Exhibit 10.7
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of March 28, 2000 (this
"Agreement"), by and between Cendant Corporation, a Delaware corporation
("Cendant"), and Liberty Digital, Inc., a Delaware corporation ("Liberty
Digital").
WHEREAS, Cendant has created a network of websites which offer
a wide selection of quality relocation, real estate and home-related products
and services primarily through a new internet portal at XXX.XXXX.XXX (the
"Xxxx.xxx Group");
WHEREAS, Cendant has amended and restated its Certificate of
Incorporation in order to authorize a new series of Cendant common stock, par
value $.01 per share, intended to track the performance of Xxxx.xxx Group; and
WHEREAS, Liberty Digital desires to purchase from Cendant, and
Cendant desires to sell to Liberty Digital, 1,598,030 shares (the "Shares") of
Xxxx.xxx Common Stock ("Xxxx.xxx Stock").
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
hereby agree as follows:
ARTICLE I
THE PURCHASE
Section 1.1 PURCHASE AND SALE. (a) Upon the terms and subject to the
conditions of this Agreement, at the Closing (as hereinafter defined), Cendant
will issue to Liberty Digital, and Liberty Digital will purchase from Cendant,
the Shares, in consideration for which, at the Closing, Liberty Digital will pay
to Cendant (i) ten million dollars ($10,000,000) in cash (the "Cash
Consideration") and (ii) a number of whole shares of Liberty Digital Series A
common stock, par value $.01 per share ("Series A Common Stock"), as determined
in accordance with paragraph (b) below (the "Purchaser Shares" and, together
with the Cash Consideration, the "Purchase Price"). Upon the Closing, Liberty
Digital shall pay the Cash Consideration to Cendant by wire transfer of
immediately available funds to an account or accounts designated by Cendant in
writing for such purpose prior to the Closing and delivery of Shares.
(b) The number of whole shares of Series A Common Stock to be
delivered pursuant to Section 1.1.(a)(ii) hereof shall be determined by dividing
(i) $40,000,000 by (ii) the average of the per share closing sales prices of the
Series A Common Stock on the NASDAQ National Market System for the 20
consecutive trading days immediately preceding the third trading day prior to
the Closing Date ("Liberty Digital Stock Value"). If the above calculation would
result in the issuance of a fraction of a share of Series A Common Stock, such
result will be rounded up to the nearest whole share.
Section 1.2 TIME AND PLACE OF CLOSING. Upon the terms and subject to
the conditions of this Agreement, the closing of the transactions contemplated
by this Agreement (the "Closing") will take place at the offices of Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
9:00 a.m. (New York City time) on the third business day following the
satisfaction or waiver of the conditions set forth in Article V, unless another
time or date is agreed to by the parties hereto (the "Closing Date").
Section 1.3 DELIVERIES BY CENDANT. Subject to the terms and conditions
hereof, at the Closing, Cendant will deliver the following to Liberty Digital:
(a) A certificate or certificates, duly registered on the
stock books of Cendant in the name of Liberty
Digital, representing the Shares;
(b) A counterpart to the Registration Rights Agreement
(as hereinafter defined) duly executed by Cendant;
(c) The officer's certificate provided for in Section
5.3(c);
(d) A copy of the Amended and Restated Certificate of
Incorporation of Cendant, as in effect on the Closing
Date, certified by the Delaware Secretary of State
within the five business day period prior to the
Closing Date;
(e) A copy of the amended and restated By-laws of
Cendant, as in effect on the Closing Date, certified
as of the Closing Date by the Secretary or an
Assistant Secretary of Cendant;
(f) A certificate of existence and good standing for
Cendant in the State
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of Delaware, certified by the Delaware Secretary of
State within the five business day period prior to
the Closing Date; and
(g) Such other documents as Liberty Digital may
reasonably request relating to the existence of
Cendant, the authority of Cendant to enter into, and
the validity of, this Agreement and any other matters
relevant hereto, all in form and substance reasonably
satisfactory to Liberty Digital.
Section 1.4 DELIVERIES BY LIBERTY DIGITAL. Subject to the terms and
conditions hereof, at the Closing, Liberty Digital will deliver the following to
Cendant:
(a) The Cash Consideration in immediately available
funds, in the manner set forth in Section 1.1 hereof;
(b) A certificate or certificates, duly registered on the
stock books of Liberty Digital in the name of
Cendant, representing the Purchaser Shares;
(c) The officer's certificate provided for in Section
5.2(c);
(d) A counterpart to the Registration Rights Agreement
duly executed by Liberty Digital;
(e) A certificate of existence and good standing for
Liberty Digital in the State of Delaware, certified
by the Delaware Secretary of State within the five
business day period prior to the Closing Date; and
(f) Such other documents as Cendant may reasonably
request relating to the existence of Liberty Digital,
the authority of Liberty Digital to enter into, and
the validity of, this Agreement and any other matters
relevant hereto, all in form and substance reasonably
satisfactory to Cendant.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CENDANT
Section 2.1 ORGANIZATION. Cendant is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to carry on its business
substantially as it is now being conducted.
Section 2.2 AUTHORITY. Cendant has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all requisite corporate action on the part of Cendant. This
Agreement has been validly executed and delivered by Cendant and (assuming this
Agreement has been duly authorized, executed and delivered by Liberty Digital)
constitutes a valid and binding agreement of Cendant, enforceable against
Cendant in accordance with its terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (b) enforcement of this Agreement, including,
among other things, the remedy of specific performance and injunctive and other
forms of equitable relief, may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 2.3 THE SHARES. As of the Closing Date, the Shares will be duly
and validly authorized and, when a certificate evidencing the Shares is issued
and delivered against payment of the Purchase Price in accordance with the terms
of this Agreement, the Shares shall be duly and validly issued, fully paid and
non-assessable. Upon issuance, the Shares will have the designations,
preferences and relative participating, optional and other special rights, and
qualifications, limitations or restrictions of the Xxxx.xxx Stock, as set forth
in the Amended and Restated Certificate of Incorporation of Cendant (the
"Amended Charter"), a true and correct copy of which has been delivered to
Liberty Digital, and as described in (a) the Proxy Statement of Cendant, dated
February 10, 2000, and distributed to Cendant's stockholders in connection with
the Special Meeting (the "Xxxx.xxx Proxy Statement") and (b) the Registration
Statement on Form S-3 filed by Cendant with the Securities Exchange Commission
(the "SEC") on February 14, 2000 relating to the offering and sale of shares of
Xxxx.xxx Stock to the public (as such registration statement was filed and
without giving effect to any amendments, modifications or
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supplements thereto) (the "Xxxx.xxx Registration Statement"). Delivery of the
certificate(s) for the Shares will pass valid title to the Shares, free and
clear of any claim, lien, charge, security interest, encumbrance, restriction on
transfer or voting or other defect in title whatsoever ("Liens"), other than
Liens resulting from any action(s) by Liberty Digital.
Section 2.4 CAPITALIZATION. The authorized capital of Cendant consists
of 2,500,000,000 shares of common stock, par value $.01 per share (the "Common
Stock") of which 2,000,000,000 have been designated as CD Common Stock ("CD
Stock") and 500,000,000 have been designated as Xxxx.xxx Stock, and 10,000,000
shares of preferred stock, par value $.01 per share (the "Preferred Stock"). As
of January 24, 2000, there were 704,560,494 shares of CD Stock issued and
outstanding, no shares of Xxxx.xxx Stock issued and outstanding and no shares of
Preferred Stock issued and outstanding.
Section 2.5 CONSENTS AND APPROVALS; NO VIOLATIONS. As of the date
hereof and as of the Closing Date, neither the execution and delivery of this
Agreement by Cendant, nor the consummation by Cendant of the transactions
contemplated hereby will (a) conflict with or result in any breach of any
provision of the Amended Charter or amended and restated by-laws of Cendant, (b)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, or require any consent under, any
indenture, license, contract, agreement or other instrument or obligation to
which the Cendant is a party, (c) violate any order, writ, injunction, decree or
award rendered by any Governmental Entity (as hereinafter defined) or any
statute, rule or regulation (collectively, "Laws" and, individually, a "Law")
applicable to Cendant, or (d) require any filing with, or the obtaining of any
permit, authorization, consent or approval of, any governmental or regulatory
authority or court, domestic or foreign (a "Governmental Entity"), except in the
case of clauses (c) and (d) of this Section 2.5, for the applicable requirements
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act").
Section 2.6 SEC REPORTS. Since January 1, 1999, Cendant has filed all
required reports, schedules, forms, statements and other documents, including
exhibits and all other information incorporated therein (the "SEC Documents"),
with the SEC. As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and none of the SEC
Documents when filed (as amended and restated and as supplemented by
subsequently filed SEC Documents) contained
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any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; PROVIDED, that the SEC Documents relating to the Tracking Stock
Proposal and the proposed initial public offering of the Xxxx.xxx Stock
(including, without limitation, the Xxxx.xxx Proxy Statement and the Xxxx.xxx
Registration Statement), each as amended and supplemented to the date hereof, do
not as of the date hereof, and will not as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
Section 2.7 XXXX.XXX GROUP. As of the date hereof and as of the Closing
Date, the descriptions set forth in the Xxxx.xxx Registration Statement of the
businesses, assets and properties included in the Xxxx.xxx Group (including the
historical and pro forma financial information for those businesses, assets and
properties included therein) and the contracts, agreements, arrangements and
other relationships between the Cendant Group (as defined therein), on the one
hand, and the Xxxx.xxx Group, on the other, are true and complete in all
material respects (without regard to any amendments or supplements to the
Xxxx.xxx Registration Statement following the date hereof).
Section 2.8 TAX TREATMENT OF XXXX.XXX STOCK. On the Closing Date,
shares of Xxxx.xxx Stock will constitute stock of Cendant for purposes of the
Internal Revenue Code of 1986, as amended.
Section 2.9 INVESTMENT REPRESENTATIONS. Cendant understands that the
Purchaser Shares have not been registered under the Securities Act. Cendant also
understands that the Purchaser Shares are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
Cendant's representations contained in the Agreement.
Cendant hereby represents and warrants as follows:
(a) CENDANT BEARS ECONOMIC RISK. Cendant has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to Liberty Digital so that it is capable of evaluating the
merits and risks of its investment in Liberty Digital and has the capacity to
protect its own interests. Cendant must bear the economic risk of this
investment indefinitely unless the Purchaser Shares are registered pursuant to
the Securities Act or an exemption from registration is available. Cendant also
understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even
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if available, such exemption may not allow Cendant to transfer all or any
portion of the Purchaser Shares under the circumstances in the amounts or at the
times Cendant might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Cendant is acquiring the Purchaser
Shares for Cendant's own account for investment only and not with a view towards
their distribution other than as contemplated herein.
(c) CENDANT CAN PROTECT ITS INTEREST. Cendant represents that by reason
of its, or of its management's, business or financial experience, Cendant has
the capacity to protect its own interests in connection with the transactions
contemplated in this Agreement.
(d) ACCREDITED INVESTOR. Cendant represents that it is an accredited
investor within the meaning of Regulation D under the Securities Act.
(e) CENDANT ACKNOWLEDGMENT. Cendant has conducted its own independent
investigation, review and analysis of Liberty Digital. In entering into this
Agreement, Cendant acknowledges that it has relied solely upon the
representations and warranties made in Article III of this Agreement and/or the
aforementioned investigation, review and analysis, and, other than with respect
to the representations and warranties made in Article III of this Agreement,
Cendant acknowledges that none of Liberty Digital, or any of its directors,
officers, employees, affiliates, controlling persons, agents, advisors or
representatives makes or has made any representation or warranty, either express
or implied
(f) RULE 144. Cendant acknowledges and agrees that the Purchaser Shares
must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available as
contemplated herein. Cendant has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act, which permits limited resale of
Purchaser Shares purchased in a private placement subject to the satisfaction of
certain conditions, including, among other things: the availability of certain
current public information about Liberty Digital, the resale occurring not less
than one year after a party has purchased and paid for the security to be sold,
the sale being through an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934, as amended) and the number of Purchaser Shares being sold
during any three-month period not exceeding specified limitations.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LIBERTY DIGITAL
Section 3.1 ORGANIZATION. Liberty Digital is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has the requisite corporate power and authority to carry on its
business substantially as it is now being conducted.
Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Liberty Digital has
the corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action on the part
of Liberty Digital. This Agreement has been duly and validly executed and
delivered by Liberty Digital and (assuming this Agreement has been duly
authorized, executed and delivered by Cendant) constitutes a valid and binding
agreement of Liberty Digital, enforceable against Liberty Digital in accordance
with its terms, except that (a) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally and (b) enforcement of this Agreement, including, among other things,
the remedy of specific performance and injunctive and other forms of equitable
relief, may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the
execution and delivery of this Agreement by Liberty Digital, nor the
consummation by Liberty Digital of the transactions contemplated hereby will (a)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws (or similar organizational documents) of Liberty
Digital, (b) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or require any consent under,
any indenture, license, contract, agreement or other instrument or obligation to
which Liberty Digital is a party, (c) violate any order, writ, injunction,
decree or award rendered by any Governmental Entity or Law applicable to Liberty
Digital, or (d) require any filing with, or the obtaining of any permit,
authorization, consent or approval of, any Governmental Entity, except in the
case of clauses (c) and (d) of this Section 3.3, for the applicable requirements
of the HSR Act.
Section 3.4 PURCHASER SHARES. The Purchaser Shares have been duly and
validly authorized and, when a certificate evidencing the Purchaser Shares is
issued
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and delivered in accordance with the terms of this Agreement, the Purchaser
Shares shall be duly and validly issued, fully paid and non-assessable. Other
than as provided for herein, delivery of the certificate(s) for the Purchaser
Shares will pass valid title to the Purchaser Shares, free and clear of any
claim, lien, charge, security, interest, encumbrance, restriction on transfer or
voting or other defect in title whatsoever ("Liens"), other than Liens resulting
from any action(s) by Cendant.
Section 3.5 CAPITALIZATION. The authorized capital of Liberty Digital
consists of 295,000,000 shares of Series A Common Stock, 200,000,000 shares of
Series B Common Stock and 5,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Stock"). As of January 31, 2000, there were 26,638,479
shares of Series A Common Stock issued and outstanding, 171,950,167 shares of
Series B Common Stock issued and outstanding and 150,000 shares of Preferred
Stock issued and outstanding, all of which are designated as Series B Preferred
Stock.
Section 3.6 SEC REPORTS. Since January 1, 1998, Liberty Digital has
filed all required reports, schedules, forms, statements and other documents,
including exhibits and all other information incorporated therein (the "SEC
Documents"), with the SEC. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, as the
case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents when filed (as
amended and restated and as supplemented by subsequently filed SEC Documents)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 3.7 INVESTMENT REPRESENTATIONS. Liberty Digital understands
that the Shares have not been registered under the Securities Act. Liberty
Digital also understands that the shares are being offered and sold pursuant to
an exemption from registration contained in the Securities Act based in part
upon Liberty Digital's representations contained in the Agreement.
Liberty Digital hereby represents and warrants as follows:
(a) LIBERTY DIGITAL BEARS ECONOMIC RISK. Liberty Digital has
substantial experience in evaluating and investing in private placement
transactions of securities in companies similar to Cendant and Xxxx.xxx Group so
that it is capable of evaluating the merits and risks of its investment in
Cendant and Xxxx.xxx Group and has the capacity to protect its own interests.
Liberty Digital
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must bear the economic risk of this investment indefinitely unless the Shares
are registered pursuant to the Securities Act or an exemption from registration
is available. Liberty Digital also understands that there is no assurance that
any exemption from registration under the Securities Act will be available and
that, even if available, such exemption may not allow Liberty Digital to
transfer all or any portion of the Shares under the circumstances in the amounts
or at the times Liberty Digital might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Liberty Digital is acquiring
the Shares for Liberty Digital's own account for investment only and not with a
view towards their distribution.
(c) LIBERTY DIGITAL CAN PROTECT ITS INTEREST. Liberty Digital
represents that by reason of its, or of its management's, business or financial
experience, Liberty Digital has the capacity to protect its own interests in
connection with the transactions contemplated in this Agreement.
(d) ACCREDITED INVESTOR. Liberty Digital represents that it is
an accredited investor within the meaning of Regulation D under the Securities
Act.
(e) LIBERTY DIGITAL ACKNOWLEDGMENT. Liberty Digital has
conducted its own independent investigation, review and analysis of Cendant and
Xxxx.xxx Group. In entering into this Agreement, Liberty Digital acknowledges
that it has relied solely upon the representations and warranties made in
Article II of this Agreement, the information contained in the Xxxx.xxx
Registration Statement and the Xxxx.xxx Proxy Statement and the aforementioned
investigation, review and analysis, and, other than as specified above, Liberty
Digital acknowledges that none of Xxxx.xxx Group, Cendant, or any of its
directors, officers, employees, affiliates, controlling persons, agents,
advisors or representatives makes or has made any representation or warranty,
either express or implied.
(f) RULE 144. Liberty Digital acknowledges and agrees that the
Shares must be held indefinitely unless they are subsequently registered under
the Securities Act or an exemption from such registration is available. Liberty
Digital has been advised or is aware of the provisions of Rule 144 promulgated
under the Securities Act, which permits limited resale of shares purchased in a
private placement subject to the satisfaction of certain conditions, including,
among other things: the availability of certain current public information about
Cendant, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being through an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of
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1934, as amended) and the number of shares being sold during any three-month
period not exceeding specified limitation.
ARTICLE IV
COVENANTS
Section 4.1 CONSENTS; COOPERATION. Each of Cendant and Liberty Digital
shall cooperate, and use its reasonable best efforts, to prepare and file all
necessary materials with the appropriate Governmental Entities pursuant to the
HSR Act within ten business days of the date of this Agreement. Each party
covenants to (x) furnish the other party with such necessary or appropriate
information and reasonable assistance as such other party may reasonably request
in connection with its preparation of necessary filings and submission pursuant
to the HSR Act and (y) use its commercially reasonable efforts to comply as
promptly as possible with requests for additional information issued by
applicable Governmental Entities pursuant to the HSR Act.
Section 4.2 FUTURE DEVELOPMENT EFFORTS.
(a) From and after the Closing Date, each of Cendant and
Liberty Digital agrees to use good faith efforts to negotiate and enter into
mutually acceptable agreements relating to the development of real estate
related programming for Liberty Digital's interactive home channel based on
Xxxx.xxx Group's web content, subject to the negotiation of mutually agreeable
terms between the parties relating to such efforts. Unless terminated by either
party on or before any anniversary hereof occurring after the first anniversary
hereof, such provision will automatically continue until the following
anniversary hereof.
(b) From and after the Closing, each of Cendant and Liberty
Digital agree to endeavor to introduce the respective parties to their business
partners for purposes of enhancing their respective business development efforts
for as long as Cendant and Liberty Digital mutually agree to provide each other
such introductions; provided that the determination as to the appropriateness of
making an introduction shall be in the introducing party's sole discretion.
(c) The provisions of this Section 4.2 shall not prohibit nor
in any way interfere with the right of Liberty Digital, Xxxx.xxx Group or
Cendant, or any of their respective affiliates, to engage in any business or
pursue any business opportunity (including entering into any agreement in
connection therewith),
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anywhere in the world, including those that may be in competition with, or
complimentary to, any business engaged in by the other party or any of its
affiliates.
Section 4.3 PUBLIC ANNOUNCEMENTS. Prior to the Closing, except as
otherwise agreed to by the parties, neither party shall issue any report,
statement or press release or otherwise make any public statements with respect
to this Agreement and the transactions contemplated hereby, except as in the
reasonable judgment of such party may be required by law or in connection with
its obligations as a publicly-held, exchange-listed company, in which case the
parties will use their reasonable best efforts to reach mutual agreement as to
the language of any such report, statement or press release. Upon execution
hereof and upon the Closing, Cendant and Liberty Digital will consult with each
other with respect to the issuance of a joint report, statement or press release
with respect to this Agreement and the transactions contemplated hereby.
Section 4.4 SALE OF PURCHASER SHARES.
(a) Until the second anniversary of the Closing, Cendant
agrees not to sell, transfer or otherwise dispose of Purchaser Shares other than
up to one-seventh of the Purchaser Shares in each fiscal quarter beginning with
the fiscal quarter following the Closing Date; provided that such restrictions
shall terminate if, at any time, Liberty Media Corporation, a Delaware
corporation ("Liberty Media"), together with any affiliates of Liberty Media,
fails to own at least 50% of the combined voting power of the securities of
Liberty Digital. Cendant acknowledges that, until such time as the Liberty
Digital Registration Statement becomes effective, the Purchaser Shares will
constitute "restricted securities" as that term is used in Rule 144 promulgated
under the Securities Act. The right to sell Purchaser Shares in any quarter
pursuant to the foregoing sentence shall not cumulate except that if the Liberty
Digital Registration Statement does not become effective within 90 days of the
Closing Date such sale right will cumulate for each fiscal quarter for which
Cendant was unable to sell the Purchaser Shares as a result of the failure of
the Liberty Digital Registration Statement to be declared effective.
Notwithstanding the foregoing, Liberty Digital shall have a one-time right to
request, and Cendant agrees to comply with such request, that Cendant not sell
the Purchaser Shares for a period not to exceed 42 days. Cendant agrees that
Liberty Digital may instruct its transfer agent to place stop transfer notations
in its records to enforce the immediately preceding sentence.
(b) Notwithstanding the foregoing, Cendant may subject the
Purchaser Shares to liens, pledges or other security interests in connection
with a bona fide financing so long as the pledgee or secured party executes an
instrument
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reasonably acceptable to Liberty Digital agreeing to be bound by the
restrictions on transfer set forth in this Section 4.4.
Section 4.5 BOARD REPRESENTATION. Cendant agrees to nominate and
appoint Xxx Xxxxxxx as a member of the Xxxx.xxx Group advisory board or similar
board, effective upon the later of the Closing Date or the formation of such
board.
Section 4.6 REGISTRATION RIGHTS AGREEMENT. At the Closing, Cendant and
Liberty Digital shall enter into a registration rights agreement, substantially
in the form attached hereto as Exhibit B relating to the Shares (the
"Registration Rights Agreement").
Section 4.7 REGISTRATION STATEMENT. Following the Closing, Liberty
Digital shall prepare and file with the SEC a "shelf" registration statement on
Form S-3 (the "Liberty Digital Registration Statement") to register the
Purchaser Shares for resale by Cendant in accordance with the procedures
described on EXHIBIT A to this Agreement.
Section 4.8 REDEMPTION. If Cendant redeems all of the shares of
Xxxx.xxx Stock in exchange for shares of Cendant common stock or other
securities of Cendant it will use commercially reasonable efforts to ensure that
shares of Xxxx.xxx Stock held by Liberty Digital are redeemed in a transaction
that does not give rise to United States federal income tax liability.
Section 4.9 SALE OF SHARES BELOW PURCHASE PRICE. If Cendant issues or
sells Additional Shares of Xxxx.xxx Stock (as defined below) after the date
hereof for aggregate consideration of at least $10 million, in any transaction
or series of related transactions (including in an initial public offering of
the Xxxx.xxx Stock (an "IPO"), for an Effective Price (as defined below) less
than the Effective Price of the Shares (a "Qualifying Transaction"), Cendant
shall transfer to Liberty Digital a number of shares of Series A Common Stock
equal to the quotient of (a)(i) $50 million MINUS (ii) the product of (A)
1,598,030 (as adjusted for stock splits, stock dividends, combinations, or other
recapitalizations occurring after the date hereof and affecting the Xxxx.xxx
Stock) MULTIPLIED BY (B) the Effective Price of the Additional Shares of
Xxxx.xxx Stock issued or sold in such Qualified Transaction, DIVIDED BY (b) the
Liberty Digital Stock Value.
Cendant's obligation to transfer shares of Series A Common Stock
pursuant to this Section 4.9 shall only apply to one Qualifying Transaction
which occurs upon the earlier of (i) the consummation of an IPO or (ii) June 30,
2001 (the earlier of such dates, the "Measurement Date"). Within five business
days following the
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Measurement Date, Cendant shall transfer to Liberty Digital a number of shares
of Series A Common Stock calculated pursuant to the formula described in the
preceding paragraph, using the lowest Effective Price of the Additional Shares
of Xxxx.xxx Stock applicable to any Qualifying Transaction occurring after the
date hereof and on or prior to the Measurement Date.
"ADDITIONAL SHARES OF XXXX.XXX STOCK" shall mean all shares of Xxxx.xxx
Stock or securities convertible into or exercisable or exchangeable for Xxxx.xxx
Stock issued or issuable by Cendant other than (a) shares of Xxxx.xxx Stock
issued upon the conversion or exchange of (i) shares of Xxxx.xxx, Inc. Common
Stock outstanding on the date hereof and (ii) shares of CD Stock in accordance
with the terms of the Amended Charter, (b) shares of Xxxx.xxx Stock and/or
options, warrants or other rights to acquire Xxxx.xxx Stock and the Xxxx.xxx
Stock issued pursuant to such options, warrants or other rights to acquire
shares issued to employees, officers or directors of, or consultants or advisors
to Cendant or Xxxx.xxx Group or any subsidiary pursuant to stock purchase or
stock option plans or other arrangements, (c) shares of Xxxx.xxx Stock issued or
issuable pursuant to the exercise of options, warrants or convertible securities
outstanding as of the date hereof, including the option granted to Chatham
Street Holdings, LLC on September 30, 1999, (d) shares of Xxxx.xxx Stock and/or
options, warrants or other rights to acquire Xxxx.xxx Stock and the Xxxx.xxx
Stock issued pursuant to such options, warrants or other rights which are issued
for consideration other than cash pursuant to a merger, consolidation,
acquisition or similar business combination approved by the Board, or (e) shares
of Xxxx.xxx Stock and/or options, warrants or other rights to acquire Xxxx.xxx
Stock issued pursuant to any bona fide lease, or debt financing from a bank or
similar financial institution covered in (c). The "EFFECTIVE PRICE" of
Additional Shares of Xxxx.xxx Stock shall mean the quotient determined by
dividing the total number of Additional Shares of Xxxx.xxx Stock issued or sold
by Cendant under this Section into the aggregate consideration received, or to
be received or deemed to have been received by Cendant under this Section for
such Additional Shares of Xxxx.xxx Stock (including, in the case of options and
warrants and other rights to acquire shares, the consideration received for such
issuance as well as the exercise price payable, and in the case of indebtedness,
preferred stock or other securities which are convertible into or exchangeable
for Xxxx.xxx Stock, the purchase price therefor together with the amount of
indebtedness or other obligations to be cancelled upon the conversion or
exchange of such indebtedness, preferred stock or other security in each case to
the extent such options, warrants or other rights to acquire shares are not
excluded from being Additional Shares of Xxxx.xxx Stock pursuant to (a) through
(e) above). The "EFFECTIVE PRICE OF THE SHARES" shall equal $31.29 per share as
adjusted for stock splits, dividends, combinations or other recapitalizations
occurring after the date hereof.
14
Section 4.10 EXCHANGE PROVISIONS. If the initial public offering of
Xxxx.xxx Stock has not been consummated by June 30, 2001, then Cendant and
Liberty Digital agree to exchange the Shares for shares of Cendant common stock,
par value $.01 per share ("CD Stock"), as follows: Liberty Digital shall receive
a number of shares of CD Stock determined by dividing (a) $50 million by (b) the
average of the per share closing prices of CD Stock on the New York Stock
Exchange for the 20 consecutive trading days immediately preceding June 30, 2001
(appropriately adjusted in the event of any stock split, dividend, combination,
recapitalization or similar event occurring during such 20 day period. The CD
Stock delivered pursuant to this Section 4.10 shall be validly issued, fully
paid and nonassessible and not subject to any Liens (other than as may be
created by Liberty Digital) and will be registered under the Securities Act and
freely tradable by Liberty Digital.
ARTICLE V
CONDITIONS AND TERMINATION
Section 5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO CONSUMMATE THE
TRANSACTIONS UNDER THIS AGREEMENT. The respective obligations of each party to
consummate the transactions contemplated hereby is subject to the satisfaction
at or prior to the Closing of the following conditions:
(a) Any waiting periods applicable to the transactions
contemplated by this Agreement under the HSR Act shall have
expired or been terminated; and
(b) Neither Cendant nor Liberty Digital shall be subject to any
order, decree or injunction of a court of competent
jurisdiction, and no statute, rule or regulation shall have
been enacted, promulgated or issued, which enjoins or
prohibits the consummation of any of the transactions
contemplated by this Agreement.
Section 5.2 CONDITIONS TO CENDANT'S OBLIGATIONS TO CONSUMMATE THE
TRANSACTIONS UNDER THIS AGREEMENT. The obligation of Cendant to consummate the
transactions contemplated hereby are further subject to the satisfaction or
waiver of the following conditions:
15
(a) The representations and warranties of Liberty Digital
contained in this Agreement shall be true and correct at and
as of the Closing Date in all material respects as though such
representations and warranties were made at and as of such
date (except to the extent expressly made as of an earlier
date, in which case, as of such date);
(b) Liberty Digital shall have performed and complied in all
material respects with all agreements and obligations required
by this Agreement to be performed or complied with by it on or
prior to the Closing; and
(c) Liberty Digital shall have delivered to Cendant an officer's
certificate to the effect that each of the conditions
specified above in Sections 5.2(a) and (b) is satisfied.
Section 5.3 CONDITIONS TO LIBERTY DIGITAL'S OBLIGATIONS TO CONSUMMATE
THE TRANSACTIONS UNDER THIS AGREEMENT. The obligation of Liberty Digital to
consummate the transactions contemplated hereby are further subject to
satisfaction or waiver of the following conditions:
(a) The representations and warranties of Cendant contained in
this Agreement shall be true and correct at and as of the
Closing Date in all material respects as though such
representations and warranties were made at and as of such
date (except to the extent expressly made as of an earlier
date, in which case, as of such date);
(b) Cendant shall have performed and complied in all material
respects with all agreements and obligations required by this
Agreement to be performed or complied with by it on or prior
to the Closing; and
(c) Cendant shall have delivered to Liberty Digital an officer's
certificate to the effect that each of the conditions
specified above in Sections 5.3(a) and (b) is satisfied.
16
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date:
(a) by mutual agreement of the parties; or
(b) by Cendant or Liberty Digital at any time after 90 days from
the date of this Agreement if the Closing shall not have
occurred by such date; PROVIDED, however, that the right to
terminate this Agreement under this Section 6.1(b) shall not
be available to a party if it has breached any of its
representations, warranties or covenants hereunder in any
material respect and such breach has been the cause of or
resulted in the failure of the Closing to occur on or before
such date.
Section 6.2 PROCEDURE FOR AND EFFECT OF TERMINATION. In the event of
termination of this Agreement and the abandonment of the transactions
contemplated hereby by the parties pursuant to Section 6.1 hereof, written
notice thereof shall be given by a party so terminating to the other party and
this Agreement shall forthwith terminate and shall become null and void and of
no further effect, and the transactions contemplated hereby shall be abandoned
without further action by Cendant or Liberty Digital. If this Agreement is
terminated pursuant to Section 6.1 hereof:
(a) all filings, applications and other submissions made pursuant
hereto shall, to the extent practicable, be withdrawn from the
Governmental Entity to which made; and
(b) there shall be no liability or obligation hereunder on the
part of Cendant or Liberty Digital or any of their respective
directors, officers, employees, affiliates, controlling
persons, agents or representatives, except that Cendant or
Liberty Digital, as the case may be, may have liability to the
other party if the basis of termination is a breach by Cendant
or Liberty Digital, as the case may be, of one or more of the
provisions of this Agreement, and except that the obligations
provided for in this Section 6.2 shall survive any such
termination.
17
ARTICLE VII
MISCELLANEOUS
Section 7.1 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties relating to the subject matter hereof and supersedes
other prior agreements and understandings between the parties both oral and
written regarding such subject matter.
Section 7.2 SEVERABILITY. Any provision of this Agreement that is held
by a court of competent jurisdiction to violate applicable law shall be limited
or nullified only to the extent necessary to bring the Agreement within the
requirements of such law.
Section 7.3 NOTICES. Any notice required or permitted by this Agreement
must be in writing and must be sent by facsimile, by nationally recognized
commercial overnight courier, or mailed by United States registered or certified
mail, addressed to the other party at the address below or to such other address
for notice (or facsimile number, in the case of a notice by facsimile) as a
party gives the other party written notice of in accordance with this Section
7.3. Any such notice will be effective as of the date of receipt:
(a) if to Cendant, to
Cendant Corporation
0 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000/23
Attention: Xxxx X. Xxxx
Senior Vice President, Legal
(b) if to Liberty Digital, to
Liberty Digital Inc.
00000 X. Xxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Fax:
Attention: Xxxxx Xxxxxxxxx
Vice President, Business Development
and Strategy
18
(c) with a copy (which shall not constitute effective notice)
to
Xxxxx Xxxxx, L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxxxx X. XxXxxxx
Xxxxx Xxxxxx
Section 7.4 GOVERNING LAW; JURISDICTION. This Agreement shall be
governed by, enforced under and construed in accordance with the laws of the
State of New York, without giving effect to any choice or conflict of law
provision or rule thereof. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America in each case
located in the County of New York for any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such courts) and further
agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 7.3 (or to such
other address for notice that such party has given the other party written
notice of in accordance with Section 7.3) shall be effective service of process
for any litigation brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the laying
of venue of any litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or of the United
States of America in each case located in the County of New York and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such litigation brought in any such court has been
brought in an inconvenient forum.
Section 7.5 DESCRIPTIVE HEADINGS. The descriptive headings herein are
inserted for convenience of reference only and shall in no way be construed to
define, limit, describe, explain, modify, amplify, or add to the interpretation,
construction or meaning of any provision of, or scope or intent of, this
Agreement nor in any way affect this Agreement.
Section 7.6 COUNTERPARTS. This Agreement may be signed in counterparts
and all signed copies of this Agreement will together constitute one original of
this Agreement. This Agreement shall become effective when each party hereto
shall have received counterparts thereof signed by all the other parties hereto.
19
Section 7.7 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that Liberty Digital may cause the Shares to
be sold to, and registered in the name of, a wholly owned direct or indirect
subsidiary of Liberty Digital. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 7.8 DEFINITION OF "SHARES" AND "PURCHASER SHARES." As used in
this Agreement, the term "Shares" includes (a) all dividends (other than
ordinary cash dividends with a record date prior to the Closing) and
distributions declared by Cendant on the Shares subsequent to the date hereof
and prior to the Closing and (b) shall be appropriately adjusted to give effect
to any subdivision, combination or reclassification of the Shares effected prior
to the Closing. As used in this Agreement, the term "Purchaser Shares" includes
(a) all dividends (other than ordinary cash dividends with a record date prior
to the Closing) and distributions declared by Liberty Digital on the Purchaser
Shares subsequent to the date hereof and prior to the Closing and (b) shall be
appropriately adjusted to give effect to any subdivision, combination or
reclassification of the Purchaser Shares effected prior to the Closing.
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly
signed as of the date first above written.
CENDANT CORPORATION
By: /s/ Xxxxxx X. Xxxx
------------------------
Name:
Title:
LIBERTY DIGITAL, INC.
By: /s/ Xxx Xxxxxxx
------------------------
Name: Xxx Xxxxxxx
Title: President
EXHIBIT A
REGISTRATION PROCEDURES
The rights and obligations of Cendant and Liberty Digital with
respect to the registration, offer and sale of the Purchaser Shares contemplated
in Section 4.7 of the Agreement are as set forth on this Exhibit A.
Section 1. DEFINITIONS; INTERPRETATION.
1.1 DEFINITIONS. As used in this Exhibit A, the following
terms have the following meanings.
"ACTION" has the meaning set forth in Section 3.3.
"AGREEMENT" means the Purchase Agreement, dated as of March 28, 2000,
between Liberty Digital and Cendant, to which this Exhibit A is annexed, as such
agreement may be amended, supplemented or modified in accordance with its terms.
"COMMISSION" means the Securities and Exchange Commission.
"LIBERTY DIGITAL INDEMNIFIED PARTIES" has the meaning set forth in
Section 3.2.
"PERSON" means an individual, partnership, corporation, trust, limited
liability company, unincorporated organization or government or political
department or agency thereof or other entity.
"REGISTERED SHARES" means (i) the shares of Series A Common Stock
issued and delivered to Cendant pursuant to the Agreement and (ii) any shares of
capital stock issued with respect to or in exchange for the shares referred to
in the preceding clause (i) by way of a stock dividend or stock split or in
connection with a recapitalization or a merger, consolidation or other
reorganization. As to any particular Registered Shares, such shares shall cease
to be Registered Shares when (i) the Liberty Digital Registration Statement
shall have become effective under the Securities Act and such Registered Shares
shall have been disposed of in accordance with the Liberty Digital Registration
Statement, (ii) such shares shall have been distributed pursuant to Rule 144 (or
any successor provision then in force) under the Securities Act, (iii) such
shares shall have been otherwise transferred, new certificates or other
evidences of ownership for them not bearing a legend restricting further
transfer and not subject to any stop transfer order or other restrictions on
transfer shall have been delivered by Liberty Digital or the transfer agent for
such shares and subsequent disposition of such shares shall not require
registration or qualification under the Securities Act or any state securities
laws then in force, (iv) such shares shall become eligible for sale pursuant to
Rule 144(k) or (v) such shares shall cease to be outstanding.
"REGISTRATION EXPENSES" means the following expenses incident to
Liberty Digital's performance of its obligations hereunder: (i) registration and
filing fees with the Commission; (ii) fees and expenses of compliance with state
securities or "blue sky" laws (including reasonable fees and disbursements of
"blue sky" counsel); (iii) printing expenses, messenger and delivery expenses;
(iv) fees and expenses incurred in connection with the listing of the Registered
Shares on the Nasdaq National Market or on such securities exchange or other
national market system on which shares of Liberty Digital Common Stock may then
be principally traded; and (v) fees and expenses of counsel for Liberty Digital
and of its independent certified public accountants, including the expenses of
any special audits or "cold comfort" letters. The term "Registration Expenses"
does not include, and Liberty Digital shall not be responsible for: (1)
brokerage commissions, underwriting discounts and commissions and transfer taxes
attributable to the sale of any of the Registered Shares; (2) fees and
disbursements of underwriters and underwriters counsel (other than fees and
expenses of such counsel incurred in connection the "blue sky" qualification of
the Registered Shares); (3) fees and disbursements of counsel or of any experts
retained by Cendant in connection with the registration of the Registered Shares
or the disposition of such securities; or (4) any other out-of-pocket expenses
of Cendant.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 3.1.
All other capitalized terms used herein and not otherwise defined have
the meanings ascribed thereto in the Agreement.
1.2 INTERPRETATION. When a reference is made in this Exhibit A
to a Section, such reference shall be to a Section of this Exhibit A, unless
otherwise clearly indicated. The headings contained in this Exhibit A are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Schedule or the Agreement. Whenever the word "including"
is used in this Exhibit A, it shall be deemed to be followed by the words
"without limitation". The use of any gender herein shall be deemed to be or
include the other genders and the use of the singular herein shall be deemed to
be or include the plural (and VICE VERSA), wherever appropriate.
Section 2. REGISTRATION.
2.1 REGISTRATION PROCEDURES.
Following the Closing, Liberty Digital shall (i) prepare and,
as soon as practicable thereafter but in no event more than 60 days following
the Closing Date, cause to be filed with the Commission the Liberty Digital
Registration Statement, and (ii) use its commercially reasonable efforts to
cause the Liberty Digital Registration Statement to be declared effective at the
earliest practicable date. In connection with such registration of the Liberty
Digital Shares, Liberty Digital shall:
2
(i) prepare and file with the Commission such amendments and
supplements to the Liberty Digital Registration Statement and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the provisions
of the Securities Act with respect to the disposition of all Registered
Shares covered by such registration statement until such time as all of
such Registered Shares have been disposed of in accordance with the
intended methods of disposition thereof as set forth in such
registration statement;
(ii) furnish to Cendant and any managing underwriter such
number of conformed copies of such registration statement and of each
amendment and supplement thereto (in each case including all exhibits),
such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus), and such other
documents as Cendant or such managing underwriter may reasonably
request to facilitate the disposition of the Registered Shares in
accordance with the intended methods of disposition thereof as set
forth in such registration statement;
(iii) use its commercially reasonable efforts to register or
qualify all the Registered Shares under such securities or "blue sky"
laws of such jurisdictions as Cendant shall reasonably request (given
the intended methods of distribution), and do any and all other acts
and things which may be reasonably necessary or advisable to enable
Cendant to consummate the disposition in such jurisdictions of his
Registered Shares covered by such registration statement; PROVIDED that
in connection therewith Liberty Digital shall not be required to
register or qualify any Registered Shares under the securities or "blue
sky" laws of any jurisdiction where Liberty Digital would be required
(x) to qualify to do business as a foreign corporation or as a dealer
in such jurisdiction, (y) to conform its capitalization or the
composition of its assets at the time to the securities or "blue sky"
laws of such jurisdiction or (z) to take any action that would subject
it to service of process in suits other than those arising out of the
offer and sale of the Registered Shares covered by such registration
statement or subject itself to taxation in such jurisdiction;
(iv) immediately notify Cendant, at any time when a prospectus
relating thereto is required to be delivered pursuant to the Securities
Act, of the happening of any event which comes to the attention of
Liberty Digital and as a result of which the prospectus included in
such registration statement, as then in effect, would contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, and, subject to Section 2.4(c), Liberty Digital will
promptly prepare and furnish to Cendant a supplement to or an amendment
of such prospectus so that, as thereafter delivered to the purchasers
of such Registered Shares, such prospectus will not contain an untrue
statement of material fact or omit to state a
3
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(v) immediately notify Cendant of the issuance or, to the
knowledge of Liberty Digital, threatened issuance of any stop order by
the Commission suspending the effectiveness of the registration
statement or of the receipt by Liberty Digital of any notification with
respect to the suspension or threatened suspension of the qualification
of any Registered Shares for sale under the securities or blue sky laws
of any jurisdiction, and Liberty Digital shall take all practicable
action necessary (A) to prevent the entry of any threatened stop order
or any threatened suspension or (B) to remove any stop order or lift
any suspension once entered;
(vi) otherwise use its commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission, and
make available to its securities holders as promptly as practicable an
earnings statement covering a period of twelve months beginning after
the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated thereunder;
(vii) enter into customary agreements (including an
underwriting agreement containing customary terms and conditions) and
take such other actions as are reasonably required to facilitate the
disposition of such Registered Shares; and
(viii) use its reasonable best efforts to cause the Registered
Shares to be listed on the Nasdaq National Market or on such other
securities exchange or national market system on which securities of
Liberty Digital of the same class are then principally traded.
2.2 REGISTRATION EXPENSES. Liberty Digital will pay all
Registration Expenses in connection with the registration of Registered Shares
pursuant to Section 2.1. Cendant will pay, and hold Liberty Digital harmless
from, all other costs and expenses incurred by or on behalf of Cendant or
Cendant in connection with an offer and sale or other disposition of Registered
Shares pursuant to this Exhibit A.
2.3 PREPARATION; REASONABLE INVESTIGATION. In connection with
the preparation and filing of the Liberty Digital Registration Statement,
Liberty Digital shall provide Cendant and its attorneys and accountants the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and shall make available and give each
of them such access to its books and records, pertinent corporate documents and
such opportunities to discuss the business of Liberty Digital with its employees
as shall be necessary for Cendant to conduct a reasonable investigation within
the meaning of Section 11 of the Securities Act. Liberty Digital
4
shall not file any registration statement, any prospectus included therein or
any amendment thereof or supplement thereto with the Commission over the
reasonable objections of counsel for Cendant.
2.4 CERTAIN COVENANTS. In addition to the obligations under
the Agreement, including but not limited to Section 4.4 thereof, Cendant agrees
with Liberty as follows: (a) Cendant shall furnish to Liberty Digital such
information regarding Cendant, its intended method of distribution of Registered
Shares and such other information as Liberty Digital may from time to time
reasonably request for purposes of preparation of the Liberty Digital
Registration Statement and to maintain the effectiveness of such registration
statement.
(b) At least two business days prior to any disposition of
Registered Shares by Cendant, Cendant will orally advise Liberty Digital of the
dates on which such disposition is expected to commence and terminate, the
number of Registered Shares expected to be sold, the method of disposition and
such other information as Liberty Digital may reasonably request in order to
supplement the prospectus contained in the registration statement in accordance
with the rules and regulations of the Commission. Promptly after receiving such
advice, Liberty Digital will, if necessary, (i) prepare a supplement to the
prospectus based upon such advice and file the same with the Commission pursuant
to Rule 424(b) under the Securities Act and (ii), if necessary, qualify the
Registered Shares to be sold under the securities or blue sky laws of such
jurisdictions in the United States as Cendant shall reasonably request (subject
to the proviso of Section 2.1(iii)).
(c) Liberty Digital may postpone the filing or the
effectiveness of the Liberty Digital Registration Statement or suspend the use
of the Liberty Digital Registration Statement for a period of time, not to
exceed 180 days in any 12-month period, if Liberty Digital determines that the
filing or continued use of the Liberty Digital Registration Statement would
require Liberty Digital to disclose a material financing, acquisition or other
corporate development of Liberty Digital or any of its affiliates and Liberty
Digital shall have determined that such disclosure is not in the best interest
of Liberty Digital (any such determination to be made by resolution of the Board
of Directors of Liberty Digital); provided that (i) each executive officer and
director of Liberty Digital and (ii) each holder of more than 1% of any class of
capital stock of Liberty Digital (who, in the case of (ii) above is entitled to
similar registration rights granted by Liberty Digital), are subject to
restrictions substantially equivalent to those imposed on Cendant.
(d) Cendant agrees that, upon receipt of any notice from
Liberty Digital of the happening of any event of the kind described in Section
2.1(iv), Cendant will forthwith discontinue disposition of the Registered Shares
pursuant to such registration statement until receipt of copies of the
supplemented or amended prospectus contemplated by Section 2.1(iv), and, if so
directed by Liberty Digital, will deliver to Liberty Digital all copies of the
prospectus covering the Registered Shares in its possession at the time of
receipt of such notice.
(e) Cendant shall, at any time it is engaged in a distribution
of Registered Shares, comply with all applicable laws, including Regulation M
promulgated under the Exchange Act and (i) will not engage in any stabilization
activity in connection with the
5
securities of Liberty Digital in contravention of such rules, (ii) will
distribute the Registered Shares solely in the manner described in the Liberty
Digital Registration Statement and (iii) will not bid for or purchase any
securities of Liberty Digital or attempt to induce any person to purchase any
securities of Liberty Digital other than as permitted under the Exchange Act.
(f) Cendant shall provide such information and materials,
execute all such documents and take all such other actions as Liberty Digital
shall reasonably request in order to permit Liberty Digital to comply with all
applicable requirements of law and to effect the registration of Cendant's
Registered Shares.
Section 3. INDEMNIFICATION.
3.1 INDEMNIFICATION BY LIBERTY DIGITAL. Liberty Digital will
indemnify and hold harmless Cendant, its directors, officers and partners and
each other Person, if any, who controls Cendant within the meaning of the
Securities Act or the Exchange Act ("Seller Indemnified Parties"), against any
and all losses, claims, damages or liabilities, joint or several, and expenses
to which the Seller Indemnified Parties, or any of them, may become subject,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses arise out of or are based upon (x)
any untrue statement or alleged untrue statement of any material fact contained
in the Liberty Digital Registration Statement, any preliminary, final or summary
prospectus included therein, or any amendment or supplement thereto, or (y) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
Liberty Digital will reimburse such Seller Indemnified Parties for any legal or
any other expenses reasonably incurred by them in connection with investigating
or defending such loss, claim, liability, action or proceeding; PROVIDED, that
Liberty Digital shall not be liable to any Seller Indemnified Party to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon (i) any actual or
alleged untrue statement in or any actual or alleged omission from, the Liberty
Digital Registration Statement or amendment or supplement thereto or any
preliminary, final or summary prospectus, in reliance upon and in conformity
with written information furnished by or on behalf of Cendant to Liberty Digital
specifically for use in the preparation thereof, (ii) any actual or alleged
untrue statement of a material fact or any actual or alleged omission of a
material fact required to be stated in any preliminary prospectus if Cendant
sells Registered Shares to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if Liberty Digital had previously furnished copies thereof to Cendant or
its representatives and such final prospectus, as then amended or supplemented,
corrected any such misstatement or omission, (iii) the use of any preliminary,
final or summary prospectus by or on behalf of Cendant after Liberty Digital has
notified Cendant, in accordance with Section 2.1(iv), that such prospectus
contains an untrue statement of a material fact or omits to state a material
fact required to be stated therein, in the light of the circumstances under
which they were made, not misleading, (iv) the use of any final prospectus, as
amended or supplemented, by or on behalf of Cendant after such time as the
obligation of Liberty Digital under Section 2.1(i) to keep the related
registration statement effective has expired or (v) any violation of any federal
or state securities laws, rules or regulations committed
6
by Cendant (other than any violation that arises out of or is based upon the
circumstances described in clause (x) or (y) above and as to which Cendant would
otherwise be entitled to indemnification hereunder).
3.2 INDEMNIFICATION BY CENDANT. Cendant will indemnify and
hold harmless Liberty Digital, each of its directors and officers, and each
Person, if any, who controls Liberty Digital within the meaning of the
Securities Act or the Exchange Act (the "Liberty Digital Indemnified Parties"),
against any and all losses, claims, damages or liabilities, joint or several,
and expenses to which the Liberty Digital Indemnified Parties may become
subject, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Liberty Digital Registration Statement, any preliminary, final or summary
prospectus included therein, or amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made in reliance upon and in conformity with written
information furnished to Liberty Digital by or on behalf of Cendant specifically
for use in the preparation thereof, (ii) the use of any prospectus by or on
behalf of Cendant (x) after Liberty Digital has notified Cendant that such
prospectus contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein, in light of the circumstances under
which they were made, not misleading or (y) after such time as the obligation of
Liberty Digital to keep the Liberty Digital Registration Statement effective and
current has expired, (iii) the failure to send or deliver to a Person to whom
Cendant sells Registered Shares, at or prior to the written confirmation of
sale, a copy of the final prospectus or of the final prospectus as then amended
or supplemented, whichever is most recent, if Liberty Digital had previously
furnished copies thereof to Cendant or its representatives, or (iv) any
violation by Cendant of any federal or state securities law or rule or
regulation thereunder (other than any violation that arises out of or is based
upon the circumstances described in clause (x) or (y) of Section 3.1 above and
as to which Cendant is entitled to indemnification thereunder). Notwithstanding
the foregoing, Cendant shall not be liable under this Section 3.2 for any
amounts exceeding the gross proceeds received by Cendant in connection with the
sale of Cendant's Registered Shares.
3.3 INDEMNIFICATION PROCEDURES. Any Person that proposes to
assert the right to be indemnified under this Section 3 shall, promptly after
receipt of notice of any claim, action, suit, proceeding or other litigation
(collectively, an "Action") against such Person in respect of which a claim is
to be made against an indemnifying party under this Section 3, notify such
indemnifying party of the commencement of such Action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party of any such
Action shall not relieve it from any liability that it may have to any
indemnified party otherwise than under this Section 3, except to the extent that
such indemnifying party is prejudiced by such failure to give notice. In case
any such Action shall be brought and notice given to the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel satisfactory to
the indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any further
legal or other
7
expenses incurred by such indemnified party, except as provided below and except
for the reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The indemnified party
shall have the right to employ separate counsel and to participate in (but not
control) any such Action, but the fees and expenses of such counsel shall be the
expense of such indemnified party unless (i) the employment of counsel by such
indemnified party has been authorized by the indemnifying party, (ii) the
indemnified party shall have been advised by its counsel in writing that there
are legal defenses available to it that are different from or in addition to
those available to the indemnifying parties, (iii) the indemnified party shall
have been advised by its counsel in writing that there is a conflict of interest
between the indemnifying party and the indemnified party in the conduct of the
defense of such Action (in which case the indemnifying party shall not have the
right to direct the defense of such Action on behalf of the indemnified party)
or (iv) the indemnifying party shall not in fact have employed counsel to assume
the defense of such Action, in each of which cases the fees and expenses of such
counsel shall be at the expense of the indemnifying party. An indemnifying party
shall not be liable for any settlement of an Action effected without its written
consent (which consent shall not be unreasonably withheld). No indemnifying
party will consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
of such Action. An indemnifying party who is not entitled to, or elects not to,
assume the defense of an Action will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such Action.
3.4 CONTRIBUTION. If recovery is not available under the
foregoing indemnification provisions, for any reason other than as specified
therein, the parties entitled to indemnification by the terms thereof shall be
entitled to contribution for any and all losses, claims, damages or liabilities,
joint or several, and expenses to which they may become subject, in such
proportion as is appropriate to reflect the relative fault of the parties
entitled to indemnification, on the one hand, and the indemnifying parties, on
the other, in connection with the matter out of which such losses, claims,
damages, liabilities or expenses arise or result from. In determining the amount
of contribution to which the respective parties are entitled, there shall be
considered the parties' relative knowledge and access to information concerning
the matter with respect to which the Action was asserted, the opportunity to
correct and prevent any statement or omission, and any other equitable
considerations appropriate under the circumstances. Liberty Digital and Cendant
agree that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation.
Section 4. RULE 144. Liberty Digital hereby covenants to use its best
efforts to file in a timely manner all reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder (or, if at any time Liberty Digital is not required to
file such reports, it will, upon the request of Cendant, make publicly available
other information so long as necessary to permit sales under Rule 144 under the
Securities Act), and it will take such further action as Cendant may reasonably
request, all to the extent required from time to time to enable Liberty Digital
to meet the requirements for issuers entitled to register securities on Form S-3
or any successor form.
