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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of (Date of earliest event reported) December 17, 2001
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USA Networks, Inc.
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(Exact name of Registrant as specified in Charter)
Delaware 0-20570 59-2712887
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
152 West 57th Street, New York, New York 10019
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 314-7300
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ITEM 5. OTHER EVENTS
On December 17, 2001, USA Networks, Inc. announced an agreement to
contribute its Entertainment Group to a joint venture with Vivendi Universal,
S.A. Filed herewith, and incorporated herein by reference, is the Transaction
Agreement and the other principal agreements contemplated thereby.
ITEM 7. EXHIBITS
(c) Exhibits.
Exhibit No. Description
- ----------- -----------
2.1 Transaction Agreement, dated as of December 16, 2001, among
Vivendi Universal, S.A., Universal Studios, Inc., USA
Networks, Inc., USANi LLC and Liberty Media Corporation
4.1 Form of Equity Warrant Agreement between USA Networks, Inc.
and The Bank of New York
10.1 Amended and Restated Governance Agreement, dated as of
December 16, 2001, among USA Networks, Inc., Vivendi
Universal, S.A., Universal Studios, Inc., Liberty Media
Corporation and Barry Diller
99.1 Form of Limited Liability Limited Partnership Agreement of
[Vivendi Universal Entertainment], L.L.L.P., among a wholly owned
subsidiary of Universal Studios, Inc., USA Networks, Inc., USANi
Sub LLC and Barry Diller
99.2 Amended and Restated Stockholders Agreement, dated as of
December 16, 2001, among Universal Studios, Inc., Liberty
Media Corporation, Barry Diller and Vivendi Universal, S.A.
99.3 Agreement and Plan of Merger and Exchange, dated as of
December 16, 2001, among Vivendi Universal, S.A., Universal
Studios, Inc., Light France Acquisition 1, S.A.S., the
Merger Subsidiaries listed on the signature pages thereto,
Liberty Media Corporation, Liberty Programming Company LLC,
Liberty Programming France, Inc., LMC USA VI, Inc., LMC USA
VII, Inc., LMC USA VIII, Inc., LMC USA X, Inc., Liberty HSN
LLC Holdings, Inc. and the Liberty holding entities listed
on the signature pages thereto
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
USA NETWORKS, INC.
Date: December 18, 2001 By: /s/ Julius Genachowski
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Julius Genachowski
Senior Vice President
and General Counsel
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EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
2.1 Transaction Agreement, dated as of December
16, 2001, among Vivendi Universal, S.A.,
Universal Studios, Inc., USA Networks, Inc.,
USANi LLC and Liberty Media Corporation
4.1 Form of Equity Warrant Agreement between USA
Networks, Inc. and The Bank of New York
10.1 Amended and Restated Governance Agreement,
dated as of December 16, 2001, among USA
Networks, Inc., Vivendi Universal, S.A.,
Universal Studios, Inc., Liberty Media
Corporation and Barry Diller
99.1 Form of Limited Liability Limited Partnership
Agreement of [Vivendi Universal Entertainment],
L.L.L.P., among a wholly owned subsidiary of
Universal Studios, Inc., USA Networks, Inc.,
USANi Sub LLC and Barry Diller
99.2 Amended and Restated Stockholders Agreement,
dated as of December 16, 2001, among Universal
Studios, Inc., Liberty Media Corporation,
Barry Diller and Vivendi Universal, S.A.
99.3 Agreement and Plan of Merger and Exchange,
dated as of December 16, 2001, among Vivendi
Universal, S.A., Universal Studios, Inc.,
Light France Acquisition 1, S.A.S., the Merger
Subsidiaries listed on the signature pages
thereto, Liberty Media Corporation, Liberty
Programming Company LLC, Liberty Programming
France, Inc., LMC USA VI, Inc., LMC USA VII,
Inc., LMC USA VIII, Inc., LMC USA X, Inc.,
Liberty HSN LLC Holdings, Inc. and the Liberty
holding entities listed on the signature pages
thereto
EXHIBIT 2.1
==============================================================================
TRANSACTION AGREEMENT
Among
VIVENDI UNIVERSAL, S.A.,
UNIVERSAL STUDIOS, INC.,
USA NETWORKS, INC.,
USANi LLC
and
LIBERTY MEDIA CORPORATION
Dated as of December 16, 2001
==============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
ARTICLE II
Transactions and Closing
SECTION 2.01. Exchange Rights...............................................2
SECTION 2.02. USANi Shares..................................................3
SECTION 2.03. Transfer and Acquisition......................................3
SECTION 2.04. Other Transactions............................................4
SECTION 2.05. Assignment of Contracts and Rights............................4
SECTION 2.06. Closing Date..................................................5
SECTION 2.07. Assignment of Rights by Diller................................5
ARTICLE III
Representations and Warranties of Parent Parties
SECTION 3.01. Organization, Standing and Power..............................6
SECTION 3.02. Authority; Execution and Delivery;
Enforceability.............................................6
SECTION 3.03. No Conflicts; Consents........................................8
SECTION 3.04. Capitalization of USAi; Warrants..............................9
SECTION 3.05. The Contributed Subsidiaries.................................10
SECTION 3.06. Financial Statements; No Undisclosed
Liabilities...............................................12
SECTION 3.07. Contracts....................................................13
SECTION 3.08. Contributed Assets...........................................14
SECTION 3.09. Real Property................................................14
SECTION 3.10. Intangible Property..........................................14
SECTION 3.11. Licenses.....................................................15
SECTION 3.12. Absence of Changes or Events.................................15
SECTION 3.13. Compliance with Applicable Laws..............................15
SECTION 3.14. Litigation...................................................16
SECTION 3.15. Universal Contributed Interests..............................16
SECTION 3.16. Brokers or Finders...........................................17
SECTION 3.17. Investment Intent............................................17
SECTION 3.18. Tax Matters..................................................18
SECTION 3.19. Employee Matters.............................................18
ii
ARTICLE IV
Agreements and Covenants
SECTION 4.01. Covenants Relating to Conduct of
Business..................................................20
SECTION 4.02. Access to Information........................................23
SECTION 4.03. Confidentiality..............................................23
SECTION 4.04. Reasonable Best Efforts......................................24
SECTION 4.05. Expenses; Transfer Taxes.....................................24
SECTION 4.06. Distribution Agreements......................................25
SECTION 4.07. Publicity....................................................26
SECTION 4.08. Further Assurances...........................................26
SECTION 4.09. Board Recommendation.........................................27
SECTION 4.10. Preparation of Proxy Statement;
Stockholders Meeting......................................27
SECTION 4.11. Commercial Arrangements......................................29
SECTION 4.12. Tax Matters..................................................29
SECTION 4.13. Agreement Not To Compete.....................................30
SECTION 4.14. USAi Partnership Interests...................................32
SECTION 4.15. Officers of the Partnership..................................32
SECTION 4.16. Partnership Agreement Obligations............................32
SECTION 4.17. Committed LLC Shares; Committed Common
Equity....................................................32
SECTION 4.18. Partnership..................................................33
SECTION 4.19. Substitute Letters of Credit;
Guarantees................................................33
SECTION 4.20. USANi Tax Distribution.......................................33
SECTION 4.21. Lease Arrangement............................................34
SECTION 4.22. USA Name.....................................................34
SECTION 4.23. Options and Restricted Stock.................................34
ARTICLE V
Conditions Precedent
SECTION 5.01. Conditions to Each Party's Obligation........................35
SECTION 5.02. Additional Conditions to Obligation of
each Parent Party.........................................36
SECTION 5.03. Frustration of Closing Conditions............................36
ARTICLE VI
Termination
SECTION 6.01. Termination..................................................37
SECTION 6.02. Effect of Termination........................................37
iii
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification by Each Parent Party.........................38
SECTION 7.02. Tax Indemnification by Each Parent
Party......................................................40
SECTION 7.03. Refunds......................................................42
SECTION 7.04. Calculation of Losses........................................42
SECTION 7.05. Termination of Indemnification...............................42
SECTION 7.06. Procedures; Exclusivity......................................43
SECTION 7.07. Survival.....................................................45
ARTICLE VIII
Miscellaneous
SECTION 8.01. Approval of Transactions.....................................45
SECTION 8.02. Notices......................................................46
SECTION 8.03. No Third Party Beneficiaries.................................46
SECTION 8.04. Waiver.......................................................46
SECTION 8.05. Assignment...................................................47
SECTION 8.06. Integration..................................................47
SECTION 8.07. Headings.....................................................47
SECTION 8.08. Counterparts.................................................47
SECTION 8.09. Severability.................................................47
SECTION 8.10. Governing Law................................................47
SECTION 8.11. Jurisdiction.................................................48
SECTION 8.12. Specific Performance.........................................48
SECTION 8.13. Amendments...................................................48
SECTION 8.14. Interpretation...............................................49
ANNEX A
EXHIBITS
SCHEDULES
TRANSACTION AGREEMENT (this "Agreement") dated
as of December 16, 2001, by and among VIVENDI
UNIVERSAL, S.A., a societe anonyme organized under
the laws of France ("Vivendi"), UNIVERSAL STUDIOS,
INC., a Delaware corporation ("Universal"), USA
NETWORKS, INC., a Delaware corporation ("USAi"),
USANI LLC, a Delaware limited liability company
("USANi"), LIBERTY MEDIA CORPORATION, a Delaware
corporation ("Liberty"), and, for purposes of
Sections 2.03(a)(iv), 2.03(a)(v), 2.03(a)(vii),
2.07, 4.10(d) and 8.01 only, BARRY DILLER
("Diller").
Preliminary Statement
WHEREAS USANi desires to distribute to Universal and its Affiliates
(such term and such other terms used and not defined in this Preliminary
Statement, as defined in Annex A) the USANi Distributed Interests in return
for the cancellation of all the USANi Shares owned by Universal and its
Affiliates;
WHEREAS Affiliates of Universal and USAi desire to form the
Partnership with Universal Contributing (or causing to be Contributed) the
Universal Contributed Interests and the USANi Distributed Interests, USANi
Contributing (or causing to be Contributed) the USANi Contributed Interests
and USAi Contributing (or causing to be Contributed) all of the membership
interests in USA Films, and with the Partnership operating and conducting its
business on the terms set forth in the Partnership Agreement;
WHEREAS Universal, USAi and USANi desire that the Partnership grant
to Diller a participating interest in the Partnership as compensation for
agreeing to serve as the Chairman and CEO of the Partnership and in
consideration for Diller agreeing to be bound by certain non-competition
provisions;
WHEREAS USAi desires to issue to Universal the Warrants in exchange
for Universal agreeing to enter into the commercial arrangements described in
Section 4.11 and for other valuable consideration, including Universal
agreeing to the put/call arrangements set forth in Section 8.07 of the
Partnership Agreement and agreeing to serve as general partner of the
Partnership; and
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WHEREAS, in connection with the foregoing, the parties hereto, as
applicable, desire to terminate the Exchange Agreement, effective as of the
Closing Date, but after the exchanges contemplated by Section 2.01 of the
Universal/Liberty Merger Agreement and to amend and restate, effective as of
the Closing, the Stockholders Agreement and the Governance Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions and Usage
Unless the context shall otherwise require, terms used and not
defined herein shall have the meanings assigned thereto in Annex A. Inclusion
of, or reference to, any matter in any Schedule to this Agreement does not
constitute an admission of the materiality of any such matter.
ARTICLE II
Transactions and Closing
Upon the terms and subject to the conditions set forth herein, the
parties shall consummate each of the following transactions.
SECTION 2.01. Exchange Rights. (a) Prior to effecting the
transactions contemplated by Section 2.02 of this Agreement, but immediately
after the exchanges contemplated by Section 2.01 of the Universal/Liberty
Merger Agreement, (i) the Exchange Agreement, except the representations and
warranties contained therein, and (ii) Section 6.01 of the Investment
Agreement, shall be terminated, whereby the USANi Shares will no longer be
exchangeable for USAi Common Equity. Each party hereto that is also a party to
the Exchange Agreement and/or the Investment Agreement shall execute and
deliver, or shall cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all actions necessary to
effect the terminations required pursuant to this Section 2.01 at the time
specified herein.
(b) During the period from the date of this Agreement to the time of
the termination of the exchange right referred to above, USAi shall not take
any action to
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require either Universal or Liberty to exchange their USANi Shares for shares
of USAi Common Stock pursuant to the Exchange Agreement and during the period
from the date of this Agreement to and including the Closing Date, USAi shall
not take any action to require Liberty to exchange the shares of Home Shopping
Network, Inc. for USAi Common Stock pursuant to the Liberty Exchange
Agreement.
SECTION 2.02. USANi Shares. On the Closing Date, immediately prior to
effecting the transactions contemplated by Section 2.03, (a) the USAi Share
Exchanges and the Mergers (each as defined in the Universal/Liberty Merger
Agreement) shall be consummated, then (b) USANi shall distribute to Universal
and/or its Affiliates (I) the USANi Universal Distributed Interests in return
for the cancellation of 282,161,530 USANi Shares owned by Universal and its
Affiliates and (II) the USANi Liberty Distributed Interests in return for the
cancellation of 38,694,982 USANi Shares owned by Universal and its Affiliates
that were directly or indirectly acquired in connection with clause (a) above,
all of which USANi Shares shall be delivered by Universal and/or its Affiliates
free and clear of any Liens (the "Committed LLC Shares") and (c) Universal shall
deliver to USANi cancelled share certificates representing the cancellation of
all such Committed LLC Shares.
SECTION 2.03. Transfer and Acquisition. (a) On the Closing Date,
immediately after effecting the trans actions contemplated by Section 2.02,
(i) Universal shall Contribute (or cause to be Contributed) to the Partnership
all the right, title and interest of Universal and its Affiliates in, to and
under the Universal Contributed Interests and the USANi Distributed Interests;
(ii) USANi shall Contribute (or cause to be Contributed) to the
Partnership, directly or indirectly, all the right, title and interest of
USANi and its Affiliates in, to and under the USANi Contributed Interests;
(iii) USAi shall Contribute (or cause to be Contributed) to the
Partnership all the right, title and interest of USAi and its Affiliates in,
to and under the membership interests in USA Films;
(iv) Diller shall assume the roles of Chairman and CEO of the
Partnership;
(v) each Parent Party and Diller shall execute and deliver (or cause
its Affiliates to execute and deliver) (A) the Partnership Agreement and (B)
such appropriate bills of sale, assignment and assumption and other
instruments of
4
transfer providing for the contributions set forth in this Section 2.03, and
the parties to the Partnership Agreement shall form the Partnership;
(vi) Universal shall cause the Partnership to assume the Contributed
Liabilities; and
(vii) each of Universal, USAi, USANi Sub and Diller (or Affiliates
thereof) shall receive interests in the Partnership as set forth in the
Partnership Agreement.
(b) Prior to Closing, the Parent Parties shall agree upon a schedule
that sets forth the agreed allocation of values of the interests being
Contributed pursuant to Section 2.03(a) for tax purposes.
SECTION 2.04. Other Transactions. On the Closing Date,
(i) (A) USAi and The Bank of New York shall execute and deliver the
Warrant Agreement and (B) USAi shall issue and deliver Warrants to
Universal in the amounts and with the exercise prices as set forth in
Schedule 2.04; provided, that if any event shall have occurred after the
close of business on November 30, 2001 (the "Reference Date") and on or
prior to the Closing Date that would result in an adjustment to the
number of shares purchasable upon the exercise of Warrants under Article
IV of the Warrant Agreement if such Warrants had been issued on the
Reference Date, USAi shall issue and deliver to Universal Warrants to
purchase the number of shares set forth on Schedule 2.04 as so adjusted,
with exercise prices adjusted accordingly;
(ii) Universal shall cause the Partnership to incur third party debt
(on terms reasonably satisfactory to USAi) in an amount sufficient to
fund the special distribution contemplated by Section 8.05 of the
Partnership Agreement, which will be payable to USANi Sub on the Closing
Date out of the proceeds of such debt.
SECTION 2.05. Assignment of Contracts and Rights. Anything in this
Agreement to the contrary notwithstanding, except as set forth on Schedule
2.05, this Agreement shall not constitute an agreement to assign any Contract
or License or any claim or right or any benefit arising thereunder or
resulting therefrom, or an assumption of liability thereunder, if an attempted
assignment thereof, without the approval of a party thereto, would be
5
ineffective or would constitute a breach or other contravention thereof or
give rise to any right of termination thereof, as a direct result of such
assignment. Each Parent Party shall use its reasonable best efforts (which
shall not require any payment of money) to obtain the approval of the other
parties to any such Contract or License, or any claim or right or any benefit
arising thereunder, for the assignment thereof to, and the assumption by, the
Partnership. If as of the Closing Date an attempted assignment and assumption
thereof would be ineffective or would give rise to any right of termination
thereof, each Parent Party shall cooperate in arranging a mutually agreeable
alternative to enable the Partnership to obtain the benefits and assume the
obligations under such Contract or License in accordance with this Agreement
as of the Closing Date or as soon as practicable thereafter (including through
a sub-contracting, sub-licensing, or sub- leasing arrangement, or an
arrangement under which such Parent Party or one of its Affiliates would
enforce such Contract or License for the benefit of the Partnership, with the
Partnership assuming such Parent Party's or its Affiliate's obligations and
any and all rights of such Parent Party or its Affiliate against the other
party thereto). If the approval of the other party is obtained, such approval
shall constitute a confirmation (automatically and without further action of
the parties) that such Contract or License is assigned to the Partnership as
of the Closing Date, and (automatically and without further action of the
parties) that the liabilities with respect to such Contract or License are
assumed by the Partnership as of the Closing Date. The agreements set forth on
Schedule 2.05 will apply with respect to the USAi Contracts described therein.
SECTION 2.06. Closing Date. The closing of the transactions set
forth in this Article II (the "Closing") shall take place at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019, at 10:00
a.m. on the second Business Day following the satisfaction (or to the extent
permitted, the waiver) of all the conditions to the parties' obligations set
forth in Article V (other than those requiring the delivery of documents or
the taking of other action at the Closing), or at such other place, time and
date as the parties hereto shall agree (the "Closing Date").
SECTION 2.07. Assignment of Rights by Diller. Diller may assign
beneficial interests in the right to receive up to an aggregate of 10% of the
Common Interests (as defined in the Partnership Agreement) that Diller is
entitled to receive upon the Closing to one or more Persons
6
designated by Diller prior to Closing; provided that no more than four such
Persons may be designated. For any such assignment to be effective, such
assignee shall have agreed, pursuant to an instrument in a form reasonably
satisfactory to Universal, to be bound by the terms of Section 6.07 of the
Partnership Agreement.
ARTICLE III
Representations and Warranties of Parent Parties
Representations and warranties of USAi relating to (i) the portions
of its Existing Business contained in USA Cable, Studios USA or their
respective subsidiaries speak only as to the period between February 13, 1998,
and the date hereof and (ii) the portions of its Existing Business contained
in USA Films and its subsidiaries speak only as to the period between May 29,
1999, and the date hereof (it being understood that matters existing prior to
(x) February 13, 1998, in the case of clause (i) above, and (y) May 29, 1999,
in the case of clause (ii) above, shall not be deemed to be a breach of a
representation or warranty that speaks on and after such respective date).
Subject to the immediately preceding sentence, each Parent Party (unless
otherwise specified), with respect to itself and, as applicable, with respect
to its Affiliates, represents and warrants to the other Parent Party as
follows:
SECTION 3.01. Organization, Standing and Power. Each of such Parent
Party and its Transaction Affiliate(s) (i) is duly organized or formed,
validly existing and in good standing (with respect to jurisdictions which
recognize such concept) under the laws of the jurisdiction in which it is so
organized or formed and (ii) has full corporate or limited liability company
power and authority to perform and comply with all the terms and conditions of
each Transaction Document to which it is, or is specified to be, a party. Each
of such Parent Party and its Transaction Affiliate(s) is duly qualified to do
business as a foreign corporation or limited liability company and is in good
standing (with respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of the business transacted by it or the
character or location of the properties owned or leased by it requires such
qualification, except where failure to be so qualified would not have a
Material Adverse Effect.
SECTION 3.02. Authority; Execution and Delivery; Enforceability.
Each of such Parent Party and its Affiliates has full power and authority to
execute and
7
deliver the Transaction Documents to which it is, or is specified to be, a
party and to consummate the Transactions to which it is, or is specified to
be, a party. The execution, delivery and performance by each of such Parent
Party and its Affiliates of the Transaction Documents to which it is, or is
specified to be, a party and the consummation by each of such Parent Party and
its Affiliates of the Transactions to which it is, or is specified to be, a
party have been (or, with respect to such Affiliates, prior to the Closing
Date will be) duly authorized by all necessary corporate or limited liability
company action subject, in the case of USAi, to receipt of the USAi
Stockholder Approvals, and no other corporate proceedings on the part of such
Parent Party or its Affiliates are necessary to authorize this Agreement or
the consummation of the Transactions. Each of such Parent Party and its
Affiliates has duly executed and delivered this Agreement (to the extent a
party hereto) and prior to the Effective Time will have duly executed and
delivered each other Transaction Document to which it is, or is specified to
be, a party, and this Agreement constitutes, and each other Transaction
Document to which it is, or is specified to be, a party will, after the
Effective Time (assuming the execution and delivery by each other party
thereto), constitute its legal, valid and binding obligations, enforceable
against it in accordance with its terms. The USAi Board formed a special
committee of the USAi Board, composed of the four disinterested directors on
the USAi Board (the "Special Committee"), to consider this Agreement, the
other Transaction Documents to which USAi is a party and the Transactions, and
to make a recommendation with respect thereto to the entire USAi Board. The
Special Committee, at a meeting duly called and held at which all members of
the Special Committee were present either in person or by telephone, (x)
received the opinion of Bear, Stearns & Co. to the effect that the
consideration to be received by USAi in the Transactions is fair, from a
financial point of view, to the stockholders of USAi other than Universal,
Liberty, Diller and their Affiliates, and (y) duly and unanimously (and
without any abstentions) adopted resolutions (i) declaring advisable this
Agreement, (ii) determining that the terms of the Transactions are fair to and
in the best interests of the public stockholders of USAi, other than
stockholders party to the Transactions, and (iii) recommending that the USAi
Board approve this Agreement, the other Transaction Documents to which USAi is
a party and the Transactions, and that the USAi Board declare the advisability
of this Agreement. After receiving and considering such resolutions of the
Special Committee, the USAi Board, at a meeting duly called and held at which
all directors of USAi were present either in person or by
8
telephone, duly adopted resolutions (i) approving and declaring advisable this
Agreement, (ii) determining that the terms of the Transactions are fair to and
in the best interests of the public stockholders of USAi other than
stockholders party to the Transactions, (iii) directing that this Agreement
and the Transactions be submitted to a vote at a meeting of USAi's
stockholders to be held as promptly as practicable following the date of this
Agreement, (iv) recommending that such stockholders adopt this Agreement and
approve and authorize the Transactions to the extent USAi is a party thereto
and (v) approving the other Transaction Documents to which USAi is a party and
the Transactions, which resolutions have not been subsequently rescinded,
modified or withdrawn in any way.
SECTION 3.03. No Conflicts; Consents. Except as set forth on
Schedule 3.03, the execution, delivery and performance by each of such Parent
Party and its Affiliates of this Agreement (to the extent a party hereto) does
not, the execution, delivery and performance by each of such Parent Party and
its Affiliates of each other Transaction Document to which it is, or is
specified to be, a party will not, and the consummation of the Transactions
and compliance with the terms of the Transaction Documents will not, conflict
with or result in any violation of or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation
or acceleration of any obligation or to loss of a material benefit under, or
to increased, additional or accelerated rights or entitlements of any Person
under, or result in the creation of any Lien upon any of the properties or
assets of such Parent Party or its Affiliates under, any provision of (i) the
Organizational Documents of such Parent Party or its Affiliates, (ii) any
Material Contract to which such Parent Party or its Affiliates is a party or
by which any of their respective properties or assets is bound or (iii) any
judgment, order or decree (collectively, "Judgment") or any statute, law,
ordinance, rule or regulation (collectively, "Applicable Law") applicable to
such Parent Party or its Affiliates or their respective properties or assets,
other than, in the case of clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, would not have a Material Adverse Effect. No
consent, approval, license, permit, order or authorization (collectively,
"Consent") of, or registration, declaration or filing with, any Federal,
state, local or foreign government or any court of competent jurisdiction,
regulatory or administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (collectively, "Governmental
Entity"), is required to be obtained or made by or with respect to either such
Parent Party or any of its
9
Affiliates in connection with the execution, delivery and performance of the
Transaction Documents to which it is, or is specified to be, a party or the
consummation of the Transactions, other than such Consents, registrations,
declarations or filings, the failure of which to obtain or make, would not,
individually or in the aggregate, have a Material Adverse Effect or those set
forth on Schedule 3.03.
SECTION 3.04. Capitalization of USAi; Warrants. USAi represents and
warrants to Universal that as of the close of business on the Reference Date
(a) the authorized capital stock of USAi consisted of (i) 1,600,000,000 shares
of USAi Common Stock, of which 314,347,113 shares were then issued and
outstanding and 6,379,547 shares were then held in treasury, (ii) 400,000,000
shares of Class B common stock of USAi, par value $.01 per share ("USAi Class
B Common Stock"), of which 63,033,452 shares were then issued and outstanding
and (iii) 100,000,000 shares of preferred stock of USAi, par value $.01 per
share ("USAi Preferred Stock"), of which there were then no shares issued and
outstanding (the issued and outstanding shares in clauses (i) and (ii) above,
collectively, the "USAi Shares"). Except for the USAi Shares and the other
securities set forth in this Section 3.04, there are no shares of capital
stock or other equity securities of USAi issued, reserved for issuance or
outstanding. Except as set forth on Schedule 3.04 or, with respect to
preemptive rights, as set forth in the Investment Agreement, the USAi Shares
are duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, call option, right
of first refusal, preemptive right, subscription right or any similar right
under any provision of the DGCL, the certificate of incorporation or by-laws
of USAi or any Contract to which USAi is a party or otherwise bound. Other
than (i) options to purchase an aggregate of 82,130,198 shares of USAi Common
Stock issued pursuant to employee benefit plans and agreements of USAi as of
the date hereof, (ii) USANi Shares entitling the holders thereof to acquire,
in the aggregate, 181,366,238 shares of USAi Common Stock and 146,570,000
shares of USAi Class B Common Stock, (iii) 31,620,064 shares of USAi Common
Stock and 1,596,544 shares of USAi Class B Common Stock issuable upon the
exchange of shares of Home Shopping Network, Inc., (iv) 1,137,498 shares of
USAi Common Stock issuable upon conversion of USAi's 7% Convertible
Subordinated Debentures due July 1, 2003, (v) 167,994 shares of USAi Common
Stock issuable upon the exercise of outstanding warrants, (vi) 452,500 shares
of USAi Common Stock issuable under various restricted stock grants, (vii) up
to 54,271,825 shares of USAi Common Stock issuable pursuant to the Expedia
Agreement (including 25,739,216 shares of USAi Common Stock
10
issuable upon the conversion of shares of USAi Preferred Stock issuable
pursuant to the Expedia Agreement), (viii) up to 13,125,000 shares of USAi
Preferred Stock issuable pursuant to the Expedia Agreement and (ix) up to
16,965,000 shares of USAi Common Stock issuable upon the exercise of warrants
issuable pursuant to the Expedia Agreement, as of the date hereof, except in
connection with this Agreement and the Transactions contemplated hereby, or as
set forth in the Investment Agreement, the Governance Agreement, the
Stockholders Agreement, the Exchange Agreement and the USANi LLC Agreement, as
of the Reference Date there were not any options, warrants, rights,
convertible or exchangeable securities, "phantom" stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts or
undertakings of any kind to which USAi is a party or by which USAi is bound
(i) obligating USAi to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other equity
interests in, or any security convertible or exercisable for or exchangeable
into any capital stock of or other equity interest in, USAi, (ii) obligating
USAi to issue, grant, extend or enter into any such option, warrant, call,
right, security, commitment, Contract, arrangement or undertaking or (iii)
that give any Person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to
holders of USAi Shares.
(b) USAi has full power to execute and deliver the Warrants, and the
Warrants have been, or as of the Closing Date will be, duly authorized by USAi
and, when duly executed, issued and delivered, will be duly and validly issued
and outstanding and will constitute valid and legally binding obligations of
USAi, entitled to the benefits of the Warrant Agreement and enforceable
against USAi in accordance with their terms. As of the Closing Date, (i)
60,467,735 shares of USAi Common Stock, adjusted as set forth in Section 2.04
or pursuant to Section 4.1(f) of the Warrant Agreement, shall be issuable upon
the exercise of the Warrants and (ii) such shares of USAi Common Stock have
been or, prior to the Closing Date, will be duly and validly authorized and
reserved for issuance upon exercise of the Warrants and, when issued upon such
exercise, will be validly issued, fully paid and nonassessable.
SECTION 3.05. The Contributed Subsidiaries. USAi represents and
warrants to Universal that, (a) Schedule 3.05(a) sets forth, for each
Contributed Subsidiary, the amount of its authorized capital stock or other
ownership interests, the amount of its outstanding capital stock or other
ownership interests and the record
11
and beneficial owners of its outstanding capital stock or other ownership
interests. Except as set forth on Schedule 3.05(a), there are no shares of
capital stock or other ownership interests in any such Contributed Subsidiary
issued, reserved for issuance or outstanding. All the outstanding shares of
capital stock or other ownership interests of each such Contributed Subsidiary
have been duly authorized and validly issued and are fully paid and non-
assessable and not subject to or issued in violation of any purchase option,
call option, right of first refusal, preemptive right, subscription right or
any similar right under any provision of the DGCL, if applicable, the
certificate of incorporation, by-laws or other organizational documents of
such Contributed Subsidiary or any Contract to which such Contributed
Subsidiary is a party or otherwise bound. There are not any bonds, debentures,
notes or other indebtedness of any such Contributed Subsidiary having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which holders of capital stock or other
ownership interests of such Contributed Subsidiary may vote ("Voting
Subsidiary Debt"). Except as set forth above, as of the date hereof, there are
not any options, warrants, rights, convertible or exchangeable securities,
"phantom" stock rights, stock appreciation rights, stock-based performance
units, commitments, Contracts or undertakings of any kind to which any such
Contributed Subsidiary is a party or by which any of them is bound (i)
obligating such Contributed Subsidiary to issue, deliver or sell, or cause to
be issued, delivered or sold, additional shares of capital stock or other
ownership interests in, or any security convertible or exercisable for or
exchangeable into any capital stock of or other ownership interests in, any
such Contributed Subsidiary or Voting Subsidiary Debt, (ii) obligating such
Contributed Subsidiary to issue, grant, extend or enter into any such option,
warrant, call, right, security, commitment, Contract, arrangement or
undertaking or (iii) that give any Person the right to receive any economic
benefit or right similar to or derived from the economic benefits and rights
occurring to holders of capital stock or other ownership interests of such
Contributed Subsidiary. As of the date hereof, there are not any outstanding
contractual obligations of any such Contributed Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock of such Contributed
Subsidiary.
(b) (i) Except for ownership interests in its wholly owned
subsidiaries and the ownership interests set forth on Schedule 3.05(b), as of
the date hereof, no Contributed Subsidiary owns, directly or indirectly, any
capital stock, membership interest, partnership interest,
12
joint venture interest or other equity interest in any Person, other than any
interest in special purpose subsidiaries formed in connection with motion
picture or television production projects, and (ii) the Contributed
Subsidiaries do not own (or will not own as of the Closing), directly or
indirectly, any Excluded Assets and are not (or will not be) liable (after
giving effect to the indemnification provisions of Article VII) in respect of
any Excluded Liabilities.
SECTION 3.06. Financial Statements; No Undisclosed Liabilities. (a)
USAi represents and warrants to Universal that (i) the consolidated financial
statements of USAi included in the documents filed by USAi with the SEC since
January 1, 2000, through the date hereof (the "USAi SEC Documents") comply as
to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles in the
United States ("U.S. GAAP") (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and present
fairly, in all material respects, the consolidated financial position of USAi
and its consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth in the USAi SEC Documents, as of the date of
this Agreement, neither USAi nor any of its subsidiaries has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by U.S. GAAP to be set forth on a consolidated balance
sheet or in the notes thereto and that, individually or in the aggregate,
would have a Material Adverse Effect.
(ii) USAi has delivered to Universal a copy of the unaudited interim
balance sheet of USAi's Existing Business as of September 30, 2001 (the
"Balance Sheet"). The Balance Sheet has been prepared in accordance with U.S.
GAAP, from the books and records of USAi, and presents fairly, in all material
respects, the financial position of USAi's Existing Business as of the date
thereof, subject to normal year-end adjustments. Except as set forth in the
Balance Sheet, as of the date thereof, neither USAi nor any of its
subsidiaries had any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) arising primarily out of the
conduct of USAi's Existing Business and required by U.S. GAAP to be set forth
on a consolidated balance sheet or in the notes thereto and that,
13
individually or in the aggregate, would have a Material Adverse Effect.
(b) Universal represents and warrants to USAi that the consolidated
financial statements of Vivendi included in the documents filed by Vivendi
with the SEC since January 1, 2000, through the date hereof (the "Vivendi SEC
Documents") comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto, have been prepared in accordance with generally accepted
accounting principles in France ("French GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and present fairly, in all material respects, the consolidated financial
position of Vivendi and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments). Except as set forth in the Vivendi SEC Documents,
as of the date of this Agreement, neither Vivendi nor any of its subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by French GAAP to be set forth on a
consolidated balance sheet or in the notes thereto and that, individually or
in the aggregate, would have a Material Adverse Effect.
SECTION 3.07. Contracts. USAi's SEC Reports complied in all material
respects with the disclosure requirements of Item 601 of Regulation S-K.
Except as set forth on Schedule 3.07 and except as would not have a Material
Adverse Effect, all of the Material Contracts are in full force and effect and
are valid and binding agreements of USAi or its Affiliates and, to the
knowledge of USAi, the other parties thereto, enforceable in accordance with
their terms. Except as set forth on Schedule 3.07, to the knowledge of USAi,
no party is in default in any material respect under any of the Material
Contracts, nor does any condition exist that with notice or the lapse of time
or both would constitute such a default. Except for the need to obtain the
Consents listed on Schedule 3.03 and except as would not have a Material
Adverse Effect, the Transactions will not affect the validity or
enforceability of any of the Material Contracts. Except as set forth on
Schedule 3.07 or as would not have a Material Adverse Effect, as of the date
of this Agreement, no party to any Material Contract has informed USAi or, to
USAi's knowledge, its Affiliates, of its intention (x) to terminate such
Material Contract or amend the material terms thereof, (y) to refuse to renew
such Material Contract upon
14
expiration of its term, or (z) to renew such Material Contract upon expiration
only on terms and conditions that are more onerous to its Existing Business,
as the case may be, than those now existing.
SECTION 3.08. Contributed Assets. (a) Such Parent Party owns,
directly or indirectly, and has good and valid title to all such Parent
Party's Contributed Assets, free and clear of all Liens, except Permitted
Liens.
(b) Neither such Parent Party nor any of its Affiliates owns (or
will own as of the Closing) any asset, property or right, tangible or
intangible, that is primarily used in the business or operations of its
Existing Business, other than, in each case, such assets, properties and
rights that are being Contributed to the Partnership in accordance with this
Agreement. Such Parent Party's Contributed Assets are sufficient for the
conduct of its business by the Partnership immediately following the Closing
in substantially the same manner as currently conducted by such Parent Party.
SECTION 3.09. Real Property. No fee estates are included in the
Material Real Property. Except as set forth on Schedule 3.09, USAi or an
Affiliate thereof has good title to all the Material Real Property, free and
clear of all Liens or other restrictions on the Material Real Property, except
for Permitted Liens. Except for that portion of the Material Real Property
subject to leases where USAi is lessor or sublessor and except as would not
have a Material Adverse Effect, USAi is in possession of, and has full legal
and practical access to, the Material Real Property. As of the date hereof
there are no pending or, to the knowledge of USAi, threatened condemnation or
appropriation proceedings against any of the Material Real Property, except as
would not have a Material Adverse Effect. With respect to each leasehold or
subleasehold interest included in the Material Real Property, USAi or its
Affiliate has enforceable rights to nondisturbance and quiet enjoyment, and no
third party holds any interest in the leased premises with the right to
foreclose upon such leasehold or subleasehold interest, except as would not
have a Material Adverse Effect.
SECTION 3.10. Intangible Property. Except (i) as set forth on
Schedule 3.10 or (ii) as has arisen in the ordinary course of business
consistent with past practice and without material diminution of the value
thereof, to the knowledge of USAi, no other person has any claim of ownership
or right of use with respect to its Intangible Property. The use of such
Intangible Property by USAi's
15
Existing Business does not, and the use by the Partnership immediately after
the Closing will not, conflict with, infringe upon, violate, or interfere with
or constitute an appropriation of any right, title, interest, or goodwill,
including any intellectual property right, patent, trademark, trade name,
service mark, brand name, computer program, database, industrial design,
copyright, or any pending application therefor of any other Person (except for
such conflicts, infringements, violations or appropriations as would not have
a Material Adverse Effect), and, to the knowledge of USAi, there have been no
claims made, and USAi's Existing Business has not received any written notice,
that any such item of Intangible Property is invalid or conflicts with the
asserted rights of any Person (other than such invalidity or conflicts as
would not have a Material Adverse Effect).
SECTION 3.11. Licenses. Each material License of USAi's Existing
Business has been validly issued and is in full force and effect, and USAi, or
an Affiliate thereof, is the authorized legal holder thereof and has complied
in all material respects with all the terms and conditions thereof. As of the
date hereof, there is no Proceeding pending or, to USAi's knowledge,
threatened, seeking the revocation, modification (in a manner adverse to
USAi's Existing Business) or limitation of any material License of USAi's
Existing Business, and no such License will be subject to suspension,
modification, revocation or non-renewal as a result of the execution of this
Agreement or the consummation of the Transactions, except for such
suspensions, modifications, revocations or non-renewals as would not have a
Material Adverse Effect. USAi possesses all material Licenses to own or hold
under lease and operate its Contributed Assets that are necessary to enable it
to conduct its Existing Business as currently conducted.
SECTION 3.12. Absence of Changes or Events. Except as set forth on
Schedule 3.12 and except as disclosed in such Parent Party's SEC Reports,
since December 31, 2000 through the date hereof, (i) such Parent Party has
caused its Existing Business to be conducted in the ordinary course and in
substantially the same manner as previously conducted and (ii) there has not
been any Material Adverse Effect.
SECTION 3.13. Compliance with Applicable Laws. Except as disclosed
in such Parent Party's SEC Reports, the Existing Business of such Parent Party
has been and is presently being conducted in compliance with all Applicable
Laws, including those relating to the environment, except for instances of
noncompliance that, individually or in the aggregate, would not have a
Material Adverse Effect. Except
16
as set forth on Schedule 3.13, (i) neither such Parent Party nor any of its
Affiliates has received any written communication during the past year from a
Governmental Entity that alleges that its Existing Business is not in
compliance in any material respect with any Applicable Laws and (ii) neither
such Parent Party nor any of its Affiliates has received any written notice
that any investigation or review by any Governmental Entity with respect to
any of its Contributed Assets or its Existing Business is pending or that any
such investigation is contemplated.
SECTION 3.14. Litigation. Except as set forth on Schedule 3.14 or as
disclosed in such Parent Party's SEC Reports, there are not any (i)
outstanding Judgments against or affecting such Parent Party, its Affiliates
or its Contributed Assets or Contributed Subsidiaries, or (ii) claims,
actions, suits, proceedings, arbitrations, investigations, inquiries, or
hearings or notices of hearings (collectively, "Proceedings") pending or, to
the knowledge of such Parent Party, threatened against or affecting such
Parent Party, its Affiliates or its Contributed Assets or Contributed
Subsidiaries, by or against any Governmental Entity or any other Person, that
in any manner challenges or seeks to prevent, enjoin, materially alter or
materially delay the Transactions or that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. Universal Contributed Interests. Universal represents
and warrants to USAi that, as of the Closing Date, all the outstanding shares
of capital stock or other ownership interests of each Universal Contributed
Interest will have been duly authorized and validly issued and will have been
fully paid and non-assessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of the DGCL, if
applicable, the certificate of incorporation, by-laws or other organizational
documents of such Universal Contributed Interest or any Contract to which such
Universal Contributed Interest is a party or otherwise bound. As of the
Closing Date, there will not be any bonds, debentures, notes or other
indebtedness of any such Universal Contributed Interest having the right to
vote (or convertible into, or exchangeable for, securities having the right to
vote) on any matters on which holders of capital stock or other ownership
interests of such Universal Contributed Interest may vote ("Voting Contributed
Interest Debt"). As of the Closing Date, there will not be any options,
warrants, rights, convertible or exchangeable securities, "phantom" stock
rights, stock appreciation
17
rights, stock-based performance units, commitments, Contracts or undertakings
of any kind to which any such Universal Contributed Interest is a party or by
which any of them is bound (i) obligating such Universal Contributed Interest
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other ownership interests in, or any
security convertible or exercisable for or exchangeable into any capital stock
of or other ownership interests in, any such Universal Contributed Interest or
Voting Contributed Interest Debt, (ii) obligating such Universal Contributed
Interest to issue, grant, extend or enter into any such option, warrant, call,
right, security, commitment, Contract, arrangement or undertaking or (iii)
that give any Person the right to receive any economic benefit or right
similar to or derived from the economic benefits and rights occurring to
holders of capital stock or other ownership interests of such Universal
Contributed Interest.
(b) As of the Closing Date, the Universal Contributed Interests will
not own, directly or indirectly, any Excluded Assets and will not be liable
(after giving effect to the indemnification provisions of Article VII) in
respect of any Excluded Liabilities.
SECTION 3.16. Brokers or Finders. No agent, broker, investment
banker or other firm or person is or will be entitled to receive from a Parent
Party or its Affiliates or the Partnership any broker's or finder's fee or any
other commission or similar fee in connection with any of the Transactions,
except (i) as to Universal and its Affiliates, Goldman, Sachs & Co., whose
fees and expenses will be paid by Universal, and (ii) as to USAi and its
Affiliates, Allen & Co. and Bear, Stearns & Co., whose fees and expenses will
be paid by USAi.
SECTION 3.17. Investment Intent. Such Parent Party understands that
(i) the interests in the Partnership to be issued to it as contemplated by the
Partnership Agreement have not been, and will not be, registered under the
Securities Act of 1933, as amended, or under any state securities laws, and
are being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering, and (ii) to the extent it or
any of its Affiliates acquires any of the interests in the Partnership as
contemplated by the Partnership Agreement, it or such Affiliate will be
acquiring such shares solely for its own account for investment purposes, and
not with a view to the distribution thereof.
18
SECTION 3.18. Tax Matters. (a) All material Returns required to be
filed by such Parent Party for taxable periods ending on or prior to the
Closing Date by, or with respect to, its Existing Business have been or will
be filed in accordance with all applicable laws, and all Taxes due have been
or will be paid, except where the failure to so file or so pay would not
reasonably be expected to have, in the aggregate, a Material Adverse Effect.
(b) USAi represents and warrants that, except as set forth on
Schedule 3.18(b), each entity to be Contributed to the Partnership by USAi or
USANi Sub pursuant to this Agreement and Section 3.01 of the Partnership
Agreement will be treated as a pass-through entity for U.S. federal income tax
purposes at the time of contribution.
SECTION 3.19. Employee Matters. For purposes hereof, "USAi Benefit
Arrangements" shall mean all material employee benefit plans or arrangements
that cover any employee of USAi's Existing Business (the "USAi Business
Employees") including any employment, severance, or other similar contract,
arrangement or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, or retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation rights, stock
purchases, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits.
(b) No USAi Benefit Arrangement is an "employee pension benefit
plan," as defined in Section 3(2) of ERISA (an "USAi Pension Plan"), that is
subject to Title IV of ERISA or Section 412 of the Code, and no USAi Benefit
Arrangement provides post-retirement welfare benefits, except as required by
law. Neither USAi nor any of its Affiliates has incurred or expects to incur
any liability or lien under Title IV of ERISA or Section 412 of the Code,
which liability or lien would be reasonably expected to have a Material
Adverse Effect.
(c) Without limiting the generality of Section 3.19(b), except as
set forth on Schedule 3.19(c) to be provided within 10 Business Days
hereafter, no USAi Benefit Arrangement or employee benefit plans of any of its
Affiliates or any entity required to be combined with USAi or any of its
Affiliates under Section 414(b), Section 414(c), Section 414(m), or Section
414(o) of the Code (an "ERISA Affiliate") is a "multiemployer pension
19
plan," as defined in Section 3(37) of ERISA, and neither USAi nor any of its
Affiliates nor any of its ERISA Affiliates has incurred or expects to incur
any liability or lien with respect to any multiemployer pension plan which
liability or lien would be reasonably expected to have a Material Adverse
Effect.
(d) Except as set forth on Schedule 3.19(d), none of USAi, any of
its Affiliates, or any of its ERISA Affiliates has incurred, or expects to
incur solely as a result of the consummation of the Transactions (including
any termination of employment in connection therewith), any cost, fee,
expense, liability, claim, suit, obligation, or other damage with respect to
any USAi Pension Plan, or any USAi Benefit Arrangement that could give rise to
the imposition of any liability, cost, fee, expense, or obligation on the
Partnership or any of its Affiliates, which would be reasonably expected to
have a Material Adverse Effect, and, to USAi's knowledge, no facts or
circumstances exist that could give rise to any such cost, fee, expense,
liability, claim, suit, obligation, or other damage, which would be reasonably
expected to have a Material Adverse Effect. Except as set forth on Schedule
3.19(d), neither the execution and delivery of this Agreement nor the
consummation of the Transactions (including any terminations of employment in
connection therewith) will (i) increase any benefits otherwise payable under
any USAi Benefit Arrangement, which would be reasonably expected to have a
Material Adverse Effect or (ii) result in the acceleration of the time of
payment or vesting of any such payment, which would be reasonably expected to
have a Material Adverse Effect.
(e) USAi will deliver or make available to Universal within ten
business days hereafter true and complete copies of each of the following
documents:
(i) each USAi Benefit Arrangement (and, if applicable, related
trust agreements) and all amendments thereto, and (if applicable)
each summary plan description together with any summary of material
modifications;
(ii) each written USAi Benefit Arrangement and written
descriptions thereof that has been distributed to the USAi Business
Employees (including descriptions of the number and level of
employees covered thereby); and
20
(iii) each employee handbook or similar document describing any
USAi Benefit Arrangement applicable to the USAi Business Employees.
(f) Except as set forth on Schedule 3.19(f) to be provided within 10
Business Days hereafter, no controversies, disputes or proceedings are pending
or, to USAi's knowledge, threatened, between USAi or any of its Affiliates,
and any of the USAi Business Employees, which would be reasonably expected to
have a Material Adverse Effect. Except as set forth on Schedule 3.19(f) to be
provided within 10 Business Days hereafter, no labor union or other collective
bargaining unit represents or, to USAi's knowledge, claims to represent any
USAi Business Employees and, to USAi's knowledge, there is no union campaign
being conducted to solicit cards from employees to authorize a union to
request a National Labor Relations Board Certification election with respect
to any USAi Business Employees.
(g) Except where any such failure would not be reasonably expected
to have a Material Adverse Effect, all USAi Benefit Arrangements (i) comply in
all material respects with Applicable Law, including but not limited to ERISA
and the Code, and (ii) have been administered in all material respects in
accordance with their terms, and all required contributions have been made to
such USAi Benefit Arrangements. Except as set forth on Schedule 3.19(g), all
USAi Pension Plans that are intended to be qualified under Section 401(a) of
the Code have received a favorable determination letter from the Internal
Revenue Service, and USAi has no knowledge of any events that would cause such
letter to be revoked.
ARTICLE IV
Agreements and Covenants
SECTION 4.01. Covenants Relating to Conduct of Business. (a) Except
for matters set forth in Schedule 4.01 or otherwise expressly permitted by the
terms of this Agreement, from the date hereof to the Closing, each Parent
Party shall cause its respective Existing Business to be conducted in the
usual, regular and ordinary course in substantially the same manner as
previously conducted (including with respect to advertising, promotions,
capital expenditures and inventory levels) and use all reasonable efforts to
keep intact the respective businesses of such Parent Party's Existing
Business, keep available the services of their current employees and preserve
their
21
relationships with customers, suppliers, licensors, licensees, distributors
and others with whom they deal to the end that their respective businesses
shall be unimpaired at the Closing. Each Parent Party shall not, and shall not
permit any of its Affiliates to, take any action that would, or that could
reasonably be expected to, result in any of the conditions set forth in
Article V not being satisfied. In addition (and without limiting the
generality of the foregoing), except as set forth in Schedule 4.01 or
otherwise expressly permitted or required by the terms of this Agreement, each
Parent Party shall not, and shall not permit any of its Affiliates to, do any
of the following in connection with its Existing Business without the prior
written consent of the other Parent Party:
(i) with respect to any of its Contributed Subsidiaries, amend
its Organizational Documents, except as is necessary to consummate
the Transactions;
(ii) other than sweeping cash in the ordinary course of
business consistent with past practice, make any declaration or
payment of any dividend or any other distribution in respect of its
equity interest in any Contributed Subsidiary;
(iii) with respect to any of its Contributed Subsidiaries,
redeem or otherwise acquire any shares of its capital stock or issue
any capital stock (except upon the exercise of outstanding options)
or any option, warrant or right relating thereto or any securities
convertible into or exchangeable for any shares of such capital
stock;
(iv) incur or assume any indebtedness for borrowed money or
guarantee any such indebtedness in connection with its Existing
Business;
(v) permit, allow or suffer any Contributed Assets to become
subjected to any Lien of any nature whatsoever, except Permitted
Liens;
(vi) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value
relating to its Existing Business;
(vii) except for intercompany loans among Contributed
Subsidiaries in the ordinary course of business or transactions in
the ordinary course, consistent with past practice and not material
in amount, pay, loan or advance any amount to, or sell, transfer or
lease any of its assets to, or enter into
22
any agreement or arrangement with any of its Affiliates;
(viii) make any change in any method of financial accounting or
financial accounting practice or policy of its Existing Business
other than those required by generally accepted accounting
principles;
(ix) make any change in the methods or timing of collecting
receivables or paying payables with respect to its Existing
Business;
(x) other than in the ordinary course of business, make or
incur any capital expenditure in connection with its Existing
Business that is not currently approved in writing or budgeted;
(xi) sell, lease, license or otherwise dispose of any of the
assets of its Existing Business, except inventory, programming or
other goods or services sold in the ordinary course of business
consistent with past practice; or
(xii) authorize any of, or commit or agree to take, whether in
writing or otherwise, to do any of, the foregoing actions.
(b) Except as set forth in Schedule 4.01 or otherwise expressly
permitted by the terms of this Agreement or any ancillary agreements that may
be entered into in connection with the Transactions, USAi shall not, and shall
not permit any of its Affiliates to:
(i) adopt or amend any USAi Benefit Arrangement (or any plan or
arrangement that would be an USAi Benefit Arrangement if adopted)
relating primarily to its Existing Business or enter into, adopt,
extend (beyond the Closing Date), renew or amend any collective
bargaining agreement or other Contract relating to its Existing
Business with any labor organization, union or association, except
in each case, in the ordinary course of business and consistent with
past practice or as required by Applicable Law; or
(ii) (A) grant to any USAi Business Employee any increase in
compensation or benefits, except grants in the ordinary course of
business and consistent with past practice or as may be required
under agreements in existence on the date of this Agreement or (B)
grant new options or restricted stock to any USAi Business
23
Employee except as may be required under agreements in existence on
the date of this Agreement.
(c) Each Parent Party shall promptly advise the other Parent Party
in writing of the occurrence of any matter or event that is material to the
business, assets, financial condition, or results of operations of its
Existing Business, taken as a whole.
(d) Notwithstanding any other provision of this Agreement, following
the date hereof, each Parent Party shall manage its cash (including any sweeps
thereof), payables and receivables relating to its Existing Business in each
case in the ordinary course of business and consistent with past practice.
SECTION 4.02. Access to Information. Except as may be deemed
appropriate to ensure compliance with any Applicable Laws and subject to any
applicable privileges, from the date hereof to the Closing Date each Parent
Party (i) shall give the other Parent Party and its authorized representatives
reasonable access to the offices, properties, books and records of it relating
to its Existing Business during normal business hours and upon reasonable
prior notice, (ii) shall furnish to such other Parent Party and its authorized
representatives such financial and operating data and other information
relating to such Existing Business as such other Parent Party may reasonably
request and (iii) shall instruct its employees and representatives to
cooperate with such other Parent Party in its investigation of such Existing
Business, all for the purpose of enabling such other Parent Party and its
authorized representatives to conduct, at their own expense, business and
financial reviews, investigations and studies of such Existing Business. No
investigation pursuant to this Section 4.02 shall affect or otherwise obviate
or diminish any representations or warranties of any Parent Party or
conditions to the obligations of any Parent Party.
SECTION 4.03. Confidentiality. Each Parent Party acknowledges that
the information being provided to it in connection with the consummation of
the Transactions, as well as the information relating to its Existing Business
that will be Contributed to the Partnership as of the Closing Date, is
intended to be kept confidential, and each Parent Party shall keep
confidential, and cause its Affiliates and instruct its and their officers,
directors, employees and advisors to keep confidential, all such information,
except as required by law or administrative process and except for information
that is currently available to the public, or thereafter becomes available to
24
the public other than as a result of a breach of this Section 4.03. The
covenant set forth in this Section 4.03 shall terminate five years after the
date of this Agreement.
SECTION 4.04. Reasonable Best Efforts. (a) On the terms and subject
to the conditions of this Agreement, each Parent Party and its Affiliates
shall use its reasonable best efforts to cause the Closing to occur as soon as
practicable after the date hereof (but subject to the satisfaction of the
conditions set forth in Article V), including taking all reasonable actions
necessary to comply promptly with all legal requirements that may be imposed
on it or any of its Affiliates with respect to the Closing.
(b) Subject to Section 2.05, prior to the Closing each Parent Party
(at its own expense) shall use its reasonable best efforts to obtain, and
shall cause its Affiliates to cooperate in obtaining, all consents and
approvals from third parties necessary or appropriate to permit the
contributions contemplated by Section 2.03 and the consummation by such Parent
Party and its Affiliates of the Transactions.
(c) Following the date hereof, each Parent Party shall file promptly
any forms required under applicable law and take any other action reasonably
necessary in connection with obtaining the expiration or termination of the
waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, to the extent applicable to the Transactions.
SECTION 4.05. Expenses; Transfer Taxes. (a) Whether or not the
Closing takes place, and except as set forth in Section 6.02(b) or in Article
VII, all costs and expenses incurred in connection with the preparation of the
Transaction Documents and the consummation of the Transactions shall be paid
by the party incurring such costs and expenses, including all costs and
expenses incurred pursuant to Section 4.04.
(b) Any liabilities, obligations or commitments for transfer,
documentary, sales, use, registration, value- added and other similar Taxes,
governmental fees or other like assessments or charges of any kind whatsoever
and related amounts (including any penalties, interest and additions thereto)
(each, a "Transfer Tax") shall be paid as follows: (i) USAi shall pay all
Transfer Taxes on the contribution to the Partnership of the USANi Contributed
Interests and the membership interests in USA Films pursuant to Section
2.03(a), (ii) Universal shall pay all Transfer Taxes on the contribution of
the Universal Contributed
25
Interests and the USANi Distributed Interests to the Partnership pursuant to
Section 2.03(a) and (iii) each Parent Party shall pay one half of the Transfer
Taxes on the distribution by USANi of the USANi Distributed Interests pursuant
to Section 2.02. The Parent Party responsible for paying a Transfer Tax shall
use (and cause its Affiliates to use) its reasonable efforts to avail itself
of any available exemptions from any such Transfer Taxes, and the Parent
Parties shall cooperate with one another in providing any information and
documentation that may be necessary to obtain such exemptions.
SECTION 4.06. Distribution Agreements. (a) On the earlier to occur
of (i) the Closing Date and (ii) the date on which this Agreement is
terminated in accordance with Section 6.01, the Distribution Agreements shall
terminate (and each Parent Party shall take all efforts necessary to
effectuate the foregoing), and the parties thereto shall have no further
obligations or liabilities thereunder (including under the provisions of each
such agreement relating to (x) distribution obligations after termination or
(y) rights of first negotiation and last refusal after termination), except
with respect to services rendered prior to the date of such termination.
(b) On the Closing Date, the Ancillary Distribution Agreements shall
terminate (and each Parent Party shall take all efforts necessary to
effectuate the foregoing), and the parties thereto shall have no further
obligations or liabilities thereunder, except with respect to services
rendered prior to the date of such termination.
(c) Each Parent Party agrees, on behalf of itself and its
Affiliates, that for a reasonable period of time and not less than one year
following the termination of the Distribution Agreements, it or its Affiliates
will make available to the other Parent Party and its Affiliates (for the
domestic and international distribution of television programming produced by
such Parent Party or its Affiliates), any excess capacity, under existing
output agreements or otherwise, with respect to the domestic and international
distribution of television programming that such Parent Party and its
Affiliates are unable to use for their own programming. In connection with the
termination of the agreements set forth in Section 4.06(a), Universal and USAi
shall cooperate and act in good faith (i) to continue to provide television
distribution, including access to output agreements, for a period of one-year
following the termination date under Section 4.06(a) on terms and conditions
(not including with respect to exclusivity, non-compete and the like)
consistent with past
26
practice, and (ii) to provide for the orderly wind down of any in-process
commitments or obligations so as not to unreasonably disrupt the Existing
Businesses.
SECTION 4.07. Publicity. From the date hereof through the Closing
Date, no public release or announcement concerning the Transactions shall be
issued by any party or any of its Affiliates without the prior consent of the
other parties (which consent shall not be unreasonably withheld), except as
such release or announcement may be required by law or the rules or
regulations of any United States or foreign securities exchange or commission
(in which case the party required to make the release or announcement shall
allow the other parties reasonable time to comment on such release or
announcement in advance of such issuance); provided, however, that a party may
make internal announcements to its and its Affiliates' employees that are
consistent with the parties' prior public disclosures regarding the
Transactions.
SECTION 4.08. Further Assurances. (a) From time to time prior to and
after the Closing, as and when reasonably requested by another party, each
party shall execute and deliver, or cause to be executed and delivered, all
such documents and instruments and shall take, or cause to be taken, all such
further or other actions (subject to Section 4.04), as such other party may
reasonably deem necessary or desirable to consummate the Transactions.
(b) Universal and its Affiliates and Liberty and its Affiliates
shall use their respective reasonable best efforts (subject to the terms of
the Universal/Liberty Merger Agreement) to cause the conditions to closing set
forth in Sections 6.01, 6.02 and 6.03 of the Universal/Liberty Merger
Agreement to be satisfied as promptly as practicable. Universal and its
Affiliates shall not, without USAi's written consent, terminate the
Universal/Liberty Merger Agreement (other than pursuant to Section 7.01(a)(iv)
thereof) or amend the Universal/Liberty Merger Agreement in any manner that
would (i) delay the consummation of the Transactions in any material respect,
or (ii) increase the consideration payable to Liberty and/or its Affiliates
thereunder, other than in connection with any amendments entered into pursuant
to Section 5.01(d) of the Universal/Liberty Merger Agreement.
(c) In the event that at any time or from time to time after the
Closing, any Parent Party (or its Affiliates) shall receive or otherwise
possess any Contributed Asset that was not assigned or otherwise transferred
to the Partnership at the Closing, such Parent Party shall promptly
27
use its reasonable best efforts to transfer, or cause to be transferred, such
asset to the Partnership. Prior to any such transfer, the Parent Party (or its
Affiliates) possessing such asset shall hold such asset (and all earnings
generated by such asset from and after the Closing) in trust for the
Partnership.
SECTION 4.09. Board Recommendation. Neither the USAi Board nor any
committee thereof shall withdraw or modify in a manner adverse to Universal,
or propose to withdraw or modify, in a manner adverse to Universal, the
approval or recommendation by the USAi Board or any such committee of this
Agreement, the other Transaction Documents to which USAi is a party or the
Transactions. Notwithstanding the foregoing, if, prior to the USAi Stockholder
Approvals, (a) a majority of the Special Committee determines in good faith,
following receipt of the advice of outside counsel, that it is necessary to do
so in order to comply with its fiduciary obligations, the Special Committee
may withdraw or modify its recommendation of this Agreement, the other
Transaction Documents to which USAi is a party and the Transactions, and (b) a
majority of the USAi Board determines in good faith, following receipt of the
advice of outside counsel, that it is necessary to do so in order to comply
with its fiduciary obligations, the USAi Board may withdraw or modify its
recommendation to USAi's stockholders of this Agreement, the other Transaction
Documents to which USAi is a party and the Transactions; provided that neither
the Special Committee nor the USAi Board may take any action that would result
in USAi's stockholders no longer being legally capable under the DGCL of
approving or authorizing this Agreement or the Transactions.
SECTION 4.10. Preparation of Proxy Statement; Stockholders Meeting.
(a) As soon as practicable after execution of this Agreement, USAi shall
prepare and file with the SEC a preliminary Proxy Statement, in form and
substance reasonably satisfactory to Universal, and shall use its reasonable
best efforts to respond, after consultation with Universal, as promptly as
practicable to any comments of the SEC with respect thereto. USAi shall notify
Universal promptly of the receipt of any comments from the SEC or its staff
and of any request by the SEC or its staff for amendments or supplements to
the Proxy Statement or for additional information. USAi shall supply Universal
with copies of all correspondence between it or its representatives, on the
one hand, and the SEC or its staff, on the other hand, with respect to the
Proxy Statement. Universal shall cooperate with USAi in providing any
information or responses to comments, or other
28
assistance, reasonably requested in connection with the foregoing. If at any
time prior to receipt of the USAi Stockholder Approvals there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, USAi shall promptly prepare and mail to its stockholders such an
amendment or supplement. USAi shall use its reasonable best efforts to cause
the Proxy Statement to be mailed to its stockholders as promptly as
practicable after filing with the SEC. The Proxy Statement shall comply in all
material respects with all applicable requirements of law. None of the
information supplied or to be supplied by Vivendi, USAi or their respective
Affiliates for inclusion or incorporation by reference in the proxy statement
will contain any untrue statement of 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.
(b) USAi shall duly call, give notice of, convene and hold a meeting
of its stockholders (the "USAi Stockholders Meeting") for the purpose of
seeking the USAi Stockholder Approvals as soon as practicable after the filing
of the definitive Proxy Statement. USAi shall, through the USAi Board,
recommend to its stockholders that they give the USAi Stockholder Approvals,
except to the extent that the USAi Board shall have withdrawn or modified its
recommendation to USAi's stockholders of this Agreement and the Transactions
as permitted by Section 4.09. USAi agrees that its obligations pursuant to
this Section 4.10 shall not be affected by the withdrawal or modification by
the USAi Board or any committee thereof of such Board's or such committee's
recommendation to USAi's stockholders of this Agreement or the Transactions.
(c) Subject to clause (b) of this Section 4.10, each Parent Party
shall use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other Parent Party in doing, all things necessary, proper or advisable to
obtain the USAi Stockholder Approvals.
(d) At any meeting of the stockholders of USAi called to seek the
USAi Stockholder Approvals or in any other circumstances upon which a vote,
consent or other approval (including by written consent) with respect to this
Agreement or the Transactions is sought, such Parent Party or Diller, as
applicable, shall vote (or cause to be voted) any USAi Common Stock over which
such Parent Party or Diller, as applicable, has the power to vote in favor of
granting the USAi Stockholder Approvals.
29
SECTION 4.11. Commercial Arrangements. (a) Each Parent Party shall
enter into (or cause its Affiliates to enter into) a series of strategic and
commercial alliances with one another covering the transactional and internet
businesses of such Parent Party and its Affiliates on the Closing Date;
provided, that if such alliances are not entered into on or prior to the
Closing Date, the obligations under this provision shall continue after the
Closing Date. The commitment to enter into such agreements is an integral part
of the Transactions and the Parent Parties and their respective Affiliates
shall negotiate in good faith the terms thereof, which shall be mutually
beneficial and on mutually satisfactory terms and designed to treat each
Parent Party and its Affiliates as a "preferred partner" of the other.
(b) The Parent Parties shall negotiate in good faith to enter into
an agreement on the Closing Date pursuant to which the Partnership will
provide affiliate distribution of the Home Shopping Network, America's Store
and other transactional services (such as a travel network) on an arm's-length
basis; provided, that if such agreement is not entered into on or prior to the
Closing Date, the obligations to provide such affiliate distribution shall
continue after the Closing Date.
(c) The Parent Parties agree to the arrangements set forth on
Schedule 4.11(c).
(d) The failure to enter into any of the agreements set forth in
this Section 4.11 prior to the Closing Date will not constitute a failure of
the condition set forth in Section 5.02(b).
SECTION 4.12. Tax Matters. (a) The Parent Parties intend that the
Partnership be treated as a partnership for United States federal income tax
purposes and agree to take no actions inconsistent with such treatment. The
Parent Parties agree, except as otherwise required pursuant to a final
determination within the meaning of Section 1313(a)(1) of the Code, to treat the
transactions contemplated by Section 2.02 as a distribution by USANi to
Universal and/or its Affiliates governed by Section 731 of the Code and the
transactions contemplated by Sections 2.03 as a contribution of property to the
Partnership governed by Section 721(a) of the Code and a distribution by the
Partnership to USANi Sub, in each case that will not result in recognition of
gain or loss by any Parent Party or any of their respective Affiliates under any
provision of the Code or the Treasury Regulations thereunder.
30
(b) To the extent any entity to be Contributed to the Partnership by
Universal pursuant to this Agreement and Section 3.01 of the Partnership
Agreement is treated as other than a pass-through entity for U.S. federal
income tax purposes, Universal shall take all reasonable actions necessary to
cause such entity (or its successor) to be treated as a pass-through entity
for U.S. federal income tax purposes (a "Conversion"), provided that Universal
has determined in good faith that (i) neither Universal nor any of its
Affiliates shall suffer a material tax detriment or any other material cost as
a result of such Conversion and (ii) such Conversion is not prohibited by
applicable contract or law.
(c) Subject to Universal delivering to USAi a schedule setting forth
Universal's (or any of its Affiliate's) adjusted tax basis in any assets that
were contributed to USANi or any of its subsidiaries by Universal (or any of
its Affiliates) in a transaction in which USANi or any of its subsidiaries
took a transferred basis, USAi will deliver to Universal no later than 30 days
prior to the Closing Date a schedule setting forth to USAi's best knowledge
USANi Sub's tax basis, immediately after the Effective Time, in its interest
in the Partnership.
(d) No later than 30 days prior to the Closing Date, USAi shall
deliver to Universal a schedule setting forth, to the best knowledge of USAi,
the adjusted tax basis of USAi or USANi Sub, as the case may be, in each of
the assets to be contributed by USAi or USANi Sub, as the case may be, to the
Partnership.
SECTION 4.13. Agreement Not To Compete. (a) USAi understands that
the Partnership shall be entitled to protect and preserve the going concern
value of USAi's Existing Business to the extent permitted by law and that
Universal would not have entered into this Agreement absent the provisions of
this Section 4.13 and, therefore, for a period from the Closing Date until the
date that is the later of (1) 18 months after the Closing Date and (2) six
calendar months after the date upon which Diller ceases to be the CEO of the
Partnership, USAi shall not, and shall cause each of its controlled Affiliates
not to, directly or indirectly:
(i) engage in the Business or acquire any interest in any
Person engaged in the Business; and
(ii)(A) solicit, recruit or hire any employees of any Existing
Business or the Partnership or Persons who have worked for any
Existing Business or the
31
Partnership, in each case other than employees who perform solely
clerical functions for such Persons, (B) solicit or encourage any
employee of any Existing Business or the Partnership to leave the
employment of any Existing Business or the Partnership, in each case
other than employees who perform solely clerical functions for such
Persons, and (C) disclose or furnish to anyone any confidential
information relating to its Existing Business or the Partnership or
otherwise use such confidential information for its own benefit or
the benefit of any other Person; provided that the non- solicitation
provisions of clauses (A) and (B) shall be deemed not breached by
any advertisement or general solicitation that is not specifically
targeted at the employees or Persons referred to therein;
provided, further, that if at any time after 18 months after the Closing Date
(x) Diller shall cease to be the CEO or an officer of USAi or any of its
Affiliates but shall still be the CEO of the Partnership, or (y) Diller
resigns as CEO of the Partnership for Good Reason or is terminated without
Cause (each, as defined in the Partnership Agreement), then the restrictions
set forth in this Section 4.13(a) shall cease to apply. Notwithstanding the
foregoing, USAi agrees that it shall not restructure, reorganize or take any
other action in an effort to circumvent the terms or intent of this Section
4.13(a).
(b) Section 4.13(a) shall be deemed not breached as a result of the
ownership by USAi or any of its Affiliates of: (i) interests in the
Partnership, (ii) less than an aggregate of 5% of any class of stock of a
Person engaged, directly or indirectly, in the Business; provided, however,
that such stock is listed on a national securities exchange, (iii) Vivendi
ordinary shares as the result of the exercise of a put or a call under Section
10.03 of the Partnership Agreement, (iv) less than 10% in value of any
instrument of indebtedness of a Person engaged, directly or indirectly, in the
Business, and (v) the whole or any part of an acquired Person or business
which carries on the Business, where less than 30% of such Person's revenues
are generated by the Business, and USAi or its Affiliates will dispose of such
Business within six months of its acquisition, provided that such disposition
may be delayed pending receipt of required regulatory approvals.
(c) USAi agrees that this covenant is reasonable with respect to its
duration and scope. If, at the time of enforcement of this Section 4.13, a
court holds that the restrictions stated herein are unreasonable under the
circumstances then existing, the parties hereto agree that
32
the period and scope legally permissible under such circumstances will be
substituted for the period and scope stated herein.
SECTION 4.14. USAi Partnership Interests. USAi covenants and agrees
that at all times its interests in the Partnership shall be held directly by
USAi or by a wholly owned direct or indirect subsidiary of USAi, provided,
however, that this covenant shall not be deemed to be breached solely as a
result of the fact that Home Shopping Network, Inc. is not a wholly owned
subsidiary of USAi, so long as Liberty and USAi remain the only shareholders
of Home Shopping Network, Inc. and Liberty's ownership percentage of Home
Shopping Network, Inc. does not increase materially.
SECTION 4.15. Officers of the Partnership. Universal shall cause
Diller to be appointed as the CEO and Chairman of the Partnership, as
contemplated by the Partnership Agreement.
SECTION 4.16. Partnership Agreement Obligations. Vivendi shall
comply with the terms of Section 10.03 of the Partnership Agreement and
Universal shall comply with the terms of Sections 8.07 and 10.03 of the
Partnership Agreement, in each case, as if it were a party to such agreement.
Vivendi shall cause the general partner of the Partnership to perform all of
its obligations as the general partner under the Partnership Agreement.
SECTION 4.17. Committed LLC Shares; Committed Common Equity. (a)
Between the date hereof and the Closing, Universal shall not, and shall not
permit any of its Affiliates to, sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other arrangement
or understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, the Committed LLC Shares. Any transfer of
Committed LLC Shares not permitted hereby shall be null and void.
(b) Following the Closing and until such time that the obligations
in Section 8.07 of the Partnership Agreement are satisfied, Universal and its
Affiliates shall at all times retain at least 43,181,308 shares of USAi Common
Stock and 13,430,000 shares of USAi Class B Common Stock (as adjusted for
stock splits and the like, together, the "Committed Common Equity"), in each
case, free of any Liens, except Permitted Liens. To the extent that some, but
not all, of the Committed Common Equity is required to satisfy Universal's
obligations under the Partnership Agreement,
33
Universal and its Affiliates shall satisfy such obligations, first out of USAi
Class B Common Stock, and second out of USAi Common Stock.
SECTION 4.18. Partnership. (a) Universal shall ensure that the
Partnership, when formed, is formed as a Delaware limited liability limited
partnership, is formed for the purpose of engaging in the Transactions and for
the other purposes set forth in the Partnership Agreement, and, following its
formation through to the Closing, does not engage in any business activities
or incur any liabilities, other than as specifically contemplated by the
Transactions.
(b) Universal shall from time to time, directly or indirectly,
contribute sufficient equity to the Partnership to ensure the Partnership is
able to perform all of its obligations under Sections 8.01, 8.02 and 8.06 of
the Partnership Agreement.
SECTION 4.19. Substitute Letters of Credit; Guarantees. As promptly
as practicable following the date hereof, USAi shall provide to Universal a
list of letters of credit, guarantees and any similar obligations of USAi and
its Affiliates (other than the Contributed Subsidiaries) primarily related to
USAi's Existing Business and not constituting Excluded Liabilities. Effective
as of the Closing, Universal shall cause the Partnership or one of its
Affiliates to procure substitute letters of credit, and shall cause the
Partnership or one of its Affiliates to be substituted in all respects for any
of USAi or its Affiliates (other than the Contributed Subsidiaries) with
respect to any such matters.
SECTION 4.20. USANi Tax Distribution. A distribution (as calculated
pursuant to Section 8.2 of the USANi LLC Agreement) shall be made by USANi to
each Liberty Party that holds an interest in USANi prior to the exchanges of
USANi Shares for Shares of USAI Common Stock contemplated by Section 2.01 of
the Universal/Liberty Merger Agreement (the "Tax Distribution"), and the
proceeds of such Tax Distribution shall be distributed by such Liberty Party
to its shareholder, immediately prior to any Merger involving such Liberty
Party. The amount of such Tax Distribution shall be calculated in the good
faith judgment of USANi based on facts known as of the date of such Tax
Distribution and such Tax Distribution shall be made with respect to any
taxable period (or portion thereof) of USANi (up to and including the Closing
Date) and such determination shall be final and binding upon the parties. For
purposes of this Section 4.20, "Liberty Party" and "Merger" shall have the
34
meanings assigned to such terms by the Universal/Liberty Merger Agreement.
SECTION 4.21. Lease Arrangement. For a reasonable transition period
of up to two years following the Closing (but in no event later than the date
that executives of USAi's Existing Business as of the date hereof cease to
occupy such premises), the Partnership shall be entitled to occupy the
premises located at 8800 Sunset Boulevard, West Hollywood, California, on a
rent-free basis.
SECTION 4.22. USA Name. The Parent Parties acknowledge that the USA
Name shall be Contributed to the Partnership as of the Closing Date. Prior to
the Closing the Parent Parties shall negotiate in good faith to determine how
the ownership of the various logos and designs currently associated with the
USA Name ("Associated IP") shall be allocated, it being understood that (A)
USAi shall be granted a perpetual, non-exclusive royalty-free license to use
the USA Name in connection with its other businesses and (B) whichever Parent
Party is allocated ownership of a particular piece of Associated IP will grant
to the other Parent Party the right to use such Associated IP consistently
with current practice and without any significant economic cost to the
grantee. The Parent Parties shall work cooperatively to provide for an orderly
transition and to minimize confusion resulting from the use of the USA Name by
the Partnership and USAi.
SECTION 4.23. Options and Restricted Stock. Vivendi shall use its
reasonable best efforts to ensure that each USAi Business Employee, who holds
stock options to acquire USAi Common Stock, whether vested or unvested, in-
the-money or underwater (the "USAi Options") and/or USAi restricted Common
Stock awards (the "USAi Restricted Stock", collectively with the USAi Options,
the "USAi Equity Awards"), shall be awarded, as of the Closing Date (or, if
the date of forfeiture of the USAi Option is 90 days or more following the
Closing Date, as soon as reasonably practicable following the applicable
forfeiture date), subject to the forfeiture of any USAi Equity Award, stock
options, restricted stock or other equity-based compensation in respect of
Vivendi American Depositary Shares representing Vivendi ordinary shares par
value Euro 5.50 per share (the "ADSs") that have a "value" that is at least
equal to the "value" of the forfeited USAi Equity Awards (the "Vivendi
Replacement Awards"). The Vivendi Replacement Awards shall at a minimum (a)
preserve the intrinsic value (i.e., the "spread") of the USAi Options that are
in-the- money (relative to the fair market value of the ADSs underlying the
Vivendi Replacement Awards) and the fair
35
market value of the USAi Restricted Stock and (b) with respect to USAi Options
that are underwater, have an exercise price such that the Vivendi Replacement
Awards are not underwater by a greater percentage of fair market value than
the underwater USAi Options, in all cases measured as of the date of grant of
the Vivendi Replacement Awards. USAi represents that the maximum number of
shares of USAi Restricted Stock held by USAi Business Employees that will be
required to be replaced with Vivendi Replacement Awards is 57,500 shares of
USAi Common Stock.
ARTICLE V
Conditions Precedent
SECTION 5.01. Conditions to Each Party's Obligation. The obligation
of each party to consummate the Transactions is subject to the satisfaction on
the Closing Date of the following conditions, any one or more of which
conditions of each party may be waived by such party to the extent permitted
by law:
(a) Other than such Consents, registrations, declarations or filings
the failure of which to obtain would not have a Material Adverse Effect, all
Consents of, or registrations, declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the Transactions shall have been obtained or filed or shall
have occurred.
(b) No Applicable Law or Judgment enacted, entered, promulgated,
enforced or issued by any Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Transactions shall be in
effect.
(c) USAi shall have received the USAi Stockholder Approvals at the
USAi Stockholder Meeting.
(d) The other parties shall have furnished such other documents
relating to the corporate existence and the authority to consummate the
Transactions of such other parties and their respective Affiliates, and such
other matters as counsel to such party may reasonably request.
(e) The Transaction Documents shall have been executed and delivered
by each other party thereto, and the USAi Share Exchanges and the Mergers
(each as defined in the Universal/Liberty Merger Agreement) shall have been
consummated; provided, that USAi and Universal shall not be
36
entitled to waive the satisfaction of the foregoing condition without the
prior written approval of Liberty.
SECTION 5.02. Additional Conditions to Obligation of each Parent
Party. The obligation of each Parent Party to consummate the Transactions is
further subject to the satisfaction on the Closing Date of the following
conditions, any one or more of which conditions of such Parent Party may be
waived by such party to the extent permitted by law:
(a) Except to the extent that the failure of such representations
and warranties to be true and correct, in the aggregate, would not (after
giving effect to the operation of Section 2.05) have a Material Adverse
Effect: the representations and warranties of the other Parent Party made in
this Agreement, without regard to any materiality or Material Adverse Effect
qualification, shall be true and correct as of the date hereof and, in the
case of the representations and warranties set forth in Sections 3.01, 3.02,
3.03 (only with respect to the Organizational Documents of such Parent Party),
3.05, 3.08 and 3.15, as of the Effective Time, except to the extent such
representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct as of such
earlier date), and such Parent Party shall have received a certificate signed
by an executive officer of the other Parent Party to such effect.
(b) The other Parent Party and its Affiliates shall have performed
or complied in all material respects with all obligations and covenants
required by this Agreement to be performed or complied with by such other
Parent Party or such Affiliates by the Effective Time, and such Parent Party
shall have received a certificate signed by an authorized officer of such
other Parent Party to such effect.
SECTION 5.03. Frustration of Closing Conditions. No Parent Party may
rely on the failure of any condition set forth in this Article V to be
satisfied if such failure was caused by (i) the action or willful inaction of
such party or its Affiliates, (ii) the failure of any representation or
warranty of such party qualified as to materiality to be true and correct or,
those not so qualified to be true and correct in all material respects, or
(iii) failure to use its reasonable best efforts to cause the Closing to occur
as required by Section 4.04.
37
ARTICLE VI
Termination
SECTION 6.01. Termination. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the other
Transactions abandoned at any time prior to the Effective Time, whether before
or after the USAi Stockholder Approvals are obtained:
(i) by mutual written consent of the parties hereto;
(ii) by either Parent Party if, upon a vote at a duly held USAi
Stockholder Meeting or any adjournment thereof, the USAi Stockholder
Approvals shall not have been obtained;
(iii) by either Parent Party if any of the conditions to such
Parent Party's obligations set forth in Article V shall have become
incapable of fulfillment, and shall not have been waived by such
Parent Party;
(iv) by Universal if the USAi Board or any committee thereof
shall have withdrawn or modified its approval or recommendation of
this Agreement or the Transactions; or
(v) by any party hereto, if the Closing does not occur on or
prior to September 30, 2002;
provided, however, that the party seeking termination pursuant to clause (ii),
(iii) or (v) is not in breach of any of its representations, warranties,
covenants or agreements contained in this Agreement in any material respect.
(b) In the event of termination by a party pursuant to this Section
6.01, written notice thereof shall forthwith be given to the other parties,
and the Transactions shall be terminated without further action by any party.
If this Agreement is terminated as provided herein, each party shall return
all documents and other material received from any other party relating to the
Transactions, whether so obtained before or after the execution hereof.
SECTION 6.02. Effect of Termination. (a) If this Agreement is
terminated and the Transactions are abandoned as described in Section 6.01,
this Agreement shall
38
become null and void and of no further force and effect, except for the
provisions of (i) Section 3.16 relating to broker's and finder's fees, (ii)
Section 4.03 relating to the obligation of the Parent Parties to keep
confidential certain information and data obtained by it from the other
parties, (iii) Section 4.05 relating to certain expenses, (iv) Section 4.07
relating to publicity, and (v) Section 6.01 and this Section 6.02 relating to
termination. Nothing in this Section 6.02 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement.
(b) If this Agreement is terminated pursuant to Section 6.01(a)(iv),
then USAi shall promptly reimburse Universal and its Affiliates for all of
their documented, out of pocket expenses incurred in connection with this
Agreement and the other Transaction Documents, up to a limit of $15,000,000.
Such reimbursement shall be paid upon demand following such termination.
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification by Each Parent Party. (a) Vivendi
shall indemnify and hold harmless (x) USAi and its Affiliates and their
respective officers, directors, shareholders, employees, representatives,
agents or trustees and (y) the Partnership and its Affiliates and their
respective officers, directors, partners, employees, representatives, agents
or trustees (clauses (x) and (y) together, the "USAi Indemnified Parties"),
from and against any Losses (other than any Losses relating to Taxes, the
indemnification of which is governed solely by Section 7.02), as incurred
(payable promptly upon written request), to the extent arising from, relating
to or otherwise in respect of:
(i) any breach of any representation or warranty of Universal
or its Affiliates contained in any Transaction Document or any
certificate delivered on behalf of Universal pursuant to Section
5.02(a) (in each case, without regard to any materiality or Material
Adverse Effect qualifier contained therein);
(ii) any failure by Universal or its Affiliates (including for
purposes of this Section 7.01(a)(ii), the Partnership) to perform or
fulfill any of its covenants or agreements contained in any
Transaction
39
Document (other than Sections 8.01, 8.02 and 8.06 of the Partnership
Agreement);
(iii) any fees, expenses or other payments incurred or owed by
Universal or its Affiliates to any brokers, financial advisors or
comparable other persons retained or employed by it in connection
with the Transactions;
(iv) any Excluded Liability of Universal or its Affiliates; and
(v) any dissolution or winding up of the Partnership or
Bankruptcy (as defined in the Partnership Agreement) of the general
partner of the Partnership, in each case at any time while the
Preferred Interests (as defined in the Partnership Agreement) are
outstanding;
but only (with respect to items described in Section 7.01(a)(i)) to the extent
the aggregate amount of all such Losses of all such USAi Indemnified Parties
exceed $150 million (the "Basket"), provided, however, that the Basket shall
not apply to the representations contained in Section 3.18.
(b) USAi shall indemnify and hold harmless (x) Universal and its
Affiliates and their respective officers, directors, shareholders, employees,
representatives, agents or trustees and (y) the Partnership and its Affiliates
and their respective officers, directors, partners, employees,
representatives, agents or trustees (clauses (x) and (y) together, the
"Universal Indemnified Parties"), from and against any Losses (other than any
Losses relating to Taxes, the indemnification of which is governed solely by
Section 7.02), as incurred (payable promptly upon written request), to the
extent arising from, relating to or otherwise in respect of:
(i) any breach of any representation or warranty of USAi or its
Affiliates contained in any Transaction Document or any certificate
delivered on behalf of USAi pursuant to Section 5.02(a) (in each
case, without regard to any materiality or Material Adverse Effect
qualifier contained therein);
(ii) any failure by USAi or its Affiliates to perform or
fulfill any of its covenants or agreements contained in any
Transaction Document;
(iii) any fees, expenses or other payments incurred or owed by
USAi or its Affiliates to any brokers,
40
financial advisors or comparable other persons retained or employed
by it in connection with the Transactions; and
(iv) any Excluded Liability of USAi or its Affiliates;
but only (with respect to items described in Section 7.01(b)(i)) to the extent
the aggregate amount of all such Losses of all such Universal Indemnified
Parties exceed the Basket, provided, however, that the Basket shall not apply
to the representation contained in Section 3.18.
SECTION 7.02. Tax Indemnification by Each Parent Party. (a) Vivendi
shall be liable for, and shall indemnify and hold harmless USAi, the
Partnership and their respective Affiliates from and against, the following
Taxes:
(i) any and all Taxes with respect to its Existing Business and
any Taxes attributable to its ownership of USANi Shares, in each
case for any taxable period ending (or deemed pursuant to Section
7.02(c) to end) on or before the Closing Date; and
(ii) any several liability under Treasury Regulation Section
1.1502-6 or under any comparable or similar provision under state,
local or foreign laws or regulations for periods ending on or prior
to the Closing Date.
(b) In addition, Vivendi shall be liable for, and shall indemnify
and hold harmless USAi and its Affiliates from and against any Tax Detriment
incurred by USAi or any of its Affiliates solely as a result of (i) the breach
by Universal or any of its Affiliates of any of the covenants set forth in
Sections 2.07, 3.01(c), 5.05(a)(i), 5.05(a)(v) or 5.05(a)(vi) of the
Partnership Agreement or (ii) if Vivendi has elected that any covenant set
forth in Section 5.05(b) of the Partnership Agreement shall not apply, any
action or inaction that would constitute a breach of such covenant.
(c) USAi shall be liable for, and shall indemnify and hold harmless
Universal, the Partnership and their respective Affiliates from and against,
the following Taxes:
(i) any and all Taxes with respect to its Existing Business
(other than Taxes attributable to the ownership of USANi Shares by
Universal or any of its Affiliates) for any taxable period beginning
on or after February 13, 1998 (in the case of Taxes relating
41
to USA Cable, Studios USA or their respective subsidiaries) and
May 29, 1999 (in the case of Taxes relating to USA Films or its
subsidiaries) and ending (or deemed pursuant to Section 7.02(c) to
end) on or before the Closing Date; and
(ii) any several liability under Treasury Regulation Section
1.1502-6 or under any comparable or similar provision under state,
local or foreign laws or regulations for periods beginning on or
after February 13, 1998 (in the case of Taxes relating to USA Cable,
Studios USA or their respective subsidiaries) and May 29, 1999 (in
the case of Taxes relating to USA Films or its subsidiaries) and
ending on or prior to the Closing Date.
(d) In addition, USAi shall be liable for, and shall indemnify and
hold harmless Universal and its Affiliates from and against any Tax Detriment
incurred by Universal or any of its Affiliates solely as a result of the
breach by USAi or any of its Affiliates of any covenant set forth in Section
2.07 or 3.01(c) of the Partnership Agreement.
(e) (i) The Parent Parties agree that if any entity transferred
to the Partnership is permitted but not required under applicable
foreign, state or local Income Tax laws to treat the day before the
Closing Date or the Closing Date as the last day of a taxable
period, such day shall be treated as the last day of a taxable
period.
(ii) For purposes hereof, in the case of any Taxes that are
imposed on a periodic basis and are payable for a period that begins
before the Closing Date and ends after the Closing Date, the portion
of such Tax that shall be deemed to be payable for the portion of
the period ending on the Closing Date shall (i) in the case of any
Taxes, other than Taxes based upon or related to income or receipts,
be deemed to be the amount of such Taxes for the entire period (or,
in the case of such Taxes determined on an arrears basis, the amount
of such Taxes for the immediately preceding period), whether
actually paid before, during, or after such period, multiplied by a
fraction the numerator of which is the number of calendar days in
the period ending on (and including) the Closing Date and the
denominator of which is the number of calendar days in the entire
period, and (ii) in the case of any Taxes based upon or related to
income or receipts (including but not limited to withholding Taxes),
be deemed equal
42
to the amount which would be payable if the taxable year ended on
the close of business on the Closing Date. Any credits for such a
period shall be prorated, based upon the fraction employed in clause
(i) of the preceding sentence. Such clause (i) shall be applied with
respect to Taxes for such period relating to capital (including net
worth or long-term debt) or intangibles by reference to the level of
such items on the Closing Date. Principles similar to those of this
Section 7.02(c)(ii) shall be applied in determining whether a Tax is
for a taxable period beginning on or after February 13, 1998 or
May 29, 1999, as applicable.
SECTION 7.03. Refunds. (a) Universal and its Affiliates shall be
entitled to any refunds or credits of Taxes attributable to or arising in
taxable periods ending (or deemed pursuant to Section 7.02(c) to end) on or
before the Closing Date with respect to its Existing Business or its ownership
of the USANi Shares, as the case may be.
(b) USAi and its Affiliates shall be entitled to any refunds or
credits of Taxes attributable to or arising in taxable periods ending (or
deemed pursuant to Section 7.02(c) to end) on or before the Closing Date with
respect to its Existing Business (other than with respect to the USANi Shares
owned by Universal or any of its Affiliates).
SECTION 7.04. Calculation of Losses. The amount of any Loss, Tax, or
Tax Detriment for which indemnification is provided under this Article VII
shall be net of any amounts actually recovered by the indemnified party (as
defined in Section 7.06(a)) under insurance policies or indemnities from third
parties with respect to such Loss, Tax, or Tax Detriment and shall be (i)
increased to take account of any net Tax cost incurred by the indemnified
party arising from the receipt of indemnity payments hereunder (grossed up for
such increase) and (ii) reduced to take account of any net Tax benefit
realized by the indemnified party arising from the incurrence or payment of
any such Loss, Tax or Tax Detriment. In computing the amount of any such Tax
cost or Tax benefit, the indemnified party shall be deemed to fully utilize,
at the highest marginal Tax rate then in effect, all Tax items arising from
the receipt of any indemnity payment hereunder or the incurrence or payment of
any indemnified Loss, Tax or Tax Detriment.
SECTION 7.05. Termination of Indemnification. The obligations to
indemnify and hold harmless any party (i) pursuant to Section 7.01(a)(i) or
7.01(b)(i), as the
43
case may be, shall terminate when the applicable representation or warranty
terminates pursuant to Section 7.07, (ii) pursuant to Section 7.02, shall
terminate when the applicable statute of limitations expires (giving effect to
any waiver, mitigation or extension thereof) and (iii) pursuant to the other
clauses of Sections 7.01, shall not terminate; provided, however, that such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the Person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basis of such claim)
pursuant to Section 7.06 to the party to be providing the indemnification.
SECTION 7.06. Procedures; Exclusivity. (a) In order for a party (the
"indemnified party") to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving a claim made by any
Person against the indemnified party (a "Third Party Claim"), such indemnified
party must notify the indemnifying party in writing (and in reasonable detail)
of the Third Party Claim promptly following receipt by such indemnified party
of written notice of the Third Party Claim; provided, however, that failure to
give such notification shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually
prejudiced as a result of such failure. Thereafter, the indemnified party
shall deliver to the indemnifying party, promptly after the indemnified
party's receipt thereof, copies of all notices and documents (including court
papers) received by the indemnified party relating to the Third Party Claim.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party shall be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected by
the indemnifying party; provided, however, that such counsel is not reasonably
objected to by the indemnified party. Should the indemnifying party so elect
to assume the defense of a Third Party Claim, the indemnifying party shall not
be liable to the indemnified party for any legal expenses incurred from and
after the date of such assumption by the indemnified party in connection with
the defense thereof. If the indemnifying party assumes such defense, the
indemnified party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the counsel employed
by the indemnifying party, it being understood that the indemnifying party
shall control such defense. The indemnifying party shall be
44
liable for the fees and expenses of counsel employed by the indemnified party
for any period during which the indemnifying party has not assumed the defense
thereof. If the indemnifying party chooses to defend or prosecute a Third
Party Claim, all the indemnified parties shall cooperate in the defense or
prosecution thereof. Such cooperation shall include the retention and (upon
the indemnifying party's request and at its expense) the provision to the
indemnifying party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. Whether or not the indemnifying party assumes the
defense of a Third Party Claim, the indemnified party shall not admit any
liability with respect to, or settle, compromise or discharge, such Third
Party Claim without the indemnifying party's prior written consent (which
consent shall not be unreasonably withheld). If the indemnifying party assumes
the defense of a Third Party Claim, the indemnified party shall agree to any
settlement, compromise or discharge of a Third Party Claim that the
indemnifying party may recommend and that by its terms obligates the
indemnifying party to pay the full amount of the liability in connection with
such Third Party Claim (or, in the case of any Third Party Claim with respect
to Taxes, as to which the indemnifying party acknowledges in writing its
obligation to make payment in full), that releases the indemnified party
completely in connection with such Third Party Claim (or, in the case of any
Third Party Claim with respect to Taxes, as to which the indemnifying party
acknowledges in writing its obligation to make payment in full) and that would
not otherwise materially and adversely affect the indemnified party.
Notwithstanding the foregoing, the indemnifying party shall not be entitled to
assume the defense of any Third Party Claim (and shall be liable for the
reasonable fees and expenses of counsel incurred by the indemnified party in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the indemnified party that the indemnified party reasonably
determines, after conferring with its outside counsel, cannot be separated
from any related claim for money damages.
(c) In the event any indemnified party should have a claim against
any indemnifying party under this Article VII that does not involve a Third
Party Claim being asserted against or sought to be collected from such
indemnified party, the indemnified party shall deliver notice of such claim
with reasonable promptness to the indemnifying party. So long as the
indemnified party
45
provides notification to the indemnifying party prior to the termination of
the obligation to indemnify as set forth in Section 7.05, the failure by any
indemnified party so to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to such indemnified
party under this Article VII, except to the extent that the indemnifying party
demonstrates that it has been actually prejudiced by such failure. The
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of any dispute with respect to such a claim and, if not
resolved through negotiations, such dispute shall be resolved by litigation in
an appropriate court of competent jurisdiction.
(d) After the Closing, Section 7.01 shall constitute the exclusive
remedy for any misrepresentation or breach of warranty contained in this
Agreement.
SECTION 7.07. Survival. The representations, warranties, covenants
and agreements contained in the Transaction Documents or in any certificates
delivered pursuant to Section 5.02(a) shall survive the Closing and shall
terminate on March 31, 2003, except for those contained in Section 3.18, which
shall survive until the expiration of the applicable statute of limitations
(giving effect to any waiver, mitigation or extensions thereof).
Notwithstanding the foregoing, those covenants or agreements that contemplate
or may involve actions to be taken or obligations in effect after the Closing
shall survive in accordance with their terms.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Approval of Transactions. By execution of this
Agreement, each of the parties hereto approves and consents, in each case on
its own behalf and on behalf of its Affiliates, to the Transactions (including
in respect of any transaction to be taken after the Closing in respect of USAi
Shares under Section 8.07 of the Partnership Agreement) and the actions
necessary to be taken by USAi, USANi and their respective Affiliates in
connection therewith, for all purposes under the Investment Agreement, the
Governance Agreement, the Stockholders Agreement and the USANi LLC Agreement
and all other agreements to which it or its Affiliates is a party that
provides the right to consent to USAi's entering into the Transactions. Each
of Diller, Universal and Liberty hereby waives any right of first refusal or
tag along right and any restriction on Transfer
46
(as defined in the Stockholders Agreement) relating to the Transactions;
provided that (x) Liberty will be entitled to exercise its preemptive rights
in accordance with the Governance Agreement with respect to the Warrants to be
issued to Universal pursuant to this Agreement and (y) nothing herein shall be
deemed to constitute a waiver or consent of Diller or Liberty of his or its
rights under the Stockholders Agreement or the Governance Agreement with
respect to transactions relating to Transfers of USAi Shares occurring after
the Closing Date (other than delivery by Universal or its Affiliates of USAi
Shares in accordance with Section 8.07 of the Partnership Agreement).
SECTION 8.02. Notices. All notices, requests and other
communications to any party under this Agreement shall be in writing
(including a facsimile or similar writing) and shall be given to a party
hereto at the address or facsimile number set forth for such party on Schedule
8.02 or as such party shall at any time otherwise specify by notice to each of
the other parties to such agreement or instrument. Each such notice, request
or other communication shall be effective (i) if given by facsimile, at the
time such facsimile is transmitted and the appropriate confirmation is
received (or, if such time is not during a Business Day, at the beginning of
the next such Business Day), (ii) if given by mail, five Business Days (or, if
to an address outside the United States, ten calendar days) after such
communication is deposited in the United States mails with first-class postage
prepaid, addressed as aforesaid, or (iii) if given by any other means, when
delivered at the address specified pursuant hereto.
SECTION 8.03. No Third Party Beneficiaries. The terms of this
Agreement are not intended to confer any rights or remedies hereunder upon,
and shall not be enforceable by, any Person other than the parties hereto,
other than (i) with respect to the provisions of Article VII hereof, each
indemnified person and (ii) with respect to Section 4.13, the Partnership.
SECTION 8.04. Waiver. No failure by any party to this Agreement to
insist upon the strict performance of any covenant, agreement, term or
condition hereof or to exercise any right or remedy consequent upon a breach
of such or any other covenant, agreement, term or condition shall operate as a
waiver of such or any other covenant, agreement, term or condition of this
Agreement. Any party to this Agreement, by notice given in accordance with
Section 8.02, may, but shall not be under any obligation to, waive any of its
rights or conditions to its obligations under this Agreement, or any duty,
obligation or covenant of any other
47
party hereto. No waiver shall affect or alter the remainder of this Agreement
and each and every covenant, agreement, term and condition hereof shall
continue in full force and effect with respect to any other then existing or
subsequent breach. Subject to Section 7.06(d), the rights and remedies
provided by this Agreement are cumulative and the exercise of any one right or
remedy by any party shall not preclude or waive its right to exercise any or
all other rights or remedies.
SECTION 8.05. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
SECTION 8.06. Integration. This Agreement and the other Transaction
Documents (including the schedules and exhibits hereto and thereto) constitute
the entire agreement among the parties hereto pertaining to the subject matter
hereof and supersede all prior agreements and understandings of the parties in
connection herewith, and no covenant, representation or condition not
expressed in such Transaction Documents shall affect, or be effective to
interpret, change or restrict, the express provisions of this Agreement.
SECTION 8.07. Headings. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
otherwise affect the provisions of this Agreement.
SECTION 8.08. Counterparts. This Agreement may be executed by the
parties hereto in multiple counterparts, each of which shall be deemed an
original and all of which, taken together, shall constitute one and the same
instrument.
SECTION 8.09. Severability. Each provision of this Agreement shall
be considered separable and if for any reason any provision or provisions
hereof are determined to be invalid and contrary to any applicable law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
SECTION 8.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the conflicts of law principles thereof.
48
SECTION 8.11. Jurisdiction. Each party to this Agreement irrevocably
submits to the jurisdiction of (i) the courts of the State of Delaware, New
Castle County, and (ii) the United States District Court for the District of
Delaware, for the purposes of any suit, action or other proceeding (other than
suits, actions or other proceedings arising solely out of the
Universal/Liberty Merger Agreement) arising out of this Agreement or the
Transactions. Each party agrees to commence any such action, suit or
proceeding either in the courts of the State of Delaware, New Castle County or
if such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the District Court for the District of Delaware.
Each party further agrees that service of any process, summons, notice or
document by U.S. registered mail to such party's respective address in
accordance with Section 8.02 shall be effective service of process for any
action, suit or proceeding in Delaware with respect to any matters to which it
has submitted to jurisdiction in this Section 8.11. Each party irrevocably and
unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the Transactions in (i)
the courts of the State of Delaware, New Castle, or (ii) the United States
District Court for the District of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
SECTION 8.12. Specific Performance. Each of the parties to this
Agreement agrees that the other parties hereto would be irreparably damaged if
any of the provisions of this Agreement are not performed in accordance with
its specific terms and that monetary damages would not provide an adequate
remedy in such event. Accordingly, in addition to any other remedy to which
the nonbreaching parties may be entitled, at law or in equity, the
nonbreaching parties (or the Partnership, in the case of Section 4.13) may be
entitled to injunctive relief to prevent breaches of this Agreement and to
specifically enforce the terms and provisions hereof.
SECTION 8.13. Amendments. This Agreement may be amended by an
instrument in writing signed on behalf of each of the parties hereto at any
time before or after receipt of the USAi Stockholder Approvals, provided,
however, that after any such approval, there shall be made no amendment that
by law requires further approval by such stockholders without the further
approval of such stockholders.
49
SECTION 8.14. Interpretation. References in this Agreement to
Articles, Sections, Annexes, Exhibits and Schedules shall be deemed to be
references to Articles and Sections of, and Annexes, Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. References to
Schedules shall be deemed to be references to the respective Schedules of USAi
and Universal, as applicable. All Annexes, Exhibits and Schedules attached to
this Agreement shall be deemed incorporated therein as if set forth in full
therein. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of such
agreement or instrument.
50
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
VIVENDI UNIVERSAL, S.A.,
By /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief
Executive Officer
UNIVERSAL STUDIOS, INC.,
By /s/ Guillaume Hannezo
------------------------------
Name: Guillaume Hannezo
Title: Special Power of
Attorney
USA NETWORKS, INC.,
By /s/ Julius Genachowski
------------------------------
Name: Julius Genachowski
Title: Senior Vice President
and General Counsel
USANi LLC,
By /s/ Julius Genachowski
------------------------------
Name: Julius Genachowski
Title: Senior Vice President
and General Counsel
LIBERTY MEDIA CORPORATION,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
51
Only for purposes of Sections
2.03(iv), 2.03(v), 2.03(vii), 2.07,
4.10(d) and 8.01 only:
BARRY DILLER,
/s/ Barry Diller
-------------------------------
ANNEX A
The terms defined below have the meanings set forth below for all
purposes of this Agreement, and such meanings shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such specified Person. For purposes of the foregoing, (i) USANi
and its Affiliates shall be deemed to be Affiliates of USAi, (ii) none of
USAi, USANi or any of their respective Affiliates shall be deemed to be an
Affiliate of Universal, (iii) none of Diller, Universal, Liberty or any of
their respective Affiliates shall be deemed to be an Affiliate of USAi and
(iv) none of USAi or Universal or any of their respective Affiliates shall be
deemed to be an Affiliate of the Partnership.
"Ancillary Distribution Agreements" shall mean the Home Video
Distribution Agreement, the Other Business Rights Agreement and the Music
Administration Agreement.
"Applicable Law" shall have the meaning set forth in Section 3.03.
"Balance Sheet" shall have the meaning set forth in Section 3.06(b).
"Basket" shall have the meaning set forth in Section 7.01(a).
"Business" means the operation, programming or delivery of any
general or genre-based entertainment television channel (irrespective of how
such channel is delivered to the customer, including delivery by cable,
satellite, the internet or other technologies), the production and
distribution of entertainment television programming and feature films and any
other business to be Contributed to the Partnership as of the Closing Date,
including any reasonably foreseeable entertainment-focused extensions of such
businesses after such date that are programming or film-oriented, other than
in a transactional context. The term "Business" shall not include (i) televi
sion channels (irrespective of how such channel is delivered to the customer,
including delivery by cable, satellite, the internet or other technologies)
which are consumer transaction-oriented, such as Home Shopping Network,
America's Store and USAi's planned travel network or which provide
informational services which lend themselves to
2
commerce (such as Travel Channel, Home & Garden Television, the Food Network,
and Do It Yourself) or which otherwise serve as a means of introducing,
starting or promoting transactional services, including transaction-oriented
television channels whose primary focus is the provision of electronic
retailing, auction services or gaming/gambling services or (ii) electronic
commerce and retailing, information and services.
"Business Day" means any day other than a Saturday, a Sunday or a
United States Federal holiday.
"CEO" means chief executive officer.
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.06.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committed LLC Shares" shall have the meaning set forth in Section
2.02.
"Consent" shall have the meaning set forth in Section 3.03.
"Contracts" means all contracts, agreements, commitments and other
legally binding arrangements, whether oral or written.
"Contribute" means to contribute, assign, transfer, convey and
deliver, and "Contributing" and "Contributed" shall have correlative meanings.
"Contributed Assets" means, with respect to any Parent Party, all
the business, properties, assets, goodwill and rights of such Parent Party and
its Affiliates of whatever kind and nature, real or personal, tangible or
intangible, that are owned, leased or licensed by such Parent Party or its
Affiliates immediately prior to the Effective Time and used, held for use or
intended to be used primarily in the operation or conduct of its Existing
Business, other than Excluded Assets, including (i) Real Property, (ii)
tangible personal property and interests therein, including machinery,
equipment, furniture and vehicles, (iii) Inventory, (iv) Licenses, (v)
Investments, (vi) accounts receivable on the Closing Date arising out of the
operation or conduct of its Existing Business, (vii) Intangible Property,
(viii) Contracts, (ix) credits, prepaid expenses, deferred charges, advance
payments, security deposits and other prepaid items, (x) rights,
3
claims and credits to the extent relating to any other Contributed Asset or
Contributed Liability, including such items arising under insurance policies
and all guarantees, warranties, indemnities and similar rights in favor of
such Parent Party or its Affiliates in respect of any other Contributed Asset
or Contributed Liability, (xi) Records, (xii) goodwill generated by or
associated with its Existing Business and (xiii) in the case of USAi, the USA
Name.
"Contributed Liabilities" means with respect to any Parent Party,
(i) the liabilities, obligations and commitments contained in the Contracts
primarily relating to such Parent Party's Existing Business, (ii) all accounts
payable of such Parent Party and its Affiliates arising primarily out of the
operation or conduct of its Existing Business prior to the Closing and (iii)
all other liabilities, obligations and commitments of such Parent Party or its
Affiliates of any nature whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, arising primarily
out of the operation or conduct of its Existing Business before, on or after
the Closing Date.
"Contributed Subsidiaries" means, with respect to USAi only, (i)
New-U Studios Inc., (ii) Studios USA, (iii) Tier One Subsidiary, Inc., (iv)
USA Cable, (v) USA Films, (vi) USA Networks Partner LLC and (vii) USA
Television Production Group LLC.
"Diller" shall have the meaning set forth in the Preamble.
"Distribution Agreements" means the Domestic Television Distribution
Agreement and the International Television Distribution Agreement.
"DGCL" means the Delaware General Corporation Law, as amended from
time to time.
"Domestic Television Distribution Agreement" means the Domestic
Television Distribution Agreement, dated as of February 12, 1998, by and
between USAi and Universal.
"Effective Time" means the time at which the Closing shall have
occurred.
"Exchange Agreement" means the Exchange Agreement dated as of
October 19, 1997, by and among USAi, Universal, for itself and on behalf of
certain of its subsidiaries and Liberty, for itself and on behalf of certain
of its subsidiaries.
4
"Excluded Assets" means, with respect to any Parent Party, (i) all
rights of such Parent Party under the Transaction Documents, (ii) all Records
prepared for the purpose of the Transactions, (iii) all financial and tax
records relating to such Parent Party's Existing Business that form part of
its general ledger and (iv) all rights, claims and credits of such Parent
Party and its Affiliates to the extent relating to any Excluded Asset or
Excluded Liability, including such items arising under insurance policies and
all guarantees, warranties, indemnities and similar rights in favor of such
Parent Party or its Affiliates in respect of any other Excluded Asset or
Excluded Liability. For the avoidance of doubt, with respect to USAi, the
Excluded Assets shall include any and all outstanding obligations to USAi
pursuant to the Non- Negotiable Promissory Note, dated May 28, 1999, between
Universal Studios Holding I Corp., as borrower and USAi, as lender, in the
principal amount of $200 million.
"Excluded Liability" means, with respect to any Parent Party, any
(i) liability, obligation or commitment of such Parent Party that is not a
Contributed Liability, (ii) any liability, commitment or obligation of an
entity this is being Contributed to the Partnership to guarantee, indemnify or
otherwise be liable for any obligation of USAi, Universal or any of their
respective Affiliates that are not being Contributed to the Partnership or
(iii) any liability, obligation or commitment under (A) the Warrant Agreements
dated as of March 2, 1992 between Savoy Pictures and Allen & Co. or (B) the
Warrant Agreement dated as of April 20, 1994, by and between Savoy Pictures
Entertainment Inc., GkH Partners, L.P. and GkH Private Limited.
"Existing Business" means, (i) with respect to Universal, the filmed
entertainment, television and recreation businesses of Universal Studios,
Inc., Centenary Holding N.V., and Universal Pictures International B.V.
(excluding, for the avoidance of doubt all Universal Music Group and VU-Net
businesses) in each case as conducted by such entities immediately prior to
the Effective Time, and (ii) with respect to USAi, the programming, television
distribution, cable networks and film businesses as conducted by USAi and its
Affiliates immediately prior to the Effective Time (including, for the
avoidance of doubt, USA Cable, USA Films and Studios USA), other than the
business described in the second sentence of the definition of "Business".
"Expedia Agreement" means the Amended and Restated Agreement and
Plan of Recapitalization and Merger by and among USAi, Expedia, Inc., Taipei,
Inc., Microsoft
5
Corporation and Microsoft E-Holdings, Inc., dated as of July 15, 2001.
"Governance Agreement" means (i) with respect to periods prior to
the Closing Date, the Governance Agreement among Universal, USAi, Liberty and
Diller dated as of October 19, 1997 and (ii) with respect to periods on or
after the Closing Date, the Amended and Restated Governance Agreement dated as
of December 16, 2001, among USAi, Universal, Liberty, Diller and Vivendi.
"Governmental Entity" shall have the meaning set forth in Section
3.03.
"Home Video Distribution Agreement" means the Home Video
Distribution Agreement, dated as of February 12, 1998, between USAi and
Universal Studies Home Video, Inc.
"Income Tax" means all Taxes based on or measured by net income.
"indemnified party" shall have the meaning set forth in Section
7.06(a).
"Intangible Property" means, with respect to an Existing Business,
(i) any intellectual property asset of such Existing Business (other than such
property licensed to such Existing Business), with a value, as reflected on
such party's balance sheet, of $10 million or more and (ii) all material
patents, trademarks, trade names, service marks, brand marks, brand names,
proprietary computer programs, proprietary databases, industrial design,
copyrights or any pending application therefor.
"International Television Distribution Agreement" means the
International Television Distribution Agreement, dated as of February 12,
1998, by and between USAi and Universal.
"Inventory" means raw materials, work-in-process, finished goods,
supplies, parts, spare parts and other inventories.
"Investment Agreement" means the Investment Agreement dated as of
October 19, 1997, as amended and restated as of December 18, 1997, among,
Universal, for itself and on behalf of certain of its subsidiaries, USAi, HSN,
Inc. and Liberty, for itself and on behalf of certain of its subsidiaries.
6
"Investments" means partnership interests and any other equity
interest in any corporation, company, limited liability company, partnership,
joint venture, trust or other business association, including the Contributed
Subsidiaries.
"Judgment" shall have the meaning set forth in Section 3.03.
"Liberty" shall have the meaning set forth in the Preamble.
"Liberty Exchange Agreement" means the Exchange Agreement dated as
of December 20, 1996 by and between Silver King Communications, Inc. and
Liberty HSN, Inc.
"Licenses" means all licenses, permits, construction permits,
registrations, and other authorizations issued by any Governmental Entity for
use in connection with the conduct of the business or operations of the
relevant business, and all applications therefor, together with any renewals,
extensions, modifications, or additions thereto between the date of this
Agreement and the Closing Date.
"Lien" means any pledge, encumbrance, security interest, purchase
option, call or similar right.
"Loss" means any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses).
"Material Adverse Effect" means, with respect to any applicable
representation or warranty of a Parent Party, a material adverse effect on (x)
the business, assets, financial condition or results of operations of such
Parent Party's Existing Business or (y) such Parent Party's and its
Affiliates' ability to perform their obligations under any Transaction
Document to which it is, or is specified to be, a party as of the date hereof,
other than any such effect arising our of or resulting from general economic
conditions, or from changes in or generally affecting the industries in which
such Parent Party's Existing Business operates, or as a result of the
September 11, 2001 terrorist attacks, their aftermath or any similar events.
"Material Contracts" means Contracts of USAi's Existing Business as
of the date hereof which (i) at the time entered into, were outside the
ordinary course of business as then conducted by such Existing Business, or
(ii) are (A) cable television system affiliation agreements covering one
million or more subscribers (in any individual
7
case) providing for payments to and from cable television system operators in
excess of $1 million in any twelve-month period, (B) Contracts (other than
with writer producers) with respect to the production, development, broadcast
or distribution, of television programs with respect to which such Existing
Business has a commitment to pay in excess of $10 million, (C) agreements with
writer producers with respect to which such Existing Business has a commitment
to pay in excess of $2 million per year, or (D) agreements to buy or sell
advertising where the required payments to or from such Existing Business are
in excess of $10 million.
"Material Real Property" means all of the Real Property attributed
to USAi's Existing Business, providing individually for annual lease payments
in excess of $3 million.
"Music Administration Agreement" means the Music Administration
Agreement, dated as of February 12, 1998, between USAi and MCA Music
Publishing.
"Organizational Documents" means, with respect to any Person at any
time, such Person's certificate or articles of incorporation, corporate
statutes, by-laws, memorandum and articles of association, certificate of
formation of limited liability company, limited liability company agreement,
and other similar organizational or constituent documents, as applicable, in
effect at such time.
"Other Business Rights Agreement" means the Other Business Rights
Agreement, dated as of February 12, 1998, between USAi and Universal.
"Parent Party" means each or any of Universal and USAi.
"Partnership" means the Delaware limited liability limited
partnership to be formed pursuant to the Partnership Agreement.
"Partnership Agreement" means the Partnership Agreement, dated as of
the Closing Date, by and between USAi, USAi Sub, Universal and Diller in
substantially the form of Exhibit A hereto.
"Permitted Liens" shall mean, collectively, (i) all statutory or
other liens for taxes or assessments which are not yet due or the validity of
which is being contested in good faith by appropriate proceedings, (ii) all
mechanics', material men's, carriers', workers' and
8
repairers' liens, and other similar liens imposed by law, incurred in the
ordinary course of business, which allege unpaid amounts that are less than 30
days delinquent or which are being contested in good faith by appropriate
proceedings, and (iii) all other Liens which do not materially detract from or
materially interfere with the marketability, value or present use of the asset
subject thereto or affected thereby.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, governmental authority or
other entity.
"Proceedings" shall have the meaning set forth in Section 3.14.
"Proxy Statement" means the proxy or information statement relating
to the approval and authorization of the Transactions by the stockholders of
USAi.
"Real Property" means real estate and buildings and other
improvements thereon and leases and leasehold interests, leasehold
improvements, fixtures and trade fixtures.
"Records" means books of account, ledgers, general financial,
accounting, tax and personnel records, files, invoices, customers' and
suppliers' lists, other distribution lists, billing records, sales and
promotional literature, manuals, and customer and supplier correspondence (in
all cases, in any form or medium).
"Reference Date" is defined in Section 2.04(i)(B).
"Returns" means returns, reports and forms required to be filed with
any domestic or foreign taxing authority.
"SEC" means the United States Securities and Exchange Commission.
"SEC Reports" means, (i) with respect to USAi, the annual report of
USAi on Form 10-K and (ii) with respect to Universal, the annual report of
Vivendi on Form 20-F, in each case, in respect of the fiscal year ended
December 31, 2000, and each report, schedule, proxy, information statement or
registration statement (including all exhibits and schedules thereto and
documents incorporated by reference therein) filed by USAi or Vivendi, as
applicable, with the SEC following December 31, 2000, and on or before the
date of this Agreement.
9
"Special Committee" shall have the meaning set forth in Section 3.02.
"Stockholders Agreement" means (i) with respect to periods prior to
the Closing Date, the Stockholders Agreement among Universal, Liberty, Diller,
USAi and The Seagram Company Limited dated as of October 19, 1997 and (ii)
with respect to periods on or after the Closing Date, the Amended and Restated
Stockholders Agreement dated as of December 16, 2001 among Universal, Liberty,
Diller, USAi and Vivendi.
"Studios USA" means Studios USA LLC.
"Tax Detriment" means, with respect to any Taxes incurred as a
result of the recognition of income or gain by an indemnified party in a
taxable period(s) earlier than the taxable period(s) in which such income or
gain would otherwise have been recognized by such party solely as a result of
an action or inaction by an indemnifying party, the excess, if any, of (i) the
net present value of such Taxes incurred by the indemnified party in such
earlier taxable period(s) over (ii) the net present value of the Taxes that
would otherwise have been incurred in such later taxable period, assuming (i)
a discount rate equal to USAi's borrowing rate in effect as of the time such
net present values are calculated and (ii) that for all taxable years, the
indemnified party is fully taxable at the highest applicable marginal U.S.
federal income tax rate and the highest applicable marginal income and
franchise tax rates of the state, local and foreign jurisdictions in which the
Partnership or any of its subsidiaries conducts business (assuming full
deductibility of state and local taxes, and full credit ability and
deductibility of foreign taxes, for U.S. federal (and if applicable state and
local) income tax purposes).
"Taxes" means (i) all taxes (whether federal, state, local or
foreign) based upon or measured by income and any other tax whatsoever,
including gross receipts, profits, sales, use, occupation, value added, ad
valorem, transfer, franchise, withholding, payroll, employment, excise, or
property taxes, together with any interest or penalties imposed with respect
thereto and (ii) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (i) above.
"Taxing Authority" means any government authority having
jurisdiction over the assessment, determination, collection or other
imposition of Tax.
10
"Third Party Claim" shall have the meaning set forth in Section
7.06(a).
"Transaction Affiliates" means, (i) with respect to USAi, the
Contributed Subsidiaries, USANi and USANi Sub, and (ii) with respect to
Universal, Vivendi.
"Transaction Documents" means this Agreement, the Partnership
Agreement, the Warrant Agreement, the Universal/Liberty Merger Agreement, the
Stockholders Agreement and the Governance Agreement, collectively.
"Transactions" means the transactions contemplated by the
Transaction Documents.
"Transfer Tax" shall have the meaning set forth in Section 4.05(b).
"Universal" shall have the meaning set forth in the Preamble.
"Universal Contributed Interests" means such entity or entities
that, as of the Effective Time, will own all of Universal's Contributed
Assets.
"Universal/Liberty Merger Agreement" means the Agreement and Plan of
Merger and Exchange, among Vivendi, Universal, Light France Acquisition 1,
S.A.S., the merger subsidiaries listed on the signature page thereto, Liberty
Media Corporation, Liberty Programming Company LLC, Liberty Programming
France, Inc. and the Liberty holding entities listed on the signature page
thereto, dated as of December 16, 2001.
"USA Cable" means the cable network business of USAi and its
Affiliates, including the USA Cable Network, the S-F Cable Network, Trio,
Newsworld International and Crime Channel.
"USA Films" means USA Films LLC.
"USA Name" means "USA Networks", including the presentation of words
on the cable network and promotional materials.
"USAi" shall have the meaning set forth in the Preamble.
"USAi Benefit Arrangements" shall have the meaning set forth in
Section 3.19(a).
11
"USAi Board" means the board of directors of USAi.
"USAi Business Employees" shall have the meaning set forth in
Section 3.19(a).
"USAi Class B Common Stock" shall have the meaning set forth in
Section 3.04(a).
"USAi Common Equity" means USAi Common Stock and USAi Class B Common
Stock.
"USAi Common Stock" means the common stock, par value $.01 per
share, of USAi.
"USAi Pension Plans" shall have the meaning set forth in Section
3.19(b).
"USAi Preferred Stock" shall have the meaning set forth in Section
3.04(a).
"USAi SEC Documents" shall have the meaning set forth in Section
3.06(a).
"USAi Shares" shall have the meaning set forth in Section 3.04(a).
"USAi Stockholder Approvals" means (i) the authorization of the
Transactions at an annual or special meeting by the affirmative vote of at
least 66 2/3% of the outstanding voting stock, by voting power and by number
of shares, which is not owned by Universal, Liberty or Diller or their
respective Affiliates and (ii) the approval of the Transactions at an annual
or special meeting by a majority of the votes cast by the shareholders of USAi
pursuant to Rule 4350 of the National Association of Securities Dealers, Inc.
"USAi Stockholders Meeting" shall have the meaning set forth in
Section 4.10(b).
"USANi" shall have the meaning set forth in the Preamble.
"USANi Contributed Interests" means (i) an 83.48% membership interest
in USA Networks Partner LLC held by USANi Sub, (ii) 100% of the stock of Tier
One Subsidiary, Inc., which is held by New-U Studios, Inc. (iii) 100% of the
capital stock of New-U Studios Inc., which is held by New-U Studios Holdings,
Inc., (iv) a 42.48% membership interest in Studios USA held by USANi Sub, (v) a
0.3% membership interest in Studios USA held by New-U Studios Inc., (vi) a 1%
membership interest in USA Networks Partner LLC held by Tier One Subsidiary,
Inc. and (vi) a 100%
12
membership interest in USA Television Production Group LLC held by
USANi Sub.
"USANi Distributed Interests" means the USANi Universal Distributed
Interests and the USANi Liberty Distributed Interests.
"USANi Liberty Distributed Interests" means a 15.52% membership
interest in USA Networks Partner LLC held by USANi Sub.
"USANi Universal Distributed Interests" means (i) USANi Sub's 50%
partnership interest in USA Cable, and (ii) a 57.22% membership interest in
Studios USA held by USANi Sub.
"USANi Shares" means the shares representing a proportionate
interest in the capital and profits and losses of USANi.
"USANi Sub" means USANi Sub LLC, a Delaware limited liability
company.
"USANi LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of USANi LLC dated as of February 12, 1998.
"Vivendi" shall have the meaning set forth in the Preamble.
"Warrant Agreement" means the Equity Warrant Agreement between USAi
and The Bank of New York substantially in the form of Exhibit B hereto.
"Warrants" means the warrants to purchase USAi Common Stock on the
terms set forth in the Warrant Agreement.
EXHIBIT 4.1
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT AS EXPRESSLY
PERMITTED UNDER THE STOCKHOLDERS AGREEMENT, DATED AS OF DECEMBER 16,
2002, BY AND AMONG USA NETWORKS, INC. AND THE OTHER PARTIES SET FORTH ON
THE SIGNATURE PAGES THERETO, AS THE SAME MAY BE AMENDED FROM TIME TO
TIME, AND OTHERWISE IN COMPLIANCE WITH FEDERAL AND APPLICABLE STATE
SECURITIES LAWS.
FORM
OF
EQUITY WARRANT AGREEMENT
dated as of _____________, 2002
for
WARRANTS TO PURCHASE
UP TO 60,467,7355* SHARES OF COMMON STOCK
EXPIRING ____________, 2012
between
USA NETWORKS, INC.
and
THE BANK OF NEW YORK, as
Equity Warrant Agent
- --------------
* Subject to adjustment as described in this Agreement.
TABLE OF CONTENTS
PAGE
ARTICLE 1. Definitions................................................. 1
ARTICLE 2. Issuance of Equity Warrants and Execution and Delivery of
Equity Warrant Certificates................................. 3
2.1. Issuance of Equity Warrants................................. 3
2.2. Form and Execution of Equity Warrant Certificates........... 3
2.3. Issuance and Delivery of Equity Warrant Certificates........ 4
2.4. Temporary Equity Warrant Certificates....................... 4
2.5. Payment of Taxes............................................ 4
ARTICLE 3. Duration and Exercise of Equity Warrants.................... 5
3.1. Exercise Price.............................................. 5
3.2. Duration of Equity Warrants................................. 5
3.3. Exercise of Equity Warrants................................. 5
ARTICLE 4. Adjustments of Number of Shares............................. 6
4.1. Adjustments................................................. 6
4.2. Statement on Warrants....................................... 9
4.3. Cash Payments in Lieu of Fractional Shares.................. 9
4.4. Notices to Warrantholders................................... 9
ARTICLE 5. Other Provisions Relating to Rights of Holders of Equity
Warrants.................................................... 9
5.1. No Rights as Holder of Common Stock Conferred by Equity
Warrants or Equity Warrant Certificates..................... 9
5.2. Lost, Stolen, Destroyed or Mutilated Equity Warrant
Certificates................................................ 9
5.3. Holders of Equity Warrants May Enforce Rights............... 10
5.4. Consolidation or Merger or Sale of Assets................... 10
ARTICLE 6. Exchange and Transfer of Equity Warrants.................... 11
6.1. Equity Warrant Register; Exchange and Transfer of Equity
Warrants.................................................... 11
6.2. Treatment of Holders of Equity Warrants..................... 12
6.3. Cancellation of Equity Warrant Certificates................. 12
ARTICLE 7. Concerning the Equity Warrant Agent......................... 12
7.1. Equity Warrant Agent........................................ 12
7.2. Conditions of Equity Warrant Agent's Obligations............ 12
-i-
7.3. Compliance with Applicable Laws............................. 14
7.4. Resignation and Appointment of Successor.................... 15
ARTICLE 8. Miscellaneous............................................... 16
8.1. Amendment................................................... 16
8.2. Notices and Demands to the Company and Equity Warrant Agent. 16
8.3. Addresses for Notices....................................... 16
8.4. Governing Law............................................... 17
8.5. Governmental Approvals...................................... 17
8.6. Reservation of Shares of Common Stock....................... 17
8.7. Covenant Regarding Shares of Common Stock................... 17
8.8. Persons Having Rights Under Agreement....................... 17
8.9 Limitation of Liability..................................... 18
8.10 Restrictions on Transfer/Registration Rights................ 18
8.11. Headings.................................................... 18
8.12. Counterparts................................................ 18
8.13. Inspection of Agreement..................................... 18
-ii-
THIS EQUITY WARRANT AGREEMENT (the "AGREEMENT"), dated as of
______________2002, between USA Networks, Inc., a Delaware corporation (the
"COMPANY"), and Bank of New York, a New York corporation, as warrant agent (the
"EQUITY WARRANT AGENT").
WHEREAS, pursuant to the Transaction Agreement, by and among the
Company, Vivendi Universal, S.A. (the "INITIAL HOLDER"), Universal Studios,
Inc., Liberty Media Corporation, Mr. Barry Diller and USANi LLC, dated as of
December 16, 2001, the Company has agreed to issue to the Initial Holder an
aggregate of 60,467,735 warrants,* subject to adjustment pursuant to Section 4.1
hereof (collectively, the "EQUITY WARRANTS" or, individually, an "EQUITY
WARRANT"), each Equity Warrant representing the right to purchase one share of
common stock, par value $.01 per share, of the Company (the "COMMON STOCK") and
being evidenced by certificates herein called the "EQUITY WARRANT CERTIFICATES";
WHEREAS, the Company desires the Equity Warrant Agent to assist the
Company in connection with the issuance, exchange, cancellation, replacement and
exercise of the Equity Warrants, and in this Agreement wishes to set forth,
among other things, the terms and conditions on which the Equity Warrants may be
issued, exchanged, cancelled, replaced and exercised; and
WHEREAS, the Company has duly authorized the execution and delivery
of this Agreement to provide for the issuance of Equity Warrants to be
exercisable at such times and for such prices, and to have such other
provisions, as shall be fixed as hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
"AGREEMENT" shall have the meaning set forth in the preamble.
"CLOSING PRICE" for each Trading Day shall be the last reported
sales price regular way, during regular trading hours, or, in case no such
reported sales takes place on such day, the average of the closing bid and asked
prices regular way, during regular trading hours, for such day, in each case on
The Nasdaq Stock Market or, if not listed or quoted on such market, on the
principal national securities exchange on which the shares of Common Stock are
listed or admitted to trading or, if not listed or admitted to trading on a
national securities exchange, the last sale price regular way for the Common
Stock as published by the National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or if such last sale price is not so published by
NASDAQ or if no such sale takes place on such day, the mean between the closing
bid and asked prices for the Common Stock as published by NASDAQ. If the Common
Stock is not publicly held or so listed or publicly traded, "Closing Price"
shall mean the Fair Market Value per share as determined in good faith by the
Board of Directors of the Company or, if such
- ---------------------
* Comprised of 24,187,094 warrants each at $27.50 and $32.50 and 12,093,547
warrants at $37.50.
determination cannot be made, by a nationally recognized independent investment
banking firm selected in good faith by the Board of Directors of the Company.
"COMMON STOCK" shall have the meaning set forth in the recitals.
"COMPANY" shall have the meaning set forth in the preamble.
"CURRENT MARKET PRICE" shall have the meaning set forth in Section
4.1(d).
"EQUITY WARRANT" and "EQUITY WARRANTS" shall have the meaning set
forth in the recitals.
"EQUITY WARRANT AGENT" shall have the meaning set forth in the
preamble.
"EQUITY WARRANT CERTIFICATES" shall have the meaning set forth in
the recitals.
"EQUITY WARRANT REGISTER" shall have the meaning set forth in
Section 6.1.
"EXERCISE DATE" shall have the meaning set forth in 3.3(a).
"EXERCISE PRICE" shall have the meaning set forth in the applicable
Equity Warrant Certificate.
"EXPIRATION DATE" means 5:00 p.m. New York City time on
____________, 2012.
"FAIR MARKET VALUE" means the amount that a willing buyer would pay
a willing seller in an arm's length transaction.
"FORMED, SURVIVING OR ACQUIRING CORPORATION" shall have the meaning
set forth in Section 5.4.
"GOVERNANCE AGREEMENT" shall have the meaning set forth in Section
8.10.
"HOLDER" means the person or persons in whose name such Equity
Warrant Certificate shall then be registered as set forth in the Equity Warrant
Register to be maintained by the Equity Warrant Agent pursuant to Section 6.1
for that purpose.
"INITIAL HOLDER" shall have the meaning set forth in the recitals.
"NON-ELECTING SHARE" shall have the meaning set forth in Section
5.4.
"OFFICER'S CERTIFICATE" shall have the meaning set forth in Section
7.2(e).
"PROSPECTUS" shall have the meaning set forth in Section 8.9.
"SALE TRANSACTION" shall have the meaning set forth in Section 5.4.
"STOCKHOLDERS AGREEMENT" shall have the meaning set forth in Section
8.10.
-2-
"TIME OF DETERMINATION" shall have the meaning set forth in Section
4.1(d).
"TRADING DAY" shall mean a day on which the securities exchange
utilized for the purpose of calculating the Closing Price shall be open for
business or, if the shares of Common Stock shall not be listed on such exchange
for such period, a day on which The Nasdaq Stock Market is open for business.
ARTICLE 2.
ISSUANCE OF EQUITY WARRANTS AND EXECUTION AND
DELIVERY OF EQUITY WARRANT CERTIFICATES
2.1. ISSUANCE OF EQUITY WARRANTS. Equity Warrants may be issued by the
Company from time to time.
2.2. FORM AND EXECUTION OF EQUITY WARRANT CERTIFICATES.
(a) The Equity Warrants shall be evidenced by the Equity Warrant
Certificates, which shall be in registered form and substantially in the form
set forth as Exhibit A attached hereto. Each Equity Warrant Certificate shall be
dated the date it is countersigned by the Equity Warrant Agent and may have such
letters, numbers or other marks of identification and such legends or
endorsements printed, lithographed or engraved thereon as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange on which the Equity Warrants may be
listed, or to conform to usage, as the officer of the Company executing the same
may approve (his execution thereof to be conclusive evidence of such approval).
Each Equity Warrant Certificate shall evidence one or more Equity Warrants.
(b) The Equity Warrant Certificates shall be signed in the name and on
behalf of the Company by its Chairman, its Vice Chairman, its Chief Executive
Officer, President or a Vice President (any reference to a Vice President of the
Company herein shall be deemed to include any Vice President of the Company
whether or not designated by a number or a word or words added before or after
the title "Vice President") under its corporate seal, and attested by its
Secretary or an Assistant Secretary. Such signatures may be manual or facsimile
signatures of the present or any future holder of any such office and may be
imprinted or otherwise reproduced on the Equity Warrant Certificates. The seal
of the Company may be in the form of a facsimile thereof and may be impressed,
affixed, imprinted or otherwise reproduced on the Equity Warrant Certificates.
(c) No Equity Warrant Certificate shall be valid for any purpose, and no
Equity Warrant evidenced thereby shall be deemed issued or exercisable, until
such Equity Warrant Certificate has been countersigned by the manual or
facsimile signature of the Equity Warrant Agent. Such signature by the Equity
Warrant Agent upon any Equity Warrant Certificate executed by the Company shall
be conclusive evidence that the Equity Warrant Certificate so countersigned has
been duly issued hereunder.
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(d) In case any officer of the Company who shall have signed any Equity
Warrant Certificate either manually or by facsimile signature shall cease to be
such officer before the Equity Warrant Certificate so signed shall have been
countersigned and delivered by the Equity Warrant Agent, such Equity Warrant
Certificate nevertheless may be countersigned and delivered as though the person
who signed such Equity Warrant Certificate had not ceased to be such officer of
the Company; and any Equity Warrant Certificate may be signed on behalf of the
Company by such person as, at the actual date of the execution of such Equity
Warrant Certificate, shall be the proper officer of the Company, although at the
date of the execution of this Agreement such person was not such an officer.
2.3. ISSUANCE AND DELIVERY OF EQUITY WARRANT CERTIFICATES. At any time and
from time to time after the execution and delivery of this Agreement, the
Company may deliver Equity Warrant Certificates executed by the Company to the
Equity Warrant Agent for countersignature. Except as provided in the following
sentence, the Equity Warrant Agent shall thereupon countersign and deliver such
Equity Warrant Certificates to or upon the written request of the Company.
Subsequent to the original issuance of an Equity Warrant Certificate evidencing
Equity Warrants, the Equity Warrant Agent shall countersign a new Equity Warrant
Certificate evidencing such Equity Warrants only if such Equity Warrant
Certificate is issued in exchange or substitution for one or more previously
countersigned Equity Warrant Certificates evidencing such Equity Warrants or in
connection with their transfer, as hereinafter provided.
2.4. TEMPORARY EQUITY WARRANT CERTIFICATES. Pending the preparation of a
definitive Equity Warrant Certificate, the Company may execute, and upon the
order of the Company the Equity Warrant Agent shall countersign and deliver,
temporary Equity Warrant Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, substantially of the tenor of
the definitive Equity Warrant Certificates in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officer executing such Equity Warrant Certificates may determine, as
evidenced by his execution of such Equity Warrant Certificates.
If temporary Equity Warrant Certificates are issued, the Company
will cause definitive Equity Warrant Certificates to be prepared without
unreasonable delay. After the preparation of definitive Equity Warrant
Certificates, the temporary Equity Warrant Certificates shall be exchangeable
for definitive Equity Warrant Certificates upon surrender of the temporary
Equity Warrant Certificates at the corporate trust office of the Equity Warrant
Agent. Upon surrender for cancellation of any one or more temporary Equity
Warrant Certificates, the Company shall execute and the Equity Warrant Agent
shall countersign and deliver in exchange therefor definitive Equity Warrant
Certificates representing the same aggregate number of Equity Warrants. Until so
exchanged, the temporary Equity Warrant Certificates shall in all respects be
entitled to the same benefits under this Agreement as definitive Equity Warrant
Certificates.
2.5. PAYMENT OF TAXES. The Company will pay all stamp and other duties, if
any, to which this Agreement or the original issuance, or exercise, of the
Equity Warrants or Equity Warrant Certificates may be subject under the laws of
the United States of America or any state or locality; PROVIDED, HOWEVER, that
the Holder, and not the Company, shall be required to pay any stamp or other tax
or other governmental charge that may be imposed in connection with any transfer
involved in the issuance of the Common Stock where the Holder designates the
shares to
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be issued in a name other than the name of the Holder; and in the
event that any such transfer is involved, the Company shall not be required to
issue any Common Stock (and the purchase of the shares of Common Stock issued
upon the exercise of such Holder's Equity Warrant shall not be deemed to have
been consummated) until such tax or other charge shall have been paid or it has
been established to the Company's satisfaction that no such tax or other charge
is due.
ARTICLE 3.
DURATION AND EXERCISE OF EQUITY WARRANTS
3.1. EXERCISE PRICE. Each Holder shall have the right to purchase the
number of fully paid and nonassessable shares of Common Stock which the Holder
may at the time be entitled to receive on exercise of such Equity Warrant and
payment of the Exercise Price, subject to the terms herein. The number of shares
of Common Stock which shall be purchasable upon the payment of the Exercise
Price and to the extent provided therein, the Exercise Price, shall be subject
to adjustment pursuant to Article 4 hereof.
3.2. DURATION OF EQUITY WARRANTS. Each Equity Warrant is exercisable at any
time commencing on _____________, 2002* up to the Expiration Date. Each Equity
Warrant not exercised at or before the Expiration Date shall become void, and
all rights of the Holder of such Equity Warrant thereunder and under this
Agreement shall cease.
3.3. EXERCISE OF EQUITY WARRANTS.
(a) The Holder of an Equity Warrant shall have the right, at its option, to
exercise such Equity Warrant and purchase one share of Common Stock during the
period referred to in Section 3.2, subject to adjustment pursuant to Article 4
hereof. Except as may be provided in an Equity Warrant Certificate, an Equity
Warrant may be exercised by completing the form of election to purchase set
forth on the reverse side of the Equity Warrant Certificate, by duly executing
the same, and by delivering the same, together with payment in full of the
Exercise Price, in lawful money of the United States of America, in cash or by
certified or official bank check or by bank wire transfer, to the Equity Warrant
Agent. Except as may be provided in an Equity Warrant Certificate, the date on
which such Equity Warrant Certificate and payment are received by the Equity
Warrant Agent as aforesaid shall be deemed to be the date on which the Equity
Warrant is exercised and the relevant shares of Common Stock are issued (the
"EXERCISE DATE").
(b) Upon the exercise of an Equity Warrant, the Company shall, as soon as
practicable, issue, to or upon the order of the Holder of such Equity Warrant,
the shares of Common Stock to which such Holder is entitled, registered in such
name or names as may be directed by such Holder.
(c) Unless the Equity Warrant Agent and the Company agree otherwise, the
Equity Warrant Agent shall deposit all funds received by it in payment of the
Equity Warrant Price for Equity Warrants in the account of the Company
maintained with it for such purpose and
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* Date following the six-month anniversary of the Closing.
-5-
shall advise the Company by telephone by 5:00 P.M., New York City time, of each
day on which a payment of the Exercise Price for Equity Warrants is received of
the amount so deposited in its account. The Equity Warrant Agent shall promptly
confirm such telephone advice in writing to the Company.
(d) The Equity Warrant Agent shall, from time to time, as promptly as
practicable, advise the Company of (i) the number of Equity Warrants exercised
as provided herein, (ii) the instructions of each Holder of such Equity Warrants
with respect to delivery of the Common Stock issued upon exercise of such Equity
Warrants to which such Holder is entitled upon such exercise, and (iii) such
other information as the Company shall reasonably require. Such advice may be
given by telephone to be confirmed in writing.
ARTICLE 4.
ADJUSTMENTS OF NUMBER OF SHARES
4.1. ADJUSTMENTS. The number of shares of Common Stock purchasable upon the
exercise of the Equity Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (A) pay a dividend or make a distribution on
its Common Stock in shares of Common Stock, (B) subdivide its outstanding shares
of Common Stock into a greater number of shares, (C) combine its outstanding
shares of Common Stock into a smaller number of shares, or (D) issue by
reclassification, recapitalization or reorganization of its Common Stock any
shares of capital stock of the Company, then in each such case the number of
shares of Common Stock issuable upon exercise of an Equity Warrant shall be
equitably adjusted so that the Holder of any Equity Warrant thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock or other capital stock of the Company which such Holder would have
owned or been entitled to receive immediately following such action had such
Equity Warrant been exercised immediately prior to the occurrence of such event.
An adjustment made pursuant to this subsection 4.1(a) shall become effective
immediately after the record date, in the case of a dividend or distribution, or
immediately after the effective date, in the case of a subdivision, combination
or reclassification. If, as a result of an adjustment made pursuant to this
subsection 4.1(a), the Holder of any Equity Warrant thereafter exercised shall
become entitled to receive shares of two or more classes of capital stock or
shares of Common Stock and other capital stock of the Company, the Board of
Directors (whose determination shall be in its good faith judgment and shall be
described in a statement filed by the Company with the Equity Warrant Agent)
shall determine the allocation of the Exercise Price between or among shares of
such classes of capital stock or shares of Common Stock and other capital stock.
Such adjustment shall be made successively whenever any event listed above shall
occur.
(b) In case the Company shall issue options, rights or warrants to holders
of its outstanding shares of Common Stock entitling them (for a period expiring
within 45 days after the record date mentioned below) to subscribe for or
purchase shares of Common Stock or other securities convertible or exchangeable
for shares of Common Stock at a price per share of Common Stock less than the
Current Market Price (as determined pursuant to subsection (d) of this Section
4.1) (other than pursuant to any stock option, restricted stock or other
incentive or
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benefit plan or stock ownership or purchase plan for the benefit of
employees, directors or officers or any dividend reinvestment plan of the
Company in effect at the time hereof or any other similar plan adopted or
implemented hereafter, it being agreed that none of the adjustments set forth in
this Section 4.1 shall apply to the issuance of stock, rights, warrants or other
property pursuant to such benefit plans), then the number of shares of Common
Stock issuable upon exercise of an Equity Warrant shall be adjusted so that it
shall equal the product obtained by multiplying the number of shares of Common
Stock issuable upon exercise of an Equity Warrant immediately prior to the date
of issuance of such rights or warrants by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding on the date of
issuance of such rights or warrants (immediately prior to such issuance) plus
the number of additional shares of Common Stock offered for subscription or
purchase and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants
(immediately prior to such issuance) plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Current Market Price. Such adjustment shall be made successively
whenever any rights or warrants are issued, and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such rights or warrants; PROVIDED, HOWEVER, in the event that all the
shares of Common Stock offered for subscription or purchase are not delivered
upon the exercise of such rights or warrants, upon the expiration of such rights
or warrants the number of shares of Common Stock issuable upon exercise of an
Equity Warrant shall be readjusted to the number of shares of Common Stock
issuable upon exercise of an Equity Warrant which would have been in effect had
the numerator and the denominator of the foregoing fraction and the resulting
adjustment been made based upon the number of shares of Common Stock actually
delivered upon the exercise of such rights or warrants rather than upon the
number of shares of Common Stock offered for subscription or purchase. In
determining whether any security covered by this Section 4.1(b) entitles the
holders to subscribe for or purchase shares of Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received by the Company for the issuance of such options, rights, warrants or
convertible or exchangeable securities, plus the aggregate amount of additional
consideration (as set forth in the instruments relating thereto) to be received
by the Company upon the exercise, conversion or exchange of such securities, the
value of such consideration, if other than cash, to be determined by the Board
of Directors in its good faith judgment (whose determination shall be described
in a statement filed by the Company with the Equity Warrant Agent).
(c) In case the Company shall, by dividend or otherwise, distribute to all
holders of its outstanding Common Stock, evidences of its indebtedness or assets
(including securities and cash, but excluding any regular periodic cash dividend
of the Company and dividends or distributions payable in stock for which
adjustment is made pursuant to subsection (a) of this Section 4.1) or rights or
warrants to subscribe for or purchase securities of the Company (excluding those
referred to in subsection (b) of this Section 4.1), then in each such case the
number of shares of Common Stock issuable upon exercise of an Equity Warrant
shall be adjusted so that the same shall equal the product determined by
multiplying the number of shares of Common Stock issuable upon exercise of an
Equity Warrant immediately prior to the record date of such distribution by a
fraction of which the numerator shall be the Current Market Price as of the Time
of Determination, and of which the denominator shall be such Current Market
Price less the Fair Market Value on such record date (as determined by the Board
of
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Directors in its good faith judgment, whose determination shall be described
in a statement filed by the Company with the stock transfer or conversion agent,
as appropriate) of the portion of the capital stock or assets or the evidences
of indebtedness or assets so distributed to the holder of one share of Common
Stock or of such subscription rights or warrants applicable to one share of
Common Stock. Such adjustment shall be made successively whenever any such
distributions referred to in the first sentence of this Section 4.01(c) are made
and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
(d) For the purpose of any computation under subsections (b) and (c) of
this Section 4.1, the "CURRENT MARKET PRICE" per share of Common Stock on any
date shall be deemed to be the average of the daily Closing Prices for the
shorter of (A) 10 consecutive Trading Days ending on the day immediately
preceding the applicable Time of Determination or (B) the period commencing on
the date next succeeding the first public announcement of the issuance of such
rights or warrants or such distribution through such last day prior to the
applicable Time of Determination. For purposes of the foregoing, the term "TIME
OF DETERMINATION" shall mean the time and date of the record date for
determining stockholders entitled to receive the rights, warrants or
distributions referred to in Section 4.1(b) and (c).
(e) In any case in which this Section 4.1 shall require that an adjustment
in the amount of Common Stock or other property to be received by a Holder upon
exercise of an Equity Warrant be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the Holder of any Equity Warrant exercised after such
record date the Common Stock or other property issuable upon such exercise over
and above the shares of Common Stock issuable upon such exercise prior to such
adjustment, PROVIDED, HOWEVER, that the Company shall deliver to such Holder a
due bill or other appropriate instrument evidencing such Holder's right to
receive such additional shares of Common Stock or other property, if any, upon
the occurrence of the event requiring such adjustment.
(f) In the event that the Amended and Restated Merger Agreement, dated as
of July 15, 2001, among the Company, Expedia, Inc. and Microsoft Corporation, is
terminated following the date hereof without consummation of the merger
contemplated thereby, the aggregate number of Equity Warrants shall be reduced
by 3,348,2104 (subject to adjustment pursuant to Sections 4.1(a), (b) or (c)),
which reduction shall be allocated proportionately to any Equity Warrant
Certificates issued hereunder.
(g) No adjustment in the number of shares of Common Stock issuable upon
exercise of an Equity Warrant shall be required to be made pursuant to this
Section 4.1 unless such adjustment would require an increase or decrease of at
least 1% of such number; PROVIDED, HOWEVER, that any adjustments which by reason
of this subsection (g) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
subsection 4.1(g) shall be made to the nearest cent or to the nearest 1/1000th
of a share, as the case may be. Except as set forth in subsections 4.1(a), (b),
and (c) above, the
______________
* In the event of adjustment, there would be an aggregate of 57,119,525
warrants, comprised of 22,847,810 warrants each at $27.50 and $32.50 and
11,423,905 warrants at $37.50.
-8-
number of shares of Common Stock issuable upon exercise of an Equity Warrant
shall not be adjusted as a result of the issuance of Common Stock, or any
securities convertible into or exchangeable for Common Stock or carrying the
right to purchase any of the foregoing, in exchange for cash, property or
services.
4.2. STATEMENT ON WARRANTS. Irrespective of any adjustment in the amount of
Common Stock issued upon exercise of an Equity Warrant, Equity Warrants
theretofore or thereafter issued may continue to express the same number and
kind of shares as are stated in the Equity Warrants initially issuable pursuant
to this Agreement.
4.3. CASH PAYMENTS IN LIEU OF FRACTIONAL SHARES No fractional shares or
scrip representing fractions of shares of Common Stock shall be issued upon
exercise of the Equity Warrants. If more than one share of Equity Warrants shall
be exercised at one time by the same Holder, the number of full shares of Common
Stock issuable upon exercise thereof shall be computed on the basis of the
aggregate number of shares of Common Stock purchasable on exercise of the Equity
Warrants so requested to be exercised. In lieu of any fractional interest in a
share of Common Stock which would otherwise be deliverable upon the exercise of
such Equity Warrants, the Company shall pay to the Holder of such Equity
Warrants an amount in cash (computed to the nearest cent) equal to the Closing
Price on the Exercise Date (or the next Trading Day if such date is not a
Trading Day) multiplied by the fractional interest that otherwise would have
been deliverable upon exercise of such Equity Warrants.
4.4. NOTICES TO WARRANTHOLDERS. Upon any adjustment of the amount of Common
Stock issuable upon exercise of an Equity Warrant pursuant to Section 4.1 (but
not for any fractional cumulation as described in Section 4.1(f)), the Company
within 30 days thereafter shall (i) cause to be filed with the Equity Warrant
Agent an Officer's Certificate (as defined hereinafter) setting forth the amount
of Common Stock issuable upon exercise of an Equity Warrant after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based, which certificate, absent
manifest error and any failure to comply with Section 4.1 (other than failures
that are de minimus in nature), shall be conclusive evidence of the correctness
of the matters set forth therein, and (ii) cause to be given to each of the
registered Holders at his address appearing on the Equity Warrant Register (as
defined hereinafter) written notice of such adjustments by first-class mail,
postage prepaid.
ARTICLE 5.
OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS
OF EQUITY WARRANTS
5.1. NO RIGHTS AS HOLDER OF COMMON STOCK CONFERRED BY EQUITY WARRANTS OR
EQUITY WARRANT CERTIFICATES. No Equity Warrant or Equity Warrant Certificate
shall entitle the Holder to any of the rights of a holder of Common Stock,
including, without limitation, voting, dividend or liquidation rights.
5.2. LOST, STOLEN, DESTROYED OR MUTILATED EQUITY WARRANT CERTIFICATES. Upon
receipt by the Company and the Equity Warrant Agent of evidence reasonably
satisfactory to them of the ownership of and the loss, theft, destruction or
mutilation of any Equity Warrant Certificate
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and of indemnity (other than in connection with any mutilated Equity Warrant
certificates surrendered to the Equity Warrant Agent for cancellation)
reasonably satisfactory to them, the Company shall execute, and the Equity
Warrant Agent shall countersign and deliver, in exchange for or in lieu of each
lost, stolen, destroyed or mutilated Equity Warrant Certificate, a new Equity
Warrant Certificate evidencing a like number of Equity Warrants of the same
title. Upon the issuance of a new Equity Warrant Certificate under this Section,
the Company may require the payment of a sum sufficient to cover any stamp or
other tax or other governmental charge that may be imposed in connection
therewith and any other expenses (including the fees and expenses of the Equity
Warrant Agent) in connection therewith. Every substitute Equity Warrant
Certificate executed and delivered pursuant to this Section in lieu of any lost,
stolen or destroyed Equity Warrant Certificate shall represent a contractual
obligation of the Company, whether or not such lost, stolen or destroyed Equity
Warrant Certificate shall be at any time enforceable by anyone, and shall be
entitled to the benefits of this Agreement equally and proportionately with any
and all other Equity Warrant Certificates, duly executed and delivered
hereunder, evidencing Equity Warrants of the same title. The provisions of this
Section are exclusive and shall preclude (to the extent lawful) all other rights
and remedies with respect to the replacement of lost, stolen, destroyed or
mutilated Equity Warrant Certificates.
5.3. HOLDERS OF EQUITY WARRANTS MAY ENFORCE RIGHTS. Notwithstanding any of
the provisions of this Agreement, any Holder may, without the consent of the
Equity Warrant Agent, enforce and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in respect of
his right to exercise his Equity Warrants as provided in the Equity Warrants and
in this Agreement.
5.4. CONSOLIDATION OR MERGER OR SALE OF ASSETS. For purposes of this
Section 5.4, a "SALE TRANSACTION" means any transaction or event, including any
merger, consolidation, sale of assets, tender or exchange offer,
reclassification, compulsory share exchange or liquidation, in which all or
substantially all outstanding shares of the Company's Common Stock are converted
into or exchanged for stock, other securities, cash or assets or following which
any remaining outstanding shares of Common Stock fail to meet the listing
standards imposed by each of the New York Stock Exchange, the American Stock
Exchange and the Nasdaq National Market at the time of such transaction, but
shall not include any transaction the primary purpose of which is the
reincorporation of the Company in another U.S. jurisdiction so long as in such
transaction each Equity Warrant shall convert into an equity security of the
successor to the Company having identical rights as the Equity Warrant. If a
Sale Transaction occurs, then lawful provision shall be made by the corporation
formed by such Sale Transaction or the corporation whose securities, cash or
other property will immediately after the Sale Transaction be owned, by virtue
of such Sale Transaction, by the holders of Common Stock immediately prior to
the Sale Transaction, or the corporation which shall have acquired such
securities of the Company (collectively the "FORMED, SURVIVING OR ACQUIRING
CORPORATION"), as the case may be, providing that each Equity Warrant then
outstanding shall thereafter be exercisable for the kind and amount of
securities, cash or other property receivable upon such Sale Transaction by a
holder of the number of shares of Common Stock that would have been received
upon exercise of such Equity Warrant immediately prior to such Sale Transaction
assuming such holder of Common Stock did not exercise his rights of election, if
any, as to the kind or amount of securities, cash or other property receivable
upon such Sale Transaction (PROVIDED that, if the kind or amount of securities,
cash or other property receivable upon such Sale Transaction is not the same for
each
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share of Common Stock in respect of which such rights of election shall not
have been exercised ("NON-ELECTING SHARE"), then for the purposes of this
Section 5.4 the kind and amount of securities, cash or other property receivable
upon such Sale Transaction for each Non-Electing Share shall be deemed to be the
kind and amount so receivable per share by a plurality of the Non-Electing
Shares). At the option of the Company, in lieu of the foregoing, the Company may
require that in a Sale Transaction each Holder of an Equity Warrant shall
receive in exchange for each such Equity Warrant a security of the Formed,
Surviving or Acquiring Corporation having substantially equivalent rights, other
than as set forth in this Section 5.4, as the Equity Warrant. Concurrently with
the consummation of such transaction, the Formed, Surviving or Acquiring
Corporation shall enter into a supplemental Equity Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in Section 4.1.
The Formed, Surviving or Acquiring Corporation shall mail to Holders a notice
describing the supplemental Equity Warrant Agreement. If the issuer of
securities deliverable upon exercise of Equity Warrants under the supplemental
Equity Warrant Agreement is an affiliate of the formed or surviving corporation,
that issuer shall join in the supplemental Equity Warrant Agreement.
Notwithstanding anything to the contrary herein, there will be no adjustments
pursuant to Article 4 hereof in case of the issuance of any shares of the
Company's stock in a Sale Transaction except as provided in this Section 5.4.
The provisions of this Section 5.4 shall similarly apply to successive Sale
Transactions; PROVIDED, HOWEVER, that in no event shall a Holder of an Equity
Warrant be entitled to more than one adjustment pursuant to this Section 5.4 in
respect of a series of related transactions.
ARTICLE 6.
EXCHANGE AND TRANSFER OF EQUITY WARRANTS
6.1. EQUITY WARRANT REGISTER; EXCHANGE AND TRANSFER OF EQUITY WARRANT. The
Equity Warrant Agent shall maintain, at its corporate trust office or at 385
Rifle Camp Road, Reorganization Services Department, 5th Floor, West Paterson,
New Jersey 07424, a register (the "EQUITY WARRANT REGISTER") in which, upon the
issuance of Equity Warrants, and, subject to such reasonable regulations as the
Equity Warrant Agent may prescribe, it shall register Equity Warrant
Certificates and exchanges and transfers thereof. The Equity Warrant Register
shall be in written form or in any other form capable of being converted into
written form within a reasonable time.
Except as provided in the following sentence, upon surrender at the
corporate trust office of the Equity Warrant Agent or at 385 Rifle Camp Road,
Reorganization Services Department, 5th Floor, West Paterson, New Jersey 07424,
Equity Warrant Certificates may be exchanged for one or more other Equity
Warrant Certificates evidencing the same aggregate number of Equity Warrants of
the same title, or may be transferred in whole or in part. A transfer shall be
registered and an appropriate entry made in the Equity Warrant Register upon
surrender of an Equity Warrant Certificate to the Equity Warrant Agent at its
corporate trust office or at 385 Rifle Camp Road, Reorganization Services
Department, 5th Floor, West Paterson, New Jersey 07424 for transfer, properly
endorsed or accompanied by appropriate instruments of transfer and written
instructions for transfer, all in form satisfactory to the Company and the
Equity Warrant Agent. Whenever an Equity Warrant Certificate is surrendered for
exchange or transfer, the Equity Warrant Agent shall countersign and deliver to
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the person or person entitled thereto one or more Equity Warrant Certificates
duly executed by the Company, as so requested. The Equity Warrant Agent shall
not be required to effect any exchange or transfer which will result in the
issuance of an Equity Warrant Certificate evidencing a fraction of an Equity
Warrant. All Equity Warrant Certificates issued upon any exchange or transfer of
an Equity Warrant Certificate shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Equity Warrant Certificate surrendered for such exchange or
transfer.
No service charge shall be made for any exchange or transfer of
Equity Warrants, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such exchange or transfer, in accordance with Section 2.5 hereof.
6.2. TREATMENT OF HOLDERS OF EQUITY WARRANTS. Every Holder of an Equity
Warrant, by accepting the Equity Warrant Certificate evidencing the same,
consents and agrees with the Company, the Equity Warrant Agent and with every
other Holder of Equity Warrants that the Company and the Equity Warrant Agent
may treat the record holder of an Equity Warrant Certificate as the absolute
owner of such Equity Warrant for all purposes and as the person entitled to
exercise the rights represented by such Equity Warrant.
6.3. CANCELLATION OF EQUITY WARRANT CERTIFICATES. In the event that the
Company shall purchase, redeem or otherwise acquire any Equity Warrants after
the issuance thereof, the Equity Warrant Certificate shall thereupon be
delivered to the Equity Warrant Agent and be canceled by it. The Equity Warrant
Agent shall also cancel any Equity Warrant Certificate (including any mutilated
Equity Warrant Certificate) delivered to it for exercise, in whole or in part,
or for exchange or transfer. Equity Warrant Certificates so canceled shall be
delivered by the Equity Warrant Agent to the Company from time to time, or
disposed of in accordance with the instructions of the Company.
ARTICLE 7.
CONCERNING THE EQUITY WARRANT AGENT
7.1. EQUITY WARRANT AGENT. The Company hereby appoints The Bank of New York
as Equity Warrant Agent of the Company in respect of the Equity Warrants upon
the terms and subject to the conditions set forth herein; and The Bank of New
York hereby accepts such appointment. The Equity Warrant Agent shall have the
powers and authority granted to and conferred upon it in the Equity Warrant
Certificates and hereby and such further powers and authority acceptable to it
to act on behalf of the Company as the Company may hereafter grant to or confer
upon it. All of the terms and provisions with respect to such powers and
authority contained in the Equity Warrant Certificates are subject to and
governed by the terms and provisions hereof.
7.2. CONDITIONS OF EQUITY WARRANT AGENT'S OBLIGATIONS. The Equity Warrant
Agent accepts its obligations set forth herein upon the terms and conditions
hereof, including the following, to all of which the Company agrees and to all
of which the rights hereunder of the Holders shall be subject:
-12-
(a) COMPENSATION AND INDEMNIFICATION. The Company agrees to pay the
Equity Warrant Agent from time to time such compensation for its
services as the Company and the Equity Warrant shall agree in writing
and to reimburse the Equity Warrant Agent for reasonable out-of-pocket
expenses (including reasonable counsel fees) incurred by the Equity
Warrant Agent in connection with the services rendered hereunder by the
Equity Warrant Agent. The Company also agrees to indemnify the Equity
Warrant Agent for, and to hold it harmless against, any loss, liability
or expenses (including the reasonable costs and expense of defending
against any claim of liability) incurred without negligence or bad
faith on the part of the Equity Warrant Agent arising out of or in
connection with its appointment as Equity Warrant Agent hereunder.
(b) AGENT FOR THE COMPANY. In acting under this Agreement and in
connection with any Equity Warrant Certificate, the Equity Warrant Agent is
acting solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with any Holder.
(c) COUNSEL. The Equity Warrant Agent may consult with counsel
reasonably satisfactory to it, and the advice of such counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with
the advice of such counsel.
(d) DOCUMENTS. The Equity Warrant Agent shall be protected and shall
incur no liability for or in respect of any action taken, suffered or
omitted by it in reliance upon any notice, direction, consent,
certification, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the
proper parties.
(e) OFFICER'S CERTIFICATE. Whenever in the performance of its duties
hereunder the Equity Warrant Agent shall reasonably deem it necessary that
any fact or matter be proved or established by the Company prior to taking,
suffering or omitting any action hereunder, the Equity Warrant Agent may
(unless other evidence in respect thereof be herein specifically
prescribed), in the absence of bad faith on its part, rely upon a
certificate signed by the Chairman, the Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Treasurer, and Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company (an
"OFFICER'S CERTIFICATE") delivered by the Company to the Equity Warrant
Agent.
(f) ACTIONS THROUGH AGENTS. The Equity Warrant Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents,
provided, however, that reasonable care shall be exercised in the selection
and continued employment of such attorneys and agents.
(g) CERTAIN TRANSACTIONS. The Equity Warrant Agent, and any officer,
director or employee thereof, may become the owner of, or acquire
interest in, any Equity Warrant, with the same rights that he, she or
it would have if it were not the Equity Warrant Agent, and, to the
extent permitted by applicable law, he, she or it may engage
-13-
or be interested in any financial or other transaction with the Company and
may serve on, or as depositary, trustee or agent for, any committee or body
of holders of any obligations of the Company as if it were not the Equity
Warrant Agent.
(h) NO LIABILITY FOR INTEREST. The Equity Warrant Agent shall not be
liable for interest on any monies at any time received by it pursuant to
any of the provisions of this Agreement or of the Equity Warrant
Certificates, except as otherwise agreed with the Company.
(i) NO LIABILITY FOR INVALIDITY. The Equity Warrant Agent shall incur
no liability with respect to the validity of this Agreement (except as to
the due execution hereof by the Equity Warrant Agent) or any Equity Warrant
Certificate (except as to the countersignature thereof by the Equity
Warrant Agent).
(j) NO RESPONSIBILITY FOR COMPANY REPRESENTATIONS. The Equity
Warrant Agent shall not be responsible for any of the recitals or
representations contained herein (except as to such statements or
recitals as describe the Equity Warrant Agent or action taken or to be
taken by it) or in any Equity Warrant Certificate (except as to the
Equity Warrant Agent's countersignature on such Equity Warrant
Certificate), all of which recitals and representations are made solely
by the Company.
(k) NO IMPLIED OBLIGATIONS. The Equity Warrant Agent shall be
obligated to perform only such duties as are specifically set forth
herein, and no other duties or obligations shall be implied. The
Equity Warrant Agent shall not be under any obligation to take any
action hereunder that may subject it to any expense or liability, the
payment of which within a reasonable time is not, in its reasonable
opinion, assured to it. The Equity Warrant Agent shall not be
accountable or under any duty or responsibility for the use by the
Company of any Equity Warrant Certificate countersigned by the Equity
Warrant Agent and delivered by it to the Company pursuant to this
Agreement or for the application by the Company of the proceeds of the
issuance or exercise of Equity Warrants. The Equity Warrant Agent
shall have no duty or responsibility in case of any default by the
Company in the performance of its covenants or agreements contained
herein or in any Equity Warrant Certificate or in case of the receipt
of any written demand from a Holder with respect to such default,
including, without limiting the generality of the foregoing, any duty
or responsibility to initiate or attempt to initiate any proceedings at
law or otherwise or, except as provided in Section 8.2 hereof, to make
any demand upon the Company.
7.3. COMPLIANCE WITH APPLICABLE LAWS. The Equity Warrant Agent agrees to
comply with all applicable federal and state laws imposing obligations on it in
respect of the services rendered by it under this Agreement and in connection
with the Equity Warrants, including (but not limited to) the provisions of
United States federal income tax laws regarding information reporting and backup
withholding. The Equity Warrant Agent expressly assumes all liability for its
failure to comply with any such laws imposing obligations on it, including (but
not limited to) any liability for failure to comply with any applicable
provisions of United States federal income tax laws regarding information
reporting and backup withholding.
-14-
7.4. RESIGNATION AND APPOINTMENT OF SUCCESSOR.
(a) The Company agrees, for the benefit of the Holders of the Equity
Warrants, that there shall at all times be an Equity Warrant Agent hereunder
until all the Equity Warrants are no longer exercisable.
(b) The Equity Warrant Agent may at any time resign as such agent by giving
written notice to the Company of such intention on its part, specifying the date
on which its desired resignation shall become effective, subject to the
appointment of a successor Equity Warrant Agent and acceptance of such
appointment by such successor Equity Warrant Agent, as hereinafter provided. The
Equity Warrant Agent hereunder may be removed at any time by the filing with it
of an instrument in writing signed by or on behalf of the Company and specifying
such removal and the date when it shall become effective. Such resignation or
removal shall take effect upon the appointment by the Company, as hereinafter
provided, of a successor Equity Warrant Agent (which shall be a banking
institution organized under the laws of the United States of America, or one of
the states thereof and having an office or an agent's office in the Borough of
Manhattan, the City of New York) and the acceptance of such appointment by such
successor Equity Warrant Agent. In the event a successor Equity Warrant Agent
has not been appointed and has not accepted its duties within 90 days of the
Equity Warrant Agent's notice of resignation, the Equity Warrant Agent may apply
to any court of competent jurisdiction for the designation of a successor Equity
Warrant Agent.
(c) In case at any time the Equity Warrant Agent shall resign, or shall be
removed, or shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or make an assignment for the benefit of its creditors or consent to
the appointment of a receiver or custodian of all or any substantial part of its
property, or shall admit in writing its inability to pay or meet its debts as
they mature, or if a receiver or custodian of it or all or any substantial part
of its property shall be appointed, or if any public officer shall have taken
charge or control of the Equity Warrant Agent or of its property or affairs, for
the purpose of rehabilitation, conservation or liquidation, a successor Equity
Warrant Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing, filed with the successor Equity Warrant Agent. Upon the
appointment as aforesaid of a successor Equity Warrant Agent and acceptance by
the latter of such appointment, the Equity Warrant Agent so superseded shall
cease to be the Equity Warrant Agent hereunder.
(d) Any successor Equity Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to its predecessor and to the Company an instrument
accepting such appointment hereunder, and thereupon such successor Equity
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Equity Warrant Agent hereunder, and such predecessor, upon payment of its
charges and disbursements then unpaid, shall thereupon become obligated to
transfer, deliver and pay over, and such successor Equity Warrant Agent shall be
entitled to receive all moneys, securities and other property on deposit with or
held by such predecessor, as Equity Warrant Agent hereunder.
(e) Any corporation into which the Equity Warrant Agent hereunder may be
merged or converted or any corporation with which the Equity Warrant Agent may
be
-15-
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Equity Warrant Agent shall be a party, or any
corporation to which the Equity Warrant Agent shall sell or otherwise transfer
all or substantially all of the assets and business of the Equity Warrant Agent,
provided that it shall be qualified as aforesaid, shall be the successor Equity
Warrant Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
ARTICLE 8.
MISCELLANEOUS
8.1. AMENDMENT.
(a) This Agreement and the Equity Warrants may be amended by the Company
and the Equity Warrant Agent, without the consent of the Holders of Equity
Warrants, for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective or inconsistent provision contained herein or
therein or in any other manner which the Company may deem to be necessary or
desirable and which will not (i) materially and adversely affect the rights of
the Equity Warrants and (ii) adversely affect the rights of the Initial Holder
under this Agreement to the extent the Initial Holder is a Holder at the time of
such amendment.
(b) The Company and the Equity Warrant Agent may modify or amend this
Agreement and the Equity Warrant Certificates with the consent of the Holders of
not fewer than a majority in number of the then outstanding unexercised Equity
Warrants affected by such modification or amendment, for any purpose; PROVIDED,
HOWEVER, (i) that no such modification or amendment that shortens the period of
time during which the Equity Warrants may be exercised, or increases the
Exercise Price, or otherwise materially and adversely affects the exercise
rights of the holders or reduces the percentage of holders of outstanding Equity
Warrants the consent of which is required for modification or amendment of this
Agreement or the Equity Warrants, may be made without the consent of each Holder
affected thereby, and (ii) that no such modification or amendment that adversely
affects the exercise rights of the holders may be made without the consent of
the Initial Holder of the Equity Warrants to the extent the Initial Holder is a
Holder at the time of such modification and/or amendment.
8.2. NOTICES AND DEMANDS TO THE COMPANY AND EQUITY WARRANT AGENT. If the
Equity Warrant Agent shall receive any notice or demand addressed to the Company
by any Holder pursuant to the provisions of the Equity Warrant Certificate, the
Equity Warrant Agent shall promptly forward such notice or demand to the
Company.
8.3. ADDRESSES FOR NOTICES. Any communications from the Company to the
Equity Warrant Agent with respect to this Agreement shall be addressed to The
Bank of New York, 385 Rifle Camp Road, Reorganization Services Department, 5th
Floor, West Paterson, New Jersey 07424; any communications from the Equity
Warrant Agent to the Company with respect to this Agreement shall be addressed
to USA Networks, Inc., 152 West 57th Street, New York, NY 10019, Attention:
General Counsel; or such other addresses as shall be specified in writing by the
Equity Warrant Agent or by the Company.
-16-
8.4. GOVERNING LAW. This Agreement and the Equity Warrants shall be
governed by the laws of the State of New York applicable to contracts made and
to be performed entirely within such state.
8.5. GOVERNMENTAL APPROVALS. The Company will from time to time use all
reasonable efforts to obtain and keep effective any and all permits, consents
and approvals of governmental agencies and authorities and the national
securities exchange on which the Equity Warrants may be listed or authorized for
trading from time to time and filings under the United States federal and state
laws, which may be or become requisite in connection with the issuance, sale,
trading, transfer or delivery of the Equity Warrants, and the exercise of the
Equity Warrants.
8.6. RESERVATION OF SHARES OF COMMON STOCK. The Company covenants that it
will at all times reserve and keep available, free from preemptive rights (other
than such rights as do not affect the ownership of shares issued to a Holder),
out of the aggregate of its authorized but unissued shares of Common Stock or
its issued shares of Common Stock held in its treasury, or both, for the purpose
of effecting exercises of Equity Warrants, the full number of shares of Common
Stock deliverable upon the exercise of all outstanding Equity Warrants not
theretofore exercised and on or before taking any action that would cause an
adjustment resulting in an increase in the number of shares of Common Stock
deliverable upon exercise above the number thereof previously reserved and
available therefor, the Company shall take all such action so required. For
purposes of this Section 8.6, the number of shares of Common Stock which shall
be deliverable upon the exercise of all outstanding Equity Warrants shall be
computed as if at the time of computation all outstanding Equity Warrants were
held by a single holder. Before taking any action which would cause an
adjustment reducing the price per share of Common Stock issued upon exercise of
the Equity Warrants below the then par value (if any) of such shares of Common
Stock, the Company shall take any corporate action which may, in the opinion of
its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of Common Stock at such Exercise
Price.
8.7. COVENANT REGARDING SHARES OF COMMON STOCK. All shares of Common Stock
which may be delivered upon exercise of the Equity Warrants will upon delivery
be duly and validly issued and fully paid and non-assessable, free of all liens
and charges and not subject to any preemptive rights (other than rights which do
not affect the Holder's right to own the shares of Common Stock to be issued),
and prior to the Exercise Date the Company shall take any corporate action
necessary therefor. The issuance of all such shares of Common Stock shall, to
the extent permitted by law, be registered under the Securities Act of 1933, as
amended.
8.8. PERSONS HAVING RIGHTS UNDER AGREEMENT. Nothing in this Agreement
expressed or implied and nothing that may be inferred from any of the provisions
hereof is intended, or shall be construed, to confer upon, or give to, any
person or corporation other than the Company, the Equity Warrant Agent and the
Holders any right, remedy or claim under or by reason of this Agreement or of
any covenant, condition, stipulation, promise or agreement hereof; and all
covenants, conditions, stipulations, promises and agreements in this Agreement
contained shall be for the sole and exclusive benefit of the Company and the
Equity Warrant Agent and their successors and of the Holders of Equity Warrant
Certificates.
-17-
8.9. LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder to purchase shares of Common Stock, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of such Holder to pay the Exercise Price for any shares of
Common Stock other than pursuant to an exercise of the Equity Warrant or any
liability as a stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
8.10. RESTRICTIONS ON TRANSFER/REGISTRATION RIGHTS. For any transfer of
Equity Warrants and/or the Common Stock purchasable upon exercise of the Equity
Warrants to be effective, the Holders of the Equity Warrants must comply with
the transfer restrictions set forth in the Amended and Restated Stockholders
Agreement, dated as of December 16, 2001, among the Company and the other
parties on the signature pages thereto, as the same may be amended from time to
time (the "STOCKHOLDERS AGREEMENT"). On delivery of the Equity Warrants by the
Company to the Initial Holder, such Initial Holder (and to the extent provided
for in the Amended and Restated Governance Agreement, dated as of December 16,
2001, among the Company and the other parties set forth on the signature pages
thereto, as the same may be amended from time to time (the "GOVERNANCE
AGREEMENT"), certain transferees of the Initial Holder) shall have registration
rights with respect to the Equity Warrants to the extent provided in the
Governance Agreement.
8.11. HEADINGS. The descriptive headings of the several Articles and
Sections and the Table of Contents of this Agreement are for convenience only
and shall not control or affect the meaning or construction of any of the
provisions hereof.
8.12. COUNTERPARTS. This Agreement may be executed by the parties hereto in
any number of counterparts, each of which when so executed and delivered shall
be deemed to be an original; but all such counterparts shall together constitute
but one and the same instrument.
8.13. INSPECTION OF AGREEMENT. A copy of this Agreement shall be available
at all reasonable times at the principal corporate trust office of the Equity
Warrant Agent, for inspection by the Holders of Equity Warrants.
-18-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the day and year first above written.
USA NETWORKS, INC.
By
--------------------------------
--------------------------------
[Printed Name and Title]
Attest:
Name:
------------------------------
Title:
------------------------------
--------------------------------------
The Bank of New York
By
------------------------------------
------------------------------------
[Printed Name and Title]
Attest:
Name:
------------------------------
Title:
------------------------------
-19-
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER
ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED EXCEPT AS EXPRESSLY
PERMITTED UNDER THE STOCKHOLDERS AGREEMENT, DATED AS OF DECEMBER [ ],
2002, BY AND AMONG USA NETWORKS, INC. AND THE OTHER PARTIES SET FORTH ON
THE SIGNATURE PAGES THERETO, AS THE SAME MAY BE AMENDED FROM TIME TO
TIME, AND OTHERWISE IN COMPLIANCE WITH FEDERAL AND APPLICABLE STATE
SECURITIES LAWS.
EXHIBIT A
SPECIMEN
FACE
No. W __ _____ Equity Warrants
(SUBJECT TO ADJUSTMENT PURSUANT
TO SECTION 4.1(F) TO THE EQUITY
WARRANT AGREEMENT)
EQUITY WARRANT CERTIFICATE
USA NETWORKS, INC.
This Warrant Certificate certifies that
- ----------------------------------------------------------------------------
- -----------------------------------------------------------------------------,
or registered assigns, is the registered Holder of Equity Warrants (the "Equity
Warrants") to purchase Common Stock, par value $0.01 per share, of USA Networks,
Inc., a Delaware corporation (the "Company"). Each Equity Warrant entitles the
Holder to purchase from the Company one fully paid and non-assessable share of
Common Stock, par value $0.01 per share, of the Company ("Common Stock") at any
time commencing on ___________, 2002* and on or before 5:00 p.m. New York City
time ___________, 2012, at the exercise price per Equity Warrant (the "Exercise
Price") of $_____ payable in lawful money of the United States of America upon
surrender of this Equity Warrant Certificate and payment of the Exercise Price
at the office or agency of the Warrant Agent in the City of New York, the State
of New York, upon such conditions set forth herein and in the Equity Warrant
Agreement (as hereinafter defined). Payment of the Exercise Price must be made
in lawful money of the United States of America, in cash or by certified check
or bank draft or bank wire transfer payable to the order of the Company. The
number of shares of Common Stock which are issuable upon exercise of the
- --------------
* Date following the six-month anniversary of the Closing.
Equity Warrants evidenced hereby and to the extent provided therein, the
Exercise Prices, is subject to adjustment upon the occurrence of certain events
set forth in the Equity Warrant Agreement.
By acceptance of this Equity Warrant Certificate, each Holder
agrees to be bound by the terms of the Equity Warrant Agreement.
Reference is hereby made to the further provisions of this Equity
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place. Capitalized defined terms used herein have the same meaning as in the
Equity Warrant Agreement.
This Equity Warrant Certificate shall not be valid unless
countersigned by the Equity Warrant Agent, as such term is used in the Equity
Warrant Agreement.
-2-
IN WITNESS WHEREOF, USA Networks, Inc. has caused this Equity
Warrant Certificate to be duly executed under its corporate seal.
USA NETWORKS, INC.
By:
--------------------------
Attest:
- ----------------
Countersigned:
The Bank of New York, as Equity Warrant Agent
By _______________________________
Authorized Signature
-3-
REVERSE
EQUITY WARRANT CERTIFICATE
USA NETWORKS, INC.
The Equity Warrants evidenced by this Equity Warrant Certificate are
part of a duly authorized issue of Equity Warrants issued pursuant to an Equity
Warrant Agreement dated as of ___________, 2002 (the "Equity Warrant
Agreement"), duly executed and delivered by the Company to The Bank of New York
(the "Equity Warrant Agent"), which Equity Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Equity Warrant Agent, the Company and
the Holders (the words "Holders" or "Holder" meaning the registered Holders or
registered Holder) of the Equity Warrants.
Equity Warrants may be exercised to purchase shares of Common Stock
of the Company, par value $.01 per share ("Common Stock") upon such terms and
conditions as are set forth in the Equity Warrant Agreement at any time on or
before 5:00 p.m. New York City time on __________, 2012, at the Exercise Price
set forth on the face hereof. The Holder of Equity Warrants evidenced by this
Equity Warrant Certificate may exercise them by surrendering the Equity Warrant
Certificate, with the form of election to purchase set forth hereon properly
completed and executed, together with payment of the Exercise Price at the
office of the Equity Warrant Agent in the City of New York in the State of New
York. In the event that upon any exercise of Equity Warrants evidenced hereby
the number of Equity Warrants exercised shall be less than the total number of
Equity Warrants evidenced hereby, there shall be issued to the Holder hereof or
his assignee a new Equity Warrant Certificate evidencing the number of Equity
Warrants not exercised. Nothing contained in the Equity Warrant Agreement or in
this Equity Warrant Certificate shall be construed as conferring upon the
Holders thereof the right to vote, to receive dividends or other distributions,
to exercise any preemptive right or to consent or to receive notice as
shareholders in respect of meetings of shareholders for the election of
Directors of the Company or any other matter, or any other rights whatsoever as
shareholders of the Company.
The Equity Warrant Agreement provides that upon the occurrence of
certain events, the number of shares of Common Stock issuable upon exercise of
an Equity Warrant may, subject to certain conditions, be adjusted.
Equity Warrant Certificates, when surrendered at the office of the
Equity Warrant Agent in the City of New York in the State of New York by the
registered Holder thereof in person or by a legal representative duly authorized
in writing or by registered mail, return receipt requested, may be exchanged, in
the manner and subject to the limitations provided in the Equity Warrant
Agreement, but without payment of any service charge, for another Equity Warrant
Certificate or Equity Warrant Certificates of like tenor evidencing in the
aggregate a like number of Equity Warrants and registered in the name of such
registered Holder.
Upon due presentment for registration of transfer of this Equity
Warrant Certificate at the office of the Equity Warrant Agent in the City of New
York in the State of New York or by registered mail, return receipt requested, a
new Equity Warrant Certificate or Equity Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Equity Warrants shall be issued to
the transferee(s) in exchange for this Equity Warrant Certificate, subject to
the limitations provided in the Equity Warrant Agreement, without charge except
for any tax or other governmental charge imposed in connection therewith.
The Company and the Equity Warrant Agent may deem and treat the
registered Holder(s) hereof as the absolute owner(s) of this Equity Warrant
Certificate (notwithstanding any notation of ownership or other writing hereon
made by anyone), for the purpose of any exercise hereof, and of any distribution
to the Holder(s) hereof, and for all other purposes, and neither the Company nor
the Equity Warrant Agent shall be affected by any notice (other than a duly
presented registration of transfer in accordance with the previous paragraph) to
the contrary and shall not be bound to recognize any equitable or other claim to
or interest in such Equity Warrant on the part of any other person.
-2-
USA NETWORKS, INC.
ELECTION TO PURCHASE
USA NETWORKS, INC.
152 West 57th Street
New York, NY 10019
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by this Equity Warrant Certificate for ________ Equity
Warrants, and to purchase thereunder the shares of Common Stock (the "Shares")
provided for therein, and requests that certificates for the Shares be issued in
the name of:
(Please Print Name, Address and Social Security Number)
If said number of Equity Warrants to be exercised shall not be all of the Equity
Warrants evidenced by this Equity Warrant Certificate, the undersigned requests
that a new Equity Warrant Certificate for the balance of the Equity Warrants be
registered in the name of the undersigned or his Assignee as below indicated and
delivered to the address stated below:
Dated:________________, 200_
Name of Equity Warrant Holder or
Assignee (Please Print):
-----------------------------------------------
Address:
----------------------------------------------------------------
Signature:
---------------------------------------------------------------
(Signature must conform to name of Holder as specified on the
face of the Equity Warrant Certificate)
Signature Guaranteed:
------------------------------------------------
Signature of Guarantor
EXHIBIT 10.1
==============================================================================
AMENDED AND RESTATED
GOVERNANCE AGREEMENT
AMONG
USA NETWORKS, INC.,
VIVENDI UNIVERSAL, S.A.,
UNIVERSAL STUDIOS, INC.,
LIBERTY MEDIA CORPORATION,
AND
BARRY DILLER
DATED AS OF DECEMBER 16, 2001
==============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I
STANDSTILL AND VOTING
SECTION 1.01. Acquisition of Voting Securities.............................2
SECTION 1.02. Further Restrictions on Conduct..............................2
SECTION 1.03. Reports......................................................3
SECTION 1.04. Transferees..................................................3
ARTICLE II
BOARD OF DIRECTORS AND RELATED MATTERS
SECTION 2.01. Board of Directors...........................................4
SECTION 2.02. Management of the Business...................................5
SECTION 2.03. Contingent Matters...........................................6
SECTION 2.04. Notice of Events.............................................7
PREEMPTIVE RIGHTS
SECTION 3.01. Liberty Preemptive Rights....................................7
SECTION 3.02. Investment Agreement.........................................8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company................9
SECTION 4.02. Representations and Warranties of the Stockholders...........9
ARTICLE IV
DEFINITIONS
SECTION 5.01. "Affiliate".................................................10
SECTION 5.02. "Amended and Restated Stockholders Agreement"...............10
SECTION 5.03. "Assumptions"...............................................10
SECTION 5.04 "BDTV Entities".............................................10
SECTION 5.05. "Beneficial Ownership" or "Beneficially Own"................10
SECTION 5.06. "CEO".......................................................11
SECTION 5.07 "CEO Termination Date"......................................11
SECTION 5.08. "Commission"................................................11
SECTION 5.09. "Company Common Shares".....................................11
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SECTION 5.10. "Company Class B Stock".....................................11
SECTION 5.11. "Company Common Stock"......................................11
SECTION 5.12. "Consenting Party"..........................................11
SECTION 5.13. "Demand Registration".......................................11
SECTION 5.14. "Disabled"..................................................11
SECTION 5.15. "EBITDA"....................................................11
SECTION 5.16. "Equity Securities".........................................11
SECTION 5.17. "Exchange Act"..............................................11
SECTION 5.18. "Exchange Shares"...........................................12
SECTION 5.19. "Excluded Issuance".........................................12
SECTION 5.20. "Fair Market Value".........................................12
SECTION 5.21. "Issue Price"...............................................12
SECTION 5.22. "Liberty Director"..........................................12
SECTION 5.23. "Liberty Exchange Agreement"................................13
SECTION 5.24. "Liberty Holdco"............................................13
SECTION 5.25. "Ownership Percentage"......................................13
SECTION 5.26. "Permitted Ownership Percentage"............................13
SECTION 5.27. "Permitted Transferee"......................................13
SECTION 5.28. "Person"....................................................13
SECTION 5.29. "Sale Transaction"..........................................13
SECTION 5.30. "Securities Act"............................................13
SECTION 5.31. "Shares"....................................................13
SECTION 5.32. "Stockholders"..............................................13
SECTION 5.33. "Stockholders Group"........................................13
SECTION 5.34. "Subsidiary"................................................14
SECTION 5.35. "Third Party Transferee"....................................14
SECTION 5.36. "13D Group".................................................14
SECTION 5.37. "Total Debt"................................................14
SECTION 5.38. "Total Debt Ratio"..........................................14
SECTION 5.39. "Total Equity Securities"...................................14
SECTION 5.40. "Transfer"..................................................15
SECTION 5.41. "VU Director"...............................................15
SECTION 5.42. "Voting Securities".........................................15
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Notices.....................................................15
SECTION 6.02. Amendments; No Waivers......................................17
SECTION 6.03. Successors and Assigns......................................18
SECTION 6.04. Governing Law; Consent to Jurisdiction......................18
SECTION 6.05. Counterparts; Effectiveness.................................18
SECTION 6.06. Specific Performance........................................18
SECTION 6.07. Registration Rights.........................................19
SECTION 6.08. Termination.................................................20
SECTION 6.09. Severability................................................20
-ii-
SECTION 6.10. Cooperation.................................................20
SECTION 6.11 Adjustment of Share Numbers.................................20
SECTION 6.12. Entire Agreement............................................20
SECTION 6.13. Interpretation..............................................21
SECTION 6.14. Headings....................................................21
-iii-
AMENDED AND RESTATED GOVERNANCE AGREEMENT
Amended and Restated Governance Agreement, dated as of December 16, 2001,
among USA Networks, Inc., a Delaware corporation ("USAi," or the "COMPANY"),
Vivendi Universal, S.A., a SOCIETE ANONYME organized under the laws of France
("VU"), Universal Studios, Inc., for itself and on behalf of the members of its
Stockholders Group ("UNIVERSAL"), Liberty Media Corporation, for itself and on
behalf of the members of its Stockholders Group ("LIBERTY") and Mr. Barry Diller
("MR. DILLER") for himself and on behalf of the members of his Stockholders
Group and. Capitalized terms used herein without definition have the meanings
ascribed to such terms in the Transaction Agreement (as hereinafter defined).
WHEREAS, the Company, VU, Universal, Liberty, Mr. Diller, and USANi LLC, a
Delaware limited liability company ("USANi"), have entered into a Transaction
Agreement, dated as of December 16, 2001 (the "TRANSACTION AGREEMENT"), pursuant
to which, among other things, (i) each of Universal and the Company will
contribute certain businesses to a limited liability partnership (the
"PARTNERSHIP") in exchange for interests in the Partnership, and (ii) each of
Universal, VU and Mr. Diller shall enter into a limited liability limited
partnership agreement (the "PARTNERSHIP AGREEMENT") under which a wholly owned
subsidiary of Universal will be the general partner and each of the Company,
USANi Sub LLC, a Delaware limited liability company and a wholly owned
subsidiary of USANi ("USANI SUB"), and Mr. Diller will be limited partners
(collectively, the "TRANSACTIONS");
WHEREAS, the parties hereto have agreed that the Company, Universal,
Liberty, Mr. Diller and VU shall enter into this Agreement in order to amend and
restate in its entirety the respective rights and obligations of the parties set
forth in the Governance Agreement, dated as of October 19, 1997 (the "1997
GOVERNANCE AGREEMENT");
WHEREAS, the Company, Universal, Liberty, Mr. Diller and VU desire to
establish in this Agreement certain terms and conditions concerning the
acquisition and disposition of securities of the Company by Universal and VU
(together, the "VU PARTIES"), and certain additional provisions concerning
Universal's, Liberty's, Mr. Diller's and VU's relationships with the Company,
none of which shall become effective until the Closing; and
WHEREAS, the parties hereto also desire to provide for certain amendments
to the Investment Agreement (the "INVESTMENT AGREEMENT"), among Universal, for
itself and on behalf of certain Subsidiaries, the Company, Home Shopping
Network, Inc. ("HSN"), and Liberty, for itself and on behalf of certain of its
Subsidiaries, dated as of October 19, 1997, as amended and restated as of
December 18, 1997.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby, the
Company, Universal, Liberty, Mr. Diller and VU hereby agree, effective as of the
Closing, as follows:
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ARTICLE I
STANDSTILL AND VOTING
SECTION 1.01. ACQUISITION OF VOTING SECURITIES. Subject to the last
sentence hereof, immediately following the Closing, neither the VU Parties nor
any of their Affiliates will acquire, directly or indirectly, the Beneficial
Ownership of any additional Equity Securities of the Company until such time
(the "TRIGGER DATE") that the Equity Securities Beneficially Owned by the VU
Parties and their Affiliates represent less than 20% (the "PERMITTED OWNERSHIP
PERCENTAGE") of the Total Equity Securities. Subject to the last sentence
hereof, following the Trigger Date, neither the VU Parties nor any of their
Affiliates will acquire, directly or indirectly, the Beneficial Ownership of any
additional Equity Securities of the Company such that the Equity Securities
Beneficially Owned by the VU Parties and their Affiliates following such
acquisition would be in excess of the Permitted Ownership Percentage. If at any
time the VU Parties become aware that they and their Affiliates Beneficially Own
more than the Permitted Ownership Percentage, then the VU Parties shall as soon
as is reasonably practicable (but in no manner that would require the VU Parties
to incur liability under Section 16(b) of the Exchange Act) take all action
necessary to reduce the amount of Equity Securities Beneficially Owned by such
Persons to an amount not greater than the Permitted Ownership Percentage. The
restrictions contained in this Section 1.01 shall cease to apply upon the later
of (x) the date that Mr. Diller no longer serves as CEO (provided that if Mr.
Diller no longer serves as CEO but continues to hold a proxy from Universal in
respect of Company Common Shares under the Amended and Restated Stockholders
Agreement, Mr. Diller shall be deemed to be continuing to serve as CEO until the
later of (i) such time as he no longer serves as CEO and (ii) such time as Mr.
Diller no longer holds the Universal proxy, with the later of such times being
referred to as the "CEO TERMINATION DATE") or becomes Disabled and (y) the date
on which VU no longer has the right to appoint a director to the Board of
Directors of the Company pursuant to Section 2.01 hereof (the later of clauses
(x) and (y), the "STANDSTILL TERMINATION DATE"). Notwithstanding anything to the
contrary contained herein, the provisions set forth in this Section 1.01 shall
not prevent the VU Parties and their Affiliates from exercising the Warrants and
continuing to Beneficially Own the shares thereunder.
SECTION 1.02. FURTHER RESTRICTIONS ON CONDUCT. The VU Parties covenant and
agree that until the Standstill Termination Date:
(a) except by virtue of VU's representation on the Board of Directors of
the Company and as otherwise contemplated under this Agreement and the
other agreements contemplated by the Transaction Agreement or as
otherwise permitted by the Board of Directors of the Company or the
CEO so long as Mr. Diller is CEO, neither the VU Parties nor any
Affiliate thereof will otherwise act, alone or in concert with others,
to seek to affect or influence the control of the management or Board
of Directors of the Company or the business, operations or policies of
the Company (it being agreed that this paragraph shall not prohibit
the VU Parties, their Affiliates and their respective employees from
engaging in ordinary course business activities with the Company);
-2-
(b) other than to a Permitted Transferee, pursuant to the Transaction
Agreement or the Amended and Restated Stockholders Agreement, neither
the VU Parties nor any Affiliate thereof shall deposit any Equity
Securities in a voting trust or subject any Equity Securities to any
proxy, arrangement or agreement with respect to the voting of such
securities or other agreement having similar effect;
(c) neither the VU Parties nor any Affiliate thereof shall propose any
merger, tender offer or other business combination involving the
Company or any of its Affiliates; PROVIDED, that discussions relating
to the possibility of such a proposal in which Mr. Diller participates
shall not be deemed to be a breach of this covenant;
(d) neither the VU Parties nor any Affiliate thereof shall initiate or
propose any stockholder proposal or make, or in any way participate
in, directly or indirectly, any "solicitation" of "proxies" to vote,
or seek to influence any Person with respect to the voting of, any
Equity Securities, or became a "participant" in a "solicitation" (as
such terms are defined in Regulation 14A under the Exchange Act) in
opposition to the recommendation of the majority of the directors of
the Company with respect to any matter, except in response to a
solicitation by a third party;
(e) other than as is contemplated by this Agreement, the Transaction
Agreement, the Amended and Restated Stockholders Agreement and the
other agreements contemplated by the Transaction Agreement, neither
the VU Parties nor any Affiliate thereof shall join a partnership,
limited partnership, syndicate or other group, or otherwise act in
concert with any other Person (other than a Permitted Transferee), for
the purpose of acquiring, holding, voting or disposing of Equity
Securities, or otherwise become a "person" within the meaning of
Section 13(d)(3) of the Exchange Act; and
(f) neither the VU Parties nor any Affiliate thereof shall, directly or
indirectly, request that the Company or its Board of Directors amend
or waive any of the provisions of this Section 1.02.
SECTION 1.03. REPORTS. The VU Parties shall deliver to the Company,
promptly after any acquisition or Transfer of Equity Securities representing
more than a 1% change in the Ownership Percentage, an accurate written report
specifying the amount and class of Equity Securities acquired or Transferred in
such transaction and the amount of each class of Equity Securities owned by the
VU Parties and their Affiliates after giving effect to such transaction;
PROVIDED, HOWEVER, that no such report need be delivered with respect to any
such acquisition or Transfer of Equity Securities by the VU Parties or their
Affiliates that is reported in a statement on Schedule 13D filed with the
Commission and delivered to the Company by the VU Parties in accordance with
Section 13(d) of the Exchange Act. The Company shall be entitled to rely on such
reports and statements on Schedule 13D for all purposes of this Agreement.
SECTION 1.04. TRANSFEREES. No Third Party Transferee shall have any rights
or obligations under this Agreement, except as specifically provided for in this
Agreement and
-3-
except that if such Third Party Transferee shall acquire Beneficial Ownership of
more than 5% of the outstanding Total Equity Securities upon consummation of any
Transfer or series of related Transfers from a Stockholder, to the extent such
Stockholder has the right to Transfer a Demand Registration assigns such right
in connection with a Transfer, such Third Party Transferee shall have the right
to initiate one or more Demand Registrations pursuant to Section 6.07 or any
registration rights agreement that replaces or supersedes Section 6.07 (and
shall be entitled to such other rights that a Stockholder would have applicable
to such Demand Registration), subject to the obligations of such Stockholder
applicable to such demand (and the number of Demand Registrations to which such
Stockholder is entitled under Section 6.07 hereof shall be correspondingly
decreased). Except in connection with open market transactions (other than
pursuant to an underwritten offering), neither the VU Parties, nor any of their
Affiliates, shall be entitled to Transfer to any single Third Party Transferee
(including Affiliates of such Third Party Transferee), in the aggregate, 10% or
more of the Total Equity Securities, unless the VU Parties cause such Third
Party Transferee (and its Affiliates, to the extent applicable) to agree to the
provisions set forth in Sections 1.01 and 1.02 hereof until such time as such
Third Party Transferee and its Affiliates own less than 10% of the Total Equity
Securities. Subject to applicable securities laws, except as provided in this
Section 1.04 and the Amended and Restated Stockholders Agreement, there are no
restrictions on Transfer on the Company Common Stock (and, in the case of the VU
Parties, the Warrants).
ARTICLE II
BOARD OF DIRECTORS AND RELATED MATTERS
SECTION 2.01. BOARD OF DIRECTORS. (a) Immediately following the Closing,
the Company Board of Directors shall include Phillippe Germond and Jean-Marie
Messier. VU shall have the right to nominate up to two VU Directors so long as
the number of Equity Securities Beneficially Owned by the VU Parties and their
Affiliates is at least equal to 75% of the number of Equity Securities
Beneficially Owned by the VU Parties and their Affiliates immediately following
the Closing (appropriately adjusted to reflect any stock splits and the like)
(so long as the Ownership Percentage of the VU Parties and their Affiliates is
at least equal to the lesser of (x) 15% of the Total Equity Securities and (y)
the percentage that is five percentage points less than the percentage of the
Total Equity Securities Beneficially Owned by the VU Parties and their
Affiliates immediately following the Closing). VU shall have the right to
nominate one VU Director so long as the VU Parties Beneficially Own a number of
Equity Securities at least equal to 50% of the number of the Equity Securities
Beneficially Owned by them immediately following the Closing (appropriately
adjusted to reflect any stock splits and the like) (so long as the VU Party's
Ownership Percentage is at least equal to 10% of the Total Equity Securities).
(b) The Company shall cause each VU Director and each Liberty Director, as
the case may be, to be included in the slate of nominees recommended by the
Board of Directors to the Company's stockholders for election as directors at
each annual meeting of the stockholders of the Company and shall use all
reasonable efforts to cause the election of each VU Director and Liberty
Director, as the case may be, including soliciting proxies in favor of the
election of such persons.
-4-
(c) Within a reasonable time prior to the filing with the Commission of its
proxy statement or information statement with respect to each meeting of
stockholders at which directors are to be elected, the Company shall, to the
extent such Person is entitled to representation on the Company's Board of
Directors in accordance with this Agreement, provide VU and Liberty, as
applicable, with the opportunity to review and comment on the information
contained in such proxy or information statement applicable to the director
nominees designated by such Person.
(d) In the event that a vacancy is created at any time by the death,
disability, retirement, resignation or removal (with or without cause) of any VU
Director or Liberty Director, VU or Liberty, as the case may be, shall have the
right to designate a replacement VU Director or Liberty Director to fill such
vacancy, and the Company agrees to use its best efforts to cause such vacancy to
be filled with the replacement VU Director or Liberty Director so designated.
Upon the written request of VU or Liberty, each Stockholder shall vote (and
cause each of the members of its Stockholders Group to vote, if applicable), or
act by written consent with respect to, all Equity Securities Beneficially Owned
by it and otherwise take or cause to be taken all actions necessary to remove
the director designated by such requesting party and to elect any replacement
director designated by such party as provided in the first sentence of this
Section 2.01(d).
(e) Except as permitted by the Company Board of Directors, the parties
agree that no Company director who is a VU Director shall participate in any
action taken by the Company Board of Directors or the Company relating to any
business transaction between the Company and either of the VU Parties (including
their Affiliates), or relating to this Agreement or the Transaction Agreement,
including, without limitation, any amendment, modification or waiver hereof or
thereof.
(f) Following the Closing, the Company Board of Directors shall include
John C. Malone and Robert R. Bennett. Liberty shall have the right to nominate
up to two Liberty Directors so long as the number of Equity Securities
Beneficially Owned by Liberty is at least equal to 75% of the number of Equity
Securities Beneficially Owned by Liberty immediately following the Closing
(appropriately adjusted to reflect any stock splits and the like) (so long as
the Ownership Percentage of Liberty is at least equal to the lesser of (x) 15%
of the Total Equity Securities and (y) the percentage that is five percentage
points less than the percentage of the Total Equity Securities Beneficially
owned by Liberty immediately following the Closing). Liberty shall have the
right to nominate one Liberty Director so long as Liberty Beneficially Owns a
number of Equity Securities at least equal to 50% of the number of the Equity
Securities Beneficially Owned by it immediately following the Closing
(appropriately adjusted to reflect any stock splits and the like) (so long as
Liberty's Ownership Percentage is at least equal to 5% of the Total Equity
Securities).
SECTION 2.02. MANAGEMENT OF THE BUSINESS. Following the Closing and except
as indicated in Section 2.03 below, as required by Delaware law or the
Certificate of Incorporation of the Company and the By-Laws or as contemplated
by the Transaction Agreement and the agreements contemplated thereby, Mr.
Diller, so long as he is CEO and has not become Disabled, will continue to have
full authority to operate the day-to-day business affairs of the Company to the
same extent as prior to the Closing. The Company shall use its reasonable best
-5-
efforts to cause one Liberty Director to be appointed as a member of a committee
of the Board of Directors and, to the extent such person qualifies under
applicable tax laws and Section 16(b) under the Exchange Act or other similar
requirements, the Compensation Committee of the Board of Directors.
SECTION 2.03. CONTINGENT MATTERS. So long as in the case of Liberty,
Liberty Beneficially Owns at least two-thirds of the number of Equity Securities
Beneficially Owned by it (including the Exchange Shares and through its equity
ownership of BDTV Entities) immediately following the Closing (appropriately
adjusted to reflect any stock splits and the like) (so long as such Ownership
Percentage equals at least 5% of the Total Equity Securities), and in the case
of Mr. Diller, Mr. Diller Beneficially Owns at least twenty million Company
Common Shares with respect to which he has a pecuniary interest (appropriately
adjusted to reflect any stock splits and the like) and the CEO Termination Date
(as defined in the Amended and Restated Stockholders Agreement and not as
defined in this Agreement) has not occurred and Mr. Diller has not become
Disabled, neither the Company nor any Subsidiary shall take any of the following
actions (any such action, a "CONTINGENT MATTER") without the prior approval of
Mr. Diller and/or Liberty, as applicable:
(a) any transaction not in the ordinary course of business, launching new
or additional channels or engaging in any new field of business, in any case,
that will result in, or will have a reasonable likelihood of resulting in,
Liberty or Mr. Diller or any Affiliate thereof being required under law to
divest itself of all or any part of its Equity Securities, or interests therein,
or any other material assets of such Person, or that will render such Person's
continued ownership of such securities, shares, interests or assets illegal or
subject to the imposition of a fine or penalty or that will impose material
additional restrictions or limitations on such Person's full rights of ownership
(including, without limitation, voting) thereof or therein. This Contingent
Matter will be applied based only on the Equity Securities, interests therein or
other material assets of Liberty or Mr. Diller or any Affiliate thereof as of
the Closing Date;
(b) if the Total Debt Ratio continuously equals or exceeds 4:1 over a
twelve-month period, then, for so long as the Total Debt Ratio continues to
equal or exceed 4:1:
(i) any acquisition or disposition (including pledges), directly or
indirectly, by the Company or any of its Subsidiaries of any assets
(including debt and/or equity securities) or business (by merger,
consolidation or otherwise), the grant or issuance of any debt or
equity securities of the Company or any of its Subsidiaries, other
than, in any of the foregoing, as contemplated by the Liberty Exchange
Agreement or the Exchange Shares), the redemption, repurchase or
reacquisition of any debt or equity securities of the Company or any
of its Subsidiaries, other than as contemplated by the Liberty
Exchange Agreement or the Exchange Shares, by the Company or any such
Subsidiary, or the incurrence of any indebtedness, or any combination
of the foregoing, in any such case, in one transaction or a series of
transactions in a six-month period, with a value of 10% or more of the
market value of the Total Equity Securities at the time of such
transaction, provided that the prepayment, redemption, repurchase or
conversion of prepayable, callable, redeemable or convertible
securities in accordance with the terms thereof shall not be a
transaction subject to this paragraph;
-6-
(ii) voluntarily commencing any liquidation, dissolution or winding up of
the Company or any material Subsidiary;
(iii) any material amendments to the Certificate of Incorporation or Bylaws
of the Company (including the issuance of blank check preferred stock
containing super voting rights or class votes on any matter (except to
the extent such class vote is required by Delaware law or to the
extent the holder of such preferred stock may have the right to elect
directors upon the occurrence of a default in payment of dividends or
a redemption price));
(iv) engagement by the Company in any line of business other than media,
communications and entertainment products, services and programming,
and electronic retailing and commerce, or other businesses engaged
in by the Company as of the date of determination of the Total Debt
Ratio;
(v) adopting any stockholder rights plan (or any other plan or
arrangement that could reasonably be expected to disadvantage any
stockholder on the basis of the size or voting power of its
shareholding) that would adversely affect Liberty or Mr. Diller; and
(vi) entering into any agreement with any holder of Equity Securities in
such stockholder's capacity as such, as the case may be, which
grants such stockholder approval rights similar in type and
magnitude to those set forth in this Section 2.03.
SECTION 2.04. NOTICE OF EVENTS. In the event that (a) the Company intends
to engage in a transaction of a type that is described in Section 2.03, and (b)
the Company does not intend to seek consent from those parties that are required
to consent to a Contingent Matter (a "CONSENTING PARTY") due to the Company's
good faith belief that the specific provisions of such paragraph do not require
such consent but that reasonable people acting in good faith could differ as to
whether consent is required pursuant to such paragraph, the Company shall notify
the Consenting Parties as to the material terms of the transaction (including
the Company's estimate of the timing thereof) by written notice (including a
statement of the Total Debt Ratio) delivered as far in advance of engaging in
such transaction as is reasonably practicable unless such transaction was
previously publicly disclosed.
ARTICLE III
PREEMPTIVE RIGHTS
SECTION 3.01. LIBERTY PREEMPTIVE RIGHTS (a) In the event that after the
Closing Date, the Company issues or proposes to issue (other than to the Company
and its Affiliates or Liberty and its Affiliates, and other than pursuant to an
Excluded Issuance) any Company Common Shares (including Company Common Shares
issued upon exercise, conversion or exchange of options, warrants and
convertible securities, but excluding (x) shares of Company Common Stock issued
upon conversion of shares of Company Class B Stock, and (y) Exchange Shares
issued in accordance with the Liberty Exchange Agreement, and such issuance,
together
-7-
with any prior issuances of less than 1% with respect to which Liberty had no
rights under this Section 3.01, shall be in excess of 1% of the total number of
Company Common Shares (based on the Assumptions) outstanding after giving effect
to such issuance, the Company shall give written notice to Liberty not later
than five business days after the issuance (an "ADDITIONAL ISSUANCE"),
specifying the number of Company Common Shares issued or to be issued and the
Issue Price (if known) per share. Liberty shall have the right (but not the
obligation) to purchase or cause one or more of the Liberty Holdcos to purchase
for cash a number (but not less than such number) of Company Common Shares
(allocated between Company Common Stock and Company Class B Common Stock in the
same proportion as the issuance or issuances giving rise to the preemptive right
hereunder, except to the extent that Liberty opts to receive Company Common
Stock in lieu of Company Class B Common Stock), so that Liberty and the Liberty
Holdcos shall collectively maintain the identical percentage equity beneficial
ownership interest in the Company that Liberty and the Liberty Holdcos
collectively owned immediately prior to the notice from the Company to Liberty
described in the first sentence of this paragraph (but not in excess of the
percentage equity beneficial ownership interest in the Company that Liberty and
the Liberty Holdcos collectively owned immediately following the Closing) after
giving effect to such Additional Issuance and to shares of Company Common Stock
that are to be issued to Liberty and the Liberty Holdcos pursuant to this
Section 3.01 by sending an irrevocable written notice to the Company not later
than fifteen business days after receipt of such notice (or, if later, two
business days following the determination of the Issue Price) from the Company
that it elects to purchase or to cause one or more of the Liberty Holdcos to
purchase all of such Company Common Shares (the "ADDITIONAL SHARES"). The
closing of the purchase of Additional Shares shall be the later of ten business
days after the delivery of the notice of election by Liberty and five business
days after receipt of any necessary regulatory approvals.
(b) Additional Issuances caused by the conversion of HSN's 5 7/8%
Convertible Subordinated Debentures due March 1, 2006 ("HSN CONVERTIBLE DEBT")
into Company Common Stock shall be at an Issue Price to Liberty of $10 per share
in cash. Other than with respect to the Issue Price, any such Additional
Issuance shall be governed by the provisions set forth in 3.01(a).
(c) The purchase or redemption of any Company Common Shares by the Company
or any of its Affiliates shall not result in an increase in the percentage of
Company equity that Liberty may be entitled to acquire pursuant to the
preemptive right in paragraph 3.01(a) above.
(d) Notwithstanding anything contained herein to the contrary, Liberty
shall have the rights set forth in Section 3.01(a) hereof with respect to the
transactions contemplated by the Expedia Merger Agreement to the extent Liberty
has not previously exercised such rights pursuant to Section 1.8 of the
Investment Agreement prior to its termination in accordance with the terms of
Section 3.02 hereof. Furthermore, notwithstanding the termination of Section 1.8
of the Investment Agreement pursuant to Section 3.02 hereof, for purposes of
determining the number of Company Common Shares that shall give rise to a notice
in accordance with Section 3.01(a) hereof, the Company shall include such number
of Company Common Shares not previously included in any preemptive notice prior
to the Closing Date.
SECTION 3.02. INVESTMENT AGREEMENT Section 1.7 and Section 1.8 of the
Investment Agreement shall be of no further force or effect and Universal and
Liberty shall cease
-8-
to have any preemptive rights with respect to Equity Securities, except as
otherwise provided with respect to Liberty in Section 3.01 of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Mr. Diller, the VU Parties and Liberty that (a) the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, (b) the execution and delivery of this Agreement by the Company and
the consummation by the Company of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any of the transactions contemplated
hereby, (c) this Agreement has been duly executed and delivered by the Company
and constitutes a valid and binding obligation of the Company, and, assuming
this Agreement constitutes a valid and binding obligation of each Stockholder,
is enforceable against the Company in accordance with its terms, (d) neither the
execution, delivery or performance of this Agreement by the Company constitutes
a breach or violation of or conflicts with the Company's Certificate of
Incorporation or By-laws or any material agreement to which the Company is a
party and (e) none of such material agreements would impair in any material
respect the ability of the Company to perform its obligations hereunder.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder, as to itself (and, in the case of Mr. Diller, as applicable),
represents and warrants to the Company and the other Stockholders that (a) it is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and he or it, as the case may be, has
the power and authority (corporate or otherwise) to enter into this Agreement
and to carry out his or its obligations hereunder, (b) the execution and
delivery of this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of such Stockholder and no other proceedings on
the part of such Stockholder are necessary to authorize this Agreement or any of
the transactions contemplated hereby, (c) this Agreement has been duly executed
and delivered by such Stockholder and constitutes a valid and binding obligation
of such Stockholder, and, assuming this Agreement constitutes a valid and
binding obligation of the Company, is enforceable against such Stockholder in
accordance with its terms, (d) neither the execution, delivery or performance of
this Agreement by such Stockholder constitutes a breach or violation of or
conflicts with its certificate of incorporation or by-laws (or similar governing
documents) or any material agreement to which such Stockholder is a party and
(e) none of such material agreements would impair in any material respect the
ability of such Stockholder to perform its obligations hereunder.
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ARTICLE V
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
following meanings:
SECTION 5.01. "AFFILIATE" shall have the meaning set forth in Rule 12b-2
under the Exchange Act (as in effect on the date of this Agreement). For
purposes of this definition, (i) Matsushita Electric Industrial Co., Ltd.
("MEI") shall not be considered an Affiliate of Universal or any Subsidiary of
Universal so long as MEI does not materially increase its influence over
Universal following the Closing Date, (ii) natural persons shall not be deemed
to be Affiliates of each other, (iii) none of the Company, Mr. Diller, Liberty
or any of their respective Affiliates shall be deemed to be an Affiliate of the
VU Parties or their Affiliates, (iv) none of Mr. Diller, Liberty, the VU Parties
or any of their respective Affiliates shall be deemed to be an Affiliate of the
Company or its Affiliates, (v) none of the Company, the VU Parties, Liberty or
any of their respective Affiliates shall be deemed to be an Affiliate of Mr.
Diller or his Affiliates, and (vi) none of the Company, Mr. Diller, the VU
Parties or any of their respective Affiliates shall be deemed to be an Affiliate
of Liberty or its Affiliates.
SECTION 5.02. "AMENDED AND RESTATED STOCKHOLDERS AGREEMENT" shall mean the
stockholders agreement dated as of the date hereof among Liberty, VU, Universal
and Mr. Diller.
SECTION 5.03. "ASSUMPTIONS" shall have the meaning set forth in the
definition of Total Equity Securities.
SECTION 5.04. "BDTV ENTITIES" shall have the meaning specified in the
Amended and Restated Stockholders Agreement.
SECTION 5.05. "BENEFICIAL OWNERSHIP" or "BENEFICIALLY OWN" shall have the
meaning given such term in Rule 13d-3 under the Exchange Act and a Person's
Berneficial Ownership of Company Common Shares shall be calculated in accordance
with the provisions of such Rule; PROVIDED, HOWEVER, that for purposes of
Beneficial Ownership, (a) a Person shall be deemed to be the Beneficial Owner of
any Equity Securities (including any Exchange Shares) which may be acquired by
such Person (disregarding any legal impediments to such Beneficial Ownership),
whether within 60 days or thereafter, upon the conversion, exchange or exercise
of any warrants, options (which options held by Mr. Diller shall be deemed to be
exercisable), rights or other securities issued by the Company or any Subsidiary
thereof, (b) no Person shall be deemed to Beneficially Own any Equity Securities
solely as a result of such Person's execution of this Agreement (including by
virtue of holding a proxy with respect to any Equity Securities), the
Transaction Agreement or the Amended and Restated Stockholders Agreement, or
with respect to which such Person does not have a pecuniary interest, and (c)
Liberty shall be deemed to be the Beneficial Owner of the proportionate number
of Company Common Shares represented by Liberty's equity interest in a BDTV
Entity (as defined in the Amended and Restated Stockholders Agreement);
PROVIDED, FURTHER, that for purposes of calculating Beneficial Ownership, the
number of outstanding Company Common Shares shall be deemed to include the
number of Company Common Shares that would be outstanding if all Exchange Shares
were issued.
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SECTION 5.06. "CEO" shall mean the Chief Executive Officer of the Company
or any successor entity.
SECTION 5.07. "CEO TERMINATION DATE" shall have the meaning specified in
Section 1.01 of this Agreement.
SECTION 5.08. "COMMISSION" shall mean the Securities and Exchange
Commission.
SECTION 5.09. "COMPANY COMMON SHARES" shall mean shares of Company Common
Stock and Company Class B Stock.
SECTION 5.10. "COMPANY CLASS B STOCK" shall mean class B common stock, $.01
par value per share, of the Company.
SECTION 5.11. "COMPANY COMMON STOCK" shall mean common stock, $.01 par
value per share, of the Company.
SECTION 5.12. "CONSENTING PARTY" shall have the meaning set forth in
Section 2.03 of this Agreement.
SECTION 5.13. "DEMAND REGISTRATION" shall have the meaning set forth in
Section 6.07(b) of this Agreement.
SECTION 5.14. "DISABLED" shall mean the disability of Mr. Diller after the
expiration of more than 180 consecutive days after its commencement which is
determined to be total and permanent by a physician selected by Liberty (or, if
(i) the Liberty Termination date has occurred, and (ii) the VU Parties own 10%
or more of the Total Equity Securities, VU) and reasonably acceptable to Mr.
Diller, provided that Mr. Diller shall be deemed to be disabled only following
the expiration of 90 days following receipt of a written notice from the Company
and such physician specifying that a disability has occurred if within such
90-day period he fails to return to managing the business affairs of the
Company. Total disability shall mean mental or physical incapacity that prevents
Mr. Diller from managing the business affairs of the Company.
SECTION 5.15. "EBITDA" shall mean, for any period, for the Company and its
Subsidiaries, on a combined consolidated basis: net income plus (to the extent
reflected in the determination of net income) (i) provision for income taxes,
(ii) minority interest, (iii) interest income and expense, (iv) depreciation
and amortization, (v) amortization of cable distribution fees, and (vi)
amortization of non-cash distribution and marketing expense and non-cash
compensation expense.
SECTION 5.16. "EQUITY SECURITIES" shall mean the equity securities of the
Company calculated on a Company Common Stock equivalent basis, including the
Company Common Shares, Exchange Shares and those shares issuable upon exercise,
conversion or redemption of other securities of the Company not otherwise
included in this definition.
SECTION 5.17. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission promulgated
thereunder.
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SECTION 5.18. "EXCHANGE SHARES" shall mean the Silver King Exchange Shares
as defined in the Liberty Exchange Agreement.
SECTION 5.19. "EXCLUDED ISSUANCE" shall mean any issuance of Company Common
Stock (i) in a Sale Transaction, or (ii) which is "restricted stock" or the
ownership of which is otherwise subject to forfeiture ("RESTRICTED STOCK"),
provided that for purposes of this definition any stock covered by the
provisions of clause (ii) shall be deemed to have been issued on the date (the
"LAPSE DATE") the restrictions on such stock lapse or on which the stock is no
longer subject to forfeiture.
SECTION 5.20. "FAIR MARKET VALUE" for a security publicly traded in the
over-the-counter market (on either NASDAQ-NMS or NASDAQ) or on a recognized
exchange shall be the average closing price of such security for the three
trading days ending on the applicable day (or, if such day is not a trading day,
the trading day immediately preceding the applicable day), and for all other
securities or property "Fair Market Value" shall be determined, by a nationally
recognized investment banking firm which has not been engaged by the Company or
Liberty or their respective Affiliates for the prior three years, selected by
(i) the Company and (ii) Liberty; provided that, if the Company and Liberty
cannot agree on such an investment banking firm within 10 business days, such
investment banking firm shall be selected by a panel designated in accordance
with the rules of the American Arbitration Association. The fees, costs and
expenses of the American Arbitration Association and the investment banking firm
so selected shall be borne equally by the Company and Liberty.
SECTION 5.21. "ISSUE PRICE" shall mean the price per share equal to (i) in
connection with an underwritten offering of Company Common Shares, the initial
price at which the stock is offered to the public or other investors, (ii) in
connection with other sales of Company Common Shares for cash, the cash price
paid for such stock, (iii) in connection with the deemed issuances of Restricted
Stock, the Fair Market Value of the stock on the Lapse Date (as defined in the
definition of "Excluded Issuance" above), (iv) in connection with the issuance
of Company Common Shares as consideration in an acquisition by the Company, the
average of the Fair Market Value of the stock for the five trading days ending
on the third trading day immediately preceding (a) the date upon which
definitive agreements with respect to such acquisition were entered into if the
number of Company Common Shares issuable in such transaction is fixed on that
date, or (b) such later date on which the consideration, or remaining portion
thereof, issuable in such transaction becomes fixed, (v) in connection with a
compensatory issuance of shares of Company Common Stock, the Fair Market Value
of the Company Common Stock, and (vi) in all other cases, including, without
limitation, in connection with the issuance of Company Common Shares pursuant to
an option, warrant or convertible security (other than in connection with the
conversion of the HSN Convertible Debt, in which case the Issue Price shall be
$10 per share, or in connection with issuances described in clause (v) above),
the Fair Market Value of the Company Common Shares on the date of issuance.
SECTION 5.22. "LIBERTY DIRECTOR" shall mean (a) any executive
officer or director of Liberty designated by Liberty to serve on the Company's
Board of Directors, provided that the Company's Board of Directors is not
unable, in the exercise of its fiduciary responsibilities, to recommend that the
Company's stockholders elect such individual to serve on the Company's
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Board of Directors, or (b) any other Person designated by Liberty who is
reasonably acceptable to the Company.
SECTION 5.23. "LIBERTY EXCHANGE AGREEMENT" shall mean the Exchange
Agreement dated as of December 20, 1996, by and between the Company and Liberty
HSN, Inc.
SECTION 5.24. "LIBERTY HOLDCO" shall mean any holding company wholly owned
by Liberty and reasonably acceptable to the Company, formed solely for the
purpose of acquiring and holding an equity interest in the Company.
SECTION 5.25. "OWNERSHIP PERCENTAGE" means, with respect to any
Stockholder, at any time, the ratio, expressed as a percentage, of (i) the
Equity Securities Beneficially Owned by such Stockholder (disregarding any legal
impediments to such Beneficial Ownership) and its Affiliates to (ii) the sum of
(x) the Total Equity Securities and (y) with respect to such Stockholder, any
Company Common Shares included in clause (i) that are issuable upon conversion,
exchange or exercise of Equity Securities that are not included in clause (x).
SECTION 5.26. "PERMITTED OWNERSHIP PERCENTAGE" shall have the meaning set
forth in Section 1.01.
SECTION 5.27. "PERMITTED TRANSFEREE" shall mean Liberty or Mr. Diller and
the members of their respective Stockholder Groups.
SECTION 5.28. "PERSON" shall mean any individual, partnership, joint
venture, corporation, trust, unincorporated organization, government or
department or agency of a government.
SECTION 5.29. "SALE TRANSACTION" shall mean the consummation of a merger,
consolidation or amalgamation between the Company and another entity (other than
an Affiliate of the Company) in which the Company is acquired by such other
entity or a Person who controls such entity, or a sale of all or substantially
all of the assets of the Company to another entity, other than a subsidiary of
the Company.
SECTION 5.30. "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder.
SECTION 5.31. "SHARES" shall have the meaning set forth in the preambles to
this Agreement.
SECTION 5.32. "STOCKHOLDERS" shall mean the VU Parties, Liberty and Mr.
Diller.
SECTION 5.33. "STOCKHOLDERS GROUP" shall mean (a) in respect of Universal
and VU, the Universal Stockholders Group (as defined in the Amended and Restated
Stockholders Agreement), (b) in respect of Liberty, the Liberty Stockholders
Group (as defined in the Amended and Restated Stockholders Agreement) and (c) in
respect of Mr. Diller, the Mr. Diller Stockholders Group (as defined in the
Amended and Restated Stockholders Agreement).
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SECTION 5.34. "SUBSIDIARY" shall mean, as to any Person, any corporation or
other entity at least a majority of the shares of stock or other ownership
interests of which having general voting power under ordinary circumstances to
elect a majority of the Board of Directors or similar governing body of such
corporation or other entity (irrespective of whether or not at the time stock of
any other class or classes shall have or might have voting power by reason of
the happening of any contingency) is, at the time as of which the determination
is being made, owned by such Person, or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.
SECTION 5.35. "THIRD PARTY TRANSFEREE" shall have the meaning ascribed to
such term in the Amended and Restated Stockholders Agreement.
SECTION 5.36. "13D GROUP" shall mean any group of Persons acquiring,
holding, voting or disposing of Voting Securities which would be required under
Section 13(d) of the Exchange Act and the rules and regulations thereunder (as
in effect, and based on legal interpretations thereof existing, on the date
hereof) to file a statement on Schedule 13D with the Commission as a "person"
within the meaning of Section 13(d)(3) of the Exchange Act if such group
Beneficially Owned Voting Securities representing more than 5% of any class of
Voting Securities then outstanding.
SECTION 5.37. "TOTAL DEBT" shall mean all obligations of the Company and
its Subsidiaries for money borrowed, at such time (including all long-term
senior and subordinated indebtedness, all short-term indebtedness, the stated
amount of all letters of credit issued for the account of the Company or any of
its Subsidiaries and (without duplication) all unreimbursed draws thereunder
(but excluding trade letters of credit)), net of cash (other than working
capital) or cash equivalent securities, as shown on the consolidated quarterly
or annual financial statements, including the notes thereto, of the Company and
its Subsidiaries included in the Company's filings under the Exchange Act for
such period, determined in accordance with GAAP, provided, however, that Total
Debt shall not include hedging, pledging, securitization or similar transactions
involving securities owned by the Company or its Subsidiaries to monetize the
underlying securities, to the extent such securities are the sole means of
satisfying such obligations and otherwise the fair value thereof.
SECTION 5.38. "TOTAL DEBT RATIO" shall mean, at any time, the ratio of (i)
Total Debt of the Company and its Subsidiaries on a combined consolidated basis
as of such time to (ii) EBITDA for the four fiscal quarter period ending as of
the last day of the most recently ended fiscal quarter as of such time.
SECTION 5.39. "TOTAL EQUITY SECURITIES" at any time shall mean, subject to
the next sentence, the total number of the Company's outstanding equity
securities calculated on a Company Common Stock equivalent basis (assuming (the
"ASSUMPTIONS") that all Exchange Shares have been issued). Any Equity Securities
Beneficially Owned by a Person that are not outstanding Voting Securities but
that, upon exercise, conversion or exchange, would become Voting Securities
(other than the Exchange Shares, which shall be deemed to be outstanding Equity
Securities for all purposes), shall be deemed to be outstanding for the purpose
of computing Total Equity Securities and the percentage of the Equity Securities
owned by such
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Person but shall not be deemed to be outstanding for the purpose of computing
Total Equity Securities and the percentage of the Equity Securities owned by any
other Person.
SECTION 5.40. "TRANSFER" shall mean, directly or indirectly, to sell,
transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment,
pledge, encumbrance, hypothecation or similar disposition of, any Company Common
Shares Beneficially Owned by such Stockholder or any interest in any Company
Common Shares Beneficially Owned by such Stockholder, PROVIDED, HOWEVER, that, a
merger or consolidation in which a Stockholder is a constituent corporation
shall not be deemed to be the Transfer of any Company Common Shares Beneficially
Owned by such Stockholder (PROVIDED, that a significant purpose of any such
transaction is not to avoid the provisions of this Agreement). For purposes of
this Agreement, the conversion of Company Class B Stock into Company Common
Stock shall not be deemed to be a Transfer.
SECTION 5.41. "VU DIRECTOR" shall mean (a) any executive officer or
director of VU designated by VU to serve on the Company's Board of Directors,
provided that the Company's Board of Directors is not unable, in the exercise of
its fiduciary responsibilities to the Company's stockholders, to recommend that
the Company's stockholders elect such individual to serve on the Company's Board
of Directors, or (b) any other Person designated by VU who is reasonably
acceptable to the Company.
SECTION 5.42. "VOTING SECURITIES" shall mean at any particular time the
shares of any class of capital stock of the Company which are then entitled to
vote generally in the election of directors.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including telecopy) and shall be given,
if to Vivendi Universal, S.A. or Universal Studios, Inc., to:
Vivendi Universal, S.A.
375 Park Avenue
New York, New York 10152
Attention: Jean-Laurent Nabet
George Bushnell III
Facsimile: (212) 572-7188
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with a copy to:
Universal Studios, Inc.
100 Universal City Plaza
Universal City, California 91608
Attention: Karen Randall
Facsimile: (818) 866-3444
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Faiza J. Saeed
Facsimile: (212) 474-3700
if to Liberty Media Corporation, to:
Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Attention: General Counsel
Facsimile: (720) 875-5382
with a copy to:
Baker Botts L.L.P.
599 Lexington Avenue
New York, New York 10022
Attention: Frederick H. McGrath
Facsimile: (212) 705-5125
if to Mr. Diller, to:
Barry Diller
Chairman and Chief Executive Officer
USA Networks, Inc.
Carnegie Hall Tower
152 W. 57th Street
New York, New York 10019
Facsimile: (212) 314-7339
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with a copy to:
USA Networks, Inc.
Carnegie Hall Tower
152 W. 57th Street
New York, New York 10019
Attention: General Counsel
Facsimile: (212) 314-7329
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon
Andrew J. Nussbaum
Facsimile: (212) 403-2000
if to the Company, to:
USA Networks, Inc.
Carnegie Hall Tower
152 W. 57th Street
New York, New York 10019
Attention: General Counsel
Facsimile: (212) 314-7329
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon
Andrew J. Nussbaum
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
or such address or facsimile number as such party may hereafter specify for the
purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective when delivered personally, telegraphed,
or telecopied, or, if mailed, five business days after the date of the mailing.
SECTION 6.02. AMENDMENTS; NO WAIVERS. (a) Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by the party whose rights or
obligations hereunder are affected by such amendment, or in the case of a
waiver, by the party or parties against whom the waiver is to be effective.
Approval by the VU Parties of any amendment to this Agreement (or any waiver of
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any provision hereof) shall be required only if it relates to Article I, Section
2.01 (as applied to the VU Parties), Article VI, or if such amendment or waiver
would adversely affect any rights of, or impose any obligations on, the VU
Parties provided hereunder or under the Amended and Restated Stockholders
Agreement. Any amendment or waiver by the Company shall be authorized by a
majority of the Board of Directors (excluding for this purpose any director who
is a VU Director or Liberty Director as provided for in this Agreement).
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 6.03. SUCCESSORS AND ASSIGNS. Except as provided in Section 1.04,
neither this Agreement nor any of the rights or obligations under this Agreement
shall be assigned, in whole or in part (except by operation of law pursuant to a
merger of VU or Liberty with another Person a significant purpose of which is
not to avoid the provisions of this Agreement), by any party without the prior
written consent of the other parties hereto. Subject to the foregoing, the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
SECTION 6.04. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be construed in accordance with and governed by the internal laws of the State
of Delaware, without giving effect to the principles of conflicts of laws. Each
of the parties hereto hereby irrevocably and unconditionally consents to submit
to the non-exclusive jurisdiction of the courts of the State of Delaware, for
any action, proceeding or investigation in any court or before any governmental
authority ("LITIGATION") arising out of or relating to this Agreement and the
transactions contemplated hereby and further agrees that service of any process,
summons, notice or document by U.S. mail to its respective address set forth in
this Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.
SECTION 6.05. COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective upon the Closing, at which time this
Agreement shall supersede in all respects the 1997 Governance Agreement.
SECTION 6.06. SPECIFIC PERFORMANCE. The Company, Mr. Diller, Universal, VU
and Liberty each acknowledges and agrees that the parties' respective remedies
at law for a
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breach or threatened breach of any of the provisions of this Agreement would be
inadequate and, in recognition of that fact, agrees that, in the event of a
breach or threatened breach by the Company, Universal, VU or Liberty of the
provisions of this Agreement, in addition to any remedies at law, Mr. Diller,
Universal, VU, Liberty and the Company, respectively, without posting any bond
shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction
or any other equitable remedy which may then be available.
SECTION 6.07. REGISTRATION RIGHTS. (a) The VU Parties, Liberty and Mr.
Diller shall be entitled to customary registration rights relating to Company
Common Stock (and with respect to the VU Parties, the Warrants) owned by them as
of the Closing or acquired from the Company (including upon the exercise of the
Warrants) in the future (including the ability to transfer registration rights
in connection with the sale or other disposition of Company Common Stock as set
forth in this Agreement). In the case of the VU Parties, references in this
Section 6.07 to Company Common Stock shall be deemed to include the Warrants.
(b) If requested by a Stockholder, the Company shall be required promptly
to cause the Company Common Stock owned by such Stockholder or its Affiliates to
be registered under the Securities Act in order to permit such Stockholder or
such Affiliate to sell such shares in one or more (but not more than (i) in the
case of the VU Parties, four, (ii) in the case of Liberty, four and (iii) in the
case of Mr. Diller, three) registered public offerings (each, a "DEMAND
REGISTRATION"). Each Stockholder shall also be entitled to customary piggyback
registration rights. If the amount of shares sought to be registered by a
Stockholder and its Affiliates pursuant to any Demand Registration is reduced by
more than 25% pursuant to any underwriters' cutback, then such Stockholder may
elect to request the Company to withdraw such registration, in which case, such
registration shall not count as one of such Stockholder's Demand Registrations.
If a Stockholder requests that any Demand Registration be an underwritten
offering, then such Stockholder shall select the underwriter(s) to administer
the offering, provided that such underwriter(s) shall be reasonably satisfactory
to the Company. If a Demand Registration is an underwritten offering and the
managing underwriter advises the Stockholder initiating the Demand Registration
in writing that in its opinion the total number or dollar amount of securities
proposed to be sold in such offering is such as to materially and adversely
affect the success of such offering, then the Company will include in such
registration, first, the securities of the initiating Stockholder, and,
thereafter, any securities to be sold for the account of others who are
participating in such registration (as determined on a fair and equitable basis
by the Company). In connection with any Demand Registration or inclusion of a
Stockholder's or its Affiliate's shares in a piggyback registration, the
Company, such Stockholder and/or its Affiliates shall enter into an agreement
containing terms (including representations, covenants and indemnities by the
Company and such Stockholder), and shall be subject to limitations, conditions,
and blackout periods, customary for a secondary offering by a selling
stockholder. The costs of the registration (other than underwriting discounts,
fees and commissions) shall be paid by the Company. The Company shall not be
required to register such shares if a Stockholder would be permitted to sell the
Company Common Stock in the quantities proposed to be sold at such time in one
transaction under Rule 144 of the Securities Act or under another comparable
exemption therefrom.
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(c) If the Company and a Stockholder cannot agree as to what constitutes
customary terms within ten days of such Stockholder's request for registration
(whether in a Demand Registration or a piggyback registration), then such
determination shall be made by a law firm of national reputation mutually
acceptable to the Company and such Stockholder.
SECTION 6.08. TERMINATION. Except as otherwise provided in this Agreement,
this Agreement shall terminate (a) as to the VU Parties, at such time that the
VU Parties Beneficially Own Equity Securities representing less than 5% of the
Total Equity Securities, (b) as to Liberty, at such time that Liberty
Beneficially Owns Equity Securities representing less than 5% of the Total
Equity Securities and (c) as to Mr. Diller, at such time that the CEO
Termination Date has occurred or at such time as he becomes Disabled. In respect
of "Contingent Matters," such provisions shall terminate as to Mr. Diller and
Liberty as set forth therein.
SECTION 6.09. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, provided that the parties hereto
shall negotiate in good faith to attempt to place the parties in the same
position as they would have been in had such provision not been held to be
invalid, void or unenforceable.
SECTION 6.10. COOPERATION. Each of Universal, VU, Liberty and Mr. Diller
covenants and agrees with the other to use its reasonable best efforts to cause
the Company to fulfill the Company's obligations under this Agreement.
SECTION 6.11. ADJUSTMENT OF SHARE NUMBERS. If, after the date of this
Agreement, there is a subdivision, split, stock dividend, combination,
reclassification or similar event with respect to any of the shares of capital
stock referred to in this Agreement, then, in any such event, the numbers and
types of shares of such capital stock referred to in this Agreement shall be
adjusted to the number and types of shares of such capital stock that a holder
of such number of shares of such capital stock would own or be entitled to
receive as a result of such event if such holder had held such number of shares
immediately prior to the record date for, or effectiveness of, such event.
SECTION 6.12. ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this Agreement, the Amended and Restated Stockholders Agreement, the
Liberty Exchange Agreement, the Transaction Agreement and each of the other
agreements contemplated by the Transaction Agreement embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way (including, without limitation,
effective upon the Closing, all stockholders agreements relating to the Company
(other than the Amended and Restated Stockholders Agreement) between Liberty and
Mr. Diller). Without limiting the generality of the foregoing, to the extent
that any of the terms hereof are inconsistent with the rights or obligations of
any party under any other agreement with any other party, the terms of this
Agreement shall govern.
-20-
SECTION 6.13. INTERPRETATION. References in this Agreement to Articles and
Sections shall be deemed to be references to Articles and Sections of this
Agreement unless the context shall otherwise require. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation." The words "hereof," "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of such agreement or instrument.
SECTION 6.14. HEADINGS. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
otherwise affect the provisions of this Agreement.
-21-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
USA NETWORKS, INC.,
By /s/ Julius Genachowski
------------------------------
Name: Julius Genachowski
Title: Senior Vice President
and General Counsel
VIVENDI UNIVERSAL, S.A.,
By /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief
Executive Officer
UNIVERSAL STUDIOS, INC.,
By /s/ Guillaume Hannezo
------------------------------
Name: Guillaume Hannezo
Title: Special Power of
Attorney
LIBERTY MEDIA CORPORATION,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
/s/ Barry Diller
---------------------------------------
Barry Diller
-22-
EXHIBIT 99.1
==============================================================================
FORM
OF
LIMITED LIABILITY LIMITED PARTNERSHIP AGREEMENT
of
[VIVENDI UNIVERSAL ENTERTAINMENT], L.L.L.P.
dated as of /o/, 2002,
by and among
[UNIVERSAL SUB],
USA NETWORKS, INC.,
USANi SUB LLC
and
BARRY DILLER
==============================================================================
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions..................................................1
SECTION 1.02. Terms and Usage Generally...................................10
ARTICLE II
The Partnership
SECTION 2.01. Effectiveness of this Agreement.............................11
SECTION 2.02. Formation...................................................11
SECTION 2.03. Name........................................................11
SECTION 2.04. Term........................................................11
SECTION 2.05. Registered Agent and Registered Office......................11
SECTION 2.06. Purposes....................................................12
SECTION 2.07. Treatment as Partnership....................................12
ARTICLE III
Capital Contributions; Partners
SECTION 3.01. Initial Capital Contributions...............................12
SECTION 3.02. Admission of Partners.......................................12
SECTION 3.03. Substitute Partners and Additional
Partners.................................................13
ARTICLE IV
Reports
SECTION 4.01. Reports to Partners.........................................14
SECTION 4.02. Tax Information.............................................14
ARTICLE V
Preferred Interests
SECTION 5.01. General.....................................................15
SECTION 5.02. Ranking.....................................................15
SECTION 5.03. PIK Accretion...............................................16
SECTION 5.04. Consent Right...............................................16
i
SECTION 5.05. Negative Covenants..........................................16
SECTION 5.07. No Other Consent Rights.....................................19
ARTICLE VI
Common Interests
SECTION 6.01. General.....................................................19
SECTION 6.02. Issuances of Common Interests After the
Closing Date.............................................19
SECTION 6.03. Preemptive Rights...........................................20
SECTION 6.04. Other Issuances of Common Interests.........................21
SECTION 6.05. Contribution of Assets or Capital Stock
by Universal Sub.........................................21
SECTION 6.06. Consent Right...............................................22
SECTION 6.07. Asignee of Diller Common Interests..........................23
ARTICLE VII
Capital Accounts, Allocations of
Profit and Loss and Tax Matters
SECTION 7.01. Capital Accounts............................................23
SECTION 7.02. Allocations of Net Income and Net Loss......................24
SECTION 7.03. Allocations of Net Income and Net Loss
for Federal Income Tax Purposes..........................26
SECTION 7.04. Allocation of the Partnership Debt..........................27
SECTION 7.05. Elections...................................................27
SECTION 7.06. Fiscal Year.................................................27
SECTION 7.07. Withholding Requirements....................................27
SECTION 7.08. Tax Matters Partner.........................................27
ARTICLE VIII
Distributions
SECTION 8.01. Distributions...............................................28
SECTION 8.02. Tax Distributions...........................................28
SECTION 8.03. General Limitations.........................................29
SECTION 8.04. Distributions in Kind.......................................29
SECTION 8.05. Closing Date Distribution...................................29
SECTION 8.06. Distribution Upon Maturity of Class A
Preferred Interests......................................29
SECTION 8.07. Put/Call Rights with Respect to Class B
Preferred Interests.........................................29
ii
ARTICLE IX
Management of the Partnership
SECTION 9.01. General Partner.............................................31
SECTION 9.02. Board; Representatives; Chairman............................31
SECTION 9.03. Expenses....................................................32
SECTION 9.04. Agreement Not To Compete....................................32
ARTICLE X
Transfers of Interests
SECTION 10.01. Restrictions on Transfers...................................34
SECTION 10.02. Transfers Permitted at any Time.............................35
SECTION 10.03. Put/Call....................................................35
SECTION 10.04. Tag-Along for Limited Partners for
Transfers by Universal...................................40
ARTICLE XI
Limitation on Liability,
Exculpation
SECTION 11.01. Limitation on Liability.....................................41
SECTION 11.02. Exculpation.................................................41
SECTION 11.03. Partnership Opportunities...................................42
SECTION 11.04. Indemnification.............................................43
ARTICLE XII
Events of Withdrawal; Bankruptcy of a General Partner
SECTION 12.01. Events of Withdrawal........................................44
SECTION 12.02. Bankruptcy of a General Partner.............................44
ARTICLE XIII
Dissolution and Termination
SECTION 13.01. Dissolution.................................................45
SECTION 13.02. Winding Up of the Partnership...............................46
SECTION 13.03. Distribution of Property....................................47
SECTION 13.04. Claims of Partners..........................................47
SECTION 13.05. Termination.................................................48
iii
ARTICLE XIV
Miscellaneous
SECTION 14.01. Notices.....................................................48
SECTION 14.02. No Third Party Beneficiaries................................48
SECTION 14.03. Waiver......................................................48
SECTION 14.04. Integration.................................................49
SECTION 14.05. Headings....................................................49
SECTION 14.06. Counterparts................................................49
SECTION 14.07. Severability................................................49
SECTION 14.08. Applicable Law..............................................49
SECTION 14.09. Jurisdiction................................................49
Schedules
Schedule A - Partners
Schedule B - Initial Capital Contributions
iv
LIMITED LIABILITY LIMITED PARTNERSHIP
AGREEMENT of [VIVENDI UNIVERSAL ENTERTAINMENT],
L.L.L.P. (the "Partnership") dated as of /o/, 2002,
by and among [UNIVERSAL SUB], a Delaware corporation
and a wholly owned subsidiary of Universal
("Universal Sub"), as general partner, and USA
NETWORKS, INC., a Delaware corporation ("USAi"),
USANi SUB LLC, a Delaware limited liability company
("USANi Sub"), and Barry Diller ("Diller"), as
limited partners.
Preliminary Statement
WHEREAS the parties hereto (or Affiliates thereof) are parties to
the Transaction Agreement (the "Transaction Agreement") dated as of December
16, 2001 by and among Vivendi, Universal, USAi, USANi LLC, a Delaware limited
liability company, Liberty and Diller; and
WHEREAS, the parties hereto desire to form a limited liability
limited partnership.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions. The terms shall have the following
meanings for purposes of this Agreement:
"Additional Partner" means any Person admitted as a Partner of the
Partnership pursuant to Section 3.03 in connection with the new issuance of a
Common Interest to such Person.
"Affiliate" of any specified Person means any other Person directly
or indirectly Controlling, Controlled by or under direct or indirect common
Control with such specified Person. For purposes of the foregoing, (i) USANi
and its Affiliates shall be deemed to be Affiliates of USAi, (ii) none of
USAi, Universal or Diller, or any of their respective Affiliates, shall be
deemed to be Affiliates of one another, and (iii) none of USAi, Universal or
Diller, or any of their respective Affiliates, shall be deemed to be an
Affiliate of the Partnership.
2
"Agreement" means this Limited Liability Limited Partnership
Agreement, as the same may be amended or restated from time to time.
"Appraised Value" of a Common Interest means (x) the Participation
Percentage of such Common Interest multiplied by (y) the private market value
of the Partnership taken as a whole; provided, however, that such valuation
shall not assume the value of the Partnership in an "auction" proceeding, and
any valuation methodology shall exclude any acquisition of similar assets or
businesses at a uniquely high valuation due to a purchaser's strategic need to
acquire such assets or businesses.
"Bankrupt Partner" is defined in Section 12.02(a).
"Bankruptcy" of a Person means (i) the filing by such Person of a
voluntary petition seeking liquidation, reorganization, arrangement or
readjustment, in any form, of its debts under Title 11 of the United States
Code (or corresponding provisions of future laws) or any other bankruptcy or
insolvency law, whether foreign or domestic, or such Person's filing an answer
consenting to or acquiescing in any such petition, (ii) the making by such
Person of any assignment for the benefit of its creditors or the admission by
such Partner in writing of its inability to pay its debts as they mature or
(iii) the expiration of 60 days after the filing of an involuntary petition
under Title 11 of the United States Code (or corresponding provisions of
future laws), an application for the appointment of a receiver for the assets
of such Person, or an involuntary petition seeking liquidation,
reorganization, arrangements, composition, dissolution or readjustment of its
debts or similar relief under any bankruptcy or insolvency law, provided that
the same shall not have been vacated, set aside or stayed within such 60-day
period. This definition of "Bankruptcy" is intended to replace the bankruptcy
related events set forth in Sections 17-402(a)(4) and (a)(5) of the Delaware
Act.
"Bankruptcy Code" means the United States Bankruptcy Code of 1978,
as amended.
"Beneficial Owner" and "Beneficial Ownership" have the meanings set
forth in Rule 13d-3 and Rule 13d-5 under the Securities Exchange Act of 1934,
as amended, except that a Person shall be deemed to have Beneficial Ownership
of all securities that such Person has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent event.
3
"Board" is defined in Section 9.02(b).
"Business" means any of the programming, television distribution,
cable network, film and theme park businesses.
"Business Day" means any day other than a Saturday, a Sunday or a
U.S. Federal holiday.
"Call" means the USAi Call or the Diller Call.
"Capital Account" is defined in Section 7.01(a).
"Capital Contribution" means, with respect to any Partner, any
capital contribution made by such Partner to the Partnership pursuant to
Section 3.01 or 6.02.
"Cause" means (i) the conviction of, or pleading guilty to, any
felony, or (ii) the willful, continued and complete failure to attend to
managing the business affairs of the Partnership, after written notice of such
failure from the General Partner and reasonable opportunity to cure.
"Chairman" is defined in Section 9.02(b).
"Class A Preferred Interests" is defined in Section 5.01(a).
"Class B Preferred Consideration" is defined in Section 8.07.
"Class B Preferred Interests" is defined in Section 5.01(b).
"Closing" means the closing of the transactions contemplated by the
Transaction Agreement.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Interest" means a partnership interest in the Partnership
that is not a Preferred Interest.
"Consolidated Tangible Net Worth" means total assets of the
Partnership and its consolidated subsidiaries, determined in accordance with
U.S. generally accepted accounting principles, giving effect to purchase
accounting, and deducting therefrom consolidated current liabilities and, to
the extent otherwise included, goodwill, patents,
4
trademarks, service marks, trade names, copyrights, licenses and other
intangible items.
"Control", with reference to any Person, means the Beneficial
Ownership of a majority of the outstanding voting power (or equivalent) of
such Person and the terms "Controlling" and "Controlled" have meanings
correlative to the foregoing.
"Covered Person" means (i) each Partner, (ii) each Affiliate of a
Partner, (iii) each Representative and each officer, director, shareholder,
partner, employee, member, manager, representative, agent or trustee of a
Partner or of an Affiliate of a Partner and (iv) each officer of USAi serving
as an employee of the Partnership.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act, 6 Del. C.ss.ss.17-101 et seq., as amended from time to time
or any successor statute.
"Diller" is defined in the Preamble.
"Diller Call" is defined in Section 10.03(b).
"Diller Put" is defined in Section 10.03(b).
"Disabled" means the disability of Diller after the expiration of
more than 180 consecutive days after its commencement which is determined to
be total and permanent by a physician selected by the Partnership and
reasonably acceptable to Diller; provided that Diller shall be deemed to be
disabled only following the expiration of 90 days following receipt of a
written notice from the Partnership and such physician specifying that a
disability has occurred if within such 90-day period he fails to return to
managing the business affairs of the Partnership. A total disability shall
mean mental or physical incapacity that prevents Diller from managing the
business affairs of the Partnership.
"Effective Time" means the Closing.
"Face Value" of a Preferred Interest, as of any time, means the
amount equal to the initial Capital Contribution attributable to such
Preferred Interest as adjusted from time to time pursuant to Section 5.03.
"Fiscal Year" is defined in Section 7.06.
"General Partner" means Universal Sub, any Substitute Partner that
is admitted as the general partner
5
of the Partnership or any Person appointed as such pursuant to Section
12.02(a), in each case, for so long as such Person continues to be the general
partner of the Partnership.
"Good Reason" means the assignment to Diller of any duties
inconsistent in any respect with his position as Chairman and chief executive
officer of the Partnership, authority, duties or responsibilities (including
status, offices, title and direct reporting relationship to the chief
executive officer of Vivendi), or any diminution in such positions (or removal
from such positions), authority, duties or responsibilities or requiring him
to be based at any location other than his current locations; it being
understood that the chief executive officer of the Partnership shall have the
same authority and duties as a corresponding officer of a Delaware corporation
would have to act for a Delaware corporation.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (iii) all obligations of such Person
upon which interest charges are customarily paid, (iv) all obligations of such
Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), and (v) all capital lease obligations of such Person; provided that
the Indebtedness of any Persons shall include (A) the Indebtedness of any
other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except
to the extent the terms of such Indebtedness provide that such Person is not
liable therefor, (B) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed and (C) all
guarantees by such Person of Indebtedness of others; and provided, further,
that Indebtedness shall not include any Permitted Liens.
"Interests" means the entire partnership interest of a Partner in
the Partnership, including its Common Interests and its Preferred Interests.
"Investment Bank" means an independent, nationally recognized
investment bank.
6
"Liberty" means Liberty Media Corporation, a Delaware corporation.
"Lien" means any pledge, encumbrance, security interest, purchase
option, call or similar right.
"Limited Partner" means USAi, USANi Sub, Diller and any Additional
Partner or Substitute Partner that is admitted as a limited partner of the
Partnership, in each case for so long as such Person continues to be a limited
partner of the Partnership.
"Market Value" of a stock means the amount equal to the average of
the daily volume weighted averages of such stock on the primary exchange on
which it trades, as reported by Bloomberg, for the 15 consecutive trading days
ending on the day immediately preceding the date of determination. For the
avoidance of doubt, the Market Value of USAi Common Shares shall be determined
based on the price of USAi Common Stock.
"Maturity Date" is defined in Section 8.06.
"Net Income" or "Net Losses", as appropriate, means, for any period,
the taxable income or tax loss of the Partnership for such period for Federal
income tax purposes, taking into account any separately stated tax items and
increased by the amount of any tax-exempt income of the Partnership during
such period and decreased by the amount of any Section 705(a)(2)(B)
expenditures (within the meaning of Treasury Regulation Section
1.704-1(b)(2)(iv)(i)) of the Partnership; provided, however, that Net Income
or Net Losses of the Partnership shall be computed without regard to the
amount of any items of gross income, gain, loss or deduction that are
specially allocated pursuant to Section 7.02(c), (d) or (e). With respect to
any property contributed to the Partnership at a time when its adjusted tax
basis differs from its fair market value, and with respect to all Partnership
property after any adjustment to the Capital Accounts pursuant to Section
7.01(c), the Net Income or Net Losses of the Partnership (and the constituent
items of income, gain, loss and deduction) shall be computed in accordance
with the principles of Treasury Regulation Section 1.704-1(b)(2)(iv)(g).
"Participation Percentage" is defined in Section 6.01(a).
"Partner" means the General Partner or a Limited Partner.
7
"Partnership" is defined in the Preamble.
"Partnership Debt" means the debt incurred by the Partnership to
fund the distribution under Section 8.05, pursuant to Section 2.04(iii) of the
Transaction Agreement.
"Permitted Liens" means, collectively, (i) all statutory or other
liens for taxes or assessments which are not yet due or the validity of which
is being contested in good faith by appropriate proceedings, (ii) all
mechanics', materialmen's, carriers', workers' and repairers' liens, and other
similar liens imposed by law, incurred in the ordinary course of business,
which allege unpaid amounts that are less than 30 days delinquent or which are
being contested in good faith by appropriate proceedings, and (iii) all other
Liens which do not materially detract from or materially interfere with the
marketability, value or present use of the asset subject thereto or affected
thereby.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, governmental authority or
other entity.
"Preferred Interests" means the Class A Preferred Interests and the
Class B Preferred Interests, collectively.
"Purchasing Partner" means the Partner purchasing Common Interests
pursuant to the exercise of a Put or a Call.
"Put" means the USAi Put or the Diller Put.
"Representative" is defined in Section 9.02(b).
"Restricted Business" has the same meaning as the term "Business" in
the Transaction Agreement.
"Sale Transaction" means any merger, consolidation, tender or
exchange offer, reclassification, compulsory share exchange, liquidation or
similar transaction, in which all or substantially all of the assets or the
outstanding equity securities of the ultimate parent of a Partner are
transferred, converted into or exchanged for stock, other securities, cash or
assets of another entity.
"Section 704(c) Property" means "Section 704(c) property" as defined
in Treasury Regulation Section 1.704-3(a)(3) and property that is revalued
pursuant to Section 7.01(c) hereof.
8
"Securities Act" means the Securities Act of 1933, as amended.
"Selected Appraisal" is defined in Section 10.03(d).
"Selling Partner" means the Partner selling Common Interests
pursuant to the exercise of a Put or a Call.
"Substitute Partner" means any Person admitted as a Partner of the
Partnership pursuant to Section 3.03 in connection with the Transfer of a
then-existing Interest of a Partner to such Person.
"Tag-Along Interests" is defined in Section 10.04(a).
"Tag-Along Notice" is defined in Section 10.04(a).
"Tag-Along Offeree" is defined in Section 10.04(a).
"Tax Detriment" means, with respect to any taxes incurred as a
result of the recognition of income or gain by an indemnified party in taxable
period(s) earlier than the taxable period(s) in which such income or gain
would otherwise have been recognized by such party solely as a result of an
action or inaction by an indemnifying party, the excess, if any, of (i) the
net present value of such taxes incurred by the indemnified party in such
earlier taxable period(s) over (ii) the net present value of the taxes that
would otherwise have been incurred in such later taxable period, assuming (i)
a discount rate equal to USAi's borrowing rate in effect as of the time such
net present values are calculated and (ii) that for all taxable years, the
indemnified party is fully taxable at the highest applicable marginal Federal
income tax rate and the highest applicable marginal income and franchise tax
rates of the state, local and foreign jurisdictions in which the Partnership
or any of its subsidiaries conducts business (assuming full deductibility of
state and local taxes, and full creditability and deductibility of foreign
taxes, for Federal (and if applicable state and local) income tax purposes).
"Tax Matters Partner" is defined in Section 7.08.
"Transaction Agreement" is defined in the Preamble.
9
"Transfer" means any sale, assignment, transfer, exchange, gift,
bequest, pledge, hypothecation or other disposition or encumbrance, direct or
indirect, in whole or in part, by operation of law or otherwise, and shall
include all matters deemed to constitute a Transfer under Section 10.01(a);
provided, however, that a Transfer shall not include a Sale Transaction. The
terms "Transferred", "Transferring", "Transferor" and "Transferee" have
meanings correlative to the foregoing.
"Universal" means Universal Studios, Inc., a Delaware corporation.
"Universal Sub" is defined in the Preamble.
"USAi" is defined in the Preamble.
"USAi Call" is defined in Section 10.03(a).
"USAi Class B Common Stock" means shares of Class B common stock of
USAi, par value $.01 per share.
"USAi Common Shares" means shares of USAi Common Stock and USAi
Class B Common Stock, collectively.
"USAi Common Stock" means shares of common stock of USAi, par value
$.01 per share.
"USAi Preferred Call" is defined in Section 8.07.
"USAi Preferred Put" is defined in Section 8.07.
"USAi Put" is defined in Section 10.03(a).
"USANi Sub" is defined in the Preamble.
"Vivendi" means Vivendi Universal, S.A., a societe anonyme organized
under the laws of France.
"Vivendi Ordinary Shares" means ordinary shares of Vivendi, par
value (U) 5.5 per share, or, in the event that all or substantially all of the
shares of Vivendi are exchanged for or converted into equity securities of
another Person after the Effective Time, such other equity securities as such
shares may be exchanged for or converted into after the Effective Time, so
long as such equity securities are listed or quoted on the New York Stock
Exchange, the Nasdaq Stock Market, the London Stock Exchange, the Paris Bourse
or the Frankfurt Stock Exchange and the average monthly trading volume of such
equity securities on any such exchange immediately after such share
10
exchange or conversion (and after giving effect to all of the transactions
contemplated in connection with such exchange or conversion) is substantially
equivalent to or greater than that of the Vivendi Ordinary Shares on its
primary exchange immediately prior to such share exchange or conversion.
SECTION 1.02. Terms and Usage Generally. (a) The definitions in
Section 1.01 shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references herein to
Articles, Sections, Annexes, Exhibits and Schedules shall be deemed to be
references to Articles and Sections of, and Annexes, Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. All Annexes,
Exhibits and Schedules attached hereto shall be deemed incorporated herein as
if set forth in full herein. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. References to a Person are also to its
permitted successors and permitted assigns. Unless otherwise expressly
provided herein, any agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments
incorporated therein.
(b) As used in this Agreement, unless otherwise expressly specified
herein, any allocation or distribution to be made among Interests or Partners
"on a pro rata basis" or "ratably" shall be made in proportion to the relative
Participation Percentages or Face Values of, or Capital Contributions
attributable to, such Interests, or of such Interests owned by such Partners,
in each case determined immediately prior to the transaction with respect to
which such allocation is being made.
11
ARTICLE II
The Partnership
SECTION 2.01. Effectiveness of this Agreement. This Agreement
constitutes the partnership agreement (as defined in the Delaware Act) of the
parties hereto. This Agreement shall become effective at the Effective Time.
SECTION 2.02. Formation. The parties hereto agree to form the
Partnership as a limited partnership and unanimously agree that the
Partnership shall be qualified as a limited liability limited partnership
under and pursuant to Section 17-214 of the Delaware Act and Section 15-1001
of the Delaware Revised Uniform Partnership Act (6 Del. C. ss.ss. 15-101 et
seq. ("DRUPA")) by filing with the Secretary of State of the State of Delaware
a certificate of limited partnership of the Partnership and a statement of
qualification as a limited liability limited partnership. The General Partner
shall file and record the certificate of limited partnership of the
Partnership, such statement of qualification and such other documents as may
be required or appropriate under the laws of the State of Delaware and of any
other jurisdiction in which the Partnership may conduct business. The General
Partner shall, on request, provide any Partner with copies of each such
document as filed and recorded.
SECTION 2.03. Name. The name of the Partnership shall be [Vivendi
Universal Entertainment], L.L.L.P. The General Partner may change the name of
the Partnership or adopt such trade or fictitious names as it may determine, in
each case consistent with the requirements of the Delaware Act, including
Sections 17-102 and 17-214 thereof, and all other applicable law (e.g.,
fictitious name statutes). The General Partner will give all Partners prompt
written notice of any such name change (or adoption of any such trade or
fictitious name).
SECTION 2.04. Term. The term of the Partnership shall begin on the
date the certificate of limited partnership of the Partnership is effective
(which shall in any event be no later than the Effective Time), and the
Partnership shall have perpetual existence unless sooner dissolved as provided
in Article XIII.
SECTION 2.05. Registered Agent and Registered Office. The name of
the registered agent for service of process shall be The Corporation Trust
Company, and the address of the registered agent and the address of the
registered office in the State of Delaware shall be 1209
12
Orange Street, Wilmington, Delaware 19801. Such office and such agent may be
changed from time to time by the General Partner consistent with the
requirements of the Delaware Act, including Sections 17-104 and 17-202
thereof.
SECTION 2.06. Purposes. The Partnership shall be formed for the
object and purpose of, and the nature of the business to be conducted and
promoted by the Partnership shall be, engaging in any lawful act or activity
for which limited partnerships may be formed under the Delaware Act, including
engaging in the Business, and engaging in any and all activities necessary or
incidental to the foregoing.
SECTION 2.07. Treatment as Partnership. Except as otherwise required
pursuant to a determination within the meaning of Section 1313(a)(1) of the
Code, the parties shall treat the Partnership as a partnership for United
States federal income tax purposes and agree not to take any action or fail to
take any action which action or inaction would be inconsistent with such
treatment.
ARTICLE III
Capital Contributions; Partners
SECTION 3.01. Initial Capital Contributions. (a) On the Closing
Date, USAi, USANi Sub and Universal Sub shall make their respective initial
Capital Contributions, in property, in accordance with Section 2.03 of the
Transaction Agreement.
(b) In return for such initial Capital Contributions, Common
Interests and/or Preferred Interests shall be issued to the Partners as
provided in Articles V and VI hereof. Schedule B indicates the amount of
Capital Contributions attributable to Common Interests and Preferred
Interests, respectively, for each Partner.
(c) The parties shall treat the Capital Contributions described in
this Section 3.01 as contributions pursuant to Section 721 of the Code in
which no gain or loss is recognized to any extent, except as otherwise
required pursuant to a determination within the meaning of Section 1313(a)(1)
of the Code.
SECTION 3.02. Admission of Partners. At the Effective Time, without
the need for any further action of any Person, the Persons set forth on
Schedule A attached hereto who have executed this Agreement shall be admitted
as Partners, and each such Person shall be shown as such in the
13
books and records of the Partnership. Following the Effective Time, no Person
shall be admitted as a Partner and no additional Common Interests or Preferred
Interests shall be issued except as expressly provided herein.
SECTION 3.03. Substitute Partners and Additional Partners. (a) No
Transferee of an Interest or Person to whom an Interest is issued after the
Effective Time pursuant to this Agreement shall be admitted as a Partner
hereunder or acquire any rights hereunder, including any voting rights or the
right to receive distributions and allocations in respect of the Transferred
or issued Interest, as applicable, unless (i) such Interest is Transferred or
issued in compliance with the provisions of this Agreement and (ii) such
Transferee or recipient shall have executed and delivered to the Partnership
such customary instruments as the General Partner may reasonably require, to
effectuate the admission of such Transferee or recipient as a Partner and to
confirm the agreement of such Transferee or recipient to be bound by all the
terms and provisions of this Agreement (including Section 10.03). Upon
complying with clauses (i) and (ii) above, without the need for any further
action of any Person, a Transferee or recipient shall be deemed admitted to
the Partnership as a Partner. A Substitute Partner shall enjoy the same
rights, and be subject to the same obligations, as the Transferor; provided
that, unless expressly provided otherwise herein, such Transferor shall not be
relieved of any obligation or liability hereunder arising prior to the
consummation of such Transfer. As promptly as practicable after the admission
of any Person as a Partner, the books and records of the Partnership shall be
changed to reflect such admission. In the event of any admission of a
Substitute Partner or Additional Partner pursuant to this Section 3.03(a),
this Agreement shall be deemed amended to reflect such admission, and any
formal amendment of this Agreement (including Schedules A and B hereto) in
connection therewith shall only require execution by the General Partner and
such Substitute Partner or Additional Partner, as applicable, to be effective.
(b) If a Partner shall Transfer all (but not less than all) its
Interests, the Partner shall thereupon cease to be a Partner of the
Partnership; provided, however, that any such Partner shall not cease to be a
Partner until a Transferee of such Partner's Interests is admitted to the
Partnership as a Substitute Partner pursuant to Section 3.03(a).
14
ARTICLE IV
Reports
SECTION 4.01. Reports to Partners. (a) Within 30 days after the end
of each of the first three fiscal quarters of a Fiscal Year, the Partnership
shall deliver to each Partner (i) unaudited consolidated balance sheets of the
Partnership and its consolidated subsidiaries as at the end of such quarter
and the related consolidated statements of income, statements of cash flow and
changes in financial position of the Partnership for the period from the
beginning of such quarter to the end of such quarter, prepared on a basis
consistent with the audited financial statements of the Partnership and its
consolidated subsidiaries, subject to changes resulting from audit and normal
year-end adjustments and (ii) a certificate executed by the chief financial
officer and Tax Matters Partner of the Partnership certifying compliance by
the Partnership with the provisions set forth in Section 5.05.
(b) Within 80 days after the end of each Fiscal Year, the
Partnership shall deliver to each Partner audited consolidated balance sheets
of the Partnership and its consolidated subsidiaries as at the end of such
Fiscal Year and the related consolidated statements of income, statements of
cash flow and changes in financial position of the Partnership for such Fiscal
Year, all in reasonable detail and accompanied by a report thereon of the
Partnership's independent auditors as to such consolidated financial
statements presenting fairly the financial position of the Partnership and its
consolidated subsidiaries as at the dates indicated, and as to such audit
having been made in accordance with generally accepted auditing standards.
Concurrently with the delivery of such annual financial statements, the
General Partner shall deliver (i) a statement to each Partner of the balance
of each Partner's Capital Account and (ii) a certificate executed by the chief
financial officer and Tax Matters Partner of the Partnership certifying
compliance by the Partnership with the provisions set forth in Section 5.05.
SECTION 4.02. Tax Information. The General Partner shall timely
cause to be prepared, at the expense of the Partnership, all Federal, state,
local and foreign tax returns (including information returns) of the
Partnership and its subsidiaries, which may be required by a jurisdiction in
which the Partnership or its subsidiaries operate or conduct business for each
year or period for which such returns are required to be filed, and the
General Partner shall cause such returns to be timely filed. As
15
soon as practicable after the end of each Fiscal Year, the General Partner
shall furnish to each Partner (and each Person to whom Diller has assigned a
beneficial interest pursuant to Section 2.07 of the Transaction Agreement) an
Internal Revenue Service Schedule K-1 and such other information in the
possession of the General Partner as is reasonably requested by such Partner
to file any required Federal, state, local and foreign tax returns.
SECTION 4.03. Other Information. The Partnership shall make
available, on a reasonable basis, the chief financial officer of the
Partnership and other officers of the Partnership, as appropriate, to respond
to questions of the Limited Partners relating to the financial condition of
the Partnership.
ARTICLE V
Preferred Interests
SECTION 5.01. General. As of the Effective Time, USAi shall receive
the following Preferred Interests:
(a) a preferred partnership interest in the Partnership with an
initial Face Value of $750,000,000, having special rights as set forth in
this Article V and a preference with respect to distributions (as set
forth in Section 8.06) and liquidation (as set forth in Section 13.02)
(the "Class A Preferred Interests"), and
(b) a perpetual (subject to Section 8.07) preferred partnership
interest in the Partnership with an initial Face Value of $1,750,000,000,
having special rights as set forth in this Article V and a preference
with respect to distributions (as set forth in Section 8.01(a)) and
liquidation (as set forth in Section 13.02) (the "Class B Preferred
Interests").
SECTION 5.02. Ranking. (a) Except as otherwise provided herein, with
respect to periodic distribution rights and rights upon liquidation,
dissolution or winding up, the Preferred Interests shall rank (i) junior to
the Partnership Debt and any other of the Partnership's future indebtedness
and other obligations not incurred in violation of this Agreement, (ii) on
parity with one another and (iii) senior to the Common Interests.
(b) Other than the Class A Preferred Interests and the Class B
Preferred Interests issued pursuant to this
16
Agreement on the Effective Date, no Class A Preferred Interests or Class B
Preferred Interests shall be issued.
(c) Subject to Section 5.05(a)(i), the Preferred Interests shall be
the most senior preferred equity interests in the Partnership. The Preferred
Interests shall have no Participation Percentage, and shall not be entitled to
participate in distributions made pursuant to Section 8.01(b).
SECTION 5.03. PIK Accretion. (a) The Face Value of the Class A
Preferred Interests shall accrete at a rate of 5.0% per annum and (b) the Face
Value of the Class B Preferred Interests shall accrete at a rate of 1.4% per
annum, in each case beginning on the Closing Date, and the Face Value of each
such Preferred Interest shall increase accordingly on the last day of each
calendar quarter.
SECTION 5.04. Consent Right. The consent of the Partners who hold
the majority of the aggregate amount of a class of Preferred Interests,
determined based on the Face Value thereof, voting as a separate class, shall
be required for any amendment, alteration or repeal of the provisions of this
Agreement (including by merger, consolidation or otherwise) that would have an
adverse effect on the rights of such class or that would be materially adverse
to the rights of such Partners under this Agreement.
SECTION 5.05. Negative Covenants. (a) For so long as the Class A
Preferred Interests are outstanding, the Partnership shall not, and shall not
permit any subsidiary of the Partnership, without the prior consent of the
Partners holding the Class A Preferred Interests to:
(i) issue any equity interests in the Partnership that rank senior
to, or pari passu with, the Preferred Interests, or issue any security
that is exchangeable for or convertible into any such equity interest;
(ii) issue any other preferred equity interests in the Partnership
redeemable or exchangeable for or convertible into any equity security of
the Partnership or any subsidiary thereof (other than Common Interests),
or issue any security that is exchangeable for or convertible into cash,
cash equivalents or any such preferred equity interest described in this
clause (ii);
(iii) Transfer any assets other than in the ordinary course of
business of the Partnership unless, (x) at least 50% of the net proceeds
of such sale, transfer or
17
disposition are retained or otherwise redeployed by the Partnership or
its subsidiaries and (y) at the time of such Transfer the Partnership has
a Consolidated Tangible Net Worth of at least $4,000,000,000;
(iv) create, incur, assume, guarantee or permit to exist any
Indebtedness other than (A) the Partnership Debt or (B) Indebtedness in
an aggregate outstanding principal amount not to exceed $800,000,000 at
any time;
(v) merge with or into or consolidate with (in each case within the
meaning of Treasury Regulation Section 1.708-1(c)), or convert into or
otherwise become, by any statutory mechanism, any other Person (other
than a wholly owned subsidiary of the Partnership), if immediately after
giving effect to such merger, consolidation or conversion, the
Partnership would be in violation of clause (i) or, unless such covenants
shall be inapplicable as provided below, clause (ii), (iii) or (iv)
above, or any other provision of this Agreement relating to the Class A
Preferred Interests;
(vi) liquidate, dissolve or wind up the Partnership; or
(vii) become an "investment company" as defined in the Investment
Company Act of 1940, as amended.
The covenants set forth in this Section 5.05(a), other than those set forth in
clause (i), (v), (vi) and (vii) shall not be applicable at a particular time,
if at such time the Partnership shall have posted an irrevocable letter of
credit in a form that is reasonably acceptable to the Partner holding the
Class A Preferred Interests in favor of such Partner (1) in an amount equal to
the expected Face Value of the Class A Preferred Interests at maturity and (2)
with an expiration date falling no earlier than the maturity date of the Class
A Preferred Interests.
(b) Unless Vivendi shall have made the election described in Section
7.02(b)(ii) of the Transaction Agreement, for a period of 15 years following
the Effective Time, or if a shorter period is set forth in this Section
5.05(b), then for such shorter period, without the consent of USAi, the
Partnership shall not:
(i) sell or otherwise dispose of all or any part of the assets set
forth on Schedule 5.05(b) other than in the ordinary course of business
and other than sales
18
or other dispositions of assets the fair market values of which, as of
the Effective Time, do not, individually or in the aggregate, exceed
$5,000,000;
(ii) notwithstanding anything in Sections 8.04 and 13.03 to the
contrary, for a period of seven years following the Effective Time,
distribute any assets in kind to USAi or USANi Sub, or distribute any of
the assets set forth on Schedule 5.05(b);
(iii) pay (whether voluntarily or involuntarily) all or any part of
the principal amount of the Partnership Debt prior to the maturity of
such debt (without giving effect to any acceleration thereof) (provided,
however, that beginning 2 years after the Effective Time, the Partnership
may, from time to time, pay a part of the principal amount of the
Partnership Debt; provided that no such payment shall be permitted to the
extent such payment would exceed USAi Sub's tax basis in its interest in
the Partnership);
(iv) for a period of two years following the Effective Time, make
any distributions to USAi or USANi Sub other than distributions permitted
under Section 8.01(a) or Section 8.02 or which constitute operating cash
flow distributions within the meaning of Treasury Regulation Section
1.707-4(b) (unless the facts and circumstances would clearly establish
that any such distribution is part of a sale);
(v) change the organizational structure with respect to any Person
set forth on Schedule 5.05(b), including, for the avoidance of doubt,
taking any action or failing to take any action which action or inaction
would cause USAi Cable or Studios USAi (each as defined in the
Transaction Agreement) to be treated as other than a partnership for U.S.
federal income tax purposes;
(vi) cause or permit any Partner or any Person related to a Partner
(within the meaning of Treasury Regulation Section 1.752-4(b)) to bear
the "economic risk of loss" (within the meaning of Treasury Regulation
Section 1.752-2(b)) with respect to the Partnership Debt; or
(vii) take any action, or fail to take any action, which action or
inaction would cause the Partnership to cease to be qualified as a
limited liability limited partnership under and pursuant to the Delaware
Act and DRUPA (including any failure to make the annual filings
19
provided under Section 17-214(a)(1) of the Delaware Act and Section
15-1003 of DRUPA).
SECTION 5.07. No Other Consent Rights. Except as provided in
Sections 5.04 and 5.05, holders of Preferred Interests shall have no voting,
approval or consent rights, including with respect to any merger, conversion
or consolidation of the Partnership.
ARTICLE VI
Common Interests
SECTION 6.01. General. (a) As of the Effective Time, the
participation percentage (the "Participation Percentage") of each Partner's
Common Interest shall be as set forth below:
Partner Participation Percentage
Universal Sub 93.06%
USAi 0.54%
USANi Sub 4.90%
Diller 1.50%
(b) Such initial Participation Percentages shall be subject to
adjustment as provided in this Article VI. The aggregate outstanding
Participation Percentages at all times shall equal 100%, and Participation
Percentages shall be adjusted from time to time, pro rata, as necessary to
maintain the foregoing.
SECTION 6.02. Issuances of Common Interests After the Closing Date.
(a) After the Closing Date the Partnership, at the discretion of the Board
(or, if no Board shall then be constituted, the General Partner), may issue
additional Common Interests in return for additional Capital Contributions.
(b) In connection with the issuance of a Common Interest after the
Closing Date, the Board shall designate the Participation Percentage
associated with such issuance and any other material terms thereof. Upon such
issuance, the Participation Percentages of all Common Interests outstanding
immediately before such issuance shall be reduced in the aggregate by an
amount equal to the Participation Percentage so designated, in proportion to
their relative Participation Percentages immediately before such issuance.
20
SECTION 6.03. Preemptive Rights. (a) For so long as USAi and its
Affiliates shall have an aggregate Participation Percentage of greater than 1%
(or at least 1% in the event that USAi and its Affiliates shall have an
aggregate Participation Percentage of no less than 1% due to any reason other
than a failure by USAi to exercise its right under this Section 6.03), in
connection with any issuance of additional Common Interests by the Partnership
to Universal Sub or an Affiliate thereof under Section 6.02(a) prior to the
exercise of an USAi Put or an USAi Call, USAi (or USANi Sub) shall have the
right to purchase, at the same time, on the same terms and at the same
purchase price per Participation Percentage point (or in the event Common
Interests are being issued in exchange for property, an amount of cash equal
to the fair market value of the property being contributed), an amount of
Common Interests (x) equal to a portion of the Common Interests being issued
by the Partnership that is in proportion to the relative Participation
Percentages of USAi and its Affiliates and Universal Sub and its Affiliates,
in each case immediately prior to the issuance giving rise to USAi's rights
under this Section 6.03, or (y) such that, after giving effect to such
issuance, USAi and its Affiliates would have an aggregate Participation
Percentage equal to 1%.
(b) In connection with any issuance of additional Common Interests
by the Partnership to Universal Sub or an Affiliate thereof under Section
6.02(a) after the exercise of an USAi Put or an USAi Call, if USAi and its
Affiliates shall have an aggregate Participation Percentage of at least 1%,
USAi (or USANi Sub) shall have the right to purchase, at the same time, on the
same terms of such issuance and at the same price per Participation Percentage
point (or in the event Common Interests are being issued in exchange for
property, an amount of cash equal to the fair market value of the property
being contributed), an amount of Common Interests such that, after giving
effect to such issuance, USAi and its Affiliates would have an aggregate
Participation Percentage equal to 1%.
(c) The Partnership shall deliver written notice to USAi of any
proposed issuance of Common Interests by the Partnership to Universal Sub and
its Affiliates, including the applicable purchase price, the amount offered,
the proposed closing date, the place and time for the issuance thereof (which
shall be no less than 20 days from the date of such notice) and any other
material terms and conditions of the issuance. Within 15 days from the date of
receipt of such notice, USAi shall deliver written notice to the Partnership
if it intends to exercise its right under
21
Section 6.03(a) or (b). Upon exercising such right, USAi shall be entitled and
obligated to purchase the amount of Common Interests determined in accordance
with Section 6.03(a) on the terms and conditions of such issuance, and
Universal Sub shall be entitled and obligated to purchase the remaining amount
of Common Interests in such issuance. Thereafter, the Participation
Percentages of all the Partners shall be adjusted in accordance with Section
6.02(a).
SECTION 6.04. Other Issuances of Common Interests. (a) For so long
as USAi and its Affiliates shall have an aggregate Participation Percentage of
at least 1%, in the event that any issuance under Section 6.02(a) to a Person
other than Universal Sub or an Affiliate thereof would result in USAi and its
Affiliates having an aggregate Participation Percentage of less than 1%, USAi
(or USANi Sub) shall have the right to purchase, on the same terms of such
issuance and at the same price per Participation Percentage point (or in the
event Common Interests are being issued in exchange for property, an amount of
cash equal to the fair market value of the property being contributed), an
amount of Common Interests such that, after giving effect to such issuance to
such Person and to USAi, USAi and its Affiliates would have an aggregate
Participation Percentage equal to 1%.
(b) The Partnership shall deliver written notice to USAi of such
proposed issuance, including the applicable purchase price, the amount
offered, the proposed closing date, the place and time for the issuance
thereof (which shall be no less than 20 days from the date of such notice) and
any other material terms and conditions of the issuance. Within 15 days from
the date of receipt of such notice, USAi shall deliver written notice to the
Partnership if it intends to exercise its right under Section 6.04(a). Upon
exercising such right, USAi shall be entitled and obligated to purchase the
amount of Common Interests determined in accordance with Section 6.04(a) on
the terms and conditions of such issuance and the third party shall be
entitled and obligated to purchase the remaining amount of Common Interests in
such issuance. Thereafter, the Participation Percentages of all the Partners
shall be adjusted in accordance with Section 6.02(a).
SECTION 6.05. Contribution of Assets or Capital Stock by Universal
Sub. In connection with an acquisition by Universal Sub or an Affiliate
thereof of equity securities or assets of one or more third parties engaged in
the Business or any related business in which Universal Sub or its Affiliate
issued shares of capital stock or paid cash
22
or other consideration to such third party, Universal Sub or its Affiliate
may, in its sole discretion and upon the approval of the Board (or, if no
Board shall then be constituted, the General Partner), either (i) contribute
such acquired equity securities or assets to the Partnership in return for
cash or, to the extent permitted under Section 5.05, a promissory note with a
principal amount equal to the aggregate value (determined as set forth below)
of the consideration paid by Universal Sub or its Affiliate for such equity
securities or assets or (ii) contribute such acquired equity securities or
assets to the Partnership in return for Common Interests in the Partnership in
accordance with Section 6.02(a), subject to the provisions of Section 6.03.
The "purchase price" for any such Common Interests shall be deemed to be (i)
in the case of a contribution of equity securities or assets to the
Partnership on or prior to the first anniversary of the acquisition by
Universal Sub or an Affiliate of such equity securities or assets, the value
of the consideration paid by Universal Sub or its Affiliate for such equity
securities or assets, which consideration shall be valued at the same time it
was valued under the terms of the agreement with the applicable third party,
and (ii) in the case of a contribution of equity securities or assets to the
Partnership following the first anniversary of the acquisition by Universal
Sub or an Affiliate of such equity securities or assets, the fair market value
of such contributed equity securities or assets.
SECTION 6.06. Consent Right. Except for the General Partner, no
holder of Common Interests shall have any voting, approval or consent rights,
including with respect to any merger, conversion or consolidation of the
Partnership; provided, however, that (i) at all times a Partner holding Common
Interests shall have the right to consent to any amendment, alteration or
repeal of this Agreement that would have an adverse effect on the rights of
such Partner hereunder and (ii) for so long as an USAi Put or an USAi Call has
not been exercised and USAi has not exercised its rights under Section
6.03(a)(y), the consent of USAi shall be required prior to: (x) the entering
into, terminating, modifying or extending of any agreement, transaction or
relationship between the Partnership and any Affiliate of Vivendi that is not
on an arm's-length basis, and (y) the making of distributions in respect of,
redeeming, repurchasing or otherwise acquiring any Common Interests of
Universal Sub or any of its Affiliates, other than pro rata distributions,
redemptions, repurchases and acquisitions.
23
SECTION 6.07. Assignees of Diller Common Interests. Any holder of a
beneficial interest in Common Interests that shall have received such interest
as an assignee of Diller pursuant to Section 2.07 of the Transaction Agreement
hereby irrevocably appoints Diller (or his executor, administrator or trustee,
as the case may be) as its or his designated representative for all purposes
under this Agreement and agrees (except to the extent otherwise provided in
Section 4.02) that (a) any action taken or waived by, or binding upon, Diller
(or his executor, administrator or trustee, as the case may be) with respect
to Diller's Common Interests (including the provisions set forth in Section
10.03) shall be deemed taken or waived by, and binding upon, such assignee
with respect to such assignee's beneficial interest in Diller's Common
Interests, (b) such assignee shall have no right to deal directly with the
Partnership or its Partners and the Partnership and its Partners shall deal
solely with Diller in respect of all matters relating to such assignee's
interest in the Partnership, as if such assignment had never occurred,
including in respect of the provision of information, the giving of notices
and the payment of money, (c) such assignee shall have no right to attend
Partnership meetings, (d) all rights of a holder of Common Interests under
this Agreement or otherwise in connection with the Partnership shall be
exercisable only by Diller (or his executor, administrator or trustee, as the
case may be) and (e) such assignee shall in all respects be subject to the
same terms under this Agreement (other than Section 9.04) as Diller is subject
to hereunder. The General Partner shall treat any holder of a beneficial
interest in Common Interests who received such interest as an assignee of
Diller pursuant to Section 2.07 of the Transaction Agreement as a Partner in
the Partnership for income tax purposes with an interest in the Partnership
corresponding to such beneficial interest.
ARTICLE VII
Capital Accounts, Allocations of
Profit and Loss and Tax Matters
SECTION 7.01. Capital Accounts. (a) The Partnership shall establish
a separate capital account (a "Capital Account") in respect of each Common
Interest and Preferred Interest held by each Partner on the books of the
Partnership. The Capital Account of a Partner shall be increased by (i) the
amount of money contributed by that Partner to the Partnership, (ii) the fair
market value of property contributed by that Partner to the Partnership (net
24
of liabilities related to such contributed property that the Partnership is
considered to assume or take subject to under Section 752 of the Code) and
(iii) allocations to that Partner pursuant to Section 7.02 of profit, income
and gain (or items thereof). The Capital Account of a Partner shall be
decreased by (i) the amount of money distributed to that Partner by the
Partnership, (ii) the fair market value of property distributed to that
Partner by the Partnership (net of liabilities related to such distributed
property that such Partner is considered to assume or take subject to under
Section 752 of the Code) and (iii) allocations to that Partner pursuant to
Section 7.02 of loss, expense and deduction (or items thereof).
(b) In the event that a Partner Transfers its Interest in accordance
with the provisions of this Agreement, the Transferee of such Interest shall
succeed to the Capital Account of the Transferor attributable to such
Interest.
(c) Upon the occurrence of any event specified in Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), the Capital Accounts of the Partners
shall be adjusted to reflect the fair market value of the Partnership's
property at such time and in such manner as provided in such Regulation.
(d) No Partner shall be entitled to withdraw capital or receive
distributions except as specifically provided herein. No Partner shall have
any obligation to the Partnership, to any other Partner or to any creditor of
the Partnership to restore any negative balance in the Capital Account of such
Partner.
(e) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with the Treasury Regulations promulgated under Section 704(b) of the
Code and shall be interpreted and applied in a manner consistent with such
Treasury Regulations.
SECTION 7.02. Allocations of Net Income and Net Loss. (a) General.
(i) Except as otherwise provided in this Section 7.02, Net Income shall be
allocated to the extent thereof:
(A) first, if any Net Loss has been allocated to the holders of
Preferred Interests under Section 7.02 (a)(ii)(B), to the holders of
Preferred Interests pro rata in proportion to the amount of Net Loss so
allocated until the aggregate Net Income allocated
25
under this paragraph (A) shall equal the aggregate amount of such Net
Loss;
(B) second, to the holders of Preferred Interests pro rata until the
aggregate amount allocated under this paragraph (B) equals a return of 5%
per annum on the Face Value of their Preferred Interests;
(C) third, if any Net Loss has been allocated to the holders of
Common Interests under Section 7.02(a)(ii)(A) or (C), to the holders of
Common Interests pro rata in proportion to the amount of Net Loss so
allocated until the aggregate Net Income allocated under this paragraph
(C) shall equal the aggregate amount of such Net Loss; and
(D) fourth, to the Partners in accordance with their Participation
Percentages.
(ii) Net Loss shall be allocated to the extent thereof:
(A) first, to the holders of Common Interests pro rata to the extent
of their respective Capital Accounts;
(B) second, to the holders of Preferred Interests pro rata to the
extent of their respective Capital Accounts; and
(C) third, to the Partners in accordance with their Participation
Percentages.
(b) Minimum Gain Charge Back. The Partnership shall allocate items
of profit among the Partners at such times and in such amounts as necessary to
satisfy the minimum gain charge back requirements of Treasury Regulation
Sections 1.704-2(f) and 1.704-2(i)(4).
(c) Allocation of Deductions Attributable to Partner Nonrecourse
Liabilities. Any nonrecourse deductions attributable to a "partner nonrecourse
liability" (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be
allocated among the Partners that bear the economic risk of loss for such
Partner's nonrecourse liability under Treasury Regulation Section 1.752-2 in
accordance with the ratios in which such Partners share such economic risk of
loss and in a manner consistent with the requirements of Treasury Regulation
Sections 1.704-2(c), 1.704-2(i)(2) and 1.704-2(j)(1).
26
(d) Qualified Income Offset. The Partnership shall specially
allocate items of profit and loss when and to the extent required to satisfy
the "qualified income offset" requirement within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
(e) Curative Allocations. The allocations set forth in Sections 7.02
(b), (c) and (d) (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury Regulations. It is the intent of the
Partners that, to the extent possible, the Partnership shall make such special
allocations of Partnership income, gain, loss or deduction so that, after such
allocations are made, each Partner's Capital Account balance is, to the
greatest extent possible, equal to the Capital Account balance such Partner
would have had if the Regulatory Allocations were not part of the Agreement
and all Partnership items were allocated pursuant to Section 7.02(a) and (f)
hereof.
(f) Allocations in Liquidation and upon Maturity of Class A
Preferred Interests. Upon a dissolution of the Partnership in accordance with
Article XIII, the Net Income or Net Loss (or items of profit, income, gain,
loss, deduction and expense) of the Partnership shall be allocated to the
Partners so that the balance in each Partner's Capital Account as of the date
of dissolution shall equal the amount distributable to such Partner pursuant
to Section 13.02. In the case of any distribution made at the maturity of a
Class A Preferred Interest in accordance with Section 8.06, Net Income or Net
Loss (or items of profit, income, gain, loss, deduction and expense) for the
taxable period of the Partnership in which such distribution is made shall be
allocated so that the Capital Account of each holder of such Class A Preferred
Interest shall, as of the date of distribution, equal the amount to be
distributed to such holder pursuant to Section 8.06.
SECTION 7.03. Allocations of Net Income and Net Loss for Federal
Income Tax Purposes. Except as provided in the following sentence, profit,
income, gain, loss, deduction and expense as determined for Federal income tax
purposes shall be allocated among the Partners in the same proportions as the
corresponding items of "book" profit, income, gain, loss, deduction and
expense are allocated among such Partners pursuant to Section 7.02.
Notwithstanding the foregoing sentence, Federal income tax items relating to
any Section 704(c) Property shall be allocated among the Partners in
accordance with Section 704(c) of the Code and Treasury Regulation Section
1.704-3(c) to take into account the difference
27
between the fair market value and the tax basis of such Section 704(c)
Property as of the date of its contribution to the Partnership or its
revaluation pursuant to Section 7.01(c) using the "traditional method" as
described in Treasury Regulation Section 1.704-3(b). Items described in this
Section 7.03 shall neither be credited nor charged to the Partners' Capital
Accounts.
SECTION 7.04. Allocation of the Partnership Debt. The Partners
acknowledge that, for purposes of Section 752 of the Code and in accordance
with Treasury Regulation 1.752-3(a)(3), and consistent with allocations of
other significant items of Partnership income or gain, 100% of the Partnership
Debt shall be allocated pro rata among the Partners holding the Preferred
Interests.
SECTION 7.05. Elections. Except as otherwise expressly provided
herein, all elections required or permitted to be made by the Partnership
under the Code or other applicable tax law (including any election under
Section 754 of the Code), and all material decisions with respect to the
calculation of its taxable income or tax loss for tax purposes under the Code
or other applicable tax law, shall be made in such manner as may be determined
by the General Partner.
SECTION 7.06. Fiscal Year. The fiscal year of the Partnership for
tax and accounting purposes ("Fiscal Year") shall be the 12-month (or shorter)
period ending on December 31 of each year, unless otherwise determined by the
Board.
SECTION 7.07. Withholding Requirements. Notwithstanding any
provision herein to the contrary, the General Partner is authorized to take
any and all actions that are necessary or appropriate to ensure that the
Partnership satisfies any and all withholding and tax payment obligations
under Section 1441, 1445, 1446 or any other provision of the Code or other
applicable law. Without limiting the generality of the foregoing, the General
Partner may withhold any amount that it determines is required to be withheld
from amounts otherwise distributable to any Partner pursuant to this
Agreement; provided, however, that such amount shall be deemed to have been
distributed to such Partner for purposes of applying this Agreement. Each
Partner will timely provide any certification or file any agreement that is
required by any taxing authority in order to avoid any withholding obligation
that would otherwise be imposed on the Partnership.
28
SECTION 7.08. Tax Matters Partner. The General Partner shall act as
the "Tax Matters Partner" of the Partnership within the meaning of Section
6231(a)(7) of the Code and in any similar capacity under applicable state or
local tax law. The Tax Matters Partner shall not be liable in its capacity as
such to the Partnership or the Partners for any losses, claims or damages. All
reasonable out-of- pocket expenses incurred by the Tax Matters Partner while
acting in such capacity shall be paid or reimbursed by the Partnership.
ARTICLE VIII
Distributions
SECTION 8.01. Distributions. (a) The Partnership shall make
cumulative preferential distributions to holders of the Class B Preferred
Interests at a rate of 3.6% per annum of the Face Value of such holder's
Preferred Interests (without taking into account any adjustments thereto made
on the date of such distribution), which distributions shall begin to accrue
on the Closing Date. Distributions shall be payable in cash in quarterly
installments on the last Business Day of each calendar quarter. Any delay or
deferral of distributions required by this Section 8.01 or Section 8.02,
including upon a breach of this Section 8.01(a), shall accrue interest
commencing on the applicable due date and continuing through to the date of
payment at an annual rate equal to USAi's effective cost of borrowing,
expressed as a percentage, as of the applicable due date.
(b) At the times and in the amounts determined by the General
Partner, subject to Section 5.05(b), the Partnership may make distributions to
holders of Common Interests pro rata in accordance with the respective
Participation Percentages of such Common Interests; provided that no
distributions may be made with respect to the Common Interests unless all past
due distributions on the Preferred Interests have been made as of the date of
payment.
(c) To the extent any distribution to a Partner provided herein in
respect of a Common Interest or a Preferred Interest would exceed the balance
of such Partner's Capital Account relating to such Common Interest or
Preferred Interest, the distribution of such excess shall be deferred and
shall be made (prior to any other distribution pursuant to this Section 8.01)
when and to the extent that the balance of such Capital Account is increased.
29
SECTION 8.02. Tax Distributions. The Partnership shall, as soon as
practicable after the close of each taxable year, make cash distributions to
each Partner in an amount equal to the product of (a) the amount of taxable
income allocated to such Partner for such taxable year pursuant to Section
7.02, reduced by the amount of taxable loss allocated to such Partner for all
prior taxable years (except to the extent such taxable losses have previously
been taken into account under this sentence) and (b) the highest aggregate
marginal statutory Federal, state, local and foreign income tax rate
(determined taking into account the deductibility of state and local income
taxes for Federal income tax purposes and the creditability or deductibility
of foreign income taxes for Federal income tax purposes) applicable to any
Partner.
SECTION 8.03. General Limitations. (a) Notwith standing anything in
this Agreement to the contrary, the Partnership, and the General Partner on
behalf of the Partnership, is not required to make any distributions except to
the extent permitted under the Delaware Act.
(b) Holders of Preferred Interests shall not be entitled to any
distributions in excess of the distributions set forth in this Article VIII
and Article XIII.
SECTION 8.04. Distributions in Kind. The Partnership shall not
distribute any assets in kind, except as provided in Section 13.03.
SECTION 8.05. Closing Date Distribution. At the Effective Time, the
Partnership shall use the net proceeds of the Partnership Debt to make a cash
distribution to USANi Sub in the amount of $1,618,710,396.
SECTION 8.06. Distribution Upon Maturity of Class A Preferred
Interests. On the twentieth anniversary of the Closing Date (the "Maturity
Date"), the Class A Preferred Interests shall be redeemed by the Partnership
by payment to the holder thereof of a distribution in cash equal to the Face
Value thereof as of such date (after taking into account any accretion in the
Face Value pursuant to Section 5.03 through and including the date of
redemption). Following such payment, the Class A Preferred Interests shall
cease to be outstanding and all the rights of the holders thereof shall cease.
SECTION 8.07. Put/Call Rights with Respect to Class B Preferred
Interests. (a) Beginning on the twentieth anniversary of the Closing Date, (i)
subject to Section 160 of the Delaware General Corporation Law, Vivendi and/or
30
Universal shall have the right to purchase all (but not less than all) the
Class B Preferred Interests of USAi and its Affiliates (the "USAi Preferred
Call"), and (ii) USAi shall have the right to require Universal to purchase
all (but not less than all) its and its Affiliates' Class B Preferred
Interests (the "USAi Preferred Put"), in each case at a purchase price equal
to (A) a number of shares of USAi Common Shares equal to the lesser of (x) the
number of shares (rounded up to the nearest whole share) of USAi Common Shares
having a Market Value equal to the Face Value as of such date (after taking
into account any accretion in the Face Value pursuant to Section 5.03 through
and including such date) of the Class B Preferred Interests or (y) 56,611,308
shares of USAi Common Stock (as adjusted for any stock splits, stock dividends
or other similar transactions after the Effective Time), and (B) cash equal to
any accrued and unpaid distributions pursuant to Section 8.01(a)
(collectively, the "Class B Preferred Consideration"). Universal shall have
the right to substitute cash for the portion of the USAi Common Shares
deliverable in the form of USAi Common Stock as set forth in Section 4.17 of
the Transaction Agreement, based on the Market Value of such USAi Common
Stock.
(b) In the event that USAi Common Shares cease to be outstanding
following the Effective Time, references to each USAi Common Share in this
Section 8.07 shall refer instead to the cash (plus interest accruing at an
annual rate equal to USAi's effective cost of borrowing, expressed as a
percentage, as of the applicable date on which such cash is delivered in such
exchange or conversion) or other securities or property into which each such
USAi Common Share was exchanged for or converted into after the Effective
Time, including any successive exchange or conversion.
(c) Upon consummation of an USAi Preferred Put or an USAi Preferred
Call, the maturity of the Class B Preferred Interests shall be immediately
accelerated, and the Class B Preferred Interests shall be redeemed by the
Partnership by payment to the holder thereof of a distribution in cash equal
to the Face Value thereof as of such date (after taking into account any
accretion in the Face Value pursuant to Section 5.03 through and including the
date of redemption). Following such payment, the Class B Preferred Interests
shall cease to be outstanding and all the rights of the holders thereof shall
cease.
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ARTICLE IX
Management of the Partnership
SECTION 9.01. General Partner. (a) The business and affairs of the
Partnership shall be managed exclusively by the General Partner in a manner
consistent with this Agreement, without the need for, except as set forth in
Section 5.04, 5.05 or 6.06, any consent or approval of any other Partner.
Subject to Section 9.02 and the terms of this Agreement, the General Partner
shall have the exclusive power and authority, on behalf of the Partnership, to
collect and distribute funds in accordance with Article VIII to make
allocations and adjustments in accordance with Article VII and to take any
action of any kind not inconsistent with this Agreement and to do anything and
everything it deems necessary or appropriate to carry on the business and
purposes of the Partnership in a manner consistent with this Agreement. No
other Partner shall participate in the management and control of the business
of the Partnership, and in no event shall any Partner other than the General
Partner have any authority to bind the Partnership for any purpose. Persons
dealing with the Partnership are entitled to rely conclusively upon the power
and authority of the General Partner.
(b) The General Partner is, to the extent of its rights and powers
set forth in this Agreement, an agent of the Partnership for the purpose of
the Partnership's business, and the actions of the General Partner taken in
accordance with such rights and powers shall bind the Partnership.
SECTION 9.02. Board; Representatives; Chairman. (a) The General
Partner shall be responsible for the establishment of policy and operating
procedures with respect to the business and affairs of the Partnership and
shall appoint agents or employees, with such titles as the General Partner may
select, including a chief executive officer, as officers of the Partnership to
act on behalf of the Partnership, with such power and authority as the General
Partner may designate from time to time to any such Person. The initial chief
executive officer shall serve at his will and at the pleasure of the General
Partner, shall report directly to the chief executive officer of the General
Partner who shall be the chief executive officer of Vivendi and shall have the
same authority to act for the Partnership as a corresponding officer of a
Delaware corporation would have to act for a Delaware corporation. Diller
shall be the initial chief executive officer of the Partnership. The other
officers of the Partnership shall
32
report to the General Partner or the chief executive officer, as determined by
the General Partner; provided that, as of the Effective Date and for so long
as Diller is the chief executive officer, officers of the Partnership shall
report to the chief executive officer.
(b) The General Partner may, at its election, appoint a Board of
Directors or other governing body (a "Board") to oversee the policy and
operating procedures with respect to the business and affairs of the
Partnership, provided, however, that the appointment of a Board shall not
alter in any respect the reporting obligations of the chief executive officer.
In the event that the General Partner appoints a Board, it shall appoint all
of the members of the Board (the "Representatives"), which shall include each
of Diller as a Representative for so long as he remains an officer of the
Partnership and otherwise, one Person designated by USAi and reasonably
satisfactory to the General Partner as a Representative for so long as USAi
and its Affiliates shall have a Participation Percentage in excess of 1%,
provided that an USAi Put or an USAi Call has not been exercised and USAi has
not exercised its rights under Section 6.03(a)(y). For so long as Diller is
chief executive officer of the Partnership, Diller shall also be Chairman of
the Board ("Chairman"). The General Partner, in consultation, with the chief
executive officer, shall establish whatever procedures it deems necessary and
appropriate for operating and governing the business of the Partnership.
(c) No Representative shall be entitled to any fee, remuneration,
compensation or expense reimbursement in connection with their service at
Board meetings.
SECTION 9.03. Expenses. (a) The Partnership shall pay or reimburse
the General Partner for all out-of- pocket expenses reasonably incurred by the
General Partner in performing its duties as the General Partner. Except as
provided in Section 7.08 and this Section 9.03, the General Partner shall not
be entitled to any salary or other compensation for its services to the
Partnership as General Partner.
(b) The Partnership shall pay or reimburse Diller and any other USAi
employee who is an officer of the Partnership for all out-of-pocket expenses
directly related to the performance by Diller or such other Person of his
duties as an officer of the Partnership.
SECTION 9.04. Agreement Not To Compete. (a) Diller understands that
the Partnership shall be
33
entitled to protect and preserve the going concern value of USAi's Existing
Business (as "Existing Business" is defined in the Transaction Agreement) and
the Partnership to the extent permitted by law and that Universal would not
have entered into this Agreement absent the provisions of this Section 9.04
and, therefore, for a period from the Closing Date until the date that is the
earlier of (A) the later of (1) 18 months after the Closing Date and (2) six
calendar months after the date upon which Diller ceases to be the chief
executive officer of the Partnership and (B) three years after the Closing
Date, Diller shall not, and shall cause each of its Affiliates not to,
directly or indirectly:
(i) engage in the Restricted Business or acquire any interest in any
Person engaged in the Restricted Business; and
(ii) (A) solicit, recruit or hire any employees of USAi's Existing
Business or the Partnership or Persons who have worked for USAi's Existing
Business or the Partnership, in each case other than employees who perform
solely clerical functions for such Persons, (B) solicit or encourage any
employee of USAi's Existing Business or the Partnership to leave the
employment of USAi's Existing Business or the Partnership, in each case
other than employees who perform solely clerical functions for such
Persons, and (C) disclose or furnish to anyone any confidential information
relating to USAi's Existing Business or the Partnership or otherwise use
such confidential information for its own benefit or the benefit of any
other Person; provided that the non-solicitation provisions of clauses (A)
and (B) shall be deemed not breached by any advertisement or general
solicitation that is not specifically targeted at the employees or Persons
referred to therein;
provided that, if at any time after 18 months after the Closing Date,
Diller resigns as chief executive officer of the Partnership for Good
Reason or Diller's employment is terminated without Cause, then the
restrictions set forth in this Section 9.04(a) shall cease to apply on
and from the effective date of such resignation or termination.
(b) This Section 9.04 shall be deemed not breached as a result of
(i) the ownership by Diller or any of his Affiliates of interests in the
Partnership, or of investments in any class of stock of any entity, public or
private, engaged, directly or indirectly, in the Restricted Business so long
as Diller does not serve as a director, an
34
officer, a consultant or as an employee of such entity and is not otherwise
engaged in the management or operations of such entity, (ii) Diller's
engagement in not-for-profit or charitable activities related to the Business,
whether on boards or otherwise, (iii) ownership of Vivendi Ordinary Shares as
the result of the exercise of a Put or a Call or (iv) Diller's position as a
member of any board of directors (including on any committees thereof) on
which he is a board member on the date hereof.
(c) Diller agrees that the covenant in Section 9.04(a) is reasonable
with respect to its duration and scope. If, at the time of enforcement of this
Section 9.04, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree
that the period and scope legally permissible under such circumstances will be
substituted for the period and scope stated herein.
ARTICLE X
Transfers of Interests
SECTION 10.01. Restrictions on Transfers. (a) Except as permitted in
this Article X, without the prior written consent of the General Partner,
neither USAi nor Diller shall directly or indirectly Transfer all or any part
of their respective Interests, or any rights to receive capital, profits or
distributions of the Partnership pursuant thereto. To the fullest extent
permitted by law, any such Transfer in violation of this Agreement shall be
null and void.
(b) It shall be a condition to any Transfer not prohibited by this
Article X that such Transfer shall comply with the provisions of the
Securities Act and applicable state securities laws. Until any Interest has
been registered under the Securities Act, such Interest may not be offered or
sold except pursuant to an exemption from, or in a transaction not subject to,
the registration requirements of the Securities Act and applicable state
securities laws.
(c) It shall also be a condition to any Transfer not prohibited by
this Article X that no applicable law or judgment issued by any governmental
entity shall be in effect, and all consents of, or declarations or filings
with, or expirations of waiting periods imposed by, any governmental entity
necessary for the consummation of such Transfer shall have been obtained or
filed or shall have
35
occurred, and each Partner agrees to cooperate with the other Partners to
provide such information and make such filings as shall be necessary to
satisfy as promptly as practicable the foregoing conditions in connection with
a proposed Transfer.
SECTION 10.02. Transfers Permitted at any Time. (a) At any time and
from time to time, so long as such Transfer would not reasonably be expected
to result in any materially adverse tax consequences to any other Partners,
(i) USAi or USANi Sub may Transfer all, but not less than all, of its Interest
to USAi or a wholly owned subsidiary of USAi (including any subsidiary that is
not wholly owned solely as a result of the fact that Home Shopping Network,
Inc. is not a wholly owned subsidiary of USAi, so long as Liberty and USAi
remain the only shareholders of Home Shopping Network, Inc. and Light's
ownership percentage of Home Shopping Network, Inc. does not increase
materially from its interest as of the Closing Date) and USANi Sub may
Transfer all, but not less than all, of its Interest to a wholly owned
subsidiary of Universal Sub and (ii) USAi or USANi Sub may pledge or grant a
security interest in, or place in trust, its Preferred Interests in connection
with a bona fide indebtedness or hedging transactions; provided, however, that
the terms of such indebtedness or hedge shall not permit or enable under any
circumstance, including in the event of a default thereunder, the pledgee of
such indebtedness or party to such hedge to foreclose upon or otherwise
acquire any Preferred Interests, it being understood that USAi, USANi Sub
and/or one of their wholly owned subsidiaries shall in all cases be the only
holder(s) of the Preferred Interests.
(b) In respect of holders of Interests that are individuals, a
Transfer may be made upon or subsequent to the death of such holder to the
executors, administrators, legatees or beneficiaries of such deceased holder,
provided that such transferees shall (i) in aggregate be treated as a single
Partner for all purposes under this Agreement and (ii) upon such Transfer,
sign a counterpart to this Agreement or other similar document of accession,
in each case in a customary form, agreeing to be bound by the terms of this
Agreement (other than Section 9.04) to the same extent that the transferor was
so bound.
SECTION 10.03. Put/Call Rights. (a)(i) At any time, and from time to
time, after the fifth anniversary of the Closing Date, Universal shall have
the right to purchase all (but not less than all) the Common Interests of USAi
and its Affiliates (the "USAi Call"), and (ii) at any time, and from time to
time, after the eighth anniversary of the
36
Closing Date, USANi Sub shall have the right to require Universal to purchase
all (but not less than all) its and its Affiliates' Common Interests (the
"USAi Put"), in each case at a purchase price equal to the Appraised Value
thereof. Notwithstanding the foregoing, for so long as USAi or its Affiliates
shall be the holder of any Preferred Interests, at the election of USANi Sub,
any Call or Put under this Section 10.03(a) shall only be applicable to a
portion of the Common Interests of USANi Sub and its Affiliates such that upon
the consummation of the applicable purchase and sale USAi and its Affiliates
would retain a Participation Percentage of 1%, and in such event the
determination of Appraised Value shall only apply to the portion of the Common
Interests of USAi and its Affiliates subject to such Call or Put.
(b)(i) At any time after the first anniversary of the Closing Date,
Diller (or his executor, administrator or trustee, as the case may be) shall
have the right to sell all (but not less than all) its Common Interests to
Universal (the "Diller Put"), and (ii) at any time after the later of (A) the
second anniversary of the Closing Date and (B) such time that Diller is no
longer chief executive officer of the Partnership, Universal shall have the
right to purchase all (but not less than all) the Common Interests of Diller
(the "Diller Call"), in each case at a purchase price equal to the greater of
(x) the Appraised Value thereof and (y) $275,000,000. In the event that
Diller's employment is terminated without Cause or as a result of his death,
Diller terminates his employment for Good Reason or Diller becomes Disabled,
the Diller Put shall become thereafter exercisable (by Diller, or his
executor, administrator, or trustee, as the case may be) immediately upon such
termination or upon becoming Disabled.
(c) A Call or a Put may be exercised by the applicable Partner by
providing notice to the other Partner in accordance with Section 14.01. The
purchase and sale of the Selling Partner's Common Interests shall be
consummated at a closing the date and time of which shall be selected by the
Purchasing Partner and provided in writing at least seven days prior thereto;
provided that such date shall not be later than the 20th Business Day
following the date of the determination of the Appraised Value. Except as set
forth in Section 10.03(e), at such closing, the Purchasing Partner shall cause
to be paid to the Selling Partner the applicable purchase price, by wire
transfer of immediately available funds, against delivery by the Selling
Partner of one or more duly executed assignments and bills of sale (in form
and substance reasonably satisfactory to the Purchasing Partner, but in any
event which shall not include any
37
provision for indemnification) assigning its Common Interests to the
Purchasing Partner, free and clear of any Liens.
(d) The Appraised Value shall be determined as follows:
(i) subject to clause (iii) below, within 15 days from the date of
notice given pursuant to Section 10.03(c), the Selling Partner and the
Purchasing Partner shall each notify the other and the Partnership in
writing of their respective selection of an Investment Bank; provided
that if either such party fails to notify the other of its selection
within such period, the determination of the Appraised Value of such
Common Interests shall be rendered by the single Investment Bank already
selected, within 45 days from the date of its selection, by notice to all
the foregoing parties, and such determination shall be deemed to be the
Appraised Value of such Common Interests and shall be final for purposes
hereof;
(ii) within 45 days from the date of their selection, the Selling
Partner's Investment Bank and the Purchasing Partner's Investment Bank
shall jointly notify the Selling Partner and the Purchasing Partner in
writing of their determination of the Appraised Value of such Common
Interests (determined as set forth in the definition thereof), or, if
such Investment Banks are unable to agree on such a value (unless the
lower individual valuation is within 10% of the higher individual
valuation, in which case the two valuations shall be averaged), of their
selection of a third Investment Bank, in which case such Investment Banks
shall notify such third Investment Bank in writing of their respective
determinations of the Appraised Value concurrently with the delivery of
the notice described above, following which such third Investment Bank
shall, within 30 days, notify all of the foregoing parties of its
selection of one of the two original determinations of the Appraised
Value, (the "Selected Appraisal"), which Selected Appraisal shall be
chosen by such third Investment Bank based on its determination that the
Selected Appraisal more closely reflected the Appraised Value of such
Common Interests (determined as set forth in the definition thereof) than
the other original determination. The Selected Appraisal shall be deemed
to be the Appraised Value of such Common Interests and shall be final for
purposes hereof. The costs of such determination process shall
38
be borne equally by the Purchasing Partner and the Selling Partner; and
(iii) if at any time prior to the second anniversary of the Closing
Date Diller ceases to serve as the chief executive officer of the
Partnership, Universal and Diller shall promptly initiate the process set
forth in clauses (i) and (ii) above to determine the Appraised Value of
the Partnership as of the time of such cessation, and such Appraised
Value shall be deemed to be the Appraised Value of the Partnership with
respect to the subsequent exercise of a Diller Put or a Diller Call.
(e) At the election of the Purchasing Partner, payment of the
purchase price upon the exercise of a Call or a Put may be made in Vivendi
Ordinary Shares having a Market Value at the time of closing equal to the
applicable purchase price set forth in Section 10.03(a) or Section 10.03(b),
in which case the Selling Partner shall be entitled to the rights set forth in
Section 10.03(f) and 10.03(g). At the closing of any Put or Call pursuant to
this Section 10.03(e), Universal shall deliver to USAi or Diller, as the case
may be, validly issued Vivendi Ordinary Shares (or, if Diller requests, other
common equity securities of Vivendi listed on an exchange other than that on
which the Vivendi Ordinary Shares are listed and representing an equivalent
number of Vivendi Ordinary Shares) free and clear of all Liens (other than
Permitted Liens). The ability of any successor or new parent entity to Vivendi
to issue shares hereunder shall be subject to (i) satisfaction of the trading
volume provisions of the definition of Vivendi Ordinary Shares and (ii) the
Selling Partner receiving less than 5% of the outstanding common stock or
ordinary shares of such successor or new parent entity in such issuance.
(f) (i) Vivendi shall provide the Selling Partner with, and the
Selling Partner shall be entitled to, customary registration rights relating
to any Vivendi Ordinary Shares received pursuant to Section 10.03(e)
(including the ability to transfer registration rights (but not to exceed in
the aggregate the total number of registration rights to which the Selling
Partner is entitled under Section 10.3(f)(ii) in connection with the sale or
other disposition of all or a portion of its Vivendi Ordinary Shares). In the
event Vivendi Ordinary Shares are listed or quoted on more than one national
securities exchange (or Nasdaq), whether in the form of shares, depositary
shares or receipts therefor, the Selling Partner may elect the type of
security (or combination of
39
securities) to be issued to it (such securities sometimes being referred to in
paragraph (g) or this paragraph (f) of Section 10.03 as "Vivendi Ordinary
Shares") and such securities shall be issued in an aggregate amount
representing the amount of the Vivendi Ordinary Shares that would otherwise
have been issued. Vivendi, each of the Partners and the Partnership each
hereby agrees to cooperate and use its reasonable best efforts to provide for
the prompt marketability of the Vivendi Ordinary Shares to be received
hereunder, including, if requested by USAi or Diller, as applicable, through
the advance preparation and filing by Vivendi of (x) a registration statement
in order that such registration statement may become effective simultaneously
with the closing of the Put or Call giving rise to the registration rights
under this paragraph (f), and (y) any other regulatory filings or notices.
(ii) If requested by a Selling Partner, Vivendi shall be required
promptly to cause the Vivendi Ordinary Shares owned by such Selling Partner or
its Affiliates to be registered under the Securities Act and/or any applicable
securities laws of any foreign jurisdiction in order to permit such Selling
Partner or such Affiliate to sell such shares in one or more (but not more
than, in the case of USAi, three, and in the case of Diller, two) registered
public offerings (each, a "Demand Registration"). Each Selling Partner shall
also be entitled to customary piggyback registration rights and, except
pursuant to agreements in effect on the date hereof, no other Person shall be
entitled to piggyback registration rights with respect to a Selling Partner's
Demand Registration, without such Selling Partner's consent. If the amount of
shares sought to be registered by a Selling Partner and its Affiliates
pursuant to any Demand Registration is reduced by more than 25% pursuant to
any underwriters' cutback, then such Selling Partner may elect to request
Vivendi to withdraw such registration, in which case, such registration shall
not count as one of such Selling Partner's Demand Registrations. If a Selling
Partner requests that any Demand Registration be an underwritten offering,
then such Selling Partner shall select the underwriter(s) to administer the
offering, provided that such underwriter(s) shall be reasonably satisfactory
to Vivendi. If a Demand Registration is an underwritten offering and the
managing underwriter advises the Selling Partner initiating the Demand
Registration in writing that in its opinion the total number or dollar amount
of securities proposed to be sold in such offering is such as to materially
and adversely affect the success of such offering, then Vivendi will include
in such registration, first, the securities of the initiating Selling Partner,
and, thereafter, any securities to be sold
40
for the account of others who are participating in such registration (as
determined on a fair and equitable basis by Vivendi). In connection with any
Demand Registration or inclusion of a Selling Partner's or its Affiliate's
shares in a piggyback registration, Vivendi, such Selling Partner and/or its
Affiliates shall enter into an agreement containing terms (including
representations, covenants and indemnities by Vivendi and such Selling
Partner), and shall be subject to limitations, conditions, and blackout
periods, customary for a secondary offering by a selling stockholder. The
costs of the registration (other than underwriting discounts, fees and
commissions, except as provided herein) shall be paid by Vivendi. Vivendi
shall pay up to 1% of gross proceeds in the aggregate of any underwriting
discounts, fees and commissions related to the registration of shares on the
behalf of Diller.
(iii) If Vivendi and a Selling Partner cannot agree as to what
constitutes customary terms within 10 days of such Selling Partner's request
for registration (whether in a Demand Registration or a piggyback
registration), then such determination shall be made by a law firm of national
reputation mutually acceptable to Vivendi and such Selling Partner. In no
event shall the inability of the parties to come to agreement on customary
terms delay in any way the registration of a Selling Partner's Vivendi
Ordinary Shares hereunder.
SECTION 10.04. Tag-Along for Limited Partners for Transfers by
Universal. (a) If Universal Sub or any of its Affiliates shall desire to
Transfer in one transaction or a series of related transactions Common
Interests beneficially owned by the applicable transferor and its Affiliates,
other than to a wholly owned subsidiary of such transferor, Universal Sub
shall give not less than 10 Business Days' prior written notice to each of the
Limited Partners (each, a "Tag-Along Offeree") of such intended Transfer. Such
notice (the "Tag-Along Notice") shall set forth the terms and conditions of
such proposed Transfer, including the name of the proposed transferee, the
amount of Common Interests (and the aggregate Participation Percentage
represented thereby) proposed to be Transferred (including the number of
securities previously or proposed to be Transferred to the applicable
transferee or its Affiliates in a related transaction) (the "Tag-Along
Interests"), the purchase price per Common Interest on an equivalent basis
proposed to be paid therefor (or if part of a larger transaction, the fair
value allocable portion of the total purchase price) and the payment terms and
type of Transfer to be effectuated.
(b) Within 10 Business Days after delivery of the
41
Tag-Along Notice by Universal Sub to the Tag-Along Offerees, each Tag-Along
Offeree shall, by written notice to Universal Sub, have the opportunity and
right to sell to the transferee in such proposed Transfer (upon the same terms
and conditions as Universal Sub and/or its Affiliates, including the same
representations and warranties, covenants, indemnities, holdback and escrow
provisions, if any) up to that number of Common Interests beneficially owned
by such Tag-Along Offeree as shall represent a Participation Percentage equal
to the product of (x) a fraction, (A) the numerator of which is the aggregate
Participation Percentage represented by the Tag-Along Interests and (B) the
denominator of which is the aggregate Participation Percentage represented by
the Common Interests beneficially owned as of the date of the Tag-Along Notice
by Universal Sub and its Affiliates, multiplied by (y) the aggregate
Participation Percentage represented by the Common Interests beneficially
owned by such Tag-Along Offeree and its Affiliates as of the date of the
Tag-Along Notice. In the event that the proposed transferee is unwilling to
purchase all of the Common Interests that Universal Sub and the Limited
Partners propose to Transfer hereunder, the amount of Common Interests to be
Transferred by Universal Sub and/or its Affiliates and each of the Limited
Partners shall be reduced proportionately. The right of the Tag- Along
Offerees shall terminate with respect to that proposed Transfer if not
exercised within the period specified in the first sentence of this clause
(b).
(c) At the closing of any proposed Transfer in respect of which a
Tag-Along Notice has been delivered, each Tag-Along Offeree shall deliver to
the proposed transferee the Common Interests to be sold hereby duly endorsed,
or accompanied by written instruments of transfer in form satisfactory to the
proposed transferee, free and clear of all Liens (other than Permitted Liens),
and shall receive in exchange therefor the consideration to be paid by the
proposed transferee in respect of such Common Interests.
ARTICLE XI
Limitation on Liability,
Exculpation
SECTION 11.01. Limitation on Liability. Except as expressly provided
herein or in the other Transaction Documents, the debts, obligations and
liabilities of the Partnership, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Partnership, and no Covered Person shall be obligated
42
personally for any such debt, obligation or liability of the Partnership;
provided, however, that the foregoing shall not alter each Partner's
obligation under the Delaware Act to return funds wrongfully distributed to
it.
SECTION 11.02. Exculpation of Covered Persons. (a) Except as
expressly provided herein or in the Transaction Agreement, no Covered Person
shall be liable, including under any legal or equitable theory of fiduciary
duty or other theory of liability, to the Partnership or to any other Covered
Person for any losses, claims, damages or liabilities incurred by reason of
any act or omission performed or omitted by such Covered Person except for any
loss, claims, damages or liabilities arising from such Covered Person's fraud.
Whenever in this Agreement a Covered Person is permitted or required to make
decisions such Covered Person shall make such decisions in good faith having
regard to the best interests of the Partnership and shall not be subject to
any other or different standard (including any legal or equitable standard of
fiduciary or other duty) imposed by this Agreement or any relevant provisions
of law or in equity or otherwise.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Partnership and upon such information, opinions,
reports or statements presented to the Partnership, Board or management by any
Person as to matters the Covered Person reasonably believes are within such
Person's professional or expert competence.
SECTION 11.03. Partnership Opportunities. (a) If any of Universal
Sub, USAi, Diller or any officer, director, agent, stockholder, member,
manager, partner or Affiliate of any of the foregoing acquires knowledge of a
potential transaction or matter which may be a Partnership Opportunity (as
defined below) or otherwise is then exploiting any Partnership Opportunity,
the Partnership shall have no interest in such Partnership Opportunity and no
expectancy that such Partnership Opportunity be offered to the Partnership,
any such interest or expectancy being hereby renounced, so that, as a result
of such renunciation, and for the avoidance of doubt, such Person (i) shall
have no duty to communicate or present such Partnership Opportunity to the
Partnership, (ii) subject to Section 9.04, shall have the right to hold any
such Partnership Opportunity for its (and/or its officers', directors',
agents', stockholders', members', managers', partners' or Affiliates') own
account or to recommend, sell, assign or transfer such Partnership Opportunity
to Persons other than the Partnership or any subsidiary of the Partnership and
(iii) subject to Section 9.04, shall not breach any
43
fiduciary or other duty to the Partnership, in such Person's capacity as a
Partner or otherwise, by reason of the fact that such Person pursues or
acquires such Partnership Opportunity for itself, directs, sells, assigns or
transfers such Partnership Opportunity to another Person, or does not
communicate information regarding such Partnership Opportunity to the
Partnership.
(b) Notwithstanding the provisions of this Section 11.03, the
Partnership does not renounce any interest or expectancy it may have in any
Partnership Opportunity that is offered to an officer of the Partnership and
who is also a director or officer of Universal Sub, USAi or the respective
Affiliates of Vivendi or USAi if such opportunity is expressly offered to such
person in his or her capacity as an officer of the Partnership.
(c) For purposes of this Section 11.03 only, the terms (i)
"Partnership" shall mean the Partnership and, except where the context
requires otherwise, shall also include all corporations, partnerships, joint
ventures, associations and other entities in which the Partnership
beneficially owns (directly or indirectly) 50% or more of the outstanding
voting stock, voting power, partnership or membership interests or similar
voting interests, and (ii) "Partnership Opportunity" shall mean an investment
or business opportunity or prospective economic advantage in which the
Partnership could, but for the provisions of this Section 11.03, have an
interest or expectancy.
(d) Except as otherwise expressly provided in Section 9.04, in
Section 4.13 of the Transaction Agreement or in any other agreement to which
the Partners may be a party, (i) the Partners and their officers, directors,
agents, stockholders, members, managers, partners and Affiliates may engage or
invest in, independently or with others, any business activity of any type or
description, including those that might be the same as or similar to the
Partnership's business or the business of any subsidiary of the Partnership,
(ii) none of the Partnership, any subsidiary of the Partnership or any Person
beneficially owning Common Interests shall have any right in or to such
business activities or ventures or to receive or share in any income or
proceeds derived therefrom and (iii) to the extent required by applicable law
in order to effectuate the purpose of this Section 11.03, the Partnership
shall have no interest or expectancy, and specifically renounces any interest
or expectancy, in any such business activities or ventures.
SECTION 11.04. Indemnification. (a) The
44
Partnership shall, to the fullest extent authorized under the Delaware Act as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Partnership to
provide broader indemnification rights than said law permitted the Partnership
to provide prior to such amendment), indemnify and hold harmless any Covered
Person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit, investigation or proceeding,
whether civil, criminal or administrative by reason of the fact that he or a
Covered Person of whom he is the legal representative is or was a
Representative or officer of the Partnership, or is or was a Representative or
officer of the Partnership serving at the request of the Partnership as a
Representative, officer or employee of another partnership, corporation, joint
venture, trust or other enterprise (whether the basis of such proceeding is
alleged action in an official capacity as a Representative or officer or in
any other capacity while serving as a Representative or officer) against all
expenses, liability and loss (including attorneys' fees, judgments, fines or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by him in connection therewith, except in a case where such expenses,
liabilities or losses resulted from the fraud of such indemnified Person. The
right to indemnification conferred in this Agreement shall be a contract right
and shall include the right to be paid by the Partnership the expenses
incurred in defending any such proceeding in advance of its final disposition,
such advances to be paid by the Partnership within 20 days after the receipt
by the Partnership of a statement or statements from the claimant requesting
such advance or advances from time to time.
(b) At all times from and after the Effective Time, the Partnership
shall either maintain directors' and officers' liability insurance covering
the officers and Representatives entitled to indemnification under this
Section 11.04 or ensure that such officers and Representatives are covered in
policies maintained by Vivendi, Universal Sub or their Affiliates, in each
case providing coverage for reasonable amounts and on customary terms.
ARTICLE XII
Events of Withdrawal; Bankruptcy of a General Partner
SECTION 12.01. Events of Withdrawal. Except as otherwise provided in
this Agreement, no Partner shall
45
withdraw from the Partnership.
SECTION 12.02. Bankruptcy of a General Partner. (a) In the event of
the Bankruptcy of the General Partner (the "Bankrupt Partner"), then the
Partnership shall be dissolved unless it is continued without dissolution in
accordance with Section 13.01(c)(iii).
(b) In the event a new General Partner is appointed, the Bankrupt
Partner shall become a Limited Partner and shall have (x) no right to
participate in the management of the Partnership or the business and affairs
of the Partnership, and (y) the same interest in all items of income, gain,
loss, deduction or credit of the Partnership to the same extent as if such
Bankruptcy had not occurred. Upon the occurrence of the Bankruptcy of any
General Partner, (i) the Bankrupt Partner and the other Partners shall execute
such documents as may be necessary or appropriate to carry out the provisions
of this Article XII, and (ii) the other Partners are, without necessity of any
further action or documentation, hereby appointed attorneys- in-fact of the
Bankrupt Partner for the purpose of carrying out the provisions of this
Article XII and taking any action and executing any documents which such
Partners may deem necessary or advisable to accomplish the purposes hereof,
such appointment being irrevocable and coupled with an interest.
(c) In the event that the General Partner shall become a "debtor" as
defined in the Bankruptcy Code in any case commenced thereunder and at any
time during the pendency of such case there shall be appointed (i) a trustee
with respect to the Bankrupt Partner under Section 701, 702 or 1104 of the
Bankruptcy Code (or any successor provisions thereto), or (ii) an examiner
having expanded powers beyond those specifically enumerated in Section 1104(b)
of the Bankruptcy Code, then the other Partners may, at any time thereafter,
so long as such condition exists, unanimously elect to dissolve the
Partnership, in which event the affairs of the Partnership shall be wound up
as provided in Article XIII.
ARTICLE XIII
Dissolution and Termination
SECTION 13.01. Dissolution. (a) The Partnership shall not be
dissolved by the admission of Additional Partners or Substitute Partners
pursuant to Section 3.03.
46
(b) Subject to Section 12.01, no Partner shall withdraw from the
Partnership and, to the fullest extent permitted by applicable law, no Partner
shall take any action to dissolve, terminate or liquidate the Partnership or
to require apportionment, appraisal or partition of the Partnership or any of
its assets, or to file a bill for an accounting, except as specifically
provided in this Agreement, and each Partner, to the fullest extent permitted
by applicable law, hereby waives any rights to take any such actions (or have
such actions taken on its behalf) under applicable law, including any right to
petition a court for judicial dissolution under Section 17-802 of the Delaware
Act.
(c) The Partnership shall be dissolved and its business wound up
upon the earliest to occur of any one of the following events:
(i) at the time there are no Limited Partners unless the Partnership
is continued without dissolution in accordance with the Delaware Act;
(ii) the written agreement of all the Partners;
(iii) the occurrence of any event that causes the General Partner to
cease to be a general partner of the Partnership, unless (i) there is a
remaining General Partner who is hereby authorized to and shall continue
the business of the Partnership without dissolution or (ii) the other
Partners agree in writing, within 90 days after such event occurs, to
continue the business of the Partnership without dissolution and to
appoint, effective as of the date of such event, a new General Partner;
(iv) a decision to dissolve the Partnership in accordance with
Section 12.02(c); and
(v) the entry of a decree of judicial dissolution under Section
17-802 of the Delaware Act, in contravention of this Agreement.
(d) Except as provided herein, the resignation, Bankruptcy,
insolvency or dissolution of a Partner or the occurrence of any other event
that terminates the continued membership of a Partner of the Partnership shall
not in and of itself cause a dissolution of the Partnership.
SECTION 13.02. Winding Up of the Partnership. (a) Upon dissolution,
the Partnership's business shall be liquidated in an orderly manner. The
General Partner shall
47
be the liquidator to wind up the affairs of the Partnership pursuant to this
Agreement. If there shall be no General Partner, the remaining Partners may
approve one or more liquidators to act as the liquidator in carrying out such
liquidation. In performing its duties, the liquidator is authorized to sell,
distribute, exchange or otherwise dispose of the assets of the Partnership in
accordance with the Delaware Act and in any reasonable manner that the
liquidator shall determine to be in the best interest of the Partners.
(b) The proceeds of the liquidation of the Partnership shall be
distributed in the following order and priority:
(i) first, to the creditors (including any Partners or their
respective Affiliates that are creditors) of the Partnership in
satisfaction of all of the Partnership's liabilities (whether by payment
or by making reasonable provision for payment thereof, including the
setting up of any reserves which are, in the judgment of the liquidator,
reasonably necessary therefor);
(ii) second, to the Partners holding Preferred Interests pro rata up
to the amount of the Face Value of such Preferred Interests;
(iii) third, to the Partners holding Common Interests pro rata based
on the amount of Capital Contributions attributable thereto, up to the
amount of such Capital Contributions; and
(iv) fourth, to the Partners holding Common Interests pro rata in
accordance with their respective Participation Percentages;
provided, however, that in the event that distributions pursuant to clauses
(ii) through (iv) above would not otherwise be identical to distribution in
accordance with the positive balances in the Partners' Capital Accounts, such
distributions shall instead be made in accordance with such positive balances.
SECTION 13.03. Distribution of Property. In the event it becomes
necessary in connection with the liquidation of the Partnership to make a
distribution of property in kind, subject to the priority set forth in Section
13.02, the liquidator shall have the right to compel each Partner to accept a
distribution of any asset in kind, so long as the portion of such asset to be
distributed is
48
determined based upon the amount of cash that would be distributed to such
Partners if such property were sold for an amount of cash equal to the fair
market value of such property, as determined by the liquidator in good faith.
SECTION 13.04. Claims of Partners. The Partners shall look solely to
the Partnership's assets for the return of their Capital Contributions, and if
the assets of the Partnership remaining after payment of or reasonable
provision for the payment of all liabilities of the Partnership are
insufficient to return such Capital Contributions, the Partners shall have no
recourse against the Partnership or any Partner.
SECTION 13.05. Termination. The Partnership shall terminate when all
of the assets of the Partnership, after payment of or reasonable provision for
the payment of all debts and liabilities of the Partnership, shall have been
distributed to the Partners in the manner provided for in this Article XIII
and when permitted by this Agreement, and the certificate of limited
partnership of the Partnership shall have been canceled in the manner required
by the Delaware Act.
ARTICLE XIV
Miscellaneous
SECTION 14.01. Notices. Except as otherwise expressly provided in
this Agreement, all notices, requests and other communications to any party
hereunder shall be in writing (including a facsimile or similar writing) and
shall be given to such party at the address or facsimile number set forth for
such party in Schedule A hereto or as such party shall hereafter specify for
the purpose by notice to the other parties. Each such notice, request or other
communication shall be effective (i) if given by facsimile, at the time such
facsimile is transmitted and the appropriate confirmation is received (or, if
such time is not during a Business Day, at the beginning of the next such
Business Day), (ii) if given by mail, five Business Days (or, (x) if by
overnight courier, one Business Day, or (y) if to an address outside the
United States, seven Business Days) after such communication is deposited in
the mails with first-class postage prepaid, addressed as aforesaid, or (iii)
if given by any other means, when delivered at the address specified pursuant
to this Section 14.01.
SECTION 14.02. No Third Party Beneficiaries.
49
Except as provided in Sections 10.02(b), 10.03 and 11.04, this Agreement is
not intended to confer any rights or remedies hereunder upon, and shall not be
enforceable by, any Person other than the parties hereto.
SECTION 14.03. Waiver. No failure by any party to insist upon the
strict performance of any covenant, agreement, term or condition of this
Agreement or to exercise any right or remedy consequent upon a breach of such
or any other covenant, agreement, term or condition shall operate as a waiver
of such or any other covenant, agreement, term or condition of this Agreement.
Any Partner by notice given in accordance with Section 14.01 may, but shall
not be under any obligation to, waive any of its rights or conditions to its
obligations hereunder, or any duty, obligation or covenant of any other
Partner. No waiver shall affect or alter the remainder of this Agreement but
each and every covenant, agreement, term and condition hereof shall continue
in full force and effect with respect to any other then existing or subsequent
breach. The rights and remedies provided by this Agreement are cumulative and
the exercise of any one right or remedy by any party shall not preclude or
waive its right to exercise any or all other rights or remedies.
SECTION 14.04. Integration. This Agreement and the Transaction
Documents constitute the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersede all prior agreements and
understandings of the parties in connection herewith, and no covenant,
representation or condition not expressed in this Agreement or in any
Transaction Document shall affect, or be effective to interpret, change or
restrict, the express provisions of this Agreement.
SECTION 14.05. Headings. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
amplify the provisions of this Agreement.
SECTION 14.06. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same instrument.
SECTION 14.07. Severability. Each provision of this Agreement shall
be considered separable and if for any reason any provision or provisions
hereof are determined to be invalid and contrary to any existing or future
law, such invalidity shall not impair the operation of or affect those
portions of this Agreement which are valid.
50
SECTION 14.08. Applicable Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the conflicts of law principles thereof.
SECTION 14.09. Jurisdiction. Each of the Partners (i) consents to
and submits itself and its property to the personal jurisdiction of any
Federal or state court located in the State of Delaware in the event of any
dispute arising out of or relating to this Agreement, (ii) agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that it will not bring any
action relating to this Agreement in any court other than a Federal or state
court sitting in the State of Delaware and (iv) hereby waives any rights such
Partner may have to personal service of summons, complaint or other process in
connection therewith, and agrees that service may be made by registered or
certified mail addressed to such Partner and sent in accordance with the
provisions of Article XIV hereof.
51
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
[UNIVERSAL SUB],
By
------------------------------
Name:
Title:
USA NETWORKS, INC.,
By
------------------------------
Name:
Title:
USANi SUB LLC,
By
------------------------------
Name:
Title:
BARRY DILLER,
------------------------------
EXHIBIT 99.2
==============================================================================
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
AMONG
UNIVERSAL STUDIOS, INC.,
LIBERTY MEDIA CORPORATION,
BARRY DILLER
AND
VIVENDI UNIVERSAL, S.A.
DATED AS OF DECEMBER 16, 2001
==============================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Defined Terms.........................................1
SECTION 1.2 Other Defined Terms...........................................7
SECTION 1.3 Other Definitional Provisions.................................8
ARTICLE II
STANDSTILL
SECTION 2.1 Diller Standstill with Vivendi................................8
ARTICLE III
CORPORATE GOVERNANCE
SECTION 3.1 Voting on Certain Matters....................................10
SECTION 3.2 Restrictions on Other Agreements.............................11
SECTION 3.3 Irrevocable Proxy of Universal...............................12
SECTION 3.4 Irrevocable Proxy of Liberty.................................12
SECTION 3.5 Cooperation..................................................13
ARTICLE IV
TRANSFER OF COMMON SHARES
SECTION 4.1 Restrictions on Transfer by Liberty and Diller...............13
SECTION 4.2 Tag-Along for Diller and Liberty for Transfers by the Other..14
SECTION 4.3 Right of First Refusal of Diller on Transfers by Universal...16
SECTION 4.4 Right of First Refusal between Liberty and Diller............18
SECTION 4.5 Right of First Refusal of Liberty............................21
SECTION 4.6 Transfers of Class B Shares..................................21
SECTION 4.7 Transferees..................................................22
SECTION 4.8 Notice of Transfer...........................................23
SECTION 4.9 Compliance with Transfer Provisions..........................23
ARTICLE V
BDTV ENTITY ARRANGEMENTS
SECTION 5.1 Management...................................................24
SECTION 5.2 Treatment of Exchange Shares.................................23
SECTION 5.3 Changes to BDTV Structures...................................24
SECTION 5.4 Transfers of BDTV Interests..................................24
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Conflicting Agreements.......................................24
SECTION 6.2 Duration of Agreement........................................24
SECTION 6.3 Further Assurances...........................................25
SECTION 6.4 Amendment and Waiver.........................................25
SECTION 6.5 Severability.................................................25
SECTION 6.6 Effective Date...............................................26
SECTION 6.7 Entire Agreement.............................................26
SECTION 6.8 Successors and Assigns.......................................26
SECTION 6.9 Counterparts.................................................26
SECTION 6.10 Liabilities Under Federal Securities Laws....................26
SECTION 6.11 Remedies.....................................................26
SECTION 6.12 Notices......................................................27
SECTION 6.13 Adjustment of Share Numbers..................................28
SECTION 6.14 Governing Law; Consent to Jurisdiction.......................28
SECTION 6.15 Interpretation...............................................29
ii
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT, dated as of December 16,
2001, among Universal Studios, Inc., a Delaware corporation ("UNIVERSAL"), for
itself and on behalf of the members of the Vivendi Stockholders Group, Liberty
Media Corporation, a Delaware corporation ("LIBERTY"), for itself and on behalf
of the members of the Liberty Stockholders Group, Mr. Barry Diller ("DILLER"),
for himself and on behalf of the members of the Diller Stockholders Group, and
Vivendi Universal, S.A., a SOCIETE ANONYME organized under the laws of France
("VIVENDI").
WHEREAS, USA Networks, Inc., a Delaware corporation (the "COMPANY"),
Universal, Liberty, Diller, Vivendi and USANi LLC, a Delaware limited liability
company ("USANI"), have entered into a Transaction Agreement, dated as of
December 16, 2001 (the "TRANSACTION AGREEMENT"), pursuant to which, among other
things, (i) each of Universal and the Company will contribute certain businesses
to a limited liability limited partnership (the "PARTNERSHIP") in exchange for
interests in the Partnership, and (ii) each of Universal, Vivendi and Diller
shall enter into a limited liability limited partnership agreement (the
"PARTNERSHIP AGREEMENT") under which a wholly owned subsidiary of Universal will
be the general partner and each of the Company, USANi Sub LLC, a Delaware
limited liability company and a wholly owned subsidiary of USANi ("USANI SUB"),
and Diller will be limited partners (collectively, the "TRANSACTIONS");
WHEREAS, the parties hereto have agreed that Universal, Liberty, Diller
and Vivendi shall enter into this Agreement in order to amend and restate in its
entirety the respective rights and obligations of the parties set forth in the
Stockholders Agreement, dated as of October 19, 1997 (the "1997 STOCKHOLDERS
AGREEMENT"); and
WHEREAS, the parties hereto desire to enter into the arrangements provided
for herein to be effective as of the Closing, except that the agreements in
Section 3.1(d) shall be effective as of the date hereof.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and obligations hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person. For purposes
of this definition, natural persons shall not be deemed to be Affiliates of each
other, and none of Liberty, Universal, Diller or the Company shall be deemed to
be Affiliates of any of the others. For purposes of this definition, Matshushita
Electric Industrial Co., Ltd. ("MEI") shall not be considered an Affiliate of
Universal or any Subsidiary of Universal so long as MEI
does not materially increase its influence over Universal or any such Subsidiary
following the date hereof.
"AGREEMENT" means this Amended and Restated Stockholders Agreement as it
may be amended, supplemented, restated or modified from time to time.
"BDTV I" means BDTV, Inc., a Delaware corporation.
"BDTV II" means BDTV II, Inc., a Delaware corporation.
"BDTV III" means BDTV III, Inc., a Delaware corporation.
"BDTV IV" means BDTV IV, Inc., a Delaware corporation.
"BDTV ENTITIES" means, collectively, the BDTV Limited Entities and the
BDTV Unrestricted Entities.
"BDTV LIMITED ENTITIES" means, collectively, BDTV I and BDTV II.
"BDTV UNRESTRICTED ENTITIES" means BDTV III, BDTV IV and each other BDTV
Entity that may be formed subsequent to the date hereof; PROVIDED that each of
Liberty and Diller acknowledges and agrees that any corporation, partnership,
limited liability company or other business association hereafter formed by
Diller and Liberty to hold Common Shares will be a BDTV Unrestricted Entity and
will be a corporation, partnership, limited liability company or other business
association having a capital structure and governance rights substantially
similar to that of BDTV III.
"BENEFICIAL OWNER" or "BENEFICIALLY OWN" has the meaning given such term
in Rule 13d-3 under the Exchange Act and a Person's beneficial ownership of
Common Shares or Voting Securities shall be calculated in accordance with the
provisions of such Rule; PROVIDED, HOWEVER, that for purposes of determining
beneficial ownership, (i) a Person shall be deemed to be the beneficial owner of
any equity (including all Exchange Shares) which may be acquired by such Person
(disregarding any legal impediments to such beneficial ownership), whether
within 60 days or thereafter, upon the conversion, exchange or exercise of any
warrants, options (which options held by Diller shall be deemed to be
exercisable), rights or other securities issued by the Company or any Subsidiary
thereof, (ii) no Person shall be deemed to beneficially own any equity solely as
a result of such Person's execution of this Agreement (including by virtue of
holding a proxy with respect to any shares or having a put obligation or call
right with respect to any shares) or any other Transaction Document, and (iii)
Liberty shall be deemed to be the beneficial owner of the proportionate number
of Common Shares represented by Liberty's equity interest in a BDTV Entity,
other than for purposes of Articles III and V of this Agreement; PROVIDED,
FURTHER, that for purposes of calculating beneficial ownership, the number of
outstanding Common Shares of the Company shall be deemed to include the number
of Common Shares that would be outstanding if all Exchange Shares were issued.
Notwithstanding the foregoing, for purposes of calculating the Minimum
Stockholder Amount, a person shall be deemed to be the beneficial owner only of
outstanding Common Shares.
"BOARD" means the Board of Directors of the Company.
-2-
"BUSINESS DAY" shall mean any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in the
City of New York.
"CAPITAL STOCK" means, with respect to any Person at any time, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited) or equivalent ownership interests in or issued by such
Person.
"CAUSE" means (i) the conviction of, or pleading guilty to, any felony, or
(ii) the willful, continued and complete failure to attend to managing the
business affairs of the Company, after written notice of such failure from the
Board and reasonable opportunity to cure.
"CEO" means the Chief Executive Officer of the Company.
"CEO TERMINATION DATE" means the later of (i) such time as Diller no
longer serves as CEO and (ii) such time as Diller no longer holds the Liberty
Proxy.
"CLASS B COMMON STOCK" means the Class B common stock, par value $.01 per
share, of the Company and any securities issued in respect thereof, or in
substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization (other than Common Stock).
"CLOSING" has the meaning ascribed to such term in the Transaction
Agreement.
"COMMISSION" means the Securities and Exchange Commission, and any
successor commission or agency having similar powers.
"COMMON SHARES" means, collectively, the Common Stock and the Class B
Common Stock.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company and any securities issued in respect thereof, or in substitution
therefor, in connection with any stock split, dividend or combination, or any
reclassification, recapitalization, merger, consolidation, exchange or other
similar reorganization.
"CONTROL" (including the terms "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise.
"CURRENT MARKET VALUE" means, with respect to any security, the average of
the daily closing prices on the Nasdaq National Market (or the principal
exchange or market on which such security may be listed or may trade) for such
security for the 20 consecutive trading days commencing on the 22nd trading day
prior to the date as of which the Current Market Value is being determined. The
closing price for each day shall be the closing price, if reported, or, if the
closing price is not reported, the average of the closing bid and asked prices
as reported by the
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Nasdaq National Market (or such principal exchange or market) or a similar
source selected from time to time by the Company for such purpose. In the event
such closing prices are unavailable, the Current Market Value shall be the Fair
Market Value of such security established by independent investment banking
firms in accordance with the procedures specified in Section 4.3(h). For
purposes of this Agreement, the Current Market Value of a share of Class B
Common Stock shall be equal to the Current Market Value of a share of Common
Stock.
"CONTINGENT MATTERS" shall have the meaning ascribed to such term in the
Governance Agreement.
"DILLER INTEREST PURCHASE PRICE" means the cash amount (or cash value of
equity) invested by Diller in a BDTV Entity plus interest, from the date of such
contribution to the date of purchase, on such amount at the rate of interest per
annum in effect from time to time and publicly announced by The Bank of New York
as its prime rate of interest, compounded annually. For purposes of BDTV I, BDTV
II, BDTV III and BDTV IV, the cash amount (or cash value of equity) initially
invested by Diller is $100 in each such BDTV Entity.
"DILLER STOCKHOLDER GROUP" means Diller and Diller's 90% owned and
controlled Affiliates.
"DIRECTOR" means any member of the Board.
"DISABLED" means the disability of Diller after the expiration of more
than 180 consecutive days after its commencement which is determined to be total
and permanent by a physician selected by Liberty (or if the Liberty Termination
Date has occurred, Universal) and reasonably acceptable to Diller; PROVIDED that
Diller shall be deemed to be disabled only following the expiration of 90 days
following receipt of a written notice from the Company and such physician
specifying that a disability has occurred if within such 90-day period he fails
to return to managing the business affairs of the Company. A total disability
shall mean mental or physical incapacity that prevents Diller from managing the
business affairs of the Company.
"ELIGIBLE STOCKHOLDER AMOUNT" means, in the case of Diller, the equivalent
of 4,400,000 Common Shares and, in the case of Liberty (including, in the case
of Liberty, the proportionate number of Common Shares represented by Liberty's
equity interest in any BDTV Entity and Common Shares issuable to Liberty or a
member of the Liberty Stockholder Group pursuant to the Holder Exchange
Agreement), 4,000,000 shares of Common Stock, in each case determined on a fully
diluted basis (taking into account, in the case of Diller, all unexercised
Options, whether or not then exercisable).
"EQUITY" means any and all shares of Capital Stock of the Company,
securities of the Company convertible into, or exchangeable for, such shares
(including, without limitation, the Exchange Shares), and options, warrants or
other rights to acquire such shares.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE SHARES" means the Silver King Exchange Shares as defined in the
Holder Exchange Agreement.
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"FAIR MARKET VALUE" means, as to any securities or other property, the
cash price at which a willing seller would sell and a willing buyer would buy
such securities or property in an arm's-length negotiated transaction without
time constraints.
"FCC" means the Federal Communications Commission or its successor.
"FCC REGULATIONS" means, as of any date, all federal communications
statutes and all rules, regulations, orders, decrees and policies of the FCC as
then in effect, and any interpretations or waivers thereof or modifications
thereto.
"GOVERNANCE AGREEMENT" means the Amended and Restated Governance
Agreement, among the Company, Diller, Vivendi, Universal and Liberty, dated as
of even date herewith, as it may be amended, supplemented, restated or modified
from time to time.
"GROUP" shall have the meaning assigned to it in Section 13(d)(3) of the
Exchange Act.
"HOLDER EXCHANGE AGREEMENT" means the Exchange Agreement, dated as of
December 20, 1996, by and between the Company and Liberty HSN.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INDEPENDENT INVESTMENT BANKING FIRM" means an investment banking firm of
nationally recognized standing that is, in the reasonable judgment of the Person
engaging such firm, qualified to perform the task for which it has been engaged.
"LIBERTY HSN" means Liberty HSN, Inc., a Colorado corporation.
"LIBERTY STOCKHOLDER GROUP" means Liberty and those Subsidiaries of
Liberty that, from time to time, hold Equity subject to this Agreement.
"LIBERTY SURVIVING CLASS B STOCK" means the Surviving Class B Stock (as
defined in the Holder Exchange Agreement).
"MARKET SALE" means a "brokers' transaction" within the meaning of
Section 4(4) of the Securities Act.
"MINIMUM STOCKHOLDER AMOUNT" means Common Shares representing at least
50.1% of the outstanding voting power of the outstanding Common Shares.
"OPTIONS" means options to acquire capital stock of the Company granted by
the Company to Diller and outstanding from time to time.
"PERMITTED DESIGNEE" means any Person designated by a Stockholder, who
shall be reasonably acceptable to the other Stockholders (other than Universal),
to exercise such Stockholder's rights pursuant to Section 4.3 or 4.4.
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"PERMITTED TRANSFEREE" means (i) with respect to Liberty, any of its
Subsidiaries, (ii) with respect to Universal, Vivendi Company and any Subsidiary
of Vivendi Company, and (iii) with respect to Diller, any of his 90% owned and
controlled Affiliates. In addition, each of Liberty, Universal and Diller shall
each be a Permitted Transferee of its respective Permitted Transferees.
"PERSON" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivisions thereof or any Group comprised of two or more of the foregoing.
"PUBLIC STOCKHOLDERS" means any stockholder of the Company that, together
with its Affiliates (a) has sole or shared voting power with respect to Voting
Securities representing no more than 10% of the voting power on the applicable
vote or (b) has sole or shared power to dispose of Equity representing no more
than 10% of the Equity to be tendered or exchanged in any applicable tender or
exchange offer, as the case may be.
"REFERENCE RATE" means, for any day, a fixed rate per annum equal to the
yield, expressed as a percentage per annum, obtained at the official auction of
90-day United States Treasury Bills most recently preceding the date thereof
plus 100 basis points.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCKHOLDER" means each of Universal, Liberty and Diller.
"STOCKHOLDER GROUP" means one or more of the Diller Stockholder Group, the
Liberty Stockholder Group and the Vivendi Stockholder Group. For purposes of
this Agreement, (i) prior to the time that Liberty acquires Diller's interest in
a BDTV Entity, each BDTV Entity shall be deemed to be a member of the Liberty
Stockholder Group except as otherwise expressly set forth herein and (ii) a
Permitted Designee shall be deemed to be a member of a Stockholder's Stockholder
Group (other than for purposes of Section 4.1(a)(x)).
"SUBSIDIARY" means, with respect to any Person, any corporation or other
entity of which at least a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.
"THIRD PARTY TRANSFEREE" means any Person to whom a Stockholder (including
a Third Party Transferee subject to this Agreement pursuant to Sections 4.7(b)
and 4.7(c)) or a Permitted Transferee Transfers Common Shares, other than a
Permitted Transferee of such Stockholder or a member of another Stockholder
Group.
"TRANSACTION DOCUMENTS" means this Agreement, the Transaction Agreement,
the Partnership Agreement, the Governance Agreement and any other agreements
contemplated by any of the foregoing.
"TRANSFER" means, directly or indirectly, to sell, transfer, assign,
pledge, encumber, hypothecate or similarly dispose of, either voluntarily or
involuntarily, or to enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, assignment, pledge,
encumbrance, hypothecation or similar disposition of, any Common Shares
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beneficially owned by a Stockholder or any interest in any Common Shares
beneficially owned by a Stockholder, PROVIDED, HOWEVER, that a merger or
consolidation in which a Stockholder is a constituent corporation shall not be
deemed to be the Transfer of any Common Shares beneficially owned by such
Stockholder (PROVIDED, that a significant purpose of any such transaction is not
to avoid the provisions of this Agreement). For purposes of this Agreement, the
conversion of shares of Class B Common Stock into shares of Common Stock shall
not be deemed to be a Transfer.
"VIVENDI COMPANY" means Vivendi and any of its successors.
"VIVENDI STOCKHOLDER GROUP" means Universal, together with the Vivendi
Company and any Subsidiary of the Vivendi Company that, from time to time, hold
Equity subject to this Agreement.
"VOTING SECURITIES" means at any time shares of any class of capital stock
of the Company which are then entitled to vote generally in the election of
Directors.
SECTION 1.2. OTHER DEFINED TERMS. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
TERM SECTION
---- -------
1997 Stockholders Agreement................... Recitals
Acceptance Notice............................. Section 4.3(d)
Appraisal..................................... Section 4.3(h)
Company....................................... Recitals
Covered Market Sale........................... Section 4.3(a)
Diller........................................ Preamble
Diller Termination Date....................... Section 6.2(a)
Exchange Notice............................... Section 4.6(a)
L/D Offer Notice.............................. Section 4.4(b)
L/D Offer Price............................... Section 4.4(c)
L/D Other Party............................... Section 4.4(b)
L/D Transferring Party........................ Section 4.4(a)
Liberty....................................... Preamble
Liberty Proxy................................. Section 3.4(a)
Liberty Proxy Shares.......................... Section 3.4(a)
Liberty Termination Date...................... Section 6.2(b)
Litigation.................................... Section 6.11
Non-Transferring Stockholder.................. Section 4.6(a)
Offer Notice.................................. Section 4.3(b)
Offer Price................................... Section 4.3(c)
Other Stockholder............................. Section 4.3(b)
Partnership................................... Recitals
Partnership Agreement......................... Recitals
Regulation 14A................................ Section 2.1(a)
Restricted Period............................. Section 2.1(a)
Tag-Along Notice.............................. Section 4.2(a)
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TERM SECTION
---- -------
Tag-Along Sale................................ Section 4.2(a)
Tag-Along Shares.............................. Section 4.2(a)
Transaction Agreement......................... Recitals
Transactions.................................. Preamble
Transferring Party............................ Section 4.3(a)
Transferring Stockholders..................... Section 4.6(a)
Universal..................................... Preamble
Universal Proxy............................... Section 3.3(a)
Universal Proxy Shares........................ Section 3.3(a)
Universal Termination Date.................... Section 6.2(a)
USANi Sub..................................... Recitals
Vivendi....................................... Preamble
SECTION 1.3. OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof",
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and Article and Section references are to this Agreement unless
otherwise specified.
(b) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
(c) For purposes of calculating the amount of outstanding Common Shares or
Equity as of any date and the number of Common Shares or Equity beneficially
owned by any Person as of any date, (i) any Common Shares held in the Company's
treasury or owned by any Subsidiaries of the Company shall be disregarded and
(ii) all Exchange Shares shall be assumed to have been converted into Common
Shares.
ARTICLE II
STANDSTILL
SECTION 2.1. DILLER STANDSTILL WITH VIVENDI. (a) Diller agrees that, prior
to the earliest of (i) the fourth anniversary of the Closing Date, (ii) the sale
of all or substantially all of the assets of Vivendi and its Subsidiaries to
another Person other than a Subsidiary of Vivendi, or (iii) the effective time
of any merger or consolidation of Vivendi with or into any other Person, other
than a merger or consolidation in which a majority of the shares of the
surviving entity are held by the holders of Vivendi's voting securities
immediately prior to such effective time (the "RESTRICTED PERIOD"), he and his
Affiliates will not, in any manner, whether publicly or otherwise, directly or
indirectly, without the prior written consent of Vivendi, unless specifically
requested in writing by the CEO of Vivendi or by a resolution of a majority of
the board of directors of Vivendi:
(i) acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, by purchase or otherwise, beneficial ownership of
(A) any voting securities if immediately after such acquisition, the voting
securities beneficially owned, in the aggregate, by Diller and its
Affiliates would exceed five percent (5%) of the outstanding
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voting securities of Vivendi or (B) any significant assets of Vivendi, or
any of its Subsidiaries (other than assets acquired in the ordinary course
of business); PROVIDED, HOWEVER, that this clause shall not be deemed to be
violated by the indirect acquisition of voting securities of Vivendi as a
result of an acquisition by Diller of another Person that holds such voting
securities so long as the voting securities of Vivendi held by such Person
do not exceed 1% of such Person's total assets;
(ii) propose to enter into, directly or indirectly, any merger, tender
offer or other business combination or similar transaction involving
Vivendi or any of its Subsidiaries (including a purchase of a material
portion of their assets);
(iii) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are defined in Regulation 14A
("REGULATION 14A") under the Exchange Act but without regard to the
exclusion set forth in clause (2)(iv) of the definition of "solicitation")
to vote, or seek to advise or influence any Person with respect to the
voting of, any securities of Vivendi or any of its Subsidiaries, or become
a "participant" in a "solicitation" (as such terms are defined in
Regulation 14A but without regard to the exclusion set forth in clause
(2)(iv) of the definition of "solicitation") whether or not such
solicitation is subject to regulation under Regulation 14A;
(iv) grant any proxy with respect to any voting securities of Vivendi
(other than to Vivendi, its Affiliates or the CEO of Vivendi);
(v) call, or seek to call, a meeting of Vivendi's shareholders or
initiate any shareholder proposal for action by shareholders of Vivendi;
(vi) bring any action or otherwise act to contest the validity of this
Article II or seek a release of the restrictions contained herein;
(vii) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any voting
securities of Vivendi or any of its Subsidiaries or deposit any voting
securities of Vivendi in a voting trust or subject any voting securities of
Vivendi to any arrangement or agreement with respect to the voting of such
voting securities or other agreement having similar effect;
(viii) otherwise act, alone or in concert with others, to seek to
affect or influence the control of the management or the board of directors
of Vivendi or the business, operations or policies of Vivendi;
(ix) enter into any discussions, negotiations, arrangements,
understandings or agreements (whether written or oral) with any other
Person (other than Diller's financial advisors, agents, other advisors or
representatives) regarding a business combination involving Vivendi, any
other purchase of any voting securities involving Vivendi, or significant
assets of Vivendi;
(x) disclose any intention, plan or arrangement inconsistent with the
foregoing; or
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(xi) advise or assist any other Person in connection with any of the
foregoing.
Diller also agrees that, during the Restricted Period, neither he nor anyone
acting on his behalf will (x) request Vivendi or any of its directors, officers,
employees, agents, advisors or representatives, directly or indirectly, to amend
or waive any provision of this Article II (including this sentence) or (y) take
any action which might require Vivendi to make a public announcement regarding
the possibility of a business combination, merger or extraordinary transaction.
(b) Notwithstanding Section 2.1(a), Diller or any of his Affiliates shall
be permitted during the Restricted Period to submit a proposal addressed to the
board of directors of Vivendi that proposes a merger or other business
combination involving Vivendi if (i) Vivendi shall have publicly announced that
it has entered into a definitive agreement providing for: (A) any acquisition
from Vivendi or from one or more stockholders thereof (by tender or exchange
offer or other public offer), or both, more than 50% of the outstanding voting
or equity securities of Vivendi, (B) any acquisition of all, or substantially
all, the assets of Vivendi and its Subsidiaries or (C) a merger, consolidation,
statutory share exchange or similar transaction between or involving Vivendi and
another Person (other than a merger or consolidation in which a majority of the
voting shares of the surviving entity are held by the holders of Vivendi's
voting securities immediately prior to such effective time); or (ii) any Person
shall have commenced a tender offer or exchange offer that is likely to result
in any Person or group beneficially owning 50% or more of the voting securities
of Vivendi; PROVIDED, that in the case of this clause (ii), the right to make a
proposal pursuant to this Section 2.1(b) shall cease upon the withdrawal or
termination of such unsolicited tender offer or exchange offer or proposal
unless Diller or any of his Affiliates shall have submitted a proposal prior to
such withdrawal or termination.
ARTICLE III
CORPORATE GOVERNANCE
SECTION 3.1. VOTING ON CERTAIN MATTERS. (a) In the event that Section 2.03
of the Governance Agreement is applicable, in connection with any vote or action
by written consent of the stockholders of the Company relating to any matter
that constitutes a Contingent Matter, each Stockholder agrees (and agrees to
cause each member of its Stockholders Group, if applicable), with respect to any
Common Shares with respect to which it or he has the power to vote (whether by
proxy, the ownership of voting securities of a BDTV Entity or otherwise)
(including all shares held by any BDTV Entity), to vote against (and not act by
written consent to approve) such Contingent Matter (including not voting or not
executing a written consent with respect to the Common Shares beneficially owned
by a BDTV Entity) if Liberty and Diller have not consented to such Contingent
Matter in accordance with the provisions of the Governance Agreement and to take
or cause to be taken all other reasonable actions required, to the extent
permitted by law, to prevent the taking of any action by the Company with
respect to a Contingent Matter without the consent of Liberty.
(b) Each Stockholder agrees to vote (and cause each member of its or his
Stockholder Group to vote, if applicable), or act by written consent with
respect to any Common Shares with respect to which it or he has the power to
vote (whether by proxy, the ownership of voting
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securities of a BDTV Entity or otherwise) (including all shares held by any BDTV
Entity) in favor of (i) each of the designees of Universal which Universal has a
right to designate pursuant to the Governance Agreement, and (ii) each of the
designees of Liberty which Liberty has a right to designate pursuant to the
Governance Agreement.
(c) Upon the written request of Universal or Liberty, each Stockholder, in
such Stockholder's capacity as a stockholder only, agrees to vote (and cause
each member of its Stockholders Group to vote, if applicable), or act by written
consent with respect to any Common Shares with respect to which it or he has the
power to vote (whether by proxy, the ownership of voting securities of a BDTV
Entity or otherwise) (including all shares held by any BDTV Entity) and
otherwise take or cause to be taken all actions necessary to remove any Director
designated by such requesting party and to elect any replacement Director
designated by such party as provided in the Governance Agreement. Unless all the
Stockholders otherwise agree, no Stockholder or any member of its Stockholders
Group shall take any action to cause the removal of any Director designated by
Universal or any Director designated by Liberty except (i) in the case of a
Director designated by Universal, upon the written request of Universal, and
(ii) in the case of a Director designated by Liberty, upon the written request
of Liberty.
(d) For purposes of Sections 3.1 and 3.4 and Article V of this Agreement as
well as the 1997 Stockholders Agreement, each of Liberty, Universal and Diller
hereby consents and agrees to the taking of any action by any of Diller, a BDTV
Entity, Universal or Liberty, which action is reasonably necessary or
appropriate to approve and consummate the transactions pursuant to the
Transaction Agreement and the Transaction Documents (and including Diller's
arrangements with the Partnership). Neither Diller nor Liberty shall enter into,
or permit any material amendment to, or waiver or modification of material
rights or obligations under the Transaction Agreement or the Transaction
Documents (including by the Company) without the prior written consent of the
other Stockholder. The consent granted by the first sentence of this paragraph
is intended to be specifically limited by the foregoing sentence.
(e) Liberty will not be deemed to be in violation of paragraphs (a), (b) or
(c) of this Section 3.1 as a result of any action by Diller (including by a BDTV
Entity as a result of an action by Diller) that is not within Liberty's control.
SECTION 3.2. RESTRICTIONS ON OTHER AGREEMENTS. No Stockholder or any of its
or his Permitted Transferees shall enter into or agree to be bound by any
stockholder agreements or arrangements of any kind with any Person with respect
to any Equity (including, without limitation, the deposit of any Common Shares
in a voting trust or forming, joining or in any way participating in or
assisting in the formation of a Group with respect to any Common Shares, other
than any such Group consisting exclusively of Liberty, Universal and Diller and
any of their respective Affiliates, Permitted Designees and Permitted
Transferees) and no Stockholder (other than Universal or Liberty or any of their
respective Permitted Transferees) or any of its or his Permitted Transferees
shall enter into or agree to be bound by any agreements or arrangements of any
kind with any Person to incur indebtedness for purposes of purchasing Equity
(other than to exercise Options or to purchase Common Shares pursuant to Section
4.3 or 4.4 of this Agreement), except (i) for such agreements or arrangements as
are now in effect or as are contemplated by the Transaction Documents, (ii) in
connection with a proposed sale of
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BDTV Entity securities or Common Shares otherwise permitted hereunder or (iii)
for such agreements or arrangements with a Permitted Designee reasonably
acceptable to the other Stockholders and not inconsistent with or for the
purpose of evading the terms of this Agreement.
SECTION 3.3. IRREVOCABLE PROXY OF UNIVERSAL. (a) (i) Until the earlier of
the date that Diller ceases to exercise rights under this Section 3.3 pursuant
to Section 6.2(c) or the Universal Termination Date, Diller shall be entitled to
exercise voting authority and authority to act by written consent over all
shares of Common Stock beneficially owned by each member of the Vivendi
Stockholder Group, and (ii) until Diller ceases to exercise rights under this
Section 3.3 pursuant to Section 6.2(c), Diller shall be entitled to exercise
voting authority to act by written consent over all shares of Class B Common
Stock beneficially owned by each member of the Vivendi Stockholder Group (the
shares referred to in clauses (i) and (ii), collectively, the "UNIVERSAL PROXY
SHARES"), in each case, on all matters submitted to a vote of the Company's
stockholders or by which the Company's stockholders may act by written consent
pursuant to a conditional proxy (which proxy is irrevocable and coupled with an
interest for purposes of Section 212 of the Delaware General Corporation Law)
(the "UNIVERSAL PROXY"); PROVIDED, that in the event that Diller is removed by
the Board as CEO for any reason other than Cause, Diller shall be deemed to
continue to be CEO hereunder and shall be entitled to exercise the Universal
Proxy set forth herein until the earlier of (A) such time as he has abandoned
efforts to cause his reinstatement as CEO and (B) the next stockholders meeting
of the Company at which he had an adequate opportunity to nominate and elect his
slate of directors (unless at such stockholders meeting Diller's slate of
directors is elected and Diller is promptly thereafter reinstated as CEO).
(b) The Universal Proxy shall terminate as provided for in Section 3.3(a)
or, if earlier, (i) immediately upon a material breach by Diller of Section
3.1(b)(i) or Section 3.1(c) (as applicable to Universal) or of Article II (which
breach is not cured promptly following receipt by Diller of written notice of
such breach from Vivendi), (ii) at such time as Diller has been convicted of, or
has pleaded guilty to, any felony involving moral turpitude or (iii) at such
time as Diller ceases to beneficially own 20,000,000 Common Shares with respect
to which he has a pecuniary interest; PROVIDED, in the case of clauses (ii) and
(iii) above, that Universal sends notice of such termination to Diller within 30
days after the event giving rise to such termination, in which case the
Universal Proxy shall terminate immediately upon the receipt of such notice.
(c) Notwithstanding anything to the contrary set forth in this Agreement,
the Universal Proxy is personal to Diller and may not be assigned by Diller by
operation of law or otherwise and shall not inure to Diller's successors without
the prior written consent of Universal.
SECTION 3.4. IRREVOCABLE PROXY OF LIBERTY. (a) Subject to paragraphs (b)
and (c) below, until the earlier of the date that (x) Diller is no longer CEO or
(y) Diller is Disabled, Diller shall be entitled to exercise voting authority
and authority to act by written consent over all Common Shares beneficially
owned by each member of the Liberty Stockholder Group (the "LIBERTY PROXY
SHARES"), on all matters submitted to a vote of the Company's stockholders or by
which the Company's stockholders may act by written consent pursuant to a
conditional proxy (which proxy is irrevocable and coupled with an interest for
purposes of Section 212 of the Delaware General Corporation Law) (the "LIBERTY
PROXY"); PROVIDED, that in the event that Diller
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is removed by the Board as CEO for any reason other than Cause, Diller shall be
deemed to continue to be CEO hereunder and shall be entitled to the Liberty
Proxy set forth herein until the earlier of (A) such time as he has abandoned
efforts to cause his reinstatement as CEO and (B) the next stockholders meeting
of the Company at which he had an adequate opportunity to nominate and elect his
slate of directors (unless at such stockholders meeting Diller's slate of
directors is elected and Diller is promptly thereafter reinstated as CEO).
(d) Notwithstanding the foregoing, the Liberty Proxy shall not be valid
with respect to any of the Liberty Proxy Shares in connection with any vote for
(or consent to approve) any matter that is a Contingent Matter which Liberty has
the right to consent to pursuant to the terms of the Governance Agreement with
respect to which Liberty has not consented.
(e) The Liberty Proxy shall terminate as provided for in Section 3.4(a) or,
if earlier, (i) immediately upon a material breach by Diller of the terms of
Section 3.1(a), Section 3.1(b)(ii), Section 3.1(c) (as applicable to Liberty) or
Section 3.4(b) of this Agreement, (ii) at such time as Diller has been convicted
of, or has pleaded guilty to, any felony involving moral turpitude or (iii) at
such time as Diller ceases to beneficially own 20,000,000 Common Shares with
respect to which he has a pecuniary interest; PROVIDED, in the case of clauses
(ii) and (iii) above, that Liberty sends notice of such termination to Diller
within 30 days after receiving notice of the event giving rise to such
termination, in which case the Liberty Proxy shall terminate immediately upon
the receipt of such notice.
(f) Notwithstanding anything to the contrary set forth herein, the Liberty
Proxy is personal to Diller and may not be assigned by Diller and shall not
inure to Diller's successors without the prior written consent of Liberty.
SECTION 3.5. COOPERATION. Each Stockholder shall vote (or act or not act by
written consent with respect to) all of its Common Shares (and any Common Shares
with respect to which it has the power to vote (whether by proxy or otherwise)
and shall, as necessary or desirable, attend all meetings in person or by proxy
for purposes of obtaining a quorum, and execute all written consents in lieu of
meetings, as applicable, to effectuate the provisions of this Article III.
ARTICLE IV.
TRANSFER OF COMMON SHARES
SECTION 4.1. RESTRICTIONS ON TRANSFER BY LIBERTY AND DILLER. (a) Until the
CEO Termination Date or such time as Diller becomes Disabled, subject to the
other provisions of this Agreement, neither Liberty nor Diller shall Transfer or
otherwise dispose of (including pledges), directly or indirectly, any Common
Shares beneficially owned by its Stockholder Group other than (w) Transfers of
Common Shares by Diller in order to pay taxes arising from the granting, vesting
and/or exercise of the Options, (x) Transfers of Common Shares by Liberty to
members of the Liberty Stockholder Group or by Diller to members of the Diller
Stockholder Group, (y) a pledge or grant of a security interest in vested Common
Shares (other than the pledge of certain Common Shares pursuant to prior
arrangements between Diller and the Company) or pledges by a member of the
Liberty Stockholder Group of securities of a BDTV Entity that Liberty is
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entitled to Transfer under (b)(iii) below in connection with bona fide
indebtedness in which the pledgee of the applicable Common Shares (or securities
of such BDTV Entity) agrees that, upon any default or exercise of its rights
under such pledge or security arrangement, it will offer to sell the pledged
Common Shares (or securities of such BDTV Entity) to the non-pledging
Stockholder(s) (or its or his designee) for an amount equal to the lesser of the
applicable amount of such indebtedness and the fair market value of such pledged
Common Shares (or securities of such BDTV Entity), and (z) Transfers of Options
or Common Shares to the Company by Diller or his Affiliates in connection with a
"cashless" exercise of the Options (including Options granted to Diller on the
date hereof or in the future). The restrictions on Transfer by Liberty provided
in this Section 4.1 shall be for the sole benefit of Diller and the restrictions
on Transfer by Diller provided in this Section 4.1 shall be for the sole benefit
of Liberty.
(b) Notwithstanding the restrictions contained in subsection (a) above (and
in addition to the foregoing exceptions, but subject to the right of first
refusal described in Section 4.4 on behalf of Diller (or his designee) with
respect to Transfers by members of the Liberty Stockholder Group and to a right
of first refusal on behalf of Liberty (or its designee) with respect to
Transfers by members of the Diller Stockholder Group (which rights shall be
assignable)): (i) either Liberty or Diller may Transfer all or any portion of
the Common Shares beneficially owned by its Stockholder Group (and, in the case
of Liberty only, its entire interest in the BDTV Entities) to an unaffiliated
third party or to Universal, PROVIDED, HOWEVER, that a Transfer by either
Liberty or Diller to a third party or to Universal shall be subject to the
tag-along right pursuant to Section 4.2, and (ii) either Liberty or Diller may
Transfer any portion of the Common Shares (including, in the case of Liberty,
all or a portion of a BDTV Entity interest) held by its Stockholder Group to an
unaffiliated third party; PROVIDED that, (a) following such Transfer such
Stockholder Group retains its Eligible Stockholder Amount of Common Shares and
(b) in the case of the Transfer of an interest in or Common Shares held by a
BDTV Limited Entity as of the date hereof, following such Transfer, Liberty,
Diller and Universal, to the extent Universal remains subject to this Agreement,
and each of their respective Stockholder Groups collectively beneficially own
the Minimum Stockholder Amount. Notwithstanding the previous sentence and the
restrictions contained in paragraph (a) above and subject to the requirement,
with respect to a Transfer by Liberty of an interest in or Common Shares held by
a BDTV Limited Entity as of the date hereof, that the Stockholders and their
respective Stockholder Groups collectively beneficially own the Minimum
Stockholder Amount, either Liberty or Diller may transfer any of its Common
Shares in one or more transactions that comply with the requirements of Rule 144
or 145 (as applicable) under the Securities Act.
SECTION 4.2. TAG-ALONG FOR DILLER AND LIBERTY FOR TRANSFERS BY THE OTHER.
(a) If either Diller or Liberty shall desire to Transfer to any third party,
including Universal and the members of its Stockholder Group, any of the Common
Shares beneficially owned by him or it or any member of his or its Stockholder
Group (other than as set forth in paragraph (e) below), in one transaction or a
series of related transactions (the "TAG-ALONG SALE"), Diller or Liberty, as
applicable, shall give prior written notice to the other of such intended
Transfer. Such notice (the "TAG-ALONG NOTICE") shall set forth the terms and
conditions of such proposed Transfer, including the number of Common Shares
proposed to be Transferred (the "TAG-ALONG SHARES"), the purchase price per
Common Share proposed to be paid therefor and the payment terms and type of
Transfer to be effectuated.
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(b) Within 10 days after delivery of the Tag-Along Notice by Diller or
Liberty to the other, as applicable, Liberty or Diller, respectively, shall, by
written notice to the other, have the opportunity and right to sell to such
third party in such proposed Transfer (upon the same terms and conditions as
Diller or Liberty, as applicable) up to that number of Common Shares
beneficially owned by Liberty or Diller (including Liberty's pro rata portion of
any shares held by a BDTV Entity) as shall equal the product of (x) a fraction,
the numerator of which is the number of Tag-Along Shares and the denominator of
which is the aggregate number of Common Shares beneficially owned as of the date
of the Tag-Along Notice by Diller and his Affiliates (excluding shares held by
any BDTV Entity that were not contributed by Diller) or Liberty and its
Affiliates (including Common Shares held by any BDTV Entity that were
contributed by Liberty), multiplied by (y) the number of Common Shares
beneficially owned by Liberty or Diller, as applicable (including Liberty's pro
rata portion of any shares held by a BDTV Entity) as of the date of the
Tag-Along Notice. The number of Common Shares that Diller or Liberty may sell to
a third party pursuant to Section 4.2(a) shall be determined by multiplying the
maximum number of Tag-Along Shares that such third party is willing to purchase
on the terms set forth in the Tag-Along Notice by a fraction, the numerator of
which is the number of Common Shares that such Stockholder proposes to sell
hereunder (subject to the maximum amount for Diller or Liberty, as applicable,
calculated pursuant to the preceding sentence) and the denominator of which is
the aggregate number of Common Shares that Diller and Liberty propose to sell
hereunder.
(c) At the closing of any proposed Transfer in respect of which a Tag-Along
Notice has been delivered, Liberty or Diller, as applicable, shall deliver, free
and clear of all liens (other than liens caused by the other party), to such
third party certificates evidencing the Common Shares to be sold thereto duly
endorsed with Transfer powers and shall receive in exchange therefore the
consideration to be paid by such third party in respect of such Common Shares as
described in the Tag-Along Notice. No transferee shall be required to purchase
shares of a BDTV Entity in connection with the Tag-Along Sale and each of
Liberty and Diller shall cooperate so that any transferee will be able to
purchase directly any Common Shares held by a BDTV Entity and not the shares of
any BDTV Entity.
(d) Neither Diller and the members of his Stockholders Group, on the one
hand, nor Liberty and the members of its Stockholders Group, on the other hand,
shall effect any Transfer or Transfers constituting a Tag-Along Sale absent
compliance with this Section 4.2.
(e) This Section 4.2 shall not be applicable to the Transfer by Diller or
any member of his Stockholder Group (i) of an aggregate of not more than
4,000,000 Common Shares within any rolling twelve-month period, (ii) pursuant to
Section 4.1(a)(w) or 4.1(a)(z), (iii) in a Market Sale or (iv) following such
time as Diller is no longer CEO other than any Transfer made in connection with
Diller ceasing to be CEO.
SECTION 4.3. RIGHT OF FIRST REFUSAL OF DILLER ON TRANSFERS BY UNIVERSAL.
(a) Any Transfer of Common Shares by Universal or any member of its Stockholder
Group (the "TRANSFERRING PARTY") will be subject to the right of first refusal
provisions of this Section 4.3 other than a Transfer (i) between Universal and
any member of the Vivendi Stockholder Group or between members of the Vivendi
Stockholder Group, (ii) in connection with any Market Sale (other than any
Market Sale (a "COVERED MARKET SALE") involving the Transfer of 1,000,000 or
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more Common Shares in any rolling twelve month period), (iii) of an aggregate of
not more than 4,000,000 Common Shares within any rolling twelve-month period, or
(iv) contemplated by Section 8.07 of the Partnership Agreement.
(b) Prior to effecting any Transfer described in Section 4.3(a), the
Transferring Party shall deliver a written notice (the "OFFER NOTICE") to
Diller, which Offer Notice shall specify (i) the Person to whom the Transferring
Party proposes to make such Transfer or the proposed manner of Transfer in the
case of a public offering or a Covered Market Sale, (ii) the number or amount
and description of the Common Shares to be Transferred, (iii) except in the case
of a public offering or a Covered Market Sale, the Offer Price (as defined
below), and (iv) all other material terms and conditions of the proposed
Transfer, including a description of any non-cash consideration sufficiently
detailed to permit valuation thereof, and which Offer Notice shall be
accompanied by any written offer from the prospective transferee to purchase
such Common Shares, if available and permitted pursuant to the terms thereof.
The Offer Notice shall constitute an irrevocable offer to Diller or his
designee, for the period of time described below, to purchase all (but not less
than all) of such Common Shares upon the same terms specified in the Offer
Notice, subject to Section 4.3(g) and as otherwise set forth in this Section
4.3. Diller may elect to purchase all (but not less than all) of the Common
Shares at the Offer Price (or, if the Offer Price includes property other than
cash, the equivalent in cash of such property as determined in accordance with
Section 4.3(g)) and upon the other terms and conditions specified in the Offer
Notice.
(c) For purposes of this Section 4.3, "OFFER PRICE" shall be defined to
mean on a per share or other amount of Common Shares basis (i) in the case of a
third party tender offer or exchange offer, the tender offer or exchange offer
price per Common Share taking into account any provisions thereof with respect
to proration and any proposed second step or "back-end" transaction, (ii) in the
case of a public offering or a Covered Market Sale, the Current Market Value per
Common Share as of the date the election notice of Diller hereinafter described
is delivered and (iii) in the case of a privately-negotiated transaction, the
proposed sale price per Common Share.
(d) If Diller elects to purchase the offered Common Shares, he shall give
notice (the "ACCEPTANCE NOTICE") to the Transferring Party within 10 Business
Days of his receipt of the Offer Notice of his election (or in the case of a
third party tender offer or exchange offer, not later than five Business Days
prior to the expiration date of such offer, PROVIDED that all conditions to such
offer (other than with respect to the number of Common Shares tendered) shall
have been satisfied or waived and the Offer Notice shall have been provided at
least ten Business Days prior to the expiration date of such offer), which shall
constitute a binding obligation, subject to standard terms and conditions for a
stock purchase contract between two significant stockholders of an issuer
(provided that the Transferring Party shall not be required to make any
representations or warranties regarding the business of the Company), to
purchase the offered Common Shares, which Acceptance Notice shall include the
date set for the closing of such purchase, which date shall be no later than 20
Business Days following the delivery of such Acceptance Notice, or, if later,
five Business Days after receipt of all required regulatory approvals; PROVIDED
that the closing shall only be delayed pending receipt of required regulatory
approvals if (i) Diller is using reasonable efforts to obtain the required
regulatory approvals, (ii) there is a reasonable prospect of receiving such
regulatory approvals and (iii) if such closing is
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delayed more than 90 days after the date of the Acceptance Notice, then Diller
agrees to pay interest at the Reference Rate to the Transferring Party from such
date to the closing date. Notwithstanding the foregoing, such time periods shall
not be deemed to commence with respect to any purported notice that does not
comply in all material respects with the requirements of this Section 4.3(d).
Diller may assign its rights to purchase under this Section 4.3 to any Person
who is a Permitted Designee.
(e) Subject to Section 4.3(f) in the case of a Covered Market Sale, if
Diller does not respond to the Offer Notice within the required response time
period or elects not to purchase the offered Common Shares, the Transferring
Party shall be free to complete the proposed Transfer (to the same proposed
transferee, in the case of privately-negotiated transaction) on terms no less
favorable to the Transferring Party or its Affiliate, as the case may be, than
those set forth in the Offer Notice, PROVIDED that (x) such Transfer is closed
within (I) 90 days after the latest of (A) the expiration of the foregoing
required response time periods, or (B) the receipt by the Transferring Party of
the foregoing Acceptance Notice or, in the case of (A) or (B), if later, five
Business Days following receipt of all required regulatory approvals; PROVIDED
that the closing shall only be delayed pending receipt of required regulatory
approvals if (i) the Transferring Stockholder is using reasonable efforts to
obtain the required regulatory approvals and (ii) there is a reasonable prospect
of receiving such regulatory approvals or, (II) in the case of a public
offering, within 20 days of the declaration by the Commission of the
effectiveness of a registration statement filed with the Commission pursuant to
this Agreement, and (y) the price at which the Common Shares are transferred
must be equal to or higher than the Offer Price (except in the case of a public
offering, in which case the price at which the Common Shares are sold (before
deducting underwriting discounts and commissions) shall be equal to at least 90%
of the Offer Price).
(f) If Diller does not respond to the Offer Notice with respect to a
Covered Market Sale within the required response time period or elects not to
purchase the offered Common Shares, the Transferring Party shall be free to
complete the proposed Covered Market Sale in one or more transactions during the
90-day period commencing on the latest of (i) the expiration of the required
response time period described in Section 4.3(d) or (ii) receipt by the
Transferring Party of the election notice described in Section 4.3(d), PROVIDED
that the price at which each Common Share is transferred (excluding brokerage
commissions) shall be at least equal to 90% of the Offer Price.
(g) If (i) the consideration specified in the Offer Notice consists of, or
includes, consideration other than cash or a publicly traded security for which
a closing market price is published for each Business Day, or (ii) any property
other than Common Shares is proposed to be transferred in connection with the
transaction to which the Offer Notice relates, then the price payable by Diller
under this Section 4.3 for the Common Shares being transferred shall be equal to
the Fair Market Value of such consideration which shall be determined in the
manner set forth in Section 4.3(h). Notwithstanding anything to the contrary
contained in this Section 4.3, the time periods applicable to an election by
Diller to purchase the offered securities set forth in Section 4.3(a) shall not
be deemed to commence until the Fair Market Value has been determined, PROVIDED
that, in the case of a third party tender offer or exchange offer, in no event
shall any such election be permitted later than five Business Days prior to the
latest time by which Common Shares shall be tendered in order to be accepted
pursuant to such offer or to
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qualify for any proration applicable to such offer if all conditions to such
offer (other than the number of shares tendered) have been satisfied or waived.
Each of Diller and Universal agrees to use its best efforts to cause the Fair
Market Value to be determined as promptly as practicable but in no event later
than 10 Business Days after the receipt by Diller of the Offer Notice.
(h) Promptly upon receipt by the Transferring Party of the Acceptance
Notice, each of Universal and Diller shall select an Independent Investment
Banking Firm each of which shall promptly make a determination (each such
determination, an "APPRAISAL") of the Fair Market Value of the Transferring
Party's Equity. If the higher of such Appraisals is less than or equal to 110%
of the lower of such Appraisals, then the Fair Market Value shall be equal to
the average of such Appraisals. If the higher of such Appraisals is greater than
110% of the lower of such Appraisals, then a third Independent Investment
Banking Firm (which shall be an Independent Investment Banking Firm that shall
not have been engaged by the Company, Universal or Diller for the three years
prior to the date of such selection) shall be selected by the first two
Independent Investment Banking Firms, which third Independent Investment Banking
Firm shall promptly make a determination of the Fair Market Value. The Fair
Market Value shall equal the average of the two of such three Appraisals closest
in value (or if there are no such two, then of all three Appraisals).
SECTION 4.4. RIGHT OF FIRST REFUSAL BETWEEN LIBERTY AND DILLER. (a) Any
Transfer of Common Shares by a member of the Liberty Stockholder Group or a
member of the Diller Stockholder Group (the "L/D TRANSFERRING PARTY") will be
subject to the right of first refusal provisions of this Section 4.4, other than
a Transfer by a member of the Liberty Stockholder Group or the Diller
Stockholder Group permitted by Section 4.1(a) hereof, a Transfer that is a sale
described in Section 4.2(e)(i) or a Market Sale that is not a Covered Market
Sale.
(b) Prior to effecting any Transfer referred to in Section 4.4(a), the L/D
Transferring Party shall deliver written notice (the "L/D OFFER NOTICE") to
Diller, if the L/D Transferring Party is a member of the Liberty Stockholder
Group, or to Liberty, if the L/D Transferring Party is a member of the Diller
Stockholder Group (the recipient of such notice, the "L/D OTHER PARTY"), which
Offer Notice shall specify (i) the Person to whom the L/D Transferring Party
proposes to make such Transfer or the proposed manner of Transfer in the case of
a public offering or a Covered Market Sale, (ii) the number or amount and
description of the Common Shares to be Transferred, (iii) except in the case of
a public offering or a Covered Market Sale, the L/D Offer Price (as defined
below), and (iv) all other material terms and conditions of the proposed
Transfer, including a description of any non-cash consideration sufficiently
detailed to permit valuation thereof, and which Offer Notice shall be
accompanied by any written offer from the prospective transferee to purchase
such Common Shares, if available and permitted pursuant to the terms thereof.
The L/D Offer Notice shall constitute an irrevocable offer to the L/D Other
Party, for the period of time described below, to purchase all (but not less
than all) of such Common Shares.
(c) For purposes of this Section 4.4, "L/D OFFER PRICE" shall mean the
purchase price per Common Share to be paid to the L/D Transferring Party in the
proposed transaction (as it may be adjusted in order to determine the net
economic value thereof). In the event that the consideration payable to the L/D
Transferring Party in a proposed transaction consists of securities, the
purchase price per share shall equal the fair market value of such securities
divided
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by the number of Common Shares to be Transferred. Such fair market value
shall be the market price of any publicly traded security and, if such security
is not publicly traded, the fair market value shall be equal to the Fair Market
Value (calculated in accordance with the method described in Section 4.3(h)) of
such security.
(d) If the L/D Other Party elects to purchase the offered Common Shares, it
shall give notice to the L/D Transferring Party within ten Business Days after
receipt of the L/D Offer Notice of its election (or in the case of a third party
tender offer or exchange offer, not later than five Business Days prior to the
expiration date of such offer, PROVIDED that all conditions to such offer (other
than with respect to the number of Common Shares tendered) shall have been
satisfied or waived and the L/D Offer Notice shall have been provided at least
ten Business Days prior to the expiration date of such offer), which shall
constitute a binding obligation, subject to standard terms and conditions for a
stock purchase contract between two significant stockholders of an issuer
(provided that the L/D Transferring Party shall not be required to make any
representations or warranties regarding the business of the Company), to
purchase the offered Common Shares, which notice shall include the date set for
the closing of such purchase, which date shall be no later than 20 Business Days
following the delivery of such election notice, or, if later, five Business Days
after receipt of all required regulatory approvals; PROVIDED that the closing
shall only be delayed pending receipt of required regulatory approvals if (i)
the L/D Other Party is using reasonable efforts to obtain the required
regulatory approvals, (ii) there is a reasonable prospect of receiving such
regulatory approvals and (iii) if such closing is delayed more than 90 days
after the date of the L/D Other Party's notice of election to purchase, then the
L/D Other Party agrees to pay interest at the Reference Rate to the L/D
Transferring Party from such date to the closing date. Notwithstanding the
foregoing, such time periods shall not be deemed to commence with respect to any
purported notice that does not comply in all material respects with the
requirements of this Section 4.4(d). Liberty and Diller may assign their
respective rights to purchase under this Section 4.4 to any Person who is a
Permitted Designee.
(e) Subject to Section 4.4(f) in the case of a Covered Market Sale, if the
L/D Other Stockholder does not respond to the L/D Offer Notice within the
required response time period or elects not to purchase the offered Common
Shares, the L/D Transferring Party shall be free to complete the proposed
Transfer (to the same proposed transferee, in the case of a privately-negotiated
transaction) on terms no less favorable to the L/D Transferring Party or its
Affiliate, as the case may be, than those set forth in the L/D Offer Notice,
provided that (x) such Transfer is closed within (I) 90 days after the latest of
(A) the expiration of the foregoing required response time periods, or (B) the
receipt by the L/D Transferring Party of the foregoing election notice or, in
the case of (A) or (B), if later, five Business Days following receipt of all
required regulatory approvals; PROVIDED that the closing shall only be delayed
pending receipt of required regulatory approvals if (i) the L/D Transferring
Stockholder is using reasonable efforts to obtain the required regulatory
approvals and (ii) there is a reasonable prospect of receiving such regulatory
approvals, or (II) in the case of a public offering, within 20 days of the
declaration by the Commission of the effectiveness of a registration statement
filed with the Commission pursuant to this Agreement, and (y) the price at which
the Common Shares are transferred must be equal to or higher than the L/D Offer
Price (except in the case of a public offering, in which case the price at which
the Common Shares are sold (before deducting underwriting discounts and
commissions) shall be equal to at least 90% of the L/D Offer Price).
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(f) If the L/D Other Stockholder does not respond to the L/D Offer Notice
with respect to a Covered Market Sale within the required response time period
or elects not to purchase the offered Common Shares, the L/D Transferring Party
shall be free to complete the proposed Covered Market Sale in one or more
transactions during the 90-day period commencing on the latest of (i) the
expiration of the required response time period described in Section 4.4(d) or
(ii) receipt by the L/D Transferring Party of the election notice described in
Section 4.4(d), PROVIDED that the price at which each Common Share is
transferred (excluding brokerage commissions) shall be at least equal to 90% of
the L/D Offer Price.
(g) If the L/D Other Party elects to exercise its right of first refusal
under this Section 4.4, the L/D Other Party shall pay the L/D Offer Price in
cash (by wire transfer of immediately available funds) or by the delivery of
marketable securities having an aggregate fair market value equal to the L/D
Offer Price, PROVIDED, that if the securities to be so delivered by the L/D
Other Party would not, in the L/D Transferring Party's possession, have at least
the same general degree of liquidity as the securities the L/D Transferring
Party was to receive in such proposed transaction (determined by reference to
the L/D Transferring Party's ability to dispose of such securities (including,
without limitation, the trading volume of such securities and the L/D Other
Party's percentage ownership of the issuer of such securities)), then the L/D
Other Party shall be required to deliver securities having an appraised value
(calculated in accordance with the method described in Section 4.3(h)) equal to
the L/D Offer Price. If the L/D Other Party delivers securities in payment of
the L/D Offer Price, it will cause the issuer of such securities to provide the
L/D Transferring Party with customary registration rights related thereto (if,
in the other transaction, the L/D Transferring Party would have received cash,
cash equivalents, registered securities or registration rights). Each of Diller
and Liberty agrees to use his or its commercially reasonable efforts (but not to
expend any money) to preserve for the other Stockholder, to the extent possible,
the tax benefits available to it in such proposed transaction, and to otherwise
seek to structure such transaction in the most tax efficient method available.
Notwithstanding the foregoing, if Diller pays the L/D Offer Price in securities,
such securities must be securities that Liberty is permitted to own under
applicable FCC Regulations.
(h) Notwithstanding anything to the contrary contained in this Section 4.4,
the time periods applicable to an election by the L/D Other Party to purchase
the offered securities shall not be deemed to commence until the fair market
value has been determined, provided that, in the case of a third party tender
offer or exchange offer, in no event shall any such election be permitted later
than five Business Days prior to the latest time by which Common Shares shall be
tendered in such offer if all conditions to such offer (other than the number of
shares tendered) have been satisfied or waived. Each of Diller and Liberty
agrees to use his and its best efforts to cause the fair market value to be
determined as promptly as practicable, but in no event later than ten Business
Days after the receipt by the L/D Other Stockholder of the L/D Offer Notice.
SECTION 4.5. (a) Subject to the right of first refusal of Diller pursuant
to Section 4.3, any direct or indirect Transfer of Common Shares by a member of
the Vivendi Stockholder Group with respect to which Diller would have a right of
first refusal pursuant to Section 4.3 will be subject to a right of first
refusal by Liberty on the same terms and conditions as are applicable to Diller
pursuant to Section 4.3, mutatis mutandis.
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(b) Liberty acknowledges and agrees that its right of first refusal
pursuant to this Section 4.5 is subject to the right of first refusal by Diller
pursuant to Section 4.3.
SECTION 4.6. TRANSFERS OF CLASS B SHARES. (a) Subject to the rights of
first refusal pursuant to Sections 4.3, 4.4 and 4.5 and subject to paragraph (c)
below, in the event that any Stockholder or any members of its Stockholders
Group (the "TRANSFERRING STOCKHOLDER") proposes to Transfer any shares of Class
B Common Stock, such Transferring Stockholder shall send a written notice (which
obligation may be satisfied by the delivery of the applicable Offer Notice) (the
"EXCHANGE NOTICE") to Diller, if the Transferring Stockholder is Liberty,
Universal or a member of their respective Stockholder Groups, or to Liberty, if
the Transferring Stockholder is Diller, Universal or a member of their
respective Stockholder Groups (the recipient of such notice, the
"NON-TRANSFERRING STOCKHOLDER"), that such Transferring Stockholder intends to
Transfer shares of Class B Common Stock, including the number of such shares
proposed to be Transferred. The Non-Transferring Stockholder(s) shall give
notice to the Transferring Stockholder within 20 days of its receipt of the
Exchange Notice of its or their desire to exchange some or all of such shares of
Class B Common Stock proposed to be Transferred for an equivalent number of
shares of Common Stock. If the Non-Transferring Stockholder(s) desire to
exchange some or all of such shares and to the extent that such shares are not
otherwise Transferred to any Stockholder (or its Permitted Designee) pursuant to
Section 4.3, 4.4 or 4.5, such shares of Class B Common Stock shall be exchanged;
PROVIDED that if the Transferring Stockholder is Universal or a member of its
Stockholder Group, first with Diller (to the extent he elects to exchange) and,
second with Liberty (to the extent that Liberty elects to exchange). Except to
the extent necessary to avoid liability under Section 16(b) of the Exchange Act
and subject to applicable law, any such exchange shall be consummated
immediately prior to the consummation of any such Transfer.
(b) If any shares of Class B Common Stock proposed to be Transferred are
not exchanged pursuant to the provisions of paragraph (a) above, prior to any
such Transfer, the Transferring Stockholder shall convert, or cause to be
converted, such shares of Class B Common Stock into shares of Common Stock (or
such other securities of the Company into which such shares are then
convertible).
(c) The provisions of Section 4.6(a) and 4.6(b) shall not be applicable to
any Transfers (i) to a member of such Stockholder's Stockholder Group, (ii)
pursuant to a pledge or grant of a security interest in compliance with clause
(y) of Section 4.1(a), or (iii) from Liberty, Diller or their respective
Stockholder Group to the other Stockholder or its or his Stockholder Group
subject to the terms of this Agreement.
SECTION 4.7. TRANSFEREES. (a) Any Permitted Transferee or Permitted
Designee of a Stockholder shall be subject to the terms and conditions of this
Agreement as if such Permitted Transferee or Permitted Designee were Universal
(if Universal or a Permitted Transferee of Universal is the transferor), Liberty
(if Liberty or a Permitted Transferee of Liberty is the transferor) or Diller
(if Diller or a Permitted Transferee of Diller is the transferor). Prior to the
initial acquisition of beneficial ownership of any Common Shares by any
Permitted Transferee (or a Permitted Designee), and as a condition thereto, each
Stockholder agrees (i) to cause its respective Permitted Transferees or
Permitted Designees to agree in writing with the other parties hereto to be
bound by the terms and conditions of this Agreement to the extent described
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in the preceding sentence and (ii) that such Stockholder shall remain directly
liable for the performance by its respective Permitted Transferees or Permitted
Designees of all obligations of such Permitted Transferees or Permitted
Designees under this Agreement. Except as otherwise contemplated by this
Agreement (i) each of Universal, Diller and Liberty agrees not to cause or
permit any of its respective Permitted Transferees to cease to qualify as a
member of such Stockholder's Stockholders Group so long as such Permitted
Transferee beneficially owns any Common Shares, and if any such Permitted
Transferee shall cease to be so qualified, such Permitted Transferee shall
automatically upon the occurrence of such event cease to be a "Permitted
Transferee" for any purpose under this Agreement and (ii) each Stockholder
agrees not to Transfer any Common Shares to any Affiliate other than a Permitted
Transferee of such Stockholder.
(b) No Third Party Transferee shall have any rights or obligations under
this Agreement, except:
(i) in the case of a Third Party Transferee of Liberty (or any member
of the Liberty Stockholder Group) who acquires shares of Common Stock and
who (together with its Affiliates) would not be a Public Stockholder, such
Third Party Transferee shall be subject to the obligations of Liberty (but
subject to the other terms and conditions of this Agreement) pursuant to
Section 3.1(a) (but shall not have the right to consent to any Contingent
Matters), Section 3.1(b), Section 3.1(c), Section 3.2, Section 3.5, as
applicable, this Section 4.7 and Article VI; PROVIDED that such Third Party
Transferee shall only be subject to such obligations for so long as it
would not be a Public Stockholder;
(ii) in the case of a Third Party Transferee of Universal (or any
member of the Vivendi Stockholder Group) who (together with its Affiliates)
upon consummation of any Transfer would not be a Public Stockholder, such
Third Party Transferee shall be subject to the obligations of Universal
(but subject to the other terms and conditions of this Agreement) pursuant
to Section 3.1(a), Section 3.1(b)(ii), Section 3.1(c), Section 3.2, Section
3.5, as applicable, this Section 4.7 and Article VI; PROVIDED that such
Third Party Transferee shall only be subject to such obligations for so
long as it would not be a Public Stockholder; and
(iii) in the case of a Third Party Transferee of Diller (or any member
of the Diller Stockholder Group) who (together with its Affiliates) upon
consummation of any Transfer would not be a Public Stockholder, such Third
Party Transferee shall be subject to the obligations of Diller (but subject
to the other terms and conditions of this Agreement) pursuant to Section
3.1(a) (but shall not have the right to consent to any Contingent Matters),
3.1(b), Section 3.1(c), Section 3.5, as applicable, this Section 4.7 and
Article VI; PROVIDED that such Third Party Transferee shall only be subject
to such obligations for so long as it would not be a Public Stockholder.
(c) Prior to the consummation of a Transfer described in Section 4.7(b) to
the extent rights and obligations are to be assigned, and as a condition
thereto, the applicable Third Party Transferee shall agree in writing with the
other parties hereto to be bound by the terms and conditions of this Agreement
to the extent described in Section 4.7(b). To the extent the Third
-22-
Party Transferee is not an "ULTIMATE PARENT ENTITY" (as defined in the HSR Act),
the ultimate parent entity of such Third Party Transferee shall agree in writing
to be directly liable for the performance of the Third Party Transferee to the
same extent Universal or Liberty would be liable for their respective Permitted
Transferees.
SECTION 4.8. NOTICE OF TRANSFER. To the extent any Stockholder and its
Permitted Transferees shall Transfer any Common Shares, such Stockholder shall,
within three Business Days following consummation of such Transfer, deliver
notice thereof to the Company and the other Stockholders, PROVIDED, HOWEVER,
that no such notice shall be required to be delivered unless the aggregate
Common Shares transferred by such Stockholder and its Permitted Transferees
since the date of the last notice delivered by such Stockholder pursuant to this
Section 4.8 exceeds 1% of the outstanding Common Shares.
SECTION 4.9. COMPLIANCE WITH TRANSFER PROVISIONS. Any Transfer or attempted
Transfer of Common Shares in violation of any provision of this Agreement shall
be void.
ARTICLE V
BDTV ENTITY ARRANGEMENTS
SECTION 5.1. MANAGEMENT. The business and affairs of each BDTV Entity will
be managed by a Board of Directors elected by the holders of a majority of the
voting equity interests in such BDTV Entity. Notwithstanding the foregoing, the
taking of any action by a BDTV Entity with respect to (i) to the extent
permitted by applicable law, any matter that would have constituted a
Fundamental Change under the 1997 Stockholders Agreement (as applied to such
BDTV Entity, MUTATIS MUTANDIS) or (ii) any acquisition or disposition (including
pledges) of any Common Shares held by such BDTV Entity, in either case, will
require the unanimous approval of the holders of all voting and non-voting
equity interests in such BDTV Entity.
SECTION 5.2. TREATMENT OF EXCHANGE SHARES. In the event that a holder of
Exchange Shares would be entitled to hold directly shares of Class B Common
Stock issuable upon an exchange of shares of Liberty Surviving Class B Stock but
for the limitation imposed by the FCC Regulations relating to a person's
aggregate voting power in the Company, and if such person would, under the FCC
Regulations, be permitted to hold directly a number of shares of Common Stock
equal to the number of shares of Class B Common Stock so issuable, then in
connection with such exchange, such holder will be required to offer to exchange
such shares of Class B Common Stock so receivable by it for Common Stock owned
by the Diller Stockholder Group and, if Diller does not accept such offer to
exchange, or if such exchange with the Diller Stockholder Group cannot be
accomplished on a tax-free basis (and the exchange of such Exchange Shares for
Common Shares would not otherwise be taxable), then such holder shall be
entitled to exchange such Exchange Shares for shares of Class B Common Stock and
thereafter convert such shares of Class B Common Stock into shares of Common
Stock.
Nothing in this Agreement shall obligate Liberty HSN to contribute any
Common Shares received pursuant to the Investment Agreement or the Holder
Exchange Agreement to a BDTV Entity.
-23-
SECTION 5.3 CHANGES TO BDTV STRUCTURES. Liberty and Diller agree, subject
to applicable law and FCC Regulations, to take such actions as may be reasonably
necessary, including but not limited to amending the certificate of
incorporation of the BDTV Entities, in order to provide Liberty with the ability
to transfer, directly or indirectly, such amounts of Common Shares Liberty is
permitted to sell hereunder.
SECTION 5.4 TRANSFERS OF BDTV INTERESTS. Except as otherwise specifically
provided in this Agreement (including Section 4.1(b)), no transfers or other
dispositions (including pledges), directly or indirectly, of any interest in (a)
any BDTV Limited Entity by Liberty or (b) any BDTV Entity by Diller will be
permitted without the consent of the other; provided, PROVIDED (i) Liberty shall
be entitled to transfer all or part of its interest in a BDTV Entity to members
of the Liberty Stockholder Group, (ii) at such time Liberty becomes the owner of
any voting securities of any BDTV Limited Entity, such BDTV Limited Entity shall
be deemed to be a BDTV Unrestricted Entity, and (iii) in connection with any
sale by Diller entitling Liberty to a right pursuant to Section 4.2, Liberty and
Diller shall take such reasonable action as may be required in order for such
interest in a BDTV Limited Entity to be sold in any such transaction. Without
the prior written consent of Liberty, Diller shall not Transfer any interest in
a BDTV Entity (other than to Liberty or, subject to Liberty's reasonable
consent, a member of the Diller Stockholder Group).
For purposes of determining whether Liberty is permitted to transfer the
Common Shares held by a BDTV Unrestricted Entity, (i) such BDTV Unrestricted
Entity shall be deemed to be a member of the Liberty Stockholder Group and the
restrictions on transfers of interests in BDTV Entities shall not apply to
Liberty (subject, however, to the other restrictions on transfer of Common
Shares set forth herein, including the Right of First Refusal) and (ii) in
connection with any proposed sale by Liberty HSN of the Common Shares held by a
BDTV Entity (or its equity interest in such BDTV Entity), Liberty shall be
entitled to purchase Diller's entire interest in such BDTV Entity for an amount
in cash equal to the Diller Interest Purchase Price or, at its election, require
Diller to sell his interest in such BDTV Entity to any such transferee for a pro
rata portion of the consideration to be paid by the applicable transferee in
such transaction.
At such time as (i) the CEO Termination Date has occurred or Diller
becomes Disabled or (ii) the Diller Stockholder Group ceases to own its Eligible
Stockholder Amount of Common Shares, Diller shall be required to sell his entire
interest in the BDTV Entities to Liberty (or Liberty's designee) at a price
equal to the Diller Interest Purchase Price.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 CONFLICTING AGREEMENTS. Each of the Stockholders represents
and warrants that such party has not granted and is not a party to any proxy,
voting trust or other agreement that is inconsistent with or conflicts with any
provision of this Agreement.
SECTION 6.2 DURATION OF AGREEMENT. Except as otherwise provided in this
Agreement, the rights and obligations of a Stockholder under this Agreement
shall terminate as follows:
-24-
(a) Universal shall cease to be entitled to exercise any rights and
shall cease to have any obligations under this Agreement as of the date
that it ceases to have the right under the Governance Agreement to
designate any directors to the Board (the "UNIVERSAL TERMINATION DATE").
(b) Each of Liberty and Diller shall cease to be entitled to exercise
any rights and shall cease to have any obligations under this Agreement as
of the date that its Stockholder Group collectively ceases to own its
Eligible Stockholder Amount of Common Shares; PROVIDED that Liberty shall
cease to be entitled to exercise any rights and shall cease to have any
obligations under Section 4.2 at such time as the Liberty Stockholder Group
ceases to beneficially own at least 5% of the outstanding Common Shares
(the "LIBERTY TERMINATION DATE").
(c) Diller and each member of his Stockholder Group shall cease to be
entitled to exercise any rights under this Agreement if the CEO Termination
Date has occurred or Diller has become Disabled (the "DILLER TERMINATION
DATE").
In addition, at such time as the CEO Termination Date has occurred or
Diller has become Disabled, neither the Diller Stockholder Group nor the Liberty
Stockholder Group shall have any obligation under this Agreement with respect to
the matters covered under Sections 3.4, 4.1 and 4.4. The obligations under
Section 3.1(d) terminate upon termination of the Transaction Agreement.
SECTION 6.3 FURTHER ASSURANCES. At any time or from time to time after the
date hereof, the parties agree to cooperate with each other, and at the request
of any other party, to execute and deliver any further instruments or documents
and to take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.
SECTION 6.4 AMENDMENT AND WAIVER. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against any Stockholder unless such modification, amendment or waiver
is approved in writing by each Stockholder; provided that with respect to any
provision containing an agreement between only two Stockholders or pursuant to
which only two Stockholders have rights thereunder, such provision may be
modified or waived by approval in writing by such Stockholders, without the
consent of the third Stockholder unless such modification or waiver adversely
affects the rights of such third Stockholder as provided under this Agreement or
the Governance Agreement. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 6.5 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed,
-25-
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
SECTION 6.6 EFFECTIVE DATE. Other than with respect to Section 3.1(d) which
shall be effective as of the date hereof, this Agreement shall become effective
immediately upon the Closing.
SECTION 6.7 ENTIRE AGREEMENT. Except as otherwise expressly set forth
herein, this document and the Transaction Documents embody the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, that may have related
to the subject matter hereof in any way. Without limiting the generality of the
foregoing, to the extent that any of the terms hereof are inconsistent with the
rights or obligations of any Stockholder under any other agreement with any
other Stockholder, the terms of this Agreement shall govern. Upon the Closing,
the 1997 Stockholders Agreement shall terminate and shall be superseded by this
Agreement.
SECTION 6.8 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights or obligations under this Agreement shall be assigned, in whole or in
part (except by operation of law pursuant to a merger whose purpose is not to
avoid the provisions of this Agreement), by any party without the prior written
consent of the other parties hereto. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of and be enforceable by the parties hereto
and their respective successors and assigns.
SECTION 6.9 COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.
SECTION 6.10 LIABILITIES UNDER FEDERAL SECURITIES LAWS. The exercise by any
Stockholder (or its Affiliates or Stockholder Group, if applicable) (and
including, in the case of the Liberty Stockholder Group, its exercise of the
preemptive rights under Article III of the Governance Agreement or the rights
relating to the Holder Exchange Agreement) of any rights under this Agreement
shall be subject to such reasonable delay as may be required to prevent any
Stockholder or its respective Stockholder Group from incurring any liability
under the federal securities laws and the parties agree to cooperate in good
faith in respect thereof.
SECTION 6.11 REMEDIES. (a) Each party hereto acknowledges that money
damages would not be an adequate remedy in the event that any of the covenants
or agreements in this Agreement are not performed in accordance with its terms,
and it is therefore agreed that in addition to and without limiting any other
remedy or right it may have, the non-breaching party will have the right to an
injunction, temporary restraining order or other equitable relief in any court
of competent jurisdiction enjoining any such breach and enforcing specifically
the terms and provisions hereof.
(b) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the
-26-
exercise or beginning of the exercise of any thereof by any party shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
SECTION 6.12 NOTICES. Any notice, request, claim, demand or other
communication under this Agreement shall be in writing, shall be either
personally delivered, delivered by facsimile transmission, or sent by reputable
overnight courier service (charges prepaid) to the address for such Person set
forth below or such other address as the recipient party has specified by prior
written notice to the other parties hereto and shall be deemed to have been
given hereunder when receipt is acknowledged for personal delivery or facsimile
transmission or one day after deposit with a reputable overnight courier
service.
If to Vivendi and/or Universal:
Vivendi Universal, S.A.
375 Park Avenue
New York, NY 10152
Attention: Jean-Laurent Nabet
George Bushnell III
Telephone: (212) 572-7000
Facsimile: (212) 572-7188
and
Universal Studios, Inc.
100 Universal City Plaza
Universal City, CA 91608
Attention: Karen Randall, Esq.
Telephone: (818) 777-1000
Facsimile: (818) 866-3444
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Faiza J. Saeed, Esq.
Telephone: (212) 474-1000
Facsimile: (212) 474-3700
If to Liberty:
Liberty Media Corporation
12300 Liberty Boulevard
Englewood, CO 80112
Attention: General Counsel
Telephone: (720) 875-5400
-27-
Facsimile: (720) 875-5382
with a copy to:
Baker Botts LLP
599 Lexington Avenue
Suite 2900
New York, New York 10022
Attention: Frederick H. McGrath, Esq.
Telephone: (212) 705-5000
Facsimile: (212) 705-5125
If to Diller:
c/o USA Networks, Inc.
152 West 57th Street
New York, NY 10019
Attention: General Counsel
Telephone: (212) 314-7300
Facsimile: (212) 314-7329
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Pamela S. Seymon, Esq.
Andrew J. Nussbaum, Esq.
Telephone: (212) 403-1000
Facsimile: (212) 403-2000
SECTION 6.13 ADJUSTMENT OF SHARES NUMBERS. If, after the date of this
Agreement, there is a subdivision, split, stock dividend, combination,
reclassification or similar event with respect to any of the shares of capital
stock referred to in this Agreement, then, in any such event, the numbers and
types of shares of such capital stock referred to in this Agreement shall be
adjusted to the number and types of shares of such capital stock that a holder
of such number of shares of such capital stock would own or be entitled to
receive as a result of such event if such holder had held such number of shares
immediately prior to the record date for, or effectiveness of, such event.
SECTION 6.14 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflicts of law. Each of
the parties hereto hereby irrevocably and unconditionally consents to submit to
the non-exclusive jurisdiction of the courts of the State of Delaware for any
action, proceeding or investigation in any court or before any governmental
authority ("LITIGATION") arising out of or relating to this Agreement and the
transactions contemplated hereby and further agrees that service of any process,
summons, notice or
-28-
document by U.S. mail to its respective address set forth in this Agreement
shall be effective service of process for any Litigation brought against it in
any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Agreement or the transactions contemplated hereby.
SECTION 6.15 INTERPRETATION. The table of contents and headings contained
in this Agreement are for convenience 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". Whenever it is necessary for
purposes of this Agreement to determine whether an exchange is tax-free or
taxable, such determination shall be made without regard to any interest imputed
pursuant to Section 483 of the Code.
-29-
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement as of the date first written above.
UNIVERSAL STUDIOS, INC.,
By: /s/ Guillaume Hannezo
------------------------------
Name: Guillaume Hannezo
Title: Special Power of Attorney
LIBERTY MEDIA CORPORATION
By: /s/ Robert R. Bennett
-----------------------------------
Name: Robert R. Bennett
Title: President
/s/ Barry Diller
---------------------------------------
BARRY DILLER
VIVENDI UNIVERSAL, S.A.
By: /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief Executive
Officer
-30-
EXHIBIT 99.3
==============================================================================
AGREEMENT AND PLAN OF MERGER AND EXCHANGE
Among
VIVENDI UNIVERSAL, S.A.,
UNIVERSAL STUDIOS, INC.,
LIGHT FRANCE ACQUISITION 1, S.A.S.,
THE MERGER SUBSIDIARIES LISTED
ON THE SIGNATURE PAGE HERETO,
LIBERTY MEDIA CORPORATION,
LIBERTY PROGRAMMING COMPANY LLC,
LIBERTY PROGRAMMING FRANCE, INC.,
LMC USA VI, INC.,
LMC USA VII, INC.,
LMC USA VIII, INC.,
LMC USA X, INC.,
LIBERTY HSN LLC HOLDINGS, INC.
AND
THE LIBERTY HOLDING ENTITIES LISTED
ON THE SIGNATURE PAGE HERETO
Dated as of December 16, 2001
==============================================================================
Page
TABLE OF CONTENTS
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions and Usage.........................................2
ARTICLE II
Transactions and Closing
SECTION 2.01. Exchange of USANi Shares for USAi Common
Shares......................................................2
SECTION 2.02. Share Exchanges and Mergers...................................3
SECTION 2.03. Effects of Mergers on Capital Stock of
Constituent Corporations....................................5
SECTION 2.04. Closing Date; Effective Time;
Dissolution.................................................6
SECTION 2.05. Effects of Mergers............................................7
SECTION 2.06. Certificates of Incorporation and By-
laws........................................................7
SECTION 2.07. Directors.....................................................7
SECTION 2.08. Officers......................................................7
SECTION 2.09. Withholding...................................................8
ARTICLE III
Representations and Warranties of Universal Parties
SECTION 3.01. Organization, Standing and Power..............................8
SECTION 3.02. Authority; Execution and Delivery;
Enforceability..............................................9
SECTION 3.03. No Conflicts; Consents........................................9
SECTION 3.04. Merger Subsidiaries..........................................10
SECTION 3.05. Vivendi Securities...........................................10
SECTION 3.06. Taxes........................................................11
SECTION 3.07. Absence of Certain Changes or Events.........................12
SECTION 3.08. Financial Statements; Contingent
Liabilities................................................12
SECTION 3.09. Litigation...................................................13
SECTION 3.10. Foreign Private Issuer.......................................13
SECTION 3.11. Reports......................................................13
SECTION 3.12. Compliance with Laws.........................................14
Contents, p. ii
Page
ARTICLE IV
Representations and Warranties of the Liberty Parties
SECTION 4.01. Organization, Standing and Power.............................14
SECTION 4.02. Authority; Execution and Delivery;
Enforceability.............................................15
SECTION 4.03. No Conflicts; Consents.......................................15
SECTION 4.04. Capitalization; Ownership and Validity
of Shares..................................................16
SECTION 4.05. No Liabilities of the Liberty Holding
Entities...................................................18
SECTION 4.06. Taxes........................................................19
SECTION 4.07. Investment Intent............................................21
ARTICLE V
Agreements and Covenants
SECTION 5.01. Reasonable Best Efforts......................................21
SECTION 5.02. Expenses; Transfer Taxes.....................................23
SECTION 5.03. Publicity....................................................23
SECTION 5.04. Further Assurances...........................................24
SECTION 5.05. Tax Treatment................................................24
SECTION 5.06. Tax Matters..................................................25
SECTION 5.07. Resignation of multiThematiques
Directors..................................................25
SECTION 5.08. Vivendi Securities...........................................25
SECTION 5.09. Put Option Agreements........................................25
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation........................26
SECTION 6.02. Conditions to the Obligations of the
Universal Parties..........................................26
SECTION 6.03. Conditions to the Obligations of the
Liberty Parties............................................27
Page
ARTICLE VII
Termination
SECTION 7.01. Termination..................................................28
SECTION 7.02. Effect of Termination........................................29
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification..............................................29
SECTION 8.02. Survival.....................................................34
ARTICLE IX
Restrictions on Transfers
SECTION 9.01. Restrictions on Transfers....................................35
SECTION 9.02. Transfers Permitted at any Time..............................36
ARTICLE X
Standstill
SECTION 10.01. Standstill..................................................36
ARTICLE XI
Registration Rights
SECTION 11.01. Registration Rights.........................................39
SECTION 11.02. Blackout Periods............................................39
ARTICLE XII
Miscellaneous
SECTION 12.01. Approval of Transactions....................................41
SECTION 12.02. Notices.....................................................41
SECTION 12.03. No Third Party Beneficiaries................................42
Contents, p. iv
Page
SECTION 12.04. Waiver......................................................42
SECTION 12.05. Assignment..................................................42
SECTION 12.06. Integration.................................................42
SECTION 12.07. Headings....................................................43
SECTION 12.08. Counterparts................................................43
SECTION 12.09. Severability................................................43
SECTION 12.10. Governing Law...............................................43
SECTION 12.11. Jurisdiction................................................43
SECTION 12.12. Specific Performance........................................44
SECTION 12.13. Amendments..................................................44
SECTION 12.14. Interpretation..............................................44
SECTION 12.15. Adjustment of Share Numbers.................................45
SCHEDULE I Exchange of USANi Shares for USAi
Shares and USAi Share Exchange I
SCHEDULE II USAi Share Exchange II
SCHEDULE III Mergers
SCHEDULE 2.02(d) Allocation
SCHEDULE 4.06(b) Taxes
SCHEDULE 12.02 Addresses and Facsimile Numbers for
Notices
EXHIBIT A Certificates of Incorporation of
Surviving Corporations
EXHIBIT B Deposit Agreement
EXHIBIT C Capitalization of Liberty Holding
Entities
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER AND
EXCHANGE (this "Agreement") dated as of
December 16, 2001, by and among VIVENDI
UNIVERSAL, S.A., a societe anonyme organized
under the laws of France ("Vivendi"),
UNIVERSAL STUDIOS, INC., a Delaware
corporation ("Universal"), LIGHT FRANCE
ACQUISITION 1, S.A.S., a societe par actions
simplifee organized under the laws of France
and a direct, wholly-owned subsidiary of
Vivendi ("Universal France"), each of the
Merger Subsidiaries (as defined herein),
LIBERTY MEDIA CORPORATION, a Delaware
corporation ("Liberty"), LMC USA VI, INC., a
Delaware corporation, LMC USA VII, INC., a
Delaware corporation, LMC USA VIII, INC., a
Delaware corporation, LMC USA X, INC., a
Delaware corporation, LIBERTY HSN LLC
HOLDINGS, INC., a Delaware corporation,
LIBERTY PROGRAMMING COMPANY LLC, a limited
liability company formed under the laws of
the state of Delaware ("LPC"), LIBERTY
PROGRAMMING FRANCE, INC., a Delaware
corporation ("LPF"), and each of the Liberty
Holding Entities (as defined herein).
Preliminary Statement
WHEREAS, Universal desires to purchase from certain Liberty Parties
(as defined below), and such Liberty Parties desire to sell to Universal,
25,000,000 USAi Common Shares (as defined below) in exchange for Vivendi ADSs
(as defined below);
WHEREAS, Universal France desires to acquire from LPF, and LPF
desires to transfer to Universal France, all of its assets, which consist
solely of 4,921,250 multiThematiques Shares, the Loan Agreement, rights under
the Articles of Association, the multiThematiques Cooperation Agreement and
the Call Option Agreement (each as defined below), in exchange for Vivendi
ADSs and the assumption by Universal France of certain obligations pursuant to
Section 5.09, and LPF desires to dissolve and make a liquidating distribution
of such Vivendi ADSs following such exchange;
WHEREAS, the parties hereto desire to cause each Merger Subsidiary
to merge with and into a Liberty Holding Entity;
2
WHEREAS for Federal Income Tax (as defined below) purposes it is
intended that the multiThematiques Transaction (as defined below) and each of
the Mergers (as defined below) qualify as a separate "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the Boards of Directors of each of Vivendi, Universal, the
Merger Subsidiaries, the Liberty Holding Entities, the Liberty Transferring
Entities and LPF have approved and declared advisable this Agreement and
Vivendi, as the sole stockholder of each Merger Subsidiary, LPC, as the sole
stockholder of each Liberty Holding Entity, and Liberty Media International,
Inc. ("LMI"), as the sole stockholder of LPF, have approved and adopted this
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions and Usage. Unless the context shall
otherwise require, terms used and not defined herein shall have the meanings
assigned thereto in Annex A or, if not defined herein or therein, in the
Transaction Agreement.
ARTICLE II
Transactions and Closing
Upon the terms and subject to the conditions set forth herein, the
parties shall consummate each of the following transactions.
SECTION 2.01. Exchange of USANi Shares for USAi Common Shares. (a)
On the terms and subject to the conditions of this Agreement, immediately
prior to effecting the transactions contemplated by Section 2.02(a), each
Liberty Party set forth on Schedule I hereto under the caption "Exchange of
USANi Shares for USAi Common Shares" shall surrender the number of USANi
Shares set forth on Schedule I next to the name of such Liberty Party in
exchange for an equal number of USAi Common Shares in
3
accordance with the Exchange Agreement.
(b) On the terms and subject to the conditions of this Agreement,
immediately prior to effecting the transactions contemplated by Section
2.02(a), LMC USA VI, Inc. shall surrender 5,774,688 USANi Shares in exchange
for an equal number of USAi Common Shares in accordance with the Exchange
Agreement.
(c) Immediately after the Exchanges contemplated by this Section
2.01, (i) the Exchange Agreement, except the representations and warranties
contained therein, and (ii) Section 6.01 of the Investment Agreement shall be
terminated, whereby the USANi Shares will no longer be exchangeable for USAi
Common Shares.
SECTION 2.02. Share Exchanges and Mergers. (a) On the terms and
subject to the conditions of this Agreement, at the Closing, immediately prior
to effecting the transactions contemplated by Sections 2.02(b)and (c):
(i) each Liberty Party set forth on Schedule I hereto under the
caption "USAi Share Exchange I" shall sell, transfer and deliver to
Universal, and Universal shall purchase from each such Liberty Party, the
number of USAi Common Shares set forth on Schedule I next to the name of
such Liberty Party in exchange for Vivendi ADSs as set forth in Section
2.02(d) (the "USAi Share Exchange I") and each such Liberty Party that is
a Liberty Holding Entity shall distribute to its sole stockholder the
Vivendi ADSs received by such Liberty Party pursuant to this clause (i);
provided, however, Universal may elect at any time prior to the USAi
Share Exchange I, after providing the Liberty Parties a reasonable
opportunity to consult with Vivendi, not to effect all or any portion of
the USAi Share Exchange I with respect to any Liberty Holding Entity and
the consideration that would otherwise have been paid in respect of any
USAi Common Shares not purchased as a result of this proviso shall be
paid in respect of the Merger to which the Liberty Holding Entity that
holds such USAi Common Shares is a party; and
(ii) each Liberty Party set forth on Schedule II hereto shall sell,
transfer and deliver to Universal, and Universal shall purchase from each
such Liberty Party, the number of USAi Common Shares set forth on
Schedule II next to the name of such Liberty Party in exchange for
Vivendi ADSs as set forth in Section 2.02(d) (the "USAi Share Exchange
II" and, together with the USAi Share Exchange I, the "USAi
4
Share Exchanges").
(b) Subject to Section 2.04(a), on the terms and subject to the
conditions of this Agreement, at the Closing, immediately prior to effecting
the transactions contemplated by Section 2.02(c), LPF shall transfer, assign
and deliver to Universal France, and Universal France shall acquire from LPF,
all of the assets and rights of LPF and assume the obligations of LPF other
than any rights or obligations arising under this Agreement, which consist
solely of 4,921,250 multiThematiques Shares and its rights and obligations
under the Loan Agreement, the multiThematiques Cooperation Agreement and the
Call Option Agreement, in exchange solely for Vivendi ADSs as set forth in
Section 2.02(d) and the assumption of certain liabilities as set forth in
Section 5.09. The transfer and acquisition of the multiThematiques Shares is
referred to in this Agreement as the "multiThematiques Acquisition". Promptly
following the multiThematiques Acquisition, LPF shall be dissolved and
pursuant to such dissolution LPF will make a liquidating distribution to LMI,
its sole stockholder, of the Vivendi ADSs received by LPF in the
multiThematiques Acquisition (the "Liquidation" and, together with the
multiThematiques Acquisition, the "multiThematiques Transaction").
(c) On the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time:
(i) Sub II shall be merged with and into LMC USA II, Inc., the
separate corporate existence of Sub II shall cease and LMC USA II, Inc.
shall continue as the surviving corporation;
(ii) Sub III shall be merged with and into LMC USA III, Inc., the
separate corporate existence of Sub III shall cease and LMC USA III, Inc.
shall continue as the surviving corporation;
(iii) Sub IV shall be merged with and into LMC USA IV, Inc., the
separate corporate existence of Sub IV shall cease and LMC USA IV, Inc.
shall continue as the surviving corporation; and
(iv) Sub V shall be merged with and into LMC USA V, Inc., the
separate corporate existence of Sub V shall cease and LMC USA V, Inc.
shall continue as the surviving corporation.
The mergers referred to in clauses (i) through (iv) above are referred to
herein as the "Mergers". Notwithstanding
5
the foregoing, Universal may elect at any time prior to the Mergers, instead
of merging a Merger Subsidiary into the applicable Liberty Holding Entity as
provided above, to merge the applicable Liberty Holding Entity with and into
the Merger Subsidiary; provided, however, that (i) such Mergers as
restructured shall qualify as a reorganization under Section 368(a) of the
Code, and (ii) the Liberty Parties have been provided a reasonable opportunity
to consult with Vivendi on such restructuring. In such event, the parties
shall execute an appropriate amendment to this Agreement in order to reflect
the foregoing. At the election of Universal, any U.S. corporation that is a
direct, wholly-owned Subsidiary of Vivendi may be substituted for any Merger
Subsidiary as a constituent corporation in a Merger. In such event, the
parties shall execute an appropriate amendment to this Agreement in order to
reflect the foregoing. The USAi Share Exchanges, the multiThematiques
Transaction, the Mergers, the delivery of Vivendi ADSs in connection with the
foregoing and the other transactions contemplated by this Agreement are
referred to in this Agreement collectively as the "Transactions".
(d) The aggregate number of Vivendi ADSs to be delivered in
consideration for the USAi Share Exchanges, the multiThematiques Transaction
and the Mergers shall be 37,386,436, as may be adjusted pursuant to Section
8.01 hereof, which shares Vivendi will cause the Depositary to deliver in the
form of validly issued, fully paid and non- assessable Vivendi ADSs. The
37,386,436 Vivendi ADSs to be delivered in consideration for the USAi Share
Exchanges, the multiThematiques Transaction and the Mergers shall be allocated
as described in Schedule 2.02(d) hereof.
(e) Prior to the Closing Date, Vivendi and Liberty shall use
reasonable efforts to agree on an allocation of the Vivendi ADSs to be
delivered in consideration for the multiThematiques Transaction among the
assets of LPF.
SECTION 2.03. Effects of Mergers on Capital Stock of Constituent
Corporations. As of the Effective Time, by virtue of the Mergers and without
any action on the part of the holder of any shares of capital stock of any
Liberty Holding Entity or any shares of capital stock of any Merger
Subsidiary:
(a) Capital Stock of Merger Subsidiaries. Each share of the capital
stock of each Merger Subsidiary issued and outstanding immediately prior
to the Effective Time shall be converted into and become one
6
share of common stock of the surviving corporation of the Merger to which
such Merger Subsidiary is a party.
(b) Cancelation of Treasury Stock. Each share of capital stock of
any Liberty Holding Entity that is directly owned by such Liberty Holding
Entity, Vivendi or the applicable Merger Subsidiary shall automatically
be canceled and retired and shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(c) Conversion of Liberty Holding Entity Capital Stock. All of the
issued and outstanding shares of capital stock of each Liberty Holding
Entity (other than shares to be canceled in accordance with Section
2.03(b)) shall be converted into the right to receive Vivendi ADSs as set
forth in Section 2.02(d) (collectively, the "Merger Consideration"). As
of the Effective Time, all such shares of capital stock of the Liberty
Holding Entities shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such shares of capital stock of any Liberty
Holding Entity shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration.
SECTION 2.04. Closing Date; Effective Time; Dissolution. (a) The
closing of the Transactions (the "Closing") shall take place at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York 10019, at 10:00
a.m. on the Transaction Agreement Closing Date, subject to the satisfaction
(or to the extent permitted, the waiver) of all the conditions to the parties'
obligations set forth in Article VI, or at such other place, time and date as
the parties hereto shall agree (the "Closing Date").
(b) Prior to the Closing, Vivendi shall prepare, and on the Closing
Date or as soon as practicable thereafter Vivendi shall file with the
Secretary of State of the State of Delaware, a certificate of merger or other
appropriate documents reasonably acceptable to Liberty (in any such case, the
"Certificate of Merger") with respect to each Merger, executed in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL. The Mergers shall become effective at such
time as the Certificates of Merger are duly filed with such Secretary of
State, or at such other time as Universal and Liberty shall agree and specify
in the Certificates of Merger (the time at which the Mergers become effective
being the "Effective Time").
7
(c) Prior to the Closing, Liberty shall prepare, and on the Closing
Date or as soon as practicable thereafter Liberty shall file with the
Secretary of State of the State of Delaware, a certificate of dissolution or
other appropriate documents (the "Certificate of Dissolution") with respect to
the dissolution of LPF, executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the
DGCL. The dissolution shall become effective at such time as the Certificate
of Dissolution is duly filed with such Secretary of State, or at such other
time as Universal and Liberty shall agree and specify in the Certificates of
Dissolution.
SECTION 2.05. Effects of Mergers. The Mergers shall have the effects
set forth in Section 259 of the DGCL.
SECTION 2.06. Certificates of Incorporation and By-laws. (a) The
Certificate of Incorporation of the surviving corporations of the Mergers
shall be amended at the Effective Time to read in the form of (i) Exhibit A-1,
in the case of LMC USA II, Inc., (ii) Exhibit A-2, in the case of LMC USA III,
Inc., (iii) Exhibit A-3, in the case of LMC USA IV, Inc. and (iv) Exhibit A-4,
in the case of LMC USA V, Inc. and, in each case, such Certificate of
Incorporation, as so amended, shall be the Certificate of Incorporation of
such surviving corporation until thereafter changed or amended as provided
therein or by applicable law.
(b) The By-laws of each Merger Subsidiary as in effect immediately
prior to the Effective Time shall be the By-laws of the surviving corporation
of the Merger to which such Merger Subsidiary is a party until thereafter
changed or amended as provided therein or by Applicable Law.
SECTION 2.07. Directors. The directors of each Merger Subsidiary
immediately prior to the Effective Time shall be the directors of the
surviving corporation of the Merger to which such Merger Subsidiary is a
party, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualified, as the case may be.
SECTION 2.08. Officers. The officers of each Merger Subsidiary
immediately prior to the Effective Time shall be the officers of the surviving
corporation of the Merger to which such Merger Subsidiary is a party, until
the earlier of their resignation or removal or until their respective
successors are duly elected or appointed and qualified, as the case may be.
8
SECTION 2.09. Withholding. Each Universal Party shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement such amounts as it is required to deduct and withhold with respect
to the making of such payment under the Code or any applicable provision of
state, local or foreign Tax law. To the extent that amounts are so withheld by
a Universal Party, such amounts shall be treated for all purposes of this
Agreement as having been paid to the Liberty Party in respect of whose
consideration such deduction or withholding was made.
ARTICLE III
Representations and Warranties of Universal Parties
Each Universal Party represents and warrants to each Liberty Party
as follows:
SECTION 3.01. Organization, Standing and Power. Each Universal Party
(i) is duly organized or formed, validly existing and in good standing under
the laws of the jurisdiction in which it is so organized or formed and (ii)
has full corporate power and authority (A) to own, lease and use as now owned,
leased and used by it all of its assets and properties, (B) to conduct its
business and operations as currently conducted and (C) to perform and comply
with all the terms, covenants and conditions of this Agreement. Each Universal
Party is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of the business transacted
by it or the character or location of the properties owned or leased by it
requires such qualification, except where failure to be so qualified would not
have a material adverse effect on (i) the business, assets, condition
(financial or otherwise) or results of operations of Vivendi and its
subsidiaries, taken as a whole (other than any such effect arising out of or
resulting from general economic conditions, or from changes in or generally
affecting the industries in which Vivendi and its subsidiaries operate in
general and not having a materially disproportionate effect on such party
relative to other industry participants, or as a result of the September 11,
2001 terrorist attacks, their aftermath or any similar events or (ii) the
ability of the Universal Parties to perform their obligations under this
Agreement or the Transaction Documents or on the ability of the Universal
Parties to consummate the Mergers and the other Transactions (a "Universal
Material Adverse Effect" or "Universal Material Adverse Change").
9
SECTION 3.02. Authority; Execution and Delivery; Enforceability.
Each Universal Party has full power and authority (i) to execute and deliver
this Agreement and (ii) to consummate the Transactions to which it is, or is
specified to be, a party. The execution, delivery and performance by each
Universal Party of this Agreement and the consummation by each Universal Party
of the Transactions to which it is, or is specified to be, a party have been
duly authorized by all necessary corporate action, and no other corporate
proceedings on the part of any Universal Party are necessary to authorize this
Agreement or the consummation of the Transactions. Vivendi, as the sole holder
of capital stock of Universal, Universal France and the Merger Subsidiaries,
has approved this Agreement, the Mergers and the other Transactions, and no
further action to approve this Agreement is necessary on the part of such
holder. Each Universal Party has duly executed and delivered this Agreement
and this Agreement constitutes its legal, valid and binding obligations,
enforceable against it in accordance with its terms, except to the extent
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and by general equity principles
regardless of whether such proceeding is considered in equity or at law.
SECTION 3.03. No Conflicts; Consents. (a) The execution, delivery
and performance by each Universal Party of this Agreement does not, and the
consummation of the Transactions will not (with or without the giving notice
of lapse of time, or both), conflict with or result in any breach or violation
of or default under, or give rise to a right of or result in a termination,
cancelation or acceleration of any obligation or to loss of a material benefit
under, or to increased, additional or accelerated rights or entitlements of
any Person under, or result in the creation of any Lien or Encumbrance upon
any of the properties or assets of any Universal Party under, any provision of
(i) the Organizational Documents of any Universal Party, (ii) any Contract,
permit or franchise to which any Universal Party is a party or by which any of
their respective properties or assets is bound or is the beneficiary or (iii)
any judgment, order, injunction, ruling or decree of any Governmental Entity
(collectively, "Judgment") or any applicable statute (including, without
limitation, any applicable state takeover statute or other similar statute or
regulation), law, ordinance, rule or regulation (collectively, "Applicable
Law") applicable to any Universal Party or their respective properties or
assets, except that no representation or warranty is made herein with respect
to (x) Applicable Laws of any jurisdiction located outside of the United
States and the
10
European Community ("Universal Excluded Jurisdictions") and (y) in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, would not have a Universal Material Adverse Effect.
(b) No material consent, approval, license, permit, order or
authorization (collectively, "Consent") of, or registration, declaration or
filing (collectively, "Filings") with, any Federal, state, local or foreign
government or any court of competent jurisdiction, regulatory or
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (collectively, "Governmental Entity"), is
required to be obtained or made by or with respect to any Universal Party in
connection with the execution, delivery and performance of this Agreement or
the consummation of the Transactions (provided, that no representation or
warranty is made by a Universal Party with respect to Consents from, or
Filings with, any Governmental Entity in a Universal Excluded Jurisdiction),
other than (i) compliance with and filings under the HSR Act, the EC Merger
Regulation and the merger regulations of individual countries in Europe, in
each case if applicable, (ii) the filing of such reports under the securities
laws of France, and with the SEC of such reports under Sections 13 and 16 of
the Exchange Act, as may be required in connection with this Agreement, the
Mergers and the other Transactions, (iii) the filing of the Certificates of
Merger with the Secretary of State of the State of Delaware, (iv) compliance
with and such filings as may be required under applicable environmental laws,
(v) such filings as may be required in connection with the Taxes described in
Section 5.02 and (vi) such other items (A) required solely by reason of the
participation of the Liberty Parties (as opposed to any third party) in the
Transactions or (B) that, individually or in the aggregate, have not had and
would not have a Universal Material Adverse Effect.
SECTION 3.04. Merger Subsidiaries. Since the date of their
incorporation, the Merger Subsidiaries have not owned any assets and have not
carried on any business or conducted any operations other than the execution
of this Agreement, the performance of their obligations hereunder and matters
ancillary thereto.
SECTION 3.05. Vivendi Securities. All outstanding Vivendi Shares,
Vivendi ADSs and receipts evidencing Vivendi ADSs are, and all Vivendi Shares,
Vivendi ADSs and receipts evidencing Vivendi ADSs which may be delivered
pursuant to this Agreement and the Deposit Agreement shall when delivered in
accordance with this Agreement be, duly
11
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. The Vivendi Shares, Vivendi ADSs and receipts evidencing
Vivendi ADSs which may be delivered pursuant to this Agreement and the Deposit
Agreement shall, when delivered in accordance with this Agreement, be free and
clear of all Liens or Encumbrances (other than those (x) arising under this
Agreement, (y) arising under any Federal or state securities laws or (z)
created by any Liberty Party). Attached hereto as Exhibit B is a true and
complete copy of the Amended and Restated Deposit Agreement (the "Deposit
Agreement"), dated as of December 8, 2000, among Vivendi, the Bank of New York
(the "Depositary") and all owners and beneficial owners from time to time of
American Depositary Receipts of Vivendi. The Vivendi ADSs to be issued to the
Liberty Parties pursuant to this Agreement will be issued by the Depositary
(as defined in the Deposit Agreement) under the terms of the Deposit
Agreement. The Deposit Agreement is in full force and effect and is
enforceable in accordance with its terms. The Vivendi Shares underlying the
Vivendi ADSs delivered to the Liberty Parties pursuant to this Agreement, when
delivered, will be freely tradeable on the PSE.
SECTION 3.06. Taxes. (a) None of the Universal Parties has taken any
action that is reasonably likely to prevent any Merger or the multiThematiques
Transaction from qualifying as a reorganization within the meaning of Section
368(a) of the Code.
(b) Vivendi is classified as a corporation for U.S. federal income
tax purposes.
(c) Vivendi is, and will be as of the Closing Date, in control of
Universal France and each Merger Subsidiary within the meaning of Section
368(c) of the Code.
(d) None of Vivendi, Universal France or any Merger Subsidiary is an
"investment company" within the meaning of Section 368(a)(2)(F)(iii) and (iv)
of the Code.
(e) None of Vivendi, Universal France, or any Merger Subsidiary is
under the jurisdiction of a court in a case under Title 11 of the United
States Code, or a receivership, foreclosure, or similar proceeding in a
foreign, federal or state court.
(f) Taking into account the application of the special rules set
forth in Treasury Regulations Section 1.367(a)-3(c)(3)(ii), (i) Vivendi or any
"qualified subsidiary" (as defined in Treasury Regulations Section
1.367(a)-3(c)(5)(vii)) or any "qualified partnership" (as
12
defined in Treasury Regulations Section 1.367(a)- 3(c)(5)(viii)) is currently
engaged, and will have been engaged for the entire 36-month period immediately
preceding the Closing Date, in an active trade or business outside the United
States within the meaning of Treasury Regulations Section 1.367(a)-2T(b)(2)
and (3) (the "Active Trade or Business"); and (ii) Vivendi (and, if
applicable, the qualified subsidiary or qualified partnership engaged in the
Active Trade or Business) does not have any plan or intention to substantially
dispose of or discontinue such Active Trade or Business.
(g) On the Closing Date, the fair market value of Vivendi, computed
according to the special rules contained in Treasury Regulation Section
1.367(a)-3(c)(3)(iii)(B), will be at least equal to the fair market value of
LPF and each of the Liberty Holding Entities.
(h) Vivendi believes that it will not be a passive foreign
investment company, as defined in Section 1297(a) of the Code (a "PFIC"), for
its taxable year in which the Closing Date occurs and on the basis of facts
presently known does not expect to become a PFIC for any subsequent taxable
year.
(i) Immediately after the Effective Time, (i) any USANi Shares held
by the surviving corporations in the Mergers will be redeemed for USANi
Liberty Distributed Interests of approximately equal value to the USANi Shares
exchanged therefor, then (ii) the surviving corporations in the Mergers will
contribute the USANi Liberty Distributed Interests to the Partnership in
exchange for interests in the Partnership of approximately equal value to the
USANi Liberty Distributed Interests contributed therefor.
(j) At the Effective Time, neither Vivendi nor any Affiliate of
Vivendi will have any plan or intention to cause any of the surviving
corporations in the Mergers to transfer or otherwise dispose of (x) any of the
USANi Shares, except as described in Section 3.06(i) hereof, or (y) any of the
interests in the Partnership acquired as described in Section 3.06(i).
SECTION 3.07. Absence of Certain Changes or Events. Since December
31, 2000, there has not been any Universal Material Adverse Change.
SECTION 3.08. Financial Statements; Contingent Liabilities. The
audited consolidated financial statements of Vivendi included in the Vivendi
SEC Reports comply as to form in all material respects with applicable
accounting
13
requirements and the published rules and regulations of the SEC and with
respect thereto, have been prepared in accordance with French generally
accepted accounting principles ("French GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto); such financial statements
present fairly, in all material respects, the consolidated financial position
of Vivendi and its subsidiaries as of the respective dates thereof and for the
respective periods covered thereby and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements to normal year-end adjustments). Since the date of the
most recent audited financial statements included in the Vivendi SEC Reports
filed and publicly available prior to the date of this Agreement, except as
Publicly Disclosed by Vivendi (including on the most recent consolidated
balance sheet and the footnotes thereto included in the Vivendi SEC Reports
Publicly Disclosed by Vivendi), Vivendi and its subsidiaries have not incurred
any liabilities that are of a nature that would be required to be disclosed on
a balance sheet of Vivendi and its subsidiaries or the footnotes thereto
prepared in conformity with French GAAP, other than (i) liabilities incurred
in the ordinary course of business, (ii) liabilities for Taxes and (iii)
liabilities that would not, individually or in the aggregate, have a Universal
Material Adverse Effect.
SECTION 3.09. Litigation. Except as set forth on Schedule 3.14 to
the Transaction Agreement or as disclosed in the Vivendi SEC Reports, there
are not any (i) outstanding Judgments against or affecting a Universal Party
or any of its Affiliates, or (ii) Proceedings pending or, to the knowledge of
Vivendi, threatened against or affecting a Universal Party or any of its
Affiliates by or against any Governmental Entity or any other Person, in each
case, that in any manner challenges or seeks to prevent, enjoin, materially
alter or materially delay the Transactions, or that, individually or in the
aggregate, could reasonably be expected to have a Universal Material Adverse
Effect.
SECTION 3.10. Foreign Private Issuer. Vivendi (a) is a "foreign
private issuer" within the meaning of Rule 3b-4 of the Exchange Act and (b)
with respect to the Vivendi ADSs is eligible to use Form 20-F under the
Exchange Act.
SECTION 3.11. Reports. Vivendi has filed with the PSE, the CMF and
the COB true and complete copies of all material forms, reports, schedules,
statements and other documents required to be filed by it under applicable
French
14
securities laws since December 31, 2000 (such forms, reports, schedules,
statements and other documents, including any financial statements or other
documents, including any schedules included therein, are referred to as the
"Vivendi Documents"). The Vivendi Documents have been made available to
Liberty, and at the time filed, (i) did not contain any misrepresentation of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and (ii) complied in all material
respects with the requirements of applicable French securities laws. Vivendi's
Annual Report on Form 20-F for the fiscal year ended December 31, 2000, and
each other report filed by Vivendi since December 31, 2000, at the time filed,
(i) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent revised or superseded by a later filed
document, and (ii) complied in all material respects with the applicable
requirements of Form 20-F under the Exchange Act.
SECTION 3.12. Compliance with Laws. Except as disclosed in the
Vivendi SEC Reports, the business of Vivendi has been and is presently being
conducted in compliance with all Applicable Laws, including those relating to
the environment, except for instances of noncompliance that, individually or
in the aggregate, would not have a Universal Material Adverse Effect.
ARTICLE IV
Representations and Warranties of the Liberty Parties
Each Liberty Party represents and warrants, subject to its
compliance with Article II, to each Universal Party as follows:
SECTION 4.01. Organization, Standing and Power. Each Liberty Party
(i) is duly organized or formed, validly existing and in good standing under
the laws of the jurisdiction in which it is so organized or formed and (ii)
has full corporate or limited liability company power and authority (A) to
own, lease and use as now owned, leased and used by it all of its assets and
properties, (B) to conduct its business and operations as currently conducted
and (C) to perform and comply with all the terms, covenants and conditions of
this Agreement. Each Liberty Party is
15
duly qualified to do business as a foreign corporation or limited liability
company and is in good standing in each jurisdiction in which the nature of
the business transacted by it or the character or location of the properties
owned or leased by it requires such qualification, except where failure to be
so qualified would not have a material adverse effect on the ability of the
Liberty Parties to perform their obligations under this Agreement or on the
ability of the Liberty Parties to consummate the Mergers and the other
Transactions (a "Liberty Material Adverse Effect").
SECTION 4.02. Authority; Execution and Delivery; Enforceability.
Each Liberty Party has full power and authority (i) to execute and deliver
this Agreement and (ii) to consummate the Transactions to which it is, or is
specified to be, a party. The execution, delivery and performance by each
Liberty Party of this Agreement and the consummation by each Liberty Party of
the Transactions to which it is, or is specified to be, a party have been duly
authorized by all necessary corporate or limited liability company action, and
no other corporate proceedings on the part of any Liberty Party are necessary
to authorize this Agreement or the consummation of the Transactions. All of
the holders of capital stock of the Liberty Holding Entities have approved
this Agreement, the Mergers and the other Transactions, and no further action
to approve this Agreement is necessary on the part of the holders of such
capital stock. Each Liberty Party has duly executed and delivered this
Agreement and this Agreement constitutes its legal, valid and binding
obligations, enforceable against it in accordance with its terms, except to
the extent limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and by general equity
principles regardless of whether such proceeding is considered in equity or at
law.
SECTION 4.03. No Conflicts; Consents. (a) The execution, delivery
and performance by each Liberty Party of this Agreement does not, and the
consummation of the Transactions will not (with or without the giving of
notice or lapse of time, or both), conflict with or result in any breach or
violation of or default under, or give rise to a right of or result in a
termination, cancelation or acceleration of any obligation or to loss of a
material benefit under, or to increased, additional or accelerated rights or
entitlements of any Person under, or result in the creation of any Lien or
Encumbrance upon any of the properties or assets of any Liberty Party under,
any provision of (i) the Organizational Documents of any Liberty Party, (ii)
any Contract, permit or franchise to which any Liberty Party is a party or by
which any of their respective
16
properties or assets is bound or is the beneficiary or (iii) any Judgment or
any Applicable Law (including any applicable state takeover statute or other
similar statute or regulation) applicable to any Liberty Party or their
respective properties or assets, except that no representation or warranty is
made herein with respect to (x) Applicable Laws of any jurisdiction located
outside of the United States and the European Community ("Liberty Excluded
Jurisdictions"), (y) in the case of clauses (ii) and (iii) above, any such
items that, individually or in the aggregate, would not have a Liberty
Material Adverse Effect and (z) the Articles of Association of
multiThematiques (the "Articles of Association"), the multiThematiques
Cooperation Agreement and the Option Agreements.
(b) No material Consent of, or Filing with, any Governmental Entity
is required to be obtained or made by or with respect to any Liberty Party in
connection with the execution, delivery and performance of this Agreement or
the consummation of the Transactions (provided, that no representation or
warranty is made by a Liberty Party with respect to Consents from, or Filings
with, any Governmental Entity in a Liberty Excluded Jurisdiction), other than
(i) compliance with and filings under the HSR Act, the EC Merger Regulation
and the merger regulations of individual countries in Europe, in each case if
applicable, (ii) the filing of such reports as may be required under the
securities laws of France, and with the SEC of such reports under Sections 13
and 16 of the Exchange Act, as may be required in connection with this
Agreement, the Mergers and the other Transactions, (iii) the filing of the
Certificates of Merger and the Certificate of Dissolution with the Secretary
of State of the State of Delaware, (iv) compliance with and such filings as
may be required under applicable environmental laws, (v) such filings as may
be required in connection with any Taxes, (vi) filings with the Ministry of
Economy of France in connection with the liquidation of a foreign investment
and (vii) such other items (A) required solely by reason of the participation
of the Universal Parties (as opposed to any third party) in the Transactions
or (B) that, individually or in the aggregate, have not had and would not have
a Liberty Material Adverse Effect.
SECTION 4.04. Capitalization; Ownership and Validity of Shares. (a)
The authorized and issued capital stock of each of the Liberty Holding
Entities is set forth on Exhibit C hereto. The shares of capital stock of such
Liberty Holding Entities are referred to herein as the "Liberty Shares". LPC
owns of record all of the issued and outstanding Liberty Shares, and such
Liberty Shares constitute all of the issued and outstanding shares of
17
capital stock of the Liberty Holding Entities. All of the outstanding Liberty
Shares are duly authorized, validly issued, fully paid and non-assessable. LPC
owns all of the Liberty Shares free and clear of any Lien or Encumbrance
(other than those (x) arising under the Shareholder Arrangements, (y) arising
under any Federal or state securities laws or arising in connection with an
Excluded Tax Liability or (z) created by any Universal Party (collectively,
"Liberty Permitted Encumbrances")). There are no agreements or commitments of
any kind by any Liberty Party or any of their Affiliates, including LPC and
the Liberty Holding Entities, to issue any shares of capital stock of the
Liberty Holding Entities, or any securities convertible into, or exercisable
or exchangeable for the capital stock of the Liberty Holding Entities.
(b) As of the date of this Agreement and immediately prior to the
exchange contemplated by Section 2.01, the Liberty Holding Entities
collectively own in the aggregate 40,000,000 USANi Shares, free and clear of
any Encumbrances other than Liberty Permitted Encumbrances. After the exchange
contemplated by Section 2.01 has been completed, (i) assuming that USAi
complies with the Exchange Agreement, the Liberty Holding Entities
collectively will own in the aggregate 38,694,982 USANi Shares (collectively,
the "Liberty USANi Shares") and (ii) assuming USAi complies with the Exchange
Agreement, the Liberty Holding Entities and Liberty HSN LLC Holdings, Inc.
collectively will own in the aggregate 1,305,038 USAi Common Shares and the
Liberty Parties set forth on Schedule II collectively will own 23,694,962 USAi
Common Shares (collectively, the "Liberty USAi Shares"), in each case free and
clear of any Encumbrances other than Liberty Permitted Encumbrances.
Immediately following the USAi Share Exchanges, assuming that the USAi Share
Exchange I is effected in full without regard to the proviso in Section
2.02(a)(i), and that USAi complies with the Exchange Agreement, Universal will
own 25,000,000 Liberty USAi Shares and, immediately prior to the Effective
Time, each of the Liberty Holding Entities will own the number of Liberty
USANi Shares set forth next to its name in Schedule III hereto, in each case
free and clear of any Encumbrances other than Liberty Permitted Encumbrances.
Immediately following the Mergers, each of the surviving corporations of the
Mergers will own the number of Liberty USANi Shares set forth next to its name
in Schedule III hereto, in each case free and clear of any Encumbrances other
than Liberty Permitted Encumbrances.
(c) As of the date of this Agreement and immediately prior to the
multiThematiques Acquisition, LPF owns, and immediately following the
multiThematiques
18
Acquisition, Universal France will own, 4,921,250 multiThematiques Shares, in
each case free and clear of any Encumbrances (other than those (x) arising
under the multiThematiques Cooperation Agreement, the Articles of Association
and the Option Agreements, (y) arising under any Federal, state or foreign
securities laws or (z) created by any Universal Party). Except for (i) such
4,921,250 multiThematiques Shares, (ii) three shares held as directors'
qualifying shares and (iii) as provided in the Call Option Agreement, the
Articles of Association and the multiThematiques Cooperation Agreement,
directly or indirectly, any capital stock or other ownership interest or any
option or right to acquire any capital stock or other ownership interest in
multiThematiques.
SECTION 4.05. No Liabilities of the Liberty Holding Entities and
LPF. (i) None of the Liberty Holding Entities or LPF has any material assets
other than the Liberty USANi Shares and the Liberty USAi Shares in the case of
the Liberty Holding Entities, or the multiThematiques Shares, the Loan
Agreement and, the Call Option Agreement, and LPF's rights under the Articles
of Association and the multiThematiques Cooperation Agreement, in the case of
LPF, or any liabilities of any kind whatsoever, whether absolute or
contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, other than the obligation to
consummate the Mergers, the multiThematiques Transaction and the other
Transactions, other than liabilities to be assumed by Universal France
pursuant to Section 5.09 hereof, and other than liabilities (x) that are
immaterial and (y) as to which the Universal Parties and their Affiliates have
a reasonable likelihood of being fully indemnified by Liberty pursuant to
Article VIII below; (ii) upon consummation of the Mergers, the Universal
Parties and their Affiliates will not have any obligation or liability in
respect of any liabilities of any of the Liberty Holding Entities other than
those described in the preceding clause (i) that are covered by the
indemnification described in clause (i)(y); (iii) upon consummation of the
multiThematiques Transaction, the Universal Parties and their Affiliates will
not have any obligation or liability in respect of any liabilities of LPF,
other than liabilities to be assumed by Universal France pursuant to Section
5.09 hereof, and other than those described in the preceding clause (i) that
are covered by the indemnification described in clause (i)(y); and (iv) upon
consummation of the Mergers, all of the capital stock of the Liberty Holding
Entities shall have been converted, free of any Encumbrances other than
Liberty Permitted Encumbrances. Notwithstanding the foregoing, no
representation or warranty is made (and no indemnification
19
obligation on the part of any Liberty Party shall be incurred or created) with
respect to (a) any Transfer Taxes for which Vivendi is responsible pursuant to
Section 5.02(b), (b) any Tax liabilities resulting solely from the exchange of
USANi Shares for USAi Common Shares pursuant to Section 2.01(a) hereof or the
USAi Share Exchange I, (c) any Tax liabilities resulting solely from any
restructuring of, or modification to the terms of, the multiThematiques
Transaction pursuant to Section 5.01(d) hereof, (d) any Tax liabilities for
which Vivendi is responsible pursuant to Section 8.01(b)(iii), (e) any Tax
liabilities resulting solely from a breach by Vivendi of any of its
representations and warranties set forth in Sections 3.06(i) and 3.06(j), and
(f) any Tax liabilities (the "Excluded Tax Liabilities") resulting from any
Merger or the multiThematiques Transaction being a taxable transaction to the
relevant Liberty Holding Entity or LPF which result solely from any breach of
any of the representations and warranties set forth in Sections 3.04 and 3.06,
any breach by any Universal Party or any of their Affiliates of the covenants
set forth in Section 5.05 or any action (other than any action contemplated by
the Transaction Documents including, for the avoidance of doubt, any action
contemplated by Section 3.06(i) of this Agreement) taken by any Universal
Party or any of their Affiliates after the Effective Time (other than any Tax
liability which results solely from (x) any breach of the representations and
warranties set forth in Section 4.06(c), (e) or (f) or any breach by any
Liberty Party or any of their Affiliates of the covenants set forth in Section
5.05, (y) any action or unreasonable inaction by any Liberty Party or any of
their Affiliates (other than due to an action or inaction contemplated by the
Transaction Documents) or (z) any action or inaction of any Universal Party or
any of their Affiliates contemplated by the Transaction Documents, including,
for the avoidance of doubt, any action contemplated by Section 3.06(i) of this
Agreement.
SECTION 4.06. Taxes. (a) All material Returns required to be filed
by or on behalf of each of the Liberty Holding Entities or LPF or with respect
to the USANi Shares, the USAi Common Shares, the multiThematiques Shares or
any other asset of LPF have been duly filed in a timely manner and all such
Returns are true, complete and correct in all material respects. All Taxes
shown to be due on such Returns and all Taxes otherwise due and payable have
been timely paid in full or will be timely paid in full by the due date
thereof. No material Tax liens have been filed with respect to the USANi
Shares, the USAi Common Shares or with respect to the assets of the Liberty
Holding Entities or LPF.
20
(b) No deficiencies, audit examinations, refund litigation, proposed
adjustments or matters in controversy for any Taxes have been proposed,
asserted or assessed against any Liberty Holding Entity, or LPF except for
deficiencies, audit examinations, refund litigation, proposed adjustments or
matters in controversy that individually or in the aggregate would not have a
Liberty Material Adverse Effect. The Federal income Tax Returns of LPF have
been examined by and settled with the U.S. Internal Revenue Service or have
closed by virtue of the applicable statute of limitations for all taxable
years through 1992. All assessments for Taxes due and owing by each Liberty
Holding Entity or LPF with respect to completed and settled examinations or
concluded litigation have been paid. Except as set forth on Schedule 4.06(b),
there is no currently effective agreement or other document extending, or
having the effect of extending, the period of assessment or collection of any
Taxes.
(c) None of the Liberty Holding Entities nor LPF has been a "United
States real property holding corporation" within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. None of the Liberty Holding Entities nor LPF has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations.
(d) None of the Liberty Holding Entities, nor LPF, as the case may
be, has constituted either a "distributing corporation" or a "controlled
corporation" in a distribution of stock qualifying for tax-free treatment
under Section 355 of the Code (A) in the two years prior to the date of this
Agreement or (B) in a distribution which could otherwise constitute part of a
"plan" or "series of related trans actions" (within the meaning of Section
355(e) of the Code) in conjunction with the Mergers or the multiThematiques
Transaction, as the case may be.
(e) None of the Liberty Parties has taken any action that is
reasonably likely to prevent any Merger or the multiThematiques Transaction
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(f) multiThematiques is not and will not have been at any time
during the taxable year that includes the Closing Date a controlled foreign
corporation, as defined in Section 957(a) of the Code, or a PFIC or a
pass-through entity for U.S. Federal income tax purposes.
(g) Each Liberty Holding Entity purchased all its
21
USANi Shares solely for cash and directly from USANi.
(h) None of the Liberty Holding Entities or LPF have any current
non-contingent liability for the Taxes of any Person under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign law),
as a transferee or successor, by contract, or otherwise.
(i) None of the Liberty Holding Entities or LPF have any liabilities
for the payment of any amounts as a result of being party to any Tax sharing
agreement or as a result of any express or implied obligation to indemnify any
other Person with respect to the payment of any Taxes, except pursuant to the
terms of this Agreement.
(j) Based on facts currently known as of the date of this Agreement,
Liberty believes that neither it nor any member of the Selling Affiliated
Group is required to file a gain recognition agreement under Section 367 of
the Code with respect to any of the Mergers or the multiThematiques
Transaction and therefore does not intend, as of the date of this Agreement,
to file a gain recognition agreement with respect to any of the Mergers or the
multiThematiques Transaction.
SECTION 4.07. Investment Intent. The Liberty Parties are not
acquiring the Vivendi ADSs to be received pursuant to Article II with a view
to or for sale (as defined in the Securities Act) in connection with any
distribution thereof within the meaning of the Securities Act except pursuant
to an exemption therefrom or pursuant to an effective registration statement.
ARTICLE V
Agreements and Covenants
SECTION 5.01. Reasonable Best Efforts. (a) On the
terms and subject to the conditions of this Agreement, each
party hereto shall use its reasonable best efforts to cause
the Closing to occur as soon as practicable after the date
hereof (but subject to the satisfaction of the conditions
set forth in Article VI).
(b) Prior to the Closing each party hereto (at its own expense)
shall use its reasonable best efforts to obtain all consents and approvals
from third parties necessary or appropriate to permit the consummation by such
party of the Transactions.
22
(c) Following the date hereof, each party hereto shall file promptly
any forms required under applicable law and take any other action reasonably
necessary in connection with obtaining any approvals and the expiration or
termination of any waiting periods under the HSR Act and the EC Merger
Regulation and the merger regulations of individual countries in Europe, in
each case to the extent applicable to the Transactions.
Notwithstanding anything to the contrary contained herein, neither
Liberty nor Vivendi nor any of their respective Affiliates shall be required
by this Section 5.01 to: (i) pay any consideration that is not de minimus,
(ii) surrender, modify or amend in any respect any material license or
contract (including this Agreement, the Shareholders Arrangements or the
Transaction Documents), (iii) hold separately (in trust or otherwise), divest
itself of, or otherwise rearrange the composition of, any assets, (iv) agree
to any limitations on any such person's freedom of action with respect to
future acquisitions of assets or with respect to any existing or future
business or activities or on the enjoyment of the full rights or ownership,
possession and use of any asset now owned or hereafter acquired by any such
person, or (v) agree to any of the foregoing or any other conditions or
requirements of any Governmental Entity or other person that are materially
adverse or burdensome.
(d) In the event that notification under the EC Merger Regulation,
or under the merger regulations of individual countries in Europe, is
necessary for the consummation of the multiThematiques Transaction, and the
European Commission elects to extend its inquiry beyond a "phase I" inquiry,
or another comparable commission elects a similar inquiry that would otherwise
similarly delay the Closing, then the parties shall negotiate in good faith to
enter into such amendments of this Agreement as may be required so that: (i)
the obligations of the parties to consummate the Transactions shall not be
subject to any approvals or the expiration or termination of any waiting
periods under the EC Merger Regulation or the merger regulation of such
individual country in Europe necessary for the consummation of the
multiThematiques Transaction and the Closing Date shall not be delayed until
such approvals are obtained or such waiting periods have expired or
terminated; and (ii) Liberty will receive all the economic benefits of the
multiThematiques Transaction on the Closing Date; provided, however, that if
Vivendi shall propose such an arrangement pursuant to which the Liberty
Parties will receive on the Closing Date the same number of Vivendi ADSs, in
the same manner, and on the same terms and conditions as
23
provided in this Agreement, and subject to no restrictions other than those to
which they would be subject if this Section 5.01(d) were not applicable, then
the parties hereto shall execute such appropriate amendments of this Agreement
as may be required to effect such arrangement.
(e) Vivendi shall obtain all consents, approvals, releases or
waivers, as applicable, with respect to the right of first refusal under
Section 5.2 of the multiThematiques Cooperation Agreement and the first and
second rank preemptive right under Article 13 of the Articles of Association,
in each case necessary for the consummation of the multiThematiques
Transaction, and shall ensure that no shareholder of multiThematiques asserts
such right of first refusal or preemptive rights. Vivendi shall use its
reasonable best efforts to obtain such consents, approvals, releases or
waivers, as applicable, as promptly as practicable so as not to delay the
Closing Date.
SECTION 5.02. Expenses; Transfer Taxes. (a) Whether or not the
Closing takes place, and except as set forth in Article VIII, all costs and
expenses incurred in connection with the preparation of this Agreement and the
consummation of the Transactions shall be paid by the party incurring such
expense, including all costs and expenses incurred pursuant to Section 5.01.
(b) All stock transfer, real estate transfer, documentary, stamp,
recording and other similar Taxes (including interest, penalties and additions
to any such Taxes) ("Transfer Taxes") incurred in connection with the Mergers
or the multiThematiques Transaction, as the case may be, shall be paid by the
applicable Liberty Holding Entity, or LPF, as the case may be, out of its own
funds. All other Transfer Taxes incurred in connection with the Transactions
shall be shared equally between the Liberty Parties, on the one hand, and
Vivendi, on the other hand. The Liberty Parties, the Merger Subsidiaries,
Universal France, Universal and Vivendi shall cooperate in preparing,
executing and filing any Returns with respect to such Transfer Taxes.
SECTION 5.03. Publicity. From the date hereof through the Closing
Date, no public release or announcement concerning the Transactions shall be
issued by any party without the prior consent of the other parties (which
consent shall not be unreasonably withheld), except as such release or
announcement may be required by law or the rules or regulations of any United
States or foreign securities exchange or commission (in which case the party
required to make the release or announcement shall allow the other party
24
reasonable time to comment on such release or announcement in advance of such
issuance); provided, however, that a party may make internal announcements to
its and its Affiliates' employees that are consistent with the parties' prior
public disclosures regarding the Transactions.
SECTION 5.04. Further Assurances. From time to time prior to and
after the Closing, as and when reasonably requested by another party, each
party shall execute and deliver, or cause to be executed and delivered, all
such documents and instruments and shall take, or cause to be taken, all such
further or other actions (subject to Section 5.01), as such other party may
reasonably deem necessary or desirable to consummate the Transactions. From
the date hereof until the Effective Time, Liberty and the Liberty Holding
Entities shall, and shall cause the officers, directors, employees and agents
of such parties to, afford the officers, employees and agents of Vivendi
reasonable access at all reasonable times to the books and records of the
Liberty Holding Entities.
SECTION 5.05. Tax Treatment. (a) The parties intend each of the
Mergers and the multiThematiques Transaction to qualify as a reorganization
under Section 368(a) of the Code. Each party and its Affiliates shall use
reasonable efforts to cause the Mergers and the multiThematiques Transaction
to so qualify. Each of the parties hereto and each of their respective
Affiliates shall not take (or cause to be taken) any action and shall not fail
to take (or cause not to be taken) any action or suffer to exist any condition
which action or failure to act or condition would prevent, or would be
reasonably likely to prevent, any Merger or the multiThematiques Transaction
from qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(b) Each of the parties and its Affiliates will comply with all
reporting and record-keeping requirements applicable to each of the Mergers
and the multiThematiques Transaction which are prescribed by the Code, by
Treasury Regulations thereunder, or by forms, instructions, or other
publications of the Internal Revenue Service. None of the parties or any of
their Affiliates will take any position on any foreign, federal, state or
local income or franchise tax return, or take any other tax reporting position
that is inconsistent with the treatment of each of the Mergers and the
multiThematiques Transaction as a separate reorganization within the meaning
of Section 368(a) of the Code, unless otherwise required by a "determination"
(as defined in Section 1313(a)(1) of the Code).
25
SECTION 5.06. Tax Matters. From the date hereof through the Closing
Date, (i) each Liberty Holding Entity and LPF will file all Returns
("Post-Signing Returns") required to be filed by them in a timely manner, (ii)
timely pay all Taxes due and payable in respect of such Post- Signing Returns,
(iii) accrue a reserve in the books and records and financial statements of
any such entity in accordance with past practice for all Taxes payable by such
entity for which no Post-Signing Return is due prior to the Closing Date; (iv)
promptly notify Universal of any suit, claim, action, investigation,
proceeding or audit (collectively, "Actions") pending against or with respect
to any Liberty Holding Entity or LPF in respect of any Tax and not settle or
compromise any such Action without Universal's consent; (v) not make any
material Tax election or settle or compromise any material Tax liability,
other than in connection with currently pending proceedings or other than in
the ordinary course of business; and (vi) cause all existing Tax sharing
agreements, Tax indemnity obligations and similar agreements, arrangements and
practices with respect to Taxes to which any Liberty Holding Entity or LPF is
a party or by which any Liberty Holding Entity or LPF is otherwise bound to be
terminated as of the Closing Date so that after such date none of the Liberty
Holding Entities nor LPF shall have any further rights or liabilities
thereunder.
SECTION 5.07. Resignation of multiThematiques Directors. LPF shall
cause each member of the Board of Directors of multiThematiques whose
appointment was proposed by LPF under the multiThematiques Cooperation
Agreement to deliver to multiThematiques (with copies to Universal) on the
Closing Date, (i) such director's duly signed written resignations, (ii) a
full release of liability resulting solely from termination of the employment
agreement, if any, of such resigning director, effective immediately after
such closing, and (iii) to surrender any director's qualifying shares in
multiThematiques held by such resigning director.
SECTION 5.08. Vivendi Securities. Vivendi shall use its reasonable
best efforts to ensure that, after the Closing Date, upon issuance by the
Depositary to the Liberty Parties or their permitted transferees of Vivendi
Shares in exchange for Vivendi ADSs in accordance with the terms of the
Deposit Agreement, such Vivendi Shares shall be freely tradeable on the PSE
(or such other principal exchange upon which the Vivendi Shares are then
listed or traded).
SECTION 5.09. Put Option Agreements. Universal France shall assume
the obligations of LPF under the multiThematiques Cooperation Agreement, the
Option
26
Agreements and the Loan Agreement and any other obligations in respect of any
multiThematiques shareholder arrangements to which LMI and/or LPF, on the one
hand, and Vivendi and/or one or more of its Affiliates, on the other hand, are
parties, in each case relating to periods after the Closing Date, and shall
use its reasonable best efforts to cause LMI and LPF to be released from such
obligations.
ARTICLE VI
Conditions Precedent
SECTION 6.01. Conditions to Each Party's Obligation. The obligation
of each party to consummate the Transactions is subject to the satisfaction on
the Closing Date of the following conditions, any one or more of which
conditions of each party may be waived by such party to the extent permitted
by law:
(a) Other than such Consents, registrations, declarations or filings
the failure of which to obtain would not have a Universal Material Adverse
Effect or a Liberty Material Adverse Effect, all Consents of, or
registrations, declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity necessary for the consummation of the
Transactions shall have been obtained or filed or shall have occurred and
continue to be in effect, including any approvals and the expiration or
termination of any waiting periods under the HSR Act and, subject to Section
5.01(d), the EC Merger Regulation and the merger regulations of individual
countries in Europe, to the extent applicable to the Transactions.
(b) No Applicable Law or Judgment enacted, entered, promulgated,
enforced or issued by any Governmental Entity or other legal restraint or
prohibition preventing the consummation of the Transactions shall be in
effect.
(c) All conditions set forth in Article V of the Transaction
Agreement shall have been satisfied in accordance with their terms or
irrevocably waived and the Closing (as defined in the Transaction Agreement)
shall occur in accordance with the terms of the Transaction Agreement and each
of the Transaction Documents in the form attached thereto concurrently with
the Closing of the Transactions.
SECTION 6.02. Conditions to the Obligations of the Universal
Parties. The obligation of the Universal Parties to consummate the
Transactions is subject to the
27
satisfaction on the Closing Date of the following conditions, any one or more
of which conditions may be waived by Universal and the Merger Subsidiaries to
the extent permitted by law:
(a) Except to the extent that the failure of such representations
and warranties to be true and correct, in the aggregate, would not have a
Liberty Material Adverse Effect: the representations and warranties of the
Liberty Parties made in this Agreement, without regard to any materiality or
Liberty Material Adverse Effect qualification, as of the date hereof and in
the case of the representations and warranties set forth in Section 4.01,
4.02, 4.03 (only with respect to the Organizational Documents referred to
therein), 4.04, 4.05, 4.06 and 4.07, as of the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date
(in which case such representations and warranties shall be true and correct
as of such earlier date), and Universal shall have received a certificate
signed by an executive officer of Liberty to such effect.
(b) The Liberty Parties shall have performed or complied in all
material respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Liberty Parties by the
Closing Date, and Universal shall have received a certificate signed by an
authorized officer of Liberty to such effect.
SECTION 6.03. Conditions to the Obligations of the Liberty Parties.
The obligation of the Liberty Parties to consummate the Transactions is
subject to the satisfaction on the Closing Date of the following conditions,
any one or more of which conditions may be waived by the Liberty Parties to
the extent permitted by law:
(a) Except to the extent that the failure of such representations
and warranties to be true and correct, in the aggregate, would not have a
Universal Material Adverse Effect: the representations and warranties of the
Universal Parties made in this Agreement, without regard to any materiality or
Universal Material Adverse Effect qualification, shall be true and correct as
of the date hereof and, in the case of the representations and warranties set
forth in Sections 3.01, 3.02, 3.03 (only with respect to the Organizational
Documents referred to therein), 3.04, 3.05 and 3.06, as of the Closing Date,
except to the extent such representations and warranties expressly relate to
an earlier date (in which case such representations and warranties shall be
true and correct as of such earlier date), and Liberty shall have received a
28
certificate signed by an executive officer of Universal to such
effect.
(b) The Universal Parties shall have performed or complied in all
respects with all obligations and covenants set forth in Section 5.01(e) and
in all material respects with all other obligations and covenants required by
this Agreement to be performed or complied with by the Universal Parties by
the Closing Date, and Liberty shall have received a certificate signed by an
authorized officer of Universal to such effect.
(c) The Registration Statement shall have been declared effective by
the SEC under the Securities Act. No stop order suspending the effectiveness
of the Registration Statement shall have been initiated or, to the knowledge
of the Universal Parties, threatened by the SEC. The issuance of the Vivendi
ADSs to the Liberty Parties pursuant to this Agreement shall have been
qualified under applicable state securities laws. Such Vivendi ADSs shall have
been accepted for listing on the New York Stock Exchange, subject to official
notice of issuance.
(d) The Tax Distribution referred to in Section 4.20 of the
Transaction Agreement shall have been made.
ARTICLE VII
Termination
SECTION 7.01. Termination. (a) Notwithstanding anything to the
contrary in this Agreement, this Agreement may be terminated and the Mergers
and the other Transactions abandoned at any time prior to the Effective Time:
(i) by mutual written consent of the parties hereto;
(ii) by any party hereto if the Transaction Agreement is terminated;
(iii) by either party if any Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any Judgment restraining,
enjoining or otherwise prohibiting any of the Transactions and such
Judgment shall have become final and nonappealable; or
(iv) by any party hereto, if the Closing does not occur on or prior
to September 30, 2002;
29
provided, however, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not in breach of any of its representations, warranties,
covenants or agreements contained in this Agreement in any material respect.
(b) In the event of termination by a party pursuant to this Section
7.01, written notice thereof shall forthwith be given to the other parties,
and the Transactions shall be terminated without further action by any party.
If this Agreement is terminated as provided herein, each party shall return
all documents and other material received from any other party relating to the
Transactions, whether so obtained before or after the execution hereof.
SECTION 7.02. Effect of Termination. (a) If this Agreement is
terminated and the Transactions are abandoned as described in Section 7.01,
this Agreement shall become null and void and of no further force and effect,
except for the provisions of (i) Section 5.02 relating to certain expenses,
(ii) Section 5.03 relating to publicity, (iii) Section 7.01 and this Section
7.02 relating to termination and (iv) Article VIII relating to
indemnification. Nothing in this Section 7.02 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement.
ARTICLE VIII
Indemnification
SECTION 8.01. Indemnification. (a) Liberty hereby agrees to
indemnify and hold harmless the Universal Parties and their Affiliates from
and against (but without duplication) (i) any and all damages, claims, losses,
expenses, costs, obligations and liabilities, including, without limiting the
generality of the foregoing, liabilities for all Taxes and all reasonable
attorneys' fees and expenses, net of Tax benefits as and when realized and any
recovery from any third party including, without limitation, insurance
proceeds and taking into account Tax costs as and when suffered, directly or
indirectly, by the Universal Parties and their Affiliates ("Losses"), arising
out of a breach of any representation or warranty set forth in Section 4.04,
4.05 or 4.06 or any covenant of any Liberty Party set forth in Section 5.05,
(ii) any other liability including liability for Taxes of any of the Liberty
Holding Entities relating to the period or portion thereof ending at or prior
to the Effective Time, (iii) any other liability,
30
including liability for Taxes, of or in respect of LPF other than liability of
LPF assumed pursuant to Section 5.09 hereof, (iv) all liability for Transfer
Taxes for which any Liberty Party is responsible pursuant to Section 5.02(b)
and (v) any liability under Treasury Regulation Section 1.1502-6 or under any
comparable or similar provisions under state, local or foreign Tax laws or
regulations for periods or portions thereof ending on or prior to the Closing
Date, in the case of each of the preceding clauses (i) through (v) without
regard to materiality, other than, in the case of those preceding clauses, any
Loss or other liability for (t) any Tax liabilities for which Vivendi is
responsible pursuant to Section 8.01(b)(iii), (u) any Tax liabilities
resulting solely from a breach by Vivendi of any of its representations and
warranties set forth in Sections 3.06(i) and 3.06(j), (v) Transfer Taxes for
which Vivendi is responsible pursuant to Section 5.02(b), (w) any Tax
liabilities resulting solely from the exchange of USANi Shares for USAi Common
Shares pursuant to Section 2.01(a) hereof or, if consummated, the USAi Share
Exchange I, (x) any Tax liabilities resulting solely from any restructuring
of, or modification to the terms of, the multiThematiques Transaction pursuant
to Section 5.01(d) hereof, (y) an Excluded Tax Liability and (z) any Loss
arising as a result of such indemnified person's equity ownership of USANi
relating to the period prior to the Effective Time. If a claim by a third
party is made against a Universal Party, and if such Universal Party intends
to seek indemnity with respect thereto under this Section, such Universal
Party shall promptly notify Liberty in writing of such claims setting forth
such claims in reasonable detail; provided that the failure to so notify
Liberty shall not limit such Universal Party's rights to indemnity except to
the extent Liberty is materially prejudiced thereby. Liberty shall as promptly
as practicable, and in any event no later than 20 days after receipt of such
notice, undertake, through counsel of its own choosing and at its own expense,
the settlement or defense thereof, and the Universal Parties shall cooperate
with it in connection therewith; provided, however, that the Universal Parties
may participate in such settlement or defense through counsel chosen by the
Universal Parties, provided that the fees and expenses of such counsel shall
be borne by the Universal Parties unless the Universal Parties shall have
reasonably determined that representation by the same counsel would be
inappropriate under applicable standards of appropriate conduct due to actual
or potential differing interests between the Universal Parties and Liberty,
and in that event, the fees and expenses of such counsel shall be paid by
Liberty. If Liberty assumes such defense, the Universal Parties shall have the
right to participate in the defense
31
thereof and to employ counsel, at their own expense (subject to the preceding
sentence), separate from the counsel employed by Liberty, it being understood
that Liberty shall control such defense. In the event that Liberty assumes
such defense, the Universal Parties shall cooperate with Liberty in such
defense and make available to Liberty, at Liberty's expense, all pertinent
records, materials and information in their possession or under their control
relating thereto as is reasonably required by Liberty. The Universal Parties
shall not pay or settle any claim which Liberty is contesting without the
prior written consent of Liberty, which consent shall not be unreasonably
withheld. Liberty shall not settle any claim unless such settlement (i)
contains an unconditional release of the Universal Parties and their
Affiliates from any and all liability with respect to such third party claim
and (ii) does not otherwise impose new or additional limitations or
restrictions on any Universal Party or any of their Affiliates, without the
prior written consent of Universal which consent shall not be unreasonably
withheld. Notwithstanding the foregoing, the Universal Parties shall have the
right to pay or settle any such claim, provided that in such event it shall
waive any right to indemnity therefor from Liberty. If Liberty does not notify
a Universal Party within 20 days after the receipt of such Universal Party's
notice of a claim of indemnity regarding a third party claim hereunder that it
elects to undertake the defense thereof, such Universal Party shall have the
right to contest, settle or compromise the claim but shall not thereby waive
any right to indemnity therefor pursuant to this Agreement.
(b)(i) In the event that any Merger is taxable to LPC or any other
member of the Selling Affiliated Group or the multiThematiques Transaction is
taxable to LMI, LPF or any other member of the Selling Affiliated Group, in
each case as a result of a breach of any of the representations and warranties
set forth in Sections 3.04 and 3.06 or any of the covenants of the Universal
Parties set forth in Section 5.05 or any action (other than any action
contemplated by the Transaction Documents including, for the avoidance of
doubt, any action contemplated by Section 3.06(i) of this Agreement) taken by
any of the Universal Parties after the Effective Time (other than any Tax
liability that results solely from (x) a breach of the representations and
warranties set forth in Section 4.06(c), (e) or (f) or any breach by any
Liberty Party of the covenants set forth in Section 5.05 or (y) an action or
unreasonable inaction by any Liberty Party (other than due to an action or
inaction contemplated by the Transaction Documents), or any action or inaction
of the Universal
32
Parties contemplated by the Transaction Documents including, for the avoidance
of doubt, any action contemplated by Section 3.06(i) of this Agreement,
Vivendi shall indemnify and hold harmless LPC, LMI, LPF, and such other
members of the Selling Affiliated Group, as applicable, on an after-Tax basis
for the amount of any resulting Adjustments on any Return filed in respect of
such indemnified party. To the extent permitted by law, the parties agree to
treat any indemnity payments pursuant to this Section 8.01(b)(i) as
adjustments to the consideration paid in the Mergers or the multiThematiques
Transaction, as applicable.
(ii) Vivendi shall indemnify and hold harmless the Liberty Parties
on an after-Tax basis for the amount of any Adjustments on any Return
filed or to be filed in respect of such indemnified parties that result
solely from (a) the exchange of USANi Shares for USAi Common Shares
pursuant to Section 2.01(a) hereof and, if consummated, the USAi Share
Exchange I, (b) any restructuring of, or modification to the terms of,
the multiThematiques Transaction pursuant to Section 5.01(d) hereof,
and/or (c) a breach of any of the representations and warranties set
forth in Sections 3.06(i) and 3.06(j) hereof. To the extent permitted by
law, the parties agree to treat any indemnity payments pursuant to
clauses (a) and (c) of this Section 8.01(b)(ii) as adjustments to the
consideration paid in the Mergers and indemnity payments pursuant to
clause (b) of this Section 8.01(b)(ii) as adjustments to the
consideration paid in the multiThematiques Transaction.
(iii) Unless, as of the Closing Date, at least 35% of the Common
Interests (as defined in the Partnership Agreement) are held in the
aggregate by Vivendi or one or more Affiliates of Vivendi (other than the
surviving corporations of the Mergers) who are members of the same
"qualified group" (within the meaning of Treasury Regulation Section
1.368-1(d)(4)(ii)) with the surviving corporations of the Mergers and
Vivendi, Vivendi shall indemnify and hold harmless the Liberty Parties on
an after-Tax basis for the amount of any Adjustments on any Return filed
in respect of such indemnified parties that result solely from any of the
Mergers failing to qualify as a reorganization within the meaning of
Section 368(a) of the Code solely as a result of the transactions
contemplated by Sections 2.02 and 2.03(a) of the Transaction Agreement.
To the extent permitted by law, the parties agree to treat any indemnity
payments pursuant to this Section 8.01(b)(iii) as adjustments to the
consideration paid in the Mergers.
33
(c) Gain Recognition Agreements; Indemnity. If Liberty (or another
member of the Selling Affiliated Group) becomes a five-percent shareholder
(within the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii)) of
Vivendi in connection with the Mergers and/or the multiThematiques Transaction
solely as a result of the receipt of Vivendi ADSs in connection with (i) the
Transactions, (ii) any indemnification payment made pursuant to Section
8.01(b) or (iii) any purchases of Vivendi ADSs made by any Liberty Party
directly from Vivendi in connection with the Transactions (a "Five-Percent
Shareholder Event") and is required, solely as a result of such Five-Percent
Shareholder Event, to enter into one or more gain recognition agreements under
Section 367 of the Code (including any new gain recognition agreements that
Liberty (or another member of the Selling Affiliated Group) may be required to
enter into as a result of any nonrecognition transfer described in Treasury
Regulations Sections 1.367(a)-8(g)(2) or (3)) with respect to the Mergers
and/or the multiThematiques Transaction, Vivendi will, effective as of the
date of such Five-Percent Shareholder Event, indemnify and hold harmless
Liberty (the "GRA Indemnity), on an after-Tax basis, for the amount of any
Adjustments on any Return filed by Liberty or any other member of the Selling
Affiliated Group which are required to be made as a result of any gain
triggered pursuant to such gain recognition agreements (or new gain
recognition agreements) solely as a result of any action taken by Vivendi or
any of its Affiliates after the Effective Time (other than any action or
inaction contemplated by the Transaction Documents (except for any action
contemplated by Section 3.06(i) of this Agreement)); provided, however, that
for purposes of this Section 8.01(c), the determination of whether Liberty (or
another member of the Selling Affiliated Group) is a five-percent shareholder
shall be made by taking into account only those Vivendi Securities acquired
pursuant to clauses (i), (ii) and/or (iii) above. If the GRA Indemnity becomes
effective, (i) Vivendi agrees to notify Liberty of any action taken by it or
any of its Affiliates that has caused, or will cause, gain to be recognized
under such gain recognition agreements (or new gain recognition agreements)
and (ii) if Vivendi or any of its Affiliates have consummated, or consummate,
any nonrecognition transfer that is described in Treasury Regulations ss.ss.
1.367(a)- 8(g)(2) or (3), Vivendi shall provide timely notice to Liberty of
such nonrecognition transfer so Liberty (or another member of the Selling
Affiliated Group) may comply with the reporting requirements set forth in such
sections of the Treasury Regulations, and Vivendi will cause Liberty to be
informed of any subsequent disposition of property within the meaning of
Treasury Regulations ss. 1.367(a)-
34
8(g)(2)(iv). To the extent permitted by law, the parties agree to treat any
indemnity payments pursuant to this Section 8.01(c) as adjustments to the
consideration paid in the Mergers or the multiThematiques Transaction, as
applicable.
(d) Vivendi shall make (x) any indemnification payments
pursuant to Sections 8.01(b)(i), 8.01(b)(iii) and 8.01(c) hereof within thirty
(30) calendar days after the later of (i) the filing of any Return, or any
amended Return, as applicable, including the income or gain recognized that
created the applicable Adjustment, and (ii) the date (the "Indemnification
Notice Date") Vivendi receives written notice from Liberty, or any of its
Affiliates, which notice shall include a certificate setting forth in
reasonable detail the calculation and nature of such adjustment (an
"Indemnification Notice") demanding payment of such indemnity, and (y) any
indemnification payments pursuant to Section 8.01(b)(ii) within 30 calendar
days after the date Vivendi receives an Indemnification Notice from Liberty or
any of its Affiliates demanding payment of such indemnity. To the extent any
indemnification payment is not paid by Vivendi within such 30-day period, as
applicable, the amount due shall thereafter include interest thereon at a rate
per annum equal to the prime rate as publicly announced from time to time by
The Bank of New York (the "Overpayment Rate"), adjusted as and when changes to
such Overpayment Rate shall occur, compounded semi-annually. Any
indemnification payments to be made by Vivendi pursuant to Sections 8.01(b)
and (c) and any additional interest amounts to be paid pursuant to this
Section 8.01(d) shall be made by delivering shares of Vivendi ADSs. Any shares
of Vivendi ADSs shall be valued based on the average of the daily closing
prices (as of 4:00 p.m. eastern time) per share of Vivendi ADSs as reported on
the New York Stock Exchange (as published in the Wall Street Journal, or if
not published therein or incorrectly published therein, in another
authoritative source mutually selected by Vivendi and Liberty) for the ten
consecutive trading days ending on the second trading day prior to the
Indemnification Notice Date. All such Vivendi ADSs shall be duly authorized,
fully paid, and non-assessable.
SECTION 8.02. Survival. The representations, warranties, covenants
and agreements contained in this Agreement or in any certificates delivered
pursuant to Article VI shall survive the Closing and shall terminate on March
31, 2003, except for (i) those contained in Sections 3.04, 3.05, 4.04 and
4.05, which shall not terminate and (ii) those relating to Taxes (including,
but
35
not limited to those contained in Sections 3.06, 4.06, 5.05, 5.06 and 8.01)
which shall survive until the expiration of the applicable statute of
limitations (giving effect to any waiver, mitigation or extensions thereof).
Notwithstanding the foregoing, those covenants or agreements that contemplate
or may involve actions to be taken or obligations in effect after the Closing
shall survive in accordance with their terms.
ARTICLE IX
Restrictions on Transfers
SECTION 9.01. Restrictions on Transfers. (a) From the date of this
Agreement to the date that is 18 months after the Closing Date, the Liberty
Parties agree not to offer, sell, contract to sell, pledge or otherwise
dispose of, directly or indirectly, enter into a transaction which would have
the same effect, or enter into any swap, hedge or other arrangement that
Transfers, in whole or in part, any of the economic consequences of ownership
of, or publicly disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement with respect to the Vivendi Securities to be received pursuant to
Article II; provided, however, that this Section 9.01 shall cease to apply to:
(i) 18,300,000 Vivendi Securities, on and after the Closing Date;
(ii) an additional 9,543,218 Vivendi Securities, on and after the
date that is 12 months after the Closing Date; and
(iii) any additional Vivendi Securities issued pursuant to this
Agreement, on and after the date that is 18 months after the Closing
Date;
without, in each case, the prior written consent of Vivendi. Notwithstanding
the foregoing, with respect to the 18,300,000 Vivendi Securities referred to
in clause (i) above, the Liberty Parties may enter into swaps, hedges or other
arrangements ("Hedges") that Transfer, in whole or in part, any of the
economic consequences of ownership of such Vivendi Securities prior to the
Closing Date; provided, that the number of Vivendi Securities so Hedged on any
day does not exceed twice the average worldwide daily trading volume for
Vivendi Securities during the five trading days preceding such day.
36
(b) It shall be a condition to any Transfer not prohibited by this
Article IX that such Transfer shall comply with the provisions of the
Securities Act and applicable state securities laws.
(c) The Liberty Parties acknowledge and understand that the
certificates representing the Vivendi Securities to be received pursuant to
Article II will bear an appropriate legend regarding the transfer restrictions
set forth in this Article IX.
SECTION 9.02. Transfers Permitted at any Time. At any time and from
time to time, any Liberty Party may Transfer all or any portion of the Vivendi
Securities received pursuant to Article II to a wholly owned subsidiary of
Liberty that agrees in writing to be bound by this Article IX.
ARTICLE X
Standstill
SECTION 10.01. Standstill. (a) Each Liberty Party agrees that, prior
to the earliest of (i) the fourth anniversary of the Closing Date, (ii) the
sale of all or substantially all of the assets of Vivendi and its subsidiaries
to another Person other than a subsidiary of Vivendi or (iii) the effective
time of any merger or consolidation of Vivendi with or into any other Person,
other than a merger or consolidation in which a majority of the shares of the
surviving entity are held by the holders of Vivendi's voting securities
immediately prior to such effective time (the "Restricted Period"), it and its
Affiliates will not, in any manner, whether publicly or otherwise, directly or
indirectly, without the prior written consent of Vivendi, unless specifically
requested in writing by the CEO of Vivendi or by a resolution of a majority of
the board of directors of Vivendi:
(i) acquire, agree to acquire or make any proposal to acquire,
directly or indirectly, by purchase or otherwise, beneficial ownership of
(A) any voting securities if immediately after such acquisition, the
voting securities beneficially owned, in the aggregate, by Liberty and
its Affiliates would exceed five percent (5%) of the outstanding voting
securities of Vivendi or (B) any significant assets of Vivendi, or any of
its subsidiaries (other than assets acquired in the ordinary course of
business); provided, however, that this clause shall not be deemed to be
violated by the
37
indirect acquisition of voting securities of Vivendi as a result of an
acquisition by a Liberty Party of another Person that holds such voting
securities so long as the voting securities of Vivendi held by such
Person do not exceed 1% of such Person's total assets;
(ii) propose to enter into, directly or indirectly, any merger,
tender offer or other business combination or similar transaction
involving Vivendi or any of its subsidiaries (including a purchase of a
material portion of their assets);
(iii) make, or in any way participate in, directly or indirectly,
any "solicitation" of "proxies" (as such terms are defined in Regulation
14A ("Regulation 14A") under the Exchange Act but without regard to the
exclusion set forth in clause (2)(iv) of the definition of
"solicitation") to vote, or seek to advise or influence any Person with
respect to the voting of, any securities of Vivendi or any of its
subsidiaries, or become a "participant" in a "solicitation" (as such
terms are defined in Regulation 14A but without regard to the exclusion
set forth in clause (2)(iv) of the definition of "solicitation") whether
or not such solicitation is subject to regulation under Regulation 14A;
(iv) grant any proxy with respect to any voting securities of
Vivendi (other than to Vivendi, its Affiliates or the CEO of Vivendi);
(v) call, or seek to call, a meeting of Vivendi's shareholders or
initiate any shareholder proposal for action by shareholders of Vivendi;
(vi) bring any action or otherwise act to contest the validity of
this Article X or seek a release of the restrictions contained herein;
(vii) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of Vivendi or any of its subsidiaries or deposit any
voting securities of Vivendi in a voting trust or subject any voting
securities of Vivendi to any arrangement or agreement with respect to the
voting of such voting securities or other agreement having similar
effect;
(viii) otherwise act, alone or in concert with others, to seek to
affect or influence the control of
38
the management or the board of directors of Vivendi or the business,
operations or policies of Vivendi;
(ix) enter into any discussions, negotiations, arrangements,
understandings or agreements (whether written or oral) with any other
Person (other than Liberty's financial advisors or directors, officers,
employees, agents, advisors or representatives) regarding a business
combination involving Vivendi, any other purchase of any voting
securities involving Vivendi, or significant assets of Vivendi;
(x) disclose any intention, plan or arrangement inconsistent with
the foregoing; or
(xi) advise or assist any other Person in connection with any of the
foregoing.
Each Liberty Party also agrees that, during the Restricted Period, neither it
nor anyone acting on its behalf will (x) request Vivendi or any of its
directors, officers, employees, agents, advisors or representatives, directly
or indirectly, to amend or waive any provision of this Article X (including
this sentence) or (y) take any action which might require Vivendi to make a
public announcement regarding the possibility of a business combination,
merger or extraordinary transaction.
(b) Notwithstanding Section 10.01(a), Liberty or any of its
Affiliates shall be permitted during the Restricted Period to submit a
proposal addressed to the board of directors of Vivendi that proposes a merger
or other business combination involving Vivendi if (i) Vivendi shall have
publicly announced that it has entered into a definitive agreement providing
for: (A) any acquisition from Vivendi or from one or more stockholders thereof
(by tender or exchange offer or other public offer), or both, more than 50% of
the outstanding voting or equity securities of Vivendi, (B) any acquisition of
all, or substantially all, the assets of Vivendi and its subsidiaries or (C) a
merger, consolidation, statutory share exchange or similar transaction between
or involving Vivendi and another Person (other than a merger or consolidation
in which a majority of the voting shares of the surviving entity are held by
the holders of Vivendi's voting securities immediately prior to such effective
time); or (ii) any Person shall have commenced a tender offer or exchange
offer that is likely to result in any Person or group beneficially owning 50%
or more of the voting securities of Vivendi; provided, that in the case of
this clause (ii), the right to make a proposal pursuant to this Section
10.01(b) shall cease upon the
39
withdrawal or termination of such unsolicited tender offer or exchange offer
or proposal unless Liberty or any of its Affiliates shall have submitted a
proposal prior to such withdrawal or termination.
ARTICLE XI
Registration Rights
SECTION 11.01. Registration Rights. As soon as practicable after
execution of this Agreement, Vivendi shall (i) prepare and cause to be filed
with the SEC under the Securities Act a registration statement on Form F-3 (or
other appropriate form) (the "Registration Statement") registering under the
Securities Act the resale by the Liberty Parties of the Vivendi ADSs received
by such Liberty Parties pursuant to this Agreement (the "Registrable
Securities"), (ii) use its reasonable best efforts to cause such Registration
Statement to be declared effective simultaneous with the Closing and (iii)
shall use its reasonable best efforts to maintain such Registration Statement
effective for a period (the "Effective Period") of two years following the
Closing Date or, if earlier, until all Registrable Securities covered thereby
have been disposed of. In addition to such registration under the Securities
Act, as soon as practicable after the execution of this Agreement, Vivendi
shall use its reasonable best efforts to register or qualify the resale of
such Vivendi ADSs under the securities or "blue sky" laws of such
jurisdictions as Liberty shall reasonably request. Vivendi shall cause such
Vivendi ADSs to be listed for trading on the New York Stock Exchange.
SECTION 11.02. Blackout Periods. (a) Prior to the end of the
Effective Period, if Vivendi determines in good faith that the registration
and distribution of Registrable Securities (or the use of the Registration
Statement or related prospectus) would interfere with any pending financing,
acquisition, corporate reorganization or any other corporate development
involving Vivendi or any of its subsidiaries or would require premature
disclosure thereof, Vivendi shall be entitled to (i) postpone the filing of
the Registration Statement otherwise required to be prepared and filed by
Vivendi pursuant to Section 11.01 or (ii) elect that the Registration
Statement not be used, in either case, for a reasonable period of time, but
not to exceed an aggregate of 90 days in any consecutive 12-month period (a
"Section 11.02(a) Period").
(b) The period for which the Registration
40
Statement shall be kept effective pursuant to Section 11.01(a) shall be
extended by a number of days equal to the number of days of any Section
11.02(a) Period occurring during such period.
(c) Vivendi will notify Liberty, at any time when a prospectus
relating to the Registration Statement is required to be delivered under the
Securities Act, of Vivendi's becoming aware that the prospectus included in
such Registration Statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing, and at the request of Liberty, prepare and
furnish at Vivendi's expense a reasonable number of copies of an amendment or
supplement to such Registration Statement or related prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances then existing.
(d) Each Liberty Party agrees that, upon receipt of any notice from
Vivendi of the happening of any event of the kind described in Section
11.02(c), such Liberty Party will forthwith discontinue disposition of
Registrable Securities pursuant to the prospectus or Registration Statement
covering such Registrable Securities until such Liberty Party's receipt of the
copies of the supplemented or amended prospectus contemplated by Section
11.02(c), and, if so directed by Vivendi, such Liberty Party will deliver to
Vivendi (at Vivendi's expense) all copies, other than permanent file copies
then in such Liberty Party's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. In the
event Vivendi shall give any such notice, the period for which the
Registration Statement shall be kept effective pursuant to Section 11.01(a)
shall be extended by the number of days during the period from the date of the
giving of such notice pursuant to Section 11.02(c) and through the date when
each seller of Registrable Securities covered by such Registration Statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Section 11.02(c).
(e) In connection with the Registration Statement, Vivendi shall:
(i) use its best efforts to comply with all applicable rules and regulations
of the SEC in connection with the Registration Statement; (ii) prepare and
41
file with the SEC such amendments and supplements to the Registration
Statement and the prospectus used in connection therewith as may be necessary
to keep the Registration Statement effective during the Effective Period;
(iii) notify Liberty of any stop order issued or, to the best knowledge of
Vivendi, threatened by the SEC and take all reasonable action required to
prevent the entry of such stop order or to remove it if entered; and (iv) take
such other actions as Liberty may reasonably request to effect the disposition
of the Registrable Securities pursuant to the Registration Statement.
(f) Vivendi shall pay all registration expenses with respect to the
Registration Statement. Notwithstanding the foregoing, each Liberty Party
selling Registrable Securities shall be responsible for its own internal
administrative and similar costs, the legal fees and expenses of its own
counsel and all underwriting discount and underwriting commissions and
transfer Taxes, if any, in connection with the sale of Registrable Securities.
ARTICLE XII
Miscellaneous
SECTION 12.01. Approval of Transactions. The parties hereto
acknowledge that in Section 8.01 of the Transaction Agreement they have
approved of and consented to the Transactions.
SECTION 12.02. Notices. All notices, requests and other
communications to any party under this Agreement shall be in writing
(including a facsimile or similar writing) and shall be given to a party
hereto at the address or facsimile number set forth for such party on Schedule
12.02 or as such party shall at any time otherwise specify by notice to each
of the other parties to such agreement or instrument. Each such notice,
request or other communication shall be effective (i) if given by facsimile,
at the time such facsimile is transmitted and the appropriate confirmation is
received (or, if such time is not during a Business Day, at the beginning of
the next such Business Day), (ii) if given by mail, five Business Days (or, if
to an address outside the United States, ten calendar days) after such
communication is deposited in the United States mails with first-class postage
prepaid, addressed as aforesaid, (except that notice of change of address will
not be deemed given until received) or (iii) if given by any other means, when
delivered at the address specified pursuant hereto.
42
SECTION 12.03. No Third Party Beneficiaries. The terms of this
Agreement are not intended to confer any rights or remedies hereunder upon,
and shall not be enforceable by, any Person other than the parties hereto,
other than, with respect to the provisions of Article VIII hereof, each
indemnified person.
SECTION 12.04. Waiver. No failure by any party to this Agreement to
insist upon the strict performance of any covenant, agreement, term or
condition hereof or to exercise any right or remedy consequent upon a breach
of such or any other covenant, agreement, term or condition shall operate as a
waiver of such or any other covenant, agreement, term or condition of this
Agreement. Any party to this Agreement, by notice given in accordance with
Section 12.02, may, but shall not be under any obligation to, waive any of its
rights or conditions to its obligations under this Agreement, or any duty,
obligation or covenant of any other party hereto. No waiver shall affect or
alter the remainder of this Agreement and each and every covenant, agreement,
term and condition hereof shall continue in full force and effect with respect
to any other then existing or subsequent breach. The rights and remedies
provided by this Agreement are cumulative and the exercise of any one right or
remedy by any party shall not preclude or waive its right to exercise any or
all other rights or remedies.
SECTION 12.05. Assignment. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by and against, the parties and
their respective successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto without the prior written consent of the other parties;
provided, however, that after the Closing, Vivendi or Liberty may assign its
rights and obligations hereunder by operation of law or in connection with the
transfer of all or substantially all of its assets or may assign its rights
hereunder to any of its subsidiaries so long as such party remains responsible
for all of its obligations hereunder.
SECTION 12.06. Integration. This Agreement and the Transaction
Documents constitute the entire agreement among the parties hereto pertaining
to the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection with the subject matter hereof and
no covenant, representation or condition not expressed in this Agreement shall
affect, or be effective to interpret, change or restrict, the express
provisions of this Agreement.
43
SECTION 12.07. Headings. The titles of Articles and Sections of this
Agreement are for convenience only and shall not be interpreted to limit or
otherwise affect the provisions of this Agreement.
SECTION 12.08. Counterparts. This Agreement may be executed by the
parties hereto in multiple counterparts, each of which shall be deemed an
original and all of which, taken together, shall constitute one and the same
instrument.
SECTION 12.09. Severability. Each provision of this Agreement shall
be considered separable and if for any reason any provision or provisions
hereof are determined to be invalid and contrary to any applicable law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
SECTION 12.10. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the conflicts of law principles thereof, except to the extent
the laws of the State of Delaware are mandatorily applicable to the Merger.
SECTION 12.11. Jurisdiction. Each party to this Agreement
irrevocably submits to the exclusive jurisdiction of (i) the Supreme Court of
the State of New York, New York County, and (ii) the United States District
Court for the Southern District of New York, for the purposes of any suit,
action or other proceeding arising out of this Agreement or the Transactions.
Each party agrees to commence any such action, suit or proceeding either in
the United States District Court for the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the Supreme Court of the State of New York, New
York County. Each party further agrees that service of any process, summons,
notice or document by U.S. registered mail to such party's respective address
in accordance with Section 12.02 shall be effective service of process for any
action, suit or proceeding in New York with respect to any matters to which it
has submitted to jurisdiction in this Section 12.11. Vivendi and Universal
France hereby appoints Vivendi Universal U.S. Holding Co., 800 Third Avenue,
7th Floor, New York, New York 10022, Attention: President as its authorized
agent (the "Authorized Agent") upon which process may be served in any action
arising out of or based upon this Agreement or the Transactions that may be
instituted in any court by any party hereto and expressly consents to the
jurisdiction of any such court, but only in respect of any
44
such action, and waives any other requirements of or objections to personal
jurisdiction with respect thereto. Vivendi and Universal France represent and
warrant that the Authorized Agent has agreed to act as said agent for service
of process, and Vivendi agrees to take any and all action, including the
filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. If the
Authorized Agent shall cease to act as Vivendi's or Universal France's agent
for service of process, such party shall appoint without delay another such
agent and notify Liberty of such appointment in the manner provided in Section
12.02 for the giving of notices. With respect to any such action in the
courts, service of process upon the Authorized Agent in the manner provided in
Section 12.02 for the giving of notices (substituting the address set forth
above in this Section 12.11) and written notice of such service to Vivendi and
Universal France given as provided in Section 12.02 shall be deemed, in every
respect, effective service of process upon Vivendi and Universal France. Each
party irrevocably and unconditionally waives any objection to the laying of
venue of any action, suit or proceeding arising out of this Agreement or the
Transactions in (i) the Supreme Court of the State of New York, New York
County, or (ii) the United States District Court for the Southern District of
New York, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient
forum.
SECTION 12.12. Specific Performance. Each of the parties to this
Agreement agrees that the other parties hereto would be irreparably damaged if
any of the provisions of this Agreement are not performed in accordance with
its specific terms and that monetary damages would not provide an adequate
remedy in such event. Accordingly, in addition to any other remedy to which
the nonbreaching parties may be entitled, at law or in equity, the
nonbreaching parties may be entitled to injunctive relief to prevent breaches
of this Agreement and to specifically enforce the terms and provisions hereof.
SECTION 12.13. Amendments. This Agreement may be amended by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 12.14. Interpretation. References in this Agreement to
Articles, Sections, Annexes, Exhibits and Schedules shall be deemed to be
references to Articles and Sections of, and Annexes, Exhibits and Schedules
to, this
45
Agreement unless the context shall otherwise require. All Annexes, Exhibits
and Schedules attached to this Agreement shall be deemed incorporated herein
as if set forth in full herein. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of such agreement or instrument.
SECTION 12.15. Adjustment of Share Numbers. If, after the date of
this Agreement, there is a subdivision, split, stock dividend, combination,
reclassification or similar event with respect to any of the shares of capital
stock referred to in this Agreement, then, in any such event, the numbers and
types of shares of such capital stock referred to in this Agreement shall be
adjusted to the number and types of shares of such capital stock that a holder
of such number and types of shares of such capital stock would own or be
entitled to receive as a result of such event if such holder had held such
number and types of shares immediately prior to the record date for, or
effectiveness of, such event.
46
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
VIVENDI UNIVERSAL, S.A.,
By /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: Chairman and Chief
Executive Officer
UNIVERSAL STUDIOS, INC.,
By /s/ Guillaume Hannezo
------------------------------
Name: Guillaume Hannezo
Title: Special Power of
Attorney
LIGHT FRANCE ACQUISITION 1, S.A.S.,
By /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: On Behalf of Vivendi
Universal, S.A., Chairman
NYCSPIRIT CORP. II,
NYCSPIRIT CORP. III,
NYCSPIRIT CORP. IV,
NYCSPIRIT CORP. V,
By /s/ Jean-Marie Messier
------------------------------
Name: Jean-Marie Messier
Title: President
LIBERTY MEDIA CORPORATION,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
47
LIBERTY PROGRAMMING COMPANY LLC,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LIBERTY PROGRAMMING FRANCE, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LIBERTY HSN LLC HOLDINGS, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA II, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA III, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA IV, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
48
LMC USA V, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA VI, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA VII, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA VIII, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
LMC USA X, INC.,
By /s/ Robert R. Bennett
------------------------------
Name: Robert R. Bennett
Title: President
ANNEX A
The terms defined below have the meanings set forth below for all
purposes of this Agreement, and such meanings shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
"Actions" shall have the meaning set forth in Section 5.06.
"Adjustments" shall mean the deemed increase in a Tax, determined on
a transaction-by-transaction basis and using the assumptions set forth in the
next sentence, resulting from an adjustment made with respect to any amount
reflected or required to be reflected on any Return relating to such Tax. For
purposes of determining such deemed increase in Tax, the following assumptions
will be used: (a) a combined marginal Tax rate of 38%, and (b) such
determinations shall be made without regard to whether any actual increase in
such Tax will in fact be realized with respect to the Return to which such
adjustment relates (as a result, for example, of losses, credits or other
offsets against Tax).
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling, controlled by or under direct or indirect common
control with such specified Person. For purposes of the foregoing, (i) USANi
and its Affiliates shall be deemed to be Affiliates of USAi, (ii) none of
USAi, USANi or any of their respective Affiliates shall be deemed to be an
Affiliate of Universal, (iii) none of Diller, Universal, Liberty or any of
their respective Affiliates shall be deemed to be an Affiliate of USAi and
(iv) none of USAi or Universal or any of their respective Affiliates shall be
deemed to be an Affiliate of the Partnership
"Applicable Law" shall have the meaning set forth in Section
3.03(a).
"Articles of Association" shall have the meaning set forth in
Section 4.03(a).
"Authorized Agent" shall have the meaning set forth in Section
12.11.
"Business Day" means any day other than a Saturday, a Sunday or a
United States Federal holiday.
"Call Option Agreement" means the Promise to Sell
2
Agreement dated May 4, 2000 among Havas Images, as the Promisor, and Canal+,
Hachette SA and LMI, as the Beneficiaries.
"CEO" means chief executive officer.
"Certificate of Merger" shall have the meaning set forth in Section
2.04(b).
"Closing" and "Closing Date" shall have the meanings set forth in
Section 2.04(a).
"CMF" means the Conseil des Marches Financiers.
"COB" means the Commission des Operations de Bourse.
"Code" shall have the meaning set forth in the Preliminary
Statement.
"Consent" shall have the meaning set forth in Section 3.03(b).
"Contracts" means all contracts, agreements, commitments and other
legally binding arrangements, whether oral or written.
"Deposit Agreement" shall have the meaning set forth in Section
3.05.
"Depositary" shall have the meaning set forth in Section 3.05.
"DGCL" means the Delaware General Corporation Law, as amended from
time to time.
"Diller" means Barry Diller.
"EC Merger Regulation" means Council Regulation No. 4064/89/EEC of
the European Community, as amended.
"Effective Period" shall have the meaning set forth in Section
11.01.
"Effective Time" shall have the meaning set forth in Section
2.04(b).
"Encumbrance" means any charge, claim, option, right to acquire,
restriction on transfer, voting restriction or agreement, or any other
restriction of any nature whatsoever on any assets.
3
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agreement" means the Exchange Agreement dated as of
October 19, 1997, by and among USAi, Universal, for itself and on behalf of
certain of its subsidiaries, and Liberty, for itself and on behalf of certain
of its subsidiaries.
"Excluded Tax Liabilities" shall have the meaning set forth in
Section 4.05.
"Filing" shall have the meaning set forth in Section 4.03(b).
"French GAAP" shall have the meaning set forth in Section 3.08.
"Governance Agreement" shall have the meaning set forth in the
Transaction Agreement.
"Governmental Entity" shall have the meaning set forth in Section
3.03(b).
"GRA Indmenity" shall have the meaning set forth in Section 8.01(c).
"Hedge" shall have the meaning set forth in Section 9.01(b).
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Income Tax" means all Taxes based on or measured by net income.
"Indemnification Notice" shall have the meaning set forth in Section
8.01(d).
"Investment Agreement" means the Investment Agreement dated as of
October 19, 1997, as amended and restated as of December 18, 1997, among,
Universal, for itself and on behalf of certain of its subsidiaries, USAi, HSN,
Inc. and Liberty, for itself and on behalf of certain of its subsidiaries.
"Judgment" shall have the meaning set forth in Section 3.03(a).
"Lien" means any pledge, encumbrance, security interest, purchase
option, call or similar right.
4
"Liberty" shall have the meaning set forth in the Preamble.
"Liberty Excluded Jurisdiction" shall have the meaning set forth in
Section 4.03(a).
"Liberty Holding Entities" means the entities listed in paragraphs
(a) through (d) of Exhibit C hereto.
"Liberty Material Adverse Effect" shall have the meaning set forth
in Section 4.01.
"Liberty Parties" means Liberty, Liberty HSN LLC Holdings, Inc.,
LPC, LPF, the Liberty Transferring Entities and the Liberty Holding Entities;
provided, that the Liberty Holding Entities shall cease to be included as
Liberty Parties from and after the Effective Time.
"Liberty Permitted Encumbrance" shall have the meaning set forth in
Section 4.04(a).
"Liberty Shares" shall have the meaning set forth in Section
4.04(a).
"Liberty Transferring Entities" means LMC USA VI, Inc., LMC USA VII,
Inc., LMC USA VIII, Inc., LMC USA X, Inc. and Liberty HSN LLC Holdings, Inc.
"Liberty USAi Shares" shall have the meaning set forth in Section
4.04(c).
"Liberty USANi Shares" shall have the meaning set forth in Section
4.04(b).
"Liquidation" shall have the meaning set forth in Section 2.02(b).
"LMI" shall have the meaning set forth in the Preamble.
"Loan Agreement" means the Shareholder Loan Agreement dated August
9, 2000 by multiThematiques in favor of LMI, and the indebtedness represented
thereby.
"LPC" shall have the meaning set forth in the Preamble.
"LPF" shall have the meaning set forth in the Preamble.
"Loss" shall have the meaning set forth in
5
Section 8.01.
"Mergers" shall have the meaning set forth in Section 2.02(c).
"Merger Consideration" shall have the meaning set forth in Section
2.03(c).
"Merger Subsidiaries" means Sub II, Sub III, Sub IV and Sub V.
"multiThematiques" means multiThematiques S.A., a societe anonyme
organized under the laws of France.
"multiThematiques Acquisition" shall have the meaning set forth in
Section 2.02(b).
"multiThematiques Shares" means Class C shares, with a 100 French
Francs par value.
"multiThematiques Cooperation Agreement" means the Amended and
Restated Cooperation Agreement dated as of May 4, 2000 by and among Canal+
S.A., Havas Images S.A., Liberty Media International, Inc., Part'com S.A. and
Hachette S.A.
"multiThematiques Transaction" shall have the meaning set forth in
Section 2.02(b).
"Option Agreements" means the Call Option Agreement and the Put
Option Agreements.
"Organizational Documents" means, with respect to any Person at any
time, such Person's certificate or articles of incorporation, by-laws,
memorandum and articles of association, certificate of formation of limited
liability company, limited liability company agreement, and other similar
organizational or constituent documents, as applicable, in effect at such
time.
"Partnership" shall have the meaning set forth in the Transaction
Agreement.
"Person" means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, governmental authority or
other entity.
"Post-Signing Returns" shall have the meaning set forth in Section
5.06.
"Proceeding" means any claim, action, suit,
6
proceeding, arbitration, investigation, inquiry, or hearing or notice of
hearing.
"PSE" means the Paris Bourse.
"Publicly Disclosed by Vivendi" means disclosed by Vivendi in a
public filing made by Vivendi with the PSE, the COB, the CMF, the New York
Stock Exchange or the SEC.
"Put Option Agreements" means the Promise to Buy Agreement dated May
4, 2000 among Canal+, Hachette SA and LMI, as Promisors, and Part'Com, as
Beneficiary and the Promise to Buy Agreement dated May 4, 2000 among Canal+,
Hachette SA and LMI, as Promisors, and Havas Images, as Beneficiary.
"Registrable Securities" shall have the meaning set forth in Section
11.01(a).
"Related Securities" shall have the meaning set forth in Section
11.02(b).
"Regulation 14A" shall have the meaning set forth in Section
10.01(a).
"Restricted Period" shall have the meaning set forth in Section
10.01(a).
"Returns" means returns, reports and forms required to be filed with
any domestic or foreign Taxing Authority.
"SEC" means the United States Securities and Exchange Commission.
"Section 11.02(a) Period" shall have the meaning set forth in
Section 11.02(a).
"Section 11.02(b) Period" shall have the meaning set forth in
Section 11.02(b).
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Affiliated Group" means the members of the affiliated group
within the meaning of Section 1504(a) of the Code which includes Liberty.
"Shareholder Arrangements" means the Investment Agreement, the
Governance Agreement, the Stockholders Agreement, the Exchange Agreement and
the Exchange Agreement
7
dated as of December 20, 1996 by and between Silver King Communications, Inc.
and Liberty HSN, Inc., together with any and all amendments, modifications and
waivers to such agreements.
"Stockholders Agreement" shall have the meaning set forth in the
Transaction Agreement.
"Sub II" means NYCSpirit Corp. II, a Delaware corporation and a
direct, wholly-owned subsidiary of Vivendi.
"Sub III" means NYCSpirit Corp. III, a Delaware corporation and a
direct, wholly-owned subsidiary of Vivendi.
"Sub IV" means NYCSpirit Corp. IV, a Delaware corporation and a
direct, wholly-owned subsidiary of Vivendi.
"Sub V" means NYCSpirit Corp. V, a Delaware corporation and a
direct, wholly-owned subsidiary of Vivendi.
A "subsidiary" of any Person means another Person, an amount of the
voting securities, limited liability company membership interests, other
voting ownership or voting partnership interests or equity interests of which
is sufficient to elect at least a majority of its Board of Directors or other
governing body (or, if there are no such voting interests, 50% or more of the
equity or ownership interests of which) is owned directly or indirectly by
such first Person.
"Taxes" means all taxes (whether federal, state, local or foreign)
based upon or measured by income and any other tax whatsoever, including gross
receipts, profits, sales, use, occupation, value added, ad valorem, transfer,
franchise, withholding, payroll, employment, excise, or property taxes,
together with any interest or penalties imposed with respect thereto.
"Taxing Authority" means any government authority having
jurisdiction over the assessment, determination, collection or other
imposition of Tax.
"Transaction Agreement" means the Transaction Agreement dated as of
the date hereof by and among Universal, USAi, USANi, Liberty and Diller.
"Transaction Agreement Closing Date" means the
8
Closing Date (as defined in the Transaction Agreement).
"Transaction Document" means this Agreement, the Transaction
Agreement, the Partnership Agreement (as defined in the Transaction
Agreement), the Warrant Agreement (as defined in the Transaction Agreement),
the Stockholders Agreement and the Governance Agreement, collectively.
"Transactions" shall have the meaning set forth in Section 2.02.
"Transfer" means any sale, assignment, transfer, exchange, gift,
bequest, pledge, hypothecation, or other disposition or encumbrance, direct or
indirect, in whole or in part, by operation of law or otherwise. The terms
"Transferred", "Transferring", "Transferor" and "Transferee" have meanings
correlative to the foregoing.
"Transfer Tax" shall have the meaning set forth in Section 5.02(b).
"Treasury Regulations" means the regulations promulgated under the
Code in effect on the date hereof and the corresponding sections of any
regulation subsequently issued that amend or supersede such regulations.
"USAi" means USA Networks, Inc., a Delaware corporation.
"USAi Common Stock" means the common stock, par value $.01 per
share, of USAi.
"USAi Common Share" means a share of USAi Common Stock.
"USAi Share Exchange" shall have the meaning set forth in Section
2.02(a).
"USANi" means USANI LLC, a Delaware limited liability company.
"USANi Liberty Distributed Interest" shall have the meaning set
forth in the Transaction Agreement.
"USANi LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of USANi LLC dated as of February 12, 1998.
"USANi Shares" means the Class C shares representing a proportionate
interest in the capital and profits and losses of USANi.
9
"Universal" shall have the meaning set forth in the Preamble.
"Universal Excluded Jurisdiction" shall have the meaning set forth
in Section 3.03(a).
"Universal France" shall have the meaning set forth in the Preamble.
"Universal Material Adverse Effect" and "Universal Material Adverse
Change" shall have the meaning set forth in Section 3.01.
"Vivendi" shall have the meaning set forth in the Preamble.
"Vivendi ADSs" means American depositary shares representing Vivendi
Shares, each American depositary share representing one Vivendi Share.
"Vivendi Securities" means Vivendi Shares or Vivendi ADSs, as
applicable.
"Vivendi Shares" means ordinary shares, nominal value (U)5.50 per
share, of Vivendi.
"Universal Parties" means Vivendi, Universal France, Universal, the
Merger Subsidiaries and, from and after the Effective Time, the surviving
corporations of the Mergers.
"Vivendi SEC Reports" means all reports, schedules, statements and
other documents (including exhibits and all other information incorporated
therein) filed by Vivendi with the SEC following December 31, 2000, and on or
before the date of this Agreement.