Exhibit 2.2
Execution Copy
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF
MERGER (this “ Agreement ”) is made
as of this 4th day of June, 2008, by and among Discovery Holding
Company, a Delaware corporation (“ DHC
”), Discovery Communications, Inc., a Delaware corporation
(“ New DHC ”), and DHC Merger Sub, Inc.,
a Delaware corporation (“ Merger Sub
”).
RECITALS
WHEREAS , each of New DHC and
Merger Sub is a direct or indirect subsidiary of DHC;
WHEREAS , the parties desire
to effect the transactions set forth in this Agreement in
connection with (i) the creation of a new holding company
structure by merging Merger Sub with and into DHC with DHC
surviving, pursuant to which merger New DHC will become the new,
public, parent company and DHC will become a wholly-owned
subsidiary of New DHC, and (ii) the conversion of outstanding
DHC Common Stock (as defined below) into New DHC Common Stock (as
defined below);
WHEREAS , this Agreement has
been approved and declared advisable by the board of directors of
each party hereto, and has been adopted by the sole stockholders of
each of Merger Sub and New DHC; and
WHEREAS , the transactions
contemplated by this Agreement are intended to qualify as a
tax-free exchange (in conjunction with the ANPP Contribution (as
defined in the Transaction Agreement)) within the meaning of
Section 351 of the Code (as defined below).
NOW, THEREFORE , in
consideration of the foregoing premises and of the mutual
covenants, representations, warranties and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in the Agreement, the
following terms will have the following meanings unless the context
otherwise requires:
“ ANPP ”
means Advance/Newhouse Programming Partnership, a New York general
partnership.
“ Book-Entry
Shares ” means shares of DHC Common Stock held in the
Direct Registration System.
“Code”
means U.S. Internal Revenue Code of 1986, as amended.
“ Certificates
” means certificates that immediately prior to the Effective
Time of the Merger represented shares of DHC Common Stock.
“ DHC Board
” means the Board of Directors of DHC.
“ DHC Common
Stock ” means the DHC Series A Common Stock, the
DHC Series B Common Stock and DHC Series C Common
Stock.
“ DHC Incentive
Plans ” means the Discovery Holding Company 2005
Incentive Plan (As Amended and Restated Effective August 15,
2007), the Discovery Holding Company 2005 Non-Employee Director
Plan (As Amended and Restated Effective August 15, 2007) and
the Discovery Holding Company Transitional Stock Adjustment Plan
(As Amended and Restated Effective August 15, 2007).
“ DHC Rights
Agreement ” means the Rights Agreement, dated as of
July 18, 2005, between DHC and Computershare Trust Company,
N.A., as Rights Agent.
“ DHC Series A
Common Stock ” means the “Series A Common
Stock”, par value $.01 per share, of DHC (including the DHC
Series A Right attached thereto).
“ DHC Series B
Common Stock ” means the “Series B Common
Stock”, par value $.01 per share, of DHC (including the DHC
Series B Right attached thereto).
“ DHC Series C
Common Stock ” means the “Series C Common
Stock”, par value $.01 per share, of DHC (including the DHC
Series C Right attached thereto).
“ DHC Series A
Right ” has the meaning ascribed to it in the DHC
Rights Agreement.
“ DHC Series B
Right ” has the meaning ascribed to it in the DHC
Rights Agreement.
“ DHC Series C
Right ” has the meaning ascribed to it in the DHC
Rights Agreement.
“ Direct Registration
System ” means the service of the Exchange Agent that
provides for electronic direct registration of securities in a
record holder’s name on the Company’s transfer books
and allows shares to be transferred between record holders
electronically.
“ Effective Time of the
Merger ” means the time when the Merger becomes
effective under applicable law as provided in
Section 3.01(a).
“ Exchange Agent
” means Computershare Trust Company, N.A., which is the
transfer agent for DHC Common Stock, is expected to be the transfer
agent for New DHC Common Stock and is expected to be designated to
act as exchange agent for the purpose of exchanging Certificates
and Book-Entry Shares in the Merger.
“ Fair Market
Value ” means with respect to a share of any series
of New DHC Common Stock on any day, the last sale price (or, if no
last sale price is reported, the average of the high bid and low
asked prices) for a share of the applicable series of New DHC
Common Stock on such day (or if such day is not a trading day, the
next trading day) as reported on the Nasdaq
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Stock
Market, Inc. or if such shares are not then listed on the Nasdaq
Stock Market, Inc., as reported on the consolidated transaction
reporting system for the principal national securities exchange on
which shares of the applicable series of New DHC Common Stock are
listed on such day; provided, that, if for any day the Fair Market
Value of a share of the applicable series of New DHC Common Stock
is not determinable by any of the foregoing means, then the Fair
Market Value for such day shall be determined in good faith by the
board of directors of New DHC or any committee thereof on the basis
of such quotations and other considerations as the board or its
committee deems appropriate.
“ Merger ”
means the merger of Merger Sub with and into DHC with DHC surviving
the merger.
“ New DHC Common
Stock ” means, collectively, the New DHC
Series A Common Stock, New DHC Series B Common Stock and New
DHC Series C Common Stock.
“ New DHC Rights
” means, collectively, the New DHC Series A Rights, the
New DHC Series B Rights and the New DHC Series C
Rights.
“ New DHC Series A
Common Stock ” means the Series A Common Stock,
par value $0.01 per share, of New DHC (including, after the
Effective Time of the Merger, the New DHC Series A Right
attached thereto pursuant to the New DHC Rights Agreement).
“ New DHC Series B
Common Stock ” means the Series B Common Stock,
par value $0.01 per share, of New DHC (including, after the
Effective Time of the Merger, the New DHC Series B Right
attached thereto pursuant to the New DHC Rights Agreement).
“ New DHC Series C
Common Stock ” means the Series C Common Stock,
par value $0.01 per share, of New DHC (including, after the
Effective Time of the Merger, the New DHC Series C Right
attached thereto pursuant to the New DHC Rights Agreement).
“ New DHC Series A
Right ” means a Series A Right (as defined in
the New DHC Rights Agreement).
“ New DHC Series B
Right ” means a Series B Right (as defined in
the New DHC Rights Agreement).
“ New DHC Series C
Right ” means a Series C Right (as defined in
the New DHC Rights Agreement).
“ Person ”
means an individual, firm, corporation, partnership, limited
liability company, trust, joint venture or other entity or a
government, agency, political subdivision, or instrumentality
thereof.
“ Record Date
” means the date and time as of which holders of DHC Common
Stock must own shares of DHC Common Stock to be eligible to vote
such shares at the Special Meeting.
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“ SEC ”
means the Securities and Exchange Commission, and any successor
commission or agency having similar powers.
“ Securities Act
” means the Securities Act of 1933, as amended, and the rules
and regulations thereunder.
“ Special Meeting
” has the meaning ascribed to it in the Transaction
Agreement.
“ Transactions
” has the meaning ascribed to it in the Transaction
Agreement.
“ Transaction
Agreement ” means the agreement, dated as of
June 4, 2008, by and among DHC, New DHC, Merger Sub, ANPP and,
with respect to Section 5.14 thereof only, Advance
Publications, Inc., a New York corporation, and Newhouse
Broadcasting Corporation, a New York corporation.
“ VWAP ”
means, (i) with respect to the DHC Series A Common Stock
or DHC Series B Common Stock, the average of the daily volume
weighted average prices of such security over the 5-trading days
ending on the trading day immediately preceding the Closing Date
(as defined in the Transaction Agreement) or, if applicable, the
trading day immediately preceding the first date on which the DHC
Series A Common Stock or DHC Series B Common Stock, as
applicable, trades regular way on the Nasdaq Global Select Market
without the right to receive shares of common stock of the Spin-Off
Company (as defined in the Transaction Agreement), and
(ii) with respect to the New DHC Series A Common Stock,
New DHC Series B Common Stock, New DHC Series C Common
Stock, Series A common stock of the Spin-Off Company or
Series B common stock of the Spin-Off Company, the average of
the daily volume weighted average prices of such security over the
10-trading days beginning on the day immediately following the
Closing (as defined in the Transaction Agreement).
The following terms have the meanings
ascribed thereto in the sections set forth opposite such
terms:
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Additional Defined Terms |
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Section |
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Agreement
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Preamble |
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Awards
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3.04(a) |
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Carryover
Director
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3.04(b)(ii) |
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Certificate of
Merger
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3.01(a) |
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Consideration
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3.02(a)(ii) |
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Converted
Options
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3.04(b)(iv) |
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Converted
Series A Option
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3.04(b)(i) |
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Converted
Series B Option
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3.04(b)(iv) |
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DGCL
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3.01(a) |
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DHC
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Preamble |
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DHC Awards
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3.04(a) |
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DHC Charter
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3.01(c) |
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Director
Series A Option
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3.04(b)(ii) |
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Former Book-Entry
Holders
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3.03(b) |
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Former Book-Entry
Shares
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3.03(b) |
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Additional Defined Terms |
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Section |
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Former Certificate
Holders
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3.03(a)(i) |
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Former
Certificated Shares
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3.03(a)(i) |
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Former DHC
Holders
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3.03(b) |
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Former DHC
Shares
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3.03(b) |
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Merger Sub
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Preamble |
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New DHC
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Preamble |
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New DHC
Bylaws
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2.01 |
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New DHC
Charter
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2.01 |
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New DHC Original
Stock
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2.01 |
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Rollover
SARs
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3.04(b)(iii) |
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Scheduled
Series A Option
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3.04(b)(i) |
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Series A
Consideration
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3.02(a)(i) |
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Series B
Consideration
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3.02(a)(ii) |
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Series A
Option
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3.04(b)(iii) |
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Series B
Option
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3.04(b)(iv) |
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Series C
Option
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3.04(b)(i) |
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Series A
SAR
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3.04(b)(iii) |
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Series C
SAR
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3.04(b)(iii) |
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Spin-Off Company
Series A Option
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3.04(b)(i) |
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Spin-Off Company
Series B Option
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3.04(b)(iv) |
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Surviving
Entity
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3.01(a) |
ARTICLE II
NEW DHC
Section 2.01 Organization of
New DHC . DHC has caused New DHC to be organized under the laws
of the State of Delaware. The authorized capital stock of New DHC
on the date hereof consists of 10,000 shares of common stock, par
value $0.01 per share (the “ New DHC Original
Stock ”), of which 1,000 shares has been issued to
DHC and no other shares are issued and outstanding. Prior to the
Contribution Effective Time (as defined in the Transaction
Agreement), New DHC will (i) cause the Certificate of
Incorporation of New DHC (“ New DHC Charter
”) to be restated as set forth in Exhibit 2.01(c)(i) to
the Transaction Agreement and filed with the Delaware Secretary of
State, and such New DHC Charter will be in effect as of the
Effective Time of the Merger, (ii) cause the Bylaws (“
New DHC Bylaws ”) of New DHC to be restated as
set forth in Exhibit 2.01(c)(ii) to the Transaction Agreement,
and such New DHC Bylaws will be in effect as of the Effective Time
of the Merger, and (iii) execute and deliver to Computershare
Trust Company, N.A., the Rights Agreement between New DHC and the
Computershare Trust Company, N.A., in substantially the form of
Exhibit 2.01(c)(iii) to the Transaction Agreement (the “
New DHC Rights Agreement ”). The authorized
capital stock of New DHC at the Effective Time of the Merger will
be as provided for in the New DHC Charter.
Section 2.02 Directors and
Officers of New DHC .
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As of and following the Effective
Time of the Merger, until their successors are duly elected or
appointed in accordance with the New DHC Charter and the New DHC
Bylaws, the directors, executive officers and certain other
officers of New DHC will be as set forth on Schedule 2.03(f)
to the Transaction Agreement.
ARTICLE III
THE MERGER AND RELATED MATTERS
Section 3.01 The Merger
.
(a)
Merger; Effective Time of the Merger . At the Effective Time
of the Merger and subject to and upon the terms and conditions of
this Agreement, Merger Sub will merge with and into DHC in
accordance with the provisions of the General Corporation Law of
the State of Delaware (“ DGCL ”), the
separate corporate existence of Merger Sub will cease and DHC will
continue as the surviving entity (the “ Surviving
Entity ”). The Effective Time of the Merger will be
on the date and at the time that the certificate of merger with
respect to the Merger, containing the provisions required by and
executed in accordance with Section 251 of the DGCL (the
“ Certificate of Merger ”), has been
accepted for filing by the Delaware Secretary of State, and all
other documents required by the DGCL to effectuate the Merger will
have been properly executed and filed (or such later date and time
as may be specified in the Certificate of Merger).
(b)
Effects of the Merger . From and after the Effective Time of
the Merger, the Merger will have the effects set forth in the DGCL
(including Sections 259, 260 and 261 thereof). Without
limiting the generality of the foregoing, and subject thereto, at
the Effective Time of the Merger, all the properties, rights,
privileges, powers and franchises of DHC and Merger Sub will vest
in the Surviving Entity, and all debts, liabilities and duties of
DHC and Merger Sub will, by operation of law, become the debts,
liabilities and duties of the Surviving Entity.
(c)
Certificate of Incorporation of the Surviving Entity . At
the Effective Time of the Merger, the Amended and Restated
Certificate of Incorporation of DHC (the “ DHC
Charter ”) will be amended pursuant to the
Certificate of Merger to be identical to the Certificate of
Incorporation of Merger Sub in effect immediately prior to the
Effective Time of the Merger, except that Article FIRST
thereof will read as follows: “The name of the Corporation
(which is hereinafter called the “Corporation”) is
Discovery Holding Company”. Such DHC Charter as so amended
will be the Certificate of Incorporation of the Surviving Entity
until thereafter duly amended or restated in accordance with the
terms thereof and the DGCL.
(d)
Bylaws of the Surviving Entity . At the Effective Time of
the Merger, the Restated Bylaws of DHC (the “ DHC
Bylaws ”) will be amended to be identical to the
bylaws of Merger Sub in effect immediately prior to the Effective
Time of the Merger and, in such amended form, will be the Bylaws of
the Surviving Entity until thereafter duly amended or restated in
accordance with the terms thereof, the terms of the Certificate of
Incorporation of the Surviving Entity and the DGCL.
Section 3.02 Conversion of
Securities .
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(a)
Conversion of DHC Securities . At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part
of any party hereto or any holder of shares of DHC Common
Stock:
(i)
each share of DHC Series A Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger (together
with the DHC Series A Right attached thereto) will be
converted into and represent the right to receive, and will be
exchangeable for, 0.50 shares of New DHC Series A Common Stock
and 0.50 shares of New DHC Series C Common Stock
(the “ Series A Consideration
”);
(ii)
each share of DHC Series B Common Stock (together with the DHC
Series B Right attached thereto) issued and outstanding
immediately prior to the Effective Time of the Merger will be
converted into and represent the right to receive, and will be
exchangeable for, 0.50 shares of New DHC Series B Common Stock
and 0.50 shares of New DHC Series C Stock (the “
Series B Consideration ”, which, together
with the Series A Consideration, is the “
Consideration ”); and
(iii)
each share of DHC Common Stock held in treasury of DHC immediately
prior to the Effective Time of the Merger will be cancelled and
retired without payment of any consideration therefor and without
any conversion thereof.
At the Effective Time, all shares of
DHC Common Stock issued and outstanding immediately prior to the
Effective Time will no longer be outstanding and will automatically
be canceled and retired and will cease to exist, and each holder of
a Certificate or Book-Entry Share will have no further rights with
respect thereto, except as set forth in Section 3.03.
(b)
Conversion of Merger Sub Stock . At the Effective Time of
the Merger, by virtue of the Merger and without any action on the
part of any party hereto or any holder of shares of stock of Merger
Sub, each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time of the Merger
will be converted into and become one validly issued, fully paid
and nonassessable share of common stock of the Surviving Entity.
Such shares will constitute the only outstanding shares of capital
stock of the Surviving Entity.
(c)
Treatment of New DHC Securities . At the Effective Time of
the Merger, by virtue of the Merger and without any action on the
part of any party hereto, each share of New DHC Original Stock held
by DHC will be cancelled and retired and will cease to exist.
Section 3.03 Exchange
Procedures .
(a)
Exchange of Certificates .
(i) As
soon as reasonably practicable after the Effective Time of the
Merger, New DHC will cause to be mailed to (x) each record
holder, as of the Effective Time of the Merger, of Certificates
(such holders, “ Former Certificate Holders
” and such shares, “ Former Certificated
Shares ”): (A) a letter of transmittal (which
will specify that delivery will be effected, and risk of loss and
title to the Certificates held by such holder representing such
Former Certificated Shares will pass, only upon proper
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delivery of the
Certificates to the Exchange Agent) and (B) instructions for
use in effecting the surrender of the Certificates for the
Consideration. Such letter of transmittal will be in such form and
have such other reasonable provisions as New DHC may specify.
(ii)
Upon surrender by a Former Certificate Holder to the Exchange Agent
of a Certificate, together with a letter of transmittal, duly
completed and validly executed in accordance with the instructions
thereto, and such other documents as may be required pursuant to
such instructions, each Former Certificate Holder will be entitled
to receive in exchange therefor: (A) the number of whole
shares of New DHC Common Stock into which such holder’s
shares of DHC Common Stock represented by such holder’s
properly surrendered Certificates were converted in accordance with
this Article III, and such Certificates so surrendered will be
forthwith cancelled, (B) a check in an amount of U.S. dollars
(after giving effect to any required withholdings pursuant to
Section 3.03(e)) equal to any cash consideration in lieu of
fractional shares to which such holder is entitled pursuant to
Section 3.03(d), and (C) any unpaid dividends or
distributions which such holder is entitled to receive.
(iii)
If issuance of the Consideration is to be made to a Person other
than the Person in whose name the surrendered Certificate is
registered, it will be a condition of payment or issuance that the
Certificate so surrendered will be properly endorsed or will be
otherwise in proper form for transfer and that the Person
requesting such payment or issuance will have paid to the Exchange
Agent any transfer and other taxes required by reason of the
payment or issuance of the Consideration to a Person other than the
registered holder of the Certificate surrendered or will have
established to the satisfaction of the Exchange Agent tha
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