EXHIBIT 7(b)
EXECUTION COPY
NOTE: THIS DOCUMENT IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST PURSUANT
TO RULE 24b-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934. PORTIONS OF THIS
DOCUMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED HAVE BEEN REDACTED
AND ARE MARKED HEREIN BY "***". SUCH REDACTED INFORMATION HAS BEEN FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST.
STOCK PURCHASE AGREEMENT
AMONG
MIH LIMITED,
OTV HOLDINGS LIMITED,
LIBERTY MEDIA CORPORATION
AND
LDIG OTV, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE.......................................................................................1
1.1 Sale of Shares........................................................................................1
1.2 Purchase of Shares....................................................................................2
1.3 The Closing...........................................................................................2
1.4 Liberty Consideration Shares..........................................................................3
ARTICLE II REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER PARTIES........................................3
2.1 Organization - Seller Parties.........................................................................3
2.2 Corporate and Other Power; Authorization and Validity of Agreement....................................3
2.3 Subject Shares; Investors' Shares.....................................................................4
2.4 Incorporation - OpenTV................................................................................5
2.5 Capitalization........................................................................................5
2.6 Subsidiaries and Affiliates...........................................................................8
2.7 No Conflicts; Notices.................................................................................9
2.8 Commission Filings; Financial Statements; Certain Acquisitions; Netherlands Securities Laws..........11
2.9 Absence of Certain Changes...........................................................................13
2.10 Litigation...........................................................................................16
2.11 Restrictions on Business Activities; Certain Contracts...............................................16
2.12 Tax Matters..........................................................................................17
2.13 Contracts and Commitments............................................................................19
2.14 Licenses; Compliance with Regulatory Requirements....................................................21
2.15 Employee Benefit Plans...............................................................................21
2.16 Employee Matters.....................................................................................23
2.17 Interested Party Transactions........................................................................23
2.18 Patents, Trademarks and Similar Rights...............................................................23
2.19 Minute Books.........................................................................................29
2.20 Brokers' and Finders' Fees...........................................................................29
2.21 Private Placement....................................................................................29
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................................................30
3.1 Organization.........................................................................................30
3.2 Corporate Power, Authorization and Validity of Agreement.............................................30
3.3 No Conflicts; Notices................................................................................30
3.4 Brokers' and Finders' Fees...........................................................................31
3.5 Liberty Consideration Shares.........................................................................31
3.6 Liberty Reports and Financial Statements.............................................................31
3.7 Private Placement....................................................................................32
3.8 Ownership of LDIG OTV................................................................................32
(i)
3.9 Purchasers' Diligence................................................................................32
ARTICLE IV CONDUCT PENDING THE CLOSING...........................................................................33
4.1 Conduct of Business of OpenTV and its Subsidiaries Pending Closing...................................33
4.2 No Solicitation; Acquisition Proposals...............................................................38
4.3 Notice of Breach.....................................................................................39
4.4 No Conversion........................................................................................39
4.5 Information..........................................................................................39
ARTICLE V ADDITIONAL COVENANTS...................................................................................40
5.1 Access to Information................................................................................40
5.2 Confidentiality......................................................................................40
5.3 Publicity............................................................................................41
5.4 Cooperation..........................................................................................42
5.5 Tag-Along Rights Under Investors' Rights Agreement...................................................44
5.6 Filing of Form 20-F..................................................................................45
5.7 Waiver...............................................................................................46
5.8 Board Resignations...................................................................................46
5.9 Non-Competition; Solicitation of Employees: Exclusivity; Confidentiality.............................46
5.10 Continuation of Carriage.............................................................................49
5.11 Indemnification......................................................................................49
5.12 Royalty-Free License.................................................................................50
5.13 Covenant Not to Xxx, Option to License, Option to Develop............................................51
5.14 Release..............................................................................................52
5.15 Deed of Transfer.....................................................................................53
5.16 MIH-Related Assignment...............................................................................53
5.17 Cooperation..........................................................................................53
5.18 Transfers of Liberty Consideration Shares............................................................54
5.19 Listing of Liberty Consideration Shares..............................................................54
ARTICLE VI CONDITIONS PRECEDENT..................................................................................54
6.1 Conditions to Obligations of Each Party..............................................................54
6.2 Additional Conditions to Obligations of the Seller Parties...........................................55
6.3 Additional Conditions to the Obligations of Purchasers...............................................56
6.4 Waivers of Closing Conditions........................................................................58
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER....................................................................59
7.1 Termination. This Agreement may be terminated:......................................................59
7.2 Effect of Termination................................................................................60
7.3 Amendment............................................................................................61
7.4 Extension; Waiver....................................................................................61
7.5 Payment of Certain Amounts...........................................................................61
ARTICLE VIII INDEMNIFICATION.....................................................................................63
(ii)
8.1 Indemnification by the Seller Parties................................................................63
8.2 Indemnification by the Purchasers....................................................................64
8.3 Defense of Action....................................................................................65
8.4 Calculation of Indirect Losses.......................................................................66
ARTICLE IX GENERAL PROVISIONS....................................................................................67
9.1 Survival.............................................................................................67
9.2 Notices..............................................................................................67
9.3 Interpretation.......................................................................................69
9.4 Counterparts.........................................................................................70
9.5 Entire Agreement; Assignment; Parties in Interest....................................................71
9.6 Severability.........................................................................................71
9.7 No Waiver............................................................................................71
9.8 Governing Law........................................................................................71
9.9 Rules of Construction................................................................................71
9.10 Expenses.............................................................................................72
9.11 Further Assurances...................................................................................72
9.12 Enforcement..........................................................................................72
9.13 Authorized Agent Consent to Jurisdiction.............................................................72
9.14 Waiver of Jury Trial.................................................................................73
(iii)
STOCK PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 8,
2002, is entered into by and among MIH Limited, a corporation incorporated in
the British Virgin Islands ("MIHL"), OTV Holdings Limited, a corporation
incorporated in the British Virgin Islands and a wholly owned subsidiary of MIHL
(the "SELLER" and, together with MIHL, the "SELLER PARTIES"), Liberty Media
Corporation, a Delaware corporation ("LIBERTY"), and LDIG OTV, Inc., a Delaware
corporation and an indirect wholly owned subsidiary of Liberty ("LDIG OTV" and,
together with Liberty, the "PURCHASERS" and, together with the Seller Parties,
the "PARTIES").
RECITALS
WHEREAS, the Seller is the owner of A Ordinary Shares ("OPENTV A
ORDINARY SHARES") and B Ordinary Shares ("OPENTV B ORDINARY SHARES" and,
together with the OpenTV A Ordinary Shares, the "OPENTV ORDINARY SHARES") of
OpenTV Corp., a corporation incorporated in the British Virgin Islands
("OPENTV"); and
WHEREAS, the Seller Parties desire to sell to the Purchasers, and the
Purchasers desire to purchase from the Seller Parties, all of the Subject Shares
(as defined below) upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, capitalized terms not otherwise defined in this Agreement
shall have the respective meanings set forth on EXHIBIT A hereto; and
WHEREAS, the Parent Parties have executed and delivered the
Undertakings Letters for the benefit of the Purchasers on the date of this
Agreement;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
representations, warranties, covenants and agreements contained herein, the
Parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE
1.1 Sale of Shares. Upon the terms and subject to the conditions of
this Agreement and for the consideration set forth herein, the Seller hereby
agrees to sell, transfer, assign and deliver at the Closing (as defined below)
to (i) LDIG OTV, 365,460 OpenTV A Ordinary Shares (the "PURCHASED A SHARES") and
(ii) Liberty, 30,206,154 OpenTV B Ordinary Shares (the "PURCHASED B SHARES," and
together with the Purchased A Shares, the "SUBJECT SHARES") (in each case,
appropriately adjusted to reflect the effect of any stock splits, stock
dividends or similar events affecting the OpenTV A Ordinary Shares or the OpenTV
B Ordinary Shares), together
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with the right to receive all unpaid dividends or other distributions declared
or otherwise payable with respect to such Subject Shares, free and clear of any
Liens and not subject to any Restrictions (other than (a) Liens and Restrictions
arising from acts of the Purchasers or any Person that was an Affiliate of the
Purchasers prior to the Closing, (b) restrictions on transfer arising under the
Securities Act and applicable state securities Laws, (c) with respect to
Purchased A Shares, restrictions imposed on LDIG OTV pursuant to the Investors'
Rights Agreement and (d) with respect to Purchased B Shares, Restrictions
imposed by the OpenTV Charter and restrictions on transfer imposed pursuant to
the Dutch Lockup Agreement to the extent specified in this Agreement).
1.2 Purchase of Shares. Upon the terms and subject to the conditions of
this Agreement, and subject to Section 5.5, (a) LDIG OTV hereby agrees to
purchase at the Closing all, but not less than all, of the Purchased A Shares
for a per share purchase price of US $6.05 (appropriately adjusted to reflect
the effect of any stock splits, stock dividends or similar events affecting the
OpenTV A Ordinary Shares or OpenTV B Ordinary Shares, the "PER SHARE PRICE") and
(b) Liberty hereby agrees to purchase at the Closing all, but not less than all,
of the Purchased B Shares for a per share purchase price equal to the Per Share
Price. The sum of the aggregate amounts paid pursuant to clauses (a) and (b) of
the previous sentence is referred to herein as the "PURCHASE PRICE." The
Purchase Price shall be payable, at the Purchasers' election, in cash or in a
combination of cash and delivery of shares of Liberty Stock; PROVIDED THAT, the
Purchasers shall pay at least 21% of the Purchase Price in cash. The Purchasers
shall notify the Seller Parties not less than one Business Day prior to the
Closing as to the portion of the Purchase Price that will be paid in cash (such
amount is referred to as the "CASH AMOUNT").
1.3 The Closing.
(a) Subject to the terms and conditions of this Agreement, the closing
of the purchase by the Purchasers of the Subject Shares (the "CLOSING") shall
take place (i) at the offices of Xxxxx Xxxxx L.L.P., 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on the second Business Day
following the day on which the conditions set forth in Article VI shall have
been fulfilled or waived in accordance herewith (other than conditions that may
only be satisfied at the Closing) or (ii) at such other place, time or date as
the Parties agree. The date on which the Closing occurs is hereinafter referred
to as the "CLOSING DATE."
(b) At the Closing, (i) the Seller shall deliver to LDIG OTV stock
certificates representing the Purchased A Shares, duly endorsed in blank or with
separate medallion guaranteed notarized stock transfer powers attached thereto
and signed in blank, together with all other instruments of transfer necessary
or appropriate to effect the transfer of the Purchased A Shares to LDIG OTV,
(ii) the Seller shall deliver to Liberty stock certificates representing the
Purchased B Shares, duly endorsed in blank or with separate medallion guaranteed
notarized stock transfer powers attached thereto and signed in blank, together
with all other instruments of transfer necessary or appropriate to effect the
transfer of the Purchased B Shares to Liberty, (iii) in exchange therefor, the
Purchasers shall deliver or cause to be delivered to the Seller (A)
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payment, by wire transfer, of immediately available funds to an account or
accounts at a bank identified by the Seller Parties by written notice to the
Purchasers at least two Business Days prior to the Closing Date in an amount
equal to the Cash Amount and (B) one or more certificates representing a number
of shares of Liberty Stock equal to the quotient of (1) the Purchase Price minus
the Cash Amount and (2) the Average Market Price of the Liberty Stock,
registered in the name of Seller (the "LIBERTY CONSIDERATION SHARES"), and (iv)
the OpenTV share register shall be updated to reflect the transfers described in
the foregoing clauses (i) and (ii).
(c) At the Closing, the Parties shall deliver or cause to be delivered
the certificates and other documents required to be delivered pursuant to
Article VI hereof.
1.4 Liberty Consideration Shares. If any part of the Purchase Price is
paid by delivery of Liberty Consideration Shares, such Liberty Consideration
Shares shall be represented by newly issued stock certificates registered in the
name of the Seller and shall be free and clear of any Liens and not subject to
any Restrictions (other than (a) Restrictions imposed by this Agreement, (b)
Liens and Restrictions arising from acts of the Seller Parties or any of their
Affiliates and (c) restrictions on transfer arising under the Securities Act and
applicable state securities Laws), and Liberty shall comply with the procedures
set forth on EXHIBIT B with respect to a "shelf" registration statement (the
"SHELF REGISTRATION STATEMENT") covering resales, subject to the Restrictions
set forth in Section 5.18, of the Liberty Consideration Shares by the Seller
Parties.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SELLER PARTIES
The Seller Parties, jointly and severally, represent, warrant and
covenant to the Purchasers as follows:
2.1 Organization - Seller Parties. Each Seller Party (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the British Virgin Islands, (b) has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted and (c) is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or license necessary, except in the case of clause (c) where
the failure to be so duly qualified or licensed and in good standing has not had
and will not have a material adverse effect on the ability of either Seller
Party to perform its obligations under, and consummate the transactions
contemplated by, this Agreement (a "SELLER MATERIAL ADVERSE EFFECT").
2.2 Corporate and Other Power; Authorization and Validity of Agreement.
Each Seller Party has all requisite corporate and other entity power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions
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contemplated hereby, subject to receipt of the MIH Holdings Shareholder Approval
and the Naspers Shareholder Approval (each as defined in Section 6.1(d)). The
execution, delivery and performance by the Seller Parties of this Agreement and,
subject to receipt of the MIH Holdings Shareholder Approval, and the Naspers
Shareholder Approval, the consummation by each of them of the transactions
contemplated hereby have been duly authorized by all necessary corporate and
other entity action on the part of the Seller Parties. This Agreement has been
duly executed and delivered by each Seller Party and is a valid and binding
obligation of each Seller Party, enforceable in accordance with its terms
(except insofar as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
2.3 Subject Shares; Investors' Shares. The Seller is the record owner
of the Subject Shares, and other than the Subject Shares the Seller Parties do
not own of record or beneficially any capital stock of OpenTV or any of its
Subsidiaries. The Seller has good and valid title to the Subject Shares. The
Seller is the record and beneficial owner of the Subject Shares. All of the
Subject Shares are duly authorized, validly issued, fully paid and nonassessable
and are free and clear of any Liens and are not subject to any Restrictions
(other than (a) a Lien under the MIH Facilities Agreement, (b) Restrictions
imposed by the Dutch Lock-up Agreement, (c) the Restrictions described in
Section 2.3 of the Seller Disclosure Schedule and (d) restrictions on transfer
arising under the Securities Act and applicable state securities Laws). Assuming
the Purchasers have the requisite corporate power and corporate authority to own
the Subject Shares and the accuracy of the Purchasers' representations and
warranties set forth in Section 3.8, upon delivery to the Purchasers at the
Closing of certificates representing the Subject Shares, duly endorsed by Seller
for transfer to the Purchasers, and upon Seller's receipt of the Purchase Price
in accordance with this Agreement and recordation of the transfer of the Subject
Shares on the OpenTV Share Register, good and valid title to the Subject Shares
will pass to the Purchasers, free and clear of any Liens, other than (1) Liens
and Restrictions arising from acts of the Purchasers or any Person that was an
Affiliate of the Purchasers prior to the Closing, (2) restrictions on transfer
arising under the Securities Act and applicable state securities Laws, (3) with
respect to Purchased A Shares, restrictions imposed on LDIG OTV pursuant to the
Investors' Rights Agreement and (4) with respect to Purchased B Shares,
Restrictions imposed by the OpenTV Charter and restrictions on transfer imposed
pursuant to the Dutch Lockup Agreement to the extent specified in this
Agreement, and the Purchasers will possess all of the rights, privileges and
preferences relating to the Subject Shares as set forth in the OpenTV Charter
(including the right to exercise the full voting power of the Subject Shares as
set forth in the OpenTV Charter). The Restrictions imposed on Liberty following
the Closing pursuant to the Dutch Lockup Agreement will terminate in their
entirety on November 29, 2002. The Seller has delivered to Liberty a true and
complete copy of the Dutch Lockup Agreement, which copy of the Dutch Lockup
Agreement, although unexecuted, is identical in all respects (other than the
insertion of dates) to the executed Dutch Lockup Agreement. OTVH acquired all of
the Subject Shares that are OpenTV A Ordinary Shares after the date of the
initial public offering of
4
OpenTV A Ordinary Shares and, accordingly, such Subject Shares that are OpenTV A
Ordinary Shares are not subject to the restrictions on transfer imposed by the
Dutch Lockup Agreement.
2.4 Incorporation - OpenTV. OpenTV (a) is a corporation duly
incorporated and validly existing and in good standing under the laws of the
British Virgin Islands, (b) has all requisite corporate and other entity power
to own its properties and to carry on its business as now being conducted and as
proposed to be conducted and (c) is duly qualified or licensed and in good
standing to do business in each jurisdiction in which the properties owned,
leased or operated by it or the nature of the business conducted or proposed to
be conducted by it makes such qualification or license necessary, except in the
case of clause (c) where the failure to be so qualified or licensed or in good
standing would not have a Material Adverse Effect on OpenTV and its
Subsidiaries, taken as a whole, a material adverse effect on any Contract
between OpenTV or any of its Subsidiaries, on the one hand, and any Major
Customer, on the other hand, or a material adverse effect on Intellectual
Property relating to patents owned by or licensed to OpenTV or any of its
Subsidiaries ("OPENTV MATERIAL ADVERSE EFFECT"). The Seller has delivered to the
Purchaser true and correct copies of the Memorandum of Association (the "OPENTV
CHARTER") and Articles of Association (the "OPENTV ARTICLES") of OpenTV, each as
in effect on the date hereof. OpenTV is not in violation of any of the
provisions of the OpenTV Charter or the OpenTV Articles. No corporate action has
been taken with respect to any amendment to the OpenTV Charter or the OpenTV
Articles (except for any such amendments that have become effective and are
reflected in the copies of the OpenTV Charter and the OpenTV Articles delivered
by the Seller to the Purchasers as described in the second preceding sentence)
and no such corporate action is currently proposed. The circumstances which
would trigger the automatic conversion of the OpenTV B Ordinary Shares to OpenTV
A Ordinary Shares pursuant to the provisions of clause 9.2.11.2, 9.2.11.3 or
9.2.11.4 of the OpenTV Charter have not occurred. Immediately prior to the
actions referred to in Section 5.8, the Board of directors of OpenTV will
consist of eight members, of which six will be directors or officers of MIHL.
2.5 Capitalization.
(a) As of the date hereof, the authorized capital stock of OpenTV
consists solely of (i) 500,000,000 OpenTV A Ordinary Shares, (ii) 200,000,000
OpenTV B Ordinary Shares and (iii) 500,000,000 C Preference Shares ("OPENTV
PREFERENCE SHARES"). As of March 31, 2002, there were 40,674,256 OpenTV A
Ordinary Shares, 30,631,746 OpenTV B Ordinary Shares and no OpenTV Preference
Shares issued and outstanding.
(b) All issued and outstanding OpenTV A Ordinary Shares and OpenTV B
Ordinary Shares (i) have been duly authorized and validly issued, (ii) are fully
paid and nonassessable, and (iii) assuming that the representations and
warranties made by the Persons to whom such shares were issued were true and
correct when made or deemed made and that such Persons have complied with each
of the restrictions imposed upon the further disposition of such shares, were
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issued in compliance with all applicable state, federal and foreign Laws
concerning the offer, sale and issuance of securities.
(c) Except as set forth on Section 2.5 of the Seller Disclosure
Schedule, as of the date of this Agreement there are no outstanding shares of
capital stock or other securities or ownership interests of OpenTV that are not
described in clause (a) above other than (i) OpenTV A Ordinary Shares issued
after March 31, 2002 (A) upon the conversion of OpenTV B Ordinary Shares
outstanding at March 31, 2002 in accordance with the provisions of the OpenTV
Charter, (B) upon the exercise of Outstanding OpenTV Stock Options, (C) upon the
exercise of Outstanding OpenTV Warrants, (D) upon the exercise of exchange
rights under the OpenTV 2000 Exchange Plan (the "EXCHANGE Plan") by individuals
holding shares of the common stock of OpenTV Sub ("SUB SHARES"), (E) upon the
exercise by employees of purchase rights for the offering period in effect as of
the date hereof under the OpenTV Sub 1999 Employee Stock Purchase Plan, as
amended prior to the date of this Agreement (the "ESPP"), or (F) upon the
satisfaction by OpenTV of its obligation to issue 626,872 OpenTV A Ordinary
Shares pursuant to the earn-out provisions contained in that certain Principal
Share Purchase Agreement dated as of June 13, 2001 by and among OpenTV, the
Vendors named therein, and Xx. Xxxx Xxxxxx (the "STATIC SHARE PURCHASE
AGREEMENT"), and (ii) OpenTV B Ordinary Shares issued after the date hereof upon
exchange of Sub Shares pursuant to the terms of the Sun Exchange Agreement.
(d) As of March 31, 2002, OpenTV had reserved (i) (A) 2,013,360 OpenTV
A Ordinary Shares for issuance upon exercise of outstanding stock options
granted under the OpenTV 1998 Share Option/Share Issuance Plan, as amended prior
to the date of this Agreement, (B) 4,026,863 OpenTV A Ordinary Shares for
issuance upon exercise of outstanding stock options granted under the OpenTV
1999 Share Option/Share Issuance Plan, as amended prior to the date of this
Agreement, (C) 205,164 OpenTV A Ordinary Shares for issuance upon exercise of
outstanding stock options granted under the OpenTV 2001 Nonqualified Stock
Option Plan, (D) 1,089,849 OpenTV A Ordinary Shares for issuance upon exercise
of outstanding stock options originally granted under the Spyglass, Inc. 1995
Stock Incentive Plan, (E) 3,720 OpenTV A Ordinary Shares for issuance upon
exercise of outstanding stock options originally granted under the AllPen
Software 1997 Stock Option Plan, (F) 1,794 OpenTV A Ordinary Shares for issuance
upon exercise of outstanding stock options originally granted under the Navitel
Communications 1997 Stock Option Plan, (G) 48,084 OpenTV A Ordinary Shares for
issuance upon exercise of outstanding stock options originally granted under the
CSS Acquisition Corporation 2000 Special Stock Incentive Plan and (H) 5,288
OpenTV A Ordinary Shares for issuance upon exercise of outstanding stock options
originally granted under the CSS Acquisition Corporation 2000 Stock Plan
(collectively, the "OUTSTANDING OPENTV STOCK OPTIONS" and all such stock option
plans collectively, the "OPENTV STOCK OPTION PLANS"), (ii) 681,520 OpenTV A
Ordinary Shares for issuance upon the exercise of outstanding warrants to
purchase OpenTV A Ordinary Share ("OUTSTANDING OPENTV WARRANTS"), (iii)
1,005,802 OpenTV A Ordinary Shares for issuance upon the exercise of exchange
rights under the Exchange Plan by individuals holding Sub Shares, (iv) 7,594,796
OpenTV B Ordinary Shares for issuance upon the exercise of exchange rights under
the Sun Exchange Agreement by SSI, (v)
6
500,000 OpenTV A Ordinary Shares for issuance under the ESPP, and (vi) such
number of OpenTV A Ordinary Shares as shall from time to time be sufficient to
effect the conversion of all outstanding OpenTV B Ordinary Shares pursuant to
the OpenTV Charter.
(e) Section 2.5 of the Seller Disclosure Schedule sets forth with
respect to each Outstanding OpenTV Stock Option (i) the OpenTV Stock Option Plan
pursuant to which such Outstanding OpenTV Stock Option was granted, (ii) the
name of the individual who holds such Outstanding OpenTV Stock Option, (iii) the
number of OpenTV A Ordinary Shares underlying such Outstanding OpenTV Stock
Option, (iv) the vesting schedule for each such Outstanding OpenTV Stock Option
that is unvested, (v) the per share exercise price of such Outstanding OpenTV
Stock Option, (vi) the expiration date of such Outstanding OpenTV Stock Option
and (vii) a description of any material terms of such Outstanding OpenTV Stock
Option that differ materially from the terms set forth in the form of stock
option agreement attached as an exhibit to the relevant OpenTV Stock Option
Plan, in the form made available to the Purchasers. Section 2.5 of the Seller
Disclosure Schedule sets forth with respect to each Outstanding OpenTV Warrant
(1) the name of the Person that holds such Outstanding OpenTV Warrant, (2) the
number of OpenTV A Ordinary Shares issuable upon exercise of such Outstanding
OpenTV Warrant, (3) the schedule upon which such Outstanding OpenTV Warrant
becomes exercisable by the holder thereof (to the extent not currently
exercisable in full) and any conditions to such exercisability, (4) the
expiration date of such Outstanding OpenTV Warrant and (5) the per share
exercise price of such Outstanding OpenTV Warrant.
(f) Except as set forth in Section 2.5 of the Seller Disclosure
Schedule and other than OpenTV B Ordinary Shares outstanding on the date hereof
or hereafter issued pursuant to the Sun Exchange Agreement (which may be
converted at the option of the holder thereof into OpenTV A Ordinary Shares in
the manner set forth in the OpenTV Charter), the Outstanding OpenTV Stock
Options, the Outstanding OpenTV Warrants, rights under the Exchange Plan, rights
under the ESPP, rights under the Sun Exchange Agreement, the obligation of
OpenTV to issue 626,872 OpenTV A Ordinary Shares pursuant to the earn-out
provisions contained in the Static Share Purchase Agreement, there are no
outstanding subscriptions, options, warrants, puts, calls, trusts (voting or
otherwise), rights (including conversion or preemptive rights and rights of
first refusal), exchangeable or convertible securities or other commitments or
agreements of any nature relating to the capital stock or other securities or
ownership interests of OpenTV (including any phantom shares, phantom equity
interests, stock or equity appreciation rights or similar rights) or obligating
OpenTV, at any time or upon the happening of any event, to issue, transfer,
deliver, sell repurchase, redeem or otherwise acquire, or cause to be issued,
transferred, delivered, sold, repurchased, redeemed or otherwise acquired, any
of its capital stock or any phantom shares, phantom equity interests, stock or
equity appreciation rights or similar rights, or other ownership interest of
OpenTV or obligating OpenTV to grant, extend or enter into any such
subscription, option, warrant, put, call, trust, right, exchangeable or
convertible security, commitment or agreement.
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2.6 Subsidiaries and Affiliates.
(a) Section 2.6(a) of the Seller Disclosure Schedule (i) lists each
Subsidiary of OpenTV, (ii) lists, under the heading "Strategic Partners,"
certain Persons that are not Subsidiaries of OpenTV and in which OpenTV or one
or more of its Subsidiaries holds an equity interest (each such Person, a
"STRATEGIC PARTNER"), (iii) lists the jurisdiction of organization of each
Subsidiary of OpenTV and each Strategic Partner, (iv) describes the number and
type of the authorized and outstanding equity interests or securities of each
direct and indirect Subsidiary of OpenTV, (v) describes the number and type of
the equity interests or securities, including interests or securities
convertible into or exchangeable or exercisable for any equity interest or
security, in each such Subsidiary and Strategic Partner owned directly or
indirectly by OpenTV (each, an "OPENTV INVESTMENT"), (vi) lists all material
Contracts to which OpenTV or any of its Subsidiaries are parties or by which
their respective assets or properties are bound evidencing such equity interests
or securities, pursuant to which such equity interests or securities are held,
evidencing Restrictions affecting such equity interests or securities or entered
into in connection with the acquisition of such equity interests or securities
(the "OPENTV INVESTMENT AGREEMENTS") and (vii) to the knowledge of the Seller
Parties, lists each officer or director of any member of the MIH Group (as
defined below) (including OpenTV or any of its Subsidiaries) that holds any
equity interest (other than the ownership of publicly traded equity securities)
in, or has any material business relationship with, any Strategic Partner and
describes the equity interest in or relationship with each such Strategic
Partner of any such individuals. True and complete copies of the OpenTV
Investment Agreements have been made available to Liberty. OpenTV or the
applicable Subsidiary thereof has good and valid title to the OpenTV
Investments, free and clear of any Liens and, in the case of OpenTV Investments
that are Subsidiaries of OpenTV, not subject to any Restrictions, other than as
set forth in Section 2.6(a) of the Seller Disclosure Schedule or as may have
been created by this Agreement and except for restrictions on transfer under
federal, state or foreign securities Laws. None of OpenTV or any of its
Subsidiaries is a party to, nor are any of their respective assets or properties
bound by, any Contract that requires OpenTV or any of its Subsidiaries to (A)
fund any capital calls of or make other contributions or loans, or otherwise
provide funds, to a Strategic Partner or (B) purchase, from any Strategic
Partner or from any other Person, any equity interests or securities of such
Strategic Partner. Except as set forth in Section 2.6(a) of the Seller
Disclosure Schedule, there is no Legal Proceeding pending or, to the best of the
Seller Parties' knowledge, threatened, against OpenTV or any of its Subsidiaries
relating to any Strategic Partner or any Investment Agreement related to a
Strategic Partner, which Legal Proceeding is reasonably likely to have an OpenTV
Material Adverse Effect or a Seller Material Adverse Effect.
(b) OpenTV Sub and, to the knowledge of the Seller Parties, each
Subsidiary of OpenTV other than OpenTV Sub (i) is duly organized or
incorporated, validly existing and in good standing under the Laws of the
jurisdiction of its organization or incorporation, as applicable, (ii) has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted and (iii) is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the properties owned, leased or
8
operated by it or the nature of the business or activities conducted by it make
such qualification necessary, except in the case of clause (iii) where the
failure to be so duly qualified or licensed and in good standing, individually
or in the aggregate, would not have a Seller Material Adverse Effect or an
OpenTV Material Adverse Effect.
(c) As of the date hereof, the authorized capital stock of OpenTV Sub
consists solely of 275,000,000 shares of Class A Common Stock, par value $0.001
per share ("OPENTV SUB CLASS A STOCK"), 225,000,000 shares of Class B Common
Stock, par value $0.001 per share ("OPENTV SUB CLASS B STOCK"), and 25,000,000
shares of Preferred Stock, par value $0.001 per share ("OPENTV SUB PREFERRED
STOCK"). As of March 31, 2002, there were 42,049,846 shares of OpenTV Sub Class
A Stock, 38,361,114 shares of OpenTV Sub Class B Stock and no shares of OpenTV
Sub Preferred Stock issued and outstanding. As of the date of this Agreement,
there are no outstanding shares of capital stock or other securities or
ownership securities of OpenTV Sub that are not described in the immediately
preceding sentence except as may have been issued pursuant to the Sun Exchange
Agreement or the Exchange Plan. All issued and outstanding shares of OpenTV Sub
Class A Stock and OpenTV Sub Class B Stock (i) have been duly authorized and
validly issued, (ii) are fully paid and nonassessable, and (iii) assuming that
the representations and warranties made by the Persons to whom such shares were
issued were true and correct when made or deemed made and that such Persons have
complied with each of the restrictions imposed upon the further disposition of
such shares, were issued in compliance with all applicable state, federal and
foreign Laws concerning the offer, sale and issuance of securities. Except for
rights under the Exchange Plan and the Sun Exchange Agreement, there are no
outstanding subscriptions, options, warrants, puts, calls, trusts (voting or
otherwise), rights (including conversion or preemptive rights and rights of
first refusal), exchangeable or convertible securities or other commitments or
agreements of any nature relating to the capital stock or other securities or
ownership interests of OpenTV Sub (including any phantom shares, phantom equity
interests, stock or equity appreciation rights or similar rights) or obligating
OpenTV Sub, at any time or upon the happening of any event, to issue, transfer,
deliver, sell repurchase, redeem or otherwise acquire, or cause to be issued,
transferred, delivered, sold, repurchased, redeemed or otherwise acquired, any
of its capital stock or any phantom shares, phantom equity interests, stock or
equity appreciation rights or similar rights, or other ownership interest of
OpenTV Sub or obligating OpenTV Sub to grant, extend or enter into any such
subscription, option, warrant, put, call, trust, right, exchangeable or
convertible security, commitment or agreement.
2.7 No Conflicts; Notices.
(a) The execution and delivery of this Agreement do not, and, subject
to the satisfaction of the conditions set forth in Sections 6.1 and 6.2 hereof,
the consummation of the transactions contemplated hereby will not, (i) violate
or conflict with any provision of the Memorandum of Association, Articles of
Association, Certificate of Incorporation, Articles of Incorporation, Bylaws or
other organizational documents (including partnership agreements and limited
liability company operating agreements) of either Seller Party, any Controlling
Affiliate
9
of MIHL (the Seller Parties together with the Controlling Affiliates of any
Seller Party, including Naspers and MIH Holdings, collectively, the "MIH
GROUP"), (ii) violate or conflict with any Law applicable to any member of the
MIH Group any of their respective Subsidiaries (including any rule, regulation
or policy promulgated by the Euronext Amsterdam stock exchange) or any of the
properties or assets of any of the foregoing, or (iii) except as described in
Section 2.7(a) of the Seller Disclosure Schedule, result in any breach or
violation of, or constitute a default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of, or result in the creation of any Lien on any of the properties
or assets of any member of the MIH Group or any their respective Subsidiaries
pursuant to, or require any consent, approval, license, permit, order or
authorization ("CONTRACT CONSENT") of any party to, any Contract applicable to
any member of the MIH Group (including the Dutch Lockup Agreement) or any of
their respective Subsidiaries (other than OpenTV and its Subsidiaries) or any of
the properties or assets of any of the foregoing, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably likely to have a Seller Material
Adverse Effect or an OpenTV Material Adverse Effect.
(b) The execution and delivery of this Agreement do not, and, subject
to the satisfaction of the conditions set forth in Sections 6.1 and 6.2 hereof,
the consummation of the transactions contemplated hereby will not, (i) violate
or conflict with any provision of the OpenTV Charter or the OpenTV Articles or,
to the knowledge of the Seller Parties, the Memorandum of Association, Articles
of Association, Certificate of Incorporation, Articles of Incorporation, Bylaws
or other organizational documents (including partnership agreements and limited
liability company operating agreements) of any Subsidiary of OpenTV, (ii)
violate or conflict with any Law applicable to OpenTV or any of OpenTV's
Subsidiaries or any of the properties or assets of any of the foregoing, or
(iii) except as described in Section 2.7(b) of the Seller Disclosure Schedule,
result in any breach or violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of, or result in the creation of any Lien on any of
the properties or assets of OpenTV or any of OpenTV's Subsidiaries pursuant to,
or require any Contract Consent of any party to, any Contract applicable to
OpenTV or any of OpenTV's Subsidiaries or any of the properties or assets of any
of the foregoing, other than, in the case of clauses (ii) and (iii) above, any
such items that, individually or in the aggregate, have not had and are not
reasonably likely to have a Seller Material Adverse Effect or an OpenTV Material
Adverse Effect. The execution and delivery of this Agreement do not, and,
subject to the satisfaction of the conditions set forth in Sections 6.1 and 6.2
hereof, the consummation of the transactions contemplated hereby will not,
result in any breach or violation of, or constitute a default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of, or result in the creation of any Lien on any of
the properties or assets of OpenTV or any of OpenTV's Subsidiaries pursuant to,
or require any Contract Consent of any party to, any Material Contract (as
defined below).
10
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality or antitrust authority, domestic
or foreign, or any stock exchange, quotation system or similar entity or
organization ("GOVERNMENTAL ENTITY"), is required by or with respect to any
member of the MIH Group or OpenTV or any of OpenTV's Subsidiaries in connection
with the execution and delivery of this Agreement by the Seller Parties or the
consummation by the Seller Parties of the transactions contemplated hereby,
except for (i) the matters listed in Section 2.7(c) of the Seller Disclosure
Schedule, (ii) compliance with and filings under the HSR Act, (iii) compliance
with and filings under Section 13(a) and 13(d) of the Securities Exchange Act of
1934 (the "EXCHANGE ACT") and Rule 14f-1 promulgated thereunder, (iv) compliance
with and filings under non-U.S. antitrust or competition regulatory schemes or
laws, (v) compliance with and filings and notifications under applicable
Environmental Laws (as defined in Section 2.14(b)), (vi) filing with the JSE
Securities Exchange SA ("JSE") and the South African Reserve Bank, and approval
of the JSE, by the shareholder circulars to be sent to (A) the shareholders of
MIH Holdings and (B) the shareholders of Naspers and (vii) such consents,
approvals, orders, authorizations, registrations, declarations or filings the
failure of which to be made or obtained, individually or in the aggregate, is
not reasonably likely to cause an OpenTV Material Adverse Effect or Seller
Material Adverse Effect.
(d) Except as set forth in Section 2.7(d) of the Seller Disclosure
Schedule, to the knowledge of the Seller Parties, none of the members of the MIH
Group, OpenTV or any of OpenTV's Subsidiaries is or will be required to give any
notice (a "CONTRACT NOTICE") to any party to any Contract applicable to such
member of the MIH Group, OpenTV or any of OpenTV's Subsidiaries or any of their
properties or assets in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for such notices the failure of which to be made, individually or in the
aggregate is not reasonably likely to cause a Seller Material Adverse Effect or
an OpenTV Material Adverse Effect.
2.8 Commission Filings; Financial Statements; Certain Acquisitions;
Netherlands Securities Laws.
(a) The Seller Parties (i) have heretofore made available to the
Purchaser true and complete copies of all reports, registration statements and
other documents (including exhibits and in each case together with all
amendments thereto) filed by OpenTV with the Commission from December 31, 2000
to the date of this Agreement, and (ii) agree to timely file, and to make
available to the Purchasers promptly after the filing thereof true and complete
copies of, all reports, registration statements and other documents (including
exhibits and in each case together with all amendments thereto) required to be
filed by OpenTV with the Commission after the date hereof and prior to the
Closing Date (such reports, registration statements and other documents,
together with any amendments thereto, are collectively referred to as the
"OPENTV COMMISSION FILINGS"). As of the date of this Agreement, OpenTV is, and
at the Closing (but immediately prior to the purchase and sale of the Subject
Shares and the appointment of directors pursuant to
11
Section 5.8) OpenTV will be, a "foreign private issuer" within the meaning of
Rule 3b-4 of the Exchange Act and is eligible to file Annual Reports on Form
20-F promulgated under the Exchange Act. The OpenTV Commission Filings filed
with the Commission and publicly available as of the date hereof constitute, and
the OpenTV Commission Filings to be made after the date hereof and on or before
the Closing Date will constitute, all of the documents (other than preliminary
materials) that OpenTV was or will be required to file with the Commission from
December 31, 2000, to the date hereof and the Closing Date, as applicable. As of
their respective dates, each of the OpenTV Commission Filings complied and, in
the case of OpenTV Commission Filings filed after the date hereof and prior to
the Closing Date will comply, in all material respects with the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations promulgated under each of the Securities Act and the Exchange Act.
As of their respective dates, none of the OpenTV Commission Filings filed with
the Commission and publicly available as of the date hereof contained at the
time made, and none of the OpenTV Commission Filings filed with the Commission
after the date hereof shall contain at the time made, any untrue statement of a
material fact or omitted at the time made, or will omit at the time made, to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were or are
made, not misleading. When filed with the Commission, to the knowledge of the
Seller Parties, the financial statements included in the OpenTV Commission
Filings filed with the Commission and publicly available as of the date hereof
complied at the time filed, and the financial statements included in any OpenTV
Commission Filings filed with the Commission after the date hereof will comply
at the time filed, as to form in all material respects with the applicable rules
and regulations of the Commission and were, or will have been, prepared in
accordance with generally accepted accounting principles in the United States,
consistently applied ("GAAP") (except as may be indicated therein or in the
notes or schedules thereto). Such financial statements fairly present, or will
fairly present, the consolidated financial position of OpenTV and its
consolidated Subsidiaries as at the dates thereof and the consolidated results
of their operations and their consolidated cash flows for the periods then
ended, subject, in the case of unaudited interim financial statements, to
normal, recurring year-end audit adjustments. Except (a) as disclosed in the
OpenTV Commission Filings filed with the Commission and publicly available as of
the date hereof and (b) as disclosed in Section 2.8(a) of the Seller Disclosure
Schedule, none of OpenTV or any of its Subsidiaries has any actual or potential
liability or obligation of any kind that, individually or in the aggregate, has
had or is reasonably likely to have an OpenTV Material Adverse Effect or is
required by the applicable rules and regulations of the Commission and GAAP to
be disclosed, reflected or reserved against in financial statements.
(b) The unaudited consolidated financial statements of OpenTV and its
Subsidiaries at and for the period ended December 31, 2001 (including all
footnotes required to be included in accordance with GAAP) (the "2001 FINANCIAL
STATEMENTS") were delivered to the Purchaser on May 3, 2002. The 2001 Financial
Statements comply as to form in all material respects with the rules and
regulations of the Commission (assuming for such purpose that the 2001 Financial
Statements were included in an Annual Report on Form 20-F filed with the
Commission) and
12
were prepared in accordance with GAAP (except as may be indicated therein or in
the notes or schedules thereto). OpenTV's independent auditors have completed
their review of the 2001 Financial Statements and, except for footnote
disclosure regarding events that occur subsequent to the date of this Agreement,
the 2001 Financial Statements are in the form in which they will be filed with
OpenTV's Annual Report on Form 20-F for the year ended December 31, 2001. The
only condition to the execution of the audit report of OpenTV's independent
auditors with respect to the 2001 Financial Statements is notice to such
auditors of the execution and delivery of this Agreement. The 2001 Financial
Statements fairly present the consolidated financial position of OpenTV and its
consolidated Subsidiaries as at the date thereof and the consolidated results of
their operations and their consolidated cash flows for the period then ended. To
the knowledge of the Seller Parties, except as and to the extent reflected or
reserved against in the 2001 Financial Statements, none of OpenTV or any of its
Subsidiaries had as of December 31, 2001 any liability or obligation of any kind
required to be reflected or reserved against in financial statements (including
the notes thereto) of OpenTV and its consolidated Subsidiaries prepared in
accordance with the applicable rules and regulations of the Commission and GAAP
that had or is reasonably likely to have an OpenTV Material Adverse Effect.
(c) The Seller Parties and, to the knowledge of the Seller Parties,
OpenTV currently comply, and have at all times in the past complied, in all
material respects, with all applicable filing requirements and reporting and
disclosure obligations under (i) in the case of the Seller Parties with respect
to the Subject Shares, Article 46b(3)(c) of the Netherlands Securities Trade
Supervision Act of 1995 (WET TOEZICHT EFFECTENVERKEER 1995) (the "NETHERLANDS
SECURITIES ACT"), and Article 3(b) of the Decree on the reporting and regulation
of transactions in securities 1999 (REGELING MELDING EN REGLEMENTERING
TRANSACTIES IN EFFECTEN 1999) with respect to transactions in securities
relating to OpenTV within the meaning of Article 46(1) of the Netherlands
Securities Act; and (ii) in the case of OpenTV, Articles 46b(1) and 46d of the
Netherlands Securities Act and the applicable rules of the Euronext Amsterdam
Stock Exchange.
2.9 Absence of Certain Changes. From December 31, 2001 to the date
hereof, except as set forth in Section 2.9 of the Seller Disclosure Schedule,
OpenTV and each of its Subsidiaries has conducted its business in the ordinary
course consistent with past practice and there has not occurred:
(a) any Material Adverse Change to OpenTV and its Subsidiaries, taken
as a whole (excluding any developments, changes, events, occurrences or
conditions relating to United States or foreign economies in general, the
securities markets in general or generally affecting the cable television
industry or the satellite television industry);
(b) any sale, lease or other transfer or disposition of any assets that
are material, individually or in the aggregate, to OpenTV and its Subsidiaries,
taken as a whole, except in the ordinary course of business and consistent with
past practice;
13
(c) any grant of an exclusive license to, or covenant not to xxx with
respect to, any Intellectual Property or technology owned by OpenTV or any of
its Subsidiaries or any Contract entered into by OpenTV or any of its
Subsidiaries that contains "most favored nations" provisions, as such term is
customarily understood in the cable television and satellite television
industries;
(d) any change in accounting methods, practices or policies (including
any change in revenue and recognition policies or depreciation or amortization
policies or rates) by OpenTV or any of its Subsidiaries or any revaluation by
OpenTV or any of its Subsidiaries of any of their respective assets;
(e) any declaration, setting aside, or payment of any dividend or other
distribution, or any direct or indirect redemption, retirement, purchase or
other acquisition by OpenTV or any of its Subsidiaries of any of the capital
stock or other equity interests of OpenTV or any of its Subsidiaries or other
securities or options, warrants or other rights to acquire capital stock, other
than (i) the repurchase of OpenTV A Ordinary Shares from OpenTV and OpenTV Sub
employees upon termination of employment pursuant to and in accordance with
repurchase agreements with current or former employees as in effect on April 1,
2002; (ii) dividends or distributions by a wholly owned Subsidiary of OpenTV to
OpenTV or another wholly owned Subsidiary of OpenTV; and (iii) redemptions,
retirements, purchases or other acquisitions of capital stock of a wholly owned
subsidiary of OpenTV or other securities or options, warrants or other rights to
acquire capital stock of a wholly owned subsidiary of OpenTV;
(f) any (i) material modification or change to any Contract that is
material to the business of OpenTV to which OpenTV or any of its Subsidiaries is
a party or by which any of their respective assets or properties are bound or
(ii) any modification or change to any Material Contract;
(g) any commitment or transaction (including any capital expenditure or
capital financing) or series of related commitments or transactions by OpenTV or
any of its Subsidiaries that requires payments in excess of US $100,000;
(h) (i) any waiver or release of any right or claim of substantial
value related to Intellectual Property or any Material Contract by OpenTV or any
of its Subsidiaries or (ii) to the knowledge of the Seller Parties, any waiver
or release of any right or claim of substantial value (other than any right or
claim related to Intellectual Property or any Material Contract) by OpenTV or
any of its Subsidiaries;
(i) any payment, discharge or satisfaction of any material claim,
liability or obligation by OpenTV or any of its Subsidiaries, other than the
payment, discharge or satisfaction in the ordinary course of business consistent
with past practice of liabilities reflected or reserved against in its latest
balance sheet included in the 2001 Financial Statements or incurred since the
date of such balance sheet in the ordinary course of business and consistent
with past practice;
14
(j) any issuance or sale of capital stock or other securities or
membership or other ownership interests, exchangeable or convertible securities,
options, warrants, puts, calls or other rights to acquire capital stock or other
securities or other ownership interests (including any phantom shares, phantom
equity interests, stock or equity appreciation rights or similar rights) of
OpenTV or any of OpenTV's Subsidiaries, other than (i) grants of OpenTV A
Ordinary Shares or options to purchase OpenTV A Ordinary Shares to employees of
OpenTV or its Subsidiaries in the ordinary course of business and in a manner
and in amounts consistent with past practice, each of which grants is described
in Section 2.9(j) of the Seller Disclosure Schedule, (ii) upon the exercise of
options to purchase OpenTV A Ordinary Shares that were outstanding at December
31, 2001 or were granted in accordance with clause (i), (iii) issuances of
OpenTV A Ordinary Shares upon the conversion of OpenTV B Ordinary Shares in
accordance with the OpenTV Charter, (iv) issuances of OpenTV A Ordinary Shares
upon exercise of rights under the 2000 Exchange Plan or the Sun Exchange
Agreement (v) issuances of capital stock of wholly owned Subsidiaries of OpenTV
to OpenTV or to another wholly owned Subsidiary of OpenTV or (vi) issuances of
OpenTV A Ordinary Shares pursuant to the ESPP;
(k) any incurrence, assumption or guarantee by OpenTV or any of its
Subsidiaries of any indebtedness to third parties for borrowed money, other than
any such incurrence, assumption or guarantee in the ordinary course of business
and in a manner and in amounts consistent with past practice that do not exceed,
individually or in the aggregate, US $100,000;
(l) the making of any loan or cash advance by OpenTV or any of its
Subsidiaries to any Affiliate of OpenTV (other than to any wholly owned
Subsidiary of OpenTV, to OpenTV Sub or to Spyglass Integration, Inc.) or to any
Strategic Partner;
(m) the making of any loan or cash advance by OpenTV or any of its
Subsidiaries to any director, officer or employee of (i) OpenTV, (ii) any of
OpenTV's Affiliates or (iii) any Strategic Partner, other than, in the case of
any directors (other than any such director that is a director, officer or
employee of a member of the MIH Group or any of its Affiliates (other than
OpenTV and its Subsidiaries)), officers or employees of OpenTV, OpenTV Sub or
Subsidiaries of OpenTV, travel and other business expenses advanced to such
directors, officers or employees in the ordinary course of business consistent
with past practice;
(n) any increase in the salary, wage, benefit or other remuneration
payable or to become payable to any current or former officer or director of
OpenTV or of any of its Subsidiaries or any current or former employee or
contractor of OpenTV or of any of its Subsidiaries whose compensation for the
year ended December 31, 2001 exceeded US $75,000 (each such employee or agent, a
"COVERED PERSON") or any increase in any bonus or severance payment or
arrangement made to, for or with any of its or their officers, directors or
Covered Persons of any grant of a supplemental retirement plan or program or
special remuneration for any officer, director or Covered Person of OpenTV or
any of its Subsidiaries, in each case other than (i) as may be required under
agreements to which OpenTV or the applicable Subsidiary was
15
a party at December 31, 2001 or (ii) in the ordinary course of business in an
amount not in excess of 5% of such individual's compensation during the prior
year;
(o) any Person hired as an officer, employee, contractor or consultant
for total compensation in excess of US $100,000 per annum;
(p) any material change in any financial reporting or Tax practice or
policy;
(q) any change in any Tax election, of OpenTV or any of its
Subsidiaries, other than in the ordinary course of business consistent with past
practice;
(r) any change in the severance practices of OpenTV or any of its
Subsidiaries; or
(s) any agreement by OpenTV or any of its Subsidiaries to do any of the
foregoing.
2.10 Litigation. Except as set forth in Section 2.10(a) of the Seller
Disclosure Schedule, there is no Legal Proceeding pending (or with respect to
Indemnity Actions (as defined below), of which OpenTV has received notice) or,
to the knowledge of the Seller Parties, threatened, before any agency, court or
tribunal, foreign or domestic, against any member of the MIH Group or OpenTV or
any of OpenTV's Subsidiaries or any of their respective assets or properties or
any of their respective officers, directors or Affiliates or with respect to
which OpenTV or any of its Subsidiaries is or may be subject to an obligation to
indemnify or hold harmless any Person (an "INDEMNITY ACTION"), that individually
or in the aggregate, has had or is reasonably likely to have an OpenTV Material
Adverse Effect or a Seller Material Adverse Effect. There is no judgment, decree
or order (including in connection with an Indemnity Action) outstanding against
any member of the MIH Group or OpenTV or any of their respective Subsidiaries or
any of their respective assets or properties or any of their respective
directors, officers or Affiliates, that has had or is reasonably likely to have
an OpenTV Material Adverse Effect or a Seller Material Adverse Effect.
2.11 Restrictions on Business Activities; Certain Contracts. Except as
set forth in Section 2.11 of the Seller Disclosure Schedule, to the knowledge of
the Seller Parties, there is no Contract, judgment, injunction, order or decree
binding upon OpenTV or any of its Subsidiaries that has or would reasonably be
likely to have the effect of prohibiting or materially restricting or limiting
the ability of OpenTV to conduct its business as the same is currently conducted
or contemplated (by the board of directors of OpenTV as of the date of this
Agreement or as reflected in the 2002 budget for OpenTV delivered to Liberty
(the "2002 BUDGET")) to be conducted. Except as set forth in Section 2.11 of the
Seller Disclosure Schedule, none of OpenTV or any of OpenTV's Subsidiaries is a
party to, nor are any of their respective assets bound by, (a) any Contract
that, as a result of the transactions contemplated by this Agreement, would be
or would purport to be binding upon the Purchasers or any of the Purchasers'
Affiliates (other than OpenTV and OpenTV's Subsidiaries) or any Contract in
respect of which any act or omission of the Purchasers or any of their
Affiliates (other than OpenTV and OpenTV's Subsidiaries) would result in a
breach thereof or constitute (with or without notice or lapse of
16
time or both), or (b) any Disclosed Contract or Material Contract that, as a
result of the transactions contemplated by this Agreement, would permit any
Person to declare, a default or event of default thereunder, or give rise to any
right of termination, cancellation, amendment, acceleration, repurchase,
prepayment or repayment or to increased payments thereunder, or give rise to or
accelerate any material obligation or result in the loss or modification of any
material rights or benefits thereunder or result in any Lien or Restriction on
any of the material assets of, or otherwise have any material adverse effect on
the business of OpenTV.
2.12 Tax Matters. Except as specified in Section 2.12 of the Seller
Disclosure Schedule
(a) OpenTV and each of its Subsidiaries have filed or caused to be
filed all material Tax Returns that they were required to file. All such Tax
Returns were correct and complete in all material respects. All Taxes owed by
OpenTV and each of its Subsidiaries have been paid or reserved against in
OpenTV's financial statements covering the relevant period. Neither OpenTV nor
any of its Subsidiaries is currently the beneficiary of any extension of time
within which to file any Tax Return. No written notice has been received by
OpenTV or any of its Subsidiaries that a pending claim or matter is being
asserted by an authority in a jurisdiction where OpenTV or any of its
Subsidiaries does not file Tax Returns that OpenTV or any of its Subsidiaries is
or may be subject to taxation by that jurisdiction. There are no material Liens
or security interests on any of the assets or properties of OpenTV or any of its
Subsidiaries that arose in connection with any failure (or alleged failure) to
pay any Tax, except for Permitted Encumbrances.
(b) OpenTV and its Subsidiaries have withheld and paid all material
Taxes required to have been withheld and paid under applicable Laws, rules and
regulations relating to the payment and withholding of Taxes.
(c) None of the material Tax Returns filed by OpenTV or any of its
Subsidiaries has been or is currently being examined by the Internal Revenue
Service or relevant state, local or foreign taxing authorities. There are no
examinations or other administrative or court proceedings relating to material
Taxes of OpenTV or any of its Subsidiaries in progress or pending, nor, to the
knowledge of the Seller Parties, has OpenTV or any of its Subsidiaries received
any written notice or report asserting a material Tax deficiency with respect to
OpenTV or any of its Subsidiaries. To the knowledge of the Seller Parties, there
are no threatened or current actions, suits, proceedings, investigations, audits
or claims relating to or asserted for material Taxes of OpenTV or any of its
Subsidiaries.
(d) OpenTV and its Subsidiaries have not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a material Tax assessment or deficiency.
(e) Neither OpenTV nor any of its Subsidiaries (A) has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, or (B) is
required to include in income
17
any adjustment pursuant to Section 481(a) of the Code by reason of a change in
accounting method.
(f) There is no contract, agreement, plan or arrangement to which
OpenTV or any of its Subsidiaries is a party covering any employee, former
employee, officer, director, shareholder or contract worker of OpenTV or any of
its Subsidiaries, that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to Section 162(m) of
the Code.
(g) Neither OpenTV nor any of its Subsidiaries (A) has been, to the
knowledge of the Seller Parties, a member of an affiliated group (within the
meaning of Section 1504 of the Code) filing a consolidated federal income Tax
Return, (B) has been, to the knowledge of the Seller Parties, a member of any
affiliated, combined, consolidated, unitary, or similar group for state, local
or foreign Tax purposes, (C) is a party to any Tax allocation or Tax sharing
agreement, or (D) has, to the knowledge of the Seller Parties, any liability for
the Taxes of any Person (other than any of OpenTV and its Subsidiaries) under
Treasury Regulations Section 1.1502-6 (or any similar provision of state, local,
or foreign law), as a transferee or successor, by contract, or otherwise.
(h) Neither OpenTV nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (x) in the
two (2) years prior to the date of this Agreement or (y) in a distribution which
could otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.
(i) To the knowledge of the Seller Parties, OpenTV was not a passive
foreign investment company within the meaning of Section 1297(a) of the Code
during the tax year ended December 31, 2001.
(j) OpenTV has not made an election under Section 897(i) of the Code to
be treated as a domestic corporation.
(k) OpenTV does not have, and has not had, effectively connected income
in the United States or, to the knowledge of the Seller Parties, a permanent
establishment in any country other than the British Virgin Islands.
(l) To the extent that OpenTV or any of its Subsidiaries file U.S.
federal Tax Returns for the 2001 taxable year on or before the Closing Date,
OpenTV and its Subsidiaries will comply with the reporting requirements set
forth in Treasury Regulations Section 1.482-7 with respect to their cost sharing
arrangements.
(m) Neither OpenTV nor any of its Subsidiaries has participated in a
corporate tax shelter within the meaning of Treasury Regulations Section
1.6011-4T or participated in a
18
transaction that it intends to disclose pursuant to IRS Announcement 2002-2,
2002-2 I.R.B. 304. To the knowledge of the Seller Parties, OpenTV and its
Subsidiaries have disclosed on any U.S. federal Tax Returns that they are
required to file all positions taken therein that are likely to give rise to a
substantial understatement of federal income Tax within the meaning of Section
6662 of the Code.
2.13 Contracts and Commitments.
(a) Section 2.13(a) of the Seller Disclosure Schedule lists, to the
knowledge of the Seller Parties and as of the date of this Agreement, (i) all
Contracts (other than agreements described in Section 2.16) to which OpenTV or
any of its Subsidiaries is a party that are to be performed in whole or in part
after the date hereof and that would be required to be filed with the Commission
pursuant to the Exchange Act as an exhibit were OpenTV required to file Annual
Reports on Form 10-K, (ii) all agreements, bonds, notes, debentures or similar
instruments evidencing (A) indebtedness of OpenTV or any of its Subsidiaries for
borrowed money or for the deferred purchase price of any material property or
service (other than trade accounts arising in the ordinary course of business
that do not exceed US $100,000 individually or US $1,000,000 in the aggregate),
(B) obligations of OpenTV or any of its Subsidiaries under capital leases
requiring annual payments in excess of US $50,000, (C) guarantees, surety
contracts, letters of credit and indemnity agreements (other than customary
indemnity provisions in any Contract that are consistent with general industry
practice), (iii) all Contracts to which OpenTV or any of its Subsidiaries is a
party or to or by which any of their respective assets or properties are subject
or are bound that were entered into outside the ordinary course of business and
pursuant to which any obligations or liabilities (whether absolute, contingent
or otherwise) remain outstanding, (iv) all Contracts (other than agreements
described in Section 2.16) not terminable by OpenTV on 90 days or less notice
without liability to OpenTV or any of its Subsidiaries (other than for the
payment of amounts payable thereunder that have accrued to the date of
termination thereof), that (A) involved the payment by OpenTV or any of its
Subsidiaries of more than US $100,000 during the 12-month period ended December
31, 2001, or (B) are currently projected to involve the payment of more than US
$100,000 by OpenTV or any of its Subsidiaries during the 12-month period ending
December 31, 2002 and (v) all Contracts (other than agreements described in
Section 2.16) terminable by any party thereto other than OpenTV or any of its
Subsidiaries on 90 days or less notice without liability to any such other party
(other than for the payment of amounts payable thereunder that have accrued to
the date of termination thereof) that (A) involved the receipt by OpenTV or any
of its Subsidiaries of more than US $1,000,000 during the 12-month period ended
December 31, 2001 or (B) are currently projected to involve the receipt by
OpenTV or any of its Subsidiaries of more than US $1,000,000 during the 12-month
period ending December 31, 2002 (clauses (i) through (v), together with any
Contracts set forth or required to be set forth in Section 2.11 of the Seller
Disclosure Schedule, collectively, the "DISCLOSED CONTRACTS"). To the knowledge
of the Seller Parties, OpenTV and its Subsidiaries have fulfilled in all
material respects, or taken all actions necessary to enable them to fulfill in
all material respects when due, their respective obligations under each
Disclosed Contract to which they are parties. To the knowledge of the Seller
Parties, all parties to the Disclosed Contracts
19
other than the OpenTV and its Subsidiaries have complied in all material
respects with the provisions thereof and no party is in breach or violation of,
or in default (with or without notice or lapse of time, or both) under, such
Disclosed Contracts, which breach, violation or default has had or is reasonably
likely to have an OpenTV Material Adverse Effect. As of the date of this
Agreement, to the knowledge of the Seller Parties, none of OpenTV or its
Subsidiaries has received any notice of termination, cancellation or
acceleration of any Disclosed Contract. True and complete copies of all
Disclosed Contracts listed or required to be listed in Section 2.11 or 2.13(a)
of the Seller Disclosure Schedule have been made available to the Purchasers.
(b) Section 2.13(b) of the Seller Disclosure Schedule lists (i) each
Contract to which OpenTV or any of its Subsidiaries are parties or by which any
of their respective assets are bound that contain any "most favored nations"
provisions, as such term is commonly understood in the cable television and
satellite television industries ("MFN CONTRACTS"), (ii) ***, and
(iii) each Contract between OpenTV or any of its Subsidiaries, on the one hand,
and any member of the MIH Group or any of their Affiliates (other than OpenTV or
any of its Subsidiaries), on the other ("AFFILIATE CONTRACTS"; the MFN
Contracts, *** and the Affiliate Contracts are referred
to collectively as the "MATERIAL CONTRACTS" and each such Contract is referred
to individually as a "MATERIAL CONTRACT"). True and complete copies of all
Material Contracts listed or required to be listed in Section 2.13(b) of the
Seller Disclosure Schedule have been made available to the Purchasers. OpenTV
and its Subsidiaries have fulfilled in all material respects, or taken all
actions necessary to enable them to fulfill in all material respects when due,
their respective obligations under each Material Customer Contract to which they
are parties. To the knowledge of the Seller Parties, OpenTV and its Subsidiaries
have fulfilled in all material respects, or taken all actions necessary to
enable them to fulfill in all material respects when due, their respective
obligations under each MFN Contract and Affiliate Contract. Except as set forth
in Section 2.13(b) of the Seller Disclosure Schedule, to the knowledge of the
Seller Parties, all parties to the Material Contracts other than OpenTV and its
Subsidiaries have complied in all material respects with the provisions thereof
and no party is in breach or violation of, or in default (with or without notice
or lapse of time or both) under, such Material Contracts, which breach,
violation or default has had or is reasonably likely to have a Seller Material
Adverse Effect or an OpenTV Material Adverse Effect. ***
20
2.14 Licenses; Compliance with Regulatory Requirements.
(a) To the knowledge of the Seller Parties, and except as set forth on
Section 2.14(a) of the Seller Disclosure Schedule, OpenTV and its Subsidiaries
hold all licenses, franchises, ordinances, authorizations, permits,
certificates, variances, exemptions, concessions, leases, rights of way,
easements, instruments, orders and approvals, domestic or foreign ("LICENSES")
necessary to enable them to own, lease or otherwise hold their properties and
assets and to carry on their business as presently conducted, other than such
franchises, Licenses the lack of which, individually or in the aggregate, would
not have an OpenTV Material Adverse Effect (collectively, the "OPENTV
LICENSES"). To the knowledge of the Seller Parties, OpenTV and its Subsidiaries
are in compliance with, and have conducted their business so as to comply with,
the terms of their respective OpenTV Licenses and with all applicable Laws,
except where, either individually or in the aggregate, the failure so to comply
has not had and, is not reasonably likely to have an OpenTV Material Adverse
Effect. This subsection 2.14(a) does not apply to environmental matters, which
are the subject of Section 2.14(b).
(b) To the knowledge of the Seller Parties and except as set forth in
Section 2.14(b) of the Seller Disclosure Schedule, (i) OpenTV and its
Subsidiaries and the operation of their business, equipment and other assets and
the facilities owned or leased by them and for which OpenTV or its Subsidiaries
have compliance responsibility are in compliance in all material respects with
all applicable Environmental Laws; (ii) OpenTV and its Subsidiaries hold all
material Licenses required under Environmental Laws necessary to enable them to
own, lease or otherwise hold their properties and assets and to carry on their
businesses as presently conducted; (iii) there are no material investigations,
administrative proceedings, judicial actions, orders, claims or notices that are
pending, anticipated or threatened against OpenTV or any of its Subsidiaries
relating to or arising under any Environmental Laws; (iv) there is no ongoing
remediation of material contamination required by Environmental Law or any
Governmental Entity, and no Governmental Entity has proposed or threatened any
such remediation, at any real property currently leased or owned by OpenTV or
any of its Subsidiaries; and (v) neither OpenTV nor any of its Subsidiaries has
received any written notice alleging a violation of or liability of OpenTV or
any of its Subsidiaries under any Environmental Laws that would or would be
reasonably likely to have a Seller Material Adverse Effect or an OpenTV Material
Adverse Effect. For purposes of this Agreement, the term "ENVIRONMENTAL LAWS"
means any federal, state, local or foreign law, statute, rule or regulation or
the common law relating to the environment, the protection of natural resources
or wildlife, or occupational health and safety, including the federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended ("CERCLA"), and any state or foreign law counterpart.
2.15 Employee Benefit Plans.
(a) To the knowledge of the Sellers, Section 2.15(a) of the Seller
Disclosure Schedule lists, with respect to OpenTV and its Subsidiaries, (i) all
material employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
21
("ERISA")), including pension, profit sharing, savings, deferred compensation,
supplemental retirement, medical, dental, vision care, disability, life
insurance and accident insurance plans, programs or arrangements, (ii) any stock
option, stock purchase, phantom stock or stock appreciation right, plans,
programs or arrangements, and (iii) all bonus or incentive plans, programs or
arrangements (including fringe benefit plans or arrangements that would not
typically be provided to comparable employees of a public company) for senior
management of OpenTV, in each case, that are currently maintained or directly
contributed to by OpenTV or its Subsidiaries or have been maintained or
contributed to by OpenTV or its Subsidiaries since January 1, 1997
(collectively, the "EMPLOYEE PLANS").
(b) The Seller Parties have made available to the Purchaser a copy of
each of the Employee Plans and related plan documents and have, with respect to
each Employee Plan that is subject to ERISA reporting requirements, provided
copies of the Form 5500, including all schedules attached thereto and actuarial
reports, if any, filed for the last plan year. The Seller Parties have also made
available to the Purchasers the most recent Internal Revenue Service
determination letter issued with respect to each such Employee Plan intended to
be qualified under Sections 401(a) or 501(c)(9) of the Code.
(c) To the knowledge of the Seller Parties, except as set forth on
Section 2.15(c) of the Seller Disclosure Schedule, (i) none of the Employee
Plans promises or provides retiree medical or other retiree welfare benefits to
any person other than as required by Law; (ii) each Employee Plan has been
administered in accordance with its terms and in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), and OpenTV and its Subsidiaries have performed
all material obligations required to be performed by them under, are not in
default under or violation of, and have no knowledge of any default or violation
by any other party to, any of the Employee Plans, in each case, except for any
violations or defaults that individually or in the aggregate are not reasonably
likely to result in an OpenTV Material Adverse Effect; (iii) no Employee Plan is
or has ever been covered by, and neither OpenTV nor any of its Subsidiaries has
incurred or expects to incur any liability under Title IV of ERISA or Section
412 of the Code; (iv) no Legal Action has been brought or, to the knowledge of
the Seller Parties, is threatened against or with respect to any such Employee
Plan, including any audit or inquiry by the Internal Revenue Service or United
States Department of Labor that, if adversely determined, is reasonably likely
to result in an OpenTV Material Adverse Effect; and (v) neither OpenTV nor any
of its Subsidiaries is a party to, or has made any contribution to or otherwise
incurred any obligation under, any "multiemployer plan" as defined in Section
3(37) of ERISA.
(d) To the knowledge of the Seller Parties, except as described in
Section 2.15(d) of the Seller Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) entitle any current or former employee or any director of OpenTV or any
of its Subsidiaries to severance benefits or any other similar payment
(including unemployment compensation (other than as required by applicable Law),
golden parachute, bonus or otherwise), (ii) increase any benefits otherwise
payable or (iii)
22
accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or director. Except as set forth in Section
2.15(d) of the Seller Disclosure Schedule, to the knowledge of the Seller
Parties, there is no contract, agreement, plan or arrangement to which OpenTV or
any of its Subsidiaries is a party covering any employee, former employee,
officer, director, shareholder or contract worker of OpenTV or any of its
Subsidiaries, that could reasonably be expected to give rise to the payment of
any amount in connection with the consummation of the transactions contemplated
by this Agreement that would not be deductible pursuant to Section 280G of the
Code.
2.16 Employee Matters. To the knowledge of the Seller Parties, Section
2.16 of the Seller Disclosure Schedule as of the date of this Agreement lists
each employment, consulting, contractor, agency and sales commission agreement
to which OpenTV or any of its Subsidiaries is a party that is not terminable
without liability to OpenTV and its Subsidiaries upon 91 days' or less prior
notice to the employee, consultant, contractor, agent or other party and
involves compensation or remuneration of more than $100,000 per annum. True and
complete copies of each such agreement have been made available to the
Purchaser. To the knowledge of the Seller Parties, all of such agreements are in
full force and effect, and neither OpenTV, any of OpenTV's Subsidiaries nor, to
the knowledge of the Seller Parties, any other Person is in default under them.
To the knowledge of the Seller Parties, (i) there have been no claims that
OpenTV or any of its Subsidiaries have defaulted under any of these agreements
and (ii) there are no facts or conditions that if continued, or upon delivery of
notice, would result in a default by OpenTV or any of its Subsidiaries under any
of these agreements.
2.17 Interested Party Transactions. Section 2.17 of the Seller
Disclosure Schedule lists or describes all transactions, Contracts and other
arrangements (oral or written) between OpenTV or any of its Subsidiaries, on the
one hand, and any member of the MIH Group or any of their respective Affiliates
(other than OpenTV or any of its Subsidiaries) or any director or executive
officer of any member of the MIH Group or any of their respective Affiliates
(including OpenTV and its Subsidiaries), on the other hand. Attached as Section
2.17 of the Seller Disclosure Schedule is a true and correct copy of each
Contract and arrangement that is in writing, and a description of all material
terms of each transaction, Contract or arrangement that is not in writing,
described in the previous sentence. Neither OpenTV nor any of its Subsidiaries
is indebted to any member of the MIH Group or any of their respective Affiliates
(other than OpenTV or any of its Subsidiaries), or any director, officer,
employee or agent of any member of the MIH Group or any of their respective
Affiliates (including OpenTV and its Subsidiaries).
2.18 Patents, Trademarks and Similar Rights.
(a) List of Patents, Trademarks and Similar Rights. As of the date of
this Agreement, Sections 2.18(a)(i)-(iv) of the Seller Disclosure Schedule set
forth complete and accurate lists of:
(i) all Intellectual Property registrations and issued
patents, or if a registration or patent has not been issued, all
applications for patents, and all
23
applications to register trademarks, trade names, service marks,
copyrights and domain names, and all extensions, renewals,
restorations, resuscitations, continuations, divisionals, reissues, and
reexaminations thereof, as well as all invention disclosure records for
which OpenTV has not filed for patent protection, in which OpenTV or
any of its Subsidiaries claim ownership, except that for those
invention disclosure records dated prior to January 20, 2000, the list
sets forth such records to the knowledge of the Seller Parties;
(ii) any material computer software and applications in
development by and owned by Open TV or its Subsidiaries, except that
all computer software and applications that are being developed by
OpenTV for Major Customers shall be identified;
(iii) all products, including, but not limited to, middleware,
applications, tools and porting kits, commercially sold or licensed by
OpenTV or its Subsidiaries and all types of services commercially
provided by OpenTV or its Subsidiaries; and
(iv) in the case of Intellectual Property not owned by OpenTV
or its Subsidiaries, all agreements under which any material
Intellectual Property is licensed to OpenTV or its Subsidiaries or
licensed by OpenTV or its Subsidiaries to a third party (the
"INTELLECTUAL PROPERTY LICENSES"), indicating the parties to each such
agreement, provided, however, that retail or generally available types
of licenses are excepted.
(b) No Infringement.
(i) There are no patents or patent applications owned by,
licensed from, or to the knowledge of Seller Parties licensed to, any
member of the MIH Group or its Controlled Affiliates, that is or would
be infringed by the business of OpenTV or its Subsidiaries as it has
been and/or is currently conducted or, to the knowledge of the Seller
parties, as proposed to be conducted (as reflected in the 2002 Budget);
(ii) there is no Intellectual Property owned by, licensed
from, or to the knowledge of Seller Parties licensed to any member of
the MIH Group or its Controlled Affiliates, that is or would be
infringed, violated or misappropriated by the past or present making,
having made, use, sale, offer for sale, importing or exporting of the
middleware and application products of OpenTV or any of its
Subsidiaries;
(iii) to the knowledge of the Seller Parties there is no
Intellectual Property owned by, or licensed to, or licensed from, any
member of the MIH Group or its Controlled Affiliates, that is or would
be infringed by the business of
24
OpenTV or its Subsidiaries as it has been and/or is currently conducted
or, to the knowledge of the Seller Parties, as proposed to be conducted
(as reflected in the 2002 Budget).
(c) Free Title and Liens. The Seller Parties represent and warrant that
OpenTV owns all the Intellectual Property identified and indicated in Sections
2.18(a)(i), (ii) and (iii) of the Seller Disclosure Schedule. Except as set
forth on Sections 2.18(c)(i)-(iii) of the Seller Disclosure Schedule:
(i) as of the date of this Agreement, with respect to the
Intellectual Property (other than patents, patent applications, or
invention disclosure records) owned by OpenTV and its Subsidiaries,
OpenTV or the appropriate Subsidiary thereof has good and valid title
thereto free and clear of all Liens or exclusive or escrow
arrangements, provided, however, that Intellectual Property (other than
patents, patent applications or invention disclosure records) jointly
owned are excepted but to the Seller's knowledge are set forth on
Section 2.18(c)(i) of the Seller Disclosure Schedule;
(ii) with respect to the patents, patent applications and
invention disclosure records owned by OpenTV or its Subsidiaries,
OpenTV or the appropriate Subsidiary thereof has good and valid title
thereto free and clear of (x) any obligations to license or assign, or
any obligations to grant a covenant not to xxx; (y) any Liens or
restrictions on title; or (z) any licenses or covenants not to xxx
identifying patents by number or group; excluding implied licenses; and
(iii) as of the date of this Agreement, with respect to all
Intellectual Property held by OpenTV or any of its Subsidiaries under
license, other than retail or generally available licenses, OpenTV or
the appropriate Subsidiary thereof has, to the knowledge of Seller
Parties, the right to use such Intellectual Property in the manner and
subject to limitations on the scope of such use as set forth in such
licenses, free from any Lien and not subject to any restrictions, other
than as set forth in such license agreement.
(iv) with respect to certain Intellectual Property rights and
agreements referred to on Schedule 2.18 to this Agreement, the Seller
Parties make to the Purchasers the representations, warranties and
covenants set forth in Schedule 2.18 to this Agreement.
(d) Protection of Intellectual Property. To the knowledge of the Seller
Parties, except as set forth on Sections 2.18(d)(ii) and (iii) of the Seller
Disclosure Schedule, to the extent that the Intellectual Property is material to
the business of OpenTV and its Subsidiaries:
(i) OpenTV or the appropriate Subsidiary thereof has taken
actions which in its reasonable business judgment are appropriate
("REASONABLE ACTIONS")
25
to protect such Intellectual Property, including filing the necessary
documents with the United States Patent and Trademark Office, or such
other filing offices, domestic or foreign, and duly registering with or
causing the respective Intellectual Property to be issued by such
filing offices;
(ii) with respect to such Intellectual Property rights that
have been applied for or filed with the relevant Governmental Entities,
or that have been registered or issued by such relevant Governmental
Entities, OpenTV or the appropriate Subsidiary thereof has taken
Reasonable Actions to protect and maintain, respectively, such
Intellectual Property rights under applicable Laws, and such
registrations, filings, issuances, and other actions remain in full
force and effect and (x) none of the material Intellectual Property
rights owned by OpenTV or any of its Subsidiaries or, to the knowledge
of the Seller Parties licensed to any of them, has expired or fallen
into the public domain; (y) as of the date of this Agreement, the
status of patents, patent applications and invention disclosure records
identified in Section 2.18(a) of the Seller Disclosure Schedule is
accurate; and (z) as of the date of this Agreement, the status of the
Intellectual Property identified in Section 2.18(a) of the Seller
Disclosure Schedule, to the Seller's knowledge, is accurate;
(iii) as of the date of this Agreement, there are no
allegations by any non-Governmental Entity third party to indicate such
Intellectual Property rights owned by OpenTV or any of its Subsidiaries
that have been applied for or filed with the relevant Governmental
Entities and that have not been registered or issued by such relevant
Governmental Entities, that such Intellectual Property rights are not
entitled to registration or issuance by the relevant Governmental
Entities; and
(iv) the Seller Parties, and to the knowledge of the Seller
Parties, OpenTV and its Subsidiaries, have complied with, are complying
with, and will comply with: (1) their duty of disclosure before the
United States Patent and Trademark Office, as defined by the relevant
rules and regulations governing such duty, in connection with the
prosecution of pending United States patent applications; and (2) any
comparable duty of disclosure before other patent offices around the
world, if any, in connection with the prosecution of patent
applications in those respective countries.
(e) Intellectual Property from Employees and Others.
(i) Since July 1, 1996, the employment policy of OpenTV, and,
since their respective acquisitions (if later than July 1, 1996), the
employment policies of its Subsidiaries, have required that the entire
right, title and interest of any and all Intellectual Property
conceived, created, invented, developed or caused to be
26
reduced to practice by an employee of OpenTV or any of its Subsidiaries
during the term of and which relates to such employee's employment with
OpenTV or such Subsidiary shall immediately and exclusively vest in
OpenTV or the appropriate Subsidiary thereof, and OpenTV and its
Subsidiaries have taken reasonable action to generally enforce such
employment policy.
(ii) A true and complete copy of OpenTV's employment policy
and all typical known past and current OpenTV employment agreement
forms implementing this policy is attached to Section 2.18(e)(ii) of
the Seller Disclosure Schedule.
(iii) As of the date of this Agreement, except for those
employees identified in Section 2.18(e)(iii) of the Seller Disclosure
Schedule, every current OpenTV employee employed since July 1, 1996,
has executed such applicable employment agreement which sets forth
therein a covenant and assignment implementing the policy set forth in
the first sentence of Section 2.18(e)(i).
(iv) Except for those individuals identified in Section
2.18(e)(iv) of the Seller Disclosure Schedule, OpenTV and its
Subsidiaries, have a policy (a copy of which is attached to Section
2.18(e)(iv) of the Seller Disclosure Schedule), to obtain and have
obtained, from (x) all engaged technical consultants and technical
contractors who contribute, or shall contribute, or to the knowledge of
the Seller Parties have contributed, to the creation or the development
of Intellectual Property for OpenTV and (y) all non-engaged technical
consultants and technical contractors who contribute, or shall
contribute, or to the knowledge of the Seller Parties have contributed,
to the creation or development of Intellectual Property for and
material to the business of OpenTV, valid written assignments to OpenTV
or one or more of its Subsidiaries of such consultant's or contractor's
rights to any contribution that OpenTV or its Subsidiaries do not own
by operation of Law, and OpenTV and its Subsidiaries have generally
enforced such policy. For the purpose of this subsection (iv) only, the
term "ENGAGED", as applied to technical consultants and technical
contractors, shall mean having a written engagement agreement.
(v) For those patents, patent applications and invention
disclosure records listed in Section 2.18(a)(i) of the Seller
Disclosure Schedule which do not identify OpenTV as the assignee, and
except for those records listed in Section 2.18(e)(v) of the Seller
Disclosure Schedule, OpenTV has obtained or, if not, the Seller Parties
shall procure prior to Closing without requiring or providing on the
part of OpenTV any additional compensation, obligation or consideration
unless with prior written approval from the Purchasers, the necessary
assignments to vest complete title of such patents, patent applications
and invention disclosure records in OpenTV.
27
(f) Trade Secrets. To the knowledge of the Seller Parties, OpenTV and
each of its Subsidiaries have taken reasonable steps to protect and preserve the
confidentiality of all of their trade secrets. Except as described in Section
2.18(f) of the Seller Disclosure Schedule, to the knowledge of the Seller
Parties, there are no unauthorized uses, disclosures or misappropriations of any
material OpenTV trade secret and, as of the date of this Agreement, there are no
unauthorized uses, disclosures or misappropriations of any non-material trade
secret.
(g) Intellectual Property Infringement. Except as disclosed in Sections
2.18(g)(i)-(iv) of the Seller Disclosure Schedule, (i) OpenTV's and its
Subsidiaries' activities, products and services as presently conducted do not,
and to the knowledge of the Seller Parties such activities, products and
services as contemplated to be conducted in the future will not, infringe upon
or otherwise violate, any of the patent rights of the Seller Parties, or to the
knowledge of the Seller Parties any Intellectual Property rights of any other
Person, or to the knowledge of the Seller Parties any Intellectual Property
rights of the Seller Parties, except in circumstances where OpenTV and/or its
Subsidiaries are fully indemnified for such infringement; (ii) (x) there are no
material claims or suits pending, no material notice provided, or to the Seller
Parties' knowledge there are no material legal proceedings or material claims
threatened, alleging that OpenTV or any of its Subsidiaries or any of their
respective activities, products or services infringe upon or constitute the
unauthorized use of any other Person's Intellectual Property, or challenging
OpenTV's or any of its Subsidiaries' ownership of, right to use, or the validity
or enforceability or effectiveness of any license of or relating to any
Intellectual Property and (y) as of the date of this Agreement, there are no
non-material claims or suits pending, no non-material notice provided, or to the
Seller Parties' knowledge there are no non-material legal proceedings or
non-material claims threatened, alleging that OpenTV or any of its Subsidiaries
or any of their respective activities, products or services infringe upon or
constitute the unauthorized use of any other Person's Intellectual Property, or
challenging OpenTV's or any of its Subsidiaries' ownership of, right to use, or
the validity or enforceability or effectiveness of any license of or relating to
any Intellectual Property; (iii) none of OpenTV or any of its Subsidiaries has
filed a claim against, provided notice to or taken any other action against any
Person claiming the infringement, violation, or unauthorized use by any Person
of any Intellectual Property of OpenTV or any of its Subsidiaries or licensed to
OpenTV or any of its Subsidiaries; and (iv) the execution and delivery of this
Agreement by the Seller Parties does not, and the consummation of the
transactions contemplated by this Agreement will not, result in the loss of
OpenTV's or its Subsidiary's rights in any Intellectual Property including but
not limited to those rights flowing from the Sun Sublicense and Thomson
Agreements, defined herein and, immediately upon Closing the Selling Parties
will have no rights to the Intellectual Property of OpenTV or its Subsidiaries.
(h) No Waiver of Privilege. To the knowledge of the Seller Parties,
OpenTV and its Subsidiaries have taken reasonable actions to maintain any
attorney-client privilege or other legal privilege with respect to oral and
written communications relating to Intellectual Property and legal claims and
defenses related thereto.
28
2.19 Minute Books. The Seller Parties have made available to the
Purchasers true and complete copies of the minute books of OpenTV and OpenTV
Sub. Such minute books contain summaries of all meetings of directors and
shareholders or actions by written consent since the later of (i) January 1,
1996 and (ii) the time of the applicable entity's date of incorporation or
organization, and such summaries are true and complete in all material respects
and reflect all transactions referred to in such minutes accurately in all
material respects.
2.20 Brokers' and Finders' Fees. None of the members of the MIH Group,
OpenTV or any Subsidiary of OpenTV has incurred, or will incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' fees or any similar charges in connection with this
Agreement or any of the transactions contemplated hereby, except that members of
the MIH Group, other than OpenTV or any of its Subsidiaries, have retained
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("MERRILL") for certain
purposes related to this Agreement. All fees and expresses of Merrill in
connection with the transactions contemplated by this Agreement shall be the
sole responsibility of members of the MIH Group other than OpenTV or any of its
Subsidiaries.
2.21 Private Placement.
(a) Each of the Seller Parties understands that the transfer of any
Liberty Consideration Shares by the Purchasers pursuant to this Agreement is
intended to be exempt from registration under the Securities Act pursuant to
Section 4(2) thereof.
(b) The Seller Parties (either alone or together with their advisors)
have sufficient knowledge and experience in financial and business matters so as
to be capable of evaluating the merits and risks of its investment in Liberty
Consideration Shares and are capable of bearing the economic risks of such
investment.
(c) The Seller Parties are acquiring Liberty Consideration Shares to be
acquired hereunder for their own account, for investment and not with a view to
the public resale or distribution thereof in violation of any federal, state or
foreign securities Law.
(d) The Seller Parties understand that the Liberty Consideration Shares
will be transferred in a transaction exempt from the registration or
qualification requirements of the Securities Act and applicable state securities
Laws, and that such securities must be held indefinitely unless a subsequent
disposition thereof is registered or qualified under the Securities Act and such
Laws or is exempt from such registration or qualification.
(e) The Seller Parties can bear the economic risk of (i) an investment
in the Liberty Consideration Shares indefinitely and (ii) a total loss in
respect of such investment.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchasers, jointly and severally, represent and warrant to the
Seller Parties as follows:
3.1 Organization. Each of the Purchasers (a) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (b) has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
(c) is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or license
necessary, except in the case of clause (c) where the failure to be so duly
qualified or licensed and in good standing is not reasonably likely to have (i)
material adverse effect on the business, financial condition or results of
operations of the Purchasers and their Subsidiaries, taken as a whole or (ii) a
material adverse effect on the ability of the Purchasers to perform their
obligations under, and consummate the transactions contemplated by, this
Agreement (either of the foregoing clauses (i) or (ii), a "PURCHASER MATERIAL
ADVERSE EFFECT").
3.2 Corporate Power, Authorization and Validity of Agreement. Each of
the Purchasers has all requisite corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance by the
Purchasers of this Agreement and the consummation by each of them of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Purchasers. This Agreement has been duly
executed and delivered by each of the Purchasers and is a valid and binding
obligation of each of the Purchasers, enforceable in accordance with its terms
(except insofar as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, or by principles governing the availability of equitable
remedies).
3.3 No Conflicts; Notices. The execution and delivery of this Agreement
do not, and, subject to the satisfaction of the conditions set forth in Sections
6.1 and 6.3 hereof, the consummation of the transactions contemplated hereby
will not, (a) violate or conflict with any provision of the Certificate of
Incorporation or Bylaws of either of the Purchasers or the equivalent
organizational documents of any of their respective Subsidiaries, (b) violate or
conflict with any Law applicable to the Purchasers or any of their respective
Subsidiaries or the properties or assets of the Purchasers or any of their
respective Subsidiaries, or (c) result in any breach or violation of, or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise to any right of termination, cancellation or acceleration of, or
result in the creation of any Lien on any of the properties or assets of the
Purchasers or any of their respective Subsidiaries pursuant to, or require any
Contract Consent of any party to, any Contract
30
applicable to the Purchasers or any of their respective Subsidiaries or the
properties or assets of the Purchasers or any of their respective Subsidiaries,
except, in the case of clauses (b) and (c) above, any such items that,
individually or in the aggregate, have not had and are not reasonably likely to
have a Purchaser Material Adverse Effect. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to the Purchasers or any of their
respective Subsidiaries in connection with the execution and delivery of this
Agreement by the Purchasers or the consummation by the Purchasers of the
transactions contemplated hereby, except for (i) compliance with and filings
under the HSR Act, (ii) compliance with and filings under applicable state
securities Laws and the securities Laws of any foreign country or under the
rules and regulations of any stock exchange or quotation service, (iii)
compliance with and filings and notifications under non-U.S. antitrust or
competition regulatory schemes or laws, (iv) as set forth in Section 3.6 of the
Purchaser Disclosure Schedule and (v) such consents, approvals, orders,
authorizations, registrations, declarations or filings the failure of which to
be made or obtained, individually or in the aggregate, is not reasonably likely
to have a Purchaser Material Adverse Effect.
3.4 Brokers' and Finders' Fees. None of the Purchasers or any of their
Affiliates have incurred, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or investment bankers' fees or any similar
charges in connection with this Agreement or any of the transactions
contemplated hereby, other than the fees and expenses of certain of its
advisors, with respect to which the Purchasers shall be solely liable.
3.5 Liberty Consideration Shares. Any Liberty Consideration Shares
delivered in full or partial payment of the Purchase Price (a) will be duly
authorized, validly issued, fully paid and non-assessable and, (b) when
delivered, will be free and clear of any Liens and not subject to any
Restrictions (other than (i) any Restrictions imposed by this Agreement, (ii)
Liens and Restrictions arising from acts of any member of the MIH Group or any
of their Affiliates and (iii) restrictions on transfer arising under the
Securities Act or applicable state securities Laws.
3.6 Liberty Reports and Financial Statements. The Purchaser Commission
Filings constitute all of the documents (other than preliminary materials) that
the Purchaser was required to file with the Commission since December 31, 2001
to the date of this Agreement. As of their respective dates, each of the
Purchaser Commission Filings complied in all material respects with the
applicable requirements of the Securities Act, the Exchange Act and the rules
and regulations under each of the Securities Act and the Exchange Act, and, at
the time filed, none of the Purchaser Commission Filings contained as of such
date any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. When
filed with the Commission, the financial statements included in the Purchaser
Commission Filings were prepared in accordance with GAAP consistently applied
(except as may be indicated therein or in the notes or schedules thereto), and
such financial statements fairly present the consolidated financial position of
the Purchaser and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash
31
flows for the periods then ended, subject, in the case of unaudited interim
financial statements, to normal, recurring year-end audit adjustments.
3.7 Private Placement.
(a) Each of the Purchasers understands that the sale of the Subject
Shares by Seller pursuant to this Agreement is intended to be exempt from
registration under the Act pursuant to Section 4(2) thereof.
(b) The Purchasers (either alone or together with their advisors) have
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the Subject
Shares and are capable of bearing the economic risks of such investment.
(c) The Purchasers are acquiring the Subject Shares to be acquired
hereunder for their own account, for investment and not with a view to the
public resale or distribution thereof in violation of any federal, state or
foreign securities Law.
(d) The Purchasers understand that the Subject Shares will be sold in a
transaction exempt from the registration or qualification requirements of the
Securities Act and applicable state securities Laws, and that such securities
must be held indefinitely unless a subsequent disposition thereof is registered
or qualified under the Securities Act and such Laws or is exempt from such
registration or qualification.
(e) The Purchasers can bear the economic risk of (i) an investment in
the Subject Shares indefinitely and (ii) a total loss in respect of such
investment.
3.8 Ownership of LDIG OTV. LDIG OTV is a holder of OpenTV A Ordinary
Shares and was previously a holder of Convertible Preference Shares (as defined
in the OpenTV Charter). LDIG OTV is an indirect wholly owned Subsidiary of
Liberty. At the time of its acquisition of the C-1 Convertible Preference Shares
of OpenTV in November 1999, at the time it acquired OpenTV A Ordinary Shares
upon the conversion of the C-1 Convertible Preference Shares of OpenTV, and at
all relevant times after each such action (the "RELEVANT PERIOD"), LDIG OTV was
a wholly owned Subsidiary of Liberty Digital, Inc. ("LDI"). At all times during
the Relevant Period, Liberty owned in excess of 50% of all the issued shares of
LDI.
3.9 Purchasers' Diligence. In connection with their review conducted
prior to the date of this Agreement of the assets and business of OpenTV and its
Subsidiary, the Purchasers have reviewed certain documents and records regarding
OpenTV made available to them by or on behalf of the Seller Parties and have had
discussions with, and the opportunity to ask questions relating to the business
of OpenTV of, certain members of management of OpenTV. In addition, prior to the
date hereof the Purchasers have reviewed the representations and warranties of
the Seller Parties set forth in this Agreement, as each such representation and
warranty has been modified by the items set forth in the section of the Seller
Disclosure Schedule
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corresponding to such representation and warranty. Based upon such review, as of
the date of this Agreement, the Purchasers are not aware of any breach of a
representation or warranty of the Seller Parties that would reasonably be
expected to prevent the Seller Parties from satisfying the condition to Closing
set forth in the second sentence of Section 6.3(a). This representation and
warranty is made on and as of the date of this Agreement and the Purchasers will
not be under any obligation to update or reaffirm this representation. Nothing
in this Section 3.9 shall prejudice in any way the Purchasers' right to continue
its investigation of OpenTV and its Subsidiaries following the date of this
Agreement and any information obtained during such future investigation shall
not affect the Purchasers' representation and warranty made in this Section 3.9.
ARTICLE IV
CONDUCT PENDING THE CLOSING
4.1 Conduct of Business of OpenTV and its Subsidiaries Pending Closing.
During the period prior to the Closing Date, the Seller Parties will use their
commercially reasonable best efforts to cause OpenTV and its Subsidiaries to
operate their respective businesses in the ordinary course consistent with past
practice, including (1) preserving intact their present business organizations,
(2) keeping available the services of their present officers and key employees
and (3) preserving their relationships with customers, suppliers, distributors,
licensors, licensees, and others providing revenue to OpenTV or its Subsidiaries
(PROVIDED, however, that the Seller Parties shall not be obligated to provide or
make available to OpenTV or any of its Subsidiaries any additional funding from
the Seller Parties or financing (including guarantees, letters of credit and
similar instruments by which the Seller Parties are bound) from the Seller
Parties, other than pursuant to agreements or instruments in existence as of the
date of this Agreement and other than as specifically contemplated by this
Agreement). Upon obtaining knowledge of the occurrence of any event or the
taking of any action by OpenTV or its Subsidiaries that (i) is outside the
ordinary course of business, (ii) is described in any of clauses (a) through (w)
below, or (iii) is reasonably likely to have a Seller Material Adverse Effect or
an OpenTV Material Adverse Effect, the Seller Parties shall promptly notify the
Purchasers in writing of such matter, which writing will include a complete, in
all material respects, description thereof. In addition to the foregoing, after
the date of this Agreement and prior to the Closing, except (x) as provided in
Schedule 4.1, (y) as specifically contemplated by this Agreement or (z) with the
prior written consent of the Purchasers, the Seller Parties will use
commercially reasonable best efforts to cause OpenTV and each of its
Subsidiaries not to:
(a) cause or permit any amendments to the OpenTV Charter, the OpenTV
Articles or the Memorandum of Association, Articles of Association, Certificate
of Incorporation, Articles of Incorporation, bylaws, or equivalent
organizational documents (including partnership agreements and limited liability
company operating agreements) of any of OpenTV's Subsidiaries;
33
(b) adopt any employee benefit, stock purchase or option plan or amend
any Employee Plan or accelerate, amend or change the period of exercisability or
vesting of options or other rights granted under its Employee Plans or authorize
cash payments in exchange for any options or other rights granted under any of
such plans, except, in each case, to the extent required by any applicable Law
or the existing terms of such Employee Plan;
(c) acquire by merging or consolidating with, or by purchasing a
substantial portion of the securities or assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets that are material, individually or in the aggregate, to the business of
OpenTV and its Subsidiaries taken as a whole;
(d) commence (including the initiation of counter-claim actions;
provided that, in the case of any counter-claim actions proposed to be initiated
by OpenTV (other than with respect to a Major Customer), the consent of the
Purchasers shall not be unreasonably withheld) any lawsuit, arbitration or
administrative proceeding (i) against a third party related to Intellectual
Property rights (including any rights under licenses relating thereto) or any
other lawsuit or administrative proceeding, in either case that is material to
OpenTV and its Subsidiaries, taken as a whole or (ii) against a Major Customer;
(e) sell, lease or otherwise transfer or dispose of any of its assets,
other than (i) the licensing of its Intellectual Property to customers in the
ordinary course of business consistent with past practice and upon terms that
would not otherwise require the Purchasers' consent or violate the terms of this
Agreement, and (ii) dispositions of assets that, individually or in the
aggregate, (x) are not material to the business of OpenTV and (y) having a fair
market value of less than $150,000;
(f) declare, set aside, or pay any dividend or other distribution to
its stockholders, or directly or indirectly redeem, retire, purchase or
otherwise acquire any of its capital stock or other securities or options,
warrants or other rights to acquire its capital stock (other than pursuant to
the Sun Exchange Agreement or the OpenTV Sub Exchange Plan or the repurchase by
OpenTV from OpenTV employees whose employment has been terminated of OpenTV A
Ordinary Shares pursuant to the terms of agreements as in effect on the date
hereof);
(g) (i) modify or change in any material respect any Disclosed
Contract, other than in the ordinary course of business (PROVIDED, that with
respect to any such Disclosed Contract from which OpenTV or its Subsidiaries
obtain revenue (a "REVENUE DISCLOSED CONTRACT"), the consent of the Purchasers
to such modification or change shall not be unreasonably withheld), (ii) modify
or change in any respect any Major Customer Contract or MFN Contract or any
Contract related to material Intellectual Property or the use of material
technology, (iii) terminate or fail to renew or extend (where such renewal or
extension is at the option of OpenTV or a Subsidiary of OpenTV and the terms of
such renewal or extension are set forth in the applicable Contract) any
Disclosed Contract (provided, that the Purchaser's consent to any such action
will not be
34
unreasonably withheld) or any Material Customer Contract or any Contract that is
a license for Intellectual Property, (iv) offer to enter into, or enter into, a
Contract with any Person where the terms and provisions so offered, or the terms
and provisions of the Contract to be entered into, would give any other Person
(an "MFN BENEFICIARY") that is a party to any Contract with OpenTV or its
Subsidiaries the right to require at any time that the terms and conditions of
such MFN Beneficiary's Contract with OpenTV or its Subsidiaries be adjusted,
changed or modified (including retroactively) or that Contract be terminated;
(v) terminate or modify or change in any material respect any agreement setting
forth a covenant or assignment implementing the policy set forth in the first
sentence of Section 2.18(e)(i); or (vi) enter into any Contract that provides,
or amend, modify or change any existing Contract to provide, (A) another party
with "most favored nations" (as such term is customarily understood in the cable
television and satellite television industries) terms and conditions ("MFN
TERMS"), (B) that OpenTV or its Subsidiaries would be required to exclusively
use the products or services provided by another party (or Affiliate thereof) or
a specified third party (or refrain from using the products and services of any
Person other than such other party or such specified Person) within any
geographic area or line of products or services, (C) for the licensing or
granting to any other Person of the exclusive right (within any geographic area
or line of products or services) to use any of OpenTV's owned or licensed
Intellectual Property related to patents or material technology, unless the
terms of such agreement provide that such exclusive right expires or
automatically terminates within six months of the date of signing of such
agreement and is not thereafter renewed or renewable by any other party thereto,
(D) that OpenTV or any of its Subsidiaries will not xxx or otherwise institute
legal action against any Person for any reason, (E) for the sale or
cross-licensing of Intellectual Property related to patents of OpenTV with any
other Person or for grant-backs of rights to any Intellectual Property related
to patents in connection with the acquisition of such Intellectual Property
related to patents by OpenTV or its Subsidiaries, (F) any agreements with third
parties for the exchange and/or protection of confidential information unless
such agreements include provisions prohibiting such other Persons from
soliciting or hiring officers or employees of OpenTV or its Subsidiaries for a
period of not less than 18 months (subject to customary exceptions relating to
general advertising) (PROVIDED, that the Purchasers will not unreasonably
withhold consent to the entering into of such agreements), (G) rights that bind
or purport to bind any Person (other than any Subsidiary of OpenTV) that is not
a party to such Contract or (H) any provisions requiring OpenTV or any of its
Subsidiaries to indemnify any Person (other than customary indemnity provisions
that are consistent with general industry practice); PROVIDED, HOWEVER, that
customer contracts either (x) associated with the sale or license of an OpenTV
Product or service or (y) the licensing of Intellectual Property (other than
patents identified by number or group) that are entered into in the normal
course of business, shall be excluded from the restrictions of subsections (ii),
(iii) and (v) of this clause (g).
(h) revalue any of its assets, including writing down the value of any
assets or writing off any notes or accounts receivable, except as required by
GAAP;
(i) create any Lien on any of its assets other than Permitted
Encumbrances;
35
(j) waive or release any right or claim of substantial value by OpenTV
or any of its Subsidiaries;
(k) pay, discharge or satisfy any claim, liability or obligation, other
than in the ordinary course of business consistent with past practice;
(l) issue or sell any of its capital stock or other securities or
membership or other ownership interests, exchangeable or convertible securities,
options, warrants, puts, calls or other rights to acquire capital stock or other
securities or other ownership interests of OpenTV or any of its Subsidiaries
(including any phantom shares, phantom equity interests, stock or equity
appreciation rights or similar rights) except (i) that OpenTV may grant to any
newly hired employee of OpenTV or its Subsidiaries options to purchase up to an
aggregate of 93,780 OpenTV A Ordinary Shares in accordance with the terms of the
OpenTV Stock Option Plans in the manner previously disclosed to the Purchasers
and such grants are made in a manner consistent with past practice (the
"PERMITTED OPTIONS"); (ii) for OpenTV A Ordinary Shares issuable (A) upon
conversion of OpenTV B Ordinary Shares outstanding at March 31, 2002 (or
thereafter issued pursuant to the Sun Exchange Agreement) in accordance with the
provisions of the OpenTV Charter, (B) upon the exercise of Outstanding OpenTV
Stock Options, (C) upon the exercise of Outstanding OpenTV Warrants, (D) upon
the exercise of exchange rights under the Exchange Plan with respect to shares
of the common stock of OpenTV Sub that were issued and outstanding as of March
31, 2002 or options to purchase shares of common stock of OpenTV Sub held by
employees of OpenTV or OpenTV Sub as of October 23, 1999; (E) pursuant to the
ESPP and (F) the issuance of up to 626,872 OpenTV A Ordinary Shares pursuant to
the earn-out provisions contained in the Static Share Purchase Agreement and
(iii) OpenTV B Ordinary Shares issuable upon the exercise of exchange rights
under the Sun Exchange Agreement;
(m) incur any indebtedness for borrowed money or assume or guarantee
any such indebtedness, other than (1) (x) in the ordinary course of business and
consistent with past practice and (y) in an aggregate amount which does not
exceed US $100,000 or (2) in a transaction that is otherwise permitted pursuant
to clause (n) below;
(n) make any loan or cash advance to, or engage in any transaction
with, (i) any Affiliate of OpenTV or any of its Subsidiaries (in each case,
other than OpenTV Sub, Spyglass Integration, Inc. and wholly owned Subsidiaries
of OpenTV), (ii) any member of the MIH Group or any Affiliate of any member of
the MIH Group (other than OpenTV or its Subsidiaries), or (iii) any Strategic
Partner in each case described in (i) or (ii) above other than any required by
the terms of Contracts in place as of the date of this Agreement and listed in
Section 4.1 of the Seller Disclosure Schedule;
(o) make any loan or cash advance to, or engage in any transaction with
(i) any director, officer, employee, contractor or consultant of or to OpenTV or
any of its Subsidiaries, (ii) any director, officer, employee, contractor or
consultant of or to any member of the MIH Group or any of their Affiliates
(other than OpenTV or its Subsidiaries) or (iii) any director,
36
officer, employee, contractor or consultant of or to any Strategic Partner,
other than, in the case of any directors (other than any such director that is a
director, officer or employee of a member of the MIH Group or any of its
Affiliates (other than OpenTV and its Affiliates), officers or employees of
OpenTV, OpenTV Sub or Subsidiaries of OpenTV, travel and other business expenses
advanced to such directors, officers or employees in the ordinary course of
business consistent with past practice;
(p) enter into any employment, consulting, contractor, agency or
commission agreement (other than non-disclosure agreements, assignments of
inventions and similar agreements) and other than standard non-exclusive
consulting, agency, contractor or commission agreements entered into with the
Purchasers' consent, which consent will not be unreasonably withheld, make any
amendment or modification to any existing such agreement or grant any increases
in commission structure, salary, wage, benefit or other remuneration payable or
to become payable (including any grants of options, warrants or other stock
based or indexed compensation to any of its current or former officers,
directors or Senior Management employees, or agents) or grant any increases in
any bonus or severance payment or arrangement made to, for or with any of its
officers, directors, Senior Management employees, contractor or agents or grant
any supplemental retirement plan or program or special remuneration for any of
its officers, directors, Senior Management employees, contractor or agents;
PROVIDED, HOWEVER, that OpenTV shall be permitted to do any of the foregoing
with respect to employees (who are not directors, officers, or members of Senior
Management) so long as in the ordinary course of business consistent with past
practice (including regular salary and performance bonus increases resulting
from promotions); provided, FURTHER, that nothing herein shall be deemed to
authorize the promotion of any employee to a position of Senior Management;
(q) make, revoke or amend any Tax election other than in the ordinary
course of business consistent with past practice;
(r) make any material change in (i) any accounting method, practice or
policy (including any change in revenue and recognition policies or depreciation
or amortization policies or rates) except as required by GAAP as in effect at
the time of such change or (ii) any financial reporting or Tax practice or
policy;
(s) execute any waiver of restrictions on assessment or collection of
any material Tax;
(t) enter into or amend any agreement or settlement with any Tax
authority with respect to any material Tax liability;
(u) make any capital contribution to any Person other than as required
pursuant to the terms of an OpenTV Investment Agreement listed on Section 2.6(a)
of the Seller Disclosure Schedule each of which as in effect on the date hereof,
or acquire any securities or other debt or equity interests in any other Person,
other than the acquisition of shares of common stock of
37
OpenTV Sub pursuant to the Sun Shareholder Agreement or in connection with
treasury cash management policies in the ordinary course consistent with past
practice;
(v) terminate the employment of any member of Senior Management, other
than (i) because such individual is convicted of a felony involving moral
turpitude, (ii) for "cause" as defined in such individual's employment agreement
or (iii) as consented to by the Purchasers, which consent will not be
unreasonably withheld; or
(w) enter into an agreement to do any of the foregoing;
PROVIDED, HOWEVER, that nothing in this Section 4.1 shall prohibit (or require a
Seller Party to prohibit) any director of OpenTV from exercising (solely in his
or her capacity as a director of OpenTV) fiduciary duties to OpenTV or its
stockholders (other than the Seller Parties) under applicable Law; PROVIDED,
FURTHER, that nothing in the immediately preceding proviso shall relieve or be
deemed to release the Seller Parties from any obligations hereunder that can be
performed without causing a director of OpenTV to violate such fiduciary duties.
4.2 No Solicitation; Acquisition Proposals.
(a) The Seller Parties have ceased all, and will not engage in any,
discussions and/or negotiations with any Persons directly or indirectly relating
to the sale or other disposition of all or a portion of the Subject Shares, or
the voting thereof (including voting such shares for an amendment to the OpenTV
Charter to facilitate a sale of the Subject Shares) (an "ALTERNATE
TRANSACTION"), other than as required under the right of first refusal
provisions of the Sun Shareholders' Agreement. The Seller Parties will not,
except as required by the Sun Shareholders' Agreement, directly or indirectly
through any officer, director, employer, representative, agent, financial
advisor or otherwise, solicit, initiate or encourage inquiries or proposals or
offers from any Person regarding an Alternate Transaction.
(b) The Seller Parties will not, and will use their commercially
reasonable best efforts to cause OpenTV and each of its Subsidiaries not to,
directly or indirectly, through any officer, director, employee, representative,
agent, financial advisor or otherwise, solicit, initiate or encourage inquiries
or submission of proposals or offers from any Person relating to any sale or
other disposition of all or any portion of the assets, business, properties
(other than immaterial or insubstantial assets, the licensing of products and
technology and the provision of services, in each case in the ordinary course of
business), patents, patent applications or other material Intellectual Property
(including covenants not to xxx, cross-licenses and exclusive licenses, but
excluding any and all licenses to Intellectual Property other than exclusive
licenses, and other than non-exclusive licenses identifying patent rights by
number or group, given in the ordinary course of business consistent with past
practice) of, or any equity interest in, OpenTV or any of its Subsidiaries or
any business combination involving OpenTV or any of its Subsidiaries, whether by
merger, consolidation, purchase or sale of assets, tender offer or otherwise or
participate in any negotiation regarding, or furnishing to any other Person any
information with respect to, or otherwise cooperate in any way with, or assist
in, facilitate or encourage, any effort
38
or attempt by any other Person to do or seek to do any of the foregoing (any of
the foregoing, an "EXTRAORDINARY TRANSACTION"); PROVIDED, HOWEVER, that nothing
in this Section 4.2 shall prohibit (or require a Seller Party to prohibit) any
director of OpenTV from exercising (solely in his or her capacity as a director
of OpenTV) fiduciary duties to OpenTV or its stockholders (other than the Seller
Parties) under applicable Law; PROVIDED, FURTHER, that nothing in the
immediately preceding proviso shall relieve or be deemed to release the Seller
Parties from any obligations hereunder that can be performed without causing a
director of OpenTV to violate such fiduciary duties.
(c) The Seller Parties will vote all shares of voting stock of OpenTV
or of any other Person held by any of the Seller Parties and their respective
Affiliates against any Extraordinary Transaction or Alternate Transaction that
is presented or proposed at any time after the date of this Agreement and prior
to the termination of this Agreement. The Seller Parties will notify the
Purchasers immediately if any inquiries or proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated or continued with the Seller Parties or, to the knowledge of the
Seller Parties, OpenTV or any of its Subsidiaries, in each case in connection
with any of the foregoing. The Seller Parties will use their respective best
efforts to cause OpenTV and its Subsidiaries to notify the Seller Parties
immediately upon receipt of any such inquiry or proposal.
(d) For the avoidance of doubt, the sale of the Subject Shares to the
Purchasers pursuant to this Agreement shall constitute neither an Alternative
Transaction nor an Extraordinary Transaction.
4.3 Notice of Breach. Each Party hereto shall promptly give written
notice to the other Parties hereto upon becoming aware of the occurrence or, to
its knowledge, impending or threatened occurrence, of any event that is
reasonably likely to cause or constitute a breach of any of such Party's (or, in
the case of the Seller Parties, any of the Parent Parties') representations,
warranties or covenants under this Agreement or under the Undertakings Letter,
as applicable.
4.4 No Conversion. Neither Seller Party shall cause any of the Subject
Shares that are OpenTV B Ordinary Shares to be converted into OpenTV A Ordinary
Shares.
4.5 Information. From and after the date hereof to the Closing or the
earlier termination of this Agreement, the Seller Parties shall notify Liberty
promptly following such time that OpenTV or any of its Subsidiaries enters into
any Disclosed Contract or Material Contract or obtains any patents and shall
make available for Liberty's review any such Disclosed Contracts or Material
Contracts or information regarding such new patents. At the Closing, the Seller
Parties shall provide Liberty with a list of all such Disclosed Contracts and
Material Contracts entered into, and all such patents obtained, by OpenTV and
its Subsidiaries after the date hereof.
39
ARTICLE V
ADDITIONAL COVENANTS
5.1 Access to Information. Upon reasonable notice, and subject to the
terms and conditions hereof, the Seller Parties will, and will use commercially
reasonable best efforts to cause OpenTV and each of its Subsidiaries to, afford
the Purchasers and their accountants, attorneys and other representatives
reasonable access during normal business hours (and at such other times as the
Parties hereto agree) during the period prior to the Closing to (a) all of the
Seller Parties' properties, books, Contracts, commitments and records relating
to OpenTV and its Subsidiaries, (b) all properties, books, Contracts,
commitments and records of OpenTV and its Subsidiaries, and (c) all other
information in the possession of the Seller Parties, OpenTV and OpenTV's
Subsidiaries concerning the business, properties and personnel of OpenTV and its
Subsidiaries as the Purchasers may reasonably request; PROVIDED THAT the Parties
will reasonably cooperate to minimize, to the extent practicable, the disruption
in the day-to-day activities of OpenTV and its Subsidiaries as a result of the
investigation described in this sentence. No information or knowledge obtained
in any investigation pursuant to this Section 5.1 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the Parties hereto to consummate the transactions contemplated
hereby.
5.2 Confidentiality.
(a) Unless otherwise agreed to in writing by the Party disclosing
Confidential Information (as defined below) (or whose Representatives (as
defined below) disclosed) (a "DISCLOSING PARTY"), each Party receiving such
disclosure (a "RECEIVING PARTY"), from and after the Closing, shall, and shall
cause its Affiliates, directors, officers, employees and agents (such Affiliates
and other Persons with respect to any Party are collectively referred to as such
Party's "REPRESENTATIVES") to, (i) keep all Confidential Information of the
Disclosing Party confidential and not disclose or reveal any such Confidential
Information to any Person other than those Representatives of the Receiving
Party who need to know such Confidential Information and (ii) not use
Confidential Information in any manner detrimental to the Disclosing Party.
(b) For purposes of this Section 5.2, "Confidential Information" of a
Party means all confidential or proprietary information about such Party that is
furnished by it or its Representatives to the other party or the other party's
Representatives, regardless of the manner in which it is furnished, unless (i)
the Disclosing Party indicates otherwise in writing, (ii) the information was or
becomes generally available to the public other than as a result of a disclosure
in violation of this paragraph by the Receiving Party or its Representatives,
(iii) to the knowledge of the Receiving Party and its Controlled Affiliates, the
information was or becomes available to the Receiving Party or its
Representatives on a non-confidential basis from a source other than the
Disclosing Party or (iv) to the knowledge of the Receiving Party and its
Controlled Affiliates, the information was within the possession of the
Receiving Party or any of its Representatives prior to being furnished by or on
behalf of the Disclosing Party, provided that
40
with respect to clauses (iii) and (iv) above the source of such information was
not bound by a confidentiality agreement or other legal obligation in respect
thereof. Notwithstanding the foregoing, if the Receiving Party is required
(other than as a result of action taken by it or its Representatives primarily
for the purpose of causing such disclosure requirements to arise) in any
judicial or administrative proceeding or by any regulatory or judicial authority
or pursuant to any applicable Law (including the rules and regulations of the
Commission, the JSE, the Euronext Amsterdam stock exchange or of any securities
exchange or association on which such Receiving Party's securities are traded
(including pursuant to any listing agreement)) to disclose any Confidential
Information, then any disclosure of such information to the extent so required
shall not be prohibited by this paragraph; PROVIDED, that such disclosure shall
not affect a Receiving Party's liability for a breach of its obligations in
accordance with the terms of the following two sentences. The Receiving Party
shall give the Disclosing Party prompt written notice of any disclosure of
Confidential Information pursuant to the immediately preceding sentence,
including the circumstances requiring such disclosure, which notice shall be (to
the extent permitted by any applicable judicial or administrative order or
applicable Law requiring such disclosure) delivered sufficiently prior to such
disclosure to permit the Disclosing Party to seek an appropriate protective
order or other relief. The Receiving Party agrees to reasonably cooperate with
the Disclosing Party, at the Disclosing Party's expense in connection with
obtaining such protective order or other relief. Confidential Information shall
be deemed not to include information relating to OpenTV and its Subsidiaries or
their respective businesses and assets, which information is subject to the
restrictions set forth in (x) prior to the Closing, the Letter Agreement, dated
April 6, 2002, as extended from time to time prior to the date of this
Agreement, among MIHL, OTVH and Liberty (the "LETTER AGREEMENT"), and (y) from
and after the Closing, Section 5.9(b).
5.3 Publicity. The Purchasers and the Seller Parties will reasonably
cooperate with each other in connection with the issuance of mutually acceptable
press releases to be issued on or promptly after the date of this Agreement
announcing the transactions contemplated hereby. Each of the Parties agrees not
to, and to cause each of their respective Subsidiaries (including, in the case
of the Seller Parties, the other members of the MIH Group) not to, and will use
commercially reasonable best efforts to cause OpenTV and its Subsidiaries not
to, issue, or cause or permit to be issued, any press release or other public
statement regarding this Agreement or the transactions contemplated hereby
without consulting with the other Parties prior to making such release or
statement , except, if, in the judgment of the disclosing Party, such release or
statement may be required by Law (including the rules and regulations of the
Commission) or by any securities exchange or association on which such Party's
securities are traded (including pursuant to any listing agreement), in which
case the Party required to make the release or announcement shall allow the
other Party reasonable time to comment on such release or announcement (so as to
confirm the accuracy of any statements therein regarding such other Party, among
other things) in advance of such issuance; PROVIDED, HOWEVER, that each of the
Seller Parties and the Purchasers may make internal announcements to their
respective employees that are consistent with the Parties' prior public
disclosures regarding the transactions contemplated hereby.
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5.4 Cooperation.
(a) Subject to the terms and conditions of this Agreement and
applicable Law, each of the Purchasers, and the Seller Parties shall use its
commercially reasonable best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement as soon as reasonably practicable, including such actions or things as
any other Party may reasonably request in order to cause any of the conditions
to such Party's obligation to consummate the transactions contemplated by this
Agreement to be satisfied. Without limiting the generality of the foregoing,
each of the Parties shall (and each shall cause its directors, officers and
Subsidiaries, and use its commercially reasonable best efforts to cause its
Affiliates (including, in the case of the Seller Parties, OpenTV and its
Subsidiaries), employees, agents, attorneys, accountants and representatives,
to) consult and fully cooperate with and provide reasonable assistance to each
other in (i) taking such actions as may reasonably be required under applicable
state securities or blue sky Laws in connection with the transactions
contemplated by this Agreement; (ii) using its commercially reasonable best
efforts to obtain all required consents, approvals, waivers, clearances,
licenses, permits, authorizations, registrations, qualifications, or other
permissions or actions by, and to give all required notices to and to make all
required filings with and applications and submissions to, any Governmental
Entity or other Person, in each case required in order to cause any of the
conditions to each other Party's obligation to consummate such transactions to
be satisfied; (iii) filing all notification and report forms required under the
HSR Act and responding to any requests for additional information made by any
Governmental Entity pursuant to the HSR Act and cooperating with each other
Party in complying with the requirements of the HSR Act; (iv) filing all
notification, report and other forms or filings required under foreign antitrust
or competition law or set forth on SCHEDULE 5.4; (v) using commercially
reasonable efforts to cause the lifting of any permanent or preliminary
injunction or temporary restraining order or other similar order issued or
entered by any court or other Governmental Entity (an "INJUNCTION") preventing
the consummation of the transactions contemplated by this Agreement; (vi)
providing all such information about such Party, its Subsidiaries and its
officers, directors, partners and Affiliates, and making all applications and
filings, as may be necessary or reasonably requested in connection with any of
the foregoing; and (vii) in general, using commercially reasonable efforts to
consummate and make effective the transactions contemplated by this Agreement.
Each of the Seller Parties and the Purchasers shall furnish to the others such
necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of any filing or submission that is
required by any Governmental Entity in connection with the transactions
contemplated by this Agreement. The Seller Parties and the Purchasers shall keep
each other apprised of the status of any communications with, and any inquiries
or requests for additional information from, any Governmental Entity and shall
use commercially reasonable best efforts to comply promptly with any valid
inquiry or request and provide any supplemental information validly requested in
connection with the filings made hereunder. Each party shall use its
commercially reasonable best efforts to obtain any clearance required by any
Governmental Entity for the consummation of the transactions contemplated by
this Agreement. Notwithstanding the
42
foregoing, in making any such filing and in order to obtain any consent,
approval, waiver, clearance, license, permit, authorization, registration,
qualification, or other permission or action or the lifting of any Injunction
referred to in the preceding sentence, the Parties and their respective
Affiliates shall not be required to (A) pay any consideration, except filing or
application fees, (B) surrender, modify or amend in any respect any License or
Contract (including this Agreement), (C) hold separately (in trust or
otherwise), divest itself of, or otherwise rearrange the composition of, any of
its assets, (D) agree to any limitations on any such Person's freedom of action
with respect to future acquisitions of assets or with respect to any existing or
future business or activities or on the enjoyment of the full rights of
ownership, possession and use of any asset now owned or hereafter acquired by
any such Person, or (E) agree to any of the foregoing or any other conditions or
requirements of any Governmental Entity or other Person, in each case to the
extent that doing so would be adverse or burdensome to such Person in any
material respect. Prior to making any application to or filing with any
Governmental Entity or other Person in connection with this Agreement, each
Party shall provide the other Parties with drafts thereof and afford the other
Parties a reasonable opportunity to comment on such drafts.
(b) The Parties will cooperate with and assist one another in any
challenge by any Person of the applicability to the transactions contemplated by
this Agreement of any state takeover Law (or similar Laws of any other
jurisdiction) and, if any additional steps are necessary, will take all
reasonable steps to exempt the transactions contemplated by this Agreement from
any applicable state takeover Law or similar Law of any other jurisdiction.
(c) Each Seller Party shall use commercially reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things reasonably necessary, proper or advisable in order to obtain (i) the
waiver of Sun TSI Subsidiary, Inc. ("SSI") of its rights of first refusal on a
transfer of Seller's Subject Shares pursuant to Section 3.4 (and related
sections) of the Sun Shareholders' Agreement (PROVIDED, THAT such commercially
reasonable best efforts shall not require the Seller Parties to pay or provide
any monetary or non-monetary consideration, or otherwise incur any liability or
obligation in favor of, to SSI or its Affiliates in connection with obtaining
such waiver) and (ii) the approval, if required, of the Exchange Control
Department of the South African Reserve Bank and any approval by the
stockholders of any member of the MIH Group for the transactions contemplated by
this Agreement. Each of the Seller Parties agrees to vote and to cause its
Subsidiaries to vote (or, in either case, duly consent in writing) all voting
securities owned by such Person in any member of the MIH Group in favor of such
matters as are required or reasonably necessary to be approved by security
holders of any such member of the MIH Group in order to effectuate the
transactions contemplated by this Agreement and to take all such other action
reasonably related thereto (including, attending any meeting of the security
holders of any such member of the MIH Group and casting the maximum number of
votes attributable to voting securities held by it in favor of the transactions
contemplated hereby or such other proposals to security holders as are
reasonably necessary to effectuate the transactions contemplated hereby) in
order to cause there to be obtained all corporate and other approvals and
authorizations reasonably necessary for the consummation of
43
the transactions contemplated hereby. The Seller will deliver or cause to be
delivered to OpenTV and SSI immediately following the issuance on the date of
this Agreement of the press release by the Seller Parties announcing the
execution of this Agreement, a written notice pursuant to Section 3.4 of the Sun
Shareholders' Agreement offering to sell the Subject Shares to SSI at the price
set forth herein and describing the relevant terms hereof and will take such
other actions as are necessary to commence the Offer Period (as defined in the
Sun Shareholders' Agreement).
5.5 Tag-Along Rights Under Investors' Rights Agreement.
(a) Promptly following the execution and delivery of this Agreement,
the Seller Parties shall cause to be delivered to each Person (a "TAG-ALONG
HOLDER") that is entitled to exercise "Tag-Along" rights pursuant to Section 22
of the Investors' Rights Agreement ("TAG-ALONG RIGHTS") as a result of the
transactions contemplated by this Agreement written notice (a "SALE NOTICE")
complying with Section 22 of the Investors' Rights Agreement and in a form
proposed by the Seller Parties and reasonably acceptable to the Purchasers. If
the Tag-Along Holders electing to participate ("TAG-ALONG SELLERS") are entitled
pursuant to the terms of the Investors Rights Agreement to sell, or if Tag-Along
Holders demand to sell pursuant to Section 22 of the Investors Rights Agreement
and such demand is contested by the Seller Parties and is not resolved prior to
the date the Parties are otherwise prepared to close, more than an aggregate of
4,205,636 OpenTV Ordinary Shares (the "ESTIMATED TAG-ALONG SHARES" and such
number of OpenTV Ordinary Shares referred to in this sentence, if any, in excess
of the Estimated Tag-Along Shares, the "EXCESS TAG-ALONG SHARES"), then the
Seller shall (a) first reduce the number of Subject Shares that are OpenTV A
Ordinary Shares by the lesser of the number of Excess Tag-Along Shares and
365,460 and (b) to the extent the number of Excess Tag-Along Shares exceeds
365,460, reduce (the "B SHARE REDUCTION") the number of Subject Shares that are
OpenTV B Ordinary Shares by an amount equal to the difference of (A) the number
of Excess Tag-Along Shares MINUS (B) 365,460 (the "EXCESS B SHARES"). If a B
Share Reduction occurs, Seller hereby agrees to convert the Excess B Shares into
OpenTV A Ordinary Shares prior to any sale or other disposition of Excess B
Shares; PROVIDED, THAT Seller shall use reasonable efforts to notify Liberty of
such proposed conversion prior to effecting such conversion. Seller hereby
agrees that it will not Transfer a number of OpenTV A Ordinary Shares that are
Excess Tag-Along Shares or that are OpenTV A Ordinary Shares received upon the
conversion of Excess B Shares in any Trading Day that is more than (1) in the
case of a Transfer that is not executed in a manner that would be reflected in
the reported volume of trading in OpenTV A Ordinary Shares on the NASDAQ Stock
Market or the Euronext Amsterdam Stock Market, a number of shares equal to the
average daily reported volume of trading in OpenTV A Ordinary Shares on the
NASDAQ Stock Market and the Euronext Amsterdam Stock Market, computed on an
aggregate basis, during the four calendar weeks preceding such Trading Day, (2)
in the case of a Transfer that is executed in a manner that would be reflected
in the reported volume of trading in OpenTV A Ordinary Shares on the NASDAQ
Stock Market, a number of shares equal to 15% of the average daily reported
volume of trading in OpenTV A Ordinary Shares on the NASDAQ Stock Market during
the four calendar weeks preceding such Trading Day and (3) in the case of a
44
Transfer that is executed in a manner that would be reflected in the reported
volume of trading in OpenTV A Ordinary Shares on the Euronext Amsterdam Stock
Market, a number of shares equal to 15% of the average daily reported volume of
trading in OpenTV A Ordinary Shares on the Euronext Amsterdam Stock Market
during the four calendar weeks preceding such Trading Day. LDIG OTV agrees that
it will not elect to exercise its rights under Section 22 of the Investors'
Rights Agreement with respect to the sale of the Subject Shares to the
Purchasers pursuant to this Agreement (but reserves the right to elect to
exercise such rights in connection with any sale of OpenTV Ordinary Shares to
SSI pursuant to SSI's exercise of its rights under the Sun Shareholders'
Agreement or otherwise to any other Person and such election not to exercise
Tag-Along Rights on the sale of the Subject Shares to the Purchasers shall not
be deemed to terminate LDIG OTV's rights with respect to the subsequent exercise
of Tag-Along Rights in the event the transactions contemplated hereby are not
consummated). "TOTAL TAG-ALONG SHARES" means the actual number of OpenTV
Ordinary Shares sold by the Tag-Along Sellers pursuant to the Tag-Along Rights
as a result of the transactions contemplated by this Agreement. The closing of
the purchase of the Total Tag-Along Shares shall be conditioned upon the
concurrent or prior consummation of the Purchaser' purchase of the Subject
Shares pursuant to this Agreement. Any OpenTV Ordinary Shares purchased pursuant
to this subsection (a) and any reduction in the number of Subject Shares to be
purchased, shall be allocated between the Purchasers as the Purchasers may
determine.
(b) Each Tag-Along Seller who desires to accept the offer to sell its
OpenTV Ordinary Shares will be required to become a party to or otherwise bound
by the terms and conditions of this Agreement in accordance with the applicable
terms of the Investors' Rights Agreement and each Party agrees to reasonably
cooperate, take all reasonably necessary actions and enter into a supplement or
amendment to this Agreement complying with Section 22 of the Investors' Rights
Agreement and that is otherwise reasonably acceptable to the Seller Parties and
the Purchasers, in order to cause the Tag Along Sellers to become parties to and
bound by this Agreement and otherwise to implement the requirements of Section
22 of the Investors' Rights Agreement.
(c) Nothing contained in this Section 5.5 shall obligate or require the
Purchasers to purchase a number of OpenTV Ordinary Shares in excess of the
number of Subject Shares plus the number of Estimated Tag-Along Shares.
5.6 Filing of Form 20-F. The Seller Parties shall cause Open TV to file
its Annual Report on Form 20-F for the year ended December 31, 2001 on or before
the date such Annual Report on Form 20-F is required to be filed with the
Commission. The audited financial statements included in such Annual Report on
Form 20-F shall be identical to the 2001 Financial Statements delivered to the
Purchasers on May 3, 2002, with only such changes, additions or amendments
expressly contemplated by Section 2.8(b) hereof. Such Annual Report on Form
20-F, when filed, will comply, in all material respects, with the rules and
regulations of the Commission relating to the filing of Annual Reports by
foreign private issuers.
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5.7 Waiver. The Seller agrees that, from and after the Closing, it
shall not exercise, or seek to exercise, any rights it may have pursuant to the
OpenTV Sub Stockholders' Agreement
5.8 Board Resignations. Immediately prior to the Closing, and in the
following order, (a) the Seller shall cause three of its representatives on
OpenTV's board of directors to resign from OpenTV's board of directors, (b) the
Seller shall cause the vacancies created by such resignations to be filled with
individuals designated by Liberty and (c) the Seller shall cause its remaining
representatives on OpenTV's board of directors and the board of directors or
similar governing body of each Subsidiary of OpenTV to resign from each such
board of directors or similar governing body.
5.9 Non-Competition; Solicitation of Employees: Exclusivity;
Confidentiality.
(a) (i) During the period commencing on the date hereof and ending upon
the earlier of the third anniversary of the Closing or the termination of this
Agreement (the "RESTRICTED PERIOD"), each of the Seller Parties and, pursuant to
the Undertakings Agreement, the Parent Parties (each, a "RESTRICTED PARTY")
agrees that it will not, directly or indirectly through its Controlled
Affiliates, directly or indirectly engage or participate in, or acquire an
equity interest in any Person which engages or participates in, a Restricted
Business, other than in accordance with the provisions in this Section 5.9. The
term "Restricted Business" shall mean (x) the business of creating, developing,
acquiring (by license or otherwise), marketing, selling or licensing interactive
television "runtime" or "middleware" operating software (including related
software, related hardware and related software tools) for use by multi-channel
television network operators, related hardware suppliers and related application
developers and (y) to the extent not included in clause (x) above, the
interactive television business as currently conducted and as proposed to be
conducted by OpenTV and its Subsidiaries on the date hereof (as provided for in
the 2002 Budget and as described in all annual, interim and current reports
filed by OpenTV with the Commission since January 1, 2000 and prior to the date
hereof).
(ii) Notwithstanding anything herein to the contrary, the restrictions
set forth herein shall not be applicable to any of the following: (A) the
Restricted Parties' investment in OpenTV and its Subsidiaries prior to the
Closing and, solely with respect to any Remaining OpenTV Shares, after the
Closing; (B) Restricted Businesses which are engaged in by the Restricted
Parties and their respective Controlled Affiliates (other than OpenTV and its
Subsidiaries) as of the date of this Agreement; provided, that the nature and
scope of such engagement, participation or investment in such Restricted
Businesses is not materially expanded during the Restricted Period from the
engagement, participation or investment at the date hereof (except to the extent
previously disclosed in writing to Liberty); (C) any acquisition by a Restricted
Party or any of its Controlled Affiliates (whether by merger, share exchange,
purchase of securities or assets or otherwise) of a Person or any interest
therein which is engaged in a Restricted Business so long as the Restricted
Business conducted by such other Person and its Subsidiaries does not constitute
more than 10% of its business (as measured by its revenues); (D)
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the acquisition by the Restricted Parties and their Controlled Affiliates of an
interest in a Person which is engaged in a Restricted Business so long as (i)
such interest constitutes less than 49% of the outstanding equity interests of
such Person and none of the Restricted Parties or their Controlled Affiliates
are actively involved in the management of the business of such Person
(provided, that a Restricted Party's or its Controlled Affiliates' participation
in the management of such Person through representation on such Person's Board
of Directors or other governing body which is proportionate to its equity or
voting interest in such Person shall not be deemed active management in such
Person's business) and (ii) the acquisition of such interest occurred in
connection with the disposition by such Restricted Party or its Controlled
Affiliates of assets or businesses of the type described on Schedule 5.9(a)(ii)
to this Agreement which do not conduct or engage in a Restricted Business; (E)
any acquisition of equity interests in any Person engaged in a Restricted
Business so long as (1) such equity interests owned by the Restricted Parties
and their Controlled Affiliates, in the aggregate, constitute less than 10% of
the outstanding equity interests and outstanding voting power of such Person and
(2) none of the Restricted Parties or their Controlled Affiliates are actively
involved in the management of the business of such Person (provided, that a
Restricted Party's or its Controlled Affiliates' participation in the management
of such Person through representation on such Person's Board of Directors or
other governing body which is proportionate to its equity or voting interest in
such Person shall not be deemed active management in such Person's business);
(F) so long as the Restricted Parties and their Controlled Affiliates are in
compliance with Section 5.13(c) hereof, the engagement or participation by any
Restricted Party or its Controlled Affiliates in the business of the creation,
authoring, development and acquisition of applications software ("APPLICATIONS")
designed to run on the systems of multi-channel television operators which are
owned or Controlled by any Restricted Party or its Controlled Affiliates, and
the selling and licensing of such Applications solely to any Restricted Party or
its Controlled Affiliates or to (x) United Broadcasting Public Company Limited
(a Thai Company) or (y) one or more radio, film or television groups in China;
provided, that such exception shall be applicable to the entities referred to in
clauses (x) and (y) only so long as the Restricted Parties or their Controlled
Affiliates beneficially own equity interests in such Persons or have subscribed
for and are seeking to purchase such equity interests or have some revenue
sharing or other contractual arrangement with such Person; (G) the conduct by
the Restricted Parties or their respective Controlled Affiliates of the business
of creating, developing, acquiring (by license or otherwise), marketing, selling
and licensing software (including related hardware and related software tools)
and products for use in instant messaging and/or TCP/IP businesses or for use in
relation to or in conjunction with the conditional access technology of any
Restricted Party or its Controlled Affiliates (other than OpenTV and its
Subsidiaries); (H) the marketing, selling or licensing of the extensions to
OpenTV's EN2 and 1.04 products created for and on behalf of MultiChoice Africa
by parties other than OpenTV or any of its Subsidiaries, the graphic user
interface of MultiChoice Africa's t-mail application, and the Irdeto-created,
OpenTV-based software identified as the (x) Supervisory task navigation control
software, (y) SI interpretation control software, and (z) Surfer set-top box
interaction control software; and (I) the provision by the Restricted Parties or
any of their respective Controlled Affiliates of professional services relating
to any business referred to in clauses (G) and (H) above.
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(b) (i) Each Restricted Party will, and will cause its Controlled
Affiliates, and the officers, directors, employees, advisors and other agents of
such Restricted Party and its Controlled Affiliates to (x) keep secret and
retain in strictest confidence any and all confidential information relating to
OpenTV and its Subsidiaries and their respective assets and businesses in their
possession or within their knowledge at the Closing Date (provided, that such
"confidential information" will not include any information that (1) was or
became generally available to the public other than as a result of a disclosure
by a Restricted Party or its Controlled Affiliates (except OpenTV and its
Subsidiaries), (2) has been independently developed by the Restricted Parties or
their Controlled Affiliates without the use of any confidential information or
(3) was or became available to the Restricted Party or its Controlled Affiliates
on a nonconfidential basis from a third party having, to the knowledge of the
Restricted Party or its Controlled Affiliates, no obligation of confidentiality
to any Restricted Party or its Controlled Affiliates or to the Purchasers or
OpenTV and its Subsidiaries, and (y) will not disclose such confidential
information, and will cause its Controlled Affiliates not to disclose such
confidential information, to any Person; PROVIDED, THAT such disclosure shall
not affect a Restricted Party's liability for a breach of its obligations in
accordance with the terms of the following two sentences. Notwithstanding the
foregoing, if the Restricted Party is required (other than as a result of action
taken by it or its representatives (other than in connection with the
enforcement of this Agreement) for the purpose of causing such disclosure
requirements to arise) in any judicial or administrative proceeding or by any
regulatory or judicial authority or pursuant to any applicable Law (including
the rules and regulations of the Commission, the JSE, the Euronext Amsterdam
stock exchange or of any securities exchange or association on which such
Restricted Party's securities are traded (including pursuant to any listing
agreement)) to disclose any such confidential information, then any disclosure
of such information to the extent so required shall not be prohibited by this
Section 5.9(b). The Restricted Party shall give the Purchasers and OpenTV prompt
written notice of any disclosure of confidential information pursuant to the
immediately preceding sentence, including the circumstances requiring such
disclosure, which notice shall be (to the extent permitted by any applicable
judicial or administrative order or applicable Law requiring such disclosure)
delivered sufficiently prior to such disclosure to permit the Purchasers and
OpenTV to seek an appropriate protective order or other relief. The Restricted
Party agrees to reasonably cooperate with the Purchasers and OpenTV, at the
Purchasers and/or OpenTV's expense in connection with obtaining such protective
order or other relief. OpenTV shall be an intended third party beneficiary of
the Restricted Parties obligations hereunder and shall be entitled to enforce
such obligations as if it were a party hereto.
(ii) Promptly following the Closing, the Restricted Parties will, and
will cause their Controlled Affiliates and the officers, directors, employees
and advisors (financial, legal and accounting) of such Restricted Parties and
their Controlled Affiliates to, deliver to Liberty one copy of all such
confidential information regarding OpenTV and its Subsidiaries in its or their
possession, and destroy (provided that such destruction shall be certified by a
duly authorized officer of such Restricted Party and such officer shall deliver
to Liberty a list of all such documents so destroyed) all other copies of such
confidential information and all
48
summaries, analyses or extracts thereof or based thereon (whether in hard copy
form or intangible media or electronic files); provided, that, Cravath, Swaine &
Xxxxx shall be entitled to retain a list identifying (which identification
information shall not, to the extent reasonably practicable, include any such
confidential information) such confidential information so delivered for
purposes of providing evidence of such confidential information so delivered in
the event of any dispute among the parties.
(c) Each Restricted Party agrees that it will not, and it will cause
its Controlled Affiliates not to, from the date hereof until the earlier of the
third anniversary of the Closing or the termination of this Agreement, directly
or indirectly, solicit for employment any officer or employee of OpenTV or its
Subsidiaries who is (i) currently earning more than US $75,000 per annum or (ii)
a member of Senior Management. The foregoing shall not prohibit general
solicitations for employment in newspapers, trade journals and similar general
circulation media, so long as such general solicitation materials are not
directed specifically to such covered Persons.
5.10 Continuation of Carriage. Schedule 5.10 sets forth the principal
terms of an agreement to be entered into among the members of the MIH Group and
OpenTV regarding carriage of OpenTV's middleware. Promptly following the date of
this Agreement, the Seller Parties and the Purchasers will, and the Seller
Parties will use their commercially reasonable best efforts to cause OpenTV to,
negotiate in good faith, and MIHL will, and the Seller Parties will use their
commercially reasonable efforts to cause OpenTV to, enter into an agreement
prior to the Closing that will become effective upon Closing and will be
reasonably acceptable to the Purchasers and MIHL, reflecting the terms set forth
on SCHEDULE 5.10 hereto together with such other terms and conditions as are
reasonable and appropriate (the "MASTER CARRIAGE AGREEMENT").
5.11 Indemnification.
(a) During the period from the Closing Date until the expiration of the
applicable statute of limitations (the "INDEMNITY PERIOD"), the Purchasers shall
use commercially reasonable best efforts to cause OpenTV to honor its
obligations to indemnify (including any obligations to advance funds for
expenses) directors and officers of OpenTV at the time of the Closing and the
former directors and officers of OpenTV ("COVERED DIRECTORS AND Officers") for
acts or omissions by such directors or officers occurring prior to the Closing
to the extent that such obligations of OpenTV exist for the benefit of the
applicable Covered Director and Officer on the date of this Agreement pursuant
to the terms of the OpenTV Charter, the OpenTV Articles or the individual
indemnity agreements listed in Section 2.17 of the Seller Disclosure Schedule
(the "DIRECTOR INDEMNITY AGREEMENTS"). True and correct copies of all such
Director Indemnity Agreements have been delivered to the Purchasers. During the
Indemnity Period, the Purchasers shall use commercially reasonable efforts to
prevent the adoption of any amendment of the indemnification provisions of the
OpenTV Charter and the OpenTV Articles that could reasonably be expected to have
a material adverse effect upon such indemnity provided to the Covered Directors
and Officers; provided, however, that in connection with any amendment to
49
the OpenTV Charter that results from a merger or other business combination
during the Indemnity Period, the Purchasers shall be deemed to have met their
obligations under this Section if they have used commercially reasonable best
efforts to cause the organizational documents of OpenTV (or its successor)
following such merger or other business combination to provide indemnification
that is substantially equivalent to the indemnification provided to Covered
Directors and Officers by the indemnification provisions of the OpenTV Charter
and the OpenTV Articles as in effect on the date of this Agreement.
(b) Nothing in this Section 5.11 shall (i) prohibit (or require a
Purchaser to prohibit) any director of OpenTV after the Closing from exercising
(solely in his or her capacity as a director of OpenTV) such directors'
fiduciary duties to the stockholders of OpenTV (other than the Purchasers) under
applicable Law with respect to the matters referred to in this Section 5.11;
PROVIDED, FURTHER, THAT, nothing in the immediately preceding proviso shall
relieve or be deemed to release the Purchasers from any obligations hereunder
that can be performed without causing a director of OpenTV to violate such
fiduciary duties or (ii) create or impose any obligation on the part of the
Purchasers to contribute, fund, advance, guarantee, loan or otherwise make
available any funds in order to enable OpenTV to meet its obligations to the
Covered Directors and Officers.
5.12 Royalty-Free License. The Seller Parties hereby grant to OpenTV
and its Subsidiaries, commencing on the Closing Date, a three (3) year
worldwide, royalty-free, non-exclusive license to all Intellectual Property,
owned or freely licensable by any member of the MIH Group or its Controlled
Affiliates now or in the future, that is infringed by any OpenTV products and/or
services developed by or for OpenTV or any of its Subsidiaries prior to the
Closing Date, or as contemplated and proposed to be developed by or for OpenTV
or any of its Subsidiaries in the 2002 Budget, to continue to make, have made,
use, sell, offer for sale, import or export such products and/or services, and
types and categories of such products and services, around the world for such
three (3) year period; PROVIDED, HOWEVER, that this license specifically does
not extend to the Intellectual Property (i) in and to the conditional access
technology owned by the Seller Parties or their Controlled Affiliates, (ii) in
and to the extensions to OpenTV's EN2 and 1.04 products created for and on
behalf of MultiChoice Africa by parties other than OpenTV or any of its
Subsidiaries, (iii) in and to the graphic user interface of MultiChoice Africa's
t-mail application; and (iv) in and to the Irdeto-created, OpenTV-based software
identified as the (x) Supervisory task navigation control software, (y) SI
interpretation control software, and (z) Surfer set-top box interaction control
software, other than (for this clause (iv)) patent rights; FURTHER PROVIDED,
HOWEVER, that it shall be a condition to any license granted pursuant to this
Section 5.12 that OpenTV and its Subsidiaries will agree not to knowingly
license or sublicense any rights obtained hereunder to a Person operating in the
same geographic area and in a line of business substantially similar to, any
member of the MIH Group (a "DIRECT MIH COMPETITOR").
50
5.13 Covenant Not to Xxx, Option to License, Option to Develop.
(a) For 36 months after the date of Closing, each Seller Party, on
behalf of itself and its Controlled Affiliates, covenants and agrees that it
will not voluntarily initiate, join in or otherwise support any claim (including
derivative claims), suit, action, arbitration or other legal, equitable or other
proceeding seeking (directly or indirectly) relief of any kind (in money damages
or equitable remedies) against OpenTV, its Subsidiaries, or their respective
officers, directors, customers and suppliers (collectively the "OPENTV
Releasees") resulting from any infringement by any of the OpenTV Releasees of
any Intellectual Property rights owned or enforceable by any Seller Party or its
Controlled Affiliates, which infringement is based on OpenTV's continued
commercialization of those products and services, and types and categories of
such products and services, developed by or for OpenTV or any of its
Subsidiaries prior to the Closing Date or those contemplated by the 2002 Budget;
PROVIDED, HOWEVER, that this covenant specifically does not extend to
infringement of the Intellectual Property (i) in and to the conditional access
technology owned by the Seller Parties or their Controlled Affiliates, (ii) in
and to the extensions to OpenTV's EN2 and 1.04 products created for and on
behalf of MultiChoice Africa by parties other than OpenTV or any of its
Subsidiaries, (iii) in and to the graphic user interface of MultiChoice Africa's
t-mail application, and (iv) in and to the Irdeto-created, OpenTV-based software
identified as the (x) Supervisory task navigation control software, (y) SI
interpretation control software, and (z) Surfer set-top box interaction control
software, other than (for this clause (iv)) patent rights; FURTHER PROVIDED,
HOWEVER, that the Seller Parties on behalf of themselves and their Controlled
Affiliates, covenant, for 36 months after the date of Closing, not to assert or
support a claim in any proceeding anywhere in the world that the making, having
made, using, selling, offering for sale, importing or exporting of any OpenTV
product or service, developed now or in the future, because of its employment or
use in conjunction with another party's conditional access, extensions or
graphic user interface technology, in itself constitutes indirect infringement
of the conditional access or EN2, 1.04, or t-mail graphic user interface-related
Intellectual Property owned by the Seller Parties or their Controlled
Affiliates.
(b) The foregoing covenant not to xxx shall be applicable to and shall
constitute a release of all liability that may have arisen or may arise from all
Intellectual Property claims, actions or causes of action, which the Seller
Party and its Controlled Affiliates have or purport to have, based on the past
operation of OpenTV's business including the making, using and selling of
products and services developed by OpenTV and its Subsidiaries prior to the
Closing and/or based on future operations licensed under Section 5.12.
(c) During such 36-month period, to the extent any Seller Party or a
Controlled Affiliate thereof develops or acquires after the Closing any
licensable Intellectual Property rights in and to interactive television
technology or seeks to assert any rights in such Intellectual Property against
the OpenTV Releasees, which rights are not licensed under Section 5.12 above,
then OpenTV or any of its Subsidiaries shall have the right to require any such
Seller Party or its Controlled Affiliates to license such Intellectual Property
rights to OpenTV and its Subsidiaries
51
(and for the benefit of OpenTV Releasees) to allow OpenTV and its Subsidiaries
to make, have made, use, sell, offer for sale, import or export products and
services in the interactive television field (including use by customers,
viewers and others) on commercially reasonable terms and conditions. For
purposes of this subsection (c), the parties acknowledge and agree that (x) the
conditional access technology, the extensions to the EN2 and 1.04 products
created for and on behalf of MultiChoice Africa by parties other than OpenTV or
any of its Subsidiaries, the t-mail graphic user interface owned by the MIH
Group or its Subsidiaries, as well as the Irdeto-created, OpenTV-based software
identified as the Supervisory task navigation control software, the SI
interpretation control software, and the Surfer set-top box interaction control
software (except for patent rights related thereto), shall not be included in
any license granted hereunder, and (y) it shall be a condition to any license
granted pursuant to this sub section (c) that OpenTV and its Subsidiaries will
not knowingly license or sublicense any rights obtained hereunder to a Direct
MIH Competitor.
(d) During such 36 month period, in the event any Seller Party or any
Controlled Affiliates (collectively "MIH AFFILIATES") desires to obtain third
party services to create, develop and author middleware and/or application
products in the interactive television field (the "DEVELOPMENT WORK"), such MIH
Affiliate shall give OpenTV and its Subsidiaries the opportunity to bid on such
Development Work, as follows:
(1) If the bid submitted by OpenTV or its Subsidiary is no less
favorable, taken as a whole as judged by the MIH Affiliate, in
its sole discretion (after making a reasonable business
judgment taking into consideration all factors), to the MIH
Affiliate than any other third party bids received by it for
such Development Work, then the MIH Affiliate shall be
required to enter into an agreement regarding the development
of such products and such agreement shall provide that any
Intellectual Property developed by OpenTV or its Affiliates in
connection with the Development Work will be jointly owned by
the parties to such agreement;
(2) Such bid may be rejected by the MIH Affiliate if in the
reasonable business judgment of such Affiliate it is, when
taken as a whole, not reasonably competitive with the other
bids received, and in such event such products may be
developed by the MIH Affiliate or by a third party, and, if
the MIH Affiliate has the rights to do so, the MIH Affiliate
shall be obligated to offer, at OpenTV's request, to OpenTV
and its Subsidiaries the right to license such products for
all purposes on reasonable commercial terms, subject to the
licensee's agreement that it will not knowingly sublicense
such rights to a Direct MIH Competitor.
5.14 Release. Each of the Seller Parties, on behalf of itself and its
Controlled Affiliates, hereby irrevocably releases the OpenTV Releasees from any
and all claims and liabilities that arose or may have arisen as a result of any
violation, misappropriation or
52
infringement, by any of the OpenTV Releasees of any Intellectual Property owned,
purported to be owned, or enforceable by any Seller Party or their Controlled
Affiliates, stemming in any way from any activities related directly or
indirectly to the business or operations of OpenTV or any of its Subsidiaries
conducted prior to the Closing.
5.15 Deed of Transfer. The Seller shall enter into, and the Seller
Parties shall use their respective commercially reasonable best efforts to cause
OpenTV to enter into or cooperate with the entering into of a deed of transfer
("DEED OF TRANSFER") of the Dutch Lock-up Agreement with the Purchasers on or
prior to the Closing, in the form attached hereto as EXHIBIT C (with such
revisions reasonably agreed upon by the Parties), whereby the Seller, as
transferor, shall transfer its legal relationship with OpenTV under the Dutch
Lock-Up Agreement to the Purchasers, as transferees, in compliance with the
applicable rules, regulations and policies of the Euronext Amsterdam stock
exchange.
5.16 MIH-Related Assignment. Each of the members of the MIH Group and
their respective officers, directors, employees, consultants and other agents
have validly assigned or will assign to OpenTV prior to Closing any and all
rights to Intellectual Property, with the right to xxx for past damages,
conceived, invented, patented, developed or caused to be reduced to practice by
such Persons prior to the Closing Date, which Intellectual Property is or was
generated by such Persons in their dealings for OpenTV or any of its
Subsidiaries and which is material to or infringed by the business of OpenTV or
any of its Subsidiaries as now conducted or, to the knowledge of Seller Parties,
proposed to be conducted; except that all patents, patent applications and
invention disclosure records naming such Persons as an inventor shall have been
or will be assigned to OpenTV prior to Closing if conceived, invented, patented,
developed or caused to be reduced to practice during such Person's dealings for
OpenTV or any of its Subsidiaries, whether or not such patents patent
applications or invention disclosure records are material to or infringed by the
business of OpenTV.
5.17 Cooperation. After the Closing, in the case of any Legal
Proceeding against any member of the MIH Group or any of its Affiliates (other
than OpenTV or any of its Subsidiaries) or their respective current or former
directors, officers or employees (which employees are current or former
directors or officers of OpenTV or any of its Subsidiaries) that relates to the
operation of OpenTV's business prior to the Closing the Purchasers shall, upon
the request of MIHL, use their commercially reasonable best efforts to cause
OpenTV and its Subsidiaries to cooperate in good faith in connection with such
Legal Proceeding; PROVIDED, HOWEVER, that nothing in this Section 5.17 shall
require any director of OpenTV to take any action (solely in his or her capacity
as a director of OpenTV) inconsistent with the exercise of such director's
fiduciary duties to OpenTV or its stockholders (other than the Purchasers) under
applicable Law; PROVIDED, FURTHER, that nothing in the immediately preceding
proviso shall relieve or be deemed to release the Purchasers from any
obligations hereunder that can be performed without causing a director of OpenTV
to violate such fiduciary duties. MIHL shall reimburse OpenTV for all reasonable
costs and expenses in connection with such cooperation.
53
5.18 Transfers of Liberty Consideration Shares. Until the thirty-first
(31st) day following the Closing Date or, if an Extension Notice is given
pursuant to Section 3.1(a) of EXHIBIT B, until the expiration or termination of
the Lockup Extension Period, the Seller Parties shall not Transfer any Liberty
Consideration Shares. As of and after the later of the 31st day following the
Closing Date and the expiration or termination of the Lockup Extension Period
the Seller Parties shall be entitled to Transfer any Liberty Consideration
Shares in accordance with applicable securities Laws.
5.19 Listing of Liberty Consideration Shares. Liberty shall use its
commercially reasonable best efforts to cause the Liberty Consideration Shares,
if any, to be listed on the
New York Stock Exchange or such other securities
exchange on which the Liberty Stock is then principally traded.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Obligations of Each Party. The respective obligations
of each of the Parties hereto to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived (to the extent
such condition may be validly waived by such Party), in writing, by agreement of
the Seller Parties and the Purchasers:
(a) No Injunction. No Law, and no Injunction or other order issued by
any court or other Governmental Entity of competent jurisdiction or other legal
or regulatory prohibition shall be in effect, in each case that would prevent
the consummation of the transactions contemplated hereby.
(b) HSR Act. The waiting periods (and any extensions thereof)
applicable to the transactions contemplated hereby under the HSR Act shall have
expired or been terminated without litigation having been commenced that is
continuing, or threat of litigation having been made that remains unresolved, by
the DOJ or the FTC to restrain the transactions contemplated hereby. For the
purposes of this Agreement, litigation shall be deemed to be "threatened" by the
DOJ or the FTC only if, as the case may be, it shall have publicly announced or
shall have advised any of the Parties or OpenTV that it has authorized its staff
to commence proceedings in federal court seeking injunctive relief against, or
to commence administrative proceedings challenging, the transactions
contemplated by this Agreement.
(c) Deed of Transfer. The Deed of Transfer shall have been duly
executed and delivered and be in full force and effect.
(d) Shareholder Approvals. The transactions contemplated by this
Agreement shall have been ratified, approved or adopted by the board of
directors and the shareholders of MIH Holdings (the "MIH SHAREHOLDER APPROVAL")
and, if required, Naspers (the "NASPERS SHAREHOLDER
54
APPROVAL"), in each case in accordance with applicable Law and the certificate
of incorporation, bylaws or other applicable organizational documents of such
person.
(e) Listing. If any Liberty Consideration Shares are to be delivered at
Closing, such shares shall have been accepted for listing on the
New York Stock
Exchange, subject to official notice of issuance.
(f) Receipt of Approvals, Waivers and Consents. The Parties hereto
shall have made all filings with and given all notices to, and obtained all
approvals, waivers and consents from, each Governmental Entity identified on
SCHEDULE 5.4, and such approvals, waivers and consents, as applicable, shall be
in full force and effect.
6.2 Additional Conditions to Obligations of the Seller Parties. The
obligations of the Seller Parties to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing, by
the Seller Parties:
(a) Performance of Agreements; Accuracy of Representations and
Warranties. The Purchasers shall have performed and complied in all material
respects with all of their covenants in this Agreement required to be performed
and complied with by them on or prior to the Closing. The representations and
warranties of the Purchasers set forth in this Agreement shall be true and
correct in all material respects (or in all respects in the case of any
representation or warranty that is qualified by its terms by a reference to
Material Adverse Effect or other concept of materiality) when made and on and as
of the Closing Date as if such representations and warranties were made on and
as of the Closing Date (except to the extent expressly made as of an earlier
date, in which case as of such date); PROVIDED, THAT for purposes of this
Section 6.3(a), any qualification in any representation or warranty to the
"knowledge" (or similar term) of the Purchasers shall be disregarded.
(b) Officers' Certificate. MIHL and the Seller shall have received a
certificate, dated as of the Closing Date, executed on behalf of Liberty and
LDIG OTV by appropriate officers thereof certifying that the conditions
specified in Section 6.2(a) have been fulfilled.
(c) Contract Consents and Notices. All Contract Consents and Contract
Notices that are referred to in the Seller Disclosure Schedule and that, if not
obtained or given, would have, individually or in the aggregate, a Material
Adverse Effect on MIHL and its Subsidiaries (other than OpenTV and its
Subsidiaries) taken as a whole, shall have been obtained or given.
(d) Receipt of Licenses, Permits and Consents. The Parties shall have
obtained from each Governmental Entity all approvals, waivers and consents set
forth on the Seller Disclosure Schedule or otherwise legally required in
connection with the consummation of the transactions contemplated by this
Agreement, and such approvals, waivers and consents, as applicable, shall be in
full force and effect, and all filings with or notices to Governmental Entities,
if any, that are required in connection with the consummation of such
transactions shall have been made, other
55
than those that, if not obtained, in force or effect or made (as the case may
be), would not, either individually or in the aggregate, have a Material Adverse
Effect on MIHL and its Subsidiaries (other than OpenTV and its Subsidiaries)
taken as a whole.
(e) Legal Opinion. The Seller Parties shall have received the written
opinion of Xxxxx Xxxxx L.L.P. or other counsel reasonably satisfactory to the
Seller Parties, substantially in the form attached as EXHIBIT D.
6.3 Additional Conditions to the Obligations of Purchasers. The
obligations of the Purchasers to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing, by
Purchasers:
(a) Performance of Agreements; Accuracy of Representations and
Warranties. The Seller Parties shall have performed and complied in all material
respects with all of the covenants in this Agreement required to be performed
and complied with by them on or prior to the Closing; PROVIDED, THAT, with
respect to the covenant in Section 4.1, this condition will be deemed to not
have been satisfied if, notwithstanding the Seller Parties' exercise of
commercially reasonable efforts to prevent it, and without regard to any
limitations on the Seller Parties' ability to prevent such action as a result of
the exercise of fiduciary duties by those directors of OpenTV who are also
directors, officers or employees of any member of the MIH Group or their
respective Affiliates (other than OpenTV and its Subsidiaries), OpenTV or its
Subsidiaries shall have taken any of the actions specified in clauses (a)
through (w) of Section 4.1; PROVIDED FURTHER THAT, with respect to the actions
referenced in clauses (g)(i), (g)(iii) (except as such clause relates to any
Contract that is a license of Intellectual Property), (g)(vi)(F), (i), (j)
(except as such clause relates to a right or claim with respect to Intellectual
Property or a Material Contract), (k), (p) (except as such clause relates to
directors, officers and members of Senior Management) or (w) (but only insofar
as it relates to any of the foregoing clauses (and subject to the same
limitations as aforesaid)), of Section 4.1 only (each, a "SPECIFIED ACTION"),
the taking by OpenTV or any of its Subsidiaries of a Specified Action shall not
cause this condition to fail to be satisfied if, despite the taking of all such
Specified Actions taken by OpenTV and its Subsidiaries, the Seller Parties would
have performed and complied in all material respects with the covenants set
forth in Section 4.1 had that Section imposed on the Seller Parties an absolute
obligation to prevent OpenTV and its Subsidiaries from taking the Specified
Actions. The representations and warranties of the Seller Parties set forth in
this Agreement shall be true and correct in all material respects (or in all
respects in the case of any representation or warranty that is qualified by its
terms by a reference to Material Adverse Effect or other concept of materiality)
when made and on and as of the Closing Date as if such representations and
warranties were made on and as of the Closing Date (except to the extent
expressly made as of an earlier date, in which case as of such date); PROVIDED,
THAT for purposes of this Section 6.3(a), any qualification in any
representation or warranty to the "knowledge" (or similar term) of the Seller
Parties shall be disregarded.
56
(b) Officers' Certificate. The Purchasers shall have received a
certificate, dated as of the Closing Date, executed on behalf of MIHL and the
Seller by appropriate officers thereof certifying that the conditions specified
in Section 6.3(a) have been fulfilled.
(c) Contract Consents and Notices. All Contract Consents and Contract
Notices that are referred to in the Seller Disclosure Schedule or otherwise
required in connection with the consummation of the transactions contemplated
hereby and that, if not obtained or given, would have, individually or in the
aggregate, a Material Adverse Effect on the Purchasers or a Material Adverse
Effect on OpenTV and its Subsidiaries, taken as a whole, shall have been
obtained or given as applicable.
(d) ***
(e) Receipt of Approvals, Waivers and Consents. The Parties hereto
shall have obtained from each Governmental Entity and any other Person all
approvals, waivers and consents, identified on the Seller Disclosure Schedule or
otherwise legally required in connection with the consummation of the
transactions contemplated by this Agreement. Such approvals, waivers and
consents, as applicable, shall be in full force and effect, and all filings with
or notices to Governmental Entities and any other Person, if any, that are
required in connection with the consummation of such transactions shall have
been made, other than (except as provided in the following sentence) those that,
if not obtained, in force or effect or made (as the case may be), would not,
either individually or in the aggregate, have a Material Adverse Effect on the
Purchasers or a Material Adverse Effect on OpenTV and its Subsidiaries taken as
a whole.
(f) Litigation; No Injunction. No material Legal Proceeding shall be
pending or threatened involving OpenTV, any of OpenTV's Subsidiaries, or any of
the Subject Shares or relating to the transactions contemplated by this
Agreement. There shall have been no material adverse development in the Legal
Proceedings described on SCHEDULE 6.3(F). No Law, and no Injunction or other
order issued by any court or other Governmental Entity of competent jurisdiction
or other legal or regulatory prohibition, shall be in effect, in each case that
would impose on Liberty or its Subsidiaries, as a result of the consummation of
the transactions contemplated hereby, any obligation that would be materially
burdensome to Liberty and its Subsidiaries.
(g) No Material Adverse Change. There shall not have occurred any
Material Adverse Change with respect to OpenTV (excluding any developments,
changes, events, occurrences or conditions relating to United States or foreign
economies in general, the securities markets in general or generally affecting
the cable television industry or the satellite television industry) since the
date of this Agreement.
(h) Sun Waiver. SSI shall have validly waived all of its rights
pursuant to Sections 3.4 through 3.7 (including subsections) of the Sun
Shareholders' Agreement and such waiver shall not have been rescinded and shall
be in full force and effect or the period specified in the
57
Sun Shareholders Agreement during which it may exercise such rights shall have
expired without SSI accepting the offer to purchase.
(i) Xxxxxxxx Agreement. The agreement, dated as of the date of this
Agreement, among Xxxxx Xxxxxxxx, MIHL and OpenTV shall have been executed and
delivered and shall be in full force and effect.
(j) Filing of Annual Report. OpenTV shall have filed its Annual Report
on Form 20-F for the fiscal year ended December 31, 2001 with the Commission and
such Annual Report on Form 20-F as filed with the Commission shall contain
audited financial statements that are identical to the 2001 Financial
Statements, with only such changes, additions or amendments expressly
contemplated by SECTION 2.8(B), and are accompanied by the unqualified opinion
of OpenTV's independent auditors.
(k) Performance of Undertaking Letters. Each of the Parent Parties
shall have performed and complied in all material respects with all of its
covenants and agreements set forth in the applicable Undertaking Letter required
to be performed and complied with by it on or prior to the Closing and none of
the Parent Parties shall have breached in any material respect any of the
representations or warranties set forth in the applicable Undertaking Letter.
(l) Certificates. Messrs. Xxxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxx, Xxxx
Disco, Xxxxx Xxx, Xxxx Xxxxxxx and Xxxxxx Xxxxx shall have each delivered a duly
executed certificate to the Purchasers in the form attached hereto as EXHIBIT E.
(m) Legal Opinion. The Purchasers shall have received the written
opinion of Xxxxxx Westwood & Riegels or other counsel reasonably satisfactory to
the Purchasers, substantially in the form attached as EXHIBIT F.
(n) Termination of Steenkamp Agreement. The Agreement, dated April 10,
2001, between OpenTV and Jan Steenkamp shall have been terminated with no
liability whatsoever to OpenTV or any of its Subsidiaries.
(o) Receivables. Any amounts owed by any member of the MIH Group or any
of their Controlled Affiliates (other than OpenTV or any of its Subsidiaries) to
OpenTV or any of its Subsidiaries that are past due shall have been paid in
full.
(p) Master Carriage Agreement. The Master Carriage Agreement shall have
been executed and delivered and be in full force and effect.
6.4 Waivers of Closing Conditions. If a Party determines that it is
necessary to supplement its Disclosure Schedule so that, as of the Closing Date,
its representations and warranties, as so supplemented, would be true and
correct in all material respects (or in all respects in the case of any
representation or warranty that is qualified by its terms by a reference to
Material Adverse Effect or other concept of materiality), such Party shall so
notify the other
58
Parties at least one Business Day prior to the Closing (such notice to be
accompanied by the first Party's Disclosure Schedule as proposed to be so
supplemented) and provide such additional information with respect to the
matters disclosed in such supplement as the other Parties may reasonably
request. If the other Parties elect to consummate the transactions contemplated
hereby notwithstanding such supplement to the first Party's Disclosure Schedule,
then the Parties shall be deemed to have amended this Agreement to include such
Disclosure Schedule of the first Party as so supplemented and, if necessary, to
include an appropriate exception to the first Party's representations and
warranties set forth in this Agreement for matters set forth on the first
Party's Disclosure Schedule as so supplemented, and the applicable Disclosure
Schedule, as supplemented, shall be the Disclosure Schedule of the first Party
for all purposes of Article VIII.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated:
(a) at any time prior to the Closing, by mutual agreement of the Seller
Parties and the Purchasers;
(b) at any time prior to the Closing by Liberty, if (i) the Seller
Parties shall have breached in any material respect any of their covenants in
Article IV or V or if any Seller Party breached any of its representations,
warranties or covenants in Article II, in each case, which breach would result
in a failure of a condition set forth in Section 6.3(a) to be satisfied, and
such breach continues for a period of 30 days after notice of the breach is
given to the Seller Parties by the Purchasers, (ii) notwithstanding the Seller
Parties' exercise of commercially reasonable best efforts to prevent it, and
without regard to any limitations on the Seller Parties' ability to prevent such
action as a result of the exercise of fiduciary duties by those directors of
OpenTV who are also directors, officers or employees of any member of the MIH
Group or their respective Affiliates, OpenTV or its Subsidiaries shall have (x)
taken any of the actions specified in clauses (a)-(w) of Section 4.1 that would
result in a failure of the condition set forth in the first sentence of Section
6.3(a) or (y) taken any of the actions prohibited by Section 4.2, other than
actions by employees (other than employees who are also directors or officers of
OpenTV or its Subsidiaries) of OpenTV or its Subsidiaries; PROVIDED, THAT, the
Seller Parties have used their commercially reasonable best efforts to prevent
the taking of such actions and promptly upon obtaining knowledge thereof shall
take such actions as are reasonably necessary to revoke or terminate any such
actions, (iii) any of the Seller Parties shall have breached any of their
respective obligations pursuant to Section 4.2, (iv) any of the Parent Parties
shall have breached their voting obligations set forth in the Undertakings
Letters in any respect or shall have breached in any material respect (or in any
respect in the case of any representation or warranty that is qualified by its
terms by a reference to Material Adverse Effect or other concept of materiality)
any representation or warranty contained in the Undertakings Letters or shall
have breached in any material respect its covenants contained in the
Undertakings Letters, (v) the
59
Naspers Shareholder Approval (if required) or the MIH Holdings Shareholder
Approval shall not have been obtained by July 30, 2002 or if, at any time after
obtaining the Naspers Shareholders Approval (if required) or the MIH Limited
Shareholders Approval, either shall cease to be in full force and effect or
shall have been otherwise revoked or if any Governmental Entity (including the
JSE) commences any action to invalidate either such approval, or (vi) SSI or Sun
shall have exercised the right of first offer set forth in Sections 3.4 through
3.7 (including subsections) of the Sun Shareholders Agreement;
(c) at any time prior to the Closing by MIHL, if the Purchasers shall
have breached in any material respect any of their representations, warranties
or covenants in Articles III, IV or V and such breach continues for a period of
30 days after notice of the breach is given to the Purchasers by MIHL; and
(d) at any time after August 30, 2002, by either MIHL or Liberty if the
Closing shall not have occurred on or before such date; PROVIDED, HOWEVER, that
the right to terminate this Agreement under this clause (d) shall not be
available to MIHL, on the one hand, or Liberty, on the other hand, if the
failure of the Closing to occur prior to such date was a result of (i) in the
case of MIHL, (A) any breach by MIHL or any of its Affiliates (including any
member of the MIH Group) of any of the representations, warranties, covenants or
agreements of any such Person contained in this Agreement, (B) the (x) taking of
any of the actions specified in clauses (a)-(w) of Section 4.1 by OpenTV or any
of its Subsidiaries, (y) the failure by OpenTV or any of its Subsidiaries to
otherwise operate its business in the ordinary course or (z) the taking of any
of the actions prohibited by Section 4.2 by OpenTV or any of its Subsidiaries,
in any such case notwithstanding the exercise by the Seller Parties of
commercially reasonable efforts to cause OpenTV or its Subsidiaries to take, or
refrain from taking, any such action and without regard to any conditions upon
such obligations relating to the exercise of fiduciary duty of any Person, (C)
any breach by Naspers or MIH Holdings of their respective voting obligations in
any respect, or any other obligation in any material respect, set forth in the
Undertakings Letters or any breach in any material respect (or in any respect in
the case of any representation or warranty that is qualified by its terms by a
reference to Material Adverse Effect or other concept of materiality) of any
representation or warranty set forth in the Undertakings Letters or (D) the
Naspers Shareholder Approval or the MIH Holdings Shareholder Approval not having
been obtained or no longer being in full force and effect, or otherwise revoked
or if any Governmental Entity (including the JSE) commences any action to
invalidate either such approval, or (ii) in the case of Liberty, any breach by
the Purchasers of any of the representations, warranties, covenants or
agreements of any such Person contained in this Agreement.
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of the Parties hereto,
unless such termination results from (a) the willful breach by a Party hereto of
any of its representations or warranties set forth in this Agreement, or (b) the
breach by any Party hereto of its covenants set forth in this Agreement and
except as set
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forth in Sections 7.5 and 9.10; PROVIDED THAT the provisions of this Section
7.2, Section 7.5 and Article IX shall remain in full force and effect and
survive any termination of this Agreement.
7.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the Parties.
7.4 Extension; Waiver. The Parties may (a) extend the time for the
performance of any of the obligations or other acts of the other Parties, (b)
waive any inaccuracies in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c) waive
compliance with any of the agreements or conditions contained in this Agreement.
Any agreement on the part of a Party to any such extension or waiver shall be
valid only if set forth in an instrument in writing, signed on behalf of such
Party. The failure of any Party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those rights.
7.5 Payment of Certain Amounts. (a) If this Agreement is terminated by
Liberty pursuant to Section 7.1(b)(i), (ii), (iii), (iv) or (v) and the Seller
Parties or their Controlled Affiliates or OpenTV or its Subsidiaries enter into
any agreement with respect to, or consummate, an Alternate Transaction or an
Extraordinary Transaction prior to or within 18 months of the date of such
termination or the Seller Parties or any of their Affiliates tender any of the
Subject Shares in any tender offer, exchange offer or similar transaction
commencing prior to or within 18 months after the date of termination, then the
Seller Parties shall, jointly and severally, without limitation of the
Purchasers' rights at law or in equity (subject to Section 7.2), pay to the
Purchasers no later than the date of the consummation of such Alternate
Transaction or Extraordinary Transaction or the date of acceptance of shares for
purchase or exchange in such tender offer, exchange offer or similar transaction
an aggregate amount in cash (payable in immediately available funds) equal to
the product of (x) (1) the highest per share purchase price (in US dollars) to
be received by the Seller Parties or their Affiliates in such other transaction
(including the fair market value of any noncash consideration delivered to the
Seller Parties or their Affiliates in such transaction) less (2) the Per Share
Price, multiplied by (y) the number of Subject Shares that were to have been
purchased by the Purchasers pursuant to this Agreement (in each case,
appropriately adjusted to reflect the effect of any stock splits, stock
dividends or similar events affecting the OpenTV A Ordinary Shares or the OpenTV
B Ordinary Shares occurring prior to the consummation of the Alternate
Transaction or Extraordinary Transaction).
(b) If this Agreement is terminated by Liberty pursuant to Section
7.1(b)(i), (ii), (iii), (iv), (v) or (vi), then the Seller Parties shall,
without limitation of the Purchasers' rights at law or in equity (subject to
Section 7.2), and in addition to any amounts payable pursuant to Sections 7.5(a)
and 7.5(c), promptly reimburse the Purchasers for their actual costs and
expenses reasonably incurred in connection with the negotiation of this
Agreement, the Purchasers' due diligence review of OpenTV, OpenTV's Subsidiaries
and the Seller Parties, and the Purchasers' reasonable actions taken in
anticipation of the consummation of the transactions contemplated by this
Agreement, including the fees, disbursements and expenses of their respective
61
accounting, financial and legal advisors and consultants and any filing fees
paid to any Governmental Entities; PROVIDED THAT (i) in the case of a
termination of this Agreement pursuant to Section 7.1(b)(i) (if such termination
results from a willful breach by a Seller Party of any of its representations or
warranties) or Section 7.1(b)(iii), the Seller Parties shall not be obligated to
reimburse the Purchasers for such costs and expenses in an aggregate amount in
excess of US $7.5 million, (ii) in the case of a termination of this Agreement
pursuant to Section 7.1(b)(i) (if such termination does not result from a
willful breach by a Seller Party of any of its representations or warranties) or
Section 7.1(b)(ii), the Seller Parties shall not be obligated to reimburse the
Purchasers for such costs and expenses in an aggregate amount in excess of US
$5.0 million and (iii) in the case of a termination of this Agreement pursuant
to Section 7.1(b)(vi), the Seller Parties shall not be obligated to reimburse
the Purchasers for such costs and expenses in an aggregate amount in excess of
US $2.0 million.
(c) If this Agreement is terminated by Liberty pursuant to Section
7.1(b)(ii) as a result of the taking of any action prohibited by Section 4.2,
the Seller Parties shall, without limitation of the Purchasers' rights at law or
in equity (subject to Section 7.2), pay to the Purchasers, in addition to any
amounts payable pursuant to any other section of this Agreement, on the date
that is the earlier of the 18-month anniversary of the date of such termination
and the date that the Seller Parties or OpenTV or its Subsidiaries enter into
any agreement with respect to, or consummate, an Alternate Transaction or an
Extraordinary Transaction or the Seller Parties or any of their Affiliates
tender any of the Subject Shares in any tender offer, exchange offer or similar
transaction, US $4,000,000 in cash.
(d) If this Agreement is terminated by MIHL pursuant to Section 7.1(c)
(if such termination results from a willful breach by a Purchaser of any of its
representations or warranties in Article III or a breach of any of its covenants
in Articles IV or V), then the Purchasers shall, without limitation of the
Seller Parties' rights at law or in equity (subject to Section 7.2), promptly
reimburse the Seller Parties for their actual costs and expenses reasonably
incurred in connection with the negotiation of this Agreement, the Seller
Parties' due diligence review of the Purchaser, and the Seller Parties'
reasonable actions taken in anticipation of the consummation of the transactions
contemplated by this Agreement, including the fees, disbursements and expenses
of their respective accounting, financial and legal advisors and consultants and
any filing fees paid to any Governmental Entities; PROVIDED THAT the Purchasers
shall not be obligated to reimburse the Seller Parties for such costs and
expenses in an aggregate amount in excess of US $5.0 million.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Seller Parties.
(a) Subject to written notice of such claim for indemnification being
given to the Seller Parties within the appropriate survival period set forth in
Section 9.1, each of the Seller Parties, jointly and severally, covenants and
agrees, on the terms and subject to the limitations set forth in this Agreement,
from and after the Closing, to indemnify, defend and hold harmless the
Purchasers from and against:
(i) all losses, damages, liabilities, deficiencies,
obligations, costs and expenses ("Losses") directly or indirectly
resulting from or arising out of (A) any representation or warranty of
the Seller Parties contained in this Agreement that survives the
Closing pursuant to Section 9.1 or of the Parent Parties contained in
the Undertaking Letters not being true and correct when made or deemed
made, (B) any nonperformance or breach of any covenant or agreement of
the Seller Parties contained in this Agreement (including the covenants
and agreements set forth in Article I) or of the Parent Parties
contained in the Undertaking Letters; and
(ii) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts',
and other fees, costs and expenses) relating to or resulting from any
of the foregoing.
(b) The Purchasers acknowledge and agree that following the Closing,
their sole and exclusive remedy with respect to any and all claims for monetary
damages relating to this Agreement and the transactions contemplated hereby
(other than claims of, or causes of action arising from, fraud, or to enforce
the Purchaser's rights under this Article VIII) shall be pursuant to the
indemnification provisions set forth in this Article VIII.
(c) Other than with respect to Losses resulting from a breach of
Sections 2.1, 2.2, 2.3, 2.20 or 4.4 (the "SELLER BASKET EXCEPTIONS"), no
indemnification by the Seller Parties under this Section 8.1 in respect of an
inaccuracy in or breach or any representation or warranty in this Agreement or
in any certificate delivered pursuant hereto or any breach of the covenants and
agreements of the Seller Parties to be performed at or prior to the Closing in
Articles II and IV shall be due and payable unless the aggregate amount of all
such Losses exceeds US $2,250,000 (the "SELLER BASKET AMOUNT"), whereupon the
Seller Parties will be obligated to pay the Losses included in the Seller Basket
Amount, but only to the extent that the aggregate of such Losses exceeds US
$200,000, as well as the amount of any Losses in excess of the Seller Basket
Amount and the fees, costs and expenses described in Section 8.1(a)(ii). The
Seller Parties shall not be obligated to indemnify the Purchasers for
inaccuracies in or breaches of the
63
representations and warranties in this Agreement or in any certificate delivered
pursuant hereto or breaches of the covenants and agreements in Articles II and
IV to be performed on or before the Closing Date in an amount in excess of US
$35 million; PROVIDED, HOWEVER, that the limitations set forth in this sentence
shall not be applicable to any breach by the Seller Parties of the Seller Basket
Exceptions.
8.2 Indemnification by the Purchasers.
(a) Subject to written notice of such claim for indemnification being
given to the Purchaser within the appropriate survival period set forth in
Section 9.1, each of the Purchasers, jointly and severally, covenants and
agrees, on the terms and subject to the limitations set forth in this Agreement,
from and after the Closing, to indemnify, defend and hold harmless the Seller
Parties from and against:
(i) all Losses directly or indirectly resulting from or
arising out of (A) any representation or warranty of the Purchasers
contained in this Agreement that survives the Closing pursuant to
Section 9.1 not being true and correct when made or deemed made, (B)
any nonperformance or breach of any covenant or agreement of the
Purchasers contained in this Agreement (including the covenants and
agreements set forth in Article I); and
(ii) all claims, actions, suits, proceedings, demands,
judgments, assessments, fines, interest, penalties, costs and expenses
(including settlement costs and reasonable legal, accounting, experts',
and other fees, costs and expenses) relating to or resulting from any
of the foregoing.
(b) The Seller Parties acknowledge and agree that following the
Closing, their sole and exclusive remedy with respect to any and all claims for
monetary damages relating to this Agreement and the transactions contemplated
hereby (other than claims of, or causes of action arising from, fraud, or to
enforce the Seller Parties' rights under this Article VIII) shall be pursuant to
the indemnification provisions set forth in this Article VIII.
(c) Other than with respect to Losses resulting from a breach of
Sections 3.1, 3.2, 3.4 or 3.5 (the "PURCHASER BASKET EXCEPTIONS"), no
indemnification by the Purchasers under this Section 8.2 in respect of an
inaccuracy in or breach or any representation or warranty in this Agreement or
in any certificate delivered pursuant hereto shall be due and payable unless the
aggregate amount of all such Losses exceeds US $2,250,000 (the "PURCHASERS
BASKET AMOUNT"), whereupon the Purchasers will be obligated to pay the Losses
included in the Purchasers Basket Amount, but only to the extent that the
aggregate of all such Losses exceeds $200,000, as well as the amount of any
Losses in excess of the Purchasers Basket Amount and the fees, costs and
expenses described in Section 8.2(a)(ii). The Purchasers shall not be obligated
to indemnify the Seller Parties for inaccuracies in or breaches of the
representations and warranties in this Agreement or in any certificate delivered
pursuant hereto in an amount in excess of US $35
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million; provided, however, that the limitations set forth in this sentence
shall not be applicable to any breach by the Purchasers of the Purchaser Basket
Exceptions.
8.3 Defense of Action.
(a) Any Party seeking indemnification under Section 8.1 or 8.2 hereof
will give the Party from whom such indemnification is sought (the "INDEMNIFYING
PARTY") prompt (which shall not be later than ten Business Days following
receipt of written notice of such third party claim) notice of any third party
claim, investigation, action, suit or proceeding with respect to which such
indemnification is sought; 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 and materially
prejudiced as a result of such failure (except that the Indemnifying Party shall
not be liable for any expenses incurred during the period in which such
notifying Party (the "INDEMNIFIED PARTY") failed to give such notice).
Thereafter, the Indemnified Party shall deliver to the Indemnifying Party,
within five business days' time 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. In the case of any such
third party claim (other than a third party Claim against OpenTV or any of its
Subsidiaries), the Indemnified Party shall be entitled, at the sole expense and
liability of the Indemnifying Party to exercise full control of the defense,
compromise or settlement of any third party claim, investigation, action, suit
or proceeding unless the Indemnifying Party within a reasonable time after the
giving of such notice by the Indemnified Party shall: (a) deliver a written
confirmation to such Indemnified Party that the indemnification provisions of
Section 8.1 or 8.2 (as the case may be) are applicable to such claim,
investigation, action, suit or proceeding and that the Indemnifying Party will
indemnify such Indemnified Party in respect of such claim, action or proceeding
pursuant to the terms of Section 8.1 or 8.2 (as the case may be), (b) notify
such Indemnified Party in writing of the Indemnifying Party's intention to
assume the defense thereof, and (c) retain legal counsel reasonably satisfactory
to such Indemnified Party to conduct the defense of such claim, investigation,
action, suit or proceeding.
(b) If the Indemnifying Party so assumes the defense of any such claim,
investigation, action, suit or proceeding in accordance herewith, then such
Indemnified Party shall cooperate with the Indemnifying Party in any manner that
the Indemnifying Party reasonably may request in connection with the defense,
compromise or settlement thereof. If the Indemnifying Party so assumes the
defense of any such claim, investigation, action, suit or proceeding, the
Indemnified Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise, or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees
and expenses, (ii) any relief other than the payment of money damages is sought
against the Indemnified Party or (iii) such Indemnified Party shall have been
advised by its counsel that there may be one or more legal defenses available to
it that are different from or additional to those available to the Indemnifying
Party or that there may be a conflict of interest between the Indemnifying Party
and the Indemnified Party in the conduct of the defense of such Action (in
65
either of which cases the Indemnifying Party shall not have the right to control
the defense, compromise or settlement of such action on behalf of the
Indemnified Party), and in any such case described in clauses (i), (ii) or (iii)
the reasonable fees and expenses of such separate counsel shall be borne by the
Indemnifying Party. No Indemnified Party shall settle or compromise or consent
to entry of any judgment with respect to any such Action for which it is
entitled to indemnification hereunder without the prior written consent of the
Indemnifying Party, which shall not be unreasonably withheld, unless the
Indemnifying Party shall have failed, after reasonable notice thereof, to
undertake control of such Action in the manner provided above in this Section
8.3 to the extent the Indemnifying Party was entitled to do so pursuant to
Section 8.3. The Indemnifying Party shall not, without the written consent of
such Indemnified Party, settle or compromise or consent to entry of any judgment
with respect to any such claim, investigation, action, suit or proceeding (x) in
which any relief other than the payment of money damages is or may be sought
against such Indemnified Party, (y) in which the amount of money damages
contemplated to be paid in connection with such settlement, compromise or
judgment, exceeds any dollar limitations on the Indemnifying Party's obligations
hereunder pursuant to Section 8.1 or 8.2 or (z) that does not include as an
unconditional term thereof the giving by the claimant, party conducting such
investigation, plaintiff or petitioner to such Indemnified Party of a release
from all liability with respect to such claim, action, suit or proceeding.
8.4 Calculation of Indirect Losses. The Parties acknowledge that as a
result of a breach or nonperformance of any of the representations, warranties,
covenants and agreements of the Seller Parties or Tag-Along Sellers in this
Agreement, Purchasers may suffer direct Losses as well as indirect Losses in the
form of a diminution in value of OpenTV. This Section 8.4 provides the
calculation of the amount of indemnity to which the Purchasers will be entitled
in respect of such indirect Losses for which the Purchasers are entitled to
indemnification pursuant to Section 8.1. With respect to the calculation of
Losses suffered indirectly by the Purchasers for which the Purchasers are
entitled to indemnification pursuant to Section 8.1 arising out of or resulting
from any breach of a representation, warranty, covenant or agreement of the
Seller Parties or Tag-Along Sellers made with respect to the business, condition
(financial or otherwise), operating results, material customer or supplier
relationships, properties, assets (including intangible assets) or liabilities
of OpenTV and its Subsidiaries or with respect to the effect on OpenTV and its
Subsidiaries of the consummation of the transactions contemplated by this
Agreement or the breach of any covenant or agreement made for the benefit of
OpenTV and its Subsidiaries (collectively, an "OPENTV MATTER"), the Purchasers'
Losses for which the Seller Parties or any Tag-Along Seller, as applicable,
would be obligated to indemnify the Purchasers pursuant to Section 8.1 shall be
deemed to equal the product of (x) the Loss Percentage applicable to the Seller
Parties or such Tag-Along Seller, as applicable, and (y) the difference, if
positive, between the fair market value of OpenTV and its Subsidiaries as a
whole, determined as if such representation or warranty were true and correct or
such covenant or agreement performed in all respects, and the fair market value
of OpenTV and its Subsidiaries, as a whole, determined after giving effect to
the breach of such representation or warranty or the breach, nonperformance or
violation of such covenant or agreement; provided that, in any such case the
amount determined in accordance with this clause (y) will not be less than the
actual monetary
66
Loss to OpenTV and its Subsidiaries with respect to the relevant OpenTV Matter.
For purposes of this Agreement, the term "LOSS PERCENTAGE" shall mean (a) with
respect to the indemnification obligation of the Seller Parties pursuant to
Section 8.1, the result of (i) 38.4% minus (ii) the percentage obtained by
dividing (A) the total number of Excess Tag-Along Shares by (B) the sum of the
total number of OpenTV Ordinary Shares issued and outstanding as of April 30,
2002 plus the total number of OpenTV Ordinary Shares issuable upon exercise of
rights under the Sun Exchange Agreement as of April 30, 2002 (such sum, the
"OUTSTANDING NUMBER") and (b) with respect to the indemnification obligation of
each Tag-Along Seller pursuant to Section 8.1, the percentage obtained by
dividing (i) the number of Total Tag-Along Shares sold by such Tag-Along Seller
pursuant to Section 5.5 by (ii) the Outstanding Number (in each case such share
numbers shall be appropriately adjusted to reflect the effect of any stock
splits, stock dividends or similar events affecting the OpenTV A Ordinary Shares
or the OpenTV B Ordinary Shares).
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival. The representations and warranties of the Purchasers and
the Seller Parties contained herein (other than the representations and
warranties set forth in (a) Section 2.9(h) (ii), (b) Section 2.14(b)(iv) and (c)
Section 3.9, which shall not survive the Closing) shall survive the Closing and
continue in full force and effect (1) until the expiration of the applicable
statute of limitations applicable to claims that may be asserted in respect of
the matters covered thereby or related thereto, in the case of the
representations and warranties set forth in Sections 2.1, 2.2, 2.3, 2.7(a),
2.8(c), 2.12, 2.20, 2.21, 3.1, 3.2, 3.3 (first sentence only), 3.4, 3.5 and 3.7,
(2) until the 36-month anniversary of the Closing Date, in the case of the
representations and warranties set forth in Section 2.18(c)(iv), (3) until the
later of the one-year anniversary of the Closing Date and June 30, 2003, in the
case of all other representations and warranties. The covenants and agreements
made by each Party in this Agreement will survive the Closing without limitation
unless otherwise contemplated by their terms. Any representation, warranty or
covenant that is the subject of a claim or dispute asserted in writing prior to
the expiration of the applicable of the above-stated periods shall survive with
respect to such claim or dispute until the final resolution thereof.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered by hand or by a reputable
national overnight delivery service, or mailed by registered or certified mail,
return receipt requested, or sent via facsimile, with confirmation of receipt,
to the Parties at the following address or at such other address for a party as
shall be specified by notice hereunder:
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if to MIHL or the Seller, to:
MIH Limited
x/x Xxxxxx Xxxxxxxxxxxxx Xxxxxxxx X.X.
00-00 Xxxxxxxxxxxxx
2132 HC Hoofdorp
Netherlands
Attention: Chief Financial Officer
Telephone: x00 00 000 0000
Facsimile No.: x00 00 000 0000
with a copy to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
if to the Purchasers, to:
Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copies to:
(prior to May 10, 2002)
Xxxxx Xxxxx L.L.P.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. XxXxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
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(from and after May 10, 2002)
Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx X. XxXxxxx, Esq.
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
and
Xxxxx X. Xxxxxx III
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any such notice shall be deemed to have been given (a) upon actual delivery, if
delivered by hand, (b) on the next Business Day following deposit of such
notice, properly addressed with carriage prepaid, with a reputable national
overnight delivery service, (c) on the third (3d) Business Day following deposit
of such notice, properly addressed with postage prepaid, with the United States
Postal Service if mailed by registered or certified mail, return receipt
requested, or (d) upon sending such notice, if sent via facsimile, with
confirmation of receipt.
9.3 Interpretation. When a reference is made in this Agreement to
Exhibits, Schedules, Articles or Sections, such reference shall be to an
Exhibit, Schedule, Article or Section to this Agreement unless otherwise
indicated. When a reference is made in this agreement to a Disclosure Schedule,
such reference shall be to the Disclosure Schedule delivered herewith on the
date of this Agreement by the appropriate party, and not to any supplement to,
or change or modifications of, such Disclosure Schedule, except as provided in
Section 6.4. The information set forth in one section of a Disclosure Schedule
shall be deemed to be included in all other relevant sections of such Disclosure
Schedule to the extent that the relevancy of such information to such other
Sections of the Seller Disclosure Schedule is reasonably apparent from the
information so disclosed that such information is relevant for such purposes;
PROVIDED, that the foregoing shall not be applicable to sections of the Seller
Disclosure Schedule that set forth an affirmative list of items required to be
set forth in response to such item rather than as a modification or exception to
the applicable section. The words "include," "includes," "included" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The words "close of business" shall be deemed to
mean 5:00 PM,
New York City time, on the date specified. 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. The words "date hereof" shall refer to the date of this
Agreement. The term "or" is not exclusive. The word "extent" in the phrase "to
the extent"
69
shall mean the degree to which a subject or other such thing extends, and such
phrase shall not mean simply "if" unless the context in which such phrase is
used shall dictate otherwise. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. The phrase
"made available" in this Agreement shall mean that the information referred to
has been made available if requested by the party hereto to whom such
information is to be made available. The table of contents and Article and
Section headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. In
this Agreement, except as otherwise specifically provided, any reference to any
event, change, condition or effect being "material" with respect to any entity
or group of entities means any material event, change, condition or effect
related to the business, condition (financial or otherwise), operating results,
material customer or supplier relationships, properties, assets (including
intangible assets) or liabilities of such entity or group of entities. In this
Agreement, any reference to a "Material Adverse Change" or "Material Adverse
Effect" with respect to any entity or group of entities means any event, change
or effect that is materially adverse to the business, condition (financial or
otherwise), operating results, material customer or supplier relationships,
properties, assets (including intangible assets) or liabilities of such entity
and its Subsidiaries, taken as a whole. In this Agreement, any reference to a
Party's "knowledge" means such Party's actual knowledge after due and diligent
inquiry of (x) officers, directors, consultants and employees of such Party and
of such Party's Affiliates (other than, in the case of the Seller Parties,
OpenTV and its Subsidiaries, except as provided below) and, (y) in the case of
the Seller Parties, of those (i) current directors of OpenTV or its Subsidiaries
who are current or former directors, officers or employees of, or consultants to
the members of the MIH Group and its Affiliates (other than OpenTV and its
Subsidiaries), (ii) former officers and directors of OpenTV or its Subsidiaries
who are currently directors, officers or employees of or consultants to, the
members of the MIH Group and its Affiliates (other than OpenTV and its
Subsidiaries) reasonably believed by the Seller Parties to have knowledge
relevant to the matters in question and (iii) the Managers and each Person to
whom any Manager referred the Seller Parties as a Person having knowledge
relevant to such inquiry. Whenever the context may require, any pronoun shall
include the corresponding masculine, feminine and neuter forms. Any
representation, warranty, covenant or agreement contained in this Agreement
relating to the delivery or making available to the Purchasers of any document
shall be deemed to be satisfied if such document has been delivered or made
available, as applicable, to Liberty. Any representation, warranty, covenant or
agreement contained in this Agreement relating to the delivery or making
available to the Seller Parties of any document shall be deemed to be satisfied
if such document has been delivered or made available, as applicable, to MIHL.
Any reference in this Agreement to a Person shall be deemed to be a reference to
such Person and any successor (by merger, consolidation, transfer or otherwise)
to all or substantially all its assets.
9.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when one or more counterparts have been signed by each of
the Parties hereto and delivered to the other Parties hereto, it being
understood that all Parties hereto need not sign the same counterpart.
70
9.5 Entire Agreement; Assignment; Parties in Interest. This Agreement
and the documents and instruments and other agreements specifically referred to
herein or delivered pursuant hereto, including the Exhibits, the Seller
Disclosure Schedule, the Undertakings Letter, the Letter Agreement and the
letter agreement dated as of the date hereof among the Purchasers and the Seller
Parties (to the extent the subject matter thereof is not contradicted or
superseded by the provisions of this Agreement) (a) constitute the entire
agreement among the Parties hereto with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the Parties hereto with respect to the subject matter hereof; (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except in the case of (i) Sections 5.2, 5.10, 5.12 and 5.13, OpenTV, (ii)
Section 5.13, OpenTV Releasees and (iii) Section 5.11, current and former
officers and directors of OpenTV; and (c) shall not be assigned by operation of
law or otherwise except as otherwise specifically provided; PROVIDED THAT either
Purchaser may assign its right to purchase the Subject Shares to any Subsidiary
of a Purchaser, but no such assignment shall relieve the Purchasers from their
obligation to pay in full the Purchase Price for the Subject Shares.
Notwithstanding the foregoing, Paragraph 3 of the Letter Agreement shall survive
the execution and delivery of this Agreement and shall terminate only upon the
Closing or in accordance with its terms. Upon the Closing, the provisions of
paragraph 3 of the Letter Agreement shall be superseded by the provisions of
Section 5.2 and Section 5.9(b) and the provisions of paragraph 3 of the Letter
Agreement shall be of no further force and effect.
9.6 Severability. If any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the
intent of the Parties hereto. The Parties hereto further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and
other purposes of such illegal, void or unenforceable provision.
9.7 No Waiver. No failure or delay on the part of any party hereto in
the exercise of any right hereunder shall impair such right or be construed to
be a waiver of, or acquiescence in, any breach of any representation, warranty,
covenant or agreement herein, nor shall any single or partial exercise of any
such right preclude other or further exercise thereof or of any other right.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of
New York (without regard to the
principles of conflicts of law thereof).
9.9 Rules of Construction. The Parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that
71
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
9.10 Expenses. Except as otherwise provided in Section 7.5, whether or
not the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby (including the fees and expenses of its advisers, accountants, legal
counsel, brokers and finders) shall be paid by the party incurring such expense.
In the event of any action, suit or proceeding, at law or in equity, among the
Parties relating to the enforcement of the Parties' rights and obligations under
or in respect of this Agreement, the Undertaking Letters, or the letter
agreement, dated as of the date hereof, among the Purchasers and the Seller
Parties, the Party that prevails in such action, suit or proceeding shall be
entitled to reimbursement from the non-prevailing Party of its costs and
expenses reasonably incurred relating to such enforcement; PROVIDED, THAT in the
event such Party prevails on some but not all issues in such action, suit or
proceeding, then the costs and expenses between the Parties shall be allocated
in proportion to damages, and if damages are not an appropriate measure, as the
court may determine.
9.11 Further Assurances. If, at any time after the Closing, any further
action is necessary or desirable to carry out the purposes of this Agreement
with respect to the transactions consummated at such Closing and to vest the
Purchasers with full title to the Subject Shares delivered at the Closing, each
Party shall, upon the request and at the expense of the other party, and without
further consideration, execute and deliver such other instruments of conveyance
and transfer, fully cooperate with the requesting party and take such other
actions as the requesting Party reasonably may request.
9.12 Enforcement. Each Party acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement by
such Party or its representatives and that any such breach would cause the other
Party (and, in the case of a breach by the Seller Parties of the covenants
contained in Section 5.7, 5.9, 5.10, 5.12, 5.13, 5.14 and 5.16, OpenTV)
irreparable harm. Accordingly, each Party agrees that, in the event of any
breach or threatened breach of this Agreement by a Party or its representatives,
the other party, or to the extent it has the right to enforce this Agreement,
OpenTV, in addition to any other remedies at law or in equity it may have, shall
be entitled, without the requirement of posting a bond or providing a
cross-undertaking in damages or other security, to equitable relief, including
injunctive relief and an order for specific performance.
9.13 Authorized Agent Consent to Jurisdiction. Each of the Seller
Parties hereby appoints CT Corporation System at 000 0xx Xxxxxx, Xxx Xxxx, XX
00000 as its authorized agent (the "AUTHORIZED AGENT") upon which process may be
served in any action arising out of or based upon this Agreement or the
transactions contemplated hereby that may be instituted in any court by any
party hereto and expressly consents to the jurisdiction of any such court, but
only in respect of any such action, and waives any other requirements of or
objections to personal jurisdiction with respect thereto. Each of the Seller
Parties represents and warrants that the
72
Authorized Agent has agreed to act as said agent for service of process, and
each of the Seller Parties agrees to take any and all action, including the
filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. If the
Authorized Agent shall cease to act as either Seller Party's agent for service
of process, such Seller Party shall appoint without delay another such agent and
notify the Purchasers of such appointment in the manner provided in Section 9.2.
With respect to any such action in the courts, service of process upon the
Authorized Agent in the manner provided in Section 9.2 at the address indicated
above and written notice of such service to a Seller Party given as provided in
Section 9.2 shall be deemed, in every respect, effective service of process upon
such Seller Party. Each Party will submit to the exclusive jurisdiction of any
federal or state located in the State of
New York having subject matter
jurisdiction on the event of any dispute arises out of this Agreement. 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
transaction contemplated hereby in (a) the Supreme Court of the State of
New
York,
New York County, or (b) the United States District Court for the Southern
District of
New York, and hereby further irrevocably and unconditionally waives
and agrees not to plead or claim in any such court that any such action, suit or
proceeding brought in any such court has been brought in an inconvenient forum.
9.14 Waiver of Jury Trial.
EACH PARTY HERETO HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
73
IN WITNESS WHEREOF, the parties hereto have caused this
Stock Purchase
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
MIH LIMITED
By:
---------------------------
Name:
Title:
OTV HOLDINGS LIMITED
By:
---------------------------
Name:
Title:
LIBERTY MEDIA CORPORATION
By:
---------------------------
Name:
Title:
LDIG OTV, INC.
By:
---------------------------
Name:
Title:
EXHIBIT A
CERTAIN DEFINED TERMS
As used in this Agreement and the Exhibits and Schedules hereto, the
following terms have the indicated meanings:
"AFFILIATE" with respect to any Person means any other Person
Controlling, Controlled by or under common Control with such first Person. For
all purposes of this Agreement (a) United Broadcasting, Public Company Limited,
a Thai company, shall be deemed not to be an Affiliate of any member of the MIH
Group unless and until there is a change in circumstances following the date of
this Agreement such that a member of the MIH Group shall become entitled to
exercise affirmative Control of such Person with respect to the subject matter
of the applicable covenant or agreement set forth herein, and (b) Tencent (BVI)
Limited, a British Virgin Islands corporation, shall be deemed not to be an
Affiliate of any member of the MIH Group.
"AVERAGE MARKET PRICE" means, with respect to any publicly traded
security as of any relevant date of determination, the average of the Closing
Prices per share or other unit of such security for the period of five full
Trading Days ending on and including the third full Trading Day prior to such
relevant date of determination (appropriately adjusted to reflect the effect of
any stock splits, reverse splits, stock dividends and any other similar events
affecting such security).
"BUSINESS DAY" means any day other than Saturday, Sunday and a day on
which banks are required or permitted to close in
New York,
New York.
"CLOSING PRICE" of a share or other unit of any security on any Trading
Day is (i) the last reported sale price for a share or other unit of such
security on such Trading Day as reported on the principal United States
securities exchange on which such security is listed or admitted for trading or
(ii) if such security is not listed or admitted for trading on any such
securities exchange, the last reported sale price for a share or other unit of
such security on such Trading Day as reported on The Nasdaq Stock Market or
(iii) if such security is not listed or admitted to trading on any United States
securities exchange or The Nasdaq Stock Market, the average of the highest bid
and lowest asked prices for a share or other unit of such security on such
Trading Day in the over-the-counter market as reported by The National Quotation
Bureau Incorporated, or any similar organization.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the United States Securities and Exchange
Commission.
"CONTRACT" means any mortgage, indenture, lease, contract, agreement,
instrument, bond, note or franchise.
"CONTROL" means the ability to direct or cause the direction (whether
through the ownership of voting securities, by contract or otherwise), directly
or indirectly, of the management and policies of a Person or to control (whether
affirmatively or negatively and
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whether through the ownership of voting securities , by contract or otherwise)
the decision of such Person to engage in the particular conduct at issue.
"CONTROLLED AFFILIATE" with respect to any Person means any Affiliate
of such Person that such Person Controls.
"CONTROLLING AFFILIATE" means, with respect to any Person, any other
Person that Controls such first Person.
"DOJ" means the United States Department of Justice.
"DUTCH LOCK-UP AGREEMENT" means the lock-up agreement between the
Seller and OpenTV dated as of November 18, 1999.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FTC" means the United States Federal Trade Commission.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean all domestic or foreign: (a)
inventions (whether patented, patentable or unpatentable and whether or not
reduced to practice), including ideas, research and techniques, technical
designs, discoveries and specifications (written or otherwise), improvements,
modifications, adaptations, and derivations thereto, and patents, patent
applications, inventor's certificates, and patent disclosures, together with
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof; (b) trademarks, service marks, brand names,
certification marks, trade dress, logos, trade names, assumed names, corporate
names and other indications of origin, including, without limitation,
translations, adaptations, derivations, and combinations thereof; (c) original
works of authorship, copyrights, moral rights, and rights equivalent thereto,
including but not limited to, the rights of attribution, assignation and
integrity; (d) trade secrets and confidential business information (including
ideas, research and development, know-how, formulas, compositions, manufacturing
and production processes and techniques, technical data, designs, discoveries,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals); (e) computer
software, including, without limitation, programs, applications, source and
object codes, data bases, data, models, algorithms, flowcharts, tables and
documentation related to the foregoing; (f) rights in confidentiality; (g) other
similar tangible or intangible intellectual property or proprietary rights,
information and technology and copies and tangible embodiments thereof (in
whatever form or medium); (h) all applications to register, registrations, and
renewals or extensions of the foregoing; (i) domain names; and (j) the goodwill
associated with each of the foregoing.
"INVESTORS' RIGHTS AGREEMENT" means the Investors' Rights Agreement,
dated October 23, 1999, by and among OpenTV, the Investors specified therein,
the Existing Holders specified therein, MIH (BVI) Ltd., a company incorporated
in the British Virgin Islands, and Sun Microsystems, Inc.
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"LAW" means any statute, law, ordinance , rule, regulation,
registration, permit, order, license, decree or judgment, including any of the
foregoing as they relate to Tax.
"LEGAL PROCEEDING" means any private or governmental action, suit,
complaint, arbitration, legal or administrative proceeding or investigation.
"LIBERTY STOCK" means the Series A Common Stock, par value $0.01 per
share, of Liberty; PROVIDED, however that if all of the outstanding shares of
Series A Common Stock of Liberty are reclassified or converted into or exchanged
for any other publicly traded security of Liberty or any other Person in
connection with a recapitalization, merger, consolidation, binding share
exchange or otherwise, then "Liberty Stock" shall be deemed to refer to such
other publicly traded security.
"LIEN" means any mortgage, pledge, lien, encumbrance, charge, or other
security interest; PROVIDED THAT the definition of "Lien" shall not include a
license of Intellectual Property.
"MAJOR CUSTOMER" means ***
"MANAGERS" means the Chief Executive Officer of OpenTV (the "CEO") and
each person who directly reports to the CEO.
"MATERIAL ADVERSE EFFECT" and "MATERIAL ADVERSE CHANGE" have the
meanings set forth in Section 9.3.
"MIH FACILITIES AGREEMENT" means the Facilities Agreement between MIH
Limited, Villiers Securities Limited and ABSA Bank Limited dated March 30, 2001.
"MIH HOLDINGS" means MIH Holdings Limited, a company incorporated in
South Africa.
"MIH INVESTMENTS" means MIH Investments (Proprietary) Limited, a
company incorporated in South Africa.
"NASPERS" means Naspers Limited, a company incorporated in South
Africa.
"OPENTV STOCK OPTION PLANS" means, collectively the OpenTV 2001 Non
Statutory Stock Option Plan, the OpenTV, Inc. 1998 Stock Option/Stock Issuance
Plan, as amended from time to time, the OpenTV 1999 Share Option/Share Issuance
Plan, as amended from time to time, the OpenTV 1999 Employee Stock Purchase
Plan, as amended from time to time, the Spyglass, Inc. 1995 Stock Incentive
Plan, the Spyglass, Inc. 1995 Director Stock Option Plan, the AllPen Software
1997 Stock Option Plan, the Navitel Communications 1997 Stock Option Plan, the
CSS Acquisition Corporation 2000 Special Stock Incentive Plan and the CSS
Acquisition Corporation 2000 Stock Plan, in each case as such plan exists on the
date hereof.
"OPENTV SUB" means OpenTV, Inc., a Delaware corporation.
"PARENT PARTIES" means MIH Holdings, MIH Investments and Naspers.
A-3
"PERMITTED ENCUMBRANCES" means the following: (i) Liens for Taxes,
assessments or other governmental charges or levies not at the time delinquent
or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set
aside on the books of OpenTV or the applicable Subsidiary of OpenTV in
accordance with GAAP, (ii) Liens of carriers, warehousemen, mechanics,
materialmen and landlords incurred in the ordinary course of business for sums
not overdue or being contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on the
books of OpenTV or the applicable Subsidiary of OpenTV, (iii) Liens incurred in
the ordinary course of business in connection with workmen's compensation,
unemployment insurance or other forms of governmental insurance or benefits, or
to secure performance of statutory obligations, leases and Contracts (other than
for borrowed money) entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds, (iv) purchase money security interests or
Liens on property acquired or held by OpenTV or any of its Subsidiaries in the
ordinary course of business to secure the purchase price of such property or to
secure indebtedness incurred solely for the purpose of financing the acquisition
of such property, and (v) easements, restrictions and other minor defects of
title that are not, individually or in the aggregate, material or that do not,
individually or in the aggregate, materially and adversely affect the value of
the property affected thereby.
"PERSON" means any individual, corporation, company, limited liability
company, partnership, joint venture, governmental authority, business
association or other entity.
"PURCHASER COMMISSION FILINGS" means all reports, registration
statements, definitive proxy statements and other documents (including exhibits
and in each case together with all amendments thereto) filed by Liberty with the
Commission since December 31, 2001.
"RESTRICTIONS" with respect to any capital stock, partnership interest,
membership interest in a limited liability company or other security shall mean
any voting or other trust or agreement, option, warrant, preemptive right, right
of first offer, right of first refusal, right of last refusal, escrow
arrangement, proxy, buy-sell agreement, power of attorney or other Contract or
any Law that, conditionally or unconditionally, (i) grants to any Person the
right to purchase or otherwise acquire, or obligates any Person to sell or
otherwise dispose of or issue, or otherwise results or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may result in any Person acquiring, (A) any of such capital stock or other
security; (B) any of the proceeds of, or any distributions paid or that are or
may become payable with respect to, any of such capital stock or other security;
or (C) any interest in such capital stock or other security or any such proceeds
or distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, is reasonably likely to
restrict the transfer or voting of, or the exercise of any rights or the
enjoyment of any benefits arising by reason of ownership of, any such capital
stock or other security or any such proceeds or distributions (other than
ministerial requirements related to transfers); or (iii) creates or, whether
upon the occurrence of any event or with notice or lapse of time or both or
otherwise, is reasonably likely to create a Lien affecting such capital stock or
other security, proceeds or distributions.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as amended.
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"SENIOR MANAGEMENT" means the Managers and each person who directly
reports to any of the Managers.
"SSI" means Sun TSI Subsidiary, Inc, a Delaware corporation.
"SUBSIDIARY" means, with respect to any Person (a) a corporation a
majority in voting power of whose capital stock with voting power, under
ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by a Subsidiary of such Person, or by such
Person and one or more Subsidiaries of such Person, whether or not such power is
subject to a voting agreement or similar Restriction, (b) a partnership or
limited liability company in which such Person or a Subsidiary of such Person
is, at the date of determination, (i) in the case of a partnership, a general
partner of such partnership with the power affirmatively to direct the policies
and management of such partnership or (ii) in the case of a limited liability
company, the managing member or, in the absence of a managing member, a member
with the power affirmatively to direct the policies and management of such
limited liability company, or (c) any other Person (other than a corporation) in
which such Person, a Subsidiary of such Person or such Person and one or more
Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has (i) the power to elect or direct the election of a
majority of the members of the governing body of such Person, whether or not
such power is subject to a voting agreement or similar Restriction, or (ii) in
the absence of such a governing body, at least a majority ownership interest. As
used in this Agreement, the phrase "WHOLLY OWNED SUBSIDIARY OF OPENTV" and
variations thereof shall be deemed to include each Person that is a wholly owned
Subsidiary of OpenTV Sub.
"SUN EXCHANGE AGREEMENT" means the Exchange Agreement, dated October
23, 1999, by and among OpenTV, OpenTV Sub and SSI.
"SUN SHAREHOLDERS' AGREEMENT" means the Shareholders' Agreement, dated
October 23, 1999, among the Seller, SSI and OpenTV.
"TAX" and "TAXES" means all taxes, however, denominated, including any
interest, penalties or other additions to tax payable in respect thereof,
imposed by any federal, territorial, state, local or foreign government or any
agency or political subdivision of any such government, which taxes shall
include, without limiting the generality of the foregoing, all income or profits
taxes, payroll and employee withholding taxes, unemployment insurance, social
security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise
taxes, gross receipts taxes, business license taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes and other obligations of
the same or of a similar nature to any of the foregoing.
"TAX RETURNS" means all reports, estimates, declarations of estimated
tax, information statements and returns relating to, or required to be filed in
connection with, any Taxes.
"TRADING DAY," with respect to any security, means a day on which the
principal United States or foreign securities exchange on which such security is
listed or admitted to trading, or The Nasdaq Stock Market if such security is
not listed or admitted to trading on any such securities exchange, as
applicable, is open for the transaction of business (unless such trading shall
have been suspended for the entire day) or, if the applicable security is not
listed or
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admitted to trading on any United States or foreign securities exchange or The
Nasdaq Stock Market, any Business Day.
"TRANSFER" means any sale, transfer, assignment, pledge, encumbrance or
other disposition in any manner whatsoever (including in any transaction
(including hedging and similar transactions) in which a Person assigns or
transfers the economic benefit associated with a security), directly or
indirectly. A pledge of or grant of a security interest in securities to a bona
fide third party lender to secure indebtedness for borrowed money shall not be
deemed to be a Transfer provided that the lender agrees in writing with the
pledging party (in an agreement that expressly provides that the Purchasers are
third party beneficiaries thereof) that such secured party shall not foreclose
upon or Transfer any of the securities so pledged or given as security pursuant
to the exercise of its remedies with respect to such pledge or security interest
unless it first complies with the applicable provisions of Section 4 of EXHIBIT
B as if it were a Seller Party.
"TREASURY REGULATIONS" mean the regulations promulgated under the Code
in effect on the date hereof and the corresponding sections of any regulations
subsequently issued that amend or supersede such regulations.
"UNDERTAKINGS LETTERS" means collectively, (a) the letter, dated the
date hereof, from Naspers addressed to the Purchasers, and relating, among other
things, to certain actions to be taken by Naspers in connection with the
transactions contemplated by this Agreement and (b) the letter, dated the date
hereof, from MIH Holdings and relating, among other things, to certain actions
to be taken by MIH Holdings in connection with the transactions contemplated by
this Agreement.
As used in this Agreement, the following terms have the meanings
ascribed thereto in the sections set forth opposite such terms:
TERM SECTION
---- -------
2001 Financial Statements 2.8(b)
2002 Budget 2.11
Affiliate Contracts 2.13(b)
Agreement Preamble
Alternate Transaction 4.2(a)
Applications 5.9(c)
Authorized Agent 9.13
B Share Reduction 5.5(a)
Cash Amount 1.2
CERCLA 2.14(b)
Closing 1.3(a)
Closing Date 1.3(a)
Confidential Information 5.2(b)
Contract Consent 2.7(a)
Contract Notice 2.7(d)
Covered Directors and Officers 5.11(a)
Covered Person 2.9(n)
Deed of Transfer 5.15
A-6
TERM SECTION
---- -------
Development Work 5.13(d)
Direct MIH Competitor 5.12
Director Indemnity Agreements 5.11(a)
Disclosed Contracts 2.13(a)
Disclosing Party 5.2(a)
Environmental Laws 2.14(b)
Employee Plans 2.15(a)
ERISA 2.15(a)
ESPP 2.5(c)
Estimated Tag-Along Shares 5.5(a)
Excess B Shares 5.5(a)
Excess Tag-Along Shares 5.5(a)
Exchange Act 2.7(c)
Exchange Plan 2.5(c)
Extraordinary Transaction 4.2(b)
GAAP 2.8(a)
Governmental Entity 2.7(c)
Indemnified Party 8.3(a)
Indemnifying Party 8.3(a)
Indemnity Action 2.10
Indemnity Period 5.11(a)
Injunction 5.4(a)
Intellectual Property Licenses 2.18(a)
JSE 2.7(c)
LDI 3.8
LDIG OTV Preamble
Letter Agreement 5.2(b)
Liberty Preamble
Liberty Consideration Shares 1.3(b)
Licenses 2.14(a)
Loss Percentage 8.4
Losses 8.1(a)
Major Customer Contract 2.13(b)
Master Carriage Agreement 5.10
Material Contract 2.13(b)
Xxxxxxx 2.20
MFN Beneficiary 4.1(g)
MFN Contracts 2.13(b)
MFN Terms 4.1(g)
MIH Affiliates 5.13(d)
MIH Group 2.7(a)
MIHL Preamble
MIH Shareholder Approval 6.1(d)
Naspers Shareholder Approval 6.1(d)
Netherlands Securities Act 2.8(c)
A-7
TERM SECTION
---- -------
OpenTV Recitals
OpenTV A Ordinary Shares Recitals
OpenTV B Ordinary Shares Recitals
OpenTV Articles 2.4
OpenTV Charter 2.4
OpenTV Commission Filings 2.8(a)
OpenTV Investment 2.6(a)
OpenTV Investment Agreements 2.6(a)
OpenTV Licenses 2.14(a)
OpenTV Material Adverse Effect 2.4
OpenTV Matter 8.4
OpenTV Ordinary Shares Recitals
OpenTV Preference Shares 2.5(a)
OpenTV Releasees 5.13(a)
OpenTV Sub Class A Stock 2.6(c)
OpenTV Sub Class B Stock 2.6(c)
OpenTV Sub Preferred Stock 2.6(c)
Outstanding Number 8.4
Outstanding OpenTV Stock Option Plans 2.5(d)
Outstanding OpenTV Stock Options 2.5(d)
Outstanding OpenTV Warrants 2.5(d)
Parties Preamble
Per Share Price 1.2
Permitted Options 4.1(l)
Purchased A Shares 1.1
Purchased B Shares 1.1
Purchase Price 1.2
Purchaser Basket Exception 8.1(c)
Purchaser Material Adverse Effect 3.1
Purchasers Preamble
Purchasers Basket Amount 8.2(c)
Reasonable Actions 2.18(d)
Receiving Party 5.2(a)
Relevant Period 3.8
Representatives 5.2(a)
Restricted Business 5.9(c)
Restricted Party 5.9(a)
Restricted Period 5.9(a)
Revenue Disclosed Contract 4.1(g)
Sale Notice 5.5(a)
Seller Preamble
Seller Basket Amount 8.1(c)
Seller Basket Exceptions 8.1(c)
Seller Material Adverse Effect 2.1
Seller Parties Preamble
A-8
TERM SECTION
---- -------
Shelf Registration Statement 1.4
Specified Action 6.3(a)
SSI 5.4(a)
Static Share Purchase Agreement 2.5(c)
Strategic Partner 2.6(a)
Sub Shares 2.5(c)
Subject Shares 1.1
Sun Sublicense Schedule 2.18
Tag-Along Holder 5.5(a)
Tag-Along Rights 5.5(a)
Tag-Along Sellers 5.5(a)
Thomson Agreements Schedule 2.18
Total Tag-Along Shares 5.5(a)
A-9
EXHIBIT B
REGISTRATION PROCEDURES AND RELATED MATTERS
The rights and obligations of Liberty with respect to the registration,
offer and sale of the Liberty Consideration Shares contemplated by the
Stock
Purchase Agreement, dated as of May 8, 2002 (the "Agreement"), among MIH
Limited, a corporation incorporated in the British Virgin Islands ("MIHL"), OTV
Holdings Limited, a corporation incorporated in the British Virgin Islands and a
wholly owned indirect Subsidiary of MIHL, Liberty Media Corporation, a Delaware
corporation ("Liberty"), and LDIG OTV, Inc., a Delaware corporation and a wholly
owned indirect Subsidiary of Liberty, are as set forth on this EXHIBIT B.
Section 1. DEFINITIONS; INTERPRETATION.
1.1 DEFINITIONS. As used in this EXHIBIT B, the following terms have
the following meanings.
"ACTION" has the meaning set forth in Section 5.3.
"AVERAGE MARKET PRICE" means the average of the Closing Price for a share
of Liberty Stock for the period of five full Trading Days ending on and
including the relevant date of determination (appropriately adjusted to reflect
the effect of any stock splits, reverse splits, stock dividends and any other
similar events affecting the Liberty Stock during such period).
"BLACKOUT PERIOD" has the meaning set forth in Section 2.4(c).
"EFFECTIVENESS TARGET DATE" means the 30th Day or, if there is a Lockup
Extension Period, the first Trading Day following the termination of the Lockup
Extension Period.
"ACTUAL EFFECTIVE DATE" means the earlier of (i) the first anniversary of
the Closing Date and (ii) the date on which the Liberty Registration Statement
is first declared effective under the Securities Act.
"HOLDBACK PERIOD" has the meaning set forth in Section 2.4(d).
"INITIAL 30 DAY PERIOD" means the 30 calendar day period commencing
immediately after the Actual Effective Date.
"LIBERTY MAKEWHOLE AMOUNT" means the Section 3.1(b)(i) Makewhole Amount,
the Section 3.2 Makewhole Amount and/or the Section 3.3 Makewhole Amount.
"LIBERTY REGISTRATION STATEMENT" has the meaning set forth in Section 2.1.
"LIBOR RATE" means an interest rate per annum equal to offered rate for
deposits in U.S. dollars for a period of one month which appears on the Reuters
Screen LIBO page as of 11:00
1
a.m., London time, on the 30th Day (or, if at least two such rates appear, the
arithmetic mean of such rates).
"PURCHASER INDEMNIFIED PARTIES" has the meaning set forth in Section 5.2.
"REGISTERED SHARES" means (a) the Liberty Consideration Shares issued and
delivered to the Seller Parties and the Tag-Along Sellers, if any, in accordance
with the Agreement and (b) any shares of capital stock issued with respect to or
in exchange for the shares referred to in the preceding clause (a) 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
Registration Statement shall have become effective under the Securities Act and
such Registered Shares shall have been disposed of in accordance with the
Liberty 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 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 have been repurchased by Liberty
or any of its Affiliates, (v) such shares shall become eligible for sale
pursuant to Rule 144 or (vi) such shares shall cease to be outstanding.
"REGISTRATION EXPENSES" means the following expenses incident to Liberty'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 New York Stock Exchange or on such securities exchange or other national
market system on which Liberty Consideration Shares may then be principally
traded; and (v) fees and expenses of counsel for Liberty and of Liberty's
independent certified public accountants, including the expenses of any special
audits. The term "Registration Expenses" does not include, and Liberty 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 any underwriters or underwriters counsel;
(3) fees and disbursements of counsel or of any experts retained by the Seller
Parties or Tag-Along Sellers in connection with the registration of the
Registered Shares or the disposition of such securities; (4) fees and
disbursements of Liberty's counsel and accountants in connection with the
preparation and delivery of "10b-5 opinions" or "comfort letters" pursuant to
Section 2.1(vi); or (5) any other out-of-pocket expenses of the Seller Parties
or Tag-Along Sellers in connection with the offer and sale of the Registered
Shares.
"SECTION 3.1(b)(i) MAKEWHOLE AMOUNT" has the meaning set forth in Section
3.1(b)(i).
"SECTION 3.1(b)(ii) MAKEWHOLE AMOUNT" has the meaning set forth in Section
3.1(b)(ii).
2
"SECTION 3.2 MAKEWHOLE AMOUNT" has the meaning set forth in Section 3.2.
"SECTION 3.3 MAKEWHOLE AMOUNT" has the meaning set forth in Section 3.3.
"SELLER INDEMNIFIED PARTIES" has the meaning set forth in Section 5.1.
"SELLER PARTIES" means, for purposes of this EXHIBIT B only, the Seller
Parties and any of their Permitted Affiliates to whom they Transfer Registered
Shares.
"TAG-ALONG SELLERS" means, for purposes of this EXHIBIT B only, the
Tag-Along Sellers and any of their respective direct or indirect wholly-owned
Subsidiaries (i) to whom they Transfer Registered Shares and (ii) which agree to
be bound by the applicable provisions of the Agreement (including this EXHIBIT
B) to the same extent as the transferor Tag-Along Seller.
"30TH DAY" means the thirtieth (30th) calendar day (or, if such 30th
calendar day is not a Trading Day, the next following Trading Day) following the
Closing Date.
"TRADING DAY" means a day on which the New York Stock Exchange is open for
the transaction of business (unless trading thereon shall have been suspended
for the entire day).
"UNDERWRITER INDEMNIFIED PARTIES" has the meaning set forth in Section
5.1.
All other capitalized terms used herein and not otherwise defined shall
have the meanings ascribed thereto in the Agreement or in EXHIBIT A to the
Agreement.
1.2 INTERPRETATION. When a reference is made in this EXHIBIT B to a
Section, such reference shall be to a Section of this EXHIBIT B, unless
otherwise clearly indicated. The headings contained in this EXHIBIT B are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Exhibit or the Agreement. Whenever the word "including"
is used in this EXHIBIT B, 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.
1.3 STOP TRANSFER; LEGEND.
(a) So long as applicable, a stop-transfer order will be placed on
the stock-transfer books of Liberty respecting the certificates evidencing the
Liberty Consideration Shares, and each certificate representing any portion of
the Liberty Consideration Shares, shall contain, be stamped or otherwise
imprinted with a legend in the following form (in addition to any legend
required under applicable state securities laws):
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR UNDER ANY
3
STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND PURSUANT TO THE
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS COVERING SUCH
SECURITIES OR UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR
THE HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY TO THE
ISSUER, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT AND THE PROVISIONS OF ANY
APPLICABLE STATE SECURITIES LAWS.
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, ENCUMBRANCE OR OTHER
DISPOSITION IN ANY MANNER WHATSOEVER (INCLUDING, WITHOUT LIMITATION,
IN ANY TRANSACTION (INCLUDING HEDGING AND OTHER TRANSACTIONS) IN
WHICH THE HOLDER OR CERTAIN OF ITS AFFILIATES ASSIGNS OR TRANSFERS
THE ECONOMIC BENEFIT ASSOCIATED WITH THE SECURITIES REPRESENTED BY
THIS CERTIFICATE) OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE
STOCK
PURCHASE AGREEMENT, DATED AS OF MAY [____], 2002, AMONG MIH LIMITED,
OTV HOLDINGS LIMITED, LIBERTY MEDIA CORPORATION AND LDIG OTV, INC.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE ISSUER.
(b) At the request of MIHL, Liberty shall cooperate with MIHL to
remove the transfer restrictions described in 1.3(a) above promptly following
(i) in the case of the first legend set forth in Section 1.3(a) and any related
stop-transfer order, when the Commission declares the Liberty Registration
Statement effective under the Securities Act, and (ii) in the case of the second
legend set forth in Section 1.3(a) and any related stop-transfer order, the
Effectiveness Target Date.
Section 2. REGISTRATION.
2.1 REGISTRATION PROCEDURES. If the Purchasers deliver any Liberty
Consideration Shares in payment of all or any portion of the Purchase Price, (a)
prior to or as soon as reasonably practicable following the Closing, Liberty
shall prepare and cause to be filed
4
with the Commission a registration statement on an appropriate form registering
the resale by the Seller Parties and Tag-Along Parties, if any, of the Liberty
Consideration Shares (the "LIBERTY REGISTRATION STATEMENT"), and (b) Liberty
shall use its commercially reasonable efforts to cause the Liberty Registration
Statement to be declared effective by the Commission on or before the
Effectiveness Target Date. In connection with such registration of the Liberty
Consideration Shares, Liberty shall:
(i) prepare and file with the Commission such amendments and
supplements to the Liberty Registration Statement and the prospectus used
in connection therewith (and to file such prospectus, as so amended or
supplemented under Rule 424 under the Securities Act, if required) (each,
a "prospectus") as may be necessary to keep such registration statement
effective until the earlier of (A) the first anniversary of the Closing
and (B) such date that all Registered Shares included in such registration
statement have been disposed of in accordance with the intended methods of
disposition thereof as set forth in such registration statement or have
otherwise ceased to be Registered Shares, and to comply with the
provisions of the Securities Act with respect to the disposition of all
Registered Shares covered by the Liberty Registration Statement;
(ii) promptly furnish to the Seller Parties, Tag-Along Sellers, if
any, and any managing underwriter such number of conformed copies of the
Liberty Registration Statement and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus included in the Liberty Registration Statement (including
each preliminary prospectus) and any prospectus filed under Rule 424 of
the Securities Act, and such other documents as the Seller Parties,
Tag-Along Sellers, if any, and 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 the Liberty Registration Statement;
(iii) use its commercially reasonable best efforts to register or
qualify all the Registered Shares under such securities or "blue sky" laws
of such jurisdictions as the Seller Parties and Tag-Along Sellers, if any,
shall reasonably request (given the intended methods of distribution), and
do any and all other acts and things that may be reasonably necessary or
advisable to enable the Seller Parties and the Tag-Along Sellers, if any,
to consummate the disposition in such jurisdictions of the Registered
Shares covered by such registration statement; PROVIDED that in connection
therewith Liberty shall not be required to register or qualify any
Registered Shares under the securities or "blue sky" laws of any
jurisdiction where Liberty 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
5
Registered Shares covered by such registration statement or subject itself
to taxation in such jurisdiction;
(iv) immediately notify the Seller and Tag-Along Sellers, if any, in
writing, at any time when a prospectus relating thereto is required to be
delivered pursuant to the Securities Act, of the happening of any event
that comes to the attention of Liberty 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(e), Liberty will
promptly prepare and furnish to the Seller Parties, Tag-Along Sellers, if
any, and any managing underwriter 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 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; PROVIDED
HOWEVER, and subject to Sections 2.4(c) and 2.4(d) and Section 3, Liberty
shall use its commercially reasonable best efforts to keep the prospectus
included in the Liberty Registration Statement available for continuous
use throughout the Initial 30-Day Period;
(v) immediately notify the Seller Parties and Tag-Along Sellers, if
any, of the issuance or, to the knowledge of Liberty, threatened issuance
of any stop order by the Commission suspending the effectiveness of the
Liberty Registration Statement or of the receipt by Liberty 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 shall take all
reasonably practicable action necessary (A) to prevent the entry of any
threatened stop order or any threatened suspension or (B) to remove at the
earliest practicable time any stop order or lift any suspension if
entered;
(vi) if requested by the managing underwriters(s) of Registered
Shares being offered and sold in an underwritten offering during the
Initial 30-Day Period (which shall be extended by such number of days as
the Seller Parties and Tag-Along Sellers, if any, are unable to distribute
their Registered Shares during such period due to a Blackout Period, a
Holdback Period or the occurrence of any event described in Section
2.1(iv)), instruct and permit (a) its outside securities counsel, Xxxxx
Xxxxx LLP, to cooperate with such underwriter(s) in delivering a "10b-5
opinion" in customary form and reasonably satisfactory to such
underwriter(s) and (b) its independent certified public accountants, KPMG
LLP, to cooperate with such underwriters in delivering a "cold comfort"
letter (and update thereof) in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
secondary underwritten
6
offerings and reasonably satisfactory to such underwriter(s), in each case
addressed to the underwriter(s) and the Selling Parties and Tag-Along
Sellers, if any, whose Registered Shares are included in such underwritten
offering and delivered on (x) the date on which the Selling Parties and
Tag-Along Sellers, if any, enter into an underwriting agreement with such
managing underwriter(s) and (y) at the time of the closing under such
underwriting agreement. Liberty will reasonably cooperate with such
counsel in connection with the preparation of their opinions and with such
accountants in connection with the preparation of their "comfort letter"
(and update thereof);
(vii) 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 the Liberty Registration Statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
promulgated thereunder; and
(viii) use its reasonable best efforts to cause the Registered
Shares to be listed on the New York Stock Exchange or on such other
securities exchange or national market system on which securities of
Liberty of the same class are then principally traded.
2.2 REGISTRATION EXPENSES. Liberty will pay all Registration
Expenses in connection with the registration of Registered Shares pursuant to
Section 2.1. The Seller Parties and the Tag-Along Sellers, if any, will pay, and
hold Liberty harmless from, all other costs and expenses incurred by or on
behalf of such parties in connection with an offer and sale or other disposition
of Registered Shares pursuant to this EXHIBIT B (including the reasonable fees
and disbursements of Liberty's counsel and accountants in connection with the
preparation and delivery of the "10b-5 opinions" and "comfort letters"
contemplated by Section 2.1(vi)). For the avoidance of doubt, this Section 2.2
does not apply to any costs and expenses that may be payable by Liberty under
Section 5.
2.3 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of the Liberty Registration Statement, Liberty shall
provide the Seller Parties and Tag-Along Sellers, if any, and their respective
attorneys and accountants the opportunity to participate in the preparation of
such registration statement, the prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and shall make
available and give each of them and any managing underwriter(s) and its counsel,
during normal business hours, such access to Liberty's books and records,
pertinent corporate documents and such opportunities to discuss the business of
Liberty and its subsidiaries with its employees, independent certified public
accountants and legal counsel as shall be necessary for the Seller Parties,
Tag-Along Sellers, if any, and any managing underwriter(s) to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act.
The Seller Parties, Tag-Along Sellers, if any, and any managing underwriter(s)
shall conduct their due diligence
7
investigation in such a manner so as to avoid any undue disruptions to the
ongoing business operations of Liberty. Liberty shall not file the Liberty
Registration Statement, any prospectus included therein or any amendment thereof
or supplement thereto with the Commission over the reasonable and timely
objections of counsel for the Seller Parties and Tag-Along Parties, if any;
PROVIDED, that such counsel and Liberty shall use their respective good faith
efforts to resolve such objections on a basis reasonably satisfactory for such
counsel which will permit such filing to be promptly made; and PROVIDED FURTHER,
that Liberty may file over such objections, after using its good faith efforts
to resolve such objections, if (i) the failure to so file would reasonably be
expected to delay the date on which the Liberty Registration Statement is
declared effective until after the Effectiveness Target Date and (ii) counsel to
Liberty advises it in writing that such filing conforms in all material respects
with the applicable requirements of the Securities Act and the Exchange Act.
2.4 CERTAIN COVENANTS. The Seller Parties and Tag-Along Sellers, if
any, agree with Liberty as follows:
(a) Each of the Seller Parties and Tag-Along Sellers, if any, shall
furnish to Liberty such information regarding itself, its intended method of
distribution of Registered Shares and such other information as Liberty may from
time to time reasonably request for purposes of preparation of the Liberty
Registration Statement and to maintain the effectiveness of such registration
statement.
(b) At least thirty-six (36) hours (at least three (3) hours during
the Initial 30-Day Period) prior to any disposition of Registered Shares by any
of the Seller Parties or the Tag-Along Sellers, such Seller Parties or Tag-Along
Sellers, as the case may be, will orally advise Liberty 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 may reasonably request in order to supplement the prospectus
contained in the Liberty Registration Statement or filed pursuant to Rule 424
under the Securities Act in accordance with the rules and regulations of the
Commission. Promptly after receiving such advice, Liberty 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 in
accordance with applicable Law 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 the Seller Parties or Tag-Along Sellers, if any, shall
reasonably request (subject to the proviso set forth in Section 2.1(iii) of this
EXHIBIT B).
(c) Liberty, in any event, may postpone the filing or the
effectiveness of the Liberty Registration Statement or suspend, at any time or
from time to time, the use of the Liberty Registration Statement for a period of
time, not to exceed an aggregate of 90 calendar days in any 12-month period (a
"BLACKOUT PERIOD"), if Liberty determines that the filing or continued use of
the Liberty Registration Statement would (x) require the public disclosure of
material non-public information concerning any transaction or negotiations
involving Liberty or any of its affiliates that, in the good faith judgment of
the Board of Directors of Liberty (or the
8
executive committee thereof), would materially interfere with such transaction
or negotiations or, (y) otherwise require premature disclosure of information
that, in the good faith judgment of the Board of Directors of Liberty (or the
executive committee thereof), would adversely affect or otherwise be detrimental
to Liberty. Liberty shall provide the Seller with written notice of its
commencement of a Blackout Period and of the termination of such Blackout
Period. The aggregate number of calendar days in any 12-month period during
which Liberty may require a Blackout Period shall be reduced by the number of
calendar days during which the Seller Parties and any Tag-Along Sellers are
required to cease any distribution of Registered Shares under the Liberty
Registration Statement pursuant to Section 2.4 (d) or Section 2.4(e).
(d) The Seller Parties and Tag-Along Sellers, if any, shall promptly
cease any distribution of Registered Shares under the Liberty Registration
Statement, for up to 90 calendar days (the "HOLDBACK PERIOD"), upon the written
request of Liberty if Liberty proposes to file (or has previously filed) a
registration statement under the Securities Act for the offering and sale of
securities for its own account and the Board of Directors of Liberty (or the
executive committee thereof) determines in its good faith judgment that the
continued distribution of the Registered Shares would adversely affect the
success of the offering of the securities proposed to be registered for the
account of Liberty. Liberty may not exercise its right to require the Seller
Parties and Tag-Along Sellers, if any, to cease distributing Registered Shares
pursuant to this Section 2.4(d) if Liberty has previously exercised such right.
The Holdback Period shall be reduced by the number of calendar days in which
Purchaser postpones the filing or the effectiveness of the Liberty Registration
Statement or suspends the use of the Liberty Registration Statement pursuant to
Section 2.4(c) or Section 2.4(e).
(e) The Seller Parties and Tag-Along Sellers, if any, agree that,
upon receipt of any written notice from Liberty of the happening of any event of
the kind described in Section 2.1(iv) (a "MATERIAL EVENT"), the Seller Parties
and Tag-Along Sellers, if any, will forthwith discontinue disposition of the
Registered Shares pursuant to the Liberty Registration Statement until receipt
of copies of the supplemented or amended prospectus contemplated by Section
2.1(iv), and, if so requested by Liberty, will deliver to Liberty all copies of
the prospectus covering the Registered Shares in their possession at the time of
receipt of such notice; PROVIDED, that if, at the time of receipt of such
notice, (x) any Seller Parties or Tag-Along Sellers have complied with their
obligations under Section 2.4(b), (y) such Seller Parties or Tag-Along Sellers
have sold Registered Shares (or have signed a firm commitment underwriting
agreement with respect to the purchase of such shares for an agreed-upon price)
but not yet delivered such shares and (z) the misstatement or omission arising
from the Material Event is not of a nature that would require a post-effective
amendment to the Liberty Registration Statement, then Liberty shall use its
commercially reasonable best efforts to take such action (including preparing
and delivering a prospectus supplement or filing a current report on Form 8-K)
as will permit such shares to be timely delivered.
(f) Notwithstanding Section 2.4(c) and 2.4(d), the Seller Parties
and Tag-Along Sellers, if any, shall not be required to cease distributing
Registered Shares if (i) such Seller Parties and Tag-Along Sellers, if any, have
complied with their obligations under Section
9
2.4(b) and (ii) such shares have been sold (or the Seller Parties and/or
Tag-Along Sellers, if any, have signed a firm commitment underwriting agreement
with respect to the purchase of such shares for any agreed upon price) but not
yet delivered.
(g) The Seller Parties and Tag-Along Sellers, if any, shall, at any
time they are 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
securities of Liberty in contravention of such rules, (ii) will distribute the
Registered Shares solely in the manner described in the Liberty Registration
Statement and (iii) will not bid for or purchase any securities of Liberty or
attempt to induce any person to purchase any securities of Liberty other than as
permitted under the Exchange Act.
(h) The Seller Parties and Tag-Along Sellers, if any, shall provide
such information and materials, execute all such documents and take all such
other actions as Liberty shall reasonably request in order to permit Liberty to
comply with all applicable requirements of Law and to effect the registration of
the Registered Shares.
2.5 SELECTION OF UNDERWRITERS. If the Seller Parties or Tag-Along
Sellers, if any, desire any offering of Registered Shares to be an underwritten
offering, then the Seller Parties and the Tag-Along Sellers, if any, shall have
the right to select the managing underwriter or co-managing underwriters for
such offering, subject to such underwriter or underwriters being reasonably
acceptable to Liberty. Xxxxxxx Xxxxx & Co. and Xxxxxx Brothers Inc. shall be
deemed reasonably acceptable to Liberty for purposes of this Section 2.5.
Liberty shall not be required to enter into an underwriting agreement, sales
agreement or similar agreement with any underwriter of the Registered Shares. If
requested by any underwriter, Liberty shall acknowledge to such underwriter that
it has the same rights and obligations as the Seller Parties and Tag-Along
Sellers, if any, under Section 5 hereof.
2.6 DISTRIBUTION ACTIVITIES MAY BE SEPARATE. Notwithstanding
anything to the contrary in this EXHIBIT B, neither the Seller Parties nor the
Tag-Along Sellers shall be required to participate in any distribution of
Registered Shares by the other and shall each have the rights and obligations
described herein (except that the Tag-Along Sellers will not have benefit of the
provisions of Section 2.1(vi) except through joint participation in an
underwritten offering with the Selling Parties).
Section 3. MAKEWHOLE PROVISIONS
3.1 MAKEWHOLE FOR EXTENSION OF LOCK-UP PERIOD.
(a) Any time prior to the 30th Day, Liberty may deliver written
notice (an "EXTENSION NOTICE") to the Seller Parties and the Tag-Along Sellers,
if any, that it elects to extend the 30-day lock-period with respect to the
Liberty Consideration Shares set forth in Section 5.7(b) of the Agreement. The
Extension Notice shall set forth the period of the extension, which shall not
exceed 30 calendar days (the "LOCKUP EXTENSION PERIOD"). Liberty shall have the
right
10
to terminate any Lockup Extension Period, by written notice to the Seller
Parties and the Tag-Along Sellers, at any time. Liberty may not deliver more
than one Extension Notice.
(b) If Liberty invokes a Lockup Extension Period, then:
(i) if the Average Market Price as of the last day of the Lockup
Extension Period (or, if such last day is not a Trading Day, as of the
next preceding Trading Day (the "LOCKUP LAST DAY")) is less than the
Average Market Price as of the 30th Day, then Liberty shall pay to each of
the Seller Parties and Tag-Along Sellers, if any, an amount (the "SECTION
3.1(b)(i) MAKEWHOLE AMOUNT") equal to the product of (x) the number of
Registered Shares owned by such Seller Party or Tag-Along Seller on the
Lockup Last Day and (y) the difference between the Average Market Price as
of the 30th Day and the Average Market Price as of the Lockup Last Day.
Liberty may pay the Section 3.1(b)(i) Makewhole Amount in cash or in
Liberty Stock (or any combination of the two). If Liberty elects to
deliver shares of Liberty Stock, such shares shall be deemed to have a
value per share equal to the Average Market Price as of the Lockup Last
Day; or
(ii) if the Average Market Price as of the Lockup Last Day is
greater than the Average Market Price as of the 30th Day, then each of the
Seller Parties and Tag-Along Sellers, if any, shall pay Liberty an amount
(the "Section 3.1(b)(ii) Makewhole Amount") equal to the positive
difference, if any, between (x) the Total Equity Gain and (y) the IRR
Equity Gain, where:
o "Total Equity Gain" means the product of (x) the aggregate
number of Registered Shares owned by such Seller Party or
Tag-Along Seller on the Lockup Last Day and (y) the difference
between (I) the Average Market Price as of the Lockup Last Day
and (II) the Average Market Price as of the 30th Day; and
o "IRR Equity Gain means the product of (x) the aggregate number
of Registered Shares owned by such Seller Party or Tag-Along
Seller on the Lockup Last Day and (y) the Average Market Price
as of the 30th Day, plus interest thereon at the LIBOR Rate
for the period commencing on the 30th Day and ending on the
day immediately preceding the Lockup Last Day.
Each of the Seller Parties and Tag-Along Sellers, if any, may pay the
Section 3.1(b)(ii) Makewhole Amount in cash or in Liberty Stock (or any
combination of the two). If any of the Seller Parties or Tag-Along Sellers
elects to deliver shares of Liberty Stock, such shares shall be deemed to
have a value per share equal to the Average Market Price as of the Lockup
Last Day
3.2 MAKEWHOLE FOR EFFECTIVENESS DELAY. If the Liberty Registration
Statement is not declared effective under the Securities Act on or before the
Effectiveness Target Date
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(other than due to (A) a breach by the Seller Parties or Tag-Along Sellers, if
any, of their obligations under this EXHIBIT B or (B) an act of war, terrorism
or other national calamity which shall have resulted in the closing of the
Commission after the Closing Date for a period in excess of four days (which, in
the case of this clause (B), shall result in the Effectiveness Target Date being
delayed for a number of days equal to the number of days during which the
Commission was so closed), then Liberty shall be required to comply with the
provisions of this Section 3.2. On the Effectiveness Target Date, Purchaser
shall inform the Seller Parties and Tag-Along Sellers, if any, in writing, of
its election to compensate them in the manner specified in clause (a) or (b) of
the following sentence. Liberty may compensate the Seller Parties and Tag-Along
Sellers, if any, by either (a) purchasing all, but not less than all, of the
Registered Shares owned by them on the Effectiveness Target Date for an amount
(the "SECTION 3.2 BUYBACK AMOUNT"), in cash, equal to the product derived by
multiplying the number of such Registered Shares by the Average Market Price as
of the Effectiveness Target Date (the "SECTION 3.2 BUYBACK OPTION") or (b) pay
an amount (the "SECTION 3.2 MAKEWHOLE AMOUNT"), in cash, to each of the Seller
Parties and Tag-Along Sellers equal to the product of (x) the number of
Registered Shares owned by it on the Effectiveness Target Date (less any
Registered Shares Transferred by it (other than to a Permitted Transferee) prior
to the Actual Effective Date and (y) the difference, if a positive number,
determined by subtracting (i) the Average Market Price as of the Actual
Effective Date from (ii) the Average Market Price as of the Effectiveness Target
Date (the "SECTION 3.2 MAKEWHOLE OPTION").
3.3 MAKEWHOLE FOR BLACKOUT OR HOLDBACK PERIODS. If at any time
during the Initial 30-Day Period Liberty imposes a Blackout Period or a Holdback
Period, then Liberty shall be required to comply with the provisions of this
Section 3.3. At the time Liberty notifies the Seller Parties and Tag-Along
Sellers, if any, that it is commencing a Blackout Period or a Holdback Period
(the date such period is commenced being the "COMMENCEMENT DATE"), it shall
inform the Seller Parties and the Tag-Along Sellers, in writing, whether it
elects to compensate them in the manner specified in clause (a) or (b) of the
following sentence. Liberty may compensate the Seller Parties and Tag-Along
Sellers, if any, by either (a) purchasing all, but not less than all, of the
Registered Shares owned by them on the Commencement Date for an amount (the
"SECTION 3.3 BUYBACK AMOUNT"), in cash, equal to the product derived by
multiplying the number of such Registered Shares by the Average Market Price as
of the Commencement Date (the "SECTION 3.3 BUYBACK OPTION") or (b) pay an amount
(the "SECTION 3.3 MAKEWHOLE AMOUNT"), in cash, to each of the Seller Parties and
Tag-Along Parties, if any, equal to the product of (x) the number of Registered
Shares owned by it on the Commencement Date (less any Registered Shares
Transferred by it (other than to a Permitted Transferee) prior to the first
Trading Day after the Commencement Date on which the Seller Parties and
Tag-Along Parties may distribute Registered Shares under the Purchase
Registration Statement (the "FREE TO SELL DATE")) and (y) the difference, if a
positive number, determined by subtracting (i) the Average Market Price as of
the Free to Sell Date from (ii) the Average Market Price as of the Commencement
Date (the "SECTION 3.3 MAKEWHOLE OPTION").
3.4 MAKEWHOLE PAYMENTS.
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(a) If Liberty is required to pay a Section 3.1(b)(i) Makewhole
Amount to the Seller Parties and Tag-Along Sellers, if any, then Liberty shall
pay such amount, subject to Section 3.4(e) and Section 3.4(f), on the third
Trading Day after the Lockup Last Day. If Liberty makes payment, in whole or in
part, in cash, such cash shall be paid by wire transfer of same day funds to the
respective accounts designated by such Seller Parties and Tag-Along Sellers at
least one Trading Day prior to the payment date. If Liberty makes payment, in
whole in part, with shares of Liberty Stock ("MAKEWHOLE LIBERTY SHARES"),
Liberty shall deliver such shares at a closing to be held at the offices of
Xxxxx Xxxxx LLP, 30 Rockefeller Center, New York, New York on the third Trading
Day after the Lockup Last Day. At the closing, Liberty shall cause to be
delivered to each of the Seller Parties and Tag-Along Sellers the number of
Makewhole Liberty Shares to which it is entitled, which shares shall be (i)
registered in the name of such Seller Party or Tag-Along Party and (ii) validly
issued, duly authorized, fully-paid and nonassessable and free and clear of all
Liens and Restrictions. Liberty shall enter into a registration rights
agreements with respect to the Makewhole Liberty Shares with each of the Seller
Parties and Tag-Along Sellers, containing terms and provisions substantially
identical to those contained in this EXHIBIT B, except that the makewhole
provisions of such agreement shall protect the Seller Parties and Tag-Along
Sellers from any decline in the Average Market Price of the Makewhole Liberty
Shares between the Lockup Last Day and the first date that such shares may be
sold pursuant to an effective registration statement under the Securities Act
(and for the 30-day period thereafter under the circumstances described in
Section 3.3).
(b) If the Seller Parties and Tag-Along Sellers, if any, are
required to pay a Section 3.1(b)(ii) Makewhole Amount to Liberty, then, subject
to Section 3.4(e) and Section 3.4(f), such amount shall be paid on the third
Trading Day after the Lockup Last Day. If a Seller Party or Tag-Along Seller
makes payment, in whole or in part, in cash, such cash shall be paid by wire
transfer of same day funds to an account designated by Liberty at least one
Trading Day prior to the payment date. If a Seller Party or Tag-Along Seller
makes payment, in whole in part, with Registered Shares, it shall deliver such
shares ("EQUITY GAIN REGISTERED SHARES"), together with duly executed stock
powers in blank, at a closing to be held at the offices of Xxxxx Xxxxx LLP, 30
Rockefeller Center, New York, New on the third Trading Day after the Lockup Last
Day. At the closing, each of the Seller Parties and Tag-Along Sellers, if any,
delivering Equity Gain Registered Shares shall deliver to Liberty a certificate,
signed by an appropriate officer (or equivalent representative) and certifying
that such shares are owned by such Seller Party or Tag-Along Seller,
beneficially and of record, and are free and clear of any Liens or Restrictions
whatsoever (other than those imposed by the Agreement).
(c) If Liberty elects to purchase Registered Shares pursuant to the
Section 3.2 Buyback Option or the Section 3.3 Buyback Option, then Liberty shall
purchase, and the Seller Parties and Tag-Along Sellers, if any, shall sell, such
Registered Shares at a closing to be held at the offices of Xxxxx Xxxxx LLP, 00
Xxxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the third Trading Day after the
Effectiveness Target Date or the Commencement Date, as the case may be. Liberty
and each of the Seller Parties and Tag-Along Sellers, if any, shall execute an
agreement for the purchase and sale of the Registered Shares, which agreement
shall contain representations and warranties on the part of the seller that its
Registered Shares are, and will be at the closing of
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the sale of the Registered Shares to Liberty or its designee, owned by such
Seller Party or Tag-Along Seller, beneficially and of record, and are, and at
the time of such closing will be, free and clear of any Liens or Restrictions
whatsoever (other than those imposed by the Agreement). At the closing, against
receipt of the Registered Shares of any of the Seller Parties or Tag-Along
Sellers, Liberty (or its designee) shall pay the Section 3.2 Buyback Amount or
the Section 3.3 Buyback Amount, as the case may, by wire transfer of same day
funds to an account designated by such Seller Party or Tag-Along Seller at least
one Trading Day prior to the closing.
(d) If Liberty elects to compensate the Seller Parties and Tag-Along
Sellers, if any, pursuant to the Section 3.2 Makewhole Option or the Section 3.3
Makewhole Option, then Liberty shall pay the Section 3.2 Makewhole Amount or the
Section 3.3 Makewhole Amount, as the case may be, payable to each of the Seller
Parties and Tag-Along Sellers within three Trading Days after the Actual
Effective Date or the Free to Sell Date, respectively, by wire transfer of same
day funds to an account designated by such Seller Party or Tag-Along Seller not
less than one Trading Day next preceding such payment date.
(e) There shall be credited against any Liberty Makewhole Amount any
earlier paid Liberty Makewhole Amount to the extent such earlier Liberty
Makewhole Amount compensated the Seller Parties and Tag-Along Sellers, if any,
for the same price decline in the Average Market Price of the Registered Shares.
The following example illustrates the foregoing:
o Liberty invokes a Lockup Extension Period, with the Average Market
Price as of the 30th Day being $12 and the Average Market Price as
of the Lockup Last Day being $9.00. If there are 100 Registered
Shares, the 3.1(b)(i) Makewhole Amount would be $300.
o The Actual Effective Date occurs 5 days after the Effectiveness
Target Date, with the Average Market Price as of the Effectiveness
Target Date being $9.00 and the Average Market Price as of the
Actual Effective Date being $7.00. If there are 100 Registered
Shares, the Section 3.2 Makewhole Amount would be $200. The Section
3.1(b)(i) Makewhole Amount is not credited against the Section 3.2
Makewhole Amount.
o Liberty commences a Holdback Period on the 10th day after the Actual
Effective Date, when the Average Market Price is $15.00. It
terminates the Holdback Period on the 45th day after the Actual
Effective Date, when the Average Market Price is $8.00. If there are
100 Registered Shares, the Section 3.3 Makewhole Amount would be
$700. As Liberty had previously compensated the Seller Parties and
Tag-Along Sellers, if any, for the decline in the Average Market
Price from $12.00 to $9.00 by payment of the Section 3.1(b)(i)
Makewhole Amount, and from $9.00 to $8.00 by payment of the Section
3.2 Makewhole Amount, it credits the entire $300 of the Section 3.2
Makewhole Amount (which is attributable to the price decline from
$12.00 to $9.00) and $100 of the Section 3.2(b) Makewhole Amount
(representing the portion attributable to the price decline from
$9.00 to $8.00) against the $700 Section 3.3 Makewhole Amount,
resulting in a net payment to the Seller Parties and the Tag-Along
Sellers, if any, of $400.
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(f) If Liberty is obligated to pay a Section 3.1(b)(i) Makewhole
Amount and the Actual Effective Date does not occur on the Effectiveness Target
Date, then Liberty may, by written notice delivered to the Seller Parties and
Tag-Along Sellers, if any, on or before the first Trading Day next following the
Lockup Last Day, delay payment of such Section 3.1(b)(i) Makewhole Amount until
the third Trading Day after the Actual Effective Date. If the Seller Parties and
Tag-Along Parties, if any, are obligated to pay a Section 3.2(b)(ii) Makewhole
Amount, each of the Seller Parties or Tag-Along Parties, if any, may, by written
notice delivered to Liberty on or before the before the first Trading Day next
following the Lockup Last Day, delay payment until the third Trading Day after
the Actual Effective Date. In such event, the Section 3.2(b)(ii) Makewhole
Amount payable by any of the Seller Parties or Tag-Along Sellers shall be netted
against any Section 3.2 Makewhole Amount payable to such Seller Party or
Tag-Along Party by Liberty.
(g) Any payment of a Liberty Makewhole Amount or Section 3.1(b)(ii)
Makewhole Amount shall be deemed, to the extent permissible under applicable
Law, an adjustment to the purchase price paid for the Open TV Ordinary Shares
under the Agreement.
Section 4. RIGHT OF FIRST REFUSAL.
(a) Prior to the first Transfer of any Registered Shares by any of
the Seller Parties or Tag-Along Sellers, if any (other than to a Permitted
Transferee), after the Closing Date, but not prior to the second Trading Day
immediately preceding the Effectiveness Target Date, the Seller Parties and
Tag-Along Sellers, if any, shall deliver written notice (a "ROFR NOTICE") to
Liberty of Seller's irrevocable offer (a "ROFR OFFER") to sell to Liberty all,
but not less than all, of the Registered Shares owned by them for a purchase
price (the "ROFR PRICE"), in cash, equal to the product derived by multiplying
(a) the number of Registered Shares owned by the Seller Parties and Tag-Along
Sellers, if any, by (b) the Average Market Price as of the Trading Day
immediately prior to Liberty's receipt of the ROFR Notice. If Liberty desires to
accept the ROFR Offer, it may do so by delivering written notice thereof (an
"ACCEPTANCE NOTICE") to each of the Seller Parties and Tag-Along Sellers prior
to 9:00 a.m., New York City time, on the second Trading Day after Liberty's
receipt of the ROFR Notice (the "ACCEPTANCE DATE"). The delivery of a timely
Acceptance Notice shall constitute a binding agreement between Liberty and the
Seller Parties and Tag-Along Sellers as to the purchase and sale of the
Registered Shares at the ROFR Price. Liberty shall purchase, and the Seller
Parties and Tag-Along Parties shall sell, the Registered Shares at a closing to
be held at 10:00 a.m., New York City time, at the offices of Xxxxx Xxxxx LLP, 00
Xxxxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the third Trading Day after the
Acceptance Date. Liberty and the Seller Parties and Tag-Along Sellers shall
execute a customary agreement for the purchase and sale of the Registered
Shares, which agreement shall contain representations and warranties on the part
of each of the Seller Parties and Tag-Along Sellers that its Registered Shares
are, and will be at the closing of the sale of the Registered Shares to Liberty
or its designee, owned by such Seller Party or Tag-Along Seller, as the case may
be, beneficially and of record, and are, and at the time of such closing will
be, free and clear of any Liens or Restrictions whatsoever. At the closing,
against receipt of the Registered Shares, Liberty (or its designee) shall pay
the ROFR Price by
15
wire transfer of same day funds to the accounts designated by the Seller Parties
and Tag-Along Sellers not less than one Trading Day next preceding the closing.
(b) If Liberty does not timely deliver an Acceptance Notice or
notifies the Seller Parties and Tag-Along Sellers in writing that it does not
wish to exercise its right of first refusal, then the Seller Parties and
Tag-Along Sellers may thereafter, for a period of 30 calendar days commencing on
the earlier of (i) the date Liberty notifies the Seller Parties and Tag-Along
Sellers in writing that it does not wish to exercise its right of first refusal
and (ii) the second Trading Day after Liberty's receipt of the ROFR Notice (the
"FREE SALE PERIOD"), Transfer any or all of their Registered Shares to such
Persons and at such prices as they may each determine in their sole discretion.
Any Registered Shares that are not sold by the Seller Parties and Tag-Along
Sellers during the Free Sale Period shall thereafter not be Transferred (other
than to a Permitted Affiliate) by any of them without the Seller Parties and
Tag-Along Sellers again delivering to Liberty a ROFR Notice and complying with
the other requirements of Section 4(a).
(c) Notwithstanding anything to the contrary in this Section 4, a
ROFR Offer of the Seller Parties shall not be binding on the Tag-Along Sellers,
if any, and VICE VERSA, and the obligations of the Seller Parties, on the one
hand, and Tag-Along Sellers, if any, on the other under this Section 4 shall be
several and not joint.
Section 5. INDEMNIFICATION.
5.1 INDEMNIFICATION BY LIBERTY. Liberty will indemnify and hold
harmless, to the full extent permitted by law, (i) each of the Seller Parties
and the Tag-Along Sellers, their respective directors, officers and partners and
each other Person, if any, who controls any of the Seller Parties or the
Tag-Along Sellers within the meaning of the Securities Act or the Exchange Act
("SELLER INDEMNIFIED PARTIES") and (ii) each other Person who participates as an
underwriter (within the meaning of the Securities Act) in the offering and sale
of the Registered Shares and each other Person, if any, who controls such
underwriter within the meaning of the Securities Act or the Exchange Act (the
"UNDERWRITER INDEMNIFIED PARTIES"), against any and all losses, claims, damages
or liabilities, joint or several, and expenses to which the Seller Indemnified
Parties or the Underwriter 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 Registration Statement, any preliminary, final or summary
prospectus included therein or filed under Rule 424, 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 (in the case of the Liberty Registration Statement, in
light of the circumstances in which they were made), and Liberty will reimburse
such Seller Indemnified Parties and Underwriter Indemnified Parties for any
legal or any other expenses reasonably incurred by them in connection with
investigating or defending such loss, claim, damage, liability, action or
proceeding against receipt of reasonably detailed invoices therefor; PROVIDED,
that Liberty shall not be liable to any Seller Indemnified Party or Underwriter
Indemnified Party to the extent that any such loss, claim, damage, liability
16
(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 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 the
Seller Indemnified Parties or the Underwriter Indemnified Parties to Liberty
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 any of the
Seller Parties or Tag-Along Sellers or any Underwriter Indemnified Party 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 had previously furnished copies thereof to the Seller or its
representatives or the Underwriter Indemnified Parties, or any of them, and such
final prospectus, as then amended or supplemented, corrected any such
misstatement or omission, (iii) the use of any prospectus by or on behalf of any
of the Sellers Parties or Tag-Along Sellers or any Underwriter Indemnified
Parties more than 24 hours after Liberty has notified the Seller Parties and
Tag-Along Parties, 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 or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
(iv) the use of any prospectus by or on behalf of the Seller Parties of
Tag-Along Sellers or any Underwriter Indemnified Parties after such time as the
obligation of Liberty 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 by any of the Seller Parties,
Tag-Along Sellers or underwriters (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 the Seller Parties and Tag-Along Sellers would otherwise be entitled to
indemnification hereunder).
5.2 INDEMNIFICATION BY THE SELLER PARTIES AND TAG-ALONG SELLERS, IF
ANY, AND UNDERWRITERS, IF ANY. The Seller Parties (jointly and severally),
Tag-Along Sellers, if any, and any underwriters will indemnify and hold harmless
Liberty, each of its directors and officers, and each Person, if any, who
controls Liberty within the meaning of the Securities Act or the Exchange Act
(the "PURCHASER INDEMNIFIED PARTIES"), against any and all losses, claims,
damages or liabilities, joint or several, and expenses to which Liberty
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 (w) any untrue statement or alleged untrue statement of
any material fact contained in the Liberty Registration Statement, any
preliminary, final or summary prospectus included therein or in any prospectus
filed pursuant to Rule 424, 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, in light of the
circumstances in which they were made, not misleading, if the statement or
omission was made in reliance upon and in conformity with written information
furnished to Liberty by or on behalf of any Seller Party or Tag-Along Seller or
any of the underwriters specifically for use in the preparation thereof, (x) the
use of any prospectus by or on behalf of any of the Seller Parties or Tag-Along
Parties or any underwriter (i), subject to Section 2.4(f), more than 24 hours
after
17
Liberty has notified the Seller Parties and Tag-Along Sellers, 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 or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (ii) after such time as the obligation
of Liberty to keep the Liberty Registration Statement effective and current has
expired, (y) the failure to send or deliver to a Person to whom any of the
Seller Parties or Tag-Along Sellers or any of the underwriters sells or
transfers Registered Shares, at or prior to the written confirmation of sale or
transfer, a copy of the final prospectus or of the final prospectus as then
amended or supplemented, whichever is most recent, if Liberty had previously
furnished copies thereof to the Seller Parties and Tag-Along Sellers or their
representatives, or (z) any violation by any of the Seller Parties, Tag-Along
Sellers or underwriters 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 the Seller Parties, Tag-Along Sellers or underwriters are entitled
to indemnification thereunder). For the avoidance of doubt, none of the Seller
Parties (considered as a group), Tag-Along Sellers, if any, or any underwriters
shall be required to indemnify any Purchaser Indemnified Party for any losses,
claims, damages or liabilities or expenses that arise out of or are based upon
any action, inaction, provision of information or representation of any of the
other Seller Indemnified Parties.
5.3 INDEMNIFICATION PROCEDURES. Any Person that proposes to assert
the right to be indemnified under this Section 5 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 5, 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 5, 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 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
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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 that (x) includes a statement as to or
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party or (y) 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 (in addition to
local counsel) for all parties indemnified by such indemnifying party with
respect to such Action.
5.4 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 as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Liberty, on the one hand, or
any of the Seller Parties, Tag-Along Sellers, if any, or any underwriter, on the
other, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 5.4 shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is the
subject of this Section 5.4. Notwithstanding any other provision of this Section
5.4, none of the Seller Parties, Tag-Along Sellers, if any, or underwriters, if
any, shall be required to contribute any amount in excess of the amount by which
the net proceeds received by such party from the sale of its Registered Shares
pursuant to the Liberty Registration Statement exceeds the amount of damages
which such party would have otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Liberty, on the one hand, and
the Seller Parties, Tag-Along Sellers, if any, and underwriters, if any, on the
other, agree that it would not be equitable if the amount of such contribution
were determined by pro rata or per capita allocation.
5.5 INDEMNITY NOT SUBJECT TO ARTICLE VIII. The provisions of this
Section 5 are not in any way limited or covered by, or subject to, the
provisions of Article VIII of the Agreement.
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