available for
an annual cost not exceeding such amount.
(c) This Section 6.06 shall survive the consummation of the Merger,
is intended to benefit each indemnified party, shall be binding, jointly and
severally, on all successors and assigns of the Surviving Corporation, and
shall be enforceable by the indemnified parties and their successors.
SECTION 6.07. Notification of Certain Matters. CBS shall give prompt
notice to Viacom, and Viacom shall give prompt notice to CBS, of (i) the
occurrence, or nonoccurrence, of any event the occurrence, or nonoccurrence,
of which would be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of CBS or Viacom, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant
to this Section 6.07 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.08. Tax Treatment. (a) The Agreement is intended to
constitute a "plan of reorganization" within the meaning of Section 1.368-2(g)
of the income tax regulations promulgated under the Code.
(b) Between the date of this Agreement and the Effective Time,
neither CBS nor Viacom nor their affiliates shall directly or indirectly take
any action that could prevent the Merger from qualifying as a reorganization
under Section 368(a) of the Code, that could prevent each of them from
providing representations required from them in Sections 7.02(c) or 7.03(c),
or that could prevent the opinions described in such Sections from being
provided. Each of them shall use all reasonable efforts to cause the opinions
described in such Sections to be provided, and to cause similar opinions to be
provided at the date of filing of the Registration Statement.
(c) Neither CBS nor Viacom shall (without the consent of the other)
take any action, except as specifically contemplated by this Agreement, that
could adversely affect the intended tax treatment of the Pending Transactions.
SECTION 6.09. Stock Exchange Listing. Viacom shall as promptly as
reasonably practicable prepare and submit to NYSE a listing application
covering the shares of
36
Viacom Class B Common Stock to be issued in the Merger, the shares of Viacom
Class B Common Stock underlying the CBS Options outstanding immediately prior
to the Effective Time and the shares of Viacom Class B Common Stock issuable
upon conversion of the Viacom Series C Preferred Stock and shall use its best
efforts to cause such shares to be approved for listing on the NYSE prior to
the Effective Time.
SECTION 6.10. Public Announcements. Viacom and CBS shall consult
with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement and shall not issue any such
press release or make any such public statement without the prior consent of
the other (which consent shall not be unreasonably withheld or delayed),
except as may be required by Law or any listing agreement with the NYSE to
which Viacom or CBS is a party. The parties have agreed on the text of a joint
press release by which Viacom and CBS will announce the execution of this
Agreement.
SECTION 6.11. Viacom's Directors. The Board of Directors of Viacom
shall take all such action as may be necessary to cause the number of
directors on the Board of Directors of Viacom to be increased to eighteen as
of the Effective Time and to cause to be appointed to the Board of Directors
of Viacom as of the Effective Time eight designees of CBS, one of whom shall
be ▇▇▇ ▇▇▇▇▇▇▇▇ (unless ▇▇▇ ▇▇▇▇▇▇▇▇ shall no longer be available to serve in
such capacity) and the other seven of whom shall consist of CBS directors
designated in writing by CBS to Viacom prior to the Effective Time as set
forth in Exhibit A-1 hereto.
SECTION 6.12. Rights Agreement. The Board of Directors of CBS shall
take such action as is necessary to render the Rights inapplicable to the
Merger and the other transactions contemplated by this Agreement.
SECTION 6.13. Assumption of Debt and Leases. (a) With respect to
debt issued by CBS under indentures qualified under the Trust Indenture Act of
1939, and any other debt of CBS the terms of which require Viacom to assume
such debt in order to avoid default thereunder (collectively, the "CBS
Indentures"), Viacom shall execute and deliver to the trustees or other
representatives in accordance with the terms of the respective CBS Indentures,
Supplemental Indentures, in form satisfactory to the respective trustees or
other representatives, expressly assuming the obligations of CBS with respect
to the due and punctual payment of the principal of (and premium, if any) and
interest, if any, on all debt securities issued by CBS under the respective
Indentures and the due and punctual performance of all the terms, covenants
and conditions of the respective CBS Indentures to be kept or performed by CBS
and shall deliver such Supplemental Indentures to the respective trustees or
other representatives under the CBS Indentures.
(b) Viacom shall, promptly upon the reasonable request of CBS,
provide CBS with a letter which states that Viacom agrees that, as the
Surviving Corporation in the Merger, as of and following the Effective Time,
it will succeed to, honor, and satisfy all obligations and liabilities of CBS.
SECTION 6.14. Affiliates of CBS. CBS represents and warrants to
Viacom that prior to the date of the CBS Stockholders' Meeting CBS will
deliver to Viacom a letter identifying all persons who may be deemed
affiliates of CBS under Rule 145 of the Securities Act, including, without
limitation, all directors and executive officers of CBS, and CBS represents
and warrants to Viacom that CBS has advised the persons identified in such
letter of the resale restrictions imposed by applicable securities laws. CBS
shall use its reasonable best efforts to obtain from each person identified in
such letter a written agreement, substantially in the form of Exhibit 6.14.
CBS shall use its reasonable best efforts to obtain as soon as
37
practicable from any person who may be deemed to have become an affiliate of
CBS after CBS's delivery of the letter referred to above and prior to the
Effective Time, a written agreement substantially in the form of Exhibit 6.14.
SECTION 6.15. Prior Service. With respect to any medical and dental
benefits provided to Continuing Employees as of or following the Effective
Time under Viacom's benefit plans, Viacom agrees that it will waive waiting
periods and pre-existing condition requirements under such plans (to the
extent waived under CBS's plans), and will give Continuing Employees credit
for any co-payments and deductibles actually paid by such employees under
CBS's medical and dental plans during the calendar year in which the Effective
Time occurs. In addition, service with CBS shall be recognized for all
purposes under Viacom's compensation and benefit plans, programs, policies and
arrangements, except where crediting such service would result in a
duplication of benefits. Without limiting the generality of the foregoing,
Viacom shall honor all vacation, personal and sick days accrued by Continuing
Employees under CBS's plans, policies, programs and arrangements immediately
prior to the Effective Time.
SECTION 6.16. Employee Matters. (a) Viacom may establish retention
and severance arrangements for its officers or employees consistent with the
terms and conditions set forth in Section 6.16 of the Viacom Disclosure
Schedule (the "Viacom Employee Arrangements").
(b) CBS may establish retention and severance and similar
compensation arrangements for its officers or employees; provided that the
aggregate amount expended pursuant to such arrangements does not materially
exceed the estimated value of the Viacom Employee Arrangements.
(c) Each of CBS and Viacom shall consult with the other on the
design and implementation of the retention arrangements and the allocations of
the payments thereunder.
SECTION 6.17. ▇▇▇▇▇▇▇. CBS shall, if permitted under the terms of
the ▇▇▇▇▇▇▇ Proxy, exercise its rights under the ▇▇▇▇▇▇▇ Proxy to vote the
shares of CBS Series B Preferred Stock held by ▇▇▇▇▇▇▇ in favor of adoption of
this Agreement at the CBS Stockholders' Meeting, or any adjournment or
postponement thereof, and shall not waive or transfer to any person its rights
under the ▇▇▇▇▇▇▇ Proxy.
SECTION 6.18. ▇▇▇▇▇▇▇ Tax Matters. CBS covenants and agrees that,
between October 8, 1999 and the Effective Time, CBS shall not, without
Viacom's consent, take any action or permit any action to be taken that would
cause Viacom to be in violation of any provision of the First Amendment to the
Amended and Restated Tax Matters Agreement (as referred to in the ▇▇▇▇▇▇▇
Agreement) at the time such amendment is executed in the form attached as
Annex A to the Amended and Restated Tax Matters Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Obligations of Each Party. The
obligations of CBS and Viacom to consummate the Merger are subject to the
satisfaction or waiver of the following conditions:
(a) (i) this Agreement shall have been adopted by the affirmative
vote of a majority of the votes cast by all shareholders entitled to vote
at the CBS Stockholders'
38
Meeting in accordance with Pennsylvania Law and CBS's Articles of
Incorporation and (ii) the Viacom Proposal shall have been approved by
the affirmative vote of the holders of a majority of the Viacom Class A
Common Stock;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no Governmental Authority or court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any Law,
rule, regulation, executive order or Order which is then in effect and
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger;
(d) the Registration Statement shall have been declared effective,
and no stop order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall be
pending before or threatened by the SEC;
(e) (i) all authorizations, consents, waivers, orders or approvals
for the Merger required to be obtained and all conditions precedent to
such authorizations, consents, waivers, orders or approvals shall have
been satisfied, and all filings, notices or declarations required to be
made, by Viacom and CBS prior to the consummation of the Merger and the
transactions contemplated hereunder, shall have been obtained from, and
made with, the FCC and competition and antitrust Governmental Authorities
in Canada and either the European Union or the United Kingdom, as
applicable, and (ii) all other authorizations, consents, waivers, orders
or approvals for the Merger required to be obtained, and all other
filings, notices or declarations required to be made, by Viacom and CBS
prior to the consummation of the Merger and the transactions contemplated
hereunder, shall have been obtained from, and made with, all required
Governmental Entities, except for such authorizations, consents, waivers,
orders, approvals, filings, notices or declarations the failure to obtain
or make which would not have a material adverse effect, at or after the
Effective Time, on the business, results of operations or financial
condition of CBS and its subsidiaries and Viacom and its subsidiaries,
collectively taken as a whole; and
(f) the shares of Viacom Class B Common Stock issuable to CBS's
shareholders in the Merger, to holders of CBS Options outstanding
immediately prior to the Effective Time and upon conversion of the Viacom
Series C Preferred Stock shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
SECTION 7.02. Conditions to the Obligations of Viacom. The
obligations of Viacom to consummate the Merger are subject to the satisfaction
or waiver of the following further conditions:
(a) each of the representations and warranties of CBS contained in
this Agreement shall be true and correct as of the Effective Time as
though made on and as of the Effective Time (except to the extent
expressly made as of an earlier date, in which case as of such date),
except where the failure to be so true and correct would not have,
individually or in the aggregate, a CBS Material Adverse Effect, and
Viacom shall have received a certificate of an officer of CBS to such
effect;
(b) CBS shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to
be performed or
39
complied with by it on or prior to the Effective Time, and Viacom shall
have received a certificate of an officer of CBS to that effect; and
(c) Viacom shall have received the opinion of ▇▇▇▇, Weiss, Rifkind,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, in form and substance reasonably satisfactory to
Viacom, to the effect that the Merger will be treated for federal income
tax purposes as a reorganization qualifying under the provisions of
Section 368(a) of the Code, and Viacom and CBS will each be a party to
the reorganization within the meaning of Section 368(b) of the Code. In
rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of CBS and Viacom.
SECTION 7.03. Conditions to the Obligations of CBS. The obligations
of CBS to consummate the Merger are subject to the satisfaction or waiver of
the following further conditions:
(a) each of the representations and warranties of Viacom contained
in this Agreement shall be true and correct as of the Effective Time as
though made on and as of the Effective Time (except to the extent
expressly made as of an earlier date, in which case as of such date),
except where failure to be so true and correct would not have,
individually or in the aggregate, a Viacom Material Adverse Effect, and
CBS shall have received a certificate of an officer of Viacom to such
effect;
(b) Viacom shall have performed or complied in all material respects
with all material agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective Time,
and CBS shall have received a certificate of an officer of Viacom to that
effect; and
(c) CBS shall have received the opinion of Cravath, Swaine & ▇▇▇▇▇,
in form and substance reasonably satisfactory to CBS, to the effect that
the Merger will be treated for federal income tax purposes as a
reorganization qualifying under the provisions of Section 368(a) of the
Code, and Viacom and CBS will each be a party to such reorganization
within the meaning of Section 368(b) of the Code. In rendering such
opinion, counsel may require and rely upon representations contained in
certificates of officers of Viacom and CBS.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement, as
follows:
(a) by mutual written consent duly authorized by the Boards of
Directors of each of Viacom and CBS;
(b) by either Viacom or CBS, if the Effective Time shall not have
occurred on or before August 31, 2000; provided, however, that the right
to terminate this Agreement under this Section 8.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur by such time;
40
(c) by CBS upon delivery to Viacom of written notice that a
Competing Proposal constitutes a CBS Superior Proposal; provided,
however, that such termination pursuant to this subsection (c) shall not
be effective until two business days have elapsed following delivery to
Viacom of such written notice (which written notice will inform Viacom of
the material terms and conditions of the CBS Superior Proposal); provided
further, however, that such termination under this subsection (c) shall
not be effective until CBS has made payment to Viacom of the amounts
required to be paid pursuant to Section 8.05;
(d) by either CBS or Viacom, if this Agreement shall fail to receive
the requisite vote for adoption at the CBS Stockholders' Meeting;
(e) by CBS, upon a breach of any representation, warranty, covenant
or agreement on the part of Viacom set forth in this Agreement, or if any
representation or warranty of Viacom shall have become untrue, in either
case such that the conditions set forth in Sections 7.03(a) or (b) are
not capable of being satisfied on or before August 31, 2000 (a
"Terminating Viacom Breach");
(f) by Viacom, upon breach of any representation, warranty, covenant
or agreement on the part of CBS set forth in this Agreement, or if any
representation or warranty of CBS shall have become untrue, in either
case such that the conditions set forth in Sections 7.02(a) or (b) are
not capable of being satisfied on or before August 31, 2000 ("Terminating
CBS Breach"); or
(g) by either Viacom or CBS, if any Governmental Authority shall
have issued an Order or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement, and such Order or other action shall have become final and
nonappealable.
SECTION 8.02. Effect of Termination. Subject to Section 8.05 hereof,
in the event of termination of this Agreement pursuant to Section 8.01, this
Agreement shall forthwith become void, there shall be no liability under this
Agreement on the part of Viacom or CBS or any of their respective officers or
directors and all rights and obligations of each party hereto shall cease;
provided, however, that nothing herein shall relieve any party from liability
for the willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
SECTION 8.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective Boards of
Directors at any time prior to the Effective Time; provided, however, that,
after the approval and adoption of this Agreement by either the stockholders
of Viacom or shareholders of CBS, there shall not be any amendment that by Law
requires further approval by the stockholders of Viacom or shareholders of CBS
without the further approval of such stockholders or such shareholders. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
SECTION 8.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) subject to the proviso of Section 8.03, waive
compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
41
SECTION 8.05. Expenses. (a) Except as set forth in this Section
8.05, all Expenses (as defined below) incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger or any other
transaction is consummated, except that CBS and Viacom each shall pay one-half
of all Expenses relating to (i) printing, filing and mailing the Registration
Statement and the Proxy Statement and all SEC and other regulatory filing fees
incurred in connection with the Registration Statement and the Proxy
Statement, (ii) any filing with the FCC or similar authority and (iii) any
filing with antitrust authorities. "Expenses" as used in this Agreement shall
include all reasonable out-of-pocket expenses (including all fees and expenses
of counsel, accountants, investment bankers, experts and consultants to a
party hereto and its affiliates) incurred by a party or on its behalf in
connection with or related to the authorization, preparation, negotiation,
execution and performance of this Agreement, the preparation, printing, filing
and mailing of the Registration Statement and the Proxy Statement, the
solicitation of stockholder and shareholder approvals, the filing of any
required notices under the HSR Act or other similar regulations and all other
matters related to the closing of the Merger and the other transactions
contemplated by this Agreement.
(b) CBS agrees that:
(i) if CBS shall terminate this Agreement pursuant to Section
8.01(c); or
(ii) if (A) Viacom or CBS shall terminate this Agreement pursuant to
Section 8.01(d) due to the failure of CBS's shareholders to approve this
Agreement, (B) at or prior to the time of such failure to so approve this
Agreement a Competing Transaction with respect to CBS shall have been
made public and (C) within twelve months after such termination (i) a
Competing Transaction is consummated or (ii) a binding agreement to enter
into a Competing Transaction is entered into by CBS (solely for purposes
of this Section 8.05(b)(ii), the term "Competing Transaction" shall have
the meaning assigned to such term in Section 6.05(b) except that
references to "35%" in the definition of "Competing Transaction" in
Section 6.05(b) shall be deemed to be references to 50%),
then CBS shall pay to Viacom an amount equal to $1,000,000,000 (the "CBS
Alternative Transaction Fee").
(c) Each of CBS and Viacom agrees that the agreements contained in
Section 8.05(b) are an integral part of the transactions contemplated by this
Agreement.
(d) All payments to Viacom under this Section 8.05 shall be made by
wire transfer of immediately available funds to an account designated by
Viacom.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
and any certificate delivered pursuant hereto by any person shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to
Section 8.01, as the case may be, except that this Section 9.01 shall not
limit any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time or after termination of this Agreement.
42
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by delivery
in person, by facsimile, by courier service or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 9.02):
if to Viacom:
Viacom Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Senior Vice President,
General Counsel and Secretary
with a copy to:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ O'▇. ▇▇▇▇▇▇, Esq. and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
if to CBS:
CBS Corporation
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Executive Vice President and
General Counsel
with copies to:
Cravath, Swaine & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq. and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
SECTION 9.03. Interpretation, Certain Definitions. When a reference
is made in this Agreement to an Article, Section or Exhibit, such reference
shall be to an Article or Section of, or an Exhibit to, this Agreement unless
otherwise indicated. The table of contents and headings for this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation". The words "hereof", "herein" and "hereunder"
and words of similar import
43
when used in this Agreement shall refer to this Agreement as a whole and not
to any particular provision of this Agreement. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any statute defined
or referred to herein or in any agreement or instrument that is referred to
herein means such statute as from time to time amended, modified or
supplemented, including (in the case of statutes) by succession of comparable
successor statutes. References to a person are also its permitted successors
and assigns.
For purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any shares means a person who
shall be deemed to be the beneficial owner of such shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates
or associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of consideration rights, exchange rights, warrants
or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person
or any of its affiliates or associates or any person with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any such shares;
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "Governmental Authority" means any United States (federal, state
or local) or foreign government, or governmental, regulatory or
administrative authority, agency or commission;
(f) "knowledge" means the actual knowledge of the following officers
and employees of CBS and Viacom, without benefit of an independent
investigation of any matter, as to (i) CBS: ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and (ii) Viacom: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇;
44
(g) "person" means an individual, corporation, limited liability
company, partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(h) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either above or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock or
other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Merger is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
in order that the Merger be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement
(including the Exhibits, the CBS Disclosure Schedule and the Viacom Disclosure
Schedule which are hereby incorporated herein and made a part hereof for all
purposes as if fully set forth herein), the Parent Voting Agreements and the
Confidentiality Agreement constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements
and undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof. The parties agree to comply with
all covenants and agreements set forth on the CBS Disclosure Schedule and the
Viacom Disclosure Schedule as if such covenants and agreements were fully set
forth in this Agreement. This Agreement shall not be assigned by operation of
law or otherwise.
SECTION 9.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Article II and Section 6.06 (which are
intended to be for the benefit of the persons covered thereby and may be
enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 9.08. Governing Law. This Agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware, except for
such provisions where Pennsylvania Law is mandatorily applicable, which
provisions shall be governed by and construed in accordance with the laws of
the Commonwealth of Pennsylvania.
45
SECTION 9.09. Consent to Jurisdiction. (a) Each of Viacom and CBS
hereby irrevocably submits to the exclusive jurisdiction of the courts of the
State of Delaware and to the jurisdiction of the United States District Court
for the State of Delaware, for the purpose of any action or proceeding arising
out of or relating to this Agreement and each of Viacom and CBS hereby
irrevocably agrees that all claims in respect to such action or proceeding may
be heard and determined exclusively in any Delaware state or federal court.
Each of Viacom and CBS agrees that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
(b) Each of Viacom and CBS irrevocably consents to the service of
the summons and complaint and any other process in any other action or
proceeding relating to the transactions contemplated by this Agreement, on
behalf of itself or its property, by personal delivery of copies of such
process to such party. Nothing in this Section 9.09 shall affect the right of
any party to serve legal process in any other manner permitted by law.
SECTION 9.10. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF VIACOM AND CBS HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF VIACOM OR CBS IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Viacom and CBS have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
VIACOM INC.
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Senior Vice President
CBS CORPORATION
By:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President,
Chief Financial Officer
EXHIBIT A-1 TO THE
MERGER AGREEMENT
RESTATED CERTIFICATE OF INCORPORATION
OF
VIACOM INC.
(Originally incorporated on November 10, 1986 under the name Arsenal Holdings,
Inc.)
ARTICLE I
NAME
The name of this Corporation is Viacom Inc.
ARTICLE II
REGISTERED OFFICE AND AGENT FOR SERVICE
The registered office of the Corporation in the State of Delaware is
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle. The
name and address of the Corporation's registered agent for service of process
in Delaware is:
Corporation Service Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
ARTICLE III
CORPORATE PURPOSES
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
ARTICLE IV
CAPITAL STOCK
(1) Shares, Classes and Series Authorized.
(a) The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 3,525,000,000
shares. The classes and the aggregate number of shares of stock of
each class which the Corporation shall have authority to issue are
as follows:
1
(i) 500,000,000 shares of Class A Common Stock, $0.01 par value
("Class A Common Stock).
(ii) 3,000,000,000 shares of Class B Common Stock, $0.01 par
value ("Class B Common Stock").
(iii) 25,000,000 shares of Preferred Stock, $0.01 par value
("Preferred Stock").
(b) The number of authorized shares of Class B Common Stock may be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by the affirmative vote of the holders of
a majority of the stock of the Corporation entitled to vote.
(2) Powers and Rights of the Class A Common Stock and the Class B Common
Stock.
Except as otherwise expressly provided in this Restated Certificate
of Incorporation, all issued and outstanding shares of Class A Common Stock
and Class B Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges.
A. Voting Rights and Powers. Except as otherwise provided in
this Restated Certificate of Incorporation or required by law, with
respect to all matters upon which stockholders are entitled to vote,
the holders of the outstanding shares of Class A Common Stock shall
vote together with the holders of any other outstanding shares of
capital stock of the Corporation entitled to vote, without regard to
class, and every holder of outstanding shares of Class A Common
Stock shall be entitled to cast thereon one vote in person or by
proxy for each share of Class A Common Stock standing in his name.
The holders of shares of Class A Common Stock shall have the
relevant class voting rights set forth in Article IX. Except as
otherwise required by law, the holders of outstanding shares of
Class B Common Stock shall not be entitled to any votes upon any
questions presented to stockholders of the Corporation, including
but not limited to, whether to increase or decrease (but not below
the number of shares then outstanding) the number of authorized
shares of Class B Common Stock.
B. Dividends. Subject to the rights and preferences of the
Preferred Stock set forth in this Article IV and in any resolution
or resolutions providing for the issuance of such stock as set forth
in Section (3) of this Article IV, the holders of Class A Common
Stock and Class B Common Stock shall be entitled to receive ratably
such dividends as may from time to time be declared by
2
the Board of Directors out of funds legally available therefor.
C. Distribution of Assets Upon Liquidation. In the event the
Corporation shall be liquidated, dissolved or wound up, whether
voluntarily or involuntarily, after there shall have been paid or
set aside for the holders of all shares of the Preferred Stock then
outstanding the full preferential amounts to which they are entitled
under Section 5 of this Article IV or the resolutions, as the case
may be, authorizing the issuance of such Preferred Stock, the net
assets of the Corporation remaining thereafter shall be divided
ratably among the holders of Class A Common Stock and Class B Common
Stock.
D. Split, Subdivision or Combination. If the Corporation shall
in any manner split, subdivide or combine the outstanding shares of
Class A Common Stock or Class B Common Stock, the outstanding shares
of the other class of Common Stock shall be proportionally split,
subdivided or combined in the same manner and on the same basis as
the outstanding shares of the other class of Common Stock have been
split, subdivided or combined.
E. Conversion. So long as there are 10,000 shares of Class A
Common Stock outstanding, each record holder of shares of Class A
Common Stock may convert any or all of such shares into an equal
number of shares of Class B Common Stock by surrendering the
certificates for such shares, accompanied by payment of documentary,
stamp or similar issue or transfer taxes, if any, along with a
written notice by such record holder to the Corporation stating that
such record holder desires to convert such shares into the same
number of shares of Class B Common Stock and requesting that the
Corporation issue all of such Class B Common Stock to the persons
named therein, setting forth the number of shares of Class B Common
Stock to be issued to each such person and the denominations in
which the certificates therefor are to be issued.
(3) Powers and Rights of the Preferred Stock.
Subject to Article XIII of this Restated Certificate of
Incorporation, the Preferred Stock may be issued from time to time in one or
more series, with such distinctive serial designations as may be stated or
expressed in the resolution or resolutions providing for the issue of such
stock adopted from time to time by the Board of Directors; and in such
resolution or resolutions providing for the issuance of shares of each
particular series, the Board of Directors is also expressly authorized to fix:
the right to vote, if any;
3
the consideration for which the shares of such series are to be issued; the
number of shares constituting such series, which number may be increased
(except as otherwise fixed by the Board of Directors) or decreased (but not
below the number of shares thereof then outstanding) from time to time by
action of the Board of Directors; the rate of dividends upon which and the
times at which dividends on shares of such series shall be payable and the
preference, if any, which such dividends shall have relative to dividends on
shares of any other class or classes or any other series of stock of the
Corporation; whether such dividends shall be cumulative or noncumulative, and,
if cumulative, the date or dates from which dividends on shares of such series
shall be cumulative; the rights, if any, which the holders of shares of such
series shall have in the event of any voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets, dissolution or winding
up of the affairs of the Corporation; the rights, if any, which the holders of
shares of such series shall have to convert such shares into or exchange such
shares for shares of any other class or classes or any other series of stock
of the Corporation or for any debt securities of the Corporation and the terms
and conditions, including, without limitation, price and rate of exchange, of
such conversion or exchange; whether shares of such series shall be subject to
redemption, and the redemption price or prices and other terms of redemption,
if any, for shares of such series including, without limitation, a redemption
price or prices payable in shares of Class A Common Stock or ClassB Common
Stock; the terms and amounts of any sinking fund for the purchase or
redemption of shares of such series; and any and all other powers, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof pertaining to shares of
such series permitted by law.
(4) Issuance of Class A Common Stock, Class B Common Stock and Preferred
Stock.
Subject to Article XIII of this Restated Certificate of
Incorporation, the Board of Directors of the Corporation may from time to time
authorize by resolution the issuance of any or all shares of Class A Common
Stock, Class B Common Stock and Preferred Stock herein authorized in
accordance with the terms and conditions set forth in this Restated
Certificate of Incorporation for such purposes, in such amounts, to such
persons, corporations, or entities, for such consideration, and in the case of
the Preferred Stock, in one or more series, all as the Board of Directors in
its discretion may determine and without any vote or other action by any of
the stockholders of the Corporation, except as otherwise required by law.
4
(5) Series C Preferred Stock
(a). DESIGNATION AND AMOUNT. The shares of this series shall be
designated as "Series C Preferred Stock" (the "Series C Preferred Stock"). The
par value of each share of Series C Preferred Stock shall be $.01. The number
of shares constituting the Series C Preferred Stock shall initially be the
Preferred Exchange Ratio (as defined in the Amended and Restated Agreement and
Plan of Merger dated as of September 6, 1999, as amended and restated as of
October 8, 1999, as it may be further amended from time to time, among the
Corporation and CBS (as defined in Article XIII of this Restated Certificate
of Incorporation)(the "Merger Agreement")) multiplied by the number of shares
of CBS Series B Participating Preferred Stock, par value $1.00 per share,
issued and outstanding immediately prior to the Effective Time (as defined in
the Merger Agreement). The Corporation is authorized to issue fractional
shares of Series C Preferred Stock to 1/1000th of a share in accordance with
the terms herein. All references herein to shares of Series C Preferred Stock
shall be deemed to include, if applicable, references to such fractional
shares.
(b). DIVIDENDS AND DISTRIBUTIONS.
(1) Subject to the provisions for adjustment hereinafter set forth,
the holders of outstanding shares of Series C Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, a cash dividend in an amount per
share (rounded to the nearest cent) equal to 1000 times the aggregate per
share amount of each cash dividend declared or paid on the Class B Common
Stock. In addition, in the event the Corporation shall, at any time after the
issuance of any share or fraction of a share of Series C Preferred Stock, pay
any dividend or make any distribution on the shares of Class B Common Stock of
the Corporation, whether by way of a dividend or a reclassification of stock,
a recapitalization, reorganization or partial liquidation of the Corporation
or otherwise, which is payable in cash or any debt security, debt instrument,
real or personal property or any other property (other than (x) cash dividends
subject to the immediately preceding sentence, (y) a distribution of shares of
Class B Common Stock or other capital stock of the Corporation subject to
paragraph (h)(1) below or (z) a distribution of rights or warrants to acquire
any such shares subject to paragraph (h)(3) or (h)(5) below, including as such
a right any debt security convertible into or exchangeable for any such
shares, at a price less than the Fair Market Value (as hereinafter defined) of
such shares on the date of issuance of such
5
rights or warrants), then, and in each such event, the Corporation shall
simultaneously pay on each then outstanding share of Series C Preferred Stock
a distribution, in like kind, of 1000 times such distribution paid on a share
of Class B Common Stock (subject to the provisions for adjustment hereinafter
set forth). The dividends and distributions on the Series C Preferred Stock to
which holders thereof are entitled pursuant to the first and second sentences
of this paragraph (b)(1) are hereinafter referred to as "Dividends" and the
multiple of such cash and non-cash dividends and distributions on the Class B
Common Stock applicable to the determination of the Dividends, which shall be
1000 initially but shall be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Dividend Multiple." In the event
the Corporation shall, at any time after the issuance of any share or fraction
of a share of Series C Preferred Stock, declare or pay any dividend or make
any distribution on Class B Common Stock payable in shares of Class B Common
Stock, or effect a subdivision or split or a combination, consolidation or
reverse split of the outstanding shares of Class B Common Stock into a greater
or lesser number of shares of Class B Common Stock, then in each such case the
Dividend Multiple thereafter applicable to the determination of the amount of
Dividends which holders of shares of Series C Preferred Stock shall be
entitled to receive shall be the Dividend Multiple applicable immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Class B Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class B Common
Stock that were outstanding immediately prior to such event.
(2) The Corporation shall declare each Dividend at the same time it
declares any cash or non-cash dividend or distribution on the Class B Common
Stock in respect of which a Dividend is required to be paid. No cash or
non-cash dividend or distribution on the Class B Common Stock in respect of
which a Dividend is required to be paid shall be paid or set aside for payment
on the Class B Common Stock unless a Dividend in respect of such dividend or
distribution on the Class B Common Stock shall be simultaneously paid, or set
aside for payment, on the Series C Preferred Stock.
(3) All Dividends paid with respect to shares of the Series C
Preferred Stock shall be paid pro rata on a share-by-share basis to the
holders entitled thereto.
(4) The holders of shares of Series C Preferred Stock shall not be
entitled to receive any dividends or distributions except as provided herein.
6
(c). VOTING RIGHTS. The holders of record of outstanding shares of
Series C Preferred Stock shall have the following voting rights:
(1) Subject to the provisions for adjustment hereinafter set forth,
each share of Series C Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the holders of the Common Stock.
The number of votes which a holder of a share of Series C Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple." In the event the
Corporation shall, at any time after the issuance of any share or fraction of
a share of Series C Preferred Stock, declare or pay any dividend on Class A
Common Stock, payable in shares of Class A Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Class A Common Stock into a greater or lesser number of
shares of Class A Common Stock, then in each such case the Vote Multiple
thereafter applicable to the determination of the number of votes per share to
which holders of shares of Series C Preferred Stock shall be entitled after
such event shall be the Vote Multiple applicable immediately prior to such
event multiplied by a fraction the numerator of which is the number of shares
of Class A Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Class A Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided in this Restated Certificate of
Incorporation or required by law, the holders of shares of Series C Preferred
Stock and the holders of shares of Class A Common Stock shall vote together as
one class on all matters submitted to a vote of shareholders of the
Corporation.
(3) Except as otherwise provided in this Restated Certificate of
Incorporation or required by law, holders of Series C Preferred Stock shall
have no other special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Class A Common
Stock as set forth herein) for the taking of any corporate action.
(d). CONVERSION. The shares of Series C Preferred Stock shall be
convertible as follows:
(1) Each share of Series C Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of
such share at the office of the Corporation or any transfer agent for the
Series C
7
Preferred Stock. Subject to the provisions for adjustment hereinafter set
forth, each share of Series C Preferred Stock shall be convertible into 1000
shares of Class B Common Stock. The number of shares of Class B Common Stock
into which each share of Series C Preferred Stock may be converted is
hereinafter referred to as the "Conversion Rate." In the event the Corporation
shall, at any time after the issuance of any share or fraction of a share of
Series C Preferred Stock, declare or pay any dividend or make any distribution
on Class B Common Stock payable in shares of Class B Common Stock, or effect a
subdivision or split or a combination, consolidation or reverse split of the
outstanding shares of Class B Common Stock into a greater or lesser number of
shares of Class B Common Stock, then in each such case the Conversion Rate
thereafter applicable shall be the Conversion Rate applicable immediately
prior to such event multiplied by a fraction the numerator of which is the
number of shares of Class B Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Class B Common
Stock that were outstanding immediately prior to such event.
(2) No fractional shares of Class B Common Stock shall be issued upon
conversion of the Series C Preferred Stock. In lieu of any fractional shares
to which the holder would otherwise be entitled, the Corporation shall pay
cash equal to such fraction multiplied by the then Fair Market Value per share
of the Class B Common Stock. For such purpose, all shares of Series C
Preferred Stock being converted by a holder shall be aggregated, and any
resulting fractional share of Class B Common Stock shall be paid in cash.
Before any holder of shares of Series C Preferred Stock shall be entitled to
convert the same into full shares of Class B Common Stock, and to receive
certificates therefor, the holder shall surrender the certificate or
certificates representing the shares of Series C Preferred Stock, duly
endorsed, at the office of the Corporation or of any transfer agent for the
Series C Preferred Stock, and shall give written notice to the Corporation at
such office that such holder elects to convert the same.
The Corporation shall, as soon as practicable after such delivery, issue
and deliver at such office to such holder of Series C Preferred Stock a
certificate or certificates for the number of shares of Class B Common Stock
to which such holder shall be entitled and a check payable to such holder in
the amount of any cash amount payable as the result of a conversion into
fractional shares of Class B Common Stock, plus any declared and unpaid
dividends on the converted Series C Preferred Stock. Such conversion shall be
deemed to have been made immediately
8
prior to the close of business on the date of receipt of such surrender of the
shares of Series C Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Class B Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Class B Common Stock on such date.
(3) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class B Common Stock, solely for the
purpose of effecting the conversion of the shares of Series C Preferred Stock,
such number of shares of Class B Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding shares of Series C
Preferred Stock.
(4) Any notice required by the provisions of this Section 4 to be given
to the holders of shares of Series C Preferred Stock or to the Corporation
shall be given via facsimile transmission or via certified or registered U.S.
mail or via private overnight delivery service, if to the holder, at
(▇▇▇) ▇▇▇-▇▇▇▇ or such holder's address appearing on the books of the
Corporation, and if to the Corporation, at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇,
attention General Counsel, facsimile no.: ▇▇▇-▇▇▇-▇▇▇▇, or such other
facsimile number or address as the holder or the Corporation shall notify the
other of in accordance with the notice provisions set forth in this
paragraph (d)(5). Notice shall be deemed to have been given on the date of
facsimile transmission (if the notice is faxed) or five days after mailing (if
the notice is mailed) or the day after the notice is given to the delivery
service (if sent by overnight courier).
(e). CERTAIN RESTRICTIONS.
(1) Whenever Dividends are in arrears or the Corporation shall be in
default on payment thereof, thereafter and until all accrued and unpaid
Dividends, whether or not declared, on shares of Series C Preferred Stock
outstanding shall have been paid or set irrevocably aside for payment in full,
and in addition to any and all other rights which any holder of shares of
Series C Preferred Stock may have in such circumstances, the Corporation shall
not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration, any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series C Preferred Stock;
9
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity as to dividends with the Series C
Preferred Stock, unless dividends are paid ratably on the Series C
Preferred Stock and all such parity stock on which dividends are payable
or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled if the full dividends accrued thereon
were to be paid;
(iii) except as permitted by subparagraph (iv) of this paragraph
(e)(1), redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series C Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares
of any stock of the Corporation ranking junior (both as to dividends and
upon liquidation, dissolution or winding up) to the Series C Preferred
Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series C Preferred Stock, or any shares of stock ranking on a parity with
the Series C Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up) except as permitted by subparagraph (iii) of
this paragraph (e)(1) or in accordance with a purchase offer made to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative
rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
(2) The Corporation shall not permit any Subsidiary (as hereinafter
defined) of the Corporation to purchase or otherwise acquire for consideration
any shares of stock of the Corporation unless the Corporation could, under
subparagraph (1) of this paragraph (e), purchase or otherwise acquire such
shares at such time and in such manner. A "Subsidiary" of the Corporation
shall mean any corporation or other entity of which securities or other
ownership interests entitled to cast at least a majority of the votes that
would be entitled to be cast in an election of the board of directors of such
corporation or other entity or other persons performing similar functions are
beneficially owned, directly or indirectly, by the Corporation or by any
corporation or other entity that is otherwise controlled by the Corporation.
10
(3) The Corporation shall not issue any shares of Series C Preferred
Stock except pursuant to the Merger Agreement, a copy of which is on file with
the Secretary of the Corporation at its principal executive offices and shall
be made available to holders of Series C Preferred Stock without charge upon
written request therefor addressed to the Secretary of the Corporation at the
address set forth in paragraph (d)(4) above. Notwithstanding the foregoing
sentence, nothing contained in the provisions of this Article IV shall
prohibit or restrict the Corporation from issuing for any purpose any series
of Preferred Stock with rights and privileges similar to, different from, or
greater than, those of the Series C Preferred Stock or, subject to the
limitations set forth in paragraph (n), from creating other securities senior
to, junior to or on a parity with the Series C Preferred Stock.
(f). REACQUIRED SHARES. Any shares of Series C Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares upon their retirement and cancellation shall become authorized but
unissued shares of Preferred Stock, without designation as to series, and such
shares may be redesignated and reissued as part of any series of Preferred
Stock.
(g). LIQUIDATION, DISSOLUTION OR WINDING UP.
(1) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, no distribution shall be made (i) to the
holders of shares of stock ranking junior (upon liquidation, dissolution or
winding up) to the Series C Preferred Stock unless the holders of shares of
Series C Preferred Stock outstanding shall have received out of the assets of
the Corporation available for distribution to its shareholders after payment
or provision for payment of any securities ranking senior to the Series C
Preferred Stock, for each share of Series C Preferred Stock, subject to
adjustment as hereinafter provided, (A) $.01 plus an amount equal to accrued
and unpaid dividends and distributions thereon, whether or not declared, to
the date of such payment or, (B) if greater than the amount specified in
clause (i)(A) of this sentence, an amount equal to 1000 times the aggregate
amount to be distributed per share to holders of Class B Common Stock, as the
same may be adjusted as hereinafter provided, and (ii) to the holders of stock
ranking on a parity upon liquidation, dissolution or winding up with the
Series C Preferred Stock, unless simultaneously therewith distributions are
made ratably on the Series C Preferred Stock and all other shares of such
parity stock in
11
proportion to the total amounts to which the holders of shares of Series C
Preferred Stock are entitled under clause (i)(A) of this sentence and to which
the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series
C Preferred Stock may be entitled upon liquidation, dissolution or winding up
of the Corporation pursuant to clause (i)(B) of the foregoing sentence is
hereinafter referred to as the "Participation Liquidation Amount" and the
multiple of the amount to be distributed to holders of shares of Class B
Common Stock upon the liquidation, dissolution or winding up of the
Corporation applicable pursuant to said clause to the determination of the
Participating Liquidation Amount, as said multiple may be adjusted from time
to time as hereinafter provided, is hereinafter referred to as the
"Liquidation Multiple". In the event the Corporation shall, at any time after
the issuance of any share or fraction of a share of Series C Preferred Stock,
declare or pay any dividend or make any distribution on Class B Common Stock
payable in shares of Class B Common Stock, or effect a subdivision or split or
a combination, consolidation or reverse split of the outstanding shares of
Class B Common Stock into a greater or lesser number of shares of Class B
Common Stock, then in each such case the Liquidation Multiple thereafter
applicable to the determination of the Participating Liquidation Amount to
which holders of Series C Preferred Stock shall be entitled after such event
shall be the Liquidation Multiple applicable immediately prior to such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event. Except as provided in this paragraph (g)(1),
holders of Series C Preferred Stock shall not be entitled to any distribution
in the event of liquidation, dissolution or winding up of the Corporation.
(2) For the purposes of this paragraph (g), none of the following
shall be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Corporation:
(i) the voluntary sale, conveyance, lease, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation;
(ii) the consolidation or merger of the Corporation with or into one
or more other corporations or other associations;
12
(iii) the consolidation or merger of one or more corporations or
other associations with or into the Corporation; or
(iv) the participation by the Corporation in a share exchange.
(h). CERTAIN RECLASSIFICATIONS AND OTHER EVENTS.
(1) In the event that holders of shares of Class B Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class B Common Stock any share
of capital stock of the Corporation (other than any share of Class B Common
Stock), whether by way of reclassification, recapitalization, reorganization,
dividend or other distribution or otherwise (a "Class B Transaction"), then,
and in each such event, the dividend rights, conversion rights and rights upon
the liquidation, dissolution or winding up of the Corporation of the shares of
Series C Preferred Stock shall be adjusted so that after such Transaction the
holders of Series C Preferred Stock shall be entitled, in respect of each
share of Series C Preferred Stock held, in addition to such rights in respect
thereof to which such holder was entitled immediately prior to such
adjustment, (i) to such additional dividends as equal the Dividend Multiple in
effect immediately prior to such Class B Transaction multiplied by the
additional dividends which the holder of a share of Class B Common Stock shall
be entitled to receive by virtue of the receipt in the Class B Transaction of
such capital stock, (ii) upon surrender of shares of Series C Preferred Stock
for conversion, to the aggregate number and kind of shares of capital stock of
the Corporation which, if such shares of Series C Preferred Stock had been
converted immediately prior to such Class B Transaction, such holder would
have been entitled to receive by virtue of such Class B Transaction and
(iii) to such additional distributions upon liquidation, dissolution or
winding up of the Corporation as equal the Liquidation Multiple in effect
immediately prior to such Class B Transaction multiplied by the additional
amount which the holder of a share of Class B Common Stock shall be entitled
to receive upon liquidation, dissolution or winding up of the Corporation by
virtue of the receipt in the Class B Transaction of such capital stock, as the
case may be, all as provided by the terms of such capital stock.
(2) In the event that holders of shares of Class A Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class A Common Stock any share
of capital stock of the Corporation (other than any share of Class A
13
Common Stock), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise (a "Class A
Transaction"), then, and in each such event, the voting rights of the shares
of Series C Preferred Stock shall be adjusted so that after such Class A
Transaction the holders of Series C Preferred Stock shall be entitled, in
respect of each share of Series C Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior
to such adjustment, to such additional voting rights as equal the Vote
Multiple in effect immediately prior to such Class A Transaction multiplied by
the additional voting rights to which the holder of a share of Class A Common
Stock shall be entitled by virtue of the receipt in the Class A Transaction of
such capital stock.
(3) In the event that holders of shares of Class B Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class B Common Stock any right
or warrant to purchase Class B Common Stock (including as such a right, for
all purposes of this paragraph (h)(3), any security convertible into or
exchangeable for Class B Common Stock) at a purchase price per share less than
the Fair Market Value of a share of Class B Common Stock on the date of
issuance of such right or warrant, then and in each such event the dividend
rights, conversion rights and rights upon the liquidation, dissolution or
winding up of the Corporation of the shares of Series C Preferred Stock shall
each be adjusted so that after such event the Dividend Multiple, the
Conversion Rate and the Liquidation Multiple shall each be the product of the
Dividend Multiple, the Conversion Rate and the Liquidation Multiple, as the
case may be, in effect immediately prior to such event multiplied by a
fraction the numerator of which shall be the number of shares of Class B
Common Stock outstanding immediately before such issuance of rights or
warrants plus the maximum number of shares of Class B Common Stock which could
be acquired upon exercise in full of all such rights or warrants and the
denominator of which shall be the number of shares of Class B Common Stock
outstanding immediately before such issuance of rights or warrants plus the
number of shares of Class B Common Stock which could be purchased, at the Fair
Market Value of the Class B Common Stock at the time of such issuance, by the
maximum aggregate consideration payable upon exercise in full of all such
rights or warrants.
(4) In the event that holders of shares of Class A Common Stock
receive, after the issuance of any share or fraction of a share of Series C
Preferred Stock, in respect of their shares of Class A Common Stock any right
or warrant
14
to purchase Class A Common Stock (including as such a right, for all purposes
of this paragraph (h)(4), any security convertible into or exchangeable for
Class A Common Stock) at a purchase price per share less than the Fair Market
Value of a share of Class A Common Stock on the date of issuance of such right
or warrant, then and in each such event the voting rights of the shares of
Series C Preferred Stock shall be adjusted so that after such event the Vote
Multiple shall be the product of the Vote Multiple in effect immediately prior
to such event multiplied by a fraction the numerator of which shall be the
number of shares of Class A Common Stock outstanding immediately before such
issuance of rights or warrants plus the maximum number of shares of Class A
Common Stock which could be acquired upon exercise in full of all such rights
or warrants and the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately before such issuance of rights or
warrants plus the number of shares of Class A Common Stock which could be
purchased, at the Fair Market Value of the Class A Common Stock at the time of
such issuance, by the maximum aggregate consideration payable upon exercise in
full of all such rights or warrants.
(5) In the event that holders of shares of Class B Common Stock of
the Corporation receive, after the issuance of any share or fraction of a
share of Series C Preferred Stock, in respect of their shares of Class B
Common Stock any right or warrant to purchase capital stock of the Corporation
(other than shares of Class B Common Stock), including as such a right, for
all purposes of this paragraph (h)(5), any security convertible into or
exchangeable for capital stock of the Corporation (other than Class B Common
Stock) at a purchase price per share less than the Fair Market Value of a
share of such capital stock on the date of issuance of such right or warrant,
then and in each such event the dividend rights, conversion rights and rights
upon liquidation, dissolution or winding up of the Corporation of the shares
of Series C Preferred Stock shall each be adjusted so that after such event
each holder of a share of Series C Preferred Stock shall be entitled, in
respect of each share of Series C Preferred Stock held, in addition to such
rights in respect thereof to which such holder was entitled immediately prior
to such event, to receive (i) such additional dividends as equal the Dividend
Multiple in effect immediately prior to such event multiplied, first, by the
additional dividends to which the holder of a share of Class B Common Stock
shall be entitled upon exercise of such right or warrant by virtue of the
capital stock which could be acquired upon such exercise, and multiplied again
by the Discount Fraction (as hereinafter defined),(ii) such additional
conversion rights as equal the Conversion Rate in effect immediately prior to
15
such event multiplied by a fraction the numerator of which shall be the Fair
Market Value per share of Class B Common Stock on the date of such event less
the Fair Market Value of the portion of the right or warrant so distributed
applicable to one share of Class B Common Stock and the denominator of which
shall be the Fair Market Value per share of Class B Common Stock on the date
of such event and (iii) such additional distributions upon liquidation,
dissolution or winding up of the Corporation as equal the Liquidation Multiple
in effect immediately prior to such event multiplied, first, by the additional
amount which the holder of a share of Class B Common Stock shall be entitled
to receive upon liquidation, dissolution or winding up of the Corporation upon
exercise of such right or warrant by virtue of the capital stock which could
be acquired upon such exercise, and multiplied again by the Discount Fraction.
For purposes of this paragraph, the "Discount Fraction" shall be a fraction
the numerator of which shall be the difference between the Fair Market Value
of a share of the capital stock subject to a right or warrant distributed to
holders of shares of Class B Common Stock of the Corporation as contemplated
by this paragraph (h)(5) immediately after the distribution thereof and the
purchase price per share for such share of capital stock pursuant to such
right or warrant and the denominator of which shall be the Fair Market Value
of a share of such capital stock immediately after the distribution of such
right or warrant.
(6) In the event that holders of shares of Class A Common Stock of
the Corporation receive, after the issuance of any share or fraction of a
share of Series C Preferred Stock, in respect of their shares of Class A
Common Stock any right or warrant to purchase capital stock of the Corporation
(other than shares of Class A Common Stock), including as such a right, for
all purposes of this paragraph (h)(6), any security convertible into or
exchangeable for capital stock of the Corporation (other than Class A Common
Stock) at a purchase price per share less than the Fair Market Value of a
share of such capital stock on the date of issuance of such right or warrant,
then and in each such event the voting rights of the shares of Series C
Preferred Stock shall be adjusted so that after such event each holder of a
share of Series C Preferred Stock shall be entitled, in respect of each share
of Series C Preferred Stock held, in addition to such rights in respect
thereof to which such holder was entitled immediately prior to such event, to
receive such additional voting rights as equal the Vote Multiple in effect
immediately prior to such event multiplied, first, by the additional voting
rights to which the holder of a share of Class A Common Stock shall be
entitled upon exercise of such right or warrant by virtue of the capital stock
which could
16
be acquired upon such exercise, and multiplied again by the Voting Discount
Fraction (as hereinafter defined). For purposes of this paragraph, the "Voting
Discount Fraction" shall be a fraction the numerator of which shall be the
difference between the Fair Market Value of a share of the capital stock
subject to a right or warrant distributed to holders of shares of Class A
Common Stock of the Corporation as contemplated by this paragraph (h)(6)
immediately after the distribution thereof and the purchase price per share
for such share of capital stock pursuant to such right or warrant and the
denominator of which shall be the Fair Market Value of a share of such capital
stock immediately after the distribution of such right or warrant.]
(7) For purposes of this Section 5 of Article IV, the "Fair Market
Value" of a share of capital stock of the Corporation on any date shall be
deemed to be the average of the daily closing price per share thereof over the
15 consecutive Trading Days (as hereinafter defined) immediately prior to such
date; provided, however, that in the event the Fair Market Value of any such
share of capital stock is determined during a period which includes any date
that is within 15 Trading Days after (i) the ex-dividend date for a dividend
or distribution on stock payable in shares of such stock or securities
convertible into shares of such stock, or (ii) the effective date of any
subdivision, split, combination, consolidation, reverse stock split or
reclassification of such capital stock, then, and in each such case, the Fair
Market Value shall be appropriately adjusted by the Board of Directors of the
Corporation to take into account ex-dividend or post-effective date trading.
The closing price for any day shall be the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way (in either case, as reported in the applicable
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange), or, if the shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
applicable transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares are listed or
admitted to trading or, if the shares are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other system then in
use, or if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by
a professional market maker making a market in the shares selected by the
Board of Directors of the Corporation. The
17
term "Trading Day" shall mean a day on which the principal national securities
exchange on which the shares are listed or admitted to trading is open for the
transaction of business or, if the shares are not listed or admitted to
trading on any national securities exchange, on which the New York Stock
Exchange or such other national securities exchange as may be selected by the
Board of Directors of the Corporation is open. If the shares are not publicly
held or not so listed or traded on any day within the 15 Trading Day period
applicable to the determination of Fair Market Value thereof as aforesaid,
"Fair Market Value" shall mean the fair market value thereof per share as
determined in good faith by the Board of Directors of the Corporation. In
either case referred to in the foregoing sentence, the determination of Fair
Market Value shall be described in a statement filed with the Secretary of the
Corporation.
(i). CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, division, share exchange, combination, sale of
all or substantially all of the Corporation's assets, or other transaction in
which the shares of Class B Common Stock are exchanged for or changed into
other securities, cash and/or any other property, then in any such case each
outstanding share of Series C Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of securities,
cash and/or other property (payable in like kind), as the case may be, for
which or into which each share of Class B Common Stock is changed or exchanged
multiplied by the highest of the Dividend Multiple, the Conversion Rate or the
Liquidation Multiple in effect immediately prior to such event; provided,
however, that no fractional share or scrip representing fractional shares of
any other securities shall be issued. Instead of any fractional interest in a
share of such other securities which would otherwise be deliverable pursuant
to this paragraph (i), the Corporation will pay to the holder thereof an
amount in cash (computed to the nearest cent) equal to the same fraction of
the Fair Market Value of a share of such other security or such other amount
as may be set forth in the agreement governing the related consolidation,
division, share exchange, combination, sale of all or substantially all of the
Corporation's assets or other transactions.
(j). EFFECTIVE TIME OF ADJUSTMENTS.
(1) Adjustments to the Series C Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event
requiring such adjustments occurs.
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(2) The Corporation shall give prompt written notice to each holder
of a share of outstanding Series C Preferred Stock of the effect of any
adjustment to the voting rights, dividend rights, conversion rights or rights
upon liquidation, dissolution or winding up of the Corporation of such shares
required by the provisions hereof. Notwithstanding the foregoing sentence, the
failure of the Corporation to give such notice shall not affect the validity
or the force or effect of, or the requirement for, such adjustment.
(k). NO REDEMPTION. The shares of Series C Preferred Stock shall not
be redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this paragraph (11), the Corporation
may acquire shares of Series C Preferred Stock in any other manner permitted
by law, the provisions of this Restated Certificate of Incorporation.
(l). RANKING. Unless otherwise provided in this Restated Certificate
of Incorporation or in any certificate of designation relating to the
determination of a subsequent series of Preferred Stock, the Series C
Preferred Stock shall rank senior to the Class B Common Stock and the Class A
Common Stock and the Series C Preferred Stock shall rank junior to all other
series of Preferred Stock as to the payment of dividends and the distribution
of assets on liquidation, dissolution or winding up.
(m). LIMITATIONS. Except as may otherwise be required by law, the
shares of Series C Preferred Stock shall not have any powers, preferences or
relative, participating, optional or other special rights other than those
specifically set forth in this Article IV (as such may be amended from time to
time) or otherwise in the Restated Certificate of Incorporation.
(n). AMENDMENT. So long as any shares of the Series C Preferred
Stock are outstanding, the Corporation shall not amend this Article IV or the
Restated Certificate of Incorporation in any manner which would alter or
change the rights, preferences or limitations of the Series C Preferred Stock
so as to affect such rights, preferences or limitations in any material
respect prejudicial to the holders of the Series C Preferred Stock without, in
addition to any other vote of shareholders required by law, the affirmative
vote of the holders of at least two-thirds of the outstanding shares of Series
C Preferred Stock, voting together as a single class either in writing or by
resolution adopted at an annual or special meeting called for the purpose;
provided, however, that the creation of another series of Preferred Stock
ranking senior to or on a
19
parity with the Series C Preferred Stock as to the payment of dividends or the
distribution of assets on liquidation, dissolution or winding up, or which has
equivalent or greater voting rights than the Series C Preferred Stock, in each
case shall not be deemed to be prejudicial to the holders of the Series C
Preferred Stock for the purposes of this paragraph (n).
ARTICLE V
DIRECTORS
(1) Power of the Board of Directors. Subject to Article XIII of this
Restated Certificate of Incorporation, the property and business of the
Corporation shall be controlled and managed by or under the direction of its
Board of Directors. In furtherance, and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of Directors is
expressly authorized, subject in all cases to Article XIII of this Restated
Certificate of Incorporation:
(a) To make, alter, amend or repeal the By-Laws of the
Corporation; provided that no By-Laws hereafter adopted
shall invalidate any prior act of the Directors that
would have been valid if such By-Laws had not been
adopted;
(b) To determine the rights, powers, duties, rules and
procedures that affect the power of the Board of
Directors to manage and direct the property, business and
affairs of the Corporation, including, without
limitation, the power to designate and empower committees
of the Board of Directors, to elect, appoint and empower
the officers and other agents of the Corporation, and to
determine the time and place of, and the notice
requirements for Board meetings, as well as the manner of
taking Board action; and
(c) To exercise all such powers and do all such acts
as may be exercised by the Corporation, subject to the
provisions of the laws of the State of Delaware, this
Restated Certificate of Incorporation, and the By-Laws of
the Corporation.
(2) Number and Qualifications of Directors. The number of directors
constituting the entire Board of Directors shall be fixed from time to time by
resolution of the Board of Directors but shall not be less than three nor more
than twenty. Directors shall be elected to hold office for a term of one year.
As used in this Restated Certificate of Incorporation, the term "entire Board
of Directors" means
20
the total number of Directors fixed in the manner provided
in this Article V Section (2) and in the By-Laws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
(1) Action Not By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or
in the right of the Corporation) by reason of the fact that he is or was a
Director, officer, employee or agent of the Corporation, or is or was serving
at the request of the Corporation as a director, officer, employee or agent
(including, without limitation, a trustee) of another corporation,
partnership, joint venture, trust or other enterprise, against judgments,
fines, amounts paid in settlement and expenses (including, without limitation,
attorneys' fees), actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) Action By or on Behalf of Corporation. The Corporation shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that
he is or was a Director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
or other enterprise against expenses (including, without limitation,
attorneys' fees) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be made in
respect of any claim, issue
21
or matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability and in view of all of the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper.
(3) Successful Defense. To the extent that a present or former Director,
officer, employee or agent of the Corporation has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred to
in Section 1 or 2 of this Article VI, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including, without
limitation, attorneys fees) actually and reasonably incurred by him in
connection therewith.
(4) Determination of Right to Indemnification in Certain Circumstances.
Any indemnification under Section 1 or 2 of this Article VI (unless ordered by
a court) shall be made by the Corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Section 1 or 2 of this
Article IV. Such determination shall be made, with respect to a person who is
a Director or officer at the time of such determination, (1) by a majority
vote of the Directors who are not parties to such action, suit or proceeding,
even though less than a quorum, or (2) by a committee of such Directors
designated by a majority vote of such Directors, even though less than a
quorum, or (3) if there are no such Directors, or if such Directors so direct,
by independent legal counsel in a written opinion, or (4) by the stockholders
of the Corporation entitled to vote thereon.
(5) Advance Payment of Expenses.
(a) Expenses (including attorneys' fees) incurred by a Director or
officer in defending any civil, criminal, administrative or investigative
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Director or officer, to repay such amount
if it shall ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Article.
(b) Expenses (including attorneys' fees) incurred by any other
employee or agent in defending any civil,
22
criminal, administrative or investigative action, suit or proceeding may be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon such terms and conditions, if any, as the Corporation
deems appropriate.
(6) Not Exclusive. The indemnification and advancement of expenses
provided by, or granted pursuant to, the other sections of this Article VI
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any statute,
by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office. Without limiting the foregoing,
the Corporation is authorized to enter into an agreement with any Director,
officer, employee or agent of the Corporation providing indemnification for
such person against expenses, including, without limitation, attorneys' fees,
judgments, fines and amounts paid in settlement that result from any
threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative, including, without limitation, any
action by or in the right of the Corporation, that arises by reason of the
fact that such person is or was a Director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, to the full extent allowed by law,
except that no such agreement shall provide for indemnification for any
actions that constitute fraud, actual dishonesty or willful misconduct.
(7) Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, officer, employee or agent of
the Corporation, or is or was serving as the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to
indemnify him against such liability under the provisions of this Article VI.
(8) Certain Definitions. For the purposes of this Article VI, (A) any
Director, officer, employee or agent of the Corporation who shall serve as a
director, officer, employee or agent of any other corporation, joint venture,
trust or other enterprise of which the Corporation, directly or indirectly, is
or was a stockholder or creditor, or in which the Corporation is or was in any
way interested, or
23
(B) any director, officer, employee or agent of any subsidiary corporation,
joint venture, trust or other enterprise wholly owned by the Corporation,
shall be deemed to be serving as such director, officer, employee or agent at
the request of the Corporation, unless the Board of Directors of the
Corporation shall determine otherwise. In all other instances where any person
shall serve as a director, officer, employee or agent of another corporation,
joint venture, trust or other enterprise of which the Corporation is or was a
stockholder or creditor, or in which it is or was otherwise interested, if it
is not otherwise established that such person is or was serving as such
director, officer, employee or agent at the request of the Corporation, the
Board of Directors of the Corporation may determine whether such service is or
was at the request of the Corporation, and it shall not be necessary to show
any actual or prior request for such service. For purposes of this Article VI,
references to a corporation include all constituent corporations absorbed in a
consolidation or merger as well as the resulting or surviving corporation so
that any person who is or was a director, officer, employee or agent of such a
constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, joint venture, trust or other enterprise shall stand in the same
position under the provisions of this Article VI with respect to the resulting
or surviving corporation as he would if he had served the resulting or
surviving corporation in the same capacity. For purposes of this Article VI,
references to "other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on a person with
respect to an employee benefit plan; and references to "serving at the request
of the Corporation" shall include any service as a director, officer, employee
or agent of the Corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an employee benefit
plan, its participants, or beneficiaries, and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VI.
(9) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VI shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
24
ARTICLE VII
DIRECTOR LIABILITY TO THE CORPORATION
(a) A Director's liability to the Corporation for breach of duty to the
Corporation or its stockholders shall be limited to the fullest extent
permitted by Delaware law as now in effect or hereafter amended. In particular
no Director of the Corporation shall be liable to the Corporation or any of
its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the Director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, as
the same exists or hereafter may be amended, or (iv) for any transaction from
which the Director derived an improper personal benefit.
(b) Any repeal or modification of the foregoing paragraph (a) by the
stockholders of the Corporation entitled to vote thereon shall not adversely
affect any right or protection of a director of the Corporation existing at
the time of such repeal or modification.
(c) If the General Corporation Law of the State of Delaware is amended to
authorize corporate action further eliminating or limiting the liability of
directors, then a director of the Corporation, in addition to the
circumstances in which he is not now liable, shall be free of liability to the
fullest extent permitted by the General Corporation Law of the State of
Delaware, as so amended.
ARTICLE VIII
RESERVATION OF RIGHT TO AMEND
CERTIFICATE OF INCORPORATION
Subject to Article XIII of this Restated Certificate of Incorporation,
the Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all the provisions of this
Restated Certificate of Incorporation and all rights and powers conferred in
this Restated Certificate of Incorporation on stockholders, directors and
officers are subject to this reserved power.
Each reference in the Restated Certificate of Incorporation to "the
Restated Certificate of Incorporation," "hereunder," "hereof," or words of
like
25
import and each reference to the Restated Certificate of Incorporation set
forth in any amendment to the Restated Certificate of Incorporation shall mean
and be a reference to the Restated Certificate of Incorporation as
supplemented and amended through such amendment to the Restated Certificate of
Incorporation.
ARTICLE IX
VOTING RIGHTS
(1) Class A Common Stock. In addition to any other approval required by
law or by this Restated Certificate of Incorporation, the affirmative vote of
a majority of the then outstanding shares of Class A Common Stock, voted
separately as a class, shall be necessary to approve any consolidation of the
Corporation with another corporation, any merger of the Corporation into
another corporation or any merger of any other corporation into the
Corporation pursuant to which shares of Common Stock are converted into or
exchanged for any securities or any other consideration.
(2) Preferred Stock. Subject to Article XIII of this Restated Certificate
of Incorporation, in addition to any other approval required by law or by this
Restated Certificate of Incorporation, each particular series of any class of
Preferred Stock shall have such right to vote, if any, as shall be fixed in
the resolution or resolutions, adopted by the Board of Directors, providing
for the issuance of shares of such particular series.
ARTICLE X
STOCK OWNERSHIP
AND THE FEDERAL COMMUNICATIONS LAWS
(1) Requests for Information. So long as the Corporation or any of its
subsidiaries holds any authorization from the Federal Communications
Commission (or any successor thereto), if the Corporation has reason to
believe that the ownership, or proposed ownership, of shares of capital stock
of the Corporation by any stockholder or any person presenting any shares of
capital stock of the Corporation for transfer into his name (a "Proposed
Transferee") may be inconsistent with, or in violation of, any provision of
the Federal Communications Laws (as hereinafter defined), such stockholder or
Proposed Transferee, upon request of the Corporation, shall furnish promptly
to the Corporation such information (including, without limitation,
information with respect to citizenship, other ownership interests and
affiliations) as the Corporation shall reasonably request to determine whether
the ownership of, or the exercise of any
26
rights with respect to, shares of capital stock of the Corporation by such
stockholder or Proposed Transferee is inconsistent with, or in violation of,
the Federal Communications Laws. For purposes of this Article X, the term
"Federal Communications Laws" shall mean any law of the United States now or
hereafter in effect (and any regulation thereunder) pertaining to the
ownership of, or the exercise of the rights of ownership with respect to,
capital stock of corporations holding, directly or indirectly, Federal
Communications Commissions authorizations, including, without limitation, the
Communications Act of 1934, as amended (the "Communications Act"), and
regulations thereunder pertaining to the ownership, or the exercise of the
rights of ownership, of capital stock of corporations holding, directly or
indirectly, Federal Communications Commission authorizations, by (i) aliens,
as defined in or under the Communications Act, as it may be amended from time
to time, (ii) persons and entities having interests in television or radio
stations, daily newspapers and cable television systems or (iii) persons or
entities, unilaterally or otherwise, seeking direct or indirect control of the
Corporation, as construed under the Communications Act, without having
obtained any requisite prior Federal regulatory approval to such control.
(2) Denial of Rights, Refusal to Transfer. If any stockholder or
Proposed Transferee from whom information is requested should fail to respond
to such request pursuant to Section (1) of this Article or the Corporation
shall conclude that the ownership of, or the exercise of any rights of
ownership with respect to, shares of capital stock of the Corporation, by such
stockholder or Proposed Transferee, could result in any inconsistency with, or
violation of, the Federal Communications Laws, the Corporation may refuse to
permit the transfer of shares of capital stock of the Corporation to such
Proposed Transferee, or may suspend those rights of stock ownership the
exercise of which would result in any inconsistency with, or violation of, the
Federal Communications Laws, such refusal of transfer or suspension to remain
in effect until the requested information has been received and the
Corporation has determined that such transfer, or the exercise of such
suspended rights, as the case may be, is permissible under the Federal
Communications Laws, and the Corporation may exercise any and all appropriate
remedies, at law or in equity, in any court of competent jurisdiction, against
any such stockholder or Proposed Transferee, with a view towards obtaining
such information or preventing or curing any situation which would cause any
inconsistency with, or violation of, any provision of the Federal
Communications Laws.
27
(3) Legends. The Corporation may note on the certificates of its capital
stock that the shares represented by such certificates are subject to the
restrictions set forth in this Article.
(4) Certain Definitions. For purposes of this Article, the word "person"
shall include not only natural persons but partnerships, associations,
corporations, joint ventures and other entities, and the word "regulation"
shall include not only regulations but rules, published policies and published
controlling interpretations by an administrative agency or body empowered to
administer a statutory provision of the Federal Communications Laws.
ARTICLE XI
TRANSACTIONS WITH DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more of its
directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting of the board
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose if (a) the material
facts as to his relationship or interest and as to the contract or transaction
are disclosed or are known to the Board of Directors or the committee, and the
Board of Directors or the committee in good faith authorizes the contract or
transaction by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum, or
(b) the material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of such stockholders, or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified by the Board of Directors, a committee thereof, or the
stockholders entitled to vote thereon. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
28
ARTICLE XII
COMPROMISE AND REORGANIZATION
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions
of Section 291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of Section 279 of Title 8 of the Delaware
Code order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agrees to any compromise or arrangement and
to any reorganization of the Corporation as a consequence of such compromise
or arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may
be, and also on this Corporation.
ARTICLE XIII
GOVERNANCE OF THE CORPORATION
DURING SPECIFIED PERIOD
(1) Definitions. As used in this Article XIII, the following terms shall
have the following meanings:
(a) "CBS" shall mean CBS Corporation, a Pennsylvania corporation,
immediately prior to the Effective Time.
(b) "CBS Directors" shall mean (i) eight (8) of those directors
serving as members of the Board of Directors of CBS on September 6, 1999 (or
any Independent Directors elected or appointed prior to the Effective Time to
serve as a CBS Director) who are designated as such by the Board of Directors
of CBS prior to the Effective Time and (ii) any Replacement CBS Director (as
defined in Section 2(b) of this Article XIII).
29
(c) "CEO" shall mean the Chief Executive Officer.
(d) "COO" shall mean the President and Chief Operating Officer.
(e) "Effective Time" shall mean the time of filing of the Certificate
of Merger to which this Certificate of Incorporation is attached.
(f) "Independent Director" shall mean a disinterested, independent
person (determined in accordance with customary standards for independent
directors applicable to U.S. public companies).
(g) "NAI" shall mean National Amusements, Inc., a Maryland
corporation, and its successors or assigns.
(h) "Specified Independent Directors" shall mean the directors of the
Corporation first elected after 1993 and who are not management of the
Corporation or NAI (together with any replacements of such persons).
(i) "Specified Period" shall mean the period of three years commencing
at the Effective Time.
(j) "Stockholder Agreement" shall mean the Stockholder Agreement dated
as of September 6, 1999, by and between NAI and CBS, relating to Corporation
governance matters.
(k) "Viacom Directors" shall mean the ten (10) directors of the
Corporation serving as the Board of Directors of the Corporation immediately
prior to the Effective Time (including the Specified Independent Directors).
(2) Directors.
(a) Effective immediately at the Effective Time, the Board of
Directors shall consist of eighteen (18) directors. The number of directors
may be fixed by resolution of the Board from time to time, provided, however,
that the size of the Board of Directors may not be changed during the
Specified Period without the approval of at least fourteen (14) directors. At
the Effective Time, ten (10) directors shall be Viacom Directors and eight (8)
directors shall be CBS Directors.
(b) Until the expiration of the Specified Period, the Board of
Directors (subject to the fiduciary duties of the directors) shall take all
action necessary to ensure that any seat on the Board of Directors held by
(i) a CBS Director which becomes vacant is filled promptly by a person
qualifying as an Independent Director and designated to fill such seat by
30
a majority of the CBS Directors remaining on the Board of Directors (a
"Replacement CBS Director") and (ii) a Specified Independent Director which
becomes vacant is filled promptly by an Independent Director who is the chief
executive officer, chief operating officer or chief financial officer or
former chief executive officer of a Fortune 500 company or a non-U.S. public
company of comparable size.
(c) During the Specified Period, all committees of the Board of
Directors (other than the Compensation Committee and the Officers Nominating
Committee) shall have such number of CBS Directors as equals the total number
of members of the Committee multiplied by a fraction, the numerator of which
is eight (8) and the denominator of which is eighteen (18), rounded to the
closest whole number; provided that in no event shall any committee have
(x) fewer than one (1) CBS Director or (y) less than a majority of Viacom
Directors.
(d) During the Specified Period, the Board of Directors shall not take
any action or fail to take any action which would have the effect of
eliminating, limiting, restricting, avoiding or otherwise modifying the effect
of the provisions set forth in this Article XIII (e.g., by creating a holding
company structure if the certificate of incorporation or similar document of
such holding company does not contain equivalent provisions).
(3) Chairman and Chief Executive Officer.
(a) At the Effective Time, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall remain the Chairman
and CEO. In the event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is not the CEO at the Effective
Time or ceases to be the CEO at any time during the Specified Period, then ▇▇▇
▇▇▇▇▇▇▇▇, if he is COO at such time, shall succeed to the position of CEO for
the remainder of the Specified Period. During any such period of succession,
▇▇▇ ▇▇▇▇▇▇▇▇ shall continue to exercise the powers, rights, functions and
responsibilities of the COO in addition to exercising those of the CEO.
(b) The Chairman shall chair all meetings of the Board of Directors
and stockholders at which he is present.
(c) The CEO shall be responsible, in consultation with the COO, for
corporate policy and strategy and the COO shall consult on all major decisions
with, and shall report directly to, the CEO, during the Specified Period;
provided, however, that the CEO shall not exercise any powers, rights,
functions or responsibilities of the COO unless ▇▇▇ ▇▇▇▇▇▇▇▇ is the CEO.
31
(4) President and Chief Operating Officer.
(a) At the Effective Time, the President and Chief Operating Officer
of the Corporation shall be ▇▇▇ ▇▇▇▇▇▇▇▇. During the Specified Period, ▇▇▇
▇▇▇▇▇▇▇▇ may not be terminated or demoted from the position of COO (or, in the
event that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ is not the CEO, from the position of CEO) and no
COO Functions (as defined below) may be changed without the affirmative vote
of at least fourteen (14) directors.
(b) Subject to the requirement that the COO consult with the CEO on
all major decisions, the powers, rights, functions and responsibilities of the
COO (collectively, the "COO Functions") shall include, without limitation, the
following:
(i) supervising, coordinating and managing the
Corporation's business, operations, activities, operating
expenses and capital allocation;
(ii) matters relating to officers (other than the
Chairman, CEO and COO) and employees, including, without
limitation, hiring (subject to (A) the specific Board of
Directors authority described below with respect to the
CFO, the General Counsel and the Controller and
(B) Section 5 below), terminating, changing positions and
allocating responsibilities of such officers and employees;
and
(iii) substantially all of the powers, rights, functions
and responsibilities typically exercised by a chief
operating officer.
All officers (other than the Chairman, CEO and COO) will report,
directly or indirectly, to the COO (this reporting relationship will be deemed
a COO Function).
(c) In the event that ▇▇▇ ▇▇▇▇▇▇▇▇ is not COO or CEO, the Board may
terminate the COO's employment, eliminate the COO position and the Officers
Nominating Committee and reallocate the COO Functions without regard to the
other provisions of this Article XVIII.
(5) Officers Nominating Committee; Compensation Committee.
(a) Subject to the powers of the Compensation Committee set forth
below, during the Specified Period, all powers of the Board of Directors,
including, without limitation, the right to hire, elect, terminate, change
positions, allocate responsibilities or determine non-equity compensation,
with respect to officers and employees, shall be exercised, subject to
clauses (b) and (c) below, by, and delegated to, the
32
Officers Nominating Committee of the Board of Directors. The Officers
Nominating Committee shall consist solely of the member of the Board of
Directors who is the COO, except that in the event ▇▇▇ ▇▇▇▇▇▇▇▇ succeeds to
the position of CEO, the sole member of the Officers Nominating Committee
shall be the member of the Board of Directors who is the CEO.
(b) The Officers Nominating Committee shall have no powers with
respect to the Chairman, CEO and COO, and shall not have the power to fill the
positions of Chief Financial Officer, Controller or General Counsel of the
Corporation without the approval of the Board of Directors; provided that this
provision shall in no way affect the other powers and authorities of the
Officers Nominating Committee with respect to the Chief Financial Officer,
Controller and General Counsel positions, including, without limitation, the
power to terminate employment of persons holding such positions.
(c) The Compensation Committee shall not be required to, or have any
power to, approve the annual compensation of (i) any employee if the total
value of such employee's annual cash compensation (assuming for this purpose
that the actual bonus of each officer and employee is equal to his or her
target bonus) is less than $1 million or (ii) talent (as such term is commonly
used in the media or entertainment industries), in each such case which power
shall be delegated to the Officers Nominating Committee. The annual
compensation of all other officers and employees and any equity or
equity-based compensation of any officer or employee must be approved by the
Compensation Committee.
(d) The Compensation Committee shall consist of three CBS Directors
who are Independent Directors and three non-CBS Directors, two of whom will be
the Specified Independent Directors and the other of whom will be an
Independent Director.
(e) Any decision or determination of the Officers Nominating Committee
may be reversed or overridden by (and only by) the affirmative vote of at
least fourteen (14) directors.
(6) Stockholder Agreement.
The Stockholder Agreement may not be amended, and no provision thereof
may be modified or waived, except with the approval of at least fourteen (14)
directors.
(7) Issuance of Voting Stock.
During the Specified Period, in addition to any other approval
required by law or by this Restated Certificate of
33
Incorporation, the Corporation may not issue (i) additional shares of Class A
Common Stock or (ii) any shares of Preferred Stock or any other class or
series of stock or securities, in each case with, or convertible into or
exchangeable or exercisable for stock or other securities with, the right to
vote on any matter on which stockholders are entitled to vote if the result
would be that parties bound by the Stockholder Agreement could fail to own at
least a majority of the outstanding shares of voting stock of the Corporation.
(8) Voting.
During the Specified Period, except for those actions set forth on
Annex I to this Restated Certificate of Incorporation, which shall require the
approval of the Board of Directors, all action by the Board of Directors shall
require the affirmative vote of at least fourteen (14) directors. At all
meetings of the Board of Directors a majority of the full Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the Directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or this Restated Certificate of
Incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
(9) Amendment.
Until the expiration of the Specified Period the provisions of any
Article of this Restated Certificate which refer to this Article XIII, the
provisions of this Article XIII, and the provisions of Article VIII of the by-
laws of the Corporation, may not be amended, altered, repealed or waived in
any respect without the approval of at least fourteen (14) directors.
(10) Successors.
During the Specified Period, the provisions of this Article XIII shall
be applicable to (i) any successor to the Corporation as the result of a
merger, consolidation or other business combination, whether or not the
Corporation is the surviving company in such transaction, or otherwise and
(ii) any corporation or other entity with respect to which the Corporation or
its successor is or becomes a direct or indirect subsidiary, the Board of
Directors shall not permit the Corporation to be a party to any transaction
which would not comply with the foregoing without the approval of at least
fourteen (14) directors.
34
(11) Subsidiaries.
The Board of Directors shall have the right, following consultation
with the COO or, if ▇▇▇ ▇▇▇▇▇▇▇▇ is the CEO, the CEO, with respect to any
public company which is a subsidiary of the Corporation, to take such steps as
the Board of Directors reasonably determines are necessary to implement
corporate governance arrangements applicable to such subsidiary in a manner as
consistent as practicable with the provisions contained in this Restated
Certificate of Incorporation; provided that any such steps shall not vest in
the Board of Directors greater power or provide the COO with fewer rights than
those provided for in this Restated Certificate of Incorporation.
35
ANNEX I
TO VIACOM INC. RESTATED
CERTIFICATE OF INCORPORATION
The provisions of this Annex I shall form a part of, and be
incorporated in all respects in, the Restated Certificate of Incorporation to
which this Annex I is attached. The following actions shall require the
approval of a majority of the directors:
A. Acquisitions, Divestitures, Joint Ventures, Guarantees
- Any acquisition, equity investment or joint venture
(each an "Acquisition") by the Corporation or any of
its subsidiaries for more than $25 million.
- Any divestiture or other sale of assets (each a
"Divestiture") (not in the ordinary course) by the
Corporation or any of its subsidiaries for more than
$25 million (based on purchase price or net book
value of assets).
- Any real estate purchase, sale or lease by the
Corporation or any of its subsidiaries for more than
$25 million.
- Any guarantee by the Corporation or any of its
subsidiaries of an obligation of a third party where
the obligation guaranteed is more than $25 million.
- Notwithstanding the above, any Acquisition or
Divestiture by the Corporation or any of its
subsidiaries of (a) internet or internet related
businesses for more than $25 million but less than
$100 million, with the value thereof represented by
multi-year commitments for advertising, promotion
and content licensing, is excluded, so long as the
aggregate of such Acquisitions or Divestitures, in
each case, does not exceed $550 million and
(b) radio or outdoor advertising businesses for more
than $25 million but less than $100 million, is
excluded, so long as the aggregate of such
Acquisitions or Divestitures, in each case, does not
exceed $300 million; provided that (i) any
Divestiture of shares of a publicly traded internet
or internet related business with a value of up to
$75 million is excluded and shall not be included in
the calculation of any of the threshold amounts set
forth above, (ii) Board approval may be secured (but
is not required) for any transaction of more than
$25 million but less than $100 million where the
regular meeting schedule of the Board so permits
(and shall not otherwise be required), (iii) the
Board will be provided with information about and a
status report on such transactions completed without
36
Board approval and (iv) this limit of authority will
be reviewed in 12 months from the Effective Time (as
defined in Article XIII of the Restated Certificate)
and may be amended only with the approval of 14
members of the Board of Directors.
- Any contract of the Corporation or any of its
subsidiaries not in the ordinary course with a value
in excess of $25 million.
- Notwithstanding the above, any of the foregoing
transactions that is approved by the Board shall not
be included in the calculation of any of the
threshold amounts set forth above.
B. Employee Matters
- Employee benefit plans (at the Corporation or a
subsidiary): (a) creating a new plan, (b) suspending
or terminating an existing plan, (c) any amendment
that materially increases cost to the Corporation or
subsidiary.
- Entering into any modifications or amendments to the
employment agreements with the CEO or the COO.
C. General
- The Annual Report on Form 10-K.
- Proxy statement and notice of meeting (including
annual or special meeting date, location, record
date for voting).
- Any issuance of Corporation stock, or options,
warrants or other similar rights (including stock
appreciation rights) or debt or other securities
convertible into or exchangeable for Corporation
stock.
- Any issuance of debt unless such debt is short term
and is within the spending limits of the annual
operating budget or is replacing existing debt.
- Annual capital expenditure and annual operating
budgets and individual capital expenditure
transactions in excess of $25 million for the
Corporation or any of its subsidiaries.
- Any Corporation or subsidiary pays a dividend or
repurchases stock from a third party.
37
- Review and approve any action or transaction where
Board action is required by law (other than Section 141(a)
of the Delaware General Corporation Law) or by the
terms of the transaction (in all cases other than as
specifically set forth in the Restated Certificate
of Incorporation).
- Review and approve Board minutes.
- Subject to Article XIII of the Restated Certificate
of Incorporation, determine Board administration,
including number of directors, meeting schedule,
nominees, committees, director compensation, D&O
insurance authorization, internal investigations and
retention of advisors in connection therewith, and
decisions regarding indemnification of individuals.
- Subject to Article XIII of the Restated Certificate
of Incorporation, amendments to the Restated
Certificate of Incorporation and by-laws of the
Corporation.
- Commencement and settlement of major litigation.
- Selection of independent auditors.
- All matters on which the Corporation Board of
Directors has historically taken action other than
(1) matters relating to the subject matters
addressed in this Annex I and not requiring approval
of the Board of Directors hereunder and (2) those
matters delegated to the COO, including all of the
COO Functions (as defined in Article XIII of this
Restated Certificate of Incorporation).
38
EXHIBIT A-2
TO THE MERGER AGREEMENT
VIACOM INC.
AMENDED AND RESTATED
B Y - L A W S
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other
places both within and without the state of Delaware as the board of directors
may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Meetings of stockholders may be held at such time and
place, within or without the State of Delaware, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof. The
annual meeting of stockholders may be held at such place, within or without
the State of Delaware, as shall be designated by the board of directors and
stated in the notice of the meeting or in a duly executed waiver of notice
thereof.
2
Section 2. The annual meeting of stockholders for the purpose of
electing directors and for the transaction of such other business as may
properly come before the meeting shall be held at such date and hour as shall
be determined by the board of directors or, in the absence of such
determination, on the third Thursday of the ninth month after the month end
most nearly coinciding with the close of the fiscal year of the Corporation.
Section 3. Written notice of the annual meeting stating the place,
date and hour of the meeting shall be given to each stockholder entitled to
vote at such meeting not less than ten nor more than sixty days before the
date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
Corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice
3
of the meeting, or, if not so specified, at the place where the meeting is to
be held. The list shall also be produced and kept open at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Restated
Certificate of Incorporation, may be called by the affirmative vote of a
majority of the board of directors, the Chairman of the Board, the Chief
Executive Officer, the Vice Chairman of the Board or the President and Chief
Operating Officer and shall be called by the Chairman of the Board, the Chief
Executive Officer, the Vice Chairman of the Board, the President and Chief
Operating Officer or Secretary at the request in writing of the holders of
record of at least 50.1% of the aggregate voting power of all outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of Directors, acting together as a single class. Such request shall
state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place,
date and hour of the meeting and the purpose or purposes for which the meeting
is called, shall be given not less than ten nor more than sixty days before
4
the date of the meeting to each stockholder of record entitled to vote at such
meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the aggregate voting power
of the shares of the capital stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
at all meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by the Restated Certificate of Incorporation.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have the power to adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might
have been transacted at the meeting as originally notified. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
5
Section 9. When a quorum is present at any meeting, the vote of the
holders of a majority of the aggregate voting power of the shares of the
capital stock having voting power present in person or represented by proxy
shall decide any question brought before such meeting, unless the question is
one upon which, by provision of applicable law or of the Restated Certificate
of Incorporation, a different vote is required in which case such express
provision shall govern and control the decision of such question.
Section 10. At every meeting of the stockholders, each stockholder
shall be entitled to vote, in person or by proxy executed in writing by the
stockholder or his duly authorized attorney-in-fact, each share of the capital
stock having voting power held by such stockholder in accordance with the
provisions of the Restated Certificate of Incorporation and, if applicable,
the certificate of designations relating thereto, but no proxy shall be voted
or acted upon after three years from its date, unless the proxy provides for a
longer period.
Section 11. Any action required to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken
6
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by stockholders
representing not less than the minimum number of votes that would be necessary
to authorize or take such actions at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of such
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing. The Secretary shall
file such consents with the minutes of the meetings of the stockholders.
Section 12. At all meetings of stockholders, the chairman of the
meeting shall have absolute authority over matters of procedure, and there
shall be no appeal from the ruling of the chairman.
Section 13. Attendance of a stockholder, in person or by proxy, at
any meeting shall constitute a waiver of notice of such meeting, except where
the stockholder, in person or by proxy, attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.
7
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the entire
Board of Directors shall be fixed as set forth in Article XIII of the Restated
Certificate of Incorporation, and shall not be less than three nor more than
eighteen. Directors shall have such qualifications as may be prescribed by
these by-laws. Directors need not be stockholders. If required by regulations
of the Federal Communications Commission, each director shall be a citizen of
the United States of America.
Section 2. Subject to the rights of the holders of any series of
Preferred Stock or any other class of capital stock of the corporation then
outstanding (other than the Common Stock), and subject to Article XIII of the
Restated Certificate of Incorporation, vacancies in the board of directors for
any reason, including by reason of an increase in the authorized number of
directors, shall, if occurring prior to the expiration of the term of office
in which the vacancy occurs, be filled by a majority of the directors then in
office, though less than a quorum, or by a sole remaining director, and the
directors so chosen shall hold office until the next annual meeting of
stockholders of the Corporation or until their successors are duly elected and
shall qualify, unless sooner displaced. Subject to
8
Article XIII of the Restated Certificate of Incorporation, if there are no
directors in office, then an election of directors may be held in the manner
provided by statute.
Section 3. The property and business of the Corporation shall be
controlled and managed in accordance with the terms of the Restated
Certificate of Incorporation by its board of directors which may, subject to
Article XIII of the Restated Certificate of Incorporation, exercise all such
powers of the Corporation and do all such lawful acts and things as are not by
statute or by the Restated Certificate of Incorporation or by these by-laws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the Corporation, or any
committees thereof, may hold meetings, both regular and special, either within
or without the State of Delaware.
Section 5. A regular annual meeting of the board of directors,
including newly elected directors, shall be held immediately after each annual
meeting of stockholders at the place of such stockholders' meeting, and no
notice of such meeting to the directors shall be necessary in order legally to
constitute the meeting, provided a quorum shall be present. If such meeting is
held at any other time or
9
place, notice thereof must be given or waived as hereinafter provided for
special meetings of the board of directors.
Section 6. Additional regular meetings of the board of directors
shall be held on such dates and at such times and at such places as shall from
time to time be determined by the board of directors.
Section 7. The Chairman of the Board, the Chief Executive Officer,
Vice Chairman of the Board or the President and Chief Operating Officer of the
Corporation and the Secretary may call a special meeting of the board of
directors at any time by giving notice, specifying the business to be
transacted at and the purpose or purposes of the meeting, to each member of
the board at least twenty-four (24) hours before the time appointed.
Section 8. At all meetings of the board a majority of the full board
of directors shall constitute a quorum for the transaction of business and the
act of a majority of the directors present at any meeting at which there is a
quorum shall be the act of the board of directors, except as may be otherwise
specifically provided by statute, the Restated Certificate of Incorporation or
these by-laws. If a quorum shall not be present at any meeting of the board of
directors, the directors present thereat may adjourn the meeting from time to
time, without
10
notice other than announcement at the meeting, until a quorum shall be
present.
Section 9. Any action required or permitted to be taken at any
meeting of the board of directors or of any committee thereof may be taken
without a meeting if all members of the board or committee, as the case may
be, consent thereto in writing, setting forth the action so taken, and the
writing or writings are filed with the minutes of proceedings of the board or
committee.
Section 10. Unless otherwise restricted by the Restated Certificate
of Incorporation or these by-laws, members of the board of directors, or any
committee thereof, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment whereby all persons participating in the meeting can hear each
other, and such participation in a meeting shall constitute presence in person
at the meeting.
COMMITTEES OF DIRECTORS
Section 11. Designation of Committees. Subject to Article XIII of
the Restated Certificate of Incorporation, the board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of
11
the directors of the Corporation. Subject to Article XIII of the Restated
Certificate of Incorporation, the board of directors may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee.
Section 12. Vacancies. Subject to Article XIII of the Restated
Certificate of Incorporation, in the absence or disqualification of a member
of a committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
Section 13. Powers. Subject to Article XIII of the Restated
Certificate of Incorporation, any such committee, to the extent provided in
the resolution of the board of directors, shall have and may exercise all the
powers and authority of the board of directors to the extent provided by
Section 141(c) of the General Corporation Law of the State of Delaware as it
exists now or may hereafter be amended.
Section 14. Each committee of the board of directors shall keep
regular minutes of its meetings and report the same to the board of directors
when required.
12
COMPENSATION OF DIRECTORS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 15. Unless otherwise restricted by the Restated Certificate
of Incorporation or these by-laws, the board of directors shall have the
authority to fix the compensation of directors. All directors may be paid
their expenses, if any, of attendance at each meeting of the board of
directors, and directors who are not full-time employees of the Corporation
may be paid a fixed sum for attendance at each meeting of the board of
directors and/or a stated salary as director. No such payment shall preclude
any director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation and expenses for attending committee meetings.
REMOVAL OF DIRECTORS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 16. Subject to the rights of the holders of any series of
Preferred Stock or any other class of capital stock of the Corporation (other
than the Common Stock) then outstanding, (a) any director, or the entire
13
board of directors, may be removed from office at any time prior to the
expiration of his term of office, with or without cause, only by the
affirmative vote of the holders of record of outstanding shares representing
at least a majority of all of the aggregate voting power of outstanding shares
of capital stock of the Corporation then entitled to vote generally in the
election of directors, voting together as a single class at a special meeting
of stockholders called expressly for that purpose; provided that, any director
may be removed from office by the affirmative vote of a majority of the entire
board of directors, at any time prior to the expiration of his term of office,
as provided by law, in the event a director fails to meet the qualifications
stated in these by-laws for election as a director or in the event such
director is in breach of any agreement between such director and the
Corporation relating to such director's service as a director or employee of
the Corporation.
INDEMNIFICATION OF DIRECTORS
Section 17. The Corporation shall have the right to indemnify
directors, officers and agents of the Corporation to the fullest extent
permitted by the General Corporation Law of Delaware and by the Restated
Certificate of Incorporation, as both may be amended from time to time.
14
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of applicable law or of
the Restated Certificate of Incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall be construed to
mean written or printed notice given either personally or by mail or wire
addressed to such director or stockholder, at his address as it appears on the
records of the Corporation, with postage or other charges thereon prepaid, and
such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail or at the appropriate office for
transmission by wire. Notice to directors may also be given by telephone.
Section 2. Whenever any notice is required to be given under the
provisions of applicable law or of the Restated Certificate of Incorporation
or of these by-laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
Section 3. Attendance at a meeting shall constitute a waiver of
notice except where a director or shareholder attends a meeting for the
express purpose of
15
objecting to the transaction of any business because the meeting is not
lawfully called or convened.
Section 4. Neither the business to be transacted at, nor the purpose
of, any regular meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
ARTICLE V
OFFICERS
Subject to Article XIII of the Restated Certificate of
Incorporation:
Section 1. The officers of the Corporation shall be elected by the
board of directors at its first meeting after each annual meeting of the
stockholders and shall be a President and Chief Operating Officer, a Treasurer
and a Secretary. The board of directors may also elect a Chairman of the
Board, a Chief Executive Officer, one or more Vice Chairmen of the Board and
Vice Presidents and one or more Assistant Treasurers and Assistant
Secretaries. Any number of offices may be held by the same person, except that
the offices of President and Chief Operating Officer and Secretary shall not
be held by the same person. Vice Presidents may be given distinctive
designations such as Executive Vice President or Senior Vice President. Every
officer shall be a citizen of the United States of America.
16
Section 2. The board of directors may elect such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board of directors.
Section 3. The officers of the Corporation shall hold office until
their successors are elected or appointed and qualify or until their earlier
resignation or removal. Any officer elected or appointed by the board of
directors may be removed at any time with or without cause by the affirmative
vote of a majority of the whole board of directors. Any vacancy occurring in
any office of the Corporation shall be filled by the board of directors.
CHAIRMAN OF THE BOARD
Section 4. The Chairman of the Board, if any shall be elected, shall
preside at all meetings of the board of directors and the stockholders and
shall have such other powers and perform such other duties as may from time to
time be assigned to him by the board of directors.
VICE CHAIRMAN OF THE BOARD
Section 5. The Vice Chairman of the Board, if any shall be elected,
or if there be more than one, the Vice Chairmen of the Board in order of their
election, shall, in
17
the absence of the Chairman of the Board, or in the case the Chairman of the
Board shall resign, retire, become deceased or otherwise cease or be unable to
act, perform the duties and exercise the powers of the Chairman of the Board.
In addition, the Vice Chairman of the Board shall have such other powers and
perform such other duties as may from time to time be assigned to him by the
board of directors.
THE CHIEF EXECUTIVE OFFICER
Section 6. The Chief Executive Officer shall be responsible,
in consultation with the President and Chief Operating Officer, for corporate
policy and strategy. The President and Chief Operating Officer shall consult
on all major decisions with, and shall report directly to, the Chief Executive
Officer; provided, however, that the Chief Executive Officer shall not
exercise any powers, rights, functions or responsibilities of the President
and Chief Operating Officer unless ▇▇▇ ▇▇▇▇▇▇▇▇ is the Chief Executive
Officer.
THE PRESIDENT AND CHIEF OPERATING OFFICER
Section 7. Subject to Article XIII of the Restated Certificate of
Incorporation and to the requirement that the President and Chief Operating
Officer consult with the Chief Executive Officer on all major decisions, the
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President and Chief Operating Officer shall be responsible for:
(i) supervising, coordinating and managing the
Corporation's business, operations and activities,
operating expenses and capital allocation;
(ii) matters relating to officers (other than the
Chairman, the Chief Executive Officer and the President
and Chief Operating Officer) and employees, including,
without limitation, hiring, terminating, changing
positions and allocation of responsibilities of such
officers and employees;
(iii) substantially all of the powers, rights,
functions and responsibilities typically exercised by a
chief operating officer; and
(iv) all officers (other than the Chairman, the Chief
Executive Officer and the President and Chief Operating
Officer) will report, directly or indirectly, to the
President and Chief Operating Officer.
THE VICE-PRESIDENTS
Section 8. The Vice-Presidents shall have such powers and perform
such duties as may from time to time be assigned to them by the board of
directors or the President and Chief Operating Officer.
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THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The Secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings
of the meetings of the Corporation and of the board of directors in a book to
be kept for that purpose and shall perform like duties for the standing
committees of the board of directors when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of
the board of directors, and shall perform such other duties as may be
prescribed by the board of directors or the President and Chief Operating
Officer, under whose supervision he shall be. He shall have custody of the
corporate seal of the Corporation and he, or an Assistant Secretary, shall
have authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
Assistant Secretary. The board of directors may give general authority to any
other officer to affix the seal of the Corporation and to attest the affixing
by his signature.
Section 10. The Assistant Secretary, if any shall be elected, or if
there be more than one, the Assistant
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Secretaries in the order determined by the board of directors (or if there be
no such determination, then in the order of their election), shall, in the
absence of the Secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the Secretary and shall have
such other powers and perform such other duties as may from time to time be
assigned to them by the board of directors or the President and Chief
Operating Officer.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The Treasurer, under the supervision of the President
and Chief Operating Officer, shall have charge of the corporate funds and
securities and shall keep or cause to be kept full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositaries as may be designated by or at the
direction of the board of directors.
Section 12. The Treasurer shall disburse or cause to be disbursed
the funds of the Corporation as may be ordered by or at the direction of the
President and Chief Operating Officer or the board of directors, taking proper
vouchers for such disbursements, and subject to the
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supervision of the President and Chief Operating Officer, shall render to the
board of directors, when they or either of them so require, an account of his
transactions as Treasurer and of the financial condition of the Corporation.
Section 13. If required by the board of directors, the Treasurer
shall give the Corporation a bond in such sum and with such surety or sureties
as shall be satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 14. The Assistant Treasurer, if any shall be elected, or if
there shall be more than one, the Assistant Treasurers in the order determined
by the board of directors (or if there be no such determination, then in the
order of their election), shall, in the absence of the Treasurer or in the
event of his inability or refusal to act, perform the duties and exercise the
powers of the Treasurer and shall have such other powers and perform such
other duties as may from time to time be assigned to them by the board of
directors.
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Section 15. In addition to the corporate officers elected by the
board of directors pursuant to this Article V, the President and Chief
Operating Officer may, from time to time, appoint one or more other persons as
appointed officers who shall not be deemed to be corporate officers, but may,
respectively, be designated with such titles as the President and Chief
Operating Officer may deem appropriate. The President and Chief Operating
Officer may prescribe the powers to be exercised and the duties to be
performed by each such appointed officer, may designate the term for which
each such appointment is made, and may, from time to time, terminate any or
all of such appointments. Such appointments and termination of appointments
shall be reported to the board of directors.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of shares of capital stock in the
Corporation shall be entitled to have a certificate sealed with the seal of
the Corporation and signed by, or in the name of the Corporation by, the
Chairman of the Board, the Chief Executive Officer, Vice Chairman of the Board
or the President and Chief Operating Officer and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him in the
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Corporation. If the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class, the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware,
in lieu of the foregoing requirements, there may be set forth on the face or
back of the certificate which the Corporation shall issue to represent such
class or series of stock, a statement that the Corporation will furnish
without charge to each stockholder who so requests the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar
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before such certificate is issued, it may be issued by the Corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of capital stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the Corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the Corporation or the transfer agent
of the Corporation of a certificate for shares duly endorsed or accompanied by
proper evidence of
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succession, assignation or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution, or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meetings, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
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REGISTERED STOCKHOLDERS
Section 6. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of the capital
stock, subject to the provisions of any statute, the Restated Certificate of
Incorporation and these by-laws.
Section 2. Before payment of any dividend, there may be set aside
out of any funds of the Corporation
27
available for dividends such sum or sums as the directors from time to time,
in their absolute discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the Corporation, or for such other purposes as the directors
shall think conducive to the interest of the Corporation, and the directors
may modify or abolish any such reserve in the manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by
vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
CHECKS
Section 4. All checks or demands for money of the Corporation shall
be signed by such officer or officers or such other person or persons as the
board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be as specified
by the board of directors.
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SEAL
Section 6. The corporate seal shall have inscribed thereon the name
of the Corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or reproduced or otherwise.
CONTRACTS
Section 7. An Officer of the Corporation may sign any note, bond, or
mortgage of the Corporation in furtherance of the Corporation's ordinary
business and in order to implement any action authorized by these by-laws.
ARTICLE VIII
RESTATED CERTIFICATE OF INCORPORATION
In addition to all other provisions of the Restated Certificate of
Incorporation, and notwithstanding that these by-laws may contain any
provision contrary thereto, these by-laws shall be subject in all respects to
Article XIII of the Restated Certificate of Incorporation.
ARTICLE IX
AMENDMENTS
In furtherance of and not in limitation of the powers conferred by
statute, the board of directors of the
29
Corporation from time to time may make, amend, alter, change or repeal the
by-laws of the Corporation; provided, that any by-laws made, amended, altered,
changed or repealed by the board of directors or the stockholders of the
Corporation may be amended, altered, changed or repealed, and that any by-laws
may be made, by the stockholders of the Corporation. Notwithstanding any other
provisions of the Restated Certificate of Incorporation of the Corporation or
these by-laws (and notwithstanding the fact that a lesser percentage may be
specified by law, the Restated Certificate of Incorporation or these by-laws),
the affirmative vote of not less than a majority of the aggregate voting power
of all outstanding shares of capital stock of the Corporation then entitled to
vote generally in this election of Directors, voting together as a single
class, shall be required for the stockholders of the Corporation to amend,
alter, change, repeal or adopt any by-laws of the Corporation.