SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- ------------------------------------------------------------------------------
SCHEDULE 13D/A*
Under the Securities Exchange Act of 1934
USA Interactive (formerly USA Networks, Inc.)
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
902984 10 3
(CUSIP Number)
Charles Y. Tanabe, Esq. Pamela S. Seymon, Esq. George E. Bushnell III, Esq.
Senior Vice President Wachtell, Lipton, Rosen Vivendi Universal, S.A.
and General Counsel & Katz 375 Park Avenue
Liberty Media Corporation 51 West 52nd Street New York, NY 10152
12300 Liberty Boulevard New York, NY 10019 (212) 572-7000
Englewood, CO 80112 (212) 403-1000
(720) 875-5400
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 7, 2002
(Date of Event which Requires Filing of this Statement)
- ------------------------------------------------------------------------------
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [__]
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
___________________
* Note: This statement constitutes Amendment No. 10 of the Report on
Schedule 13D of the reporting group consisting of Liberty Media Corporation,
Barry Diller, Vivendi Universal Canada Inc. (formerly The Seagram Company
Ltd.), Vivendi Universal, S.A., Universal Studios, Inc. and the BDTV Entities.
This statement also constitutes Amendment No. 5 of a Report on Schedule 13D of
Liberty Media Corporation, Amendment No. 20 of a Report on Schedule 13D of
Barry Diller, Amendment No. 10 of a Report on Schedule 13D of Vivendi
Universal Canada Inc. (formerly The Seagram Company Ltd.) and Universal
Studios, Inc., Amendment No. 4 of a Report on Schedule 13D of Vivendi
Universal, S.A., Amendment No. 16 of a Report on Schedule 13D of BDTV INC.,
Amendment No. 14 of a Report on Schedule 13D of BDTV II INC., Amendment No. 11
of a Report on Schedule 13D of BDTV III INC. and Amendment No. 10 of a Report
on Schedule 13D of BDTV IV INC.
2
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
Liberty Media Corporation
(2) Check the Appropriate Box if a member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to
Items 2(d)or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
3
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
Vivendi Universal Canada Inc. (formerly The Seagram Company Ltd.)
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Canada
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
4
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
Vivendi Universal, S.A.
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
France
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
5
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
Universal Studios, Inc.
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X)
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
6
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
Barry Diller
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
United States
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
IN
7
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
BDTV INC.
(2) Check the Appropriate Box if a member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
8
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
BDTV II INC.
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
9
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
BDTV III INC.
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
10
(1) Names of Reporting Persons
I.R.S. Identification Nos. of Above Persons
BDTV IV INC.
(2) Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [X]
(3) SEC Use Only
(4) Source of Funds
Not Applicable
(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
Delaware
Number of Shares Beneficially Owned by Each Reporting Person With:
(7) Sole Voting Power None; see Item 5
(8) Shared Voting Power 162,540,762 shares
(9) Sole Dispositive Power None; see Item 5
(10) Shared Dispositive Power 162,540,762 shares
(11) Aggregate Amount Beneficially Owned
by Each Reporting Person 162,540,762 shares
(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [X]
Excludes shares beneficially owned by the executive officers and directors of
Liberty, Vivendi Universal, VU Canada and Universal. Excludes Liberty Exchange
Shares issuable to Liberty, which exchange is subject to the terms and
conditions set forth in the Liberty Exchange Agreement previously filed. See
Item 5.
(13) Percent of Class Represented by Amount in Row (11) 35.3%
Assumes conversion of all shares of Class B Common Stock beneficially owned by
the Reporting Persons into shares of Common Stock and the exercise of options
to purchase 47,120,888 shares of Common Stock which are currently exercisable
by Mr. Diller. Because each share of Class B Common Stock generally is
entitled to ten votes per share and each share of Common Stock is entitled to
one vote per share, the Reporting Persons may be deemed to beneficially own
equity securities of the Company representing approximately 69.2% of the
voting power of the Company. See Item 5.
(14) Type of Reporting Person (See Instructions)
CO
11
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D/A
Statement of
LIBERTY MEDIA CORPORATION,
BARRY DILLER,
UNIVERSAL STUDIOS, INC.,
VIVENDI UNIVERSAL CANADA INC. (FORMERLY THE SEAGRAM COMPANY LTD.),
VIVENDI UNIVERSAL, S.A.,
BDTV INC.,
BDTV II INC.,
BDTV III INC.
and
BDTV IV INC.
Pursuant to Section 13(d) of the Securities Exchange Act of 1934
in respect of
USA INTERACTIVE (formerly USA
Networks, Inc.)
This Report on Schedule 13D relates to the common stock, par value $.01
per share (the "Common Stock"), of USA Interactive, a Delaware corporation
(formerly "USA Networks, Inc.") ("USA" or the "Company"). The Reports on
Schedule 13D, as amended and supplemented, originally filed with the
Commission by (i) the reporting group (the "Reporting Group") consisting of
Liberty Media Corporation, a Delaware corporation ("Liberty"), Mr. Barry
Diller, Universal Studios, Inc., a Delaware corporation ("Universal"), Vivendi
Universal Canada Inc. (formerly The Seagram Company Ltd.), a Canadian
corporation ("VU Canada"), Vivendi Universal, S.A., a societe anonyme
organized under the laws of the Republic of France ("Vivendi Universal"), BDTV
INC., a Delaware corporation ("BDTV"), BDTV II INC., a Delaware corporation
("BDTV II"), BDTV III INC., a Delaware corporation ("BDTV III"), and BDTV IV
INC., a Delaware corporation ("BDTV IV") (each, a "Reporting Person"), on
February 24, 1998 (the "Reporting Group Schedule 13D"), (ii) Liberty on July
19, 1999 (the "Liberty Schedule 13D"), (iii) Mr. Diller on August 29, 1995
(the "Barry Diller Schedule 13D"), (iv) Universal and VU Canada on February
24, 1998 (the "Universal Schedule 13D"), (v) BDTV on August 16, 1996 (the
"BDTV Schedule 13D"), (vi) BDTV II on December 24, 1996 (the "BDTV II Schedule
13D"), (vii) BDTV III on July 28, 1997 (the "BDTV III Schedule 13D"), (viii)
BDTV IV on February 24, 1998 (the "BDTV IV Schedule 13D"), and (ix) Vivendi
Universal on August 2, 2001 (the "Vivendi Schedule 13D") are each hereby
amended and supplemented to include the information set forth herein. This
Report on Schedule 13D constitutes Amendment No. 10 to the Reporting Group
Schedule 13D, Amendment No. 5 to the Liberty Schedule 13D, Amendment No. 20 to
the Barry Diller Schedule 13D, Amendment No. 10 to the Universal Schedule 13D,
Amendment No. 4 to the Vivendi Schedule 13D, Amendment No. 16 to the BDTV
Schedule 13D, Amendment No. 14 to the BDTV II Schedule 13D, Amendment No. 11
to the BDTV III Schedule 13D and Amendment No. 10 to the BDTV IV Schedule 13D.
The Reporting Group Schedule 13D, the Liberty Schedule 13D, the Barry Diller
Schedule 13D, the Universal Schedule 13D, the Vivendi Schedule 13D, the BDTV
Schedule 13D, the BDTV II Schedule 13D, the BDTV III Schedule 13D and the BDTV
IV Schedule 13D (each, as amended) are collectively referred to as the
"Schedule 13D." Capitalized terms not defined herein have the
12
meanings given to such terms in the prior Reports on Schedule 13D referred to
in this paragraph.
Information contained herein with respect to each Reporting Person and
its executive officers, directors and controlling persons is given solely by
such Reporting Person, and no other Reporting Person has responsibility for
the accuracy or completeness of information supplied by such other Reporting
Person.
ITEM 2. Identity and Background
The information contained in Item 2 of this Schedule 13D is hereby
amended and supplemented by adding the following information:
The Seagram Company Ltd. changed its name to Vivendi Universal Canada
Inc., effective February 28, 2002.
Schedule 3 is incorporated herein by reference and amends and restates
Schedule 3 in its entirety.
As of April 24, 2002, Pierre Lescure is no longer director and Co- COO of
Vivendi Universal. Schedule 5 is incorporated herein by reference and amends
and restates Schedule 5 to the Schedule 13D in its entirety.
ITEM 3. Source and Amount of Funds or Other Consideration
The information contained in Items 5 and 6 of this Schedule 13D is hereby
incorporated by reference herein.
ITEM 4. Purpose of the Transaction
The information contained in Items 5 and 6 of this Schedule 13D is hereby
incorporated by reference herein.
Depending on market conditions and other factors, and subject to any
restrictions described in Items 5 and 6 or contained in the agreements
attached as Exhibits hereto or as previously filed as exhibits to this
Schedule 13D, the Reporting Persons or their respective subsidiaries may
purchase additional shares of Common Stock in the open market or in private
transactions. Alternatively, depending on market conditions and other factors,
and subject to any restrictions described in Item 6 or contained in the
agreements attached as Exhibits hereto or previously filed as exhibits to this
Schedule 13D, the Reporting Persons or their respective subsidiaries may sell
all or some of their shares of Common Stock.
Except as described in Items 5 and 6 or contained in the agreements
attached as Exhibits hereto or previously filed as exhibits to this Schedule
13D, neither any Reporting Person nor, to the best of their knowledge, any of
their respective directors or officers has plans or proposals that relate to
or would result in any of the actions set forth in clauses (a) through (j) of
Item 4.
ITEM 5. Interest in Securities of the Issuer
The information contained in Item 6 of this Schedule 13D is hereby
incorporated by reference herein.
13
The information contained in Item 5 of this Schedule 13D is hereby
amended and supplemented by adding the following information:
On May 7, 2002, in accordance with the terms and conditions of the
Amended and Restated Transaction Agreement, dated as of December 16, 2001, by
and among Vivendi Universal, Universal, the Company, USANi LLC, Liberty and
Mr. Diller, and in accordance with the terms of the related ancillary
agreements, including the Merger Agreement, as amended, the Amended and
Restated Partnership Agreement and the Warrant Agreement (each of the
above-mentioned agreements as defined, summarized and attached as exhibits
hereto and/or to the Schedule 13D/A filed by the parties on December 21,
2001), the Company contributed all of its entertainment businesses to Vivendi
Universal Entertainment LLLP, a new joint venture that also holds the film,
television and theme park businesses of Universal and which is controlled by
Vivendi Universal (as such transaction and related transactions are described
in this Schedule 13D, the "Transaction").
Pursuant to the terms of the Amended and Restated Transaction
Agreement, affiliates of Universal and Vivendi Universal delivered to USANi LLC
for cancellation all of the 282,161,530 shares of USANi LLC ("LLC Shares")
that Universal and its affiliates held, as well as the 38,694,982 LLC Shares
that were acquired from affiliates of Liberty as a consequence of an affiliate
of Vivendi Universal acquiring affiliates of Liberty in a merger transaction,
in accordance with the terms of the Merger Agreement, as amended. As a result
of the Transaction, USANi LLC is owned by the Company and Home Shopping
Network, Inc. In connection with the Transaction, affiliates of Liberty also
delivered 7,079,726 LLC Shares to the Company in exchange for 7,079,726 shares
of Common Stock, subsequently, Vivendi Universal and its affiliates acquired
25,000,000 shares of Common Stock from affiliates of Liberty.
As a result of the consummation of the Transaction, currently, the
members of the Reporting Group beneficially own 162,540,762 shares,
corresponding to 35.3% of the shares of Common Stock of the Company (without
giving effect to the exchange of the Holdco shares held by Liberty). Because
each share of Class B Common Stock generally is entitled to ten votes per
share and each share of Common Stock is entitled to one vote per share, the
Reporting Persons may be deemed to beneficially own equity securities of the
Company representing approximately 69.2% of the voting power of the Company.
Mr. Diller continues to hold the irrevocable proxy granted by Universal and
Liberty, pursuant to which Mr. Diller has the right to vote the Company's
securities held by Universal, Liberty and their respective affiliates.
Robert R. Bennett, President and Chief Executive Officer of Liberty and a
director of the Company, owns 26,096 shares of Common Stock.
Except as set forth or incorporated by reference herein, no Reporting
Person or, to the best knowledge of each Reporting Person, any executive
officer or director of such Reporting Person has effected any transaction in
the Common Stock during the past 60 days.
Each Reporting Person disclaims beneficial ownership of the shares of
Common Stock beneficially owned by each of the other Reporting Persons.
14
ITEM 6. Contracts, Arrangements, Understandings, or Relationships
with Respect to the Securities of the Issuer.
The information contained in Item 5 of this Schedule 13D is hereby
incorporated by reference herein.
The information contained in Item 6 of this Schedule 13D is hereby
amended and supplemented by adding the following information:
Vivendi Universal, the Company, USANi LLC, Liberty and Mr. Diller
executed the Amended and Restated Transaction Agreement (the "Amended and
Restated Transaction Agreement"), attached hereto. The Amended and Restated
Transaction Agreement is materially the same as the Transaction Agreement
previously described and filed.
As provided in the Amended and Restated Transaction Agreement, on May 7,
2002, USI Entertainment Inc., USANI Holding XX, Inc., Universal Pictures
International Holdings BV, Universal Pictures International Holdings 2 BV,
NYCSpirit Corp. II, the Company, USANi Sub LLC, New-U Studios Holdings, Inc.
and Mr. Diller executed the Amended and Restated Limited Liability Limited
Partnership Agreement (the "Amended and Restated Partnership Agreement"),
attached hereto. The Amended and Restated Partnership Agreement is materially
the same as the Form of Partnership Agreement previously described and filed.
Additionally, as provided in the Amended and Restated Transaction
Agreement, on May 7, 2002, the Company and The Bank of New York executed the
Equity Warrant Agreement, attached hereto, in favor of Vivendi Universal. The
executed Warrant Agreement is materially the same as the Warrant Agreement
previously described and filed.
ITEM 7. Material to be Filed as Exhibits
The information contained in Item 7 of the Schedule 13D is hereby amended
and supplemented by adding the following information:
The following documents are filed as exhibits to this statement:
44. Amended and Restated Transaction Agreement, dated as of December 16,
2001, by and among Vivendi Universal, S.A., Universal Studios, Inc., the
Company, USANi LLC, Liberty Media Corporation and Barry Diller.
48. Amended and Restated Limited Liability Limited Partnership Agreement
of Vivendi Universal Entertainment LLLP, by and among USI Entertainment Inc.,
USANI Holding XX, Inc., Universal Pictures International Holdings BV,
Universal Pictures International Holdings 2 BV, NYCSpirit Corp. II, the
Company, USANI Sub LLC, New-U Studios Holdings, Inc. and Mr. Diller.
49. Equity Warrant Agreement between the Company and The Bank of New
York, as equity warrant agent.
15
SIGNATURES
After reasonable inquiry and to the best of his or her knowledge and
belief, each of the undersigned certifies that the information in this
statement is true, complete and correct.
Dated: May 17, 2002
LIBERTY MEDIA CORPORATION
By: /s/ Christopher W. Shean
----------------------------------
Name: Christopher W. Shean
Title: Senior Vice President
BARRY DILLER
/s/ Barry Diller
--------------------------------------
UNIVERSAL STUDIOS, INC.
By: /s/ Kevin Conway
--------------------------------------
Name: Kevin Conway
Title: Vice President
VIVENDI UNIVERSAL CANADA INC.
By: /s/ George E. Bushnell III
--------------------------------------
Name: George E. Bushnell III
Title: Secretary
16
VIVENDI UNIVERSAL, S.A.
By: /s/ George E. Bushnell III
--------------------------------------
Name: George E. Bushnell III
Title: Vice President
BDTV INC., BDTV II INC.,
BDTV III INC., BDTV IV INC.
By: /s/ Barry Diller
--------------------------------------
Name: Barry Diller
Title: President
17
INDEX TO EXHIBITS
1. Written Agreement between TCI and Mr. Diller regarding Joint Filing of
Schedule 13D./*/
2. Definitive Term Sheet regarding Stockholders Agreement, dated as of
August 24, 1995, by and between Liberty Media Corporation and Mr.
Diller./*/
3. Definitive Term Sheet regarding Equity Compensation Agreement, dated as
of August 24, 1995, by and between the Company and Mr. Diller./*/
4. Press Release issued by the Company and Mr. Diller, dated August 25,
1995./*/
5. Letter Agreement, dated November 13, 1995, by and between Liberty Media
Corporation and Mr. Diller./*/
6. Letter Agreement, dated November 16, 1995, by and between Liberty Media
Corporation and Mr. Diller./*/
7. First Amendment to Stockholders Agreement, dated as of November 27, 1995,
by and between Liberty Media Corporation and Mr. Diller./*/
8. Agreement and Plan of Merger, dated as of November 27, 1995, by and among
Silver Management Company, Liberty Program Investments, Inc., and Liberty
HSN, Inc./*/
9. Exchange Agreement, dated as of November 27, 1995, by and between Silver
Management Company and Silver King Communications, Inc./*/
10. Agreement and Plan of Merger, dated as of November 27, 1995, by and among
Silver King Communications, Inc., Thames Acquisition Corp. and Savoy
Pictures Entertainment, Inc./*/
11. Voting Agreement, dated as of November 27, 1995, by and among Certain
Stockholders of the Company and Savoy Pictures Entertainment, Inc./*/
12. Letter Agreement, dated March 22, 1996, by and between Liberty Media
Corporation and Barry Diller./*/
13. In re Applications of Roy M. Speer and Silver Management Company, Federal
Communications Commission Memorandum and Order, adopted March 6, 1996 and
released March 11, 1996./*/
14. In re Applications of Roy M. Speer and Silver Management Company, Request
for Clarification of Silver Management Company, dated April 10, 1996./*/
15. In re Applications of Roy M. Speer and Silver Management Company, Federal
Communications Commission Memorandum Opinion and Order and Notice of
Apparent Liability, adopted June 6, 1996 and released June 14, 1996./*/
16. Amended and Restated Joint Filing Agreement of TCI, Mr. Diller and
BDTV./*/
17. Amended and Restated Certificate of Incorporation of BDTV INC./*/
18
18. Press Release issued by the Company and Home Shopping Network, Inc.,
dated August 26, 1996./*/
19. Agreement and Plan of Exchange and Merger, dated as of August 25, 1996,
by and among the Company, Home Shopping Network, Inc., House Acquisition
Corp., and Liberty HSN, Inc./*/
20. Termination Agreement, dated as of August 25, 1996, among the Company,
BDTV Inc., Liberty Program Investments, Inc., and Liberty HSN, Inc./*/
21. Voting Agreement, dated as of August 25, 1996, by and among Certain
Stockholders of Home Shopping Network, Inc. and the Company./*/
22. Voting Agreement, dated as of August 25, 1996, by and among Barry Diller,
Liberty Media Corporation, Arrow Holdings, LLC, BDTV Inc., and Home
Shopping Network, Inc./*/
23. Letter Agreement, dated as of August 25, 1996, by and between Liberty
Media Corporation and Barry Diller./*/
24. Second Amended and Restated Joint Filing Agreement by and between TCI,
Mr. Diller, BDTV Inc. and BDTV II Inc./*/
25. Stock Exchange Agreement, dated as of December 20, 1996, by and between
the Company and Liberty HSN, Inc./*/
26. Letter Agreement, dated as of February 3, 1997, by and between BDTV INC.
and David Geffen./*/
27. Stock Exchange Agreement, dated as of May 20, 1997, by and between HSN,
Inc. and Mr. Allen./*/
28. Stockholders Agreement, dated as of May 20, 1997, by and among, Mr.
Diller, Mr. Allen and Liberty Media Corporation./*/
29. Letter Agreement, dated as of May 20, 1997, by and between Mr. Diller and
Liberty Media Corporation./*/
30. Third Amended and Restated Joint Filing Agreement by and between TCI, Mr.
Diller, BDTV Inc., BDTV II Inc. and BDTV III Inc./*/
31. Certificate of Incorporation of BDTV III Inc./*/
32. Investment Agreement among Universal Studios, Inc., HSN, Inc., Home
Shopping Network, Inc. and Liberty Media Corporation, dated as of October
19, 1997 as amended and restated as of December 18, 1997./*/
33. Governance Agreement among HSN, Inc., Universal Studios, Inc., Liberty
Media Corporation and Barry Diller, dated as of October 19, 1997./*/
34. Stockholders Agreement among Universal Studios, Inc., Liberty Media
Corporation, Barry Diller, HSN, Inc. and The Seagram Company Ltd. dated
as of October 19, 1997./*/
35. Spinoff Agreement among Liberty Media Corporation, Universal Studios,
Inc. and HSN, Inc. dated as of October 19, 1997./*/
19
36. Exchange Agreement among HSN, Inc., Universal Studios, Inc. and Liberty
Media Corporation, dated as of October 19, 1997./*/
37. Amended and Restated LLC Operating Agreement of USANi LLC, by and among
USA Networks, Inc., Home Shopping Network, Inc., Universal Studios, Inc.,
Liberty Media Corporation and Barry Diller, dated as of February 12,
1998./*/
38. Letter Agreement between Liberty HSN, Inc. and HSN, Inc., dated as of
October 19, 1997./*/
39. Fourth Amended and Restated Joint Filing Agreement between Tele-
Communications, Inc., Universal Studios, Inc., The Seagram Company Ltd.
and Barry Diller, dated as of February 23, 1998./*/
40. Certificate of Incorporation of BDTV IV INC./*/
41. Fifth Amended and Restated Joint Filing Agreement by and among
Tele-Communications, Inc., Liberty Media Corporation, Barry Diller,
Universal Studios, Inc., The Seagram Company Ltd., BDTV INC., BDTV II
INC., BDTV III INC. and BDTV IV INC, dated as of July 19, 1999./*/
42. Sixth Amended and Restated Joint Filing Agreement by and among Liberty
Media Corporation, Barry Diller, Universal Studios, Inc., The Seagram
Company Ltd., Vivendi Universal, BDTV INC., BDTV II INC., BDTV III INC.
and BDTV IV INC. dated as of June 22, 2001. /*/
43. Letter Agreement, dated July 15, 2001, by and among USA Networks, Inc.,
Barry Diller, Universal Studios, Inc. and Liberty Media Corporation./*/
44. Amended and Restated Transaction Agreement, dated as of December 16,
2001, by and among Vivendi Universal, S.A., Universal Studios, Inc., USA
Networks, Inc., USANi LLC, Liberty Media Corporation and Barry Diller.
45. Agreement and Plan of Merger and Exchange, dated as of December 16, 2001,
by and among Vivendi Universal, S.A., Universal Studios, Inc., 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., 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
thereto./*/
46. Amended and Restated Governance Agreement, dated as of December 16, 2001,
by and among USA Networks, Inc., Universal Studios, Inc., Liberty Media
Corporation, Barry Diller, and Vivendi Universal, S.A./*/
47. Amended and Restated Stockholders Agreement, dated as of December 16,
2001, by and among Universal Studios, Inc., Liberty Media Corporation and
Barry Diller./*/
48. Amended and Restated Limited Liability Limited Partnership Agreement of
Vivendi Universal Entertainment LLLP, by and among USI Entertainment
Inc., USANI Holdings XX, Inc., Universal Pictures International Holdings
BV, Universal Pictures
20
International Holdings 2 BV, NYCSpirit Corp. II, USA Networks, Inc.,
USANI Sub LLC, New-U Studios Holdings, Inc. and Mr. Diller.
49. Equity Warrant Agreement between USA Networks, Inc. and The Bank of New
York, as equity warrant agent.
/*/ Previously filed.
21
Schedule 1 of the Schedule 13D is hereby amended to read in its entirety
as follows:
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS OF UNIVERSAL AND VIVENDI UNIVERSAL
CANADA INC. (formerly The Seagram Company Ltd.)
1. Set forth below is the name, business address, principal occupation or
employment and citizenship of each director and executive officer of
Universal. The name of each person who is a director of Universal is
marked with an asterisk. Unless otherwise indicated, the business address
of each person listed below is 100 Universal City Plaza, Universal City,
California 91608.
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
YASUO NAKAMURA* President, Matsushita Media & Japan
Entertainment Business Development
Unit
RON MEYER* President and Chief Operating United States
Officer of Universal
KAREN RANDALL* Executive Vice President and United States
General Counsel of Universal
KENNETH L. KAHRS* Executive Vice President, Human United States
Resources of Universal
FREDERICK HUNTSBERRY* Senior Vice President and Chief United States
Financial Officer of Universal
WILLIAM A. SUTMAN* Executive Vice President, Finance, United States
Canal + Group
SUSAN N. FLEISHMAN Senior Vice President, Corporate United States
Communications and Public Affairs
MARK A. WOOSTER Senior Vice President of Universal United States
MAREN CHRISTENSEN Senior Vice President of Universal United States
DIANA SCHULZ* Senior Vice President of Universal United States
WILLIAM APOSTOLIDES Vice President of Universal United States
KEVIN CONWAY Vice President of Universal United States
H. STEPHEN GORDON Vice President of Universal United States
ILANA PORAT KOCH Vice President of Universal United States
LARRY KURZWEIL Vice President of Universal United States
DAVID H. MEYERS Vice President and Assistant United States
Controller of Universal
MARC PALOTAY Vice President of Universal United States
22
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
TERRY A. REAGAN Vice President and Controller of United States
Universal
RONALD F. REED Treasurer of Universal United States
SHARON S. GARCIA Secretary of Universal United States
LEW R. WASSERMAN* Chairman Emeritus of the Board of United States
Universal
2. Set forth below is the name, business address, principal occupation or
employment and citizenship of each director and executive officer of
Vivendi Universal Canada Inc. (formerly The Seagram Company Ltd.,
effective February 28, 2002). The name of each person who is a director
of Vivendi Universal Canada Inc. is marked with an asterisk. Unless
otherwise indicated, the business address of each person listed below is
375 Park Avenue, New York, New York 10152.
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
EDGAR BRONFMAN, JR.* Consultant United States
Lexa Partners LLC
390 Park Avenue
4th Floor
New York, New York 10022
ALAN BELL* Partner, Blake Cassels & Graydon, Canada
Blake Cassels & Graydon, LLP LLP
Commerce Court West-CIBC
Building
199 Bay Street
Toronto, Ontario M5L 1A9
CRAIG THORBURN* Partner, Blake Cassels & Graydon, Canada
Blake Cassels & Graydon, LLP LLP
Commerce Court West-CIBC
Building
199 Bay Street
Toronto, Ontario M5L 1A9
JEAN-MARIE MESSIER* Chairman and Chief Executive France
Vivendi Universal S.A. Officer, Vivendi Universal
42, avenue de Freidland
75380 Paris
Cedex 08, FRANCE
ERIC LICOYS* Co-Chief Operating Officer, Vivendi France
Vivendi Universal S.A. Universal
42, avenue de Freidland
75380 Paris
Cedex 08, FRANCE
DANIEL LOSITO Vice President, Vivendi Universal United States
WILLIAM APOSTOLIDES Treasurer, Americas, Vivendi United States
Vivendi Universal Universal
800 Third Avenue
New York, NY 10022
23
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
WILLIAM PODURGIEL Director Foreign Taxes, Vivendi United States
Vivendi Universal Universal
800 Third Avenue
New York, NY 10022
GEORGE E. BUSHNELL III Vice President, Vivendi Universal United States
NICOLE LINDA KELSEY Assistant Corporate Counsel, United States
Vivendi Universal
DEBRA FORD Manager, Corporate Transactions, United States
Vivendi Universal Vivendi Universal
800 Third Avenue
New York, NY 10022
Schedule 3 of the Schedule 13D is hereby amended to read in its entirety
as follows:
SCHEDULE 3
DIRECTORS AND EXECUTIVE OFFICERS OF LIBERTY MEDIA CORPORATION
The name and present principal occupation of each director and
executive officer of Liberty Media Corporation are set forth below.
Unless otherwise noted, the business address for each person listed below
is c/o Liberty Media Corporation, 12300 Liberty Boulevard, Englewood,
Colorado 80112. All executive officers and directors listed on this
Schedule 3 are United States citizens, except for David J.A. Flowers, who
is a Canadian citizen.
Name and Business Address Principal Occupation
JOHN C. MALONE Chairman of the Board and Director of Liberty
ROBERT R. BENNETT President, Chief Executive Officer and Director of
Liberty
DONNE F. FISHER Director of Liberty; President of Fisher Capital
Partners Ltd.
GARY S. HOWARD Executive Vice President, Chief Operating Officer
and Director of Liberty; Chairman of the Board and
Director of Liberty Satellite & Technology, Inc.
PAUL A. GOULD Director of Liberty; Managing Director of Allen &
Allen & Company Company Incorporated
Incorporated
711 5th Avenue, 8th Floor
New York, NY 10022
JEROME H. KERN Director of Liberty; Consultant, Kern Consulting LLC
Kern Consulting LLC
4600 S. Syracuse Street
Denver, CO 80237
LARRY E. ROMRELL Director of Liberty
DAVID J.A. FLOWERS Senior Vice President and Treasurer of Liberty
ELIZABETH M. MARKOWSKI Senior Vice President of Liberty
24
Name and Business Address Principal Occupation
CHARLES Y. TANABE Senior Vice President, General Counsel and Secretary
of Liberty
ALBERT E. ROSENTHALER Senior Vice President of Liberty
CHRISTOPHER W. SHEAN Senior Vice President and Controller of Liberty
Schedule 5 of the Schedule 13D is hereby amended to read in its entirety
as follows:
SCHEDULE 5
DIRECTORS AND EXECUTIVE OFFICERS OF VIVENDI UNIVERSAL, S.A.
Set forth below is the name, business address, principal occupation
or employment and citizenship of each director and executive officer of
Vivendi Universal. Unless otherwise indicated, the business address of
each person listed below is 42, Avenue de Friedland, 75380 Paris Cedex
08, France.
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
JEAN-MARIE MESSIER Chairman and CEO of Vivendi France
Universal.
ERIC LICOYS Co-COO Vivendi Universal. France
BERNARD ARNAULT Chairman and CEO of LVMH/Moet France
Hennessy Louis Vuitton.
30, avenue Hoche
75008 Paris, France
EDGAR BRONFMAN, JR. Special Advisor to the Chairman of United States
the Board of Directors of Vivendi
Universal.
EDGAR M. BRONFMAN Member of the Board of Directors of United States
Vivendi Universal.
RICHARD H. BROWN Chairman and CEO of Electronic Data United States
Systems Co.
5400 Legacy Drive
Plano, Texas 75024-3198
JEAN-MARC ESPALIOUX Chairman of the Directory Board of France
Accor.
Tour Maine Montparnasse
33, avenue du Maine
75755 Paris Cedex
15, France
PHILIPPE FORIEL-DESTEZET Director of Adecco S.A. France
52, rue de la Bienfaisance
75008 Paris, France
JACQUES FRIEDMANN Retired Chairman of the
Supervisory France Board of
AXA-UAP (Chairman from 1993-2000).
80, avenue de Breteuil
75007 Paris, France
25
Principal Occupation
Name and Business Address or Employment and Business Address Citizenship
ESTHER KOPLOWITZ Director of Fomento de Spain
Construcciones y Contratas FCC
(Spain), B 1998 S.L. and Dominum
Desga S.A.
Torre Picasso
Plaza Pablo Ruiz Picasso
28020 Madrid, Spain
MARIE-JOSEE KRAVIS Senior Fellow, Hudson Institute Inc. United States
c/o 625 Park Avenue
New York, NY 12021
HENRI LACHMANN Chairman and CEO of Schneider France
Electric
43-45, boulevard
F. Roosevelt, 92500
Rueil-Malmaison, France
SAMUEL MINZBERG Chairman and Chief Executive Officer Canada
of Claridge Inc.
1170 Peel Street
Montreal, Quebec H3B, 4P2
SIMON MURRAY Chairman of Simon Murray & U.K.
Associates
Princes House-2nd Floor
38, Jermyn Street
London SW1Y 6DT
SERGE TCHURUK Chairman and CEO of Alcatel France
54, rue de la Boetie
75008 Paris, France
MARC VIENOT Honorary Chairman and Director of France
Societe Generale.
Tour Societe Generale
92972 Paris La Defense
Cedex, France
EXHIBIT 44
================================================================================
AMENDED AND RESTATED 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
AMENDED AND RESTATED 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 the parties hereto entered into a Transaction Agreement (the
"Original Transaction Agreement") on December 16, 2001;
WHEREAS the parties hereto desire to amend and restate the terms and
provisions of the Original Transaction Agreement as set forth herein;
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; and
2
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
3
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 transactions 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
4
of sale, assignment and assumption and other instruments of 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 the
Affiliate of Vivendi set forth in Schedule 2.04(b) 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 the Affiliate of Vivendi set forth in Schedule 2.04(b)
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
5
thereunder or resulting therefrom, or an assumption of liability thereunder, if
an attempted assignment thereof, without the approval of a party thereto, would
be 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
6
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 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.
7
SECTION 3.02. Authority; Execution and Delivery; Enforceability.
Each of such Parent Party and its Affiliates has full power and authority to
execute and 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
8
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 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
9
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 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
10
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 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
11
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 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
12
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, 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 -sion 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)
13
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, 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
14
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 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
15
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 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
16
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 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
17
Debt"). As of the Closing Date, there will not be 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 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
18
its own account for investment purposes, and not with a view to the
distribution thereof.
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
19
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
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 of USAi and Vivendi
shall enter into (or cause their respective Affiliates to enter into) a series
of strategic and commercial alliances with one another covering the
transactional and internet businesses of each of USAi and Vivendi and their
respective 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 each of USAi
and Vivendi 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 of USAi and Vivendi and their respective
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
30
provision of the Code or the Treasury Regulations thereunder.
(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
31
(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 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
32
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 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) As of the Closing, V-USA Holding LLC, USI-USA Holding LLC,
USIE-USA Holding LLC, SUB I-USA Holding LLC (collectively, the "USA Holding
Entities"), Vivendi, Universal and USAi shall execute, deliver and consummate
the transactions contemplated by the Assignment Agreement. Following the
Closing and until such time that the obligations in Section 8.07 of the
Partnership Agreement are
33
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 the obligations of Universal and the USA Holding Entities
under the Partnership Agreement, Universal and the USA Holding Entities and
their respective 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
34
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 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
35
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 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
36
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 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
37
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.
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
38
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 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
39
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 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
40
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, 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.
41
(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 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
42
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 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
43
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 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
44
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 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,
45
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 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.
46
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 (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 the
Affiliate of Vivendi set forth in Schedule 2.04(b) 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.
47
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 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
48
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.
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.
49
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.
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, and is effective as of the day and year first above written.
VIVENDI UNIVERSAL, S.A.,
By /s/ George E. Bushnell III
-----------------------------
Name: George E. Bushnell III
Title: Vice President
UNIVERSAL STUDIOS, INC.,
By /s/ Karen Randall
-----------------------------
Name: Karen Randall
Title: Executive Vice President
and General Counsel
USA NETWORKS, INC.,
By /s/ Julius Genachowski
-----------------------------
Name: Julius Genachowski
Title: Executive Vice President
USANi LLC,
By /s/ Julius Genachowski
-----------------------------
Name: Julius Genachowski
Title: Executive Vice President
LIBERTY MEDIA CORPORATION,
By /s/ Charles Y. Tanabe
-----------------------------
Name: Charles Y. Tanabe
Title: Senior Vice President
and General Counsel
51
Only for purposes of Sections
2.03(a)(iv), 2.03(a)(v),
2.03(a)(vii), 2.07, 4.10(d) and
8.01:
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.
"Assignment Agreement" means the Assignment Agreement dated as of
the Closing Date, by and among Vivendi, Universal, the USA Holding Entities
and USAi.
"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) -
sion channels (irrespective of how such channel is delivered to the customer,
including delivery by cable, satellite, the
2
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 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
3
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, 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.
4
"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 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
5
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 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
6
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.
"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
7
then conducted by such Existing Business, or (ii) are (A) cable television
system affiliation agreements covering one million or more subscribers (in any
individual 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.
"Original Transaction Agreement" shall have the meaning set forth in
the Preamble.
"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.
8
"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 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)
9
filed by USAi or Vivendi, as applicable, with the SEC following December 31,
2000, and on or before the date of this Agreement.
"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.
10
"Taxing Authority" means any government authority having
jurisdiction over the assessment, determination, collection or other
imposition of Tax.
"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 Holding Entities" shall have the meaning set forth in Section
4.17(b).
11
"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).
"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).
12
"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 Holdings, 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 (vii) a 100% 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 48
AMENDED AND RESTATED LIMITED LIABILITY LIMITED PARTNERSHIP
AGREEMENT
of
VIVENDI UNIVERSAL ENTERTAINMENT LLLP
dated as of May 7, 2002,
by and among
USI ENTERTAINMENT INC.,
USANI HOLDING XX, INC.,
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS BV,
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS 2 BV,
NYCSPIRIT CORP. II,
USA NETWORKS, INC.,
USANi SUB LLC,
NEW-U STUDIOS HOLDINGS, INC.
and
BARRY DILLER
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions..................................................2
SECTION 1.02. Terms and Usage Generally...................................11
ARTICLE II
The Partnership
SECTION 2.01. Effectiveness of this Agreement.............................12
SECTION 2.02. Continuation................................................12
SECTION 2.03. Name........................................................13
SECTION 2.04. Term........................................................13
SECTION 2.05. Registered Agent and Registered Office......................13
SECTION 2.06. Purposes....................................................13
SECTION 2.07. Treatment as Partnership....................................13
ARTICLE III
Capital Contributions; Partners
SECTION 3.01. Initial Capital Contributions...............................14
SECTION 3.02. Admission of Partners.......................................14
SECTION 3.03. Substitute Partners and Additional
Partners..................................................14
ARTICLE IV
Reports
SECTION 4.01. Reports to Partners.........................................15
SECTION 4.02. Tax Information.............................................16
ARTICLE V
Preferred Interests
SECTION 5.01. General.....................................................17
SECTION 5.02. Ranking.....................................................17
SECTION 5.03. PIK Accretion...............................................17
SECTION 5.04. Consent Right. ............................................18
SECTION 5.05. Negative Covenants..........................................18
SECTION 5.06. No Other Consent Rights.....................................21
ii
ARTICLE VI
Common Interests
SECTION 6.01. General.....................................................21
SECTION 6.02. Issuances of Common Interests After
the Closing Date..............................22
SECTION 6.03. Preemptive Rights...........................................23
SECTION 6.04. Other Issuances of Common Interests.........................24
SECTION 6.05. Contribution of Assets or Capital Stock
by Universal Sub..............................25
SECTION 6.06. Consent Right...............................................25
ARTICLE VII
Capital Accounts, Allocations of
Profit and Loss and Tax Matters
SECTION 7.01. Capital Accounts............................................27
SECTION 7.02. Allocations of Net Income and Net Loss......................28
SECTION 7.03. Allocations of Net Income and Net Loss
for Federal Income Tax Purposes...............31
SECTION 7.04. Allocation of the Partnership Debt.......................31
SECTION 7.05. Elections...................................................31
SECTION 7.06. Fiscal Year.................................................31
SECTION 7.07. Withholding Requirements....................................32
SECTION 7.08. Tax Matters Partner.........................................32
ARTICLE VIII
Distributions
SECTION 8.01. Distributions...............................................33
SECTION 8.02. Tax Distributions...........................................33
SECTION 8.03. General Limitations.........................................34
SECTION 8.04. Distributions in Kind.......................................34
SECTION 8.05. Closing Date Distribution...................................34
SECTION 8.06. Distribution Upon Maturity of Class A
Preferred Interests.......................................34
SECTION 8.07. Put/Call Rights with Respect to Class B
Preferred Interests.......................................34
ARTICLE IX
Management of the Partnership
SECTION 9.01. General Partner.............................................35
SECTION 9.02. Board; Representatives; Chairman............................36
SECTION 9.03. Expenses....................................................37
SECTION 9.04. Agreement Not To Compete....................................37
iii
ARTICLE X
Transfers of Interests
SECTION 10.01. Restrictions on Transfers..................................39
SECTION 10.02. Transfers Permitted at any Time............................39
SECTION 10.03. Put/Call...................................................40
SECTION 10.04. Tag-Along for Limited Partners for
Transfers by Universal...................................45
ARTICLE XI
Limitation on Liability,
Exculpation
SECTION 11.01. Limitation on Liability....................................47
SECTION 11.02. Exculpation................................................47
SECTION 11.03. Partnership Opportunities..................................47
SECTION 11.04. Indemnification............................................49
ARTICLE XII
Events of Withdrawal; Bankruptcy of a General Partner
SECTION 12.01. Events of Withdrawal.......................................50
SECTION 12.02. Bankruptcy of a General Partner............................50
ARTICLE XIII
Dissolution and Termination
SECTION 13.01. Dissolution................................................51
SECTION 13.02. Winding Up of the Partnership..............................52
SECTION 13.03. Distribution of Property...................................53
SECTION 13.04. Claims of Partners.........................................53
SECTION 13.05. Termination................................................53
ARTICLE XIV
Miscellaneous
SECTION 14.01. Notices....................................................53
SECTION 14.02. No Third Party Beneficiaries...............................54
SECTION 14.03. Waiver.....................................................54
SECTION 14.04. Integration................................................54
SECTION 14.05. Headings...................................................55
SECTION 14.06. Counterparts...............................................55
SECTION 14.07. Severability...............................................55
SECTION 14.08. Applicable Law.............................................55
SECTION 14.09. Jurisdiction...............................................55
iv
Schedules
Schedule A - Partners
Schedule B - Initial Capital Contributions
AMENDED AND RESTATED LIMITED LIABILITY
LIMITED PARTNERSHIP AGREEMENT of VIVENDI UNIVERSAL
ENTERTAINMENT LLLP (the "Partnership") dated as of
May 7, 2002, by and among USI ENTERTAINMENT INC., a
Delaware corporation ("Universal Sub"), as general
partner, USANI HOLDINGS XX, INC., a Delaware
corporation ("USANI XX"), UNIVERSAL PICTURES
INTERNATIONAL HOLDINGS BV, a corporation organized
under the laws of The Netherlands ("UPI Holdings"),
UNIVERSAL PICTURES INTERNATIONAL HOLDINGS 2 BV, a
corporation organized under the laws of The
Netherlands ("UPI Holdings 2"), NYCSPIRIT CORP. II, a
Delaware corporation ("NYCSpirit"), USA NETWORKS,
INC., a Delaware corporation ("USAi"), USANi SUB LLC,
a Delaware limited liability company ("USANi Sub"),
NEW-U STUDIOS HOLDINGS, INC., a Delaware corporation
("New-U Studios"), and Barry Diller ("Diller"), as
limited partners , for purposes of Sections 10.03(f)
and 10.04(d) only, VIVENDI UNIVERSAL, S.A., a societe
anonyme organized under the laws of France
("Vivendi"), for purposes of Sections 8.07 and 10.03
only, UNIVERSAL STUDIOS, INC., a Delaware corporation
("Universal"), and, for purposes of Section 8.07
only, SUB I - USA Holding LLC, a Delaware limited
liability company ("SUB I-USA"), USI - USA Holding
LLC, a Delaware limited liability company ("USI-
USA"), USIE - USA Holding LLC, a Delaware limited
liability company ("USIE-USA"), and V - USA Holding
LLC, a Delaware limited liability company ("V-USA").
Preliminary Statement
WHEREAS, the parties hereto (or Affiliates thereof) are parties to
the Amended and Restated 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;
WHEREAS, Universal Sub and USI Interim LP Inc. (the "Initial Limited
Partner") are parties to the Agreement of Limited Liability Limited
Partnership of the Partnership
2
(the "Original Partnership Agreement") dated as of April 15,
2002;
WHEREAS, Universal Sub, as general partner of the Partnership, has
duly executed and filed with the Secretary of State of the State of Delaware
(i) a statement of qualification as a limited liability limited partnership
and (ii) a certificate of limited partnership;
WHEREAS, the parties hereto desire to continue the Partnership and
to amend and restate the terms and provisions of the Original Partnership
Agreement in the form hereof; and
WHEREAS, immediately upon the admission of at least one additional
Limited Partner as a limited partner of the Partnership, the Initial Limited
Partner shall withdraw from the 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
Sub 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.
"Agreement" means this Amended and Restated Limited Liability
Limited Partnership Agreement, as the same may be amended or restated from
time to time.
3
"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.
"Assignment Agreement" means the Assignment Agreement dated as of
the Closing Date, by and among Vivendi, Universal, SUB I-USA, USI-USA,
USIE-USA, V-USA and USAi.
"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.
4
"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,
5
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.
"DRUPA" is defined in Section 2.02.
"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.
6
"General Partner" means Universal Sub, any Substitute Partner that
is admitted as the general partner 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.
"Initial Limited Partner" is defined in the Preamble.
7
"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.
"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, New-U Studios, Diller,
USANI XX, UPI Holdings, UPI Holdings 2, NYCSpirit 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
8
in accordance with the principles of Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
"New-U Studios" is defined in the Preamble.
"Non-U.S. Participation Percentage" is defined in Section 6.01(a).
"Non-U.S. Source Items" means, for any period, each item of gross
income, gain, loss or deduction of the Partnership attributable to the
Non-U.S. Subsidiaries.
"Non-U.S. Subsidiaries" means any subsidiaries of the Partnership
organized outside of the United States.
"NYCSpirit" is defined in the Preamble.
"Original Partnership Agreement" is defined in the Preamble.
"Participation Percentage" is defined in Section 6.01(a).
"Partner" means the General Partner or a Limited Partner.
"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(ii) 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.
9
"Purchasing Party" means the party 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.
"Securities Act" means the Securities Act of 1933, as amended.
"Selected Appraisal" is defined in Section 10.03(d).
"Selling Party" means the party 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.
"SUB I-USA" is defined in the Preamble.
"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
10
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.
"Transfer" means any sale, assignment, transfer, exchange, gift,
bequest, pledge, hypothecation, distribution, spin-off, split-off,
disposition, encumbrance or other cessation of interest, 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" is defined in the Preamble.
"Universal Limited Partners" means USANI XX, UPI Holdings, UPI
Holdings 2, NYCSpirit and their permitted transferees, in each case for so
long as such Person continues to be a limited partner of the Partnership.
"Universal Partners" initially means the Universal Limited Partners
and the General Partner.
"Universal Sub" is defined in the Preamble.
"UPI Holdings" is defined in the Preamble.
11
"UPI Holdings 2" is defined in the Preamble.
"U.S. Participation Percentage" is defined in Section 6.01(a).
"U.S. Source Items" means, for any period, each item of gross
income, gain, loss or deduction of the Partnership other than Non-U.S. Source
Items.
"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 Limited Partners" means USAi, USANi Sub, New-U Studios, Diller
and their permitted transferees, in each case for so long as such Person
continues to be a limited partner of the Partnership.
"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.
"USANI XX" is defined in the Preamble.
"USI-USA" is defined in the Preamble.
"USIE-USA" is defined in the Preamble.
"V-USA" is defined in the Preamble.
"Vivendi" is defined in the Preamble.
"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
12
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 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.
13
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. Continuation. The parties hereto agree to continue the
Partnership as a limited partnership 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.), as amended from time to time or any successor
statute ("DRUPA"). The General Partner shall, on request, provide any Partner
with copies of each document filed with the Secretary of State of the State of
Delaware.
SECTION 2.03. Name. The name of the Partnership is Vivendi Universal
Entertainment LLLP. 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 began on the date
the certificate of limited partnership of the Partnership became effective,
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 is The Corporation Trust Company,
and the address of the registered agent and the address of the registered
office in the State of Delaware is 1209 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 was formed for the object
and purpose of, and the nature of the business to be conducted and promoted by
the Partnership is, engaging in the filmed entertainment, television,
14
recreation, programming, distribution and cable businesses and any other
lawful act or activity that the General Partner may from time to time
determine 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, New-U Studios, Universal Sub, USANI XX, UPI Holdings,
UPI Holdings 2 and NYCSpirit 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, (i) Universal Sub shall
continue to be a general partner of the Partnership, and (ii) the other
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 books and records of the Partnership. Following the Effective
Time, no Person shall be admitted as a Partner and no additional Common
15
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).
SECTION 3.04. Withdrawal of Initial Limited Partner. Immediately
upon the admission of at least one additional Limited Partner as a limited
partner of the Partnership, the Initial Limited Partner shall be deemed to
16
have withdrawn from the Partnership as a limited partner of the Partnership,
and, upon such withdrawal, the Initial Limited Partner shall have no further
interest in the Partnership.
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
17
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 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, USANi Sub 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
18
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 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
19
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 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, and any extension,
renewal, refinancing or replacement of all or any part of the
Partnership Debt (whether or not incurred in accordance with Section
5.05(b)(iii)) that does not increase the outstanding principal
amount thereof and (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.
20
(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 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; provided,
however, that from time to time the Partnership may discharge all,
or any part of, the Partnership Debt using the proceeds of third
party debt (on terms reasonably satisfactory to USAi, and so long as
no more than three such third party debts may be in existence at any
time) (each, a "Refinancing Debt") if the proceeds of such
Refinancing Debt are allocable under the rules of Treasury
Regulation Section 1.163-8T (or any successor section) to the
payment discharging the Partnership Debt, and from and after the
date of such discharge references to the Partnership Debt in this
Agreement (other than in Section 5.05(a)(iv)) shall, to the extent
that the Partnership Debt is discharged with the proceeds of a
Refinancing Debt, be deemed to include such Refinancing Debt;
provided, further, 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 USANi Sub's tax basis in its interest in the Partnership;
and, provided, further, that, notwithstanding the foregoing, any
payment of the principal amount of the Partnership Debt or any
acceleration of payment thereof shall be preceded by written notice
by the Partnership to USAi of such payment or acceleration, which
notice shall indicate the amount and anticipated date of such
payment or acceleration and the event giving rise to such payment or
acceleration;
21
(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 USA Cable or Studios USA (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 provided under Section 17-214(a)(1) of the Delaware Act and
Section 15-1003 of DRUPA).
Nothing in this Section 5.05 shall prohibit the pledge of interests in
subsidiaries of the Partnership by the Partnership or by any subsidiary of the
Partnership that is properly treated as an entity disregarded from the
Partnership for U.S. Federal income tax purposes if such pledge is required by
the terms of the Partnership Debt.
SECTION 5.06. 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.
22
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 and the non-U.S. participation percentage (the "Non-U.S.
Participation Percentage") and the U.S. participation percentage (the "U.S.
Participation Percentage") of each Universal Partner's Common Interest shall
be as set forth below:
U.S. Non-U.S.
Participation Participation Participation
Partner Percentage Percentage Percentage
Universal Sub 74.77% 86.16% 53.36%
USANI XX 5.46% 7.14% --
UPI Holdings 6.52% -- 39.46%
UPI Holdings 2 1.18% -- 7.18%
NYCSpirit 5.13% 6.70% --
USAi 0.54% -- --
USANi Sub 4.59% -- --
New-U Studios 0.31% -- --
Diller 1.50% -- --
(b) Such initial Participation Percentages, Non- U.S. Participation
Percentages and U.S. Participation Percentages, as applicable, shall be
subject to adjustment as provided in this Article VI. The aggregate
outstanding Participation Percentages, the aggregate outstanding Non- U.S.
Participation Percentages and the aggregate outstanding U.S. Participation
Percentages, respectively, at all times shall equal 100%, and Participation
Percentages, Non-U.S. Participation Percentages and U.S. Participation
Percentages, as applicable, 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 and, if
applicable, the Non- U.S. Participation Percentage and the U.S. Participation
Percentage associated with such issuance and any other
23
material terms thereof. Upon such issuance, the Participation Percentages and,
if applicable, the Non-U.S. Participation Percentages and the U.S. Participation
Percentages, respectively, of all Common Interests outstanding immediately
before such issuance shall be reduced in the aggregate by an amount equal to the
Participation Percentage and, if applicable, the Non-U.S. Participation
Percentage and the U.S. Participation Percentage, respectively, so designated,
in proportion to their relative Participation Percentages and, if applicable,
their relative Non-U.S. Participation Percentages and their relative U.S.
Participation Percentages, respectively, immediately before such issuance.
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
24
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 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 (or cause its Affiliates to purchase) the remaining
amount of Common Interests in such issuance. Thereafter, the Participation
Percentages of all the Partners and the Non-U.S. Participation Percentages and
U.S. Participation Percentages of the Universal Partners shall be adjusted in
accordance with Section 6.02(b).
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
25
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 and the Non-U.S. Participation
Percentages and U.S. Participation Percentages of the Universal Partners shall
be adjusted in accordance with Section 6.02(b).
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 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
26
Partnership; provided, however, that (i) at all times a USAi Limited 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 USAi Limited 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.
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
27
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
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.
28
(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 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.
29
(b) Allocations Among Universal Partners. (i) If any Net Income or
Net Loss, or any items thereof, allocable to the Universal Partners pursuant
to Section 7.02(a) is attributable to Non-U.S. Source Items, such Non-U.S.
Source Items shall be allocated to the Universal Partners in accordance with
their Non-U.S. Participation Percentages, and if any Net Income or Net Loss,
or any items thereof, allocable to the Universal Partners pursuant to Section
7.02(a) is attributable to U.S. Source Items, such U.S. Source Items shall be
allocated to the Universal Partners in accordance with their U.S.
Participation Percentages; provided, however, that to the extent an allocation
of Non- U.S. Source Items, on the one hand, or U.S. Source Items, on the other
hand, consists of deduction or loss and that would cause the Capital Account
balance of any Universal Partner to be reduced below zero, such Non-U.S.
Source Items or U.S. Source Items, as the case may be, shall instead be
allocated to the other Universal Partners, pro rata, based upon their relative
positive Capital Account balances (determined after allocation of all other
items for such taxable period); and provided, further, if any items are
specially allocated to a Universal Partner pursuant to the immediately
preceding proviso, such Universal Partner will be specially allocated Non-U.S.
Source Items or U.S. Source Items, as the case may be, consisting of income or
gain allocable to the Universal Partners pursuant to Section 7.02(a) in
subsequent taxable periods in an amount sufficient to reverse, to the extent
practicable and as quickly as possible, the special allocation of deduction or
loss items to such Universal Partner pursuant to the immediately preceding
proviso; and
(ii) notwithstanding anything to the contrary in Section 7.02(b)(i),
any items of interest expense allocable to the Universal Partners pursuant to
Section 7.02(a) shall be allocated among the Universal Partners consistent
with the allocation of deduction or loss pursuant to this Section 7.02(b);
provided, however, that to the extent an allocation of any interest expense
items pursuant to this clause (ii) would cause or increase a deficit in the
Capital Account balance of any Universal Partner, such interest expense items
shall instead be allocated to the other Universal Partners, pro rata, based
upon the relative allocations of deduction or loss to such other Universal
Partners pursuant to this Section 7.02(b); provided, further, if any items of
interest expense are specially allocated to a Universal Partner pursuant to
the immediately preceding proviso, the other Universal Partners will be
specially allocated items of deduction or loss allocable to the Universal
Partners pursuant to Section 7.02(a) in subsequent taxable periods in an
amount sufficient to reverse, to the extent practicable and as quickly as
possible, the special allocation of
30
interest expense items to such Universal Partner pursuant to the immediately
preceding proviso.
(c) 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).
(d) 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).
(e) 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).
(f) 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.
(g) 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(b)(ii) through (iv) (determined without regard to the
provisos thereto); provided, however, that for these
31
purposes the Universal Partners, collectively, shall be treated as a single
Partner. 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 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.
32
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.
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.
33
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.
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
34
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,
Universal, USI-USA, USIE-USA, V-USA and/or SUB I-USA shall have the right to
purchase all (but not less than all) of the Class B Preferred Interests of
USAi and its Affiliates (the "USAi Preferred Call"), and (ii) USAi shall have
the right to require Universal, USI-USA, USIE-USA, V-USA and/or SUB I-USA to
purchase all (but not less than all) of 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
35
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 USAi Common Shares (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"). The terms and provisions of Section 4.17 of the Transaction
Agreement are hereby expressly incorporated herein by reference. Universal,
USI-USA, USIE- USA, V-USA and/or SUB I-USA 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. To the extent two or more
entities purchase the Class B Preferred Interests under this Section 8.07, the
Face Value thereof shall be allocated among such entities pro rata based on
the purchase price.
Each of Universal, USI-USA, USIE-USA, V-USA and SUB I-USA hereby
agrees that it is jointly and severally liable for the full and prompt payment
and performance of the obligations with respect to the USAi Preferred Put, and
that such obligations are continuing obligations of payment and performance
and not of collection, and that its obligations under this Section 8.07 shall
not be discharged until payment and performance, in full, of such obligations
has occurred, and that its obligations under this Section 8.07 shall be
absolute and unconditional, irrespective of, and unaffected by, (1) the
genuineness, validity, regularity, enforceability or any future amendment of,
or change in, this Agreement or the Transaction Agreement, (2) the absence of
any action to enforce this Agreement (including this Section 8.07) or the
Transaction Agreement, (3) the insolvency of any party to this Agreement or
the Transaction Agreement; or (4) any other action or circumstances that might
otherwise constitute a legal or equitable discharge or defense of a surety or
guarantor. Notwithstanding the forgoing, the obligations of USI-USA, USIE-USA,
V-USA and SUB I-USA shall be limited to such portion of the purchase price
that may be satisfied by the transfer to USAi (or USAi's designee) of the
Committed Common Equity (as defined in the Transaction Agreement) received by
it pursuant to the Assignment Agreement.
(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
36
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 the USAi Preferred Put or the 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 (or holders) 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 (or holders thereof on a pro rata basis) shall cease.
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
37
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 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
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.
38
(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 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
39
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 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 or any of its Affiliates nor Diller shall directly or indirectly
Transfer all or any part of their respective Interests, or any rights to
receive capital, profits or
40
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 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 any of its Affiliates may Transfer all, but not less than all, of
its Interest to USAi or a direct or indirect 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 (ii) USAi or any of its Affiliates 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
41
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 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
42
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 party by
providing notice to Universal in the case of a Put, USA in the case of a USAi
Call, or Diller in the case of a Diller Call, in each case in accordance with
Section 14.01. The purchase and sale of the Selling Party's Common Interests
shall be consummated at a closing the date and time of which shall be selected
by the Purchasing Party 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 Party shall cause
to be paid to the Selling Party the applicable purchase price, by wire
transfer of immediately available funds, against delivery by the Selling Party
of one or more duly executed assignments and bills of sale (in form and
substance reasonably satisfactory to the Purchasing Party, but in any event
which shall not include any provision for indemnification) assigning its
Common Interests to the Purchasing Party, 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 Party and
the Purchasing Party 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 Party's Investment Bank and the Purchasing Party's
Investment Bank shall jointly notify the Selling Party and the
Purchasing Party 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
43
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 be borne equally by the
Purchasing Party and the Selling Party; 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 Party, 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 Party 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 its Affiliates 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
44
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 Party 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 Party with, and the
Selling Party 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 Party
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 Party may elect the type of security
(or combination of 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 Party, Vivendi shall be required
promptly to cause the Vivendi Ordinary Shares owned by such Selling Party 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
Party 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 Party 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 Party's Demand
Registration, without such Selling Party's
45
consent. If the amount of shares sought to be registered by a Selling Party and
its Affiliates pursuant to any Demand Registration is reduced by more than 25%
pursuant to any underwriters' cutback, then such Selling Party may elect to
request Vivendi to withdraw such registration, in which case, such registration
shall not count as one of such Selling Party's Demand Registrations. If a
Selling Party requests that any Demand Registration be an underwritten offering,
then such Selling Party 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 Party 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 Party, 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 Vivendi). In connection with any Demand Registration or inclusion of a
Selling Party's or its Affiliate's shares in a piggyback registration, Vivendi,
such Selling Party and/or its Affiliates shall enter into an agreement
containing terms (including representations, covenants and indemnities by
Vivendi and such Selling Party), 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 Party cannot agree as to what
constitutes customary terms within 10 days of such Selling Party'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 Party. 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 Party's Vivendi Ordinary Shares hereunder.
SECTION 10.04. Tag-Along for USAi Limited Partners for Transfers by
Universal. (a) If Universal Sub, any Universal Limited Partner or any of their
respective
46
Affiliates (each, a "Transferring Entity") shall desire to Transfer in one
transaction or a series of related transactions Common Interests beneficially
owned by such entity, other than to (w) Vivendi, (x) Universal Studios Holding I
Corp., (y) Centenary Holding N.V. or (z) Universal Pictures International B.V.,
or to a direct or indirect wholly owned subsidiary of any of the foregoing (such
Transfer being referred to as a "Tag-Along Event"), such Transferring Entity
shall give not less than 10 Business Days' prior written notice to each of the
USAi Limited Partners (each, a "Tag-Along Offeree") of such intended Tag-Along
Event. Such notice (the "Tag-Along Notice") shall set forth the terms and
conditions of such proposed Tag-Along Event, including the name of the proposed
transferee or resulting holder of such Common Interests (the "Resulting
Holder"), the amount of Common Interests (and the aggregate Participation
Percentage represented thereby) proposed to be Transferred in the Tag-Along
Event (including the number of securities previously or proposed to be
Transferred to the Resulting Holder or its Affiliates in a related transaction)
(the "Tag-Along Interests"), the purchase price or consideration per Common
Interest on an equivalent basis proposed to be paid and received therefor (or if
part of a larger transaction, the fair value allocable portion of the total
purchase price or consideration) and the payment terms and type of Tag-Along
Event to be effectuated.
(b) Within 10 Business Days after delivery of the Tag-Along Notice
by the Transferring Entity to the Tag-Along Offerees, each Tag-Along Offeree
shall, by written notice to such Transferring Entity, have the opportunity and
right to sell to the Resulting Holder in such proposed Tag-Along Event (upon
the same terms and conditions as the Transferring Entity 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,
the Universal Limited Partners and their respective 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 (the "Tag-Along Amount"). In the event that the
proposed transferee is unwilling to purchase all of the Common
47
Interests that the Transferring Entity and the USAi Limited Partners propose to
Transfer hereunder, the amount of Common Interests to be Transferred by the
Transferring Entity and/or its Affiliates and each of the USAi Limited Partners
shall be reduced proportionately. The right of the Tag-Along Offerees shall
terminate with respect to that proposed Tag-Along Event if not exercised within
the period specified in the first sentence of this clause (b).
(c) At the closing of any proposed Tag-Along Event in respect of
which a Tag-Along Notice has been delivered, each Tag-Along Offeree shall
deliver to the proposed Resulting Entity the Common Interests to be sold
hereby duly endorsed, or accompanied by written instruments of transfer in
form satisfactory to the proposed Resulting Entity, free and clear of all
Liens (other than Permitted Liens), and shall receive in exchange therefor the
consideration to be paid by the proposed Resulting Entity in respect of such
Common Interests.
(d) If, for any reason, the rights of a Tag-Along Offeree, as set
forth in this Section 10.04, are unenforceable or otherwise unavailable to
such Tag-Along Offeree upon the occurrence of a Tag-Along Event, such
Tag-Along Offeree shall have the right to require Vivendi to purchase an
amount of Common Interests equal to the Tag-Along Amount from such Tag-Along
Offeree upon the same terms and conditions as would have applied had the
Tag-Along Offeree's rights under this Section 10.04 been fully enforceable and
available.
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 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,
48
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 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.
49
(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 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
50
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 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).
51
(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 USAi Limited Partners are, without necessity
of any further action or documentation, hereby appointed attorneys-in-fact of
the Bankrupt Partner and the Universal Limited Partners 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 USAi Limited 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.
(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
52
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 USAi Limited 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 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
53
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;
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
and; provided, further, that the aggregate amount distributable to the Universal
Partners, collectively, pursuant to clauses (ii) through (iv) above or the
preceding proviso shall be further distributed among the Universal Partners pro
rata based on their relative positive Capital Account balances (determined
taking into account any allocations incident to liquidation pursuant to Section
7.02(g)).
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
54
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.
55
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. Notwithstanding the
foregoing, the parties hereto agree to be bound by the terms and provisions of
the Letter Agreement (the "Letter Agreement") dated as of the Closing Date, by
and among the Universal Partners and the USAi Limited Partners relating to the
clarification of certain matters in this Agreement, and the terms and
provisions of the Letter Agreement are hereby expressly incorporated herein by
reference.
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.
56
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.
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.
SECTION 14.10. Attorney-in-Fact. Each Universal Limited Partner
hereby appoints Universal Sub as its attorney-in-fact, with full power and
authority, for the purpose of taking any action and executing any instrument
necessary for carrying out the respective voting, approval and consent rights
of such Person pursuant to this Agreement.
SECTION 14.11. Limited Partner Voting Rights. The Partners hereby
agree that (i) no Limited Partner other than the USAi Limited Partners shall
have any voting or consent rights under this Agreement or the Delaware Act and
(ii) when any vote or consent of the Limited Partners is to be given under
this Agreement or, subject to Section 6.06 hereof, the Delaware Act, the vote
or consent of the USAi Limited Partners shall control; provided, however, that
in the event that the General Partner becomes a Limited Partner pursuant to
Section 12.02, then such Limited Partner shall have the right bestowed upon
the USAi Limited Partners in Section 6.06(i).
57
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties as of the day and year first above written.
USI ENTERTAINMENT, INC.,
by /s/ Karen Randall
-------------------------------
Name: Karen Randall
Title: Executive Vice President
and General Counsel
USANI HOLDING XX, INC.,
by /s/ Karen Randall
-------------------------------
Name: Karen Randall
Title: Executive Vice President
and General Counsel
UNIVERSAL PICTURES INTERNATIONAL
HOLDINGS BV,
by /s/ Ad Heskes
-------------------------------
Name: Ad Heskes
Title: Director
UNIVERSAL PICTURES INTERNATIONAL
HOLDINGS 2 BV,
by /s/ J.R. Van der Eijnden
-------------------------------
Name: J.R. Van der Eijnden
Title: Director
NYCSPIRIT CORP. II,
by /s/ George E. Bushnell III
-------------------------------
Name: George E. Bushnell III
Title: Vice President and
Secretary
58
USA NETWORKS, INC.,
by /s/ Julius Genachowski
-------------------------------
Name: Julius Genachowski
Title: Executive Vice President
USANi SUB LLC,
by /s/ Eric DeGraw
-------------------------------
Name: Eric DeGraw
Title: Vice President
NEW-U STUDIOS HOLDINGS, INC.,
by /s/ Julius Genachowski
-------------------------------
Name: Julius Genachowski
Title: Vice President
BARRY DILLER,
/s/ Barry Diller
-----------------------------
Initial Limited Partner,
solely to reflect its withdrawal
from the Partnership
USI INTERIM LP INC.,
by /s/ Karen Randall
-------------------------------
Name: Karen Randall
Title: Executive Vice President
General Counsel
59
Only for purposes of Sections
8.07 and 10.03:
UNIVERSAL STUDIOS, INC.
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Vice President
Only for purposes of Sections 10.03(f) and 10.04(d):
VIVENDI UNIVERSAL, S.A.,
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Senior Vice President
Only for purposes of Section 8.07:
USI - USA HOLDING LLC
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Authorized Person
USIE - USA HOLDING LLC
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Authorized Person
60
V - USA HOLDING LLC
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Authorized Person
SUB I - USA HOLDING LLC
by /s/ Kevin Conway
-------------------------------
Name: Kevin Conway
Title: Authorized Person
SCHEDULE A
Partners
1. Vivendi, Universal, Universal Sub, USANI XX, UPI Holdings, UPI
Holdings 2, NYCSpirit, SUB I-USA, USI-USA, USIE-USA and V-USA
Address for Notices:
c/o Universal Studios, Inc.
100 Universal City Plaza
Universal, CA 91608
Attention: Karen Randall
Facsimile: 818-866-3444
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Attention: Faiza J. Saeed
Facsimile: 212-474-3700
2. USAi, USANi Sub, New-U Studios, SUB I-USA, USI- USA, USIE-USA and
V-USA
Address for Notices:
c/o USA Networks, Inc.
Carnegie Hall Tower
152 W. 57th Street
New York, NY 10019
Attention: General Counsel
Facsimile: 212-314-7329
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Andrew J. Nussbaum
Facsimile: 212-403-2000
2
3. Barry Diller
Address for Notices:
Barry Diller
Chairman and Chief Executive Officer
USA Networks, Inc.
Carnegie Hall Tower
152 W. 57th Street
New York, NY 10019
Facsimile: 212-314-7329
with a copy to:
c/o 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, NY 10019
Attention: Pamela S. Seymon
Andrew J. Nussbaum
Facsimile: 212-403-2000
3
SCHEDULE B
Initial Capital Contributions1
Initial Capital Initial Capital
Initial Capital Contribution Contribution
Partner Contribution Attributable to Attributable to
Attributable to Class A Preferred Class B Preferred
Common Interests Interests Interests
Universal Sub $13,538,862,300 $0 $0
USANI XX $989,084,736 $0 $0
UPI Holdings $1,180,133,000 $0 $0
UPI Holdings 2 $214,530,000 $0 $0
NYCSpirit $928,679,568 $0 $0
USAi $100,000,000 $0 $0
USANi Sub $842,450,000 $750,000,000 $1,750,000,000
New-U Studios $57,550,000 $0 $0
Diller $0 $0 $0
- --------
1 After giving effect to the distribution pursuant to
Section 8.05.
EXHIBIT 49
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.
EQUITY WARRANT AGREEMENT
dated as of May 7, 2002
for
WARRANTS TO PURCHASE
UP TO 60,467,735 SHARES OF COMMON STOCK
EXPIRING MAY 7, 2012
between
USA NETWORKS, INC.
and
THE BANK OF NEW YORK, as
Equity Warrant Agent
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
7.3. Compliance with Applicable Laws........................ 14
-i-
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 May 7,
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., 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 Canal+ Benelux BV (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.
"Cashless Exercise" shall have the meaning set forth in Section 3.3.
"Cashless Exercise Ratio" means a fraction, the numerator of which is
the excess of the Closing Price per share of Common Stock on the Exercise Date
over the Exercise Price per share as of the Exercise Date and the denominator of
which is the Closing Price per share of the Common Stock on the Exercise Date.
"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 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 May 7, 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.
-2-
"Stockholders Agreement" shall have the meaning set forth in Section
8.10.
"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.
-3-
(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
-4-
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 November 8, 2001* 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. In lieu of the foregoing, the Holder of an Equity Warrant shall
have the right, at its option, without payment of cash, to reduce the number of
shares of Common Stock otherwise obtainable upon the exercise of an Equity
Warrant for payment of the Exercise Price in cash, so as to yield a number of
shares of Common Stock upon the exercise of such Equity Warrant equal to the
product of (x) the number of shares of Common Stock issuable as of the Exercise
Date upon the upon the exercise of such Equity Warrant (if payment of the
Exercise Price were being made in cash) and (y) the Cashless Exercise Ratio. An
exercise of an Equity Warrant in accordance with the immediately preceding
clause (ii) is herein called a "Cashless Exercise". 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").
- --------------------
* Date following the six-month anniversary of the Closing.
-5-
(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 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
for cash or otherwise, 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
-6-
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 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
-7-
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 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) [Intentionally Omitted]
(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
-8-
share, as the case may be. Except as set forth in subsections 4.1(a), (b),
and (c) above, the 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
-9-
the ownership of and the loss, theft, destruction or mutilation of any Equity
Warrant Certificate 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
-10-
securities, cash or other property receivable upon such Sale Transaction is not
the same for each 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 Warrants. 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
-11-
surrendered for exchange or transfer, the Equity Warrant Agent shall countersign
and deliver to 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
-12-
following, to all of which the Company agrees and to all of which the rights
hereunder of the Holders shall be subject:
(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.
-13-
(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 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
-14-
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.
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,
-15-
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 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
-16-
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.
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
-17-
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.
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 /s/ Julius Genachowski
------------------------
Name: Julius Genachowski
Title: Executive Vice President
Attest:
/s/ Joanne Hawkins
- -----------------------------
Name: Joanne Hawkins
Title: Assistant Secretary
THE BANK OF NEW YORK
By /s/ Ralph Chianese
------------------------
Name: Ralph Chianese
Title: Vice President
Attest:
/s/ Nadine Murden
- -----------------------------
Name: Nadine Murden
Title: Assistant Treasurer
-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) of 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, or in lieu thereof, upon a Cashless Exercise, in each case 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
- --------------------
* Date following the six-month anniversary of the Closing
Common Stock which are issuable upon exercise of the 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 (or upon a
Cashless Exercise) 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