Exhibit 2.1
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BUSINESS COMBINATION AGREEMENT
BY AND AMONG
GENERAL ELECTRIC COMPANY,
NATIONAL BROADCASTING COMPANY HOLDING, INC.,
NATIONAL BROADCASTING COMPANY, INC.,
UNIVERSAL STUDIOS HOLDING III CORP.
AND
VIVENDI UNIVERSAL, S.A.
DATED AS OF OCTOBER 8, 2003
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TABLE OF CONTENTS
PAGE
Article 1 DEFINITIONS..........................................................................................1
Section 1.1 Definitions...........................................................................1
Section 1.2 Terms Defined Elsewhere in the Agreement.............................................19
Section 1.3 Other Definitional Provisions........................................................23
Article 2 THE NBC RESTRUCTURING, CONTRIBUTION AND EXCHANGE....................................................24
Section 2.1 The NBC Restructuring................................................................24
Section 2.2 Contribution and Exchange of Shares of Company Common Stock and Company Preferred
Stock and Shares of the BV Companies.................................................24
Section 2.3 Consideration to be Received for the Share Contribution..............................25
Section 2.4 Beneficial Ownership in NBC by GE and Vivendi........................................26
Article 3 NET OPERATING ASSETS ADJUSTMENTS; NET CASH ADJUSTMENTS..............................................26
Section 3.1 Procedures for Determination of Net Operating Assets.................................26
Section 3.2 Company Net Operating Assets Adjustments.............................................28
Section 3.3 NBC Net Operating Assets Adjustments.................................................28
Section 3.4 Company Net Cash Adjustment..........................................................29
Section 3.5 NBC Net Cash Adjustment..............................................................32
Section 3.6 Offsetting Payments..................................................................34
Section 3.7 Payment to USH3 and NBC Holding in Respect of Certain Foreign Income Taxes...........34
Section 3.8 Interest on Overdue Payments.........................................................35
Section 3.9 Coordination with Other Tax Provisions...............................................35
Section 3.10 Interest on Intercompany Balances and Opening Cash Amounts...........................35
Section 3.11 Certain Defined Terms................................................................36
Section 3.12 Amendment Upon IACI Limited Partners Tag.............................................40
Article 4 CLOSING.............................................................................................40
Section 4.1 Closing..............................................................................40
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TABLE OF CONTENTS
(CONTINUED)
Section 4.2 Closing Deliveries...................................................................40
Article 5 REPRESENTATIONS AND WARRANTIES OF VIVENDI AND USH3..................................................41
Section 5.1 Organization; Good Standing and Qualification........................................41
Section 5.2 Authorization........................................................................41
Section 5.3 Capitalization.......................................................................42
Section 5.4 Subsidiaries; Investments............................................................45
Section 5.5 Non-Contravention....................................................................46
Section 5.6 Governmental Authorization...........................................................46
Section 5.7 Company Financial Statements; Accounting Controls....................................46
Section 5.8 No Undisclosed Liabilities...........................................................48
Section 5.9 Absence of Certain Changes...........................................................48
Section 5.10 No Litigation........................................................................48
Section 5.11 Compliance with Laws.................................................................48
Section 5.12 Environmental, Health and Safety Matters.............................................49
Section 5.13 Material Contracts...................................................................50
Section 5.14 Intellectual Property................................................................52
Section 5.15 Real Property........................................................................53
Section 5.16 Taxes................................................................................54
Section 5.17 Employee Benefits; Labor Matters.....................................................58
Section 5.18 Insurance............................................................................61
Section 5.19 Affiliate Transactions...............................................................61
Section 5.20 Assets...............................................................................61
Section 5.21 Library Rights.......................................................................61
Section 5.22 Listed Titles Participants...........................................................62
Section 5.23 Library Tangible Assets..............................................................62
Section 5.24 Distribution Fees....................................................................63
Section 5.25 DreamWorks Agreements................................................................63
Section 5.26 Target Agreements....................................................................65
Section 5.27 Consultant Agreement.................................................................66
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TABLE OF CONTENTS
(CONTINUED)
Section 5.28 IACI/Xxxxxx Arrangements.............................................................66
Section 5.29 German/UK Financing..................................................................66
Section 5.30 Investment Intent....................................................................66
Section 5.31 Brokers..............................................................................66
Section 5.32 No Other Representations or Warranties; Schedules; No Implied Representations........66
Article 6 REPRESENTATIONS AND WARRANTIES OF GE AND NBC HOLDING................................................67
Section 6.1 Organization; Good Standing and Qualification........................................67
Section 6.2 Authorization........................................................................67
Section 6.3 Capitalization.......................................................................68
Section 6.4 Subsidiaries; Investments............................................................69
Section 6.5 Non-Contravention....................................................................70
Section 6.6 Governmental Authorization...........................................................71
Section 6.7 NBC Financial Statements; Accounting Controls........................................71
Section 6.8 No Undisclosed Liabilities...........................................................72
Section 6.9 Absence of Certain Changes...........................................................72
Section 6.10 No Litigation........................................................................72
Section 6.11 Compliance with Laws; Permits........................................................73
Section 6.12 Environmental, Health and Safety Matters.............................................74
Section 6.13 Material Contracts...................................................................75
Section 6.14 Intellectual Property................................................................77
Section 6.15 Real Property........................................................................78
Section 6.16 Taxes................................................................................79
Section 6.17 Employee Benefits; Labor Matters.....................................................82
Section 6.18 Insurance............................................................................85
Section 6.19 Affiliate Transactions...............................................................85
Section 6.20 Assets...............................................................................85
Section 6.21 NBC Agreements.......................................................................85
Section 6.22 Foreign Distribution Agreements......................................................86
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TABLE OF CONTENTS
(CONTINUED)
Section 6.23 Brokers..............................................................................86
Section 6.24 No Other Representations or Warranties; Schedules; No Implied Representations........86
Article 7 COVENANTS...........................................................................................86
Section 7.1 Access to Information................................................................86
Section 7.2 Conduct of the Business..............................................................88
Section 7.3 Reasonable Best Efforts; FCC; Antitrust..............................................94
Section 7.4 Publicity............................................................................95
Section 7.5 Xxxxxx Put/Call......................................................................96
Section 7.6 Stock Options and Equity Awards......................................................96
Section 7.7 Employee Matters.....................................................................96
Section 7.8 Further Assurances..................................................................100
Section 7.9 Pre-Closing Reorganization; Excluded Assets.........................................100
Section 7.10 VUE Debt............................................................................101
Section 7.11 Obligations Under the VUE Documents.................................................102
Section 7.12 Tax Matters.........................................................................103
Section 7.13 IACI Limited Partners Tag-Along Rights..............................................109
Section 7.14 Put and Call Rights on the Common Interests of IACI.................................109
Section 7.15 The Defeasance......................................................................110
Section 7.16 Insurance...........................................................................110
Section 7.17 Ancillary Agreements................................................................110
Section 7.18 Vivendi Noteholders' Consent........................................................110
Section 7.19 Company to Hold IACI Shares and NYCSpirit...........................................111
Section 7.20 Release of Liens....................................................................111
Section 7.21 Certain Real Property Matters.......................................................111
Section 7.22 Commercial Arrangements.............................................................111
Section 7.23 Baseline............................................................................111
Section 7.24 Music Compositions and Sound Recordings.............................................111
Section 7.25 Supplemental Disclosure.............................................................112
Section 7.26 Environmental Work Plans............................................................112
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TABLE OF CONTENTS
(CONTINUED)
Section 7.27 Transition Services.................................................................113
Section 7.28 Music Videos........................................................................113
Section 7.29 Cash Pooling Post-Closing...........................................................114
Section 7.30 Guarantees..........................................................................114
Section 7.31 Affiliate Transactions..............................................................115
Section 7.32 Records.............................................................................115
Section 7.33 Vivendi Intercompany Leases.........................................................115
Article 8 CONDITIONS PRECEDENT TO CLOSING....................................................................116
Section 8.1 Conditions Precedent to Obligations of Vivendi, USH3 and the GE Companies...........116
Section 8.2 Conditions Precedent to Obligations of the GE Companies.............................117
Section 8.3 Conditions Precedent to Obligations of Vivendi and USH3.............................118
Section 8.4 Satisfaction of Conditions..........................................................118
Article 9 TERMINATION........................................................................................118
Section 9.1 Termination.........................................................................118
Section 9.2 Effect of Termination...............................................................119
Article 10 INDEMNIFICATION....................................................................................119
Section 10.1 Indemnification by Vivendi..........................................................119
Section 10.2 Indemnification by GE...............................................................122
Section 10.3 Indemnification by NBC..............................................................124
Section 10.4 Third Party Claims..................................................................124
Section 10.5 Direct Claims.......................................................................125
Section 10.6 Expiration..........................................................................125
Section 10.7 Certain Limitations.................................................................126
Section 10.8 Exclusive Remedy....................................................................127
Section 10.9 Limitation on Damages...............................................................128
Section 10.10 Calculation of Losses...............................................................128
Section 10.11 Characterization of Indemnity Payments..............................................129
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TABLE OF CONTENTS
(CONTINUED)
Section 10.12 Liberty Litigation and SEC and COB Investigations...................................129
Article 11 TAX CONTROVERSY; TAX INDEMNITIES...................................................................130
Section 11.1 Tax Controversy.....................................................................130
Section 11.2 Tax Indemnification by Vivendi and USH3.............................................131
Section 11.3 Tax Indemnification by GE...........................................................132
Article 12 GENERAL PROVISIONS.................................................................................133
Section 12.1 Frustration of the Closing Conditions...............................................133
Section 12.2 Governing Law.......................................................................134
Section 12.3 Notices.............................................................................134
Section 12.4 Entire Agreement....................................................................135
Section 12.5 Amendment; Waiver...................................................................135
Section 12.6 Headings; References................................................................136
Section 12.7 Return of Information...............................................................136
Section 12.8 Counterparts........................................................................136
Section 12.9 Assignment; Third Party Beneficiaries...............................................136
Section 12.10 Severability; Enforcement...........................................................137
Section 12.11 Specific Performance................................................................137
Section 12.12 Jurisdiction; Waiver of Jury Trial..................................................137
Section 12.13 Mediation...........................................................................137
Section 12.14 Fees and Expenses...................................................................138
LIST OF EXHIBITS
Exhibit Document
------- --------
A Form of GE-NBC Universal Tax Sharing Agreement
B Form of Liquidity Rights Agreement
C Music Administration Agreement Term Sheet
D Form of Music Assignment Agreement
E Form of Stockholders Agreement
F UMG Trademark Agreement Term Sheet
G VU Trademark Agreement Term Sheet
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BUSINESS COMBINATION AGREEMENT
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This BUSINESS COMBINATION AGREEMENT, dated as of October 8,
2003, is by and among GENERAL ELECTRIC COMPANY, a New York corporation ("GE"),
NATIONAL BROADCASTING COMPANY HOLDING, INC., a Delaware corporation and a
wholly-owned, direct Subsidiary of GE ("NBC HOLDING"), NATIONAL BROADCASTING
COMPANY, INC., a Delaware corporation and a wholly-owned, direct Subsidiary of
NBC Holding ("NBC"), VIVENDI UNIVERSAL, S.A., a societe anonyme organized under
the Laws of France ("VIVENDI"), and UNIVERSAL STUDIOS HOLDING III CORP., a
Delaware corporation and a Subsidiary of Vivendi ("USH3").
W I T N E S S E T H:
WHEREAS, GE and Vivendi desire to combine the respective
businesses of NBC, Universal Studios, Inc., a Delaware corporation and a
wholly-owned, direct Subsidiary of USH3 (the "COMPANY"), Universal Pictures
International Holdings B.V., a company organized under the Laws of the
Netherlands and a Subsidiary of Vivendi ("BV1"), and Universal Pictures
International Holdings 2 B.V., a company organized under the Laws of the
Netherlands and a Subsidiary of Vivendi ("BV2" and, together with BV1, the "BV
ENTITIES");
WHEREAS, each of the GE Companies, Vivendi and USH3 desires
to make certain representations, warranties, covenants and agreements in
connection with the transactions contemplated by this Agreement; and
WHEREAS, the Board of Directors of each of the GE
Companies, Vivendi and USH3 has approved this Agreement and the transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement:
"ACQUIRED COMPANIES" (i) means the Company and each of its
Subsidiaries listed on Schedule 1.1(a), including any new Subsidiaries formed
after the date hereof for the purpose of conducting the Company Business and
(ii) excludes those Subsidiaries listed on Schedule 1.1(b) and those entities
created after the date hereof to conduct the Music Business or the Games
Business.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with, such Person. The term "control" (including, with correlative meaning, the
terms "controlling", "controlled by" and "under common control with"), as used
with respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise. For purposes of this definition, (i) none of (A) Vivendi or any of
its Affiliates shall be deemed to be an Affiliate of any of the GE Companies or
their respective Affiliates and (B) the GE Companies or any of their respective
Affiliates shall be deemed to be an Affiliate of Vivendi or any of its
Affiliates and (ii) from and after the Closing, (A) none of Vivendi or any of
its Affiliates shall be deemed to be an Affiliate of any of the Target Companies
or their respective Affiliates and (B) none of the Target Companies or any of
their respective Affiliates shall be deemed to be an Affiliate of Vivendi or any
of its Affiliates.
"AFFILIATION AGREEMENTS" means affiliation, distribution or
similar Contracts for the distribution of programming services as well as each
Contract with a multichannel video programming distributor for the distribution
of programming services, including cable systems, SMATV, open video systems,
MMDS, MDS and DBS systems, and any correspondence amending the foregoing.
"AGREEMENT" means this Business Combination Agreement as in
effect and as amended, restated, supplemented or otherwise modified from time to
time.
"ANCILLARY AGREEMENTS" means the Liquidity Rights
Agreement, the Stockholders Agreement, the IACI Matters Agreement, the GE-NBC
Universal Tax Sharing Agreement, the Music Assignment Agreement, the Music
Administration Agreement, the VU Trademark Agreement and the UMG Trademark
Agreement.
"BUSINESS DAY" means a day other than a Saturday, Sunday or
other day on which commercial banks located in New York, New York or Paris,
France are authorized or required by Law to close.
"CHUM AGREEMENT" means that certain Memorandum, dated June
27, 2001, from Media Group International on behalf of NBC International to CHUM
Ltd. regarding the licensing of movies of the week and mini-series for broadcast
in Canada.
"CLASS A PREFERRED INTERESTS" has the meaning given to such
term in the VUE Partnership Agreement.
"CLASS B PREFERRED INTERESTS" has the meaning given to such
term in the VUE Partnership Agreement.
"COB INVESTIGATION" means the investigation currently being
conducted by the French Commission des Operations de Bourse into Vivendi's
accounting treatment of certain transactions and the accuracy of Vivendi's
financial and public statements and any and all investigations into any such
matters now or in the future.
"CODE" means the U.S. Internal Revenue Code of 1986, as
amended.
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"COMBINED NBC RETURN" means any consolidated, combined,
joint, unitary or similar Tax Return with respect to income or other Taxes
pursuant to provisions of applicable federal, state, local or foreign law that
includes an NBC Company and at least one other company that is not an NBC
Company.
"COMMON INTEREST" has the meaning given to such term in the
VUE Partnership Agreement.
"COMPANY BALANCE SHEET" means the unaudited consolidated
balance sheet of the Company as of June 30, 2003, included in the Company
Financial Statements.
"COMPANY BUSINESS" means the business and operations of the
Acquired Companies as currently conducted, including the worldwide business of
(i) producing, licensing, marketing, distributing and selling motion pictures in
theatrical and non-theatrical, home video/DVD, television, PPV, VOD and other
markets; (ii) operating film and television production facilities; (iii)
acquiring, developing, producing, licensing, distributing and selling original
television programming; (iv) operating analog and digital cable networks; (v)
acquiring, producing, marketing, distributing and licensing musical compositions
related to the motion pictures, home video/DVD and television programming
businesses and (vi) operating theme parks and resorts, in each case as conducted
on the date hereof by the Target Companies. The term "Company Business" shall
not include the Music Business or the Games Business.
"COMPANY EMPLOYEE" means a Company Employee (non-U.S.) and
a Company Employee (U.S.).
"COMPANY EMPLOYEE BENEFIT PLANS" means the Company U.S.
Benefit Plans and the Company Non-U.S. Benefit Plans.
"COMPANY EMPLOYEE (NON-U.S.)" means any individual who, as
of the Closing, (i) is (or in the case of clause (ii)(C) below, is scheduled to
become) an employee outside the U.S. of a Target Company and, for purposes of
Sections 5.17, 7.6 and 7.7, a Theme Park Employee, and (ii) either (A) is
employed and at work on the Closing Date, (B) is absent from work on the Closing
Date because of illness or on short-term or long-term disability (including
maternity and paternity leave), workers' compensation, vacation, parental leave
of absence or other absence or leave of absence consistent with policies,
practices and procedures of the employing Target Company or Theme Park in effect
at the time such absence or leave commenced, as applicable, or (C) shall have
received an offer of employment with a Target Company or any Theme Park, in the
ordinary course of business on or prior to the Closing Date, but shall have not
yet commenced work as of the Closing Date (provided that such offer shall not
have expired or been rescinded or declined prior to the Closing Date).
"COMPANY EMPLOYEE (U.S.)" means any individual who, as of
the Closing, (i) is (or in the case of clause (ii)(C) below, is scheduled to
become) an employee in the U. S. of a Target Company and, for purposes of
Sections 5.17, 7.6 and 7.7, a Theme Park Employee, and (ii) either (A) is
3
employed and at work on the Closing Date, (B) is absent from work on the Closing
Date because of illness or on short-term or long-term disability (including
maternity and paternity leave), workers' compensation, vacation, parental leave
of absence or other absence or leave of absence consistent with policies,
practices and procedures of the employing Target Company or Theme Park in effect
at the time such absence or leave commenced, as applicable, or (C) shall have
received an offer of employment with a Target Company or any Theme Park, in the
ordinary course of business on or prior to the Closing Date, but shall have not
yet commenced work as of the Closing Date (provided that such offer shall not
have expired or been rescinded or declined prior to the Closing Date).
"COMPANY INTELLECTUAL PROPERTY CONTRACT" means Contracts
material to the Company Business which relate to Intellectual Property to which
any Target Company is a party or by which it is bound.
"COMPANY MATERIAL ADVERSE EFFECT" means any effect or
change that is or would be materially adverse to the business, assets,
liabilities, financial condition or results of operations of the Target
Companies, taken as a whole, subject to Schedule 1.1(c).
"COMPANY MATERIAL SUBSIDIARY" means any direct or indirect
Significant Subsidiary of the Company within the meaning of Rule 1-02 of
Regulation S-X of the Securities Act and any entity listed on Schedule 1.1(d).
"COMPANY OWNED INTELLECTUAL PROPERTY" means all
Intellectual Property to the extent it is owned by the Target Companies, and
without limiting the foregoing, includes the Target Companies' rights to the
Universal trademark, the Universal Studios trademark and the Universal globe
trademark.
"COMPANY OWNED REAL PROPERTIES" means all real property
(other than the Excluded Properties) owned by any Target Company, Universal City
Development Partners, Ltd. or Sundance Channel L.L.C and all improvements,
fixtures, easements, licenses, rights and appurtenances relating to the
foregoing.
"COMPANY REAL PROPERTY" means the Company Owned Real
Properties and all real property subject to Company Real Property Leases.
"COMPANY REAL PROPERTY LEASES" means all leases, subleases
or other agreements under which any of the Target Companies uses or occupies or
has the right to use or occupy, now or in the future, any real property and
pursuant to such agreement such Target Company makes payments in excess of
$1,000,000 base rent per annum.
"COMPETITION LAWS" means all Laws that are designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition through merger or acquisition or
restraint of trade.
"CONFIDENTIALITY AGREEMENT" means that certain
Confidentiality Agreement, dated as of March 20, 2003, by and between Vivendi
and NBC.
4
"CONTRACT" means any oral or written contract, agreement,
covenant, commitment, arrangement, understanding, settlement, indenture, note,
bond, loan, instrument, lease, guarantee, conditional sales contract, mortgage,
deed of trust, security agreement, royalty, license, franchise or insurance
policy, it being understood that the term "Contract" shall not include any
non-binding commitment, arrangement or understanding.
"CONTRIBUTE" means to contribute, assign, transfer, convey
and deliver.
"COPYRIGHT" means all rights in any original works of
authorship and/or any part thereof that are within the scope of any applicable
copyright Law, including all rights of authorship, use, publication,
reproduction, distribution, performance, and rights of ownership of
copyrightable works, and all rights to register and to obtain renewals,
extensions, revivals and resuscitations of any such copyright registrations.
"CREDIT AGREEMENT" means that certain Loan Agreement, dated
as of June 24, 2003, by and among VUE, as borrower, the several lenders from
time to time parties thereto, Bank of America, N.A. and JPMorgan Chase Bank, as
co-administrative agents, Barclays Bank plc, as syndication agent, JPMorgan
Chase Bank, as collateral agent, and JPMorgan Chase Bank, as paying agent, as
amended, restated or otherwise modified from time to time.
"XXXXXX" means Xxxxx Xxxxxx, an individual.
"XXXXXX CALL" has the meaning given to such term in Section
10.03(b) of the VUE Partnership Agreement.
"XXXXXX PUT" has the meaning given to such term in Section
10.03(b) of the VUE Partnership Agreement.
"DOMAIN NAMES" means all domain name registrations in all
generic top-level domains and all country-code top-level domains and any
locators associated with the Internet.
"ENVIRONMENTAL LAW" means any applicable Law relating to,
or imposing Liability or standards of conduct concerning the protection of the
environment, natural resources, human health and safety (including occupational
safety and health, but excluding theme park ride safety and food services
safety) or pollution, including the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. App.ss.1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Clean Water Act
(33 U.S.C.ss.1251 et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the
Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety
and Health Act (29 U.S.C.ss.651 et seq.), the Federal Insecticide, Fungicide,
and Rodenticide Act (7 U.S.C.ss.136 et seq.), the New Jersey Industrial Site
Recovery Act (N.J. Stat.ss.13:1K-6 et seq.), and the Connecticut Transfer Act
(Conn. Gen. Stat.ss.22a-134 et seq.) and the regulations promulgated thereunder.
5
"ENVIRONMENTAL LIABILITIES" means any liabilities,
obligations, losses, claims, damages, penalties, fines, costs and expenses
(including reasonable attorney's fees, engineering fees and other professional
or expert fees) relating to or arising from: (i) the presence of Hazardous
Substances at concentrations exceeding those allowed by Environmental Laws
(including exposure to such Hazardous Substances at concentrations exceeding
those allowed by Environmental Law) including Remedial Action and (ii) any
non-compliance with, or Liability imposed under, any Environmental Law,
including liability associated with disposal of Hazardous Substances on or
before Closing.
"ENVIRONMENTAL LIEN" means any Lien in favor of any
Governmental Authority for Environmental Liabilities.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
authorizations, approvals, variances, permissions and consents required pursuant
to Environmental Laws.
"ERISA" means the U.S. Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated thereunder.
"EU MERGER CONTROL REGULATION" means Council Regulation
(EEC) No. 4064/89, as amended.
"EXCHANGE ACT" means the U.S. Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"EXCLUDED ASSETS" means the Excluded Businesses, the
Excluded Properties, the UCI business and the UCI Assets and Peliculas Nueva
Universal de Cuba, S.A. and any other entity listed on Schedule 1.1(b) that is
not included in the Excluded Businesses, the Excluded Properties or the UCI
business.
"EXPLOITATION" means the release, exhibition, performance,
projection, broadcast, telecast, transmission, promotion, publicizing,
advertisement, rental, lease, licensing, sublicensing, sale, transfer, disposing
of, distribution, subdistribution, commercializing, merchandising, production,
marketing, use, exercise, trading in, turning to account, dealing with and in
and otherwise exploiting any asset or portions thereof, or any rights therein or
relating thereto, including the right to develop, produce and distribute
subsequent productions based thereon. "EXPLOIT" means to cause Exploitation.
"EXPLOITATION AGREEMENTS" means Contracts pursuant to which
any Person has either acquired, established, developed or granted any rights to
Exploit any portion of the Library or any of such Library's components.
"EXPLOITATION DATABASE" means (i) the databases maintained
by the Target Companies which track licensing of Library Pictures for television
and home video worldwide and (ii) the FLIX and PARIS for film and Excel
spreadsheets and Lotus Notes files for TV that were made available to NBC prior
to the date hereof.
"FILM SECURITIZATION FACILITY AGREEMENT" means,
collectively, (i) the Indenture, dated as of March 31, 2003, between Universal
Film Funding LLC and Xxxxx Fargo Bank Minnesota, National Association, (ii)
6
Annex A to the Indenture, (iii) the transaction documents as defined in the
Indenture and Annex A to the Indenture, (iv) the Periodic Assignment Agreements
for Sale executed pursuant thereto and (v) each of the Master ISDA Agreement and
confirmations for the interest rate swap required under the securitization.
"FOREIGN DISTRIBUTION AGREEMENTS" means the MGM Agreement,
the Seven Network Agreements, the Global Agreement and the CHUM Agreement.
"FRENCH GAAP" means generally accepted accounting
principles in effect in France as of the date of the applicable determination.
"GAAP" means generally accepted accounting principles in
effect in the U.S. as of the date of the applicable determination.
"GAMES BUSINESS" means the worldwide business of
developing, producing, licensing, marketing, distributing and selling
interactive entertainment and educational software products for PC, console,
handheld and online use, as conducted by Vivendi Universal Games, Inc., a
Delaware corporation, its Subsidiaries and Universal Interactive, Inc., a
California corporation.
"GE COMMON EQUITY RATIO" means, at any given time, the
ratio of the number of common shares of NBC owned by GE and each Subsidiary of
GE divided by the total number of common shares of NBC outstanding at such time.
"GE COMPANIES" means GE, NBC Holding, NBC and NBC Sub.
"GE-NBC UNIVERSAL TAX SHARING AGREEMENT" means that certain
Tax Sharing Agreement, to be dated as of the Closing Date, substantially in the
form attached hereto as Exhibit A, as the same may be amended, restated,
supplemented or otherwise modified from time to time.
"GERMAN/U.K. FILM FINANCING AGREEMENTS" means (i) each of
the agreements listed in Annex A to the Disclosure Schedule of USH3 and Vivendi,
all of which were entered into in connection with German film fund and U.K.
sale/leaseback transactions, and (ii) each other agreement entered into by any
Target Company in connection with such transactions.
"GLOBAL AGREEMENT" means that certain License Agreement,
dated as of May 1, 2001, between NBC International Ltd. and Canwest Global
Broadcasting Inc.
"GOVERNMENTAL AUTHORITY" means any domestic or foreign,
federal, state, provincial, local, municipal or other governmental judicial,
legislative, executive or regulatory department, commission, administration,
board, bureau, agency or instrumentality, including any tribunal or arbitrator
and any self-regulatory organization.
"HAZARDOUS SUBSTANCES" means any substance, waste or
material, whether solid, liquid or gaseous that is classified, defined, listed
or identified as hazardous, toxic, a contaminant, a pollutant, or by other words
7
of similar meaning or regulatory effect under applicable Environmental Law,
including, without limitation, asbestos; urea formaldehyde foam insulation;
polychlorinated biphenyls; petroleum, petroleum products or petroleum-derived
substances or wastes; radon gas; or mold, fungi or other
microbial/microbiological contaminants at levels and concentrations deemed to
present an unreasonable risk to human health.
"HSR ACT" means the U.S. Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the regulations promulgated
thereunder.
"IACI" means InterActiveCorp, a Delaware corporation
(formerly USA Interactive and prior thereto USA Networks, Inc.).
"IACI GOVERNANCE AGREEMENT" means that certain Amended and
Restated Governance Agreement, dated as of December 16, 2001, by and among
Vivendi, IACI, the Company, Liberty and Xxxxxx, as amended, restated or
otherwise modified from time to time.
"IACI LIMITED PARTNERS" has the meaning given to the term
"USAi Limited Partners" in the VUE Partnership Agreement.
"IACI MATTERS AGREEMENT" means the IACI Matters Agreement,
dated as of the date hereof, by and among GE, NBC Holding, NBC, Vivendi and
USH3.
"IACI STOCKHOLDERS AGREEMENT" means that certain Amended
and Restated Stockholders Agreement, dated as of December 16, 2001, by and among
Vivendi, the Company, Liberty and Xxxxxx, as amended by that certain Letter
Agreement, dated March 31, 2003, by and among Vivendi, the Company and Xxxxxx,
and as may be further amended, restated or otherwise modified from time to time.
"IFRS" means international financial reporting standards in
effect as of the date of the applicable determination.
"INTELLECTUAL PROPERTY" means all intellectual property
rights of any nature under the Law of the U.S. or any other country, including
all trademarks, service marks, trade names, trade dress, Domain Names,
copyrights, letters patent (including provisionals, reissues, revisions,
divisions, continuations, continuations-in-part, extensions and
re-examinations), mask works and other semiconductor chip rights, trade secrets
and any other intellectual property rights, and any applications, registrations
and renewals thereof.
"IRS" means the U.S. Internal Revenue Service.
"LAW" means any domestic or foreign, federal, state,
provincial, local, municipal or other law (including common law), constitution,
statute, code, ordinance, rule, bylaw, regulation, decree, Order or other
similar mandate or requirement.
8
"LEGAL PROCEEDINGS" means any judicial, administrative or
arbitration actions, suits, proceedings (public or private) or governmental
proceedings, whether domestic or foreign.
"LIABILITY" means any debt, liability or obligation,
whether known or unknown, whether asserted or unasserted, whether determined or
determinable, whether absolute or contingent, whether accrued or unaccrued and
whether due or to become due.
"LIBERTY" means Liberty Media Corporation, a Delaware
corporation.
"LIBERTY LITIGATION" means the Legal Proceeding involving
certain shareholders of Vivendi, Liberty, LMC Capital LLC, Liberty Programming
Company LLC, LMC USA VI, Inc., LMC USA VII, Inc., LMC USA VIII, Inc., LMC USA X,
Inc., Liberty HSN LLC Holdings, Inc. and Liberty Media International, Inc. (as
plaintiffs) and Vivendi, Messrs. Xxxx-Xxxxx Xxxxxxx and Guillaume Hannezo and
the Company (as defendants), case numbers 02 Civ. 55H (HB) and 00 Xxx. 0000
(XX), and any other Legal Proceeding now or in the future relating thereto or
arising out of any of the transactions contemplated by the Agreement and Plan of
Merger and Exchange, dated as of December 16, 2001, among Vivendi, the Company,
Liberty Media Corporation and the other parties thereto.
"LIBRARY" means, collectively, all Library Rights and all
Library Tangible Assets of (i) the Target Companies or (ii) the NBC Companies,
as applicable and the content requires.
"LIBRARY LITERARY PROPERTIES" means all literary, dramatic
or other works, screenplays, stories, adaptations, scripts, treatments, formats,
bibles, manuscripts, outlines, scenarios, characters, concepts, titles, and any
and all other literary or dramatic materials of any kind with respect to the
Programs or theme park attractions and any rights therein in all media now or
hereafter devised, including any remake, reissue, sequel, prequel, series,
character, legitimate stage, merchandising and other derivative, compilation and
ancillary rights of every kind, whether now known or hereafter recognized.
"LIBRARY PICTURES" means any and all completed audio,
visual and/or audiovisual works of any kind or character, to which any Target
Company or any NBC Company, as applicable, has rights, including any motion
pictures, films, movies-of-the-week, television programs, series, mini-series,
pilots, specials, documentaries, cartoons, compilations, promotional films,
trailers and shorts and any other programs or audio-visual works, whether
animated, live action or both, produced for Exploitation in any form or any
medium, whether now known or hereafter developed (including theatrical,
videocassette, videodisc and other home video, network, free, cable, pay,
satellite, syndication, and/or any other television medium, pay-per-view,
video-on-demand, near-video-on-demand, subscription on-demand, subscription
video-on-demand, internet and other new media), either within or outside the
U.S., in each case whether recorded on film, videotape, cassette, cartridge,
disc or on or by any other means, method, process or device, whether now known
or hereafter developed; provided that Library Pictures shall not include any
9
such works where any Target Company's, or any NBC Company's, as applicable,
rights to such works are solely as a licensee.
"LIBRARY RIGHTS" means, collectively, all Programs, Music
Rights, Library Literary Properties and Library Underlying Agreements including
all rights of Copyright contained therein or derived therefrom of (i) the Target
Companies, or (ii) the NBC Companies, as applicable and the content requires.
"LIBRARY TANGIBLE ASSETS" means all physical properties of,
or relating to, any Program, including prints, negatives, duplicating negatives,
fine grains, music and sound effects tracks, master tapes and other duplicating
materials of any kind, all various language dubbed and titled versions, prints
and negatives of stills, trailers and television spots, all promotions and other
advertising, marketing and publicity materials, stock footage, trims, tabs,
outtakes, cells, drawings, storyboards, models, sculptures, puppets, sketches,
and continuities, including any of the foregoing in the possession, custody or
control of any Target Company (as to Programs of the Target Companies) or any
NBC Company (as to Programs of the NBC Companies), or in the possession of their
respective assigns or any film laboratories, storage facilities or other
Persons.
"LIBRARY UNDERLYING AGREEMENTS" means all Contracts with
writers, directors, producers, performers, actors, artists, musicians,
animators, voice talent, cinematographers, camera persons or any other parties
relating to the development, preparation or production of any of the Programs,
Library Literary Properties or Music Rights, pursuant to which any Target
Company or any NBC Company, as applicable, has or acquires any rights in or
obligations relating to the Library or any element thereof.
"LIEN" means any lien, security interest, mortgage, pledge,
charge, or similar encumbrance.
"LIQUIDITY RIGHTS AGREEMENT" means the Liquidity Rights
Agreement substantially in the form attached as Exhibit B, as the same may
hereafter be amended, modified, restated or supplemented from time to time.
"LMC MERGER AGREEMENT" means that certain Agreement and
Plan of Merger and Exchange, dated as of December 16, 2001, by and among
Vivendi, Light France Acquisition 1, S.A.S., Liberty, Liberty Programming
Company LLC, Liberty Programming France, Inc., LMC USA VI, INC., LMC USA VII,
INC., LMC USA VIII, INC., LMC USA X, INC., Liberty HSN LLC Holdings, Inc., the
merger subsidiaries listed on the signature pages thereto and the Liberty
entities listed on the signature pages thereto, as amended, restated or
otherwise modified from time to time.
"MFN" means a provision of an Affiliation Agreement or an
Exploitation Agreement (the "SUBJECT AGREEMENT") which provides that if one or
more Persons not a party to the Subject Agreement are party to an Affiliation
Agreement or an Exploitation Agreement, respectively, under which such Person or
Persons have any other more favorable terms than are contained in such Subject
Agreement, then one or more terms of such Subject Agreement will be replaced or
10
modified to reflect the more favorable terms in such Affiliation Agreement or
Exploitation Agreement.
"MFN LIABILITY" means (i) the modification, retroactively
or prospectively, whether actual or imputed, of any material terms (including
(A) rates, discounts and other payment terms, (B) channel position, (C)
marketing and launch support, (D) delete rights and tiering, (E) MFNs and MFNs
on MFNs, (F) program definitions, (G) advertising unit load, (H) after-acquired
systems and (I) divested systems, and other matters that are material to the
underlying agreement) that would result in terms that are less favorable to a
Target Company or an NBC Company, as the case may be, than those contained in
the respective Affiliation Agreement or (ii) any liability or obligation owed by
such Target Company or an NBC Company, as the case may be, in connection with
the MFN provision of an Affiliation Agreement.
"MGM AGREEMENT" means that certain NBC/MGM Television
Distribution Term Sheet, between NBC Enterprises, Inc. and MGM International
Television Distribution Inc., dated as of March 28, 2001, as amended by
Amendment No. 1, dated as of June 18, 2002, and by Amendment No. 2, dated as of
January 2, 2003.
"MUSIC ADMINISTRATION AGREEMENT" shall mean a music
administration agreement for which the material terms are set forth on Exhibit
C, as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"MUSIC ASSIGNMENT AGREEMENT" shall mean the music
assignment agreement providing for the assignment of various musical
compositions and sound recordings substantially in the form attached hereto as
Exhibit D, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"MUSIC BUSINESS" means the worldwide business of producing,
manufacturing, licensing, marketing, distributing and selling recorded music or
recorded music videos and other businesses related to such businesses, as
conducted by the entities forming part of the Universal Music Group, and other
businesses in which any of the entities forming part of the Universal Music
Group are currently engaged.
"MUSIC RIGHTS" means music synchronization, performance,
master, mechanical, publication, performance, videogram and other music rights
to which any Target Company or NBC Company, as applicable, has rights and which
are contained in any Program.
"NBC BALANCE SHEET" means the unaudited consolidated
balance sheet of the NBC Companies as of June 30, 2003, included in the NBC
Financial Statements.
"NBC BUSINESS" means the business and operations of the NBC
Companies as currently conducted including the worldwide business of (i) the
provision of network television services to affiliated broadcast television
stations within the U.S. and its territories; (ii) the operation of television
broadcasting stations; (iii) the ownership and operation of domestic and
international cable/satellite networks around the world; (iv) the production,
distribution, syndication and licensing of news, information and entertainment
11
programming and other related content and merchandising relating thereto and (v)
investment activities in cable television and the Internet.
"NBC COMMON PARENT" means GE, as common parent of the
affiliated group of corporations of which GE and the applicable NBC Companies
are members.
"NBC COMPANIES" means NBC, each of its Subsidiaries (other
than the Subsidiaries listed on Schedule 1.1(e)) and the entities listed on
Schedule 1.1(f).
"NBC EMPLOYEE" means a NBC Employee (non-U.S.) and a NBC
Employee (U.S.).
"NBC EMPLOYEE BENEFIT PLANS" means the NBC U.S. Benefit
Plans and the NBC Non-U.S. Benefit Plans.
"NBC EMPLOYEE (NON-U.S.)" means any individual who, as of
the Closing, (i) is (or in the case of clause (ii)(C) below, is scheduled to
become) an employee outside the U.S. of a NBC Company and (ii) either (A) is
employed and at work on the Closing Date, (B) is absent from work on the Closing
Date because of illness or on short-term or long-term disability (including
maternity and paternity leave), workers' compensation, vacation, parental leave
of absence or other absence or leave of absence consistent with a NBC Company's
policies, practices and procedures in effect at the time such absence or leave
commenced, as applicable, or (C) shall have received an offer of employment with
a NBC Company, in the ordinary course of business on or prior to the Closing
Date, but shall have not yet commenced work as of the Closing Date (provided
that such offer shall not have expired or been rescinded or declined prior to
the Closing Date).
"NBC EMPLOYEE (U.S.)" means any individual who, as of the
Closing, (i) is (or in the case of clause (ii)(C) below, is scheduled to become)
an employee in the U.S. of a NBC Company and (ii) either (A) is employed and at
work on the Closing Date, (B) is absent from work on the Closing Date because of
illness or on short-term or long-term disability (including maternity and
paternity leave), workers' compensation, vacation, parental leave of absence or
other absence or leave of absence consistent with a NBC Company's policies,
practices and procedures in effect at the time such absence or leave commenced,
as applicable, or (C) shall have received an offer of employment with a NBC
Company, in the ordinary course of business on or prior to the Closing Date, but
shall have not yet commenced work as of the Closing Date (provided that such
offer shall not have expired or been rescinded or declined prior to the Closing
Date).
"NBC INTELLECTUAL PROPERTY CONTRACTS" means Contracts
material to the NBC Business which relate to Intellectual Property to which any
NBC Company is a party or by which it is bound.
"NBC MATERIAL ADVERSE EFFECT" means any effect or change
that is or would be materially adverse to the business, assets, liabilities,
financial condition or results of operations of the NBC Companies, taken as a
whole, subject to Schedule 1.1(g).
12
"NBC MATERIAL SUBSIDIARY" means any direct or indirect
Significant Subsidiary of NBC within the meaning of Rule 1-02 of Regulation S-X
of the Securities Act and any entity listed on Schedule 1.1(f).
"NBC OWNED INTELLECTUAL PROPERTY" means all Intellectual
Property that is owned by the NBC Companies, and without limiting the foregoing,
including the NBC trademark and the NBC peacock design trademark.
"NBC OWNED REAL PROPERTIES" means all real property owned
by any NBC Company and all improvements, fixtures, easements, licenses, rights
and appurtenances relating to the foregoing.
"NBC REAL PROPERTY" means the NBC Owned Real Properties and
all real property subject to NBC Real Property Leases.
"NBC REAL PROPERTY LEASES" means all leases, subleases or
other agreements under which any of the NBC Companies uses or occupies or has
the right to use or occupy, now or in the future any real property and pursuant
to such agreement an NBC Company makes payments in excess of $1,000,000 base
rent per annum.
"NBC STANDALONE TAX PRINCIPLES" means, with respect to NBC
or any Subsidiary of NBC, the determination of Tax liability (i) based on the
actual Tax liability of such company for the relevant period where the relevant
Tax is determined for the applicable taxable period on a Tax Return that does
not include items of any other company (except NBC or another Subsidiary of
NBC), provided that such Tax liability shall be reduced to take account of the
deductibility of local Taxes from state Taxes and the deductibility of state and
local Taxes from federal Taxes (using the highest state and federal marginal
rates applicable to entities of the relevant type for the relevant Tax period)
and (ii) otherwise based on the principles described in Section 3 of the GE-NBC
Universal Tax Sharing Agreement.
"NBC SUB" means a Subsidiary of NBC to be identified by NBC
and reasonably approved by Vivendi prior to the Closing Date and which
Subsidiary will be deemed to be an NBC Material Subsidiary and which will be
made a party to this Agreement.
"NET OPERATING ASSETS" means (i) with respect to the Target
Companies, all current assets (excluding cash, marketable securities,
intercompany financing amounts, deferred Tax assets, current accruals for income
Taxes, the impact of monetization and hedging activities), non-current program
rights and non-current unbilled accounts receivable, less current liabilities
(excluding short-term borrowings, intercompany financing amounts, the impact of
monetization activities, deferred Tax liabilities and current income Tax
liabilities), non-current deferred revenue, non-current program costs and
non-current participation and royalty liabilities and (ii) with respect to the
NBC Companies, all current assets (excluding cash, marketable securities,
intercompany financing amounts, Tax assets, the impact of monetization and
hedging activities), non-current program rights and non-current unbilled
accounts receivable, less current liabilities (excluding short-term borrowings,
13
intercompany financing amounts, the impact of monetization activities and Tax
liabilities), non-current deferred revenue, non-current program costs and
non-current participation and royalty liabilities.
"NWI" means the news network operated by NWI Network, Inc.
through a license agreement with a third party.
"NWI DIGITAL NETWORKS" means the digital network operated
by NWI.
"ORDER" means any order, judgment, determination, decision,
consent or other decree, injunction, ruling, or stipulation by or with any
Governmental Authority.
"ORDINARY COURSE OF BUSINESS" means the usual, regular and
ordinary course of business of the Target Companies or the NBC Companies, as
applicable, consistent with past custom and practice thereof.
"ORGANIZATIONAL DOCUMENTS" means, with respect to any
Person, such Person's certificate of incorporation, articles of incorporation,
certificate of formation, articles of association, limited liability company
agreement, partnership agreement, by-laws or other governing documents, as
applicable, together with any amendments thereto.
"PARTICIPATION" means any right in, or right to receive,
money or other consideration in respect of, or relating in any way to any
Program which consideration is based on the Exploitation of any such asset,
however measured and which was granted in return for talent or other personal
services rendered in connection with such Program or otherwise in connection
with the development, financing or production thereof.
"PERMITTED ENCUMBRANCES" means (i) all defects, exceptions,
restrictions, easements, rights of way and encumbrances disclosed in all
preliminary or final title insurance reports described in Schedule 5.15(a), or
otherwise disclosed in the manner provided for by applicable Law; (ii) statutory
Liens for Taxes, assessments or other governmental charges not yet delinquent or
the amount or validity of which is being contested in good faith in appropriate
proceedings; (iii) inchoate mechanics', materialmen's, carriers', workmen's,
warehousemen's, repairmen's, landlords' and similar Liens (including all
statutory Liens and all privileges or equivalent rights recognized by applicable
Law) granted in the ordinary course of business; (iv) customary Liens granted in
the ordinary course of business to any guild in connection with the production
of motion pictures and television programs; (v) zoning, entitlement and other
land use and environmental regulations by any Governmental Authority; (vi) Liens
securing debt reflected on the Company Financial Statements or the NBC Financial
Statements, as the case may be; (vii) title of the lessor under any capital
lease or any real property owned or leased by any of the Target Companies or any
of the NBC Companies, as applicable; (viii) such other imperfections in title,
easements, servitudes, rights of usufruct or use or other restrictions and
encumbrances that do not materially detract from the value of or materially
interfere with the present use of any real property owned or leased by any of
the Target Companies or any of the NBC Companies, as applicable, or any real
property leased under the applicable Company Real Property Lease or the NBC Real
14
Property Lease subject thereto or affected thereby; (ix) Exploitation Agreements
entered into the ordinary course of business; (x) Liens that constitute the
rights of any lessee under any lease with respect to any tangible asset or real
property owned by any of the Target Companies or any of the NBC Companies; (xi)
Liens securing indebtedness in the ordinary course of business attributable to
"negative-pick-ups" as such term is commonly understood in the U.S.
entertainment industry; and (xii) as to the Target Companies, Liens permitted
under or granted pursuant to the (A) Film Securitization Facility Agreement or
(B) the Credit Agreement.
"PERSON" means an individual, corporation, limited
liability company, partnership, joint venture, association, trust or
unincorporated organization or other entity or a government or any agency or
political subdivision thereof.
"PRE-CLOSING PERIOD" means any Tax year or period (or
portion thereof) ending on or before the Closing Date.
"PROGRAM" or "PROGRAMS" means any and all Library Pictures,
and (for the Target Companies) Works in Progress and Significant Unproduced
Properties.
"RELEASE" means any intentional or unintentional releasing,
disposing, discharging, injecting, spilling, leaking, leaching, pumping,
dumping, emitting, escaping, emptying, seeping, dispersal, migration,
transporting, placing, depositing and the like into the environment.
"REMEDIAL ACTION" means all actions required by or
necessary to achieve compliance with Environmental Laws to clean up, remove,
treat or in any other way remediate or address any Hazardous Substance or unsafe
condition in the environment at levels exceeding those allowed by Environmental
Law, including studies, monitoring, testing, investigations and care related to
any such Hazardous Substances.
"RTL LITIGATION" means that certain Legal Proceeding
involving RTL Television GmbH, CLT-UFA S.A. and UFA Film und Fernseh GmbH (as
plaintiffs) and Universal Studios International B.V. and USA Networks Inc. (as
defendants).
"SCIFI CABLE NETWORK" means the SciFi cable network
operated by VUE.
"SEC INVESTIGATION" means the investigation currently being
conducted by the U.S. Securities and Exchange Commission into Vivendi's
accounting treatment of certain transactions and the accuracy of Vivendi's
financial and public statements and any and all investigations by any other U.S.
federal or state agency, division or department into any such matters now or in
the future.
"SECURITIES ACT" means the U. S. Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"SELLER GROUP" means Vivendi and its Subsidiaries,
excluding the Target Companies.
15
"SEVEN NETWORK AGREEMENTS" means (i) that certain Output
Program License Agreement, by and between NBC Enterprises, Inc. and Seven
Network (Operations) Limited, dated as of August 29, 2003 and (ii) that certain
News and Current Affairs Program License Agreement, dated August 29, 2003, by
and between NBC Enterprises and Seven Network (Operations) Limited.
"SIGNIFICANT UNPRODUCED PROPERTIES" means those literary,
dramatic, or other materials in which any Target Company has rights and for
which development has not been abandoned as of October 6, 2003, each of which is
set forth on Schedule 1.1(h), (i) which constitute Library Literary Properties,
(ii) upon which principal photography has not yet commenced and (iii) (A) in
respect of which an amount in excess of $1,000,000 has been committed by the
Target Companies in respect of development and/or production costs as of October
6, 2003 or (B) in respect of which an amount in excess of $5,000,000 has been
expended by the Target Companies in development and/or production costs since
January 1, 2001.
"STANDALONE NBC RETURN" means any Tax Return in respect of
an NBC Company that is not a Combined NBC Return.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement
substantially in the form attached as Exhibit E, as the same may hereafter be
amended, modified, restated or supplemented from time to time.
"STRADDLE PERIOD" means a taxable year or period that
begins on or before and ends after the Closing Date.
"STRADDLE PERIOD RETURN" means any Tax Return required to
be filed by any Target Company or any NBC Company relating to a Straddle Period.
"SUBSIDIARY" means, with respect to any Person, (i) each
corporation, partnership, joint venture or other legal entity of which such
Person owns, either directly or indirectly, more than 50% of the stock or other
equity interests the holders of which are entitled to vote for the election of
the board of directors or similar governing body of such corporation,
partnership, joint venture or other legal entity, (ii) each partnership in which
such Person or a Subsidiary of such Person is the general or managing partner
and (iii) each limited liability company in which such Person or a Subsidiary of
such Person is the managing member or otherwise controls (by Contract, through
ownership of membership interests or otherwise).
"TAG-ALONG NOTICE" means a notice to be furnished pursuant
to Section 10.04(a) of the VUE Partnership Agreement in a form reasonably
acceptable to GE and Vivendi.
"TAG-ALONG OFFEREE" has the meaning given to such term in
Section 10.04(a) of the VUE Partnership Agreement.
"TARGET COMPANIES" means the Acquired Companies and the BV
Entities and, for purposes of Sections 5.17, 7.6 and 7.7, the Theme Park.
16
"TAX RETURNS" means any report, return, declaration, claim
for refund, information report or return or statement required to be supplied to
a Taxing Authority in connection with Taxes, including any schedule or
attachment thereto or amendment thereof and including, where permitted or
required, combined or consolidated returns for any group of entities that
includes any of the NBC Companies or Target Companies being acquired pursuant to
this Agreement.
"TAX SHARING AGREEMENT" means any Tax allocation, sharing
or similar contract or arrangement (whether or not written).
"TAXES" means all taxes of any kind, including all federal,
state, provincial, territorial, municipal, local or foreign income, profits,
franchise, gross receipts, environmental (including taxes under Section 59A of
the Code), customs, duties, net worth, sales, use, goods and services,
withholding, value added, ad valorem, employment, social security, disability,
occupation, pension, real property, personal property (tangible and intangible),
stamp, transfer, conveyance, severance, production, excise and other taxes,
withholdings, duties, levies, imposts and other similar charges and assessments
(including any and all fines, penalties and additions attributable to or
otherwise imposed on or with respect to any such taxes, charges, fees, levies or
other assessments, and interest thereon) imposed by or on behalf of any Taxing
Authority, whether disputed or not.
"TAXING AUTHORITY" means any Governmental Authority
exercising any authority to impose, regulate, levy, assess or administer the
imposition of any Tax.
"THEME PARK" means Universal City Development Partners,
Ltd. or Wet 'n Wild, Inc.
"THEME PARK EMPLOYEE" means an individual employed by a
Theme Park.
"TRANSFER TAXES" means any sales, use, stamp, documentary,
filing, recording, transfer, real estate transfer, stock transfer, gross
receipts, registration, duty, securities transactions or similar fees or taxes
or governmental charges (together with any interest or penalty, addition to tax
or additional amount imposed) as levied by any Taxing Authority in connection
with the transactions contemplated by this Agreement.
"TREASURY REGULATIONS" means the treasury regulations
promulgated under the Code.
"TRIO DIGITAL NETWORK" means the digital network operated
by Trio Cable, Inc.
"UMG" means the Universal Music Group, Inc.
"UMG TRADEMARK AGREEMENT" shall mean a trademark agreement
from Universal City Studios LLLP to UMG for which the material terms are set
17
forth on Exhibit F, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"UNIVERSAL COMMON PARENT" means Vivendi Universal Holding
II Corp., as the common parent of the affiliated group of corporations of which
Vivendi Universal Holding II Corp. and the applicable Target Companies are
members.
"UNIVERSAL NETWORKS" means the USA Cable Network, the SciFi
Cable Network and the Trio Digital Network.
"U.S." means the United States of America.
"USA CABLE NETWORK" means the USA cable network operated by
VUE.
"USH3 COMMON EQUITY RATIO" means, at any given time, the
ratio of the number of common shares of NBC owned by Vivendi and each Subsidiary
of Vivendi (including USH3) divided by the total number of common shares of NBC
outstanding at such time.
"USH3 GROUP" means, with respect to the Acquired Companies,
USH3 and, with respect to the BV Entities, Vivendi.
"USI BV RECEIVABLE" means the intercompany receivables
between Universal Studios International BV and Vivendi or an Affiliate of
Vivendi (other than a Target Company).
"VIVENDI STRADDLE PERIOD RETURN" shall mean the federal
partnership Tax Return filed by or on behalf of VUE or the income Tax Return
filed by or on behalf of the BV Entities, in each case, as such Tax Return
relates to a Straddle Period.
"VU TRADEMARK AGREEMENT" shall mean a trademark agreement
from Universal City Studios LLLP to Vivendi for which the material terms are set
forth on Exhibit G, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"VUE" means Vivendi Universal Entertainment LLLP, a
Delaware limited liability limited partnership.
"VUE CREDIT FACILITY CONSENT LETTER" means that certain
Extension of $1,620,000,000 Credit Facility Consent Letter and Agreement, dated
as of November 25, 2002, by and among Vivendi, VUE, IACI and USANi Sub LLC.
"VUE DOCUMENTS" means, collectively, the VUE Transaction
Agreement, the VUE Partnership Agreement, the IACI Governance Agreement, the
IACI Stockholders Agreement, the LMC Merger Agreement, the VUE Credit Facility
Consent Letter, the VUE Second Credit Facility Consent Letter, the VUE Film
Securitization Consent Letter, the VUE SPE Agreements and each other agreement,
document, instrument or certificate entered into in connection with the
18
consummation of the transactions contemplated by the VUE Transaction Agreement
and contained on the CD ROM provided to NBC prior to the date hereof.
"VUE FILM SECURITIZATION CONSENT LETTER" means that certain
Film Securitization Facility Consent Letter, dated March 31, 2003, by and among
Vivendi, VUE, Universal City Studios Productions LLLP, Universal Film Funding
LLC, IACI and USANi Sub LLC.
"VUE PARTNERSHIP AGREEMENT" means that certain Amended and
Restated Limited Liability Limited Partnership Agreement of VUE, dated as of May
7, 2002, by and among USI Entertainment Inc., USANI Holding XX, Inc., BV1, BV2,
NYCSpirit Corp. II, IACI, USANi Sub LLC, New-U Studios Holdings, Inc. and
Xxxxxx, as amended, clarified, restated or otherwise modified from time to time
(including all clarifications and amendments set forth in those certain letter
agreements, dated as of May 7, 2002, November 25, 2002 and June 24, 2003, by and
among the parties to the VUE Partnership Agreement).
"VUE SECOND CREDIT FACILITY CONSENT LETTER" means that
certain Consent Letter and Agreement, dated June 24, 2003, by and among Vivendi,
VUE, IACI and USANi Sub LLC.
"VUE SPE AGREEMENTS" means, collectively, the Limited
Liability Company Agreement of each of V-USA Holding LLC, USI-USA Holding LLC,
SUB I-USA Holding LLC and XXXX-USA Holding LLC.
"VUE TRANSACTION AGREEMENT" means that certain Amended and
Restated Transaction Agreement, dated as of December 16, 2001, by and among
Vivendi, the Company, IACI, USANi LLC, Xxxxxx and Liberty, as amended, restated
or otherwise modified from time to time.
"WORKS IN PROGRESS" means all audio, visual and/or
audiovisual works of any kind or character in which any Target Company has
rights, each of which is set forth on Schedule 1.1(i) hereto, (i) for which
principal photography has commenced on or prior to the date hereof, (ii) which
are in current production or post-production and have not been abandoned, (iii)
which are not complete and which, if completed, would otherwise constitute
feature-length Library Pictures intended for theatrical release and (iv) as of
the date hereof, with respect to which an amount in excess of $5,000,000 has
been expended or is reasonably anticipated to be expended by the Target
Companies in development and/or production costs since January 1, 2001.
Section 1.2 Terms Defined Elsewhere in the Agreement. As
used in this Agreement, the following terms have the meanings set forth in the
Sections indicated:
TERM SECTION
---- -------
ADVANCE 5.25(f)
AUDITED COMPANY NET OPERATING ASSETS 3.1(a)
19
TERM SECTION
---- -------
AUDITED NBC NET OPERATING ASSETS 3.1(a)
BV ENTITIES Recitals
BV SHARE CONTRIBUTION CONSIDERATION 2.3(b)(ii)
BV1 Recitals
BV1 COMMON STOCK 2.2(b)(i)
BV1 SHARE CONTRIBUTION 2.2(b)(i)
BV1 SHARE CONTRIBUTION CONSIDERATION 2.3(b)(i)
BV1 SHAREHOLDER 2.2(b)(i)
BV2 Recitals
BV2 COMMON STOCK 2.2(b)(ii)
BV2 SHARE CONTRIBUTION 2.2(b)(ii)
BV2 SHARE CONTRIBUTION CONSIDERATION 2.3(b)(ii)
BV2 SHAREHOLDERS 2.2(b)(ii)
CASH 3.11
CASH AMOUNT 2.3(d)
CLASS U PARITY STOCK 5.25(a)
CLASS U PREFERRED STOCK 5.25(a)
CLASS U SENIOR STOCK 5.25(a)
CLOSING 4.1
CLOSING DATE 4.1
COMMERCIAL ARRANGEMENTS 7.22
COMMUNICATIONS ACT 5.6
COMPANY Recitals
COMPANY AFFILIATE TRANSACTIONS 5.19
COMPANY BUSINESS ASSETS 5.20(a)
COMPANY CAPITAL STOCK 5.3(a)
COMPANY CASH POOLING ARRANGEMENTS 3.4(c)
COMPANY COMMON STOCK 2.2(a)
COMPANY FINANCIAL STATEMENTS 5.7(b)
COMPANY INTELLECTUAL PROPERTY 5.14(a)
COMPANY INTERIM UNAUDITED FINANCIAL STATEMENTS 5.7(b)
COMPANY LICENSES 5.11(b)
COMPANY MATERIAL CONTRACTS 5.13(a)
COMPANY MATERIAL JV AGREEMENTS 5.13(a)(iii)
COMPANY MINORITY INTERESTS 5.4(b)
COMPANY NET OPERATING ASSETS STATEMENT 3.1(a)
COMPANY NON-U.S. BENEFIT PLANS 5.17(b)
COMPANY NON-U.S. PENSION PLANS 7.7(h)(i)
COMPANY PREFERRED STOCK 2.2(a)
COMPANY 2002 PRO FORMA FINANCIAL STATEMENTS 5.7(b)
COMPANY REFERENCE DATE 3.1(a)
COMPANY RELATED PARTIES 5.17(a)
COMPANY RELATED PARTY LIABILITIES 10.1(a)(viii)
COMPANY SHARE CONTRIBUTION 2.2(a)
20
TERM SECTION
---- -------
COMPANY SHARE CONTRIBUTION CONSIDERATION 2.3(a)
COMPANY STAND-ALONE PLANS 5.17(a)
COMPANY U.S. BENEFIT PLAN 5.17(a)
CONSULTANT 5.27
CONSULTANT AGREEMENT 5.27
COVERED FOREIGN TAXES 3.11
COVERED OPERATING TAXES 3.11
COVERED PROCEEDING 11.1(a)
COVERED TAXES 3.11
CPR 12.13
DEFEASANCE 7.15
XXXXXX COMMON INTERESTS 7.5
DISPUTES 12.13
DISPUTE NOTICE 12.13
DREAMWORKS 5.25(f)
DREAMWORKS LLC AGREEMENT 5.25(f)
DREAMWORKS MASTER AGREEMENT 5.25(f)
DW CLASS U SHARES 5.25(a)
EHS WORK PLANS 7.26(a)
ESTIMATED COMPANY NET CASH STATEMENT 3.4(c)
ESTIMATED NBC NET CASH STATEMENT 3.5(c)
EXCLUDED BUSINESSES 7.9(a)(i)
EXCLUDED PROPERTIES 7.9(a)(ii)
EXISTING NBC COMMON STOCK 6.3(b)(i)
FCC 5.6
FCC LICENSES 6.11(b)
FILING PARTY 7.12(c)(vi)(B)
FINAL COMPANY NET CASH STATEMENT 3.3.4(g)
FINAL COMPANY NET OPERATING ASSETS 3.1(d)
FINAL NBC NET CASH STATEMENT 3.5(e)
FINAL NBC NET OPERATING ASSETS 3.1(d)
GE Preamble
GE COMMON STOCK 2.3(d)
GE GROUP COMPANIES 3.11
GOVERNMENTAL ANTITRUST ENTITY 7.3(c)
GUARANTEES 7.30(a)
INDEMNIFIED PARTY 10.4(a)
INDEMNIFYING PARTY 10.4(a)
INTERIM PERIOD 3.11
LISTED TITLES 5.21(a)
LOSS OR LOSSES 10.1(a)
MATSUSHITA MINORITY INTERESTS 5.3(e)
MHI 2.3(b)(iii)
NBC Preamble
NBC AFFILIATE TRANSACTIONS 6.19
21
TERM SECTION
---- -------
NBC BUSINESS ASSETS 6.20(a)
NBC CASH POOLING ARRANGEMENTS 3.5(c)
NBC CLASS A COMMON STOCK 2.4
NBC CLASS B COMMON STOCK 2.3(a)
NBC FINANCIAL STATEMENTS 6.7(a)
NBC FOREIGN TAX AMOUNT 3.11
NBC FOREIGN TAX CLOSING PAYMENT 3.11
NBC FOREIGN TAX CREDIT SHORTFALL AMOUNT 3.11
NBC-GE INTERCOMPANY NET BALANCE 3.11
NBC HOLDING Preamble
NBC HOLDING COMMON STOCK 6.3(a)
NBC INTELLECTUAL PROPERTY 6.14(a)
NBC LICENSES 6.11(b)
NBC MATERIAL CONTRACTS 6.13(a)
NBC MATERIAL JV AGREEMENTS 6.13(a)(iii)
NBC MINORITY INTERESTS 6.4(b)
NBC MULTIEMPLOYER PLAN 6.17(i)
NBC NET OPERATING ASSETS STATEMENT 3.1(a)
NBC NON -U.S. BENEFIT PLANS 6.17(b)
NBC PLANS 7.7(b)
NBC REFERENCE DATE 3.1(a)
NBC RELATED PARTIES 6.17(a)
NBC RELATED PARTY LIABILITIES 10.2(a)(viii)
NBC RESTRUCTURING 2.1
NBC U.S. BENEFIT PLANS 6.17(a)
NOTEHOLDERS' CONSENT 7.18
NOTICE OF DISAGREEMENT 3.1(b)
NYCSPIRIT 5.3(f)
OPENING NBC CASH AMOUNT 3.5(a)
OPENING USI CASH AMOUNT 3.4(a)
OPENING VUE CASH AMOUNT 3.4(a)
OPERATING TAXES 3.11
OTHER PARTY 7.12(c)(vi)(A)
OUTPUT AGREEMENTS 5.13(a)(viii)
PAYING PARTY 7.12(c)(vi)(B)
POST-CLOSING INSPECTION PERIOD 7.1(c)
RESPONSIBLE PARTY 7.12(c)(vi)(A)
RETAINED PLANS 10.1(a)(vii)
SHARE CONTRIBUTION 2.2(b)(ii)
STATION VENTURE HOLDINGS 6.7(d)
STATION VENTURE OPERATIONS 6.7(d)
STATIONS 6.11(d)
TALENT CONTRACTS 5.13(a)(x)
TARGET COMPANY MULTIEMPLOYER PLAN 5.17(i)
TARGET COMPANY TENANT ENTITY 7.33(b)
22
TERM SECTION
---- -------
TAX BENEFIT 10.10(b)
TAX OPINION 9.1(d)
THEATRICAL AGREEMENT 5.25(f)
THIRD PARTY CLAIM 10.4(a)
UCDP 5.15(a)
UCI 7.9(b)
UCI ASSETS 7.9(b)
USA ACQUISITION 5.7(b)
USH3 Preamble
USI/BV COMPANIES 3.11
USI-VU INTERCOMPANY NET BALANCE 3.11
USI-VUE INTERCOMPANY NET BALANCE 3.11
VIDEOGRAM AGREEMENT 5.25(f)
VIVENDI Preamble
VIVENDI COMPANIES 3.11
VIVENDI COBRA BENEFICIARIES 7.7(j)
VIVENDI EMPLOYEES 7.7(k)
VIVENDI EQUITY PLANS 7.6
VIVENDI RETIREE HEALTH PLAN 7.7(f)
VIVENDI TENANT ENTITY 7.33(a)
VU BUSINESS INSURANCE POLICY 7.16(b)
VUE ASSIGNMENT AND ASSUMPTION AGREEMENT 7.11(a)
VUE AUDITED FINANCIAL STATEMENTS 5.7(a)
VUE COMPANIES 3.11
VUE DEFERRED COMPENSATION PLANS 7.7(g)
VUE FINANCIAL STATEMENTS 5.7(a)
VUE FOREIGN TAX AMOUNT 3.11
VUE FOREIGN TAX CLOSING PAYMENT 3.11
VUE FOREIGN TAX CREDIT SHORTFALL AMOUNT 3.11
VUE INTERIM FINANCIAL STATEMENTS 5.7(a)
XXX-XX INTERCOMPANY NET BALANCE 3.11
WORK PAPERS ACCESS LETTER 3.1(b)
0000 XX XXXXXXXXX 5.25(f)
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein" and "hereunder" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) Whenever the context so requires, gender-specific
pronouns include the neuter, masculine and feminine.
23
(d) The terms "DOLLARS" and "$" mean U.S. dollars.
(e) The term "INCLUDING" shall be deemed to be immediately
followed by the term "BUT NOT LIMITED TO."
(f) The term "KNOWLEDGE" as it applies to the knowledge of
Vivendi means the actual knowledge of the individuals identified on Schedule
1.3(f).
(g) The term "KNOWLEDGE" as it applies to the knowledge of
GE means the actual knowledge of the individuals identified on Schedule 1.3(g).
(h) References to a Person include such Person and its
successors and assigns.
ARTICLE 2
THE NBC RESTRUCTURING, CONTRIBUTION AND EXCHANGE
Section 2.1 The NBC Restructuring. Prior to or at the
Closing, GE shall cause the transactions set forth on Schedule 2.1 to be
consummated (the "NBC RESTRUCTURING").
Section 2.2 Contribution and Exchange of Shares of Company
Common Stock and Company Preferred Stock and Shares of the BV Companies. Upon
the terms and subject to the conditions set forth in this Agreement, at the
Closing:
(a) USH3 shall Contribute to NBC Sub, and GE shall cause
NBC Sub to accept from USH3, (i) 2,984.57080 shares of common stock, par value
$0.01 per share, of the Company ("COMPANY COMMON STOCK") and (ii) 69,316 shares
of Series A preferred stock, par value $0.01 per share, of the Company ("COMPANY
PREFERRED STOCK") (clauses (i) and (ii) above, collectively, the "COMPANY SHARE
CONTRIBUTION"); and
(b) Vivendi shall cause:
(i) a Subsidiary of Vivendi (the "BV1 SHAREHOLDER") to
Contribute to NBC Sub, and GE shall cause NBC Sub to accept from the BV1
Shareholder, 1,929 shares of common stock, par value (euro)45.38 per share ("BV1
COMMON STOCK"), of BV1 (the "BV1 SHARE CONTRIBUTION"); and
(ii) each of the Subsidiaries of Vivendi set forth on
Schedule 2.2(b)(ii) (the "BV2 SHAREHOLDERS") to Contribute to NBC Sub, and GE
shall cause NBC Sub to accept from each of the BV2 Shareholders, shares of
common stock, par value (euro)1.00 per share ("BV2 COMMON STOCK"), of BV2 owned
by such BV2 Shareholder set forth opposite such BV2 Shareholder's name on
Schedule 2.2(b)(ii) (the "BV2 SHARE CONTRIBUTION" and, together with the BV1
Share Contribution and the Company Share Contribution, the "SHARE
CONTRIBUTION").
24
Section 2.3 Consideration to be Received for the Share
Contribution.
(a) At the Closing, in exchange for the Company Share
Contribution, GE shall cause (i) NBC Sub to deliver to USH3 that number of
shares of Class B common stock of NBC ("NBC CLASS B COMMON STOCK") representing
20% of the issued and outstanding capital stock of NBC, (ii) NBC Holding to
issue and deliver, at the direction of USH3, to one or more financial
institutions selected by NBC Holding and reasonably acceptable to Vivendi,
shares of capital stock of NBC Holding, and such financial institutions shall
deliver up to $2,947,998,114 to USH3, and (iii) NBC Sub to deliver cash to USH3
equal to the excess of (A) $2,947,998,114 over (B) the amount of cash delivered
pursuant to clause (ii) (clauses (i), (ii) and (iii) above collectively referred
to herein as the "COMPANY SHARE CONTRIBUTION CONSIDERATION").
(b) At the Closing:
(i) GE shall, in exchange for the BV1 Share
Contribution, cause (x) NBC Holding to issue and deliver (at the direction of
the BV1 Shareholder) to one or more financial institutions selected by NBC
Holding and reasonably acceptable to Vivendi shares of capital stock of NBC
Holding, and such financial institutions shall deliver up to $548,894,573 to the
BV1 Shareholder, and (y) NBC Sub to deliver cash to the BV1 Shareholder equal to
the excess of (A) $548,894,573 over (B) the amount of cash delivered pursuant to
clause (x) (the "BV1 SHARE CONTRIBUTION CONSIDERATION").
(ii) GE shall, in exchange for the BV2 Share
Contribution, cause (x) NBC Holding to issue and deliver (at the direction of
the BV2 Shareholders) to one or more financial institutions selected by NBC
Holding and reasonably acceptable to Vivendi shares of capital stock of NBC
Holding, and such financial institutions shall deliver up to $107,579,510 to the
BV2 Shareholders, and (y) NBC Sub to deliver cash to the BV2 Shareholders equal
to the excess of (A) $107,579,510 over (B) the amount of cash delivered pursuant
to clause (x) (the "BV2 SHARE CONTRIBUTION CONSIDERATION" and, together with the
BV1 Share Contribution Consideration, the "BV SHARE CONTRIBUTION
CONSIDERATION"). The BV2 Share Contribution Consideration shall be allocated
among the BV2 Shareholders in accordance with their pro rata ownership of shares
of BV2 Common Stock as set forth on Schedule 2.2(b)(ii).
(iii) Subject to Section 7.9(c), GE shall offer to
purchase the 160 shares of BV1 Common Stock held by MHI Investment Corporation
or its Affiliates ("MHI") for the same consideration per share as the BV1
Contribution Consideration.
(c) Notwithstanding the foregoing, if between the date of
this Agreement and the Closing, the outstanding shares of NBC Class A Common
Stock or NBC Class B Common Stock, as the case may be, shall have been changed
into a different number of shares or a different class, by reason of the
occurrence or record date of any stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange of shares or similar transaction,
the Company Share Contribution Consideration shall be appropriately adjusted to
25
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination, exchange of shares or similar transaction.
(d) Notwithstanding the foregoing, GE shall have the right,
at its election (such election to be delivered in writing to Vivendi no later
than three (3) Business Days before the Closing), to deliver, in lieu of any
amount of cash (a "CASH AMOUNT") to be paid pursuant to Section 2.3(a),
2.3(b)(i) and 2.3(b)(ii), such number of shares of common stock, par value $0.06
per share, of GE ("GE COMMON STOCK") having a value, net of all applicable
transaction costs, equal to the Cash Amount. In the event of a delivery of
shares of GE Common Stock under this Section 2.3(d), GE will arrange for the
sale of such shares no later than twenty (20) Business Days after the Closing,
and shall pay interest on the applicable Cash Amount from the Closing Date to
the date such shares are sold at a rate equal to Vivendi's bank borrowing rate
for such period as notified to GE by Vivendi, provided that if the net proceeds
from such sale are less than the Cash Amount, GE shall pay to USH3, the BV1
Shareholder and the BV2 Shareholders, by wire transfer of immediately available
funds to an account designated by Vivendi within two (2) Business Days after
such sale, the amount of such deficiency.
Section 2.4 Beneficial Ownership in NBC by GE and Vivendi.
Notwithstanding anything to the contrary contained in this Agreement,
immediately following the transactions contemplated by this Article 2 and by
Section 7.13, the beneficial ownership by GE of its shares of Class A common
stock of NBC ("NBC CLASS A COMMON STOCK") shall represent at least 80% of the
issued and outstanding capital stock of NBC and, except as set forth on Schedule
7.13, the beneficial ownership by Vivendi of its shares of NBC Class B Common
Stock shall represent at least 20% of the issued and outstanding capital stock
of NBC.
ARTICLE 3
NET OPERATING ASSETS ADJUSTMENTS;
NET CASH ADJUSTMENTS
Section 3.1 Procedures for Determination of Net Operating
Assets.
(a) Within 120 days after the date hereof, (i) Vivendi
shall prepare and deliver to GE a statement (the "COMPANY NET OPERATING ASSETS
STATEMENT") setting forth Net Operating Assets of the Target Companies as of the
close of business on September 30, 2003 (the "COMPANY REFERENCE DATE") for the
Company ("AUDITED COMPANY NET OPERATING ASSETS"), together with a certificate of
Vivendi certifying that the Company Net Operating Assets Statement has been
prepared in accordance with the requirements of this Section 3.1, and (ii) GE
shall prepare and deliver to Vivendi a statement (the "NBC NET OPERATING ASSETS
STATEMENT") setting forth Net Operating Assets of the NBC Companies as of the
close of business on September 28, 2003 (the "NBC REFERENCE DATE") for NBC
("AUDITED NBC NET OPERATING ASSETS"), together with a certificate of GE
certifying that the NBC Net Operating Assets Statement has been prepared in
accordance with the requirements of this Section 3.1. The Company Net Operating
26
Assets Statement and the NBC Net Operating Assets Statement shall be prepared in
accordance with GAAP following the presentation of and containing the accounts
set forth on the statements set forth on Schedule 3.1(a)(i) and Schedule
3.1(a)(ii), respectively, and in a manner consistent with the preparation of the
Company Interim Unaudited Financial Statements or the NBC Financial Statements,
as the case may be. The Company Net Operating Assets Statement and the NBC Net
Operating Assets Statement shall be accompanied by reports from Vivendi's
independent auditor (or such other independent auditor selected by Vivendi and
reasonably acceptable to GE) and GE's independent auditor, respectively, to the
effect that such statements (i) have been prepared in accordance with GAAP
following the presentation of and containing the accounts set forth on the
statements set forth on Schedule 3.1(a)(i) and Schedule 3.1(a)(ii),
respectively, and audited in accordance with U.S. generally accepted auditing
standards, and (ii) fairly present in all material respects the Company Net
Operating Assets and the NBC Net Operating Assets as of the Company Reference
Date and the NBC Reference Date, respectively, following the presentation of and
containing the accounts set forth on the statements set forth on Schedule
3.1(a)(i) and Schedule 3.1(a)(ii), respectively.
(b) During the 20-Business Day period following the date of
execution of the Work Papers Access Letter with GE's independent auditors or
with Vivendi's independent auditors, as the case may be, GE and its independent
auditors and Vivendi and its independent auditors (in each case, excluding any
audit personnel involved with due diligence related to the transactions
contemplated by this Agreement) shall review and perform related audit
procedures with respect to (i) reasonably available supporting information
prepared by Vivendi in preparing the Company Net Operating Assets Statement or
by GE in preparing the NBC Net Operating Assets Statement, as the case may be,
and (ii) subject to the execution and delivery by GE or Vivendi, as the case may
be, of a reasonable and customary release and indemnity agreement (the "WORK
PAPERS ACCESS LETTER") with Vivendi's or GE's, as the case may be, independent
auditors (or such other independent auditor selected by Vivendi and reasonably
acceptable to GE), the working papers, schedules and other documents prepared,
used or otherwise generated by Vivendi's or GE's independent auditors (or such
other independent auditor selected by Vivendi and reasonably acceptable to GE)
relating to the Company Net Operating Assets Statement or the NBC Net Operating
Assets Statement, as the case may be. Each of the Company Net Operating Assets
Statement and the NBC Net Operating Assets Statement shall become final and
binding upon the parties on the 20th Business Day following execution of the
Work Papers Access Letter with GE's independent auditors or Vivendi's
independent auditors (or such other independent auditor selected by Vivendi and
reasonably acceptable to GE), as the case may be, unless GE or Vivendi, as the
case may be, gives a separate written notice of its disagreement with respect to
the Company Net Operating Assets Statement or the NBC Net Operating Assets
Statement, as the case may be (each such notice, a "NOTICE OF DISAGREEMENT") to
Vivendi or GE, as the case may be, prior to such date, provided that (A) Vivendi
shall not be permitted to submit a Notice of Disagreement unless such notice
sets forth disagreements that in the aggregate would result in a downward
adjustment to NBC Net Operating Assets in excess of $30 million, and (B) GE
shall not be permitted to submit a Notice of Disagreement unless such notice
sets forth disagreements that in the aggregate would result in a downward
27
adjustment to Company Net Operating Assets in excess of $50 million. A Notice of
Disagreement shall (I) specify the nature of any disagreement so asserted in
reasonable detail, identify the specific items involved and specify the amount
(or an estimate thereof) of each such disagreement and (II) include only
disagreements based upon the Company Net Operating Assets Statement or the NBC
Net Operating Assets Statement, as the case may be, not being prepared in
accordance with this Section 3.1.
(c) If a Notice of Disagreement is received by Vivendi or
GE, as the case may be, within the 20-Business Day period following the
execution of the Work Papers Access Letter with GE's independent auditors and
Vivendi's independent auditors (or such other independent auditor selected by
Vivendi and reasonably acceptable to GE), as the case may be, then the Company
Net Operating Assets Statement or the NBC Net Operating Assets Statement, as the
case may be (as revised in accordance with this Section 3.1(c)), shall become
final and binding upon the parties on the date on which GE and Vivendi resolve
in writing any differences they have with respect to the matters specified in
such Notice of Disagreement. During the 15-Business Day period following the
delivery of a Notice of Disagreement, members of senior management of GE and
Vivendi shall seek in good faith to resolve in writing any differences that they
may have with respect to the matters specified in such Notice of Disagreement.
At the end of such 15-Business Day period, such members of senior management
shall refer to the respective Chief Executive Officers of NBC and Vivendi for
resolution any and all matters that remain in dispute and were properly included
in such Notice of Disagreement. The Chief Executive Officers shall meet within
15 days after such referral and shall attempt in good faith to resolve the
dispute. The fees and disbursements of any party's independent auditors, its
attorneys or any other expenses of such party incurred in connection with this
Section 3.1 shall be borne by such party.
(d) "FINAL COMPANY NET OPERATING ASSETS" means (i) Audited
Company Net Operating Assets if no Notice of Disagreement is delivered by GE to
Vivendi or (ii) the Net Operating Assets of the Company as of the close of
business on the Company Reference Date as finally determined pursuant to Section
3.1(c) if a Notice of Disagreement is delivered by GE. "FINAL NBC NET OPERATING
ASSETS" means (i) Audited NBC Net Operating Assets if no Notice of Disagreement
is delivered by Vivendi to GE or (ii) the Net Operating Assets of NBC as of the
close of business on the NBC Reference Date as finally determined pursuant to
Section 3.1(c) if a Notice of Disagreement is delivered by Vivendi.
Section 3.2 Company Net Operating Assets Adjustments. In
the event that Final Company Net Operating Assets are less than $1,550 million
and such shortfall exceeds $50 million, Vivendi shall, or shall cause USH3 to,
pay on the later of (A) the third Business Day after the Company Net Operating
Assets Statement becomes final and binding and (B) the Closing Date, at the
Closing, to NBC, by wire transfer of immediately available funds to an account
designated by NBC, an amount equal to such shortfall.
Section 3.3 NBC Net Operating Assets Adjustments. In the
event that Final NBC Net Operating Assets are less than $913 million and such
shortfall exceeds $30 million, GE shall pay, on the later of (A) the third
28
Business Day after the NBC Net Operating Assets Statement becomes final and
binding and (B) the Closing Date, at the Closing, to NBC, by wire transfer of
immediately available funds to an account designated by NBC, an amount equal to
such shortfall.
Section 3.4 Company Net Cash Adjustment.
(a) Opening Cash Amounts. Vivendi represents and warrants
to GE that (i) the net cash balance of the VUE Companies as of September 30,
2003 is $589,335,000 (the "OPENING VUE CASH AMOUNT"), which represents (A) the
sum of (x) the Cash of the VUE Companies, plus (y) the XXX-XX Intercompany Net
Balance, minus (B) the USI-VUE Intercompany Net Balance (which, for the
avoidance of doubt, is a negative number and such number (expressed as a
positive number) has been added to the sum referred to in clause (A) above),
calculated in the manner set forth on Schedule 3.4(a), in each case as of
September 30, 2003, and (ii) the net cash balance of the USI/BV Companies as of
September 30, 2003 is ($27,811,000) (a negative number) (the "OPENING USI CASH
AMOUNT"), which represents the sum of (A) the Cash of the USI/BV Companies, plus
(B) the USI-VU Intercompany Net Balance, plus (C) the USI-VUE Intercompany Net
Balance, calculated in the manner set forth on Schedule 3.4(a), in each case as
of September 30, 2003. Vivendi and GE agree that, in addition to the payments to
be made pursuant to Article 2 at the Closing, an amount equal to 93.06% of the
Opening VUE Cash Amount shall be paid to USH3 and an amount equal to the Opening
USI Cash Amount (expressed as a positive number) shall be paid by USH3 to the
Company, in each case in accordance with this Section 3.4.
(b) Interim Cash Flows. Vivendi and GE agree that from
October 1, 2003 (inclusive) through the close of business on the Closing Date,
(i) any increase or decrease in the net cash balance of the VUE Companies (to
the extent of NBC's ownership interest in such VUE Companies after the Closing)
shall be for the account of GE and Vivendi in accordance with their
proportionate equity interests in NBC immediately after the Closing and (ii) any
increase or decrease in the net cash balance of the USI/BV Companies shall be
for the account of GE and Vivendi in accordance with their proportionate equity
interests in NBC immediately after the Closing. The changes in such net cash
balances shall be accounted for in accordance with this Section 3.4.
(c) Company Cash Pooling Arrangements. Vivendi and GE agree
that from the date hereof until the Closing Date (but not thereafter), each of
the Target Companies shall be permitted to make readily identifiable payments to
Vivendi or any of its Affiliates pursuant to lawful cash pooling arrangements
presently existing at any of the Target Companies as modified pursuant to this
Section 3.4 and Section 3.11 (such arrangements, as so modified, the "COMPANY
CASH POOLING ARRANGEMENTS"). After September 30, 2003, no payments shall be made
or accrue under any Tax Sharing Agreement involving the Universal Common Parent
or any of its Affiliates (other than any Target Company), on the one hand, and
any Target Company, on the other hand. As of the close of business on the
Closing Date, Vivendi shall, and shall cause the Target Companies to, (i) cease
all payments under the Company Cash Pooling Arrangements and (ii) prevent any
other change in the XXX-XX Intercompany Net Balance, the USI-VU Intercompany Net
Balance and the USI-VUE Intercompany Net Balance. No later than two Business
Days prior to the Closing, Vivendi shall prepare and deliver to NBC and GE a
statement setting forth the XXX-XX Intercompany Net Balance, the USI-VU
29
Intercompany Net Balance, the USI-VUE Intercompany Net Balance and the VUE
Foreign Tax Closing Payment, in each case as of the close of business on the
last day of the month immediately preceding the Closing Date (the "ESTIMATED
COMPANY NET CASH STATEMENT").
(d) USI Closing Cash Adjustment Payments. Subject to any
offsetting of payments pursuant to Section 3.6, the following payments shall be
made at the Closing (and all balances as of the close of business on the Closing
Date taken into account under the definition of USI-VUE Intercompany Net Balance
and the USI-VU Intercompany Net Balance shall be cancelled):
(i) If the USI-VUE Intercompany Net Balance as shown on
the Estimated Company Net Cash Statement reflects a net payable by the VUE
Companies to the USI/BV Companies, VUE shall pay such amount to the Company at
the Closing in consideration for the cancellation of all intercompany balances
included in the computation of the USI-VUE Intercompany Net Balance. If the
USI-VUE Intercompany Net Balance as shown on the Estimated Company Net Cash
Statement reflects a net payable by the USI/BV Companies to the VUE Companies,
the Company shall pay such amount to VUE at the Closing in consideration for the
cancellation of all intercompany balances included in the computation of the
USI-VUE Intercompany Net Balance, provided that in the event the amount payable
by the Company under this sentence exceeds the amount of cash available to the
Company, Vivendi shall cause USH3 to pay the shortfall.
(ii) If the USI-VU Intercompany Net Balance as shown on
the Estimated Company Net Cash Statement reflects a net payable by the Vivendi
Companies to the USI/BV Companies, Vivendi shall cause USH3 to pay such amount
to the Company (for the benefit of NBC) in consideration for the cancellation of
all intercompany balances included in the computation of the USI-VU Intercompany
Net Balance. If the USI-VU Intercompany Net Balance as shown on the Estimated
Company Net Cash Statement reflects a net payable by the USI/BV Companies to the
Vivendi Companies, the Company shall pay such amount to USH3 in consideration
for the cancellation of all intercompany balances included in the computation of
the USI-VU Intercompany Net Balance, provided that if the amount payable by the
Company to USH3 under this sentence exceeds the amount of cash available to the
Company on the Closing Date, NBC shall pay the shortfall to USH3.
(iii) Vivendi shall cause USH3 to pay the Opening USI
Cash Amount (expressed as a positive number) to the Company at the Closing.
(iv) Vivendi shall cause USH3 to pay the VUE Foreign Tax
Closing Payment as reflected on the Estimated Company Net Cash Statement to NBC
Holding at the Closing.
30
(e) VUE Closing Cash Adjustment Payments. Subject to any
offsetting of payments pursuant to Section 3.6, the following payments shall be
made immediately prior to, at or following the Closing, as the case may be (and
all balances as of the close of business on the Closing Date taken into account
under the definition of XXX-XX Intercompany Net Balance shall be cancelled):
(i) If the XXX-XX Intercompany Net Balance as shown on
the Estimated Company Net Cash Statement reflects a net payable by the Vivendi
Companies to the VUE Companies, Vivendi shall cause USH3 to pay such amount to
VUE at the Closing in consideration for the cancellation of all intercompany
balances included in the computation of the XXX-XX Intercompany Net Balance. If
the XXX-XX Intercompany Net Balance as shown on the Estimated Company Net Cash
Statement reflects a net payable by the VUE Companies to the Vivendi Companies,
VUE shall pay such amount to USH3 in consideration for the cancellation of all
intercompany balances included in the computation of the XXX-XX Intercompany Net
Balance, provided that if the amount payable by VUE exceeds the amount of cash
available to VUE at the Closing, NBC shall make an arm's-length loan in an
amount equal to the shortfall to VUE and VUE shall pay such amount to USH3.
(ii) NBC shall pay USH3 an amount equal to 93.06% of the
Opening VUE Cash Amount at the Closing.
(f) USI BV Receivable. Prior to Closing, Vivendi shall
either (i) repay the USI BV Receivable and cause Universal Studios International
BV to distribute the proceeds to VUE or (ii) cause Universal Studios
International BV to distribute the USI BV Receivable to VUE, whereupon the
provisions of Sections 3.4 and 3.6, as the case may be, shall apply as between
VUE and Vivendi and its Affiliates.
(g) Final Company Net Cash Statement. Within 45 days after
the last day of the month in which the Closing occurs, Vivendi shall prepare and
deliver to NBC and GE, a statement setting forth the XXX-XX Intercompany Net
Balance, the USI-VU Intercompany Net Balance, the USI-VUE Intercompany Net
Balance and the VUE Foreign Tax Closing Payment, in each case as of the close of
business on the Closing Date (the "FINAL COMPANY NET CASH STATEMENT"). NBC
shall, and shall cause the Target Companies to, provide Vivendi and its
independent auditors with reasonable access, during regular business hours, to
the employees, books, records or properties of the Target Companies for the
purpose of preparing the Final Company Net Cash Statement.
(h) Post-Closing Adjustments. During the 30-day period
following delivery of the Final Company Net Cash Statement, GE and its
independent auditors may review and perform related audit procedures with
respect to (i) reasonably available supporting information prepared by Vivendi
in preparing the Estimated Company Net Cash Statement and the Final Company Net
Cash Statement, and (ii) the books and records, schedules and other documents
prepared, used or otherwise generated by Vivendi relating to cash and
intercompany balances, bank statements and intercompany funding movements. The
Final Company Net Cash Statement shall become final and binding upon the parties
31
on the 30th day following delivery thereof, unless GE gives a separate written
notice of its disagreement with respect to the Final Company Net Cash Statement,
in which case the parties shall follow the dispute resolution procedures set
forth in Sections 3.1(b) and (c), provided that (A) the $50 million threshold
set forth therein shall not apply for purposes of this Section 3.4(h) and (B)
all references to the Company Net Operating Statement shall be deemed to be
references to the Final Company Net Cash Statement. If it is determined (I) that
there are differences in the XXX-XX Intercompany Net Balance, the USI-VU
Intercompany Net Balance, the USI-VUE Intercompany Net Balance or the VUE
Foreign Tax Closing Payment, in each case as shown on the final and binding
Final Company Net Cash Statement, and the XXX-XX Intercompany Net Balance, the
USI-VU Intercompany Net Balance, the USI-VUE Intercompany Net Balance or the VUE
Foreign Tax Closing Payment, in each case as shown on the Estimated Company Net
Cash Statement, respectively, or (II) in the dispute resolution process that the
payments or loans actually made pursuant to this Section 3.4 differed from the
payments or loans that should have been made, reconciliation payments or loans,
as the case may be, shall be made among the parties within three Business Days
of such determination.
(i) Access to Information. Promptly following the delivery
of the Estimated Company Net Cash Statement to GE under Section 3.4(c) and the
delivery of the Final Company Net Cash Statement to GE under Section 3.4(h), as
the case may be, Vivendi shall provide GE and its independent auditors with
reasonable access, during regular business hours, to the employees, books,
records or properties of Vivendi and, prior to the Closing, the Target Companies
in connection with GE's review of such statements.
Section 3.5 NBC Net Cash Adjustment.
(a) Opening Cash Amounts. GE represents and warrants that
the net cash balance of the NBC Companies as of September 30, 2003 is
($8,352,794,000) (a negative number) (the "OPENING NBC CASH AMOUNT"), which
represents the sum of (i) the Cash of the NBC Companies, plus (ii) the NBC-GE
Intercompany Net Balance (which, for the avoidance of doubt, is a negative
number and such number (expressed as a positive number) has been subtracted from
the amount referred to in clause (i) above), calculated in the manner set forth
on Schedule 3.5(a), in each case as of September 30, 2003. Vivendi and GE agree
that the Opening NBC Cash Amount shall be for the account of GE. Such net cash
balance (expressed as a positive number) shall be paid by NBC Holding to NBC in
accordance with this Section 3.5.
(b) Interim Cash Flows. GE and Vivendi agree that from
October 1, 2003 (inclusive) through the close of business on the Closing Date,
any increase or decrease in the net cash balance of the NBC Companies shall be
for the account of GE and Vivendi in accordance with their proportionate equity
interests in NBC immediately after Closing. The changes in such net cash balance
shall be accounted for in accordance with this Section 3.5.
32
(c) NBC Cash Pooling Arrangements. From the date hereof
until the Closing Date (but not thereafter), each of the NBC Companies shall be
permitted to make readily identifiable payments to GE or any of its Affiliates
pursuant to lawful cash pooling arrangements presently existing at any of the
NBC Companies as modified pursuant to this Section 3.5 and Section 3.11 (such
arrangements, as so modified, the "NBC CASH POOLING ARRANGEMENTS"). After
September 30, 2003, no payments shall be made or accrue under any Tax Sharing
Agreement (other than the GE-NBC Universal Tax Sharing Agreement pursuant to
which payments may be made or accrued the day after the Closing) involving GE or
any of its Affiliates (other than any NBC Company), on the one hand, and any NBC
Company, on the other hand. Except as provided under Section 7.29, as of the
close of business on the Closing Date, GE shall, and shall cause the NBC
Companies to, (i) cease all payments under the NBC Cash Pooling Arrangements and
(ii) prevent any other change in the NBC-GE Intercompany Net Balance. No later
than two Business Days prior to the Closing, GE shall prepare and deliver to
Vivendi a statement setting forth the NBC-GE Intercompany Net Balance and the
NBC Foreign Tax Closing Payment, in each case as of the close of business on the
last day of the month immediately preceding the Closing Date (the "ESTIMATED NBC
NET CASH STATEMENT").
(d) NBC Closing Cash Adjustment Payments. Subject to any
offsetting of payments pursuant to Section 3.6, the following payments shall be
made at the Closing (and all balances as of the close of business on the Closing
Date taken into account under the definition of NBC-GE Intercompany Net Balance
shall be cancelled):
(i) If the NBC-GE Intercompany Net Balance as shown on
the Estimated NBC Net Cash Statement reflects a net payable by the GE Group
Companies to the NBC Companies, GE shall cause NBC Holding to pay such amount to
NBC at the Closing in consideration for the cancellation of all intercompany
balances included in the computation of the NBC-GE Intercompany Net Balance. If
the NBC-GE Intercompany Net Balance as shown on the Estimated NBC Net Cash
Statement reflects a net payable by the NBC Companies to the GE Group Companies,
NBC shall pay such amount to NBC Holding at the Closing in consideration for the
cancellation of all intercompany balances included in the computation of the
NBC-GE Intercompany Net Balance.
(ii) GE shall cause NBC Holding to pay the Opening NBC
Cash Amount (expressed as a positive number) to NBC at the Closing.
(iii) GE shall cause NBC Holding to pay the NBC Foreign
Tax Closing Payment as reflected on the Estimated NBC Net Cash Statement to USH3
at the Closing.
(e) Final NBC Net Cash Statement. Within 45 days after the
last day of the month in which the Closing occurs, GE shall prepare and deliver
to Vivendi, a statement setting forth the NBC-GE Intercompany Net Balance and
the NBC Foreign Tax Closing Payment, in each case as of the close of business on
the Closing Date (the "FINAL NBC NET CASH STATEMENT").
33
(f) Post-Closing Adjustments. During the 30-day period
following the delivery of the Final NBC Net Cash Statement, Vivendi and its
independent auditors may review and perform related audit procedures with
respect to (i) reasonably available supporting information prepared by GE or NBC
in preparing the Estimated NBC Net Cash Statement and the Final NBC Net Cash
Statement, and (ii) the books and records, schedules and other documents
prepared, used or otherwise generated by GE or NBC relating to cash and
intercompany balances, bank statements and intercompany funding movements. The
Final NBC Net Cash Statement shall become final and binding upon the parties on
the 30th day following delivery thereof, unless Vivendi gives separate written
notice of its disagreement with respect to the Final NBC Net Cash Statement, in
which case the parties shall follow the dispute resolution procedures set forth
in Sections 3.1(b) and (c), provided that (A) the $30 million threshold set
forth therein shall not apply for purposes of this Section 3.5(f) and (B) all
references to the NBC Net Operating Statement shall be deemed to be references
to the Final NBC Net Cash Statement. If it is determined (I) that there are
differences in the NBC-GE Intercompany Net Balance or the NBC Foreign Tax
Closing Payment, in each case as shown on the final and binding Final NBC Net
Cash Statement, and the NBC-GE Intercompany Net Balance or the NBC Foreign Tax
Closing Payment, in each case as shown on the Estimated NBC Net Cash Statement,
respectively, or (II) in the dispute resolution process that the payments
actually made pursuant to this Section 3.5 differed from the payments that
should have been made, reconciliation payments shall be made among the parties
within three Business Days of such determination.
(g) Access to Information. Promptly following the delivery
of the Estimated NBC Net Cash Statement to Vivendi under Section 3.5(c) and the
delivery of the Final NBC Net Cash Statement to Vivendi under Section 3.5(f), as
the case may be, GE shall, and shall cause the NBC Companies to, provide Vivendi
and its independent auditors with reasonable access, during regular business
hours, to the employees, books, records or properties of GE or any of the NBC
Companies in connection with Vivendi's review of such statements.
Section 3.6 Offsetting Payments. In the event that any
Person required to make a payment (the "FIRST PARTY") under Section 3.4 or 3.5
to a Person (the "SECOND PARTY") is entitled to receive a payment from the
Second Party, the two payments shall be offset against the other, and only the
net amount resulting from such offsetting shall be payable by the First Party or
the Second Party, as the case may be.
Section 3.7 Payment to USH3 and NBC Holding in Respect of
Certain Foreign Income Taxes.
(a) Upon the payment after the Closing Date of any Covered
Foreign Taxes with respect to any Target Company, Vivendi shall cause USH3 to
pay NBC Holding an amount equal to the product of (i) 40%, (ii) 80% and (iii)
the amount of such Covered Foreign Taxes. Upon the payment of any Covered
Foreign Taxes with respect to any NBC Company (excluding for the avoidance of
doubt any Target Company) after the Closing Date, GE shall cause NBC Holding to
pay USH3 an amount equal to the product of (i) 40%, (ii) 20% and (iii) the
amount of such Covered Foreign Taxes.
34
(b) As promptly as practicable after the filing of the U.S.
federal consolidated income tax return of the Universal Common Parent for the
year including the Closing Date, Vivendi shall cause USH3 to pay to NBC Holding
the VUE Foreign Tax Credit Shortfall Amount, plus interest on such amount at
GE's bank borrowing rate. As promptly as practicable after the filing of the
U.S. federal consolidated income tax return of GE for the year including the
Closing Date, GE shall cause NBC Holding to pay to USH3 the NBC Foreign Tax
Credit Shortfall Amount, plus interest on such amount at Vivendi's bank
borrowing rate. If the amount of foreign tax credit carryforwards or the amount
of Covered Foreign Taxes (including by reason of a payment of Covered Foreign
Taxes after the Closing that has not previously been taken into account under
this Section 3.7(b)) taken into account for purposes of the VUE Foreign Tax
Credit Shortfall Amount or the NBC Foreign Tax Credit Shortfall Amount is
adjusted following the date payment under this Section 3.7 is made, appropriate
reconciliation payments shall be made to account for such adjustment.
Section 3.8 Interest on Overdue Payments. Any amounts due a
party under this Article 3 shall bear interest from the date such payment is due
at an interest rate equal to GE's or Vivendi's bank borrowing rate, as the case
may be, for such period as notified by such party.
Section 3.9 Coordination with Other Tax Provisions.
Notwithstanding any provision to the contrary in Section 7.12 or Article 11, and
except to the extent provided in this Article 3, none of the Vivendi Companies
shall be responsible for or required to pay any Covered Operating Taxes
attributable to any Target Company (or any Covered Foreign Taxes attributable to
any Target Company taken into account under this Article 3) and none of the GE
Group Companies shall be responsible for or required to pay any Covered
Operating Taxes attributable to any NBC Company (or any Covered Foreign Taxes
attributable to any NBC Company taken into account under this Article 3).
Section 3.10 Interest on Intercompany Balances and Opening
Cash Amounts. Vivendi and GE agree that during the Interim Period, interest on
the Opening VUE Cash Amount, the Opening USI Cash Amount and the Opening NBC
Cash Amount and on intercompany balances arising during the Interim Period will
be treated as follows:
(a) The payment of the Opening USI Cash Amount by USH3 to
the Company pursuant to Section 3.4(d)(iii) shall be increased by the amount of
any interest (i) paid by the Company to USH3 during the Interim Period on the
intercompany balance giving rise to such Opening USI Cash Amount or (ii) payable
by the Company to USH3 that accrues on the intercompany balance giving rise to
such Opening USI Cash Amount.
(b) The payment of the Opening VUE Cash Amount by NBC to
USH3 pursuant to Section 3.4(e)(ii) shall be increased by interest as follows:
(i) the portion of the Opening VUE Cash Amount that consists of cash deposits of
the VUE Companies under the Film Securitization Facility Agreement shall be
increased by 93.06% of the amount of any interest earned on such deposits during
the Interim Period and (ii) the remaining portion of the Opening VUE Cash Amount
35
shall be increased by 93.06% of the amount of any interest (A) paid by Vivendi
to VUE on such portion during the Interim Period or (B) payable by Vivendi to
VUE that accrues on such portion during the Interim Period.
(c) The payment of the NBC Opening Cash Amount by NBC
Holding to NBC pursuant to Section 3.5(d)(ii) shall be increased by the amount
of any interest (i) paid by NBC to GE on the Opening NBC Cash Amount during the
Interim Period or (ii) payable by NBC to GE that accrues on the NBC Opening Cash
Amount during the Interim Period.
(d) All other intercompany balances arising after October
1, 2003 and taken into account in the determination of the NBC-GE Intercompany
Net Balance, the XXX-XX Intercompany Net Balance, the USI-VU Intercompany Net
Balance and the USI-VUE Intercompany Net Balance shall accrue interest in the
ordinary course of business consistent with past practices.
Section 3.11 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings.
"CASH" means cash and cash equivalents, it being agreed
that foreign currencies shall be deemed converted into U.S. dollars at the
prevailing exchange rates in effect on September 20, 2003 for GE and the NBC
Companies and September 24, 2003 for Vivendi and the Target Companies, on the
last day of the month immediately preceding the Closing Date or on the Closing
Date, as the case may be.
"COVERED OPERATING TAXES" means Operating Taxes that (i)
are paid by, or withheld from payments to, any of the NBC Companies or the
Target Companies, as the case may be, during the Interim Period, (ii) are
attributable to the Interim Period, (iii) relate exclusively to the business and
assets that will be held by NBC and its Subsidiaries after the Closing (and do
not relate to any other business or asset) and (iv) arise and are paid in the
ordinary course of business, consistent with past practice and do not arise from
or relate to any extraordinary transaction (including any transaction which is
the subject of any indemnity under this Agreement or any of the Ancillary
Agreements).
"COVERED FOREIGN TAXES" means non U.S. federal, state or
local Taxes (other than Operating Taxes) that (i) are paid by, or withheld from
payments to, any of the NBC Companies or the Target Companies, as the case may
be, during the Interim Period (or are paid after the Closing Date, but only to
the extent such Taxes are duly and timely paid upon the initial filing of a Tax
Return after the Closing Date in accordance with Section 7.12), (ii) are
attributable to the Interim Period, (iii) relate exclusively to the business and
assets that will be held by NBC and its Subsidiaries after the Closing (and do
not relate to any other business or asset) and (iv) arise and are paid in the
ordinary course of business, consistent with past practice and do not arise from
or relate to any extraordinary transaction (including any transaction which is
the subject of any indemnity under this Agreement or any of the Ancillary
Agreements), provided that in the case of any such Taxes paid by, or withheld
36
from payments to, any of the VUE Companies, Covered Foreign Taxes shall mean
94.56% of such Taxes.
"COVERED TAXES" means Covered Operating Taxes and Covered
Foreign Taxes (determined without regard to the proviso).
"GE GROUP COMPANIES" means GE and its Affiliates (other
than the NBC Companies).
"INTERIM PERIOD" means the period beginning October 1, 2003
and ending on the Closing Date.
"NBC FOREIGN TAX AMOUNT" means the Covered Foreign Taxes
paid by, or withheld from payments to, any NBC Company.
"NBC FOREIGN TAX CLOSING PAYMENT" means the product of (i)
40%, (ii) 20% and (iii) the Covered Foreign Taxes paid by, or withheld from
payments to, any of the NBC Companies during the Interim Period. "NBC FOREIGN
TAX CREDIT SHORTFALL AMOUNT" means the product of (i) 20% and (ii) the excess
(if any) of (A) 60% of the NBC Foreign Tax Amount over (B) 60% of the foreign
tax credit carryforward (for U.S. federal income tax purposes) of the NBC
Companies (other than any foreign subsidiaries) to the first taxable year
beginning after the Closing.
"NBC-GE INTERCOMPANY NET BALANCE" means the intercompany
net balance of the NBC Companies with the GE Group Companies, which intercompany
net balance shall be (a) determined by GE in accordance with its past practice
and (b) expressed as (I) a positive number if such balance reflects a net
payable by the GE Group Companies to the NBC Companies and (II) a negative
number if such balance reflects a net payable by the NBC Companies to the GE
Group Companies, provided that the following items shall be accounted for as
follows: (i) trade balances arising in the ordinary course of business under
Contracts in effect as of the date hereof or permitted, or not prohibited, by
Section 7.2(b) or (d) shall be excluded; (ii) any cash expenditures made by the
NBC Companies that relate to an expense or obligation to be borne by GE under
this Agreement or under the IACI Matters Agreement, including under Sections
10.2(a)(iii) - (viii), Section 10.7, Section 11.3(b) and Section 12.14 shall be
deemed to give rise to an intercompany balance payable by GE to NBC; (iii) the
transactions contemplated by Schedule 2.1 and any distribution by NBC to GE of
the proceeds (net of all related transaction expenses) from the sale of any
assets transferred in accordance with Schedule 2.1 by any NBC Company to a
Person (other than another NBC Company) shall not give rise to any intercompany
balance but shall be treated as a permitted dividend, payment or distribution
under Section 7.2(d)(x); (iv) any Tax payment made by (or any Tax withheld from
any payment to) any NBC Company (other than a Covered Tax) shall be deemed to
give rise to an intercompany balance payable by GE to NBC, and any Covered Tax
payment made or incurred by any NBC Company shall not give rise to an
intercompany balance; and (v) any balances stated in foreign currencies shall be
37
deemed converted into U.S. dollars at the prevailing exchange rates in effect on
September 20, 2003, on the last day of the month immediately preceding the
Closing Date or on the Closing Date, as the case may be.
"OPERATING TAXES" means real, personal and intangible
property Taxes, payroll Taxes, sales and use Taxes, value added Taxes and any
other similar Taxes not based on or measured by income.
"USI/BV COMPANIES" means the Target Companies (other than
the VUE Companies).
"USI-VU INTERCOMPANY NET BALANCE" means the intercompany
net balance of the USI/BV Companies with the Vivendi Companies, which
intercompany net balance shall be (a) determined by Vivendi in accordance with
its past practice and (b) expressed as (I) a positive number if such balance
reflects a net payable by the Vivendi Companies to the USI/BV Companies and (II)
a negative number if such balance reflects a net payable by the USI/BV Companies
to the Vivendi Companies, provided that the following items shall be accounted
for as follows: (i) trade balances arising in the ordinary course of business
under Contracts in effect as of the date hereof or permitted pursuant to Section
7.2(c)(xxii) shall be excluded; (ii) any cash expenditures made by any USI/BV
Company that relate to an expense or obligation to be borne by Vivendi under
this Agreement or the IACI Matters Agreement, including under Sections
10.1(a)(iii) - (xii), Section 10.7, Section 11.2(b), and Section 12.14, shall be
deemed to give rise to an intercompany balance payable by Vivendi to the
Company; (iii) any distribution by any USI/BV Company to the Vivendi Companies
of the proceeds (net of all related transaction expenses) from the sale of any
Excluded Asset shall not give rise to any intercompany balance but shall be
treated as a permitted dividend, payment or distribution for purposes of Section
7.2(c)(viii); (iv) any payments made to the Company by Vivendi or any of its
Affiliates in connection with the transactions contemplated by Section 7.5 shall
not give rise to an intercompany balance; (v) an amount equal to 93.06% (if the
Xxxxxx Put or Xxxxxx Call is not exercised at or prior to the Closing) or 94.56%
(if the Xxxxxx Put or Xxxxxx Call is exercised at or prior to the Closing) of
any cash dividends paid by VUE on the Class B Preferred Interests during the
Interim Period shall give rise to an intercompany balance in such amount payable
by Vivendi to the Company; (vi) any Tax payment made by (or any Tax withheld
from any payment to) any USI/BV Company and 94.56% of any Tax payment made by
(or any Tax withheld from any payment to) any VUE Company (other than in either
case a Covered Tax) shall be deemed to give rise to an intercompany balance
payable by Vivendi to the Company, and any Covered Tax payment made or incurred
by any Target Company shall not give rise to an intercompany balance; and (vii)
any balances stated in foreign currencies shall be deemed converted into U.S.
dollars at the prevailing exchange rates in effect on September 24, 2003, on the
last day of the month immediately preceding the Closing Date or on the Closing
Date, as the case may be.
"USI-VUE INTERCOMPANY NET BALANCE" means the intercompany
net balance of the USI/BV Companies with the VUE Companies, which intercompany
net balance shall be (a) determined by Vivendi in accordance with its past
practice and (b) expressed as (I) a positive number if such balance reflects a
38
net payable by the VUE Companies to the USI/BV Companies and (II) a negative
number if such balance reflects a net payable by the USI/BV Companies to the VUE
Companies, provided that the following items shall be accounted for as follows:
(i) trade balances arising in the ordinary course of business under Contracts in
effect as of the date hereof or permitted pursuant to Section 7.2(c)(xxii) shall
be excluded and (ii) any balances stated in foreign currencies shall be deemed
converted into U.S. dollars at the prevailing exchange rates in effect on
September 24, 2003, on the last day of the month immediately preceding the
Closing Date or on the Closing Date, as the case may be.
"VIVENDI COMPANIES" means Vivendi and its Affiliates (other
than the Target Companies).
"VUE COMPANIES" means VUE and its Subsidiaries.
"VUE FOREIGN TAX AMOUNT" means the Covered Foreign Taxes
paid by, or withheld from payments to, any of the Target Companies.
"VUE FOREIGN TAX CLOSING PAYMENT" means the product of (i)
40%, (ii) 80% and (iii) the Covered Foreign Taxes paid by, or withheld from
payments to, any of the Target Companies during the Interim Period.
"VUE FOREIGN TAX CREDIT SHORTFALL AMOUNT" means the product
of (i) 80% and (ii) the excess (if any) of (A) 60% of the VUE Foreign Tax Amount
over (B) 60% of the foreign tax credit carryforward (for U.S. federal income tax
purposes) of the Company and its Subsidiaries (other than the VUE Companies) to
the taxable year beginning the date after the Closing.
"XXX-XX INTERCOMPANY NET BALANCE" means the intercompany
net balance of the VUE Companies with the Vivendi Companies, which intercompany
net balance shall be determined (a) by Vivendi in accordance with its past
practice and (b) expressed as (I) a positive number if such balance reflects a
net payable by the Vivendi Companies to the VUE Companies and (II) a negative
number if such balance reflects a net payable by the VUE Companies to the
Vivendi Companies, provided that the following items shall be accounted for as
follows: (i) trade balances arising in the ordinary course of business under
Contracts in effect as of the date hereof or permitted pursuant to Section
7.2(c)(xxii) shall be excluded; (ii) any cash expenditures made by any VUE
Company that relate to an expense or obligation to be borne by Vivendi under
this Agreement or the IACI Matters Agreement, including under Sections
10.1(a)(iii) - (xii), Section 10.7, Section 11.2(b) and Section 12.14, shall be
deemed to give rise to an intercompany balance payable by Vivendi to VUE; (iii)
any distribution by VUE to Vivendi of the proceeds (net of all related
transaction expenses) from the sale of any Excluded Asset shall not give rise to
any intercompany balance and shall be treated as a permitted dividend, payment
or distribution under Section 7.2(c)(viii); and (iv) any balances stated in
foreign currencies shall be deemed converted into U.S. dollars at the prevailing
exchange rates in effect on September 24, 2003, on the last day of the month
immediately preceding the Closing Date or on the Closing Date, as the case may
be.
39
Section 3.12 Amendment Upon IACI Limited Partners Tag. The
parties hereto shall make appropriate amendments to this Article 3 in the event
any of the IACI Limited Partners exercises its tag-along rights in connection
with the transactions contemplated by this Agreement.
ARTICLE 4
CLOSING
Section 4.1 Closing. Unless this Agreement shall have been
terminated and the transactions contemplated by this Agreement shall have been
abandoned pursuant to Article 9, the closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at 10:00 a.m., New York City
time, at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, on the third Business Day following the date on which all conditions
precedent set forth in Article 8 have been satisfied or waived (other than those
conditions that by their terms are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), or at such other place or
time or on such other date as GE and Vivendi may agree in writing. The date on
which the Closing actually occurs is referred to in this Agreement as the
"CLOSING DATE". The Closing shall be deemed to occur and be effective as of the
close of business on the Closing Date.
Section 4.2 Closing Deliveries.
(a) At the Closing, Vivendi or USH3, as the case may be,
shall deliver, or cause to be delivered, to the applicable GE Company in
accordance with the terms of this Agreement the following:
(i) a certificate or certificates representing (A) all
of the outstanding shares of Company Common Stock and all of the outstanding
shares of Company Preferred Stock, (B) 1,929 shares of BV1 Common Stock and (C)
all of the outstanding shares of BV2 Common Stock, in each case duly endorsed in
blank or accompanied by stock transfer powers;
(ii) written resignations of each of the directors of
the Company and the BV Entities or the removal of such directors by USH3, the
BV1 Shareholder or the BV2 Shareholders, as applicable;
(iii) the Ancillary Agreements; and
(iv) the certificates and other documents to be
delivered pursuant to Section 8.2.
(b) At the Closing, one of the GE Companies shall deliver,
or cause to be delivered, to Vivendi, USH3, the BV1 Shareholder or the
applicable BV2 Shareholder, as the case may be, in accordance with the terms of
this Agreement the following:
40
(i) (A) the Company Share Contribution Consideration
payable to USH3, including the certificate or certificates representing the
shares of NBC Class B Common Stock issued in the name of USH3 pursuant to
Section 2.3(a), (B) the BV1 Share Contribution Consideration payable to the BV1
Shareholder and (C) the BV2 Share Contribution Consideration allocated among and
payable to each of the BV2 Shareholders in accordance with its pro rata
ownership of the shares of BV2 Common Stock as set forth on Schedule 2.2(b)(ii);
(ii) the Ancillary Agreements; and
(iii) the certificates and other documents to be
delivered pursuant to Section 8.3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF VIVENDI AND USH3
Vivendi and USH3, jointly and severally, represent and
warrant to GE:
Section 5.1 Organization; Good Standing and Qualification.
(a) Each of Vivendi, USH3, the Company, BV1 and BV2 is a
corporation duly organized, validly existing and in good standing under the Laws
of the jurisdiction in which it is incorporated and has all requisite corporate
power and authority to own or lease and operate its properties and to own and
operate its business as now conducted.
(b) Each of BV1, BV2 and the Company is duly qualified to
do business and, where applicable, is in good standing in each jurisdiction
where the nature of its business and properties makes such qualification legally
necessary, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(c) Vivendi has previously made available to GE a complete
and correct copy of the Organizational Documents of each of the Company Material
Subsidiaries, as amended through the date hereof. The Organizational Documents
of each of the Company and the Company Material Subsidiaries are in full force
and effect, and no resolution is pending or has been adopted providing for the
amendment thereof (except as reflected therein) or for the dissolution or
winding up of any such company. Neither the Company nor any Company Material
Subsidiary is in violation of any of the provisions of its Organizational
Documents.
Section 5.2 Authorization.
(a) Each of Vivendi and USH3 has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party and to perform its respective obligations hereunder and
thereunder. The execution and delivery by each of Vivendi and USH3 of this
Agreement and the Ancillary Agreements to which it is a party, and the
41
performance of its respective obligations hereunder and thereunder, have been
duly authorized by all requisite action (corporate or other), including, in the
case of Vivendi, in the manner required by Article L225-35 of the French Code du
Commerce.
(b) This Agreement and the IACI Matters Agreement have
been, and the other Ancillary Agreements will be at the Closing, duly executed
and delivered by each of Vivendi and USH3 to the extent it is a party thereto,
and, assuming the due authorization, execution and delivery by all the other
parties to this Agreement and the IACI Matters Agreement and, upon their
execution, the other Ancillary Agreements, each of this Agreement and the IACI
Matters Agreement constitutes and the other Ancillary Agreements will constitute
valid and binding obligations of Vivendi and USH3 to the extent it is a party
thereto, enforceable against each of Vivendi and USH3 in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors' rights and remedies generally
and subject, as to enforceability, to general principles of equity (regardless
of whether enforcement is sought in a proceeding at law or in equity).
(c) Vivendi is able to pay its debts as they fall due and
is not, and will not be on the Closing Date, insolvent under the applicable Laws
of any relevant jurisdiction.
Section 5.3 Capitalization.
(a) The Company. The authorized capital stock of the
Company consists of (i) 10,000 shares of Company Common Stock and (ii) 200,000
shares of Company Preferred Stock (collectively, "COMPANY CAPITAL STOCK"), of
which 2,984.57080 shares of Company Common Stock and 69,316 shares of Company
Preferred Stock were issued and outstanding as of the date hereof. Such issued
and outstanding shares of Company Capital Stock constitute the only issued and
outstanding shares of capital stock of the Company as of the date hereof and are
duly authorized, validly issued, fully paid and nonassessable. Except as set
forth on Schedule 5.3(a), (A) there are no outstanding capital calls, warrants,
options, agreements, subscriptions, convertible or exchangeable securities,
rights of first refusal or first offer, preemptive rights, calls, puts or other
commitments or obligations pursuant to which the Company is or may become
obligated to issue, sell, purchase, repurchase, return or redeem, or any other
Person is or may become obligated to purchase, any shares of Company Capital
Stock or other securities of the Company, (B) no equity securities of the
Company are reserved for issuance for any purpose and (C) except for this
Agreement, no member of the Seller Group is a party to any Contract for the sale
of or is otherwise obligated to sell, transfer or otherwise dispose of any
equity securities, or any securities convertible into or exchangeable for any
equity securities, of the Company. USH3 is the sole record and beneficial owner
of 2,984.57080 shares of Company Common Stock and 69,316 shares of Company
Preferred Stock, free and clear of any Liens (other than Liens securing Vivendi
debt which shall be released prior to the Closing and any restrictions under the
Securities Act and other applicable securities Laws). At the Closing, USH3 shall
deliver good and valid title to all such shares to NBC Sub, free and clear of
42
all Liens (other than Liens created by NBC Sub and any restrictions under the
Securities Act and other applicable securities Laws).
(b) BV1. The authorized capital stock of BV1 consists of
5,000 shares of BVI Common Stock, of which 2,089 shares are issued and
outstanding as of the date hereof. Such issued and outstanding shares of BV1
Common Stock constitute the only issued and outstanding Shares of capital stock
of BV1 and are duly authorized, validly issued, fully paid and nonassessable.
Except as set forth on Schedule 5.3(b), (i) there are no outstanding capital
calls, warrants, options, agreements, subscriptions, convertible or exchangeable
securities, rights of first refusal or first offer, preemptive rights, calls,
puts or other commitments or other obligations pursuant to which BV1 is or may
become obligated to issue, sell, purchase, repurchase, return or redeem, or any
other Person is or may become obligated to purchase, any shares of capital stock
or other securities of BV1, (ii) no equity securities of BV1 are reserved for
issuance for any purpose and (iii) except for this Agreement, neither Vivendi
nor BV1 is a party to any Contract for the sale of or is otherwise obligated to
sell, transfer or otherwise dispose of any equity securities, or any securities
convertible into or exchangeable for any equity securities, of BV1. The BV1
Shareholder is the record and beneficial owner of 1,929 shares of BV1 Common
Stock, free and clear of any Liens (other than Liens securing Vivendi debt which
shall be released prior to the Closing and any restrictions under the Securities
Act and other applicable securities Laws). At the Closing, Vivendi shall cause
the BV1 Shareholder to deliver good and valid title to all such shares to NBC
Sub, free and clear of all Liens (other than Liens created by NBC Sub and any
restrictions under the Securities Act and other applicable securities Laws).
(c) BV2. The authorized capital stock of BV2 consists of
2,500,000 shares of BV2 Common Stock, of which 1,000,000 shares are issued and
outstanding as of the date hereof. Such issued and outstanding shares constitute
the only issued and outstanding shares of capital stock of BV2 and are duly
authorized, validly issued, fully paid and nonassessable. Except as set forth on
Schedule 5.3(c), (i) there are no outstanding capital calls, warrants, options,
agreements, subscriptions, convertible or exchangeable securities, rights of
first refusal or first offer, preemptive rights, calls, puts or other
commitments or obligations pursuant to which BV2 is or may become obligated to
issue, sell, purchase, repurchase, return or redeem, or any other Person may
become obligated to purchase, any shares of capital stock or other securities of
BV2, (ii) no equity securities of BV2 are reserved for issuance for any purpose
and (iii) except for this Agreement, neither Vivendi nor BV2 is a party to any
Contract for the sale of or is otherwise obligated to sell, transfer or
otherwise dispose of any equity securities, or any securities convertible into
or exchangeable for any equity securities, of BV2. Each of the BV2 Shareholders
is the record and beneficial owner of shares of BV2 Common Stock indicated as
being owned by such BV2 Shareholder on Schedule 2.2(b)(ii), free and clear of
any Liens (other than Liens securing Vivendi debt which shall be released prior
to the Closing and any restrictions under the Securities Act and other
applicable securities Laws). At the Closing, Vivendi shall cause each of the BV2
Shareholders to deliver good and valid title to all such shares to NBC Sub, free
and clear of all Liens (other than Liens created by NBC Sub and any restrictions
under the Securities Act and other applicable securities Laws).
43
(d) VUE. The authorized partnership interests of VUE
consist solely of Common Interests, Class A Preferred Interests and Class B
Preferred Interests as set forth on Schedule 5.3(d), which sets forth the name
of each registered holder of Common Interests, Class A Preferred Interests and
Class B Preferred Interests. With respect to each registered holder of Common
Interests, Schedule 5.3(d) sets forth the Participation Percentage (as defined
in the VUE Partnership Agreement) of each such holder, and with respect to each
holder of Class A Preferred Interests or Class B Preferred Interests, Schedule
5.3(d) sets forth the Face Value (as defined in the VUE Partnership Agreement)
of each such holder's interest, plus any accrued and unpaid distributions
thereon, as of June 30, 2003. As of the Closing, the Company will, directly or
indirectly, hold at least 85.360% of the Common Interests and the BV Entities
will, directly or indirectly, hold in the aggregate at least 7.700% of the
Common Interests, in each case free and clear of any Liens (other than Liens
securing debt reflected on the Company Financial Statements, any restrictions
under the Securities Act and other applicable securities Laws or the
restrictions under Section 10.04 of the VUE Partnership Agreement). Except as
set forth on Schedule 5.3(d), all of the outstanding partnership interests of
VUE are duly authorized and validly issued. Except as set forth in the VUE
Documents or on Schedule 5.3(d), (i) there are no capital calls, warrants,
options, agreements, subscriptions, convertible or exchangeable securities,
rights of first refusal or first offer, preemptive rights, calls, puts or other
commitments or obligations pursuant to which VUE is or may become obligated to
issue, sell, purchase, return or redeem, or any other Person may become
obligated to purchase, any partnership interest or other security of VUE, (ii)
no equity securities of VUE are reserved for issuance for any purpose and (iii)
none of the Company or the BV Entities or any of their respective Affiliates is
a party to any Contract for the sale of or is otherwise obligated to sell,
transfer or otherwise dispose of any equity securities, or any securities
convertible into or exchangeable for any equity securities, of VUE.
(e) Matsushita Minority Interests. To the Knowledge of
Vivendi, as of the date hereof, MHI is the direct or indirect beneficial owner
of 160 shares of BV1 Common Stock (representing approximately 7.659% of the
issued and outstanding shares of BV1 Common Stock) (the "MATSUSHITA MINORITY
INTERESTS"), free and clear of any Liens (other than any restrictions under the
Securities Act and other applicable securities Laws).
(f) Other than the Common Interests owned by it, each of
BV1, BV2 and NYCSpirit Corp. II, a Delaware corporation ("NYCSPIRIT") owns no
other equity interests or assets and has no Liabilities.
(g) Except for the IACI Limited Partners pursuant to
Section 10.04 of the VUE Partnership Agreement, no Person has any right to
acquire any stock (or any instrument treated as stock for purposes of Section
1504 of the Code) of NBC or NBC Sub by virtue of any relationship with, or
ownership of, any Target Company, Vivendi or any Affiliate of Vivendi. Except as
set forth on Schedule 5.3(g) or 5.4(a), no Person has any right to acquire any
stock (or any instrument treated as stock for purposes of Section 1504 of the
Code) of any Company Material Subsidiary by virtue of any relationship with, or
ownership of, any Target Company, Vivendi or any Affiliate of Vivendi.
44
Section 5.4 Subsidiaries; Investments.
(a) Schedule 5.4(a) sets forth the name and the
jurisdiction of organization of each Company Material Subsidiary, the authorized
and issued and outstanding capital stock or other equity securities of each such
Company Material Subsidiary (other than VUE) and the number of shares of capital
stock or other equity securities and the percentage ownership of each such
Company Material Subsidiary (other than VUE) held by the Company or any other
Target Company. Except as set forth on Schedule 5.4(a), each Company Material
Subsidiary is duly organized, validly existing and, where applicable, in good
standing under the Laws of its jurisdiction of organization, with the corporate
or other power and authority to own or lease and operate its properties and to
own and operate its business as now conducted, and is duly qualified to do
business and, where applicable, in good standing in each jurisdiction where the
nature of its business or properties makes such qualification necessary, except
where the failure to be so qualified or in good standing would not, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Except as set forth on Schedule 5.4(a), all of the outstanding shares of
capital stock or other securities of each Company Material Subsidiary (other
than VUE) are validly issued, fully paid and nonassessable, and the Company or
another Target Company, as the case may be, owns such shares, free and clear of
any Liens, other than Liens securing debt reflected on the Company Financial
Statements and any restrictions under the Securities Act and other applicable
securities Laws. Except as set forth on Schedule 5.4(a), (i) there are no
capital calls, warrants, options, agreements, subscriptions, convertible or
exchangeable securities, rights of first refusal or first offer, preemptive
rights, calls, puts or other commitments or other obligations pursuant to which
any Company Material Subsidiary is or may become obligated to issue, sell,
purchase, return or redeem, or any other Person, who is not a Target Company,
may be obligated to purchase, any shares of capital stock or other equity
security of such Company Material Subsidiary (other than VUE), (ii) no equity
securities of such Company Material Subsidiary (other than VUE) are reserved for
issuance for any purpose and (iii) none of the Target Companies or any of their
respective Affiliates that is a stockholder of such Company Material Subsidiary
(other than VUE) is a party to any Contract for the sale of or is otherwise
obligated to sell, transfer or otherwise dispose of any equity securities, or
any securities convertible into or exchangeable for any equity securities, of
such Company Material Subsidiary (other than VUE).
(b) Schedule 5.4(b) sets forth the name and jurisdiction of
each Person that is not a Subsidiary of the Company or any of the BV Entities
but in which any Target Company holds an equity interest (other than any such
equity interest related to the Games Business or the Music Business) (i) having
a value as of June 30, 2003 of $50,000,000 or more as reflected on the Company
Balance Sheet or (ii) in respect of which the equity income or loss for the year
ended December 31, 2002 as reflected in the Company Financial Statements was
equal to or greater than $20,000,000 (collectively, together with Shanghai
Universal Theme Park Co., Ltd., the "COMPANY MINORITY INTERESTS"). All of the
Company Minority Interests are owned, directly or indirectly, by one or more of
the Target Companies free and clear of any Liens (other than Permitted
Encumbrances, any restrictions under the Securities Act and other applicable
45
securities Laws or other Liens provided by the agreements or governing
Organizational Documents of such entity). Except as set forth on Schedule
5.4(b), no Target Company has an obligation, contingent or otherwise, to fund or
participate in the debts of any Person in which a Target Company holds a Company
Minority Interest.
Section 5.5 Non-Contravention. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is a
party by each of Vivendi and USH3 and the consummation by each of Vivendi, USH3,
the BV1 Shareholder and the BV2 Shareholders of the transactions contemplated
hereby and thereby do not and will not (a) violate any provision of the
Organizational Documents of Vivendi, USH3 or any of the Target Companies, (b)
except as set forth on Schedule 5.5, subject to obtaining the consents
contemplated in Section 5.6, conflict with, or result in the breach of,
constitute a default or require a consent under, result in the termination,
cancellation, modification, violation or acceleration (whether after the giving
of notice or the lapse of time or both) of any right or obligation of any of the
Target Companies under, entitle any party to exercise any right under, or result
in a loss of any benefit to which any of the Target Companies is entitled under,
any Company Material Contract to which any of the Target Companies is a party or
to which its assets are subject, (c) assuming compliance with the matters set
forth in Sections 5.6 and 6.6, violate or result in a breach of or constitute a
default under any Law to which either Vivendi, USH3 or any Target Company is
subject or (d) result in the creation or imposition of any Lien on any
properties or assets of any of the Target Companies, except in the case of
clauses (b), (c) and (d), for such matters as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 5.6 Governmental Authorization. Except as set forth
on Schedule 5.6, the execution, delivery and performance by each of Vivendi and
USH3 of this Agreement and the Ancillary Agreements to which it is a party and
the consummation by each of Vivendi and USH3 of the transactions contemplated
hereby and thereby do not and will not require any consent, approval or
authorization of, or registration, declaration or filing with, any Governmental
Authority, except for (a) compliance with the applicable requirements of the HSR
Act and the EU Merger Control Regulation, (b) such consents, approvals,
authorizations, registrations, declarations or filings as may be required under
applicable Competition Laws of any other jurisdiction, (c) compliance with the
applicable requirements of the U.S. Communications Act of 1934, as amended, and
the rules, regulations and policies of the U.S. Federal Communications
Commission or any successor agency thereto (the "FCC") thereunder (collectively,
the "COMMUNICATIONS ACT") and (d) such other consents, approvals,
authorizations, registrations, declarations or filings, the failure of which to
obtain would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
Section 5.7 Company Financial Statements; Accounting
Controls.
(a) VUE Financial Statements. Vivendi has delivered to GE
(i) the audited financial statements of VUE as of December 31, 2002 and December
31, 2001, set forth on Schedule 5.7(a)(i) (the "VUE AUDITED FINANCIAL
46
STATEMENTS") and (ii) the unaudited financial statements of VUE as of June 30,
2003, set forth on Schedule 5.7(a)(ii) (the "VUE INTERIM FINANCIAL STATEMENTS"
and, together with the VUE Audited Financial Statements, the "VUE FINANCIAL
STATEMENTS"). Except as set forth in Schedule 5.7(a)(iii), the VUE Financial
Statements have been prepared in accordance with GAAP (other than the absence of
notes) consistently applied and present fairly in all material respects the
consolidated financial position, results of operations and cash flows of VUE as
of the dates and for the periods indicated.
(b) Company Unaudited Financial Statements. Vivendi has
delivered to GE (i) the unaudited pro forma financial statements of the Company
as of and for the year ended December 31, 2002, set forth on Schedule 5.7(b)(i)
(the "COMPANY 2002 PRO FORMA FINANCIAL STATEMENTS") and (ii) the unaudited
financial statements of the Company as of and for the six-month period ended
June 30, 2003, set forth on Schedule 5.7(b)(ii) (the "COMPANY INTERIM UNAUDITED
FINANCIAL STATEMENTS" and, together with the Company 2002 Pro Forma Unaudited
Financial Statements, the "COMPANY FINANCIAL STATEMENTS"). The Company 2002 Pro
Forma Financial Statements give effect to the acquisition by VUE of the
entertainment assets of USA Networks, Inc. (the "USA ACQUISITION") as if the
acquisition had occurred on January 1, 2002. Except as set forth on Schedule
5.7(b)(iii), the Company Financial Statements have been prepared in accordance
with GAAP (other than the absence of notes and, in the case of the Company 2002
Pro Forma Financial Statements, with respect to the pro forma adjustments for
the USA Acquisition) consistently applied and present fairly in all material
respects the consolidated financial position, results of operations and cash
flows of the Company as of the dates and for the periods indicated.
(c) Accounting Controls. The Acquired Companies have
maintained systems of internal accounting controls with respect to the Company
Business sufficient to provide reasonable assurances that (i) all transactions
are executed in accordance with management's general or specific authorization,
(ii) all transactions are recorded as necessary to permit the preparation of
annual and interim financial statements in conformity with GAAP and to maintain
proper accountability for items and (iii) access to their property and assets is
permitted only in accordance with management's general or specific
authorization.
(d) Exploitation Database. The Exploitation Database has
been made available to the GE Companies prior to the date hereof. The
information in the Exploitation Database has been maintained by VUE in the
ordinary course of business, is derived from the books and records and the
Exploitation Agreements of the Target Companies, and is relied on by the Target
Companies in conducting the Company Business.
(e) Off-Balance Sheet Obligations. Except as set forth on
Schedule 5.7(e), the Target Companies have no off-balance sheet financing
obligations in excess of $10,000,000 individually or $50,000,000 in the
aggregate.
47
Section 5.8 No Undisclosed Liabilities.
(a) None of the Target Companies has any Liabilities that
are of a nature that would be required to be disclosed on a consolidated balance
sheet of the Company (or the notes thereto) prepared in accordance with GAAP,
other than (i) Liabilities incurred in the ordinary course of business since
June 30, 2003 that have not had and would not reasonably be expected to have a
Company Material Adverse Effect, (ii) Liabilities reflected or reserved against
on the Company Balance Sheet, (iii) Liabilities set forth on Schedules 5.8(a) or
5.10, (iv) Liabilities incurred solely as a result of the refusal of GE to
consent to any actions set forth in Sections 7.2(a) or (c), (v) Liabilities
incurred outside of the ordinary course of business with the consent of GE in
accordance with Sections 7.2(a) or (c) or (vi) Liabilities not incurred in the
ordinary course of business since June 30, 2003 that have not exceeded, and
would not reasonably be expected to exceed, individually or in the aggregate,
$15,000,000.
(b) Except as set forth on Schedule 5.8(b), none of the
Target Companies has any Liability, directly or indirectly, as obligor,
guarantor, surety, or otherwise for the indebtedness for borrowed money of any
Person (other than on behalf of other Target Companies).
Section 5.9 Absence of Certain Changes. Except for actions
required to be undertaken in accordance with this Agreement or the Ancillary
Agreements or as set forth on Schedule 5.9, since June 30, 2003, (i) the Company
Business has been conducted only in the ordinary course of business, and (ii)
there have not been any changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have a Company Material
Adverse Effect.
Section 5.10 No Litigation. Except as set forth on Schedule
5.10 and except as provided in Section 5.16 and the Schedules thereto, no Legal
Proceeding is pending or, to the Knowledge of Vivendi, threatened against any of
the Target Companies or any of their respective properties or assets, and no
Target Company has received any subpoena or notice of any claim or
investigation, that (a) involves or would reasonably be expected to result in a
Loss (together with all Losses arising out of the same event or series of
related events) in excess of $5,000,000 (other than Legal Proceedings or claims
involving personal injury that are fully insured under insurance policies) or
(b) would reasonably be expected to prevent or materially delay the consummation
of the transactions contemplated hereby, nor is there any Order outstanding
against, or, to the Knowledge of Vivendi, any investigation by any Governmental
Authority, involving any of the Target Companies or any of their respective
properties or assets, that would reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated hereby.
Section 5.11 Compliance with Laws.
(a) This Section 5.11 does not address Environmental Laws
(which are subject to Section 5.12), Taxes (which are subject to Section 5.16)
or Company Employee Benefit Plans (which are subject to Section 5.17). Each of
the Target Companies is in compliance in all material respects with all Laws
48
applicable to the ownership of their respective assets and properties and the
operation of the Company Business, and no Target Company has received any notice
from any Governmental Authority alleging any material conflict with, material
violation or breach of or material default under any such Law.
(b) Each of the Target Companies has all material permits,
licenses, permissions, franchises, and amendments thereto, from any Governmental
Authority necessary for the ownership and operation of the Company Business (the
"COMPANY LICENSES"). Each of the Target Companies is in compliance in all
material respects with the terms of the Company Licenses, and no Target Company
has received any notice from any Governmental Authority alleging any material
conflict with, violation or breach of any Company License.
Section 5.12 Environmental, Health and Safety Matters.
Except as set forth on Schedule 5.12 or as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect:
(a) Each Target Company has obtained or has timely
submitted an application for or an application for renewal of all Environmental
Permits required for the operation of its businesses as presently conducted, and
is and has been in compliance with all Environmental Permits and applicable
Environmental Laws (including in connection with equipment containing
polychlorinated biphenyls).
(b) To the Knowledge of Vivendi, there are no facts,
circumstances or conditions arising out of or relating to the past or present
operations of any Target Company or real property currently or formerly owned,
operated or leased by any Target Company reasonably likely to cause the Target
Companies to incur Environmental Liabilities.
(c) There has not been any request, claim, or requirement
seeking payment from Vivendi or any of its Affiliates for response to, or
remediation of, Hazardous Substances at or arising from any current or past
properties or operations of the Target Companies, or their predecessors in
interest, which has not been resolved.
(d) No Target Company has entered into or agreed to, nor
does any of them contemplate entering into, any settlement, consent decree or
administrative or court order concerning applicable Environmental Laws in
respect of the Company Business or the properties of the Target Companies, and
none of them is subject to any settlement, administrative or court order
relating to any compliance with Environmental Laws, or addressing the presence,
Release or threatened Release of Hazardous Substances.
(e) No Environmental Law imposes any obligation upon any
Target Company arising out of, or as a condition to, any transaction
contemplated by this Agreement, including any requirement to modify or transfer
any Environmental Permit, any requirement to file any notice or other submission
with a Governmental Authority, the placement of any notice, restriction,
49
acknowledgement or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree.
(f) None of the Target Companies or any real property
currently or, to the Knowledge of Vivendi, previously owned, operated or leased
by or for any Target Company is subject to any pending, or to the Knowledge of
Vivendi, threatened claim, summons, complaint, order, notice of violation, or
notice of potential liability against such Target Company or involving any such
real property or is the subject of any pending or, to the Knowledge of Vivendi,
threatened proceeding or governmental investigation against such Target Company
or involving any such real property under or pursuant to Environmental Laws.
(g) Vivendi has made available to NBC for review copies of
all reports of material environmental investigations, studies, audits, reviews
and other analyses conducted in relation to any operations, properties or
facilities of the Target Companies now or previously owned or leased by the
Target Companies, which are in the possession or control of the Target
Companies.
(h) No Environmental Lien has attached to any property of
any Target Company and, to the Knowledge of Vivendi, no current facts,
circumstances or conditions exist that could reasonably be expected to result in
any such Environmental Lien attaching to any such property.
This Section 5.12 constitutes the sole and exclusive
representations and warranties with respect to environmental matters with
respect to the Target Companies.
Section 5.13 Material Contracts.
(a) Schedule 5.13(a) sets forth a complete list as of the
date of this Agreement of all of the following Contracts to which any Target
Company is a party or by which it or any of its properties or assets are bound
(in each case as amended, supplemented, waived or otherwise modified through the
date of this Agreement, collectively, the "COMPANY MATERIAL CONTRACTS"):
(i) stock purchase agreements or asset purchase
agreements (other than Contracts related to the purchase of goods and services
(including services provided under Talent Contracts) entered into in the
ordinary course of business) that (x) involve payment of fixed sums in excess of
$20,000,000, (y) have not expired by, and have not been terminated in accordance
with, their terms and (z) relate to the prospective acquisition or disposition
of any Company Business Assets;
(ii) Contracts pursuant to which a Target Company
currently leases any Company Business Assets (other than Company Real Property
Leases, Contracts related to transactions involving its Library entered into in
the ordinary course of business, and Contracts related to purchases of goods and
services entered into in the ordinary course of business) and in respect of
which any Target Company is obligated, as of September 30, 2003, to make, on or
after the date hereof, aggregate payments of fixed sums in excess of
$20,000,000;
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(iii) (A) material joint venture, partnership and
limited liability company operating agreements pursuant to which any Target
Company is presently obligated to make, on or after the Closing Date and on a
non-contingent basis, aggregate payments of specified sums in excess of
$50,000,000 and (B) Organizational Documents of other material joint ventures,
partnerships and limited liability companies as are set forth on Schedule 5.4(b)
(the "COMPANY MATERIAL JV AGREEMENTS");
(iv) Contracts prohibiting or materially restricting the
ability of any Company Material Subsidiary to engage in any business, operate in
any geographical area or compete in any line of business related to the Company
Business, other than geographic exclusivity and channel distribution
restrictions contained in Exploitation Agreements entered into in the ordinary
course of business;
(v) Contracts relating to the borrowing of money or
extension of credit involving amounts in excess of $50,000,000;
(vi) Company Real Property Leases where any Target
Company is required to pay base rent in excess of $20,000,000 over the base term
of the lease (excluding any option for renewal);
(vii) Affiliation Agreements representing (w) the top
ten (10), as of the date hereof (ranked by the aggregate distribution fees
received by the Target Companies), programming service distribution arrangements
for the USA Cable Network; (x) the top ten, as of the date hereof (ranked by the
aggregate distribution fees received by the Target Companies), programming
service distribution arrangements for the SciFi Cable Network; (y) the top four,
as of the date hereof (ranked by the number of subscribers), programming service
distribution arrangements for the Trio Digital Network; and (z) the top four, as
of the date hereof (ranked by the number of subscribers), programming service
distribution arrangements for the NWI Digital Network;
(viii) each Contract pursuant to which any Target
Company licenses any television exhibition rights in Programs to third parties
for any period ending on or after September 30, 2003 on an output basis (i.e.,
which grants television exhibition rights to Library Pictures, or films that
will become Library Pictures, that will become available for such exhibition
during a specified prospective multiyear period of time, and under which not all
Library Pictures are specifically identified by title) ("OUTPUT AGREEMENTS")
pursuant to which the relevant Target Companies have, as of the date of this
Agreement, budgeted in respect thereof the receipt of annual revenue to the
Target Companies (or that the applicable Target Companies anticipate that a
budget entry in respect thereof will be made in the applicable budgeting cycle
in an amount) in excess of $10,000,000 in either of fiscal year 2003 or 2004;
(ix) Company Intellectual Property Contracts, except for
Exploitation Agreements;
51
(x) Talent Contracts with writers, producers, directors,
creators, show runners, actors or other talent ("TALENT CONTRACTS") pursuant to
which one or more Target Companies is required, as of September 30, 2003, to pay
on or after the date hereof, aggregate fixed sums of $20,000,000 or more;
(xi) "term deals" as commonly understood in the motion
picture and television industry pursuant to which one or more Target Companies
is obligated, as of September 30, 2003, or reasonably anticipates being required
to pay, on or after the date hereof and on a non-contingent basis, aggregate
compensation of fixed sums in excess of $10,000,000;
(xii) infomercial or similar paid programming Contracts
granting any Person the right to program any block of time on the Universal
Networks pursuant to which one or more Target Companies is entitled, as of
September 30, 2003, to receive, on or after the date hereof and on a
non-contingent basis, aggregate consideration of fixed sums of more than
$10,000,000;
(xiii) Contracts for the acquisition, lease or servicing
of satellite transponders and other uplink and downlink and terrestrial
transmission (including fiber optic) arrangements relating to the distribution
of the Universal Networks; and
(xiv) the Contracts listed on Schedule 5.13(a)(xiv).
(b) The Company has made available to NBC complete copies
of all written Company Material Contracts, together with any amendments thereto,
and accurate descriptions of all material terms of any oral Company Material
Contracts. Except as set forth on Schedule 5.13(b), each of the Company Material
Contracts is in full force and effect and is a legal, valid and binding
obligation of the applicable Target Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity). Except as set forth in Schedule 5.13(b), none of the Target Companies
is in breach or in material default under any Company Material Contract, nor
does there exist under any Company Material Contract any event or condition
that, after notice or lapse of time or both, would constitute a material breach
or event of default thereunder on the part of any Target Company or, to the
Knowledge of Vivendi, any other Person.
(c) Except as set forth in Schedule 5.13(c), (i) no
Exploitation Agreement pursuant to which the Company's theme park business
licenses material Intellectual Property contains any MFN, and (ii) no Target
Company has received any written notice of any violation or breach of any MFN
included in any such Exploitation Agreement.
Section 5.14 Intellectual Property.
(a) Title. All of the Intellectual Property necessary for
the conduct of or otherwise material to the Company Business (the "COMPANY
INTELLECTUAL PROPERTY") either: (i) is Company Owned Intellectual Property, (ii)
52
is licensed to a Target Company pursuant to a Company Intellectual Property
Contract, or (iii) is Intellectual Property that a Target Company has the right
to use under Law. Except as set forth on Schedule 5.14(a), all of the Company
Owned Intellectual Property is free of any Liens (other than Permitted
Encumbrances).
(b) No Infringement. To the Knowledge of Vivendi, (i) the
conduct of the Company Business by a Target Company does not infringe or
otherwise conflict with any rights of any Person in respect of any Intellectual
Property, moral rights or neighboring rights to the extent such infringement or
conflict would reasonably be expected to have a material adverse effect on the
Company Business, and (ii) except for such infringements that would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or infringements arising from the unauthorized
reproduction, performance or distribution by peer-to-peer file sharing or
piracy, none of the Company Intellectual Property is being infringed or
misappropriated.
(c) No Intellectual Property Legal Proceedings. To the
Knowledge of Vivendi, except as set forth in Schedule 5.14(c), no material Legal
Proceedings are pending or threatened in writing, nor are there any material
written claims or demands of any Person, that (i) assert that any Target Company
is infringing or misappropriating any Intellectual Property, moral rights or
neighboring rights of any Person or (ii) assert that any Company Owned
Intellectual Property material to the Company Business is invalid or
unenforceable.
(d) Due Registration, Etc. Where necessary, and consistent
with customary industry practices as of the date hereof, except as set forth in
Schedule 5.14(d), each item of the Company Owned Intellectual Property material
to the Company Business has been duly registered with, filed in or issued by, as
the case may be, the U.S. Patent and Trademark Office, the U.S. Copyright Office
or, in the case of trademarks, foreign trademark offices, to the extent
necessary to ensure full protection under any applicable Law. Except as set
forth in Schedule 5.14(d), all maintenance fees have been paid and all such
registrations, filings and issuances and other actions remain in full force and
effect, in each case to the extent such registration is material to the Company
Business.
(e) Trade Secrets. Each Target Company has taken security
measures reasonable in the industry in which it operates to protect the secrecy,
confidentiality and value of all of the confidential Company Intellectual
Property.
Section 5.15 Real Property.
(a) Schedule 5.15(a) sets forth a list, as of the date
hereof, of all of the Company Owned Real Properties. Except as set forth on
Schedule 5.15(a), a Target Company, Universal City Development Partners, Ltd.
("UCDP") or Sundance Channel L.L.C. has good and valid fee title to each of the
Company Owned Real Properties, free and clear of any Liens, other than Permitted
Encumbrances.
53
(b) Schedule 5.15(b) sets forth a list, as of the date hereof, of the Company
Real Property Leases. The Target Companies have good and valid leasehold estates
in all real property affected by the Company Real Property Leases, free and
clear of any Liens, other than Permitted Encumbrances. To the Knowledge of
Vivendi, none of the Target Companies has received any written notice of any
default under the Company Real Property Leases that remains uncured. No consent
or approval under any of the Company Real Property Leases is required in
connection with the consummation of the transactions contemplated by this
Agreement, other than consents that cannot, by the terms of such Company Real
Property Lease, be unreasonably withheld.
(c) Schedule 5.15(c) sets forth a list of all Company Real
Property Leases as of June 30, 2003 between Vivendi or USH3 on the one hand, and
any Target Company, on the other hand, that involve continuing Liabilities.
Section 5.16 Taxes.
(a) Except as set forth on Schedule 5.16(a):
(i) The Target Companies and each affiliated group
(within the meaning of Section 1504 of the Code or any similar provision of any
state, local or foreign Tax Law) of which any Target Company is or has been a
member (A) have timely filed (or there has been timely filed on their behalf)
with the appropriate Taxing Authority all material Tax Returns required to be
filed, and all such Tax Returns are true, correct and complete in all material
respects and (B) have paid all material Taxes due and payable or claimed or
asserted in writing by any Taxing Authority to be due, from or with respect to
them, or have provided for all such Taxes on their books and records, including
in the Company Financial Statements, to the extent required under GAAP. With
respect to any period for which Tax Returns have not yet been filed, or for
which Taxes are not yet due or owing, each of the Target Companies has made due
and sufficient current accruals for Taxes in their books and records, including
the Company Financial Statements.
(ii) No audit report has been issued in the five (5)
years prior to the date of this Agreement relating to any material Taxes due
from or with respect to any of the Target Companies, their respective incomes,
assets or operations. All material income and franchise Tax Returns filed in
respect of any of the Target Companies have been examined by the relevant Taxing
Authority, or the applicable statute of limitations on assessment with respect
to such Tax Returns has expired.
(iii) No claim has been made by a Taxing Authority in a
jurisdiction where any Target Company does not file Tax Returns to the effect
that the Target Company is or may be liable for Taxes in that jurisdiction.
(iv) None of the Target Companies has waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, which waiver or extension is
currently in effect.
54
(v) All deficiencies for Taxes in excess of $1,000,000
asserted or assessed by the IRS or any other Taxing Authority relating to the
Tax Returns of, covering or including any of the Target Companies or the
business of any of the Target Companies, have been fully paid, and there are no
other actions, controversies, suits, audits or, to the Knowledge of Vivendi,
investigations or claims by any Taxing Authority in progress relating to the
Target Companies or the business of the Target Companies, nor has any Target
Company, or any of their respective shareholders, directors or officers received
any written notice from any Taxing Authority that it intends to conduct such an
audit or investigation, in each case, that may reasonably be anticipated to give
rise to a Tax liability in excess of $1,000,000. No Target Company has received
any private letter ruling of the IRS or comparable rulings of other Taxing
Authorities (other than any such ruling that is subject to any confidentiality
provision) in the five (5) years prior to the date of this Agreement.
(vi) There are no material liens for Taxes (other than
Permitted Encumbrances) upon the assets of the Target Companies.
(vii) All material Taxes that any of the Target
Companies has been or is required by law to withhold or to collect for payment
have been duly withheld and collected, and have been paid over to the
appropriate Taxing Authority or accrued, reserved against and entered on the
books and records of the applicable Target Company or the applicable Target
Company's Affiliates.
(viii) None of the Target Companies, or any other Person
on behalf of any Target Company, has (A) executed or entered into a closing
agreement pursuant to Section 7121 of the Code or any predecessor provision
thereof or any similar provision of foreign, state or local Law (other than any
such agreement that is subject to any confidentiality provision) with respect to
any of the Target Companies that is currently in effect; (B) filed a consent
pursuant to Section 341(f) of the Code (as in effect prior to the repeal under
the Jobs and Growth Tax Reconciliation Act of 2003) or agreed to have Section
341(f)(2) of the Code (as in effect prior to the repeal under the Jobs and
Growth Tax Reconciliation Act of 2003) apply to any disposition of a subsection
(f) asset (as such term is defined in Section 341(f)(4) of the Code) owned by
any of the Target Companies; (C) extended the time within which to file any Tax
Return (other than an automatic extension not requiring the consent of any
Taxing Authority), which Tax Return has since not been filed; or (D) granted to
any Person any power of attorney that is currently in force with respect to any
Tax matter (other than any federal Tax matter) relating to any of the Target
Companies.
(ix) Except for the group of which Vivendi Universal
Holding II Corp. is the Universal Common Parent that files a consolidated
federal income Tax Return, to the Knowledge of Vivendi, for the fifteen (15)
years prior to the date hereof, none of the Target Companies is or was a member
of any consolidated, combined or affiliated group of corporations that filed or
was required to file a consolidated, combined or unitary Tax Return.
55
(x) USH3 is not a foreign person within the meaning of
Section 1445 of the Code.
(xi) None of the Target Companies (A) is a party to,
bound by, or obligated under, any Tax Sharing Agreement (excluding, for the
avoidance of doubt, the GE-NBC Universal Tax Sharing Agreement) pursuant to
which it will have any obligation to make any payments to any Person (other than
to another Target Company) after the Closing, and (B) to the Knowledge of
Vivendi, no Target Company is or may be liable for Taxes of any other Person
(other than any member of the group that includes the Universal Common Parent)
under Treasury Regulation 1.1502-6 (or any similar provision of state, local or
foreign Law giving rise to or imposing joint and several liability for Taxes),
as a member of an affiliated group, a transferee or successor, or similar
principle.
(xii) No Target Company has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (A) in the two years prior to
the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or a "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
(xiii) No Target Company constitutes or owns, directly
or indirectly, an interest in a taxable mortgage pool within the meaning of
Section 7701(i) of the Code.
(xiv) None of the Target Companies has participated in,
or cooperated with, an international boycott within the meaning of Section 999
of the Code.
(xv) None of the Target Companies has any "corporate
acquisition indebtedness" within the meaning of Section 279(b) of the Code.
(xvi) None of the Target Companies will be required to
include any material item of income in, or exclude any material item of
deduction from, taxable income for any taxable period (or portion thereof)
beginning after the Closing Date and as a result of any agreement to or
requirement to make any adjustments pursuant to Section 481(a) of the Code (or
any predecessor provision) or any similar provision of foreign, state or local
Law by reason of a change in accounting methods initiated by any of the Target
Companies, or has any knowledge that the IRS or any other Taxing Authority has
proposed any such adjustment or change in accounting methods or has any
application pending with any Taxing Authority requesting permission for any
changes in accounting methods that relate to the business or operations of any
of the Target Companies. There is no taxable income of any of the Target
Companies that will be reportable in a taxable period beginning after the
Closing Date that is attributable to a transaction (such as an installment sale)
that occurred prior to the Closing.
56
(xvii) None of the Target Companies has participated in
a "listed transaction" within the meaning of Treasury Regulations Section
1.6011-4(c)(3)(i)(A).
(xviii) Vivendi and USH3 have made available to GE true
and correct copies of all material income or franchise Tax Returns of the Target
Companies (or, in the case of Tax Returns filed for an affiliated group, the
portions of such consolidated, combined or unitary Tax Returns relating to the
Target Companies) relating to the taxable periods ending on or after June 30,
2001.
(xix) Other than Sections 2.07, 3.01(c), 5.05(a)(i),
5.05(a)(v), 5.05(a)(vi) and 5.05(b) of the VUE Partnership Agreement, Section
7.02(b) of the VUE Transaction Agreement and the VUE Film Securitization Consent
Letter, there are no agreements, understandings or arrangements as to which any
Target Company is a party concerning the tax consequences to IACI or any of its
Affiliates of the transaction effected pursuant to the VUE Documents.
(b) No Target Company is currently a party to a "gain
recognition agreement," as such term is defined in Treasury Regulation Section
1.367(a)-8.
(c) To the Knowledge of Vivendi, a valid election under
Section 1295 of the Code has been made for each Target Company that is or has
been prior to the date hereof a "passive foreign investment company," as defined
in Section 1297 of the Code, such that the provisions of Section 1291 of the
Code (other than Section 1291(d)(1) of the Code) will not apply to any
distribution from, or any disposition of, such Target Company.
(d) Except as set forth on Schedule 5.16(d), none of VUE,
UCF Hotel Venture or UCDP has elected the "traditional method with curative
allocations" described in Section 1.704-3(c) of the Treasury Regulations or the
"remedial allocation method" described in Section 1.704-3(d) of the Treasury
Regulations.
(e) The (i) Matsushita Minority Interests that may be
acquired by Vivendi or GE, as the case may be and (ii) the shares of common
stock, par value $0.01 per share, of IACI and Class B common stock, par value
$0.01 per share, of IACI to be transferred to one or more of the Target
Companies at or prior to the Closing pursuant to Section 7.19 will have a tax
basis upon the completion of such transfer equal to the fair market value of
such stock.
(f) The consolidated group of which the Universal Common
Parent is the parent does not have a "consolidated overall foreign loss" or
"consolidated separate limitation loss," each within the meaning of Section
1.1502-9 of the Treasury Regulations.
(g) None of the shares of any of the Target Companies is
"section 306 stock," as defined in Section 306(c) of the Code.
(h) For purposes of this Section 5.16, any reference to a
Target Company shall be deemed to include any predecessor thereto.
57
Section 5.17 Employee Benefits; Labor Matters.
(a) Schedule 5.17(a)(i) sets forth a list of all material
"employee benefit plans," as defined in section 3(3) of ERISA (whether or not
subject to ERISA) other than a "multiemployer plan," as defined in Section 3(37)
of ERISA, and each material bonus, incentive or deferred compensation,
severance, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based, loan,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding, whether written or unwritten,
maintained inside the jurisdiction of the U.S. (A) under which any Company
Employee or former employee of the Company Business (including any beneficiaries
and dependents thereof) is or may become eligible to participate or derive a
benefit and that is or has been maintained, established or contributed to by
Vivendi, any Target Company, or any trade or business, whether or not
incorporated, which, together with any Target Company, is or would have been at
any date of determination occurring within the preceding six years, treated as a
single employer under Section 414 of the Code (such other trades and businesses,
the "COMPANY RELATED PARTIES"), or (B) under which any Target Company may have
any material outstanding liability or obligation ("COMPANY U.S. BENEFIT PLAN").
Schedule 5.17(a)(ii) sets forth a list of all Company U.S. Benefit Plans that
are sponsored by any of the Target Companies (the "COMPANY STAND-ALONE Plans"),
and such plans are the only Company U.S. Benefit Plans sponsored or maintained
by any of the Target Companies for the benefit of Company Employees (U.S.). With
respect to each Company U.S. Benefit Plan, a copy of each of the following
documents (if applicable) has been provided or made available to GE: (i) the
most recent plan document or agreement and all amendments thereto; (ii) the most
recent summary plan description and all related summaries of material
modifications; and (iii) with respect to each Company Stand-Alone Plan, the most
recent trust document or any third party funding vehicle (including insurance)
and all amendments thereto, the two most recent Forms 5500 required to have been
filed with the IRS and all schedules thereto, and the most recent IRS
determination letter. Except as set forth in Schedule 5.17(a)(iii), none of the
Company U.S. Benefit Plans is, or in the last six years has been, subject to
Section 4063, 4064 or 4202 of ERISA. Except as set forth in Schedule
5.17(a)(iv), none of the Target Companies sponsors a Company U.S. Benefit Plan
subject to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA.
All contributions required to have been made by the applicable Target Company
under any Company U.S. Benefit Plan or any applicable Law to any trusts
established thereunder or in connection therewith have been made in all material
respects by the due date therefor (including any extensions). The Company U.S.
Benefit Plans have been administered in accordance with their terms and are in
compliance with applicable Laws, in each case in all material respects.
(b) Schedule 5.17(b)(i) sets forth a list of all material
"employee benefit plans," within the meaning of Section 3(3) of ERISA (whether
or not subject to ERISA), and each material bonus, incentive or deferred
compensation, severance, termination, retention, change of control, stock
option, stock appreciation, stock purchase, phantom stock or other equity-based,
loan, performance or other employee or retiree benefit or compensation plan,
program, arrangement, agreement, policy or understanding, whether written or
58
unwritten, maintained outside the jurisdiction of the U.S. (A) under which any
Company Employee or any former employee of the Company Business (including any
beneficiaries and dependents thereof) is or may become eligible to participate
or derive a benefit and that is or has been maintained, established or
contributed to by Vivendi or any Target Company, or (B) under which any Target
Company may have any material outstanding liability or obligation, other than
any such plans or arrangements required to be maintained pursuant to applicable
Law (collectively, "COMPANY NON-U.S. BENEFIT PLANS"). With respect to each
Company Non-U.S. Benefit Plan, a copy of each of the following documents (if
applicable) has been provided or made available to GE: (i) the most recent plan
document or agreement and all amendments thereto; (ii) the most recent summary
of such plan (and all amendments thereto); and (iii) the most recent trust
document or any third party funding vehicle (including insurance) and all
amendments thereto, the two most recent annual reports required to have been
filed with a Governmental Authority and all schedules thereto, and the most
recent determination letter issued by a Governmental Authority as to the
tax-qualified status of any such plan if any. Except as set forth in Schedule
5.17(b)(ii), all contributions required to have been made by the applicable
Target Company under any Company Non-U.S. Benefit Plan or any applicable Law to
any trusts established thereunder or in connection therewith have been made in
all material respects by the due date therefor (including any extensions).
Except as set forth in Schedule 5.17(b)(iii), the Company Non-U.S. Benefit Plans
have been administered in accordance with their terms and are in compliance with
applicable Laws, in each case in all material respects.
(c) Schedule 5.17(c) sets forth a list of each collective
bargaining agreement with any labor union, or other agreement with any works
council or association representing any Company Employee. Since January 1, 2002
there have been no strikes, work stoppages, slowdowns, lockouts or grievances or
other labor disputes pending or, to the Knowledge of Vivendi, threatened against
or involving any Target Company, except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect. The
Target Companies are and have been in compliance with all Laws relating to
employment practices, terms and conditions of employment (including termination
of employment), wages, hours of work and occupational safety and health, and
worker classification, and are not engaged in any unfair labor practices, except
for such noncompliance as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. No Target
Company has received notice of the intent of any Governmental Authority
responsible for the enforcement of any labor or employment Laws to conduct an
investigation with respect to or relating to Company Employees, former employees
of, or consultants to, the Company Business and, to the Knowledge of Vivendi, no
such investigation is threatened or in progress which would, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(d) Except as set forth in Schedule 5.17(d)(i), there are
no Company Employee Benefit Plans currently in effect which provide for the
payment of any amount (whether in cash or property or the vesting of property)
as a result of any of the transactions contemplated by this Agreement (either
alone or in combination with any other event or events) that would give rise to
a payment that is nondeductible by reason of Section 280G or would be subject to
59
withholding under Section 4999 of the Code. Schedule 5.17(d)(ii) sets forth a
list of all Company Employee Benefit Plans pursuant to which any amounts may
become vested or payable as a result of the consummation of the transactions
contemplated by this Agreement (either alone or in combination with any other
event or events).
(e) Except as set forth on Schedule 5.17(e) or as
specifically contemplated by this Agreement, as of the date hereof, none of
Vivendi, any Target Company and any Affiliate thereof has communicated to any
Company Employee or former employees of the Company Business any intention or
commitment to materially modify any Company Employee Benefit Plan or to
establish or implement any other employee or retiree benefit or compensation
plan or arrangement (other than as required by applicable Law or any collective
bargaining agreement).
(f) Except as set forth in Schedule 5.17(f), each Company
U.S. Benefit Plan intended to be qualified under Section 401(a) of the Code, and
the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code and to
the effect that each such trust is exempt from taxation under Section 501(a) of
the Code, and to the Knowledge of Vivendi, nothing has occurred since the date
of such determination letter that could reasonably be expected to adversely
affect such qualification or tax-exempt status; provided that, if any such
Company U.S. Benefit Plan has not received a favorable determination letter,
then, to the Knowledge of Vivendi, such plan and any trust forming a part
thereof is qualified under Section 401(a) and 501(a) of the Code.
(g) No Target Company or any Company Related Party has
incurred (either directly or indirectly, including as a result of an
indemnification obligation) any material liability under or pursuant to Title I
or IV of ERISA or the penalty, excise Tax or joint and several liability
provisions of the Code relating to employee benefit plans and, to the Knowledge
of Vivendi, no event, transaction or condition has occurred or exists that could
reasonably be expected to result in any such material liability to any Target
Company, any such Company Related Party or, following the Closing, any GE
Company or any of their respective Affiliates.
(h) There are no pending or threatened claims against any
Company Employee Benefit Plans, by any Company Employee or former employees of
the Company Business or otherwise involving any such Company Employee Benefit
Plans or the assets of any Company Employee Benefit Plans (other than routine
claims for benefits, all of which have been fully reserved for on the regularly
prepared balance sheets of the Target Companies), except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(i) Schedule 5.17(i) lists each multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) to which any Target Company is, or
within the preceding two years was, obligated to contribute (a "TARGET COMPANY
MULTIEMPLOYER PLAN"), and there is no potential liability under any other
multiemployer plan to which any Target Company is, or within the preceding six
years was, obligated to contribute. No condition exists and no event has
60
occurred with respect to any Target Company Multiemployer Plan that presents a
material risk of a complete or partial withdrawal of a Target Company under
subtitle E of Title IV of ERISA and neither the Target Companies nor any Company
Related Party has, within the preceding six years, withdrawn in a complete or
partial withdrawal from any Target Company Multiemployer Plan or incurred any
contingent liability under Section 4204 of ERISA. To the Knowledge of Vivendi,
no Target Company Multiemployer Plan is in "reorganization" or "insolvent."
Section 5.18 Insurance. All material insurance policies
maintained by or for the benefit of any Target Company, including all existing
errors and omission insurance policies, are in full force and effect. The Target
Companies have complied in all material respects with the terms and provisions
of such policies. The insurance coverage provided by such policies is adequate
and suitable for the Company Business in all material respects having regard to
insurance customarily carried by comparable companies of established reputation
similarly situated and carrying on the same or similar business. Except as set
forth on Schedule 5.18, no claim has been made since January 1, 2002 with
respect to the Library Rights under any errors and omissions policy of the
Target Companies.
Section 5.19 Affiliate Transactions. Schedule 5.19 contains
a complete list, as of the date hereof, of all Contracts to or by which any
Target Company, on the one hand, and Vivendi or any of its Affiliates (other
than any Target Company), on the other hand, are currently a party or otherwise
bound or affected excluding immaterial commercial arrangements entered into on
an arm's-length basis (the "COMPANY AFFILIATE TRANSACTIONS").
Section 5.20 Assets.
(a) The Target Companies have good and valid title to, or
in the case of leased property have good and valid leasehold interests in, or
license to, or reasonable equivalents thereof outside of the U.S. (subject to
the terms of the relevant lease or license) in, all of the properties and assets
(other than (i) Company Owned Real Properties and all real property subject to
the Company Real Property Leases, which are addressed in Section 5.15, and (ii)
the Company Intellectual Property rights, which are addressed in Section 5.14),
used or held for use in connection with, necessary for the conduct of, or
otherwise material to, the Company Business (the "COMPANY BUSINESS ASSETS") in
each case free and clear of any Liens, except Permitted Encumbrances.
(b) The Target Companies have maintained all tangible
Company Business Assets that are material to the Company Business in good
working order, subject only to ordinary wear and tear. Vivendi has no Knowledge
of any facts or circumstances that would require a material write down of any
Company Business Assets under GAAP.
Section 5.21 Library Rights.
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(a) Schedule 5.21(a)(i) sets forth a list of certain of the
Target Companies' Programs (the "LISTED TITLES"). The Target Companies have made
available to NBC complete copies of the Contracts, together with any amendments
thereto, pursuant to which they acquired their rights to Exploit the Listed
Titles. All Exploitation Agreements relating to Listed Titles have been entered
into in the ordinary course of business of the Target Companies.
(b) Except for Permitted Encumbrances or as set forth on
Schedule 5.21(b):
(i) There are no Liens created by any Target Company
encumbering any of the Listed Titles or the Company's rights of Exploitation
therein.
(ii) The Target Companies have taken reasonable and
prudent actions (in accordance with industry custom and practice) necessary to
ensure that neither the Listed Titles, nor the Library Rights relating thereto,
nor the Exploitation thereof by any Target Company libels, defames or violates
the rights of privacy or publicity of any Person.
(iii) All of the rights in the music compositions and
sound recordings contained in the Listed Titles (that are not Works in Progress
or Significant Unproduced Properties) and necessary for any current or presently
anticipated Exploitation by the Target Companies of the music contained in the
Listed Titles are (A) duly licensed to, or otherwise owned by, a Target Company
with sufficient rights to permit such Exploitation, (B) in the public domain
throughout the world or (C) are otherwise available to the Target Companies for
such Exploitation under Law.
(c) Except as set forth on Schedule 5.21(c), no Target
Company has received, nor does Vivendi have any Knowledge that any Target
Company will receive, from any registration or filing office of requisite
authority in any jurisdiction, any notice from any third party terminating or
purporting to terminate copyright assignments pursuant to 17 U.S.C. ss. 203 or
ss. 304 and relating to the Listed Titles.
Section 5.22 Listed Titles Participants. The memoranda
provided by the Target Companies to the NBC Companies, dated as of October 3,
2003, set forth a description of those Participation obligations of any Target
Company as of the date of this Agreement with respect to the Exploitation of the
Listed Titles. No Participation set forth in such memoranda is subject to
acceleration in any manner whatsoever as a result of or by reason of the
consummation of the transactions contemplated hereby.
Section 5.23 Library Tangible Assets.
(a) An original negative or master of each of the Library
Pictures currently being Exploited has been properly stored, in each case in
accordance with standards customarily applied by major theatrical, television
and home video distributors, as applicable, or the Target Company has access to
printable elements of such Library Pictures. Such original negatives, masters or
printable elements are, in all material respects, in a commercially reasonable
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condition. Schedule 5.23(a) sets forth, as of the date hereof, a list, which is
true and complete in all material respects, of the physical locations of such
original negatives, masters, or printable elements, and to the extent such
physical locations are owned or controlled by third parties, the Target
Companies are party to customary access agreements.
(b) Other than such Library Tangible Assets related to the
Listed Titles set forth in Schedule 5.23(a), the Library Tangible Assets for the
Listed Titles are stored and maintained in accordance with standard industry
practices for the use and preservation of such materials, and the Target
Companies have customary access thereto sufficient to Exploit the Listed Titles.
Section 5.24 Distribution Fees.
(a) To the Knowledge of Vivendi, except as set forth on
Schedule 5.24, each of such distributors for which Affiliation Agreements have
been provided pursuant to Section 5.13(a)(vii) is obligated to pay, and is
paying, a monthly license fee in an amount at least equal to the per subscriber
rate set forth in the applicable Affiliation Agreements (excluding launch
incentives). Except as set forth on Schedule 5.24, no distributor of the USA
Cable Network, the SciFi Cable Network, the Trio Digital Network or the NWI
Digital Network who is distributing such programming service pursuant to an
Affiliation Agreement that has not been provided pursuant to Section
5.13(a)(vii), is authorized to pay or is paying a monthly license fee at a per
subscriber rate for the respective service that is less than that provided in
the applicable Affiliation Agreement (excluding launch incentives). The
representations contained in this Section 5.24(a) exclude deductions from
monthly license fees taken by distributors for marketing support, channel
placement, bad debts and a 29% tax applicable to gross license fees from
subscribers in Puerto Rico.
(b) Excluding payments which have not been made as a result
of the bankruptcy of Adelphia Communications Corporation and certain related
entities, as of the date hereof, no distributor of Universal Networks
programming for which an Affiliation Agreement has been provided pursuant to
Section 5.13(a)(vii), is in arrears in the payment of the entire distribution
fee due any Target Company for any month by more than 90 days.
(c) With respect to any Affiliation Agreement containing a
delete right, no multichannel video programming distributor has notified any
Target Company of its intention to delete or materially reposition any
programming service.
(d) As of August 31, 2003, (i) the USA Cable Network had
not less than 78,000,000 billable subscribers, (ii) the SciFi Cable Network had
not less than 72,000,000 billable subscribers, (iii) the Trio Digital Network
had not less than 15,000,000 billable subscribers and (iv) the NWI Digital
Network had not less than 15,000,000 billable subscribers.
Section 5.25 DreamWorks Agreements.
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(a) VUE is the holder, beneficially and of record, of
3,000,000 shares of "CLASS U PREFERRED STOCK" (as such term is defined in the
DreamWorks LLC Agreement) (the "DW CLASS U SHARES") and all right, title and
interest in and to the DW Class U Shares. Complete copies of the DreamWorks LLC
Agreement and the DreamWorks Master Agreement previously have been made
available to NBC. The DreamWorks LLC Agreement has not been restated, amended,
supplemented or modified other than to reflect the admission of new members
holding interests in DreamWorks that do not constitute "CLASS U PARITY STOCK" or
"CLASS U SENIOR STOCK" (each as defined under the DreamWorks LLC Agreement). To
the Knowledge of Vivendi, the DW Class U Shares are duly and validly issued,
fully paid and non-assessable. The DW Class U Shares are free and clear of any
Liens created by the Target Companies other than the Lien granted pursuant to
the Credit Agreement and, to the Knowledge of Vivendi, are free and clear of any
Liens created by any other Person. There are no existing options, warrants,
rights, calls or similar commitments relating to the DW Class U Shares, other
than the rights of redemption of the holder and the issuer thereof expressly
provided for in the DreamWorks LLC Agreement. Except as set forth on Schedule
5.25(a), no Target Company has granted any consent, approval, authorization or
waiver in respect of the issuance of any Class U Preferred Stock (other than the
DW Class U Shares) or any Class U Parity Stock or Class U Senior Stock, or that
would otherwise adversely affect in any manner VUE's rights as holder of the DW
Class U Shares. No Person has any option, right of first refusal, preemptive
right, subscription right, right of participation or similar right created or
granted by any Target Company in respect of the DW Class U Shares. To the
Knowledge of Vivendi, the DW Class U Shares constitute all of the issued and
outstanding shares of Class U Preferred Stock. Except as set forth on Schedule
5.25(a), to the Knowledge of Vivendi, there are no issued and outstanding shares
of Class U Parity Stock or Class U Senior Stock. Other than the DreamWorks LLC
Agreement and the DreamWorks Master Agreement, or as set forth on Schedule
5.25(a), there are no other Contracts currently in effect between DreamWorks and
any member of the Seller Group which would amend, alter or otherwise affect the
DreamWorks LLC Agreement and the DreamWorks Master Agreement
(b) To the Knowledge of Vivendi, (i) DreamWorks has not
made any tax distributions pursuant to Section 8.02 of the DreamWorks LLC
Agreement, and (ii) DreamWorks' "Commitments" (as referenced in Section 4.07(e)
of the DreamWorks LLC Agreement) do not exceed $1,500,000,000, and accordingly,
no event has occurred which would result in the conversion of any outstanding
shares of Class U Preferred Stock into subordinated debt of DreamWorks, as
contemplated by such Section 4.07(e).
(c) No Class U Non-Cash Amount (as defined in the
DreamWorks LLC Agreement) has become or is due and payable-in-kind or deemed
paid, or a combination thereof, as a result of the provisions of Section 8.01
(or any other provision) of the DreamWorks LLC Agreement, and accordingly, no
amount has been or is required to be added to the Class U Investment Amount (as
defined in the DreamWorks LLC Agreement) in accordance with the terms of Section
8.01 (or any other provision) of the DreamWorks LLC Agreement.
64
(d) Except as set forth in Schedule 5.25(d), (i) to the
Knowledge of Vivendi no event has occurred which, with or without the passage of
time or the giving of notice, would require DreamWorks to redeem any shares of
Class U Preferred Stock pursuant to the provisions of Section 8.01(a)(iv) (or
any other provision) of the DreamWorks LLC Agreement and (ii) no Target Company
has received notice from DreamWorks that any such event has occurred.
(e) The exercise by Dream Works of its termination right
under the DreamWorks Master Agreement for a "VUE Change of Control" (as defined
in the DreamWorks Master Agreement) will not cause any of the Target Companies
to be in material breach of any material third-party agreement.
(f) As used in this Agreement, (i) "DREAMWORKS" means
DreamWorks, LLC, a Delaware limited liability company, (ii) "DREAMWORKS LLC
AGREEMENT" means that certain Sixth Amended and Restated Limited Liability
Company Agreement of DreamWorks, dated as of March 21, 2003, as amended to date,
among the members of DreamWorks, as amended by that certain Amendment thereto
consented to as of June 6, 2003, (iii) "DREAMWORKS MASTER AGREEMENT" means that
certain DreamWorks/Universal Studios, Inc. Master Agreement, dated as of June
14, 1995, as amended and restated as of June 20, 2001, between DreamWorks and
the Company, as amended as of May 30, 2003 pursuant to Amendment No. 1 to the
Master Agreement and Amendment No. 1 to Exhibit A of the Master Agreement and
Amendment No. 4 to Exhibit B of the Master Agreement, (the "2003 DW AMENDMENT")
(and includes the Videogram Agreement and Theatrical Agreement), (iv) "VIDEOGRAM
AGREEMENT" means that certain Memorandum of Agreement between DreamWorks and the
Company, which is Exhibit B (Home Video Fulfillment Services) to the DreamWorks
Master Agreement, as (A) amended and restated as of June 20, 2001 pursuant to a
DW/Universal Studios, Inc. Master Agreement, (B) amended as of January 15, 2002,
pursuant to Amendment No. 2 to such Exhibit B, and (C) amended as of January 15,
2003 pursuant to Amendment No. 3 to such Exhibit B, and (D) amended as of May
30, 2003 by the 0000 XX Xxxxxxxxx, (v) "THEATRICAL AGREEMENT" means that certain
Memorandum of Agreement between DreamWorks and the Company, which is Exhibit A
(Foreign Theatrical Distribution) to the Master Agreement (A) as amended and
restated as of June 20, 2001 pursuant to the Master Agreement and (B) as amended
as of May 30, 2003 pursuant to the 0000 XX Xxxxxxxxx and (vi) "ADVANCE" has the
meaning set forth in the DreamWorks Master Agreement. Capitalized terms used in
this Section 5.25 shall have the respective meanings accorded to them in the
DreamWorks LLC Agreement unless otherwise defined herein.
Section 5.26 Target Agreements. Except as set forth in
Schedule 5.26, (a) no Target Company has received any written notice of any
violation or breach of any MFN included in any Affiliation Agreement, and (b)
Vivendi has no Knowledge of any assertion, allegation or claim by any Person
that any Target Company currently is, or in the past has been, in breach or
violation in any material respect of any MFN included in any Affiliation
Agreement.
65
Section 5.27 Consultant Agreement. The Target Companies
have made available to NBC a complete copy of the Agreement, dated January 20,
1987 as amended on February 5, 2001 and July 15, 2003 ("CONSULTANT AGREEMENT"),
between UCDP and an individual (the "CONSULTANT"). Other than the Consultant
Agreement and the Guarantee, dated as of November 4, 1988, by MCA Inc. and
Cineplex Odeon Corporation of the performance of Universal City Florida
Partners, there are no Contracts currently in effect between the Consultant and
any member of the Seller Group which amend or supplement the Consultant
Agreement. Pursuant to the Consultant Agreement, the Company guaranteed the
performance by UCDP of UCDP's obligations to the Consultant.
Section 5.28 IACI/Xxxxxx Arrangements. The Company has made
available to NBC complete copies of all VUE Documents. Other than the VUE
Documents, as of the date hereof, there are no Contracts currently in effect
between IACI, Xxxxxx or any of their respective Affiliates, on the one hand, and
any Target Company, on the other hand, other than Contracts entered into in the
ordinary course of business or Contracts that are at arm's-length relating to
commercial or trade matters.
Section 5.29 German/UK Financing. Except as set forth in
detail in Schedule 5.29, no Target Company has any future obligation (other than
contingent participation payments) pursuant to or in connection with any of the
German/U.K. Film Financing Agreements or the transactions contemplated thereby.
Section 5.30 Investment Intent. USH3 is not acquiring the
NBC Class B Common Stock to be issued as Company Share Contribution
Consideration with a view to or for sale (as defined in the Securities Act) in
connection with any distribution (within the meaning of the Securities Act)
thereof except pursuant to an exemption from the registration requirements of
the Securities Act or pursuant to an effective registration statement
thereunder.
Section 5.31 Brokers. No broker, investment banker,
financial advisor or other Person, other than Citigroup Global Markets Limited,
Xxxxxxx, Xxxxx & Co., Societe Generale and BNP Paribas, the fees and expenses of
which will be paid by Vivendi, is or shall be entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement or the Ancillary Agreements
as a result of arrangements made by or on behalf of Vivendi, USH3 or any of the
Target Companies or any of their respective Affiliates.
Section 5.32 No Other Representations or Warranties;
Schedules; No Implied Representations. Except for the representations and
warranties contained in this Agreement, neither Vivendi, USH3 nor any other
Person makes any representation or warranty herein, express or implied, with
respect to Vivendi, USH3, the Company Business, the Target Companies, the
Company Minority Interests, Company Capital Stock, BV1 Common Stock or BV2
Common Stock or the transactions contemplated by this Agreement or the Ancillary
Agreements, and Vivendi and USH3 disclaim all such other representations or
warranties. The disclosure of any matter or item in any Schedule shall not be
deemed to constitute an acknowledgment that any such matter is required to be
66
disclosed or is material to the representations and warranties set forth in this
Agreement or that such matter would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF GE AND NBC HOLDING
GE and NBC Holding, jointly and severally, represent and
warrant to Vivendi:
Section 6.1 Organization; Good Standing and Qualification.
(a) Each of the GE Companies is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction in which it is incorporated and has all requisite corporate power
and authority to own or lease and operate its properties and to own and operate
its business as now conducted.
(b) NBC is duly qualified to do business and, where
applicable, is in good standing in each jurisdiction where the nature of its
business and properties makes such qualification legally necessary, except where
the failure to be so qualified or in good standing would not, individually or in
the aggregate, reasonably be expected to have a NBC Material Adverse Effect.
(c) GE has previously made available to Vivendi a complete
and correct copy of the Organizational Documents of each of the NBC Material
Subsidiaries, as amended through the date hereof. The Organizational Documents
of each of NBC Holding, NBC, NBC Sub and the NBC Material Subsidiaries are in
full force and effect and no resolution is pending or has been adopted providing
for the amendment thereof (except as reflected therein) or for the dissolution
or winding up of any such NBC Company. None of NBC Holding, NBC, NBC Sub or any
NBC Material Subsidiary are in violation of any of the provisions of its
respective Organizational Documents.
Section 6.2 Authorization.
(a) Each of the GE Companies has all requisite power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party and to perform its respective obligations hereunder and
thereunder. The execution and delivery by each of the GE Companies of this
Agreement and the Ancillary Agreements to which it is a party, and the
performance of its respective obligations hereunder and thereunder, have been
duly authorized by all requisite action (corporate or other).
(b) This Agreement and the IACI Matters Agreement have
been, and the other Ancillary Agreements will be at the Closing, duly executed
and delivered by each of the GE Companies to the extent it is a party thereto,
and, assuming the due authorization, execution and delivery by all the other
parties to this Agreement and the IACI Matters Agreement, upon their execution,
the other Ancillary Agreements, each of this Agreement and the IACI Matters
Agreement constitutes and the other Ancillary Agreements will constitute valid
67
and binding obligations of the GE Companies to the extent it is a party thereto,
enforceable against each of the GE Companies, as applicable, in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in
equity).
Section 6.3 Capitalization.
(a) NBC Holding. The authorized capital stock of NBC
Holding consists of 100 shares of common stock, no par value, of NBC Holding
("NBC HOLDING COMMON STOCK"), of which 100 shares of NBC Holding Common Stock
are issued and outstanding. Such issued and outstanding shares of NBC Holding
Common Stock constitute the only issued and outstanding shares of capital stock
of NBC Holding and are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 6.3(a), (i) there are no
outstanding capital calls, warrants, options, agreements, subscriptions,
convertible or exchangeable securities, rights of first refusal or first offer,
preemptive rights, calls, puts or other commitments or obligations pursuant to
which NBC Holding is or may become obligated to issue, sell, purchase,
repurchase, return or redeem, or any other Person is or may become obligated to
purchase, any shares of capital stock or other securities of NBC Holding, (ii)
no equity securities of NBC Holding are reserved for issuance for any purpose
and (iii) except for this Agreement, no GE Company is a party to any Contract
for the sale of or is otherwise obligated to sell, transfer or otherwise dispose
of any equity securities, or any securities convertible into or exchangeable for
any equity securities, of NBC Holding. GE is the sole record and beneficial
owner of 100 shares of NBC Holding Common Stock, free and clear of any Liens
(other than any restrictions under the Securities Act and other applicable
securities Laws).
(b) NBC.
(i) As of the date hereof, the authorized capital stock
of NBC consists of 100 shares of common stock, no par value, of NBC ("EXISTING
NBC COMMON Stock"), of which 100 shares of Existing NBC Common Stock were issued
and outstanding. As of the date hereof, such issued and outstanding shares of
Existing NBC Common Stock constitute the only issued and outstanding shares of
capital stock of NBC and are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 6.3(b)(i), (A) there are no
outstanding capital calls, warrants, options, agreements, subscriptions,
convertible or exchangeable securities, rights of first refusal or first offer,
preemptive rights, calls, puts or other commitments or obligations pursuant to
which NBC is or may become obligated to issue, sell, purchase, repurchase,
return or redeem, or any other Person is or may become obligated to purchase,
any shares of capital stock or other securities of NBC, (B) no equity securities
of NBC are reserved for issuance for any purpose and (C) except for this
Agreement, no GE Company is a party to any Contract for the sale of or is
otherwise obligated to sell, transfer or otherwise dispose of any equity
securities, or any securities convertible into or exchangeable for any equity
securities, of NBC. As of the date hereof, NBC Holding is the sole record and
68
beneficial owner of 100 shares of Existing NBC Common Stock, free and clear of
any Liens (other than any restrictions under the Securities Act and other
applicable securities Laws).
(ii) After the NBC Restructuring, the authorized capital
stock of NBC will consist of shares of NBC Class A Common Stock and shares of
NBC Class B Common Stock, having terms set forth on Schedule 2.1. After the NBC
Restructuring and as of the Closing, such issued and outstanding shares of
capital stock of NBC will constitute the only issued and outstanding shares of
capital stock of NBC and will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 6.3(b)(ii), after the NBC
Restructuring (A) there will be no outstanding capital calls, warrants, options,
agreements, subscriptions, convertible or exchangeable securities, rights of
first refusal or first offer, preemptive rights, calls, puts or other
commitments or obligations pursuant to which NBC is or may become obligated to
issue, sell, purchase, repurchase, return or redeem, or any other Person is or
may become obligated to purchase, any shares of capital stock or other
securities of NBC, (B) no equity securities of NBC will be reserved for issuance
for any purpose and (C) except for this Agreement, no GE Company is a party to
any Contract for the sale of or is otherwise obligated to sell, transfer or
otherwise dispose of any equity securities, or any securities convertible into
or exchangeable for any equity securities, of NBC. After the NBC Restructuring
and as of the Closing, NBC Holding will be the sole record and beneficial owner
of all of the shares of NBC Class A Common Stock, free and clear of any Liens
(other than any restrictions under the Securities Act and other applicable
securities Laws). The shares of NBC Class B Common Stock to be issued pursuant
to this Agreement shall be duly authorized, validly issued, fully paid and
nonassessable. At the Closing, GE shall cause NBC Sub to deliver to USH3 good
and valid title to the shares of NBC Class B Common Stock issuable to USH3
hereunder free and clear of all Liens (other than Liens created by Vivendi or
USH3 and any restrictions under the Securities Act and other applicable
securities Laws).
Section 6.4 Subsidiaries; Investments.
(a) Schedule 6.4(a) sets forth the name and the
jurisdiction of organization of each NBC Material Subsidiary, the authorized and
issued and outstanding capital stock or other equity securities of each such NBC
Material Subsidiary and the number of shares of capital stock or other equity
securities and the percentage ownership of each such NBC Material Subsidiary
held by NBC or any other NBC Company. Each NBC Material Subsidiary is duly
organized, validly existing and, where applicable, in good standing under the
Laws of its jurisdiction of organization, with the corporate or other power and
authority to own or lease and operate its properties and to own and operate its
business as now conducted, and is duly qualified to do business and, where
applicable, in good standing in each jurisdiction where the nature of its
business or properties makes such qualification necessary, except where the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a NBC Material Adverse Effect. Except
as set forth on Schedule 6.4(a), all of the outstanding shares of capital stock
or other securities of each NBC Material Subsidiary are validly issued, fully
paid and nonassessable, and NBC or another NBC Company, as the case may be, owns
69
such shares, free and clear of any Liens (other than restrictions under the
Securities Act and other applicable securities Laws). Except as set forth on
Schedule 6.4(a), (i) there are no capital calls, warrants, options, agreements,
subscriptions, convertible or exchangeable securities, rights of first refusal
or first offer, preemptive rights, calls, puts or other commitments or
obligations pursuant to which any NBC Material Subsidiary is or may become
obligated to issue, sell, purchase, return or redeem, or any other Person is or
may become obligated to purchase, any shares of capital stock or other equity
security of such NBC Material Subsidiary, (ii) no equity securities of such NBC
Material Subsidiary are reserved for issuance for any purpose and (iii) none of
the NBC Companies or any of their respective Affiliates that is a stockholder of
such NBC Material Subsidiary is a party to any Contract for the sale of or is
otherwise obligated to sell, transfer or otherwise dispose of any equity
securities, or any securities convertible into or exchangeable for any equity
securities, of such NBC Material Subsidiary.
(b) Schedule 6.4(b) sets forth the name and jurisdiction of
each Person that is not a Subsidiary of NBC but in which any NBC Company holds
an equity interest (i) having a value as of June 30, 2003 of $50,000,000 or more
as reflected on the NBC Balance Sheet, or (ii) in respect of which the equity
income or loss for the year ended December 31, 2002 as reflected in the NBC
Financial Statements was equal to or greater than $20,000,000 (collectively, the
"NBC MINORITY INTERESTS"). All of the NBC Minority Interests are owned, directly
or indirectly by one of the NBC Companies free and clear of any Liens (other
than Permitted Encumbrances, any restrictions under the Securities Act and other
applicable securities Laws or other Liens provided by the agreements or
Organizational Documents of such entity). Except as set forth on Schedule
6.4(b), no NBC Company has an obligation, contingent or otherwise, to fund or
participate in the debts of any Person in which an NBC Company holds an NBC
Minority Interest.
Section 6.5 Non-Contravention. The execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is a
party by each of the GE Companies and the consummation by any of the GE
Companies of the transactions contemplated hereby (including, for the avoidance
of doubt, the NBC Restructuring) and thereby do not and will not (a) violate any
provision of the Organizational Documents of any of the GE Companies or any of
the NBC Companies, (b) except as set forth on Schedule 6.5, subject to obtaining
the consents contemplated in Section 6.6, conflict with, or result in the breach
of, constitute a default or require a consent under, result in the termination,
cancellation, modification, violation or acceleration (whether after the giving
of notice or the lapse of time or both) of any right or obligation of any of the
NBC Companies under, entitle any party to exercise any right under, or result in
a loss of any benefit to which any of the NBC Companies is entitled under, any
NBC Material Contract to which any of the NBC Companies is a party or to which
its assets are subject, (c) assuming compliance with the matters set forth in
Sections 5.6 and 6.6, violate or result in a breach of or constitute a default
under any Law to which any of GE or any NBC Company is subject, or (d) result in
70
the creation or imposition of any Lien on any properties or assets of any of the
NBC Companies, except in the case of clauses (b), (c) and (d), for such matters
as would not, individually or in the aggregate, reasonably be expected to have a
NBC Material Adverse Effect.
Section 6.6 Governmental Authorization. Except as set forth
on Schedule 6.6, the execution, delivery and performance by each of the GE
Companies of this Agreement and the Ancillary Agreements to which it is a party
and the consummation by each of the GE Companies of the transactions
contemplated hereby (including, for the avoidance of doubt, the NBC
Restructuring) and thereby do not and will not require any consent, approval or
authorization of, or registration, declaration or filing with, any Governmental
Authority, except for (a) compliance with the applicable requirements of the HSR
Act and the EU Merger Control Regulation, (b) such consents, approvals,
authorizations, registrations, declarations or filings as may be required under
applicable Competition Laws of any other jurisdiction, (c) compliance with the
applicable requirements of the Communications Act, and the rules, regulations
and policies of the FCC and (d) such other consents, approvals, authorizations,
registrations, declarations or filings, the failure of which to obtain would
not, individually or in the aggregate, reasonably be expected to have a NBC
Material Adverse Effect.
Section 6.7 NBC Financial Statements; Accounting Controls.
(a) NBC has delivered to Vivendi (i) the unaudited
consolidated balance sheets of the NBC Companies as of December 31, 2002 and
2001 and the related unaudited consolidated statements of income and of cash
flows for such years then ended, including the schedules thereto, set forth on
Schedule 6.7(a)(i), and (ii) the unaudited consolidated balance sheet of the NBC
Companies as of June 30, 2003 and the related unaudited consolidated statements
of income and cash flows for the six month period then ended set forth on
Schedule 6.7(a)(ii) (such unaudited statements, including the schedules thereto,
are referred to herein as the "NBC FINANCIAL STATEMENTS"). Except as set forth
on Schedule 6.7(a)(iii), each of the NBC Financial Statements has been prepared
in accordance with GAAP (other than the absence of notes) consistently applied
and presents fairly in all material respects the consolidated financial
position, results of operations and cash flows of the NBC Companies as of the
dates and for the periods indicated.
(b) Accounting Controls. The NBC Companies have maintained
systems of internal accounting controls with respect to the NBC Business
sufficient to provide reasonable assurances that (i) all transactions are
executed in accordance with management's general or specific authorization, (ii)
all transactions are recorded as necessary to permit the preparation of annual
and interim financial statements in conformity with GAAP and to maintain proper
accountability for items and (iii) access to their property and assets is
permitted only in accordance with management's general or specific
authorizations.
(c) Off-Balance Sheet Obligations. Except as set forth on
Schedule 6.7(c), the NBC Companies have no off-balance sheet financing
obligations in excess of $10,000,000 individually or $50,000,000 in the
aggregate.
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(d) Station Venture Holdings. NBC owns indirectly 79.62% of
the ownership interests of Station Venture Holdings, LLC ("STATION VENTURE
HOLDINGS"), and a 0.25% general partnership interest in Station Venture
Operations, L.P. ("STATION VENTURE OPERATIONS"). Station Venture Holdings owns
directly a 99.75% limited partnership interest in Station Venture Operations.
Station Venture Holdings had, as of June 30, 2003, indebtedness in the aggregate
amount of $815 million, which indebtedness is not included in or consolidated
with the liabilities reflected on the balance sheet included in the NBC
Financial Statements.
Section 6.8 No Undisclosed Liabilities.
(a) None of the NBC Companies has any Liabilities that are
of a nature that would be required to be disclosed on a consolidated balance
sheet of the NBC Companies (or the notes thereto) prepared in accordance with
GAAP, other than (i) Liabilities incurred in the ordinary course of business
since June 30, 2003 that have not had and would not reasonably be expected to
have a NBC Material Adverse Effect, (ii) Liabilities reflected or reserved
against on the NBC Balance Sheet, (iii) Liabilities set forth on Schedules
6.8(a) or Schedule 6.10, (iv) Liabilities incurred solely as a result of the
refusal of Vivendi to consent to any actions set forth in Section 7.2(b) or (d),
(v) Liabilities incurred outside of the ordinary course of business with the
consent of Vivendi in accordance with Section 7.2(b) or (d) or (vi) Liabilities
not incurred in the ordinary course of business since June 30, 2003 that have
not exceeded and would not reasonably be expected to exceed, individually or in
the aggregate, $15,000,000.
(b) Except as set forth on Schedule 6.8(b), none of the NBC
Companies has any Liability, directly or indirectly, as obligor, guarantor,
surety or otherwise for the indebtedness for borrowed money of any Person (other
than on behalf of other NBC Companies).
Section 6.9 Absence of Certain Changes. Except for actions
requested to be undertaken in accordance with this Agreement or the Ancillary
Agreements or as set forth on Schedule 6.9, since June 30, 2003, (a) the NBC
Business has been conducted only in the ordinary course of business and (b)
there have not been any changes or developments that, individually or in the
aggregate, have had or would reasonably be expected to have a NBC Material
Adverse Effect.
Section 6.10 No Litigation. Except as set forth on Schedule
6.10 and except as provided in Section 6.16 and the Schedules thereto, no Legal
Proceeding is pending or, to the Knowledge of GE, threatened against any of the
NBC Companies or any of their respective properties or assets, and no NBC
Company has received any subpoena or notice of any claim or investigation that
(a) involves or would reasonably be expected to result in a Loss (together with
all Losses arising out of the same event or series of related events) in excess
of $5,000,000 (other than Legal Proceedings or claims involving personal injury
that are fully insured under GE or NBC insurance policies or self-insurance
programs) or (b) would reasonably be expected to prevent or materially delay the
consummation of the transactions contemplated hereby, nor is there any Order
outstanding against, or, to the Knowledge of GE, any investigation by any
Governmental Authority, involving any of the NBC Companies or any of their
72
respective properties or assets, that would reasonably be expected to prevent or
materially delay the consummation of the transactions contemplated hereby.
Section 6.11 Compliance with Laws; Permits.
(a) This Section 6.11 does not address Environmental Laws
(which are subject to Section 6.12), Taxes (which are subject to Section 6.16)
or NBC Employee Benefit Plans (which are subject to Section 6.17). Each of the
NBC Companies is in compliance in all material respects with all Laws applicable
to the ownership of their respective assets and properties and the operation of
the NBC Business, and no GE Company has received any notice from any
Governmental Authority alleging any material conflict with, material violation
or breach of or material default under any such Law.
(b) Each of the NBC Companies has all material permits,
licenses, permissions, franchises, and amendments thereto, from any Governmental
Authority (including those required under the Communications Act, the "FCC
LICENSES") necessary for the ownership and operation of the NBC Business (the
"NBC Licenses"). Each of the NBC Companies is in compliance in all material
respects with the terms of the NBC Licenses, and no GE Company has received any
notice from any Governmental Authority alleging any material conflict with,
violation or breach of any NBC License.
(c) Schedule 6.11(c) sets forth a complete list of the
material FCC Licenses held by the NBC Companies currently in effect and all
applications pending before any Governmental Authority with respect to the
material FCC Licenses or the Stations (as hereinafter defined). The material NBC
Licenses are in full force and effect and are not subject to any restrictions or
conditions other than those generally applicable to television broadcasting
licensees under the Communications Act. The NBC Companies have filed all
reports, notifications and filings with the FCC necessary to maintain all
material FCC Licenses in full force and effect, have timely paid all FCC
regulatory fees with respect thereto and, to the Knowledge of GE, there are no
facts, events or conditions based upon which the FCC might reasonably be
expected to revoke, suspend, cancel, rescind, terminate, require the disposition
of, or fail to renew any of the material FCC Licenses or, except as set forth on
Schedule 6.11(c), fail to grant any pending FCC application or petition for a
material FCC License. The NBC Companies maintain public files for the Stations
as required by FCC rules. The NBC Companies are operating only those facilities
for which an appropriate FCC authorization has been obtained in accordance with
such authorization in all material respects.
(d) Schedule 6.11(d) lists each of the full-power
television stations owned and operated by the NBC Companies (the "STATIONS") and
provides information concerning carriage (or non-carriage) of each such station
by (i) the cable television systems serving its local television market (as
defined in Section 76.55 of the rules and regulations of the FCC, 47 CFR Section
76.55) and (ii) satellite carriers providing local-into-local television service
(as defined in Section 76.66 of the rules and regulations of the XXX, 00 XXX
Section 76.66). With respect to each Station, each of the NBC Companies, during
73
the period of ownership of such Station by such NBC Company in accordance with
Section 76.64 of the FCC Rules (47 CFR Section 76.64), has made the required
election between retransmission consent or must carry status with respect to
each multi-channel video programming distributor serving all or any part of the
television market (as defined by the FCC) of such Station. The Stations, their
respective physical facilities, electrical and mechanical systems and
transmitting and studio equipment are being operated in compliance with the
applicable FCC Licenses and the requirements of the Communications Act in all
material respects. NBC and the Stations are in compliance, in all material
respects, with all requirements of the FCC and the Federal Aviation
Administration with respect to the construction and/or alteration of the antenna
structures owned or used by the any of the NBC Companies.
(e) Except as set forth in Schedule 6.11(e), no
application, action or proceeding is pending for the renewal or modification of
any material FCC Licenses and, except for actions or proceedings affecting
television broadcast stations generally, no application, complaint, action or
proceeding is pending or, to the Knowledge of GE, threatened that seeks or is
reasonably likely to result in (i) the denial of an application for renewal of a
material FCC License, (ii) the revocation, adverse modification, non-renewal or
suspension of any of the material FCC Licenses, (iii) the issuance of a material
cease-and-desist order or (iv) the imposition of any material administrative or
judicial sanction with respect to any of the Stations. There is not now issued,
outstanding, pending or to the knowledge of GE, threatened, by or before the FCC
or any court, any order to show cause, notice of violation, notice of apparent
liability, notice of forfeiture or complaint with respect to any of the FCC
Licenses or the Stations that would, individually or in the aggregate,
reasonably be expected to have an NBC Material Adverse Effect.
Section 6.12 Environmental, Health and Safety Matters.
Except as set forth on Schedule 6.12, or as would not, individually or in the
aggregate, reasonably be expected to have an NBC Material Adverse Effect:
(a) Each NBC Company has obtained or has timely submitted
an application for or an application for renewal of all Environmental Permits
required for the operation of its businesses as presently conducted, and is and
has been in compliance with all Environmental Permits and applicable
Environmental Laws (including, in connection with equipment containing
polychlorinated biphenyls).
(b) To the Knowledge of GE, there are no facts,
circumstances or conditions arising out of or relating to the past or present
operations of any NBC Company or real property currently or formerly owned,
operated or leased by any NBC Company reasonably likely to cause the NBC
Companies to incur Environmental Liabilities.
(c) There has not been any request, claim, or requirement
seeking payment from GE or any of its Affiliates for response to, or remediation
of, Hazardous Substances at or arising from any current or past properties or
operations of the NBC Companies, or their predecessors in interest, which has
not been resolved.
74
(d) No NBC Company has entered into or agreed to, nor does
any of them contemplate entering into, any settlement, consent decree or
administrative or court order concerning applicable Environmental Laws in
respect of the Company Business or the properties of the NBC Companies, and none
of them is subject to any settlement, administrative or court order relating to
any compliance with Environmental Laws, or addressing the presence, Release or
threatened Release of Hazardous Substances.
(e) No Environmental Law imposes any obligation upon any
NBC Company arising out of, or as a condition to, any transaction contemplated
by this Agreement, including any requirement to modify or transfer any
Environmental Permit, any requirement to file any notice or other submission
with a Governmental Authority, the placement of any notice, restriction,
acknowledgement or covenant in any land records, or the modification of or
provision of notice under any agreement, consent order or consent decree.
(f) None of the NBC Companies or any real property
currently or, to the Knowledge of GE, previously owned, operated or leased by or
for any NBC Company is subject to any pending, or to the Knowledge of GE,
threatened claim, summons, complaint, order, notice of violation, or notice of
potential liability against such NBC Company or involving any such real property
or is the subject of any pending or, to the Knowledge of GE, threatened
proceeding or governmental investigation against such NBC Company or involving
any such real property under or pursuant to Environmental Laws.
(g) NBC has made available to Vivendi for review copies of
all reports of material environmental investigations, studies, audits, reviews
and other analyses conducted in relation to any operations, properties or
facilities of the NBC Companies now or previously owned or leased by the NBC
Companies, which are in the possession or control of the NBC Companies.
(h) No Environmental Lien has attached to any property of
any NBC Company and, to the Knowledge of GE, no current facts, circumstances or
conditions exist that could reasonably be expected to result in any such
Environmental Lien attaching to any such property.
This Section 6.12 constitutes the sole and exclusive
representations and warranties with respect to environmental matters with
respect to the NBC Companies.
Section 6.13 Material Contracts.
(a) Schedule 6.13 sets forth a complete list as of the date
of this Agreement of all of the following Contracts to which any NBC Company is
a party or by which it or any of its properties or assets may be bound (in each
case as amended, supplemented, waived or otherwise modified through the date of
this Agreement, collectively, the "NBC MATERIAL CONTRACTS"):
(i) stock purchase agreements or asset purchase
agreements (other than Contracts related to the purchase of goods and services
(including services provided under Talent Contracts) entered into in the
75
ordinary course of business) that (x) involve payment of fixed sums in excess of
$20,000,000, (y) have not expired by, and have not been terminated in accordance
with, their terms, and (z) relate to the prospective acquisition or disposition
of any NBC Business Assets;
(ii) Contracts pursuant to which an NBC Company
currently leases any NBC Business Assets (other than NBC Real Property Leases,
Contracts related to transactions involving its Library entered into in the
ordinary course of business, and Contracts related to purchases of goods and
services entered into in the ordinary course of business) and in respect of
which any NBC Company is obligated, as of September 30, 2003, to make, on or
after the date hereof, aggregate payments of fixed sums in excess of
$20,000,000;
(iii) (A) material joint venture, partnership and
limited liability company operating agreements pursuant to which any NBC Company
is presently obligated to make, on or after the Closing Date and on a
non-contingent basis, aggregate payments of specified sums in excess of
$50,000,000 and (B) Organizational Documents of other material joint ventures,
partnerships and limited liability companies as are set forth on Schedule
6.13(a)(iii) (the "NBC MATERIAL JV AGREEMENTS");
(iv) Contracts prohibiting or materially restricting the
ability of any NBC Material Subsidiary to engage in any business, operate in any
geographical area or compete in any line of business related to the NBC
Business, other than geographic exclusivity and channel distribution
restrictions contained in Exploitation Agreements entered into in the ordinary
course of business;
(v) Contracts relating to the borrowing of money or
extension of credit involving amounts in excess of $50,000,000;
(vi) NBC Real Property Leases where any NBC Company is
required to pay base rent in excess of $20,000,000 over the base term of the
lease (excluding any option for renewal);
(vii) Affiliation Agreements representing the top ten
(10) as of the date hereof (ranked by aggregate distribution fees) programming
service distribution agreements for each of CNBC and MSNBC;
(viii) the Foreign Distribution Agreements (which
constitute all Output Agreements of the NBC Companies);
(ix) "term deals" as commonly understood in the
television industry pursuant to which one or more NBC Companies is obligated, as
of September 30, 2003, or reasonably anticipates being required to pay, on or
after the date hereof and on a non-contingent basis, aggregate compensation of
fixed sums in excess of $10,000,000;
(x) Contracts between NBC and the owners of broadcast
television stations in the top 50 designated market areas pursuant to which NBC
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Television Network programming is provided to and telecast by such broadcast
television stations;
(xi) NBC Intellectual Property Contracts, except for
Exploitation Agreements;
(xii) infomercial or similar paid programming Contracts
granting any Person the right to program any block of time on the Stations or
NBC Cable Networks pursuant to which one or more NBC Companies is entitled, as
of September 30, 2003, to receive, on or after the date hereof and on a
non-contingent basis, aggregate consideration of fixed sums of more than
$10,000,000;
(xiii) Contracts for the acquisition, lease or servicing
of satellite transponders and other uplink and downlink and terrestrial
transmission (including fiber optic) arrangements relating to the distribution
of the NBC television network or NBC cable networks; and
(xiv) the Contracts listed on Schedule 6.13(a)(xiv).
(b) NBC has made available to Vivendi complete copies of
all written NBC Material Contracts, together with any amendments thereto, and
accurate descriptions of all material terms of any oral NBC Material Contracts.
Except as set forth on Schedule 6.13(b), each of the NBC Material Contracts is
in full force and effect and is a legal, valid and binding obligation of the
applicable NBC Company, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar Laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set forth
in Schedule 6.13(b), none of the NBC Companies is in breach or in material
default under any NBC Material Contract, nor does there exist under any NBC
Material Contract any event or condition that, after notice or lapse of time or
both, would constitute a material breach or event of default thereunder on the
part of any NBC Company or, to the Knowledge of any GE Company, any other
Person.
Section 6.14 Intellectual Property.
(a) Title. All of the Intellectual Property necessary for
the conduct of or otherwise material to the NBC Business of any NBC Company (the
"NBC INTELLECTUAL PROPERTY"), either (i) is NBC Owned Intellectual Property,
(ii) is licensed to an NBC Company pursuant to an NBC Intellectual Property
Contract, or (iii) is Intellectual Property that an NBC Company has the right to
use under Law. Except as set forth on Schedule 6.14(a), all of the NBC Owned
Intellectual Property is free of any Liens (other than Permitted Encumbrances).
(b) No Infringement. To the Knowledge of GE, (i) the
conduct of the NBC Business by an NBC Company does not infringe or otherwise
conflict with any rights of any Person in respect of any Intellectual Property,
moral rights or neighboring rights to the extent such infringement or conflict
would reasonably be expected to have a material adverse effect on the NBC
77
Business, and (ii) except for such infringements that would not, individually or
in the aggregate, reasonably be expected to have a NBC Material Adverse Effect
or infringements arising from the unauthorized reproduction, performance or
distribution by peer-to-peer file sharing or piracy, none of the NBC
Intellectual Property is being infringed or misappropriated.
(c) No Intellectual Property Legal Proceedings. To the
Knowledge of GE, except as set forth in Schedule 6.14(c), no material Legal
Proceedings are pending or threatened in writing, nor are there any material
claims or demands of any Person, that (i) assert that any NBC Company is
infringing or misappropriating any Intellectual Property, moral rights or
neighboring rights of any Person, or (ii) assert that any NBC Owned Intellectual
Property material to the NBC Business is invalid or unenforceable.
(d) Due Registration, Etc. Where necessary, and consistent
with customary industry practices as of the date hereof, except as set forth in
Schedule 6.14(d), each item of the NBC Owned Intellectual Property material to
the NBC Business has been duly registered with, filed in or issued by, as the
case may be, the U.S. Patent and Trademark Office, the U.S. Copyright Office or,
in the case of trademarks, foreign trademark offices, to the extent necessary to
ensure full protection under any applicable Law. Except as set forth in Schedule
6.14(d), all maintenance fees have been paid and all such registrations, filings
and issuances and other actions remain in full force and effect, in each case to
the extent such registration is material to the NBC Business.
(e) Trade Secrets. Each NBC Company has taken security
measures reasonable in the industry in which it operates to protect the secrecy,
confidentiality and value of all of the confidential NBC Intellectual Property.
Section 6.15 Real Property.
(a) Schedule 6.15(a) sets forth a list, as of the date
hereof, of all of the NBC Owned Real Properties. Except as set forth on Schedule
6.15(a), an NBC Company has good and valid fee title to each of the NBC Owned
Real Properties, free and clear of any Liens, other than Permitted Encumbrances.
(b) Schedule 6.15(b) sets forth a list, as of the date
hereof, of the NBC Real Property Leases. The NBC Companies have good and valid
leasehold estates in all real property affected by the NBC Real Property Leases,
free and clear of any Liens, other than Permitted Encumbrances. To the Knowledge
of GE, none of the NBC Companies has received any written notice of any default
under the NBC Real Property Leases that remains uncured. No consent or approval
under any of the NBC Real Property Leases is required in connection with the
consummation of the transactions contemplated by this Agreement, other than
consents that cannot, by the terms of such NBC Real Property Lease, be
unreasonably withheld.
(c) Schedule 6.15(c) sets forth a list of all NBC Real
Property Leases as of June 30, 2003 between any of the GE Companies on the one
hand, and any NBC Company, on the other hand, that involve continuing
Liabilities.
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Section 6.16 Taxes.
(a) Except as set forth on Schedule 6.16(a):
(i) The NBC Companies and each affiliated group (within
the meaning of Section 1504 of the Code or any similar provision of any state,
local or foreign Tax Law) of which any NBC Company is or has been a member (A)
have timely filed (or there has been timely filed on their behalf) with the
appropriate Taxing Authority all material Tax Returns required to be filed, and
all such Tax Returns are true, correct and complete in all material respects and
(B) have paid all material Taxes due and payable or claimed or asserted in
writing by any Taxing Authority to be due, from or with respect to them, or have
provided for all such Taxes on their books and records, including in the NBC
Financial Statements, to the extent required under GAAP. With respect to any
period for which Tax Returns have not yet been filed, or for which Taxes are not
yet due or owing, each of the NBC Companies has made due and sufficient current
accruals for Taxes in their books and records, including the NBC Financial
Statements.
(ii) No audit report has been issued in the five (5)
years prior to the date of this Agreement relating to any material Taxes due
from or with respect to any of the NBC Companies, their respective incomes,
assets or operations. All material income and franchise Tax Returns filed in
respect of any of the NBC Companies have been examined by the relevant Taxing
Authority, or the applicable statute of limitations on assessment with respect
to such Tax Returns has expired.
(iii) No claim has been made by a Taxing Authority in a
jurisdiction where any NBC Company does not file Tax Returns to the effect that
the NBC Company is or may be liable for Taxes in that jurisdiction.
(iv) None of the NBC Companies has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency, which waiver or extension is currently in
effect.
(v) All deficiencies for Taxes in excess of $1,000,000
asserted or assessed by the IRS or any other Taxing Authority relating to the
Tax Returns of, covering or including any of the NBC Companies or the business
of any of the NBC Companies, have been fully paid, and there are no other
actions, controversies, suits, audits or, to the Knowledge of GE, investigations
or claims by any Taxing Authority in progress relating to the NBC Companies or
the business of the NBC Companies, nor has any NBC Company, or any of their
respective shareholders, directors or officers received any written notice from
any Taxing Authority that it intends to conduct such an audit or investigation,
in each case, that may reasonably be anticipated to give rise to a Tax liability
in excess of $1,000,000. No NBC Company has received any private letter ruling
of the IRS or comparable rulings of other Taxing Authorities (other than any
such ruling that is subject to any confidentiality provision) in the five (5)
years prior to the date of this Agreement.
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(vi) There are no material liens for Taxes (other than
Permitted Encumbrances) upon the assets of the NBC Companies.
(vii) All material Taxes that any of the NBC Companies
has been or is required by law to withhold or to collect for payment have been
duly withheld and collected, and have been paid over to the appropriate Taxing
Authority or accrued, reserved against and entered on the books and records of
the applicable NBC Company or the applicable NBC Company's Affiliates.
(viii) None of the NBC Companies, or any other Person on
behalf of any NBC Company, has (A) executed or entered into a closing agreement
pursuant to Section 7121 of the Code or any predecessor provision thereof or any
similar provision of foreign, state or local Law (other than any such agreement
that is subject to any confidentiality provision) with respect to any of the NBC
Companies that is currently in effect; (B) filed a consent pursuant to Section
341(f) of the Code (as in effect prior to the repeal under the Jobs and Growth
Tax Reconciliation Act of 2003) or agreed to have Section 341(f)(2) of the Code
(as in effect prior to the repeal under the Jobs and Growth Tax Reconciliation
Act of 2003) apply to any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by any of the NBC Companies; (C)
extended the time within which to file any Tax Return (other than an automatic
extension not requiring the consent of any Taxing Authority), which Tax Return
has since not been filed; or (D) granted to any Person any power of attorney
that is currently in force with respect to any Tax matter (other than any
federal Tax matter) relating to any of the NBC Companies.
(ix) Except for the group of which GE is the NBC Common
Parent that files a consolidated federal income Tax Return, to the Knowledge of
GE, for the fifteen (15) years prior to the date hereof, none of the NBC
Companies is or was a member of any consolidated, combined or affiliated group
of corporations that filed or was required to file a consolidated, combined or
unitary Tax Return.
(x) NBC is not a foreign person within the meaning of
Section 1445 of the Code.
(xi) None of the NBC Companies (A) is a party to, bound
by, or obligated under, any Tax Sharing Agreement (excluding, for the avoidance
of doubt, the GE-NBC Universal Tax Sharing Agreement) pursuant to which it will
have any obligation to make any payments to any Person (other than to another
NBC Company) after the Closing, and (B) to the Knowledge of GE, no NBC Company
is or may be liable for Taxes of any Person (other than any member of the group
that includes the NBC Company Parent) under Treasury Regulation 1.1502-6 (or any
similar provision of state, local or foreign Law giving rise to or imposing
joint and several liability for Taxes), as a member of an affiliated group, a
transferee or successor, or similar principle.
(xii) No NBC Company has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (A) in the two years prior to
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the date of this Agreement or (B) in a distribution which could otherwise
constitute part of a "plan" or a "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.
(xiii) No NBC Company constitutes or owns, directly or
indirectly, an interest in a taxable mortgage pool within the meaning of Section
7701(i) of the Code.
(xiv) None of the NBC Companies has participated in, or
cooperated with, an international boycott within the meaning of Section 999 of
the Code.
(xv) None of the NBC Companies has any "corporate
acquisition indebtedness" within the meaning of Section 279(b) of the Code.
(xvi) None of the NBC Companies will be required to
include any material item of income in, or exclude any material item of
deduction from, taxable income for any taxable period (or portion thereof)
beginning after the Closing Date and as a result of any agreement to or
requirement to make any adjustments pursuant to Section 481(a) of the Code (or
any predecessor provision) or any similar provision of foreign, state or local
Law by reason of a change in accounting methods initiated by any of the NBC
Companies, or has any knowledge that the IRS or any other Taxing Authority has
proposed any such adjustment or change in accounting methods or has any
application pending with any Taxing Authority requesting permission for any
changes in accounting methods that relate to the business or operations of any
of the NBC Companies. There is no taxable income of any of the NBC Companies
that will be reportable in a taxable period beginning after the Closing Date
that is attributable to a transaction (such as an installment sale) that
occurred prior to the Closing.
(xvii) None of the NBC Companies has participated in a
"listed transaction" within the meaning of Treasury Regulations Section
1.6011-4(c)(3)(i)(A).
(xviii) GE has made available to Vivendi true and
correct copies of all material income and franchise Tax Returns of the NBC
Companies (or, in the case of Tax Returns filed for an affiliated group, the
portions of such consolidated, combined or unitary Tax Returns relating to the
NBC Companies) relating to the taxable periods ending after December 31, 2001
and the Tax Returns of the NBC Companies filed as part of the GE federal
consolidated Tax Return for the tax year ending December 31, 2002.
(b) Except as set forth on Schedule 6.16(b), none of the
NBC Companies that are treated as partnerships for U.S. federal income tax
purposes has elected the "traditional method with curative allocations"
described in Section 1.704-3(c) of the Treasury Regulations or the "remedial
allocation method" described in Section 1.704-3(d) of the Treasury Regulations.
(c) None of the shares of any of the NBC Companies is
"section 306 stock," as defined in Section 306(c) of the Code.
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(d) NBC Sub is an existing corporation not formed for the
purpose of entering into this transaction.
(e) Assuming that the Closing were effected in accordance
with the terms hereof, based on current Law and its current understanding of
relevant facts, GE believes that the NBC Companies would be eligible to be
included on GE's consolidated U.S. federal income tax return after the Closing.
(f) For purposes of this Section 6.16, any reference to a
NBC Company shall be deemed to include any predecessor thereto.
Section 6.17 Employee Benefits; Labor Matters.
(a) Schedule 6.17(a)(i) sets forth a list of all material
"employee benefit plans," as defined in Section 3(3) of ERISA (whether or not
subject to ERISA) other than a "multiemployer plan," within the meaning of
Section 3(37) of ERISA, and each material bonus, incentive or deferred
compensation, severance, termination, retention, change of control, stock
option, stock appreciation, stock purchase, phantom stock or other equity-based,
loan, performance or other employee or retiree benefit or compensation plan,
program, arrangement, agreement, policy or understanding, whether written or
unwritten, maintained inside the jurisdiction of the U.S. (A) under which any
NBC Employee or any former employee of the NBC Business (including any
beneficiaries and dependents thereof) is or may become eligible to participate
or derive a benefit and that is or has been maintained, established or
contributed to by GE, any NBC Company or any trade or business, whether or not
incorporated, which, together with any NBC Company, is or would have been at any
date of determination occurring within the preceding six years, treated as a
single employer under Section 414 of the Code (such other trades and businesses,
the "NBC RELATED PARTIES"), or (B) under which any NBC Company may have any
material outstanding liability or obligation, but excluding such plans
applicable to any NBC Employee based solely on service with an NBC Related Party
other than an NBC Company ("NBC U.S. BENEFIT PLANS"). Except as set forth in
Schedule 6.17(a)(ii), none of the NBC Companies sponsors any material "employee
benefit plans" (within the meaning of Section 3(3) of ERISA). With respect to
each NBC U.S. Benefit Plan, a copy of each of the following documents (if
applicable) has been provided or made available to Vivendi: (i) the most recent
plan document or agreement and all amendments thereto; (ii) the most recent
summary plan description and all related summaries of material modifications;
and (iii) the most recent trust document or any third party funding vehicle
(including insurance) and all amendments thereto, the two most recent Forms 5500
required to have been filed with the IRS and all schedules thereto, and the most
recent IRS determination letter. Except as set forth in Schedule 6.17(a)(iii),
none of the NBC U.S. Benefit Plans is, or in the last six years has been,
subject to Section 4063, 4064 or 4202 of ERISA. Except as set forth in Schedule
6.17(a)(iv), none of the NBC Companies sponsors a NBC U.S. Benefit Plan subject
to Title IV of ERISA, Section 412 of the Code or Section 302 of ERISA. All
contributions required to have been made by the applicable NBC Company under any
NBC U.S. Benefit Plan or any applicable Law to any trusts established thereunder
or in connection therewith have been made in all material respects by the due
date therefor (including any extensions). The NBC U.S. Benefit Plans have been
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administered in accordance with their terms and are in compliance with
applicable Laws, in each case in all material respects.
(b) Schedule 6.17(b)(i) sets forth a list of all material
"employee benefit plans," as defined in Section 3(3) of ERISA (whether or not
subject to ERISA), and each material bonus, incentive or deferred compensation,
severance, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based, loan,
performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding, whether written or unwritten,
maintained outside the jurisdiction of the United States (A) under which any NBC
Employee or former employee of the NBC Business (including any beneficiaries and
dependents thereof) is or may become eligible to participate or derive a benefit
and that is or has been maintained, established or contributed to by any NBC
Company or any of their Affiliates, or (B) under which any NBC Company may have
any material outstanding liability or obligation, other than any such plans or
arrangements required to be maintained pursuant to applicable Law (collectively,
"NBC NON -U.S. BENEFIT PLANS"). With respect to each NBC Non-U.S. Benefit Plan,
a copy of each of the following documents (if applicable) has been provided or
made available to Vivendi: (i) the most recent plan document or agreement and
all amendments thereto; (ii) the most recent summary of such plan (and all
amendments thereto); and (iii) the most recent trust document or any third party
funding vehicle (including insurance) and all amendments thereto, the two most
recent annual reports required to have been filed with a Governmental Authority
and all schedules thereto, and the most recent determination letter issued by a
Governmental Authority as to the tax-qualified status of any such plan if any.
Except as set forth in Schedule 6.17(b)(ii), all contributions required to have
been made by the applicable NBC Company under any NBC Non-U.S. Benefit Plan or
any applicable Law to any trusts established thereunder or in connection
therewith have been made in all material respects by the due date therefor
(including any extensions). Except as set forth in Schedule 6.17(b)(iii), the
NBC Non-U.S. Benefit Plans have been administered in accordance with their terms
and are in compliance with applicable Laws, in each case in all material
respects.
(c) Schedule 6.17(c) sets forth a list of each collective
bargaining agreement with any labor union, or other agreement with any works
council or association representing any NBC Employee. Since January 1, 2002,
there have been no strikes, work stoppages, slowdowns, lockouts or grievances or
other labor disputes pending or to the Knowledge of GE threatened against or
involving any NBC Company, except as would not, individually or in the
aggregate, reasonably be expected to have a NBC Material Adverse Effect. The NBC
Companies are and have been in compliance with all Laws relating to employment
practices, terms and conditions of employment (including termination of
employment), wages, hours of work and occupational safety and health, and worker
classification, and are not engaged in any unfair labor practices, except for
such noncompliance that would not, individually or in the aggregate, reasonably
be expected to have a NBC Material Adverse Effect. No NBC Company has received
notice of the intent of any Governmental Authority responsible for the
enforcement of any labor or employment Laws to conduct an investigation with
respect to or relating to NBC Employees, former employees of, or consultants to,
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the NBC Business and, to the Knowledge of GE, no such investigation is
threatened or in progress which would, in the aggregate, reasonably be expected
to have a NBC Material Adverse Effect.
(d) There are no NBC Employee Benefit Plans currently in
effect which provide for the payment of any amount (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement (either alone or in combination with any other event or
events) that would give rise to a payment that is nondeductible by reason of
Section 280G or would be subject to withholding under Section 4999 of the Code.
Schedule 6.17(d) sets forth a list of all NBC Employee Benefit Plans pursuant to
which any amounts may become vested or payable as a result of the consummation
of the transactions contemplated by this Agreement (either alone or in
combination with any other event or events).
(e) Except as specifically contemplated by this Agreement,
as of the date hereof, none of the NBC Companies has communicated to any NBC
Employee or former employees of the NBC Business any intention or commitment to
materially modify any NBC Employee Benefit Plan or to establish or implement any
other employee or retiree benefit or compensation plan or arrangement (other
than as required by applicable Law or any collective bargaining agreement).
(f) Each NBC U.S. Benefit Plan intended to be qualified
under Section 401(a) of the Code, and the trust (if any) forming a part thereof,
has received a favorable determination letter from the IRS as to its
qualification under the Code and to the effect that each such trust is exempt
from taxation under Section 501(a) of the Code, and, to the Knowledge of GE,
nothing has occurred since the date of such determination letter that could
reasonably be expected to adversely affect such qualification or tax-exempt
status; provided that, if any such NBC U.S. Benefit Plan has not received a
favorable determination letter, then, to the Knowledge of GE, such plan and any
trust forming a part thereof is qualified under Sections 401(a) and 501(a) of
the Code.
(g) No NBC Company has incurred (either directly or
indirectly, including as a result of an indemnification obligation) any material
liability under or pursuant to Title I or IV of ERISA or the penalty, excise Tax
or joint and several liability provisions of the Code relating to employee
benefit plans and, to the Knowledge of GE, no event, transaction or condition
has occurred or exists that could reasonably be expected to result in any such
material liability to any NBC Company or, following the Closing, Vivendi or any
of its Affiliates.
(h) There are no pending or threatened claims against any
NBC Employee Benefit Plans, by any NBC Employee or former employees of the NBC
Business or otherwise involving any such NBC Employee Benefit Plans or the
assets of any NBC Employee Benefit Plans (other than routine claims for
benefits, all of which have been fully reserved for on the regularly prepared
balance sheets of the NBC Companies), except as would not, individually or in
the aggregate, reasonably be expected to have a NBC Material Adverse Effect.
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(i) Schedule 6.17(i) lists each multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) to which any NBC Company is, or within
the preceding two years was, obligated to contribute (a "NBC MULTIEMPLOYER
PLAN"), and there is no potential liability under any other multiemployer plan
to which any NBC Company is, or within the preceding six years was, obligated to
contribute. No condition exists and no event has occurred with respect to any
NBC Multiemployer Plan that presents a material risk of a complete or partial
withdrawal of a NBC Company under subtitle E of Title IV of ERISA and none of
the NBC Companies has, within the preceding six years, withdrawn in a complete
or partial withdrawal from any NBC Multiemployer Plan or incurred any contingent
liability under Section 4204 of ERISA. To the Knowledge of GE, no NBC
Multiemployer Plan is in "reorganization" or "insolvent."
Section 6.18 Insurance. All material insurance policies
maintained by or for the benefit of any NBC Company, including all existing
errors and omission insurance policies, are in full force and effect. The NBC
Companies have complied in all material respects with the terms and provisions
of such policies. The insurance coverage provided by such policies is adequate
and suitable for the NBC Business in all material respects having regard to
insurance customarily carried by comparable companies of established reputation
similarly situated and carrying on the same or similar business.
Section 6.19 Affiliate Transactions. Schedule 6.19 contains
a complete list, as of the date hereof, of all Contracts entered into other than
on an arm's-length basis, to or by which any NBC Company, on the one hand, and
GE or any of its Affiliates (other than any NBC Company), on the other hand, are
currently a party or otherwise bound or affected and which are intended to be in
effect following the Closing (the "NBC AFFILIATE TRANSACTIONS").
Section 6.20 Assets.
(a) The NBC Companies have good and valid title to, or in
the case of leased property have good and valid leasehold interests in or
license to, or reasonable equivalents thereof outside of the U.S. (subject to
the terms of the relevant lease or license), all of the properties and assets
(other than (i) NBC Owned Real Properties and all real property subject to the
NBC Real Property Leases, which are addressed in Section 6.15, and (ii) the NBC
Intellectual Property rights, which are addressed in Section 6.14), used or held
for use in connection with, necessary for the conduct of, or otherwise material
to, the NBC Business (the "NBC BUSINESS ASSETS"), in each case free and clear of
any Liens, except Permitted Encumbrances.
(b) The NBC Companies have maintained all tangible NBC
Business Assets that are material to the NBC Business in good working order
subject only to ordinary wear and tear. GE has no Knowledge of any facts or
circumstances that would require a material write down of any NBC Business
Assets under GAAP.
Section 6.21 NBC Agreements. Except as set forth in
Schedule 6.21, with respect to the CNBC, MSNBC and Bravo cable services in the
NBC Business, (a) no NBC Company has received any written notice of any
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violation or breach of any MFN included in any Affiliation Agreement or
television broadcasting affiliate Contract and (b) GE has no Knowledge of any
assertion, allegation or claim by any Person that any NBC Company currently is,
or in the past has been, in breach or violation in any material respect of any
MFN included in any Affiliation Agreement or television broadcasting affiliate
Contract.
Section 6.22 Foreign Distribution Agreements. NBC has made
available to Vivendi complete copies of each of the Foreign Distribution
Agreements, together with any amendments thereto, and there are no amendments or
supplements relating to the Foreign Distribution Agreements that are not
described in the definition of each such term as set forth in this Agreement.
Neither NBC nor any of its Affiliates is party to any other Contract (other than
the Foreign Distribution Agreements) pursuant to which it licenses any
television rights in its Programs on an output basis (i.e., which grants
television exhibition rights to Programs that will be available for such
exhibition during a specified multiyear period of time and which Programs are
not specifically identified by title).
Section 6.23 Brokers. No broker, investment banker,
financial advisor or other Person, other than Credit Suisse First Boston LLC and
AGM Partners, LLC, the fees and expenses of which will be paid by GE, is or
shall be entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement or the Ancillary Agreements as a result of arrangements made by
or on behalf of GE or any of the NBC Companies or any of their respective
Affiliates.
Section 6.24 No Other Representations or Warranties;
Schedules; No Implied Representations. Except for the representations and
warranties contained in this Agreement, none of the GE Companies or any other
Person makes any other representation or warranty herein, express or implied,
with respect to the GE Companies, the NBC Business, the NBC Companies or the
transactions contemplated by this Agreement or the Ancillary Agreements, and GE
and NBC Holding disclaim all other representations or warranties. The disclosure
of any matter or item in any Schedule shall not be deemed to constitute an
acknowledgment that any such matter is required to be disclosed or is material
to the representations and warranties set forth in this Agreement or that such
matter would, individually or in the aggregate, reasonably be expected to have a
NBC Material Adverse Effect.
ARTICLE 7
COVENANTS
Section 7.1 Access to Information.
(a) From and after the date hereof and pending Closing,
upon reasonable advance notice, Vivendi shall, and shall cause the Company and
the BV Entities to, permit GE, NBC and their respective representatives to have
reasonable access, during regular business hours, to the properties, assets,
86
employees, books and records of any of the Target Companies relating to the
Company Business and the Target Companies, including for purposes of integration
planning, and shall furnish, or cause to be furnished, to GE or NBC such
financial, tax, accounting and operating data and other reasonably available
information with respect to the Company Business as GE or NBC shall from time to
time reasonably request; provided, however, that no such access shall
unreasonably interfere with any Target Company's operation of the Company
Business.
(b) From and after the date hereof and pending Closing,
upon reasonable advance notice, GE shall, and shall cause NBC to, permit Vivendi
and its representatives to have reasonable access, during regular business
hours, to the properties, assets, employees, books and records of any of the NBC
Companies relating to the NBC Business and the NBC Companies, and shall furnish,
or cause to be furnished, to Vivendi such financial, tax, accounting and
operating data and other reasonably available information with respect to the
NBC Business as Vivendi shall from time to time reasonably request; provided,
however, that no such access shall unreasonably interfere with any NBC Company's
operation of the NBC Business.
(c) For a period of one year from the Closing Date, upon
reasonable advance notice, Vivendi and its Affiliates and their respective
representatives shall have reasonable access, during regular business hours, to
the assets, employees, books and records of NBC or any of its controlled
Affiliates for the purpose of examining the assets and liabilities of the NBC
Companies as of the Closing Date (the "POST-CLOSING INSPECTION PERIOD"). On the
twelfth (12th) month anniversary of the Closing Date, NBC shall deliver to
Vivendi a certificate signed by an authorized officer of NBC certifying that to
the knowledge of such authorized officer, none of the representations or
warranties relating to the NBC Companies contained in this Agreement have been
breached in a manner which would reasonably be expected to allow Vivendi to seek
indemnification from GE pursuant to Article 10 or 11.
(d) Notwithstanding anything to the contrary contained
herein, prior to the Closing, without the prior written consent of Vivendi,
which will not be unreasonably withheld or delayed, none of the GE Companies
shall contact any suppliers to, or customers of, the Company Business other than
contacts with such Persons in the ordinary course of business relating to
commercial matters not related to the transactions contemplated by this
Agreement.
(e) All information received by Vivendi that is given by or
on behalf of GE or NBC with respect to the NBC Business and all information
received by GE or NBC that is given by or on behalf of Vivendi with respect to
the Company Business in connection with this Agreement, the Ancillary Agreements
and the transactions contemplated hereby and thereby will be held by the
receiving party and its Affiliates, agents and representatives as "Business
Information," as defined in, and pursuant to the terms of, the Confidentiality
Agreement.
(f) After the date of this Agreement and prior to the
Closing, each of NBC and Vivendi shall deliver to the other complete copies of
such monthly financial statements as are prepared by management of the NBC
87
Companies and the Target Companies, respectively, and provided to senior
management of NBC and the Company promptly upon such financial statements being
made available to such senior management. Each of NBC and Vivendi shall deliver
to the other monthly cash tracking reports that set forth in reasonable detail
the cash position of the NBC Companies and the Target Companies, respectively.
Section 7.2 Conduct of the Business.
(a) After the date of this Agreement, and prior to the
Closing, except (i) as expressly contemplated by this Agreement or any of the
Ancillary Agreements, (ii) as required by applicable Law or (iii) with the prior
written consent of GE (which consent shall not be unreasonably withheld and
which consent or non-consent shall be given in a timely manner taking into
account the time considerations of the request), Vivendi shall cause the Target
Companies to conduct the Company Business in the ordinary course of business,
preserve the Company Business intact, and endeavor to keep available the
services of the current key officers and employees of the Company Business and
endeavor to maintain the existing relations in all material respects with
customers, authors, producers, directors, actors, suppliers, advertisers,
distributors, business partners and others having business dealings with the
Target Companies.
(b) Prior to the Closing, except (i) as expressly
contemplated by this Agreement or any of the Ancillary Agreements, (ii) as
required by applicable Law or (iii) with the prior written consent of Vivendi
(which consent shall not be unreasonably withheld and which consent or
non-consent shall be given in a timely manner taking into account the time
considerations of the request), NBC shall, and GE and NBC shall cause the other
NBC Companies to, conduct the NBC Business in the ordinary course of business,
preserve the NBC Business intact, and endeavor to keep available the services of
the current key officers and employees of the NBC Business and endeavor to
maintain the existing relations in all material respects with customers,
authors, producers, directors, actors, suppliers, advertisers, distributors,
business partners and others having business dealings with the NBC Companies.
(c) Notwithstanding Section 7.2(a) above, after the date of
this Agreement and prior to the Closing, except (i) as set forth on Schedule
7.2(c), (ii) as expressly contemplated by this Agreement or any of the Ancillary
Agreements, (iii) as required by applicable Law or (iv) with the prior written
consent of GE (which consent shall not be unreasonably withheld and which
consent or non-consent shall be given in a timely manner taking into account the
time considerations of the request), Vivendi shall cause the Target Companies
not to:
(i) acquire by merging or consolidating with, or by
purchasing all or substantially all of the assets of, or by any other manner,
any business, or any corporation, partnership, association, or other business
organization or division thereof, in each case, for consideration (including any
assumed debt for borrowed money), individually in excess of $10,000,000 or, in
the aggregate, in excess of $50,000,000, provided such aggregate cap of
$50,000,000 shall not prohibit or restrict any Target Company's ability to enter
88
into any Library Underlying Agreement or to acquire any Library Literary
Properties, in each case in the ordinary course of business and for
consideration on a per transaction basis of $10,000,000 or less;
(ii) (A) transfer, sell, dispose of, lease, license,
mortgage, pledge or encumber or otherwise subject to any Lien (other than
Permitted Encumbrances) any of the Company Business Assets, Company Owned Real
Properties or Company Intellectual Property, other than in the ordinary course
of business, for consideration, individually in excess of $20,000,000 or, in the
aggregate, in excess of $50,000,000, provided that this Section 7.2(c)(ii) shall
not prohibit any Exploitation Agreement entered into in the ordinary course of
business and involving payments to a Target Company, or (B) other than in the
ordinary course of business, transfer or grant or dispose of any rights to any
material Company Intellectual Property;
(iii) (A) create, incur, guarantee or assume any
indebtedness for borrowed money other than (1) in the ordinary course of
business as permitted under the Credit Agreement or the Film Securitization
Facility Agreement or (2) with respect to VUE and its controlled Affiliates, for
the purpose of the Defeasance or for the purposes of acquiring the Class A
Preferred Interests, or (B) sell any debt securities or prepay any indebtedness
for borrowed money other than as required under the applicable Contracts
governing such debt;
(iv) make any material change in the accounting
practices, policies or principles applied in the preparation of the Company
Financial Statements, unless such change is required by GAAP;
(v) amend the Organizational Documents of any Company
Material Subsidiary;
(vi) change any election concerning Taxes or Tax
Returns, change an annual accounting period, change any accounting method, file
any amended Tax Return, enter into any closing agreement with respect to Taxes,
settle any Tax claim or assessment or surrender any right to claim a refund of
Taxes or obtain or enter into any Tax ruling, in each case, if taking such
action would affect the Taxes of any Target Company after the Closing Date;
(vii) issue or sell any shares of any equity securities
of any Target Company, or any securities convertible into or exchangeable for
any such equity securities, or issue, sell, grant, or enter into any
subscriptions, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind, contingently or
otherwise, to purchase or otherwise acquire any such equity securities, or any
securities convertible into or exchangeable for such equity securities, or
effect any recapitalization, reclassification, stock split or like change in the
capitalization of any Target Company other than to any Target Companies in
connection with internal reorganizations;
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(viii) declare, set aside, make or pay any dividend or
other distribution in respect of its capital stock or otherwise purchase or
redeem, directly or indirectly, any equity securities, or make any loan to, or
otherwise transfer any cash to any member of the Seller Group (other than any
Target Company), except for (A) payments made in accordance with the Company
Cash Pooling Arrangements and (B) payments made to any member of the Seller
Group under commercial arrangements which terminate on or prior to the Closing
or which continue after the Closing pursuant to Section 7.31 or which may be
terminated at will by the relevant Target Companies;
(ix) forgive, cancel, compromise, waive, release,
assign, sell, transfer or relinquish any debts, rights, or receivables except
for debts, rights and receivables against any Person (other than a member of the
Seller Group (other than the Target Companies)) forgiven, cancelled,
compromised, waived, released, assigned, sold, transferred or relinquished in
the ordinary course of business;
(x) modify, amend, renew or terminate any Company
Material Contract if such modification, amendment or termination would
reasonably be expected to involve the payment by any Target Company of
additional cash or non-cash consideration under such Company Material Contract
of more than $20,000,000 or could reasonably reduce the cash or non-cash
consideration payable to the Target Companies party to such Company Material
Contract by more than $20,000,000;
(xi) enter into any Contract that would constitute a
Company Material Contract other than (A) Exploitation Agreements (not including
Output Agreements) in each case entered into in the ordinary course of business
and involving aggregate consideration payable by a Target Company not in excess
of $20,000,000 or involving payments to the Company, (B) Output Agreements
entered into in the ordinary course of business and in each case involving
aggregate consideration not in excess of $50,000,000, or (C) subject to clauses
(xv)-(xviii), Talent Contracts entered into in the ordinary course of business
and in each case (x) not involving the payment of non-contingent fixed sums in
excess of $20,000,000 (or such higher amount consistent with such Talent's
current quote), or (y) which do not constitute agreements to pay a pre-break
gross participation (as commonly understood in the U.S. entertainment industry)
other than to Talent whose current quote includes such provision;
(xii) enter into any Affiliation Agreement involving
aggregate consideration in excess of $20,000,000 or take any action with respect
to any such Affiliation Agreement that would have a material negative impact on
the Target Companies' cable and satellite distribution business;
(xiii) enter into, renew or extend the term of any
leases or subleases (other than pursuant to Section 7.33) or other Contracts
with respect to real property (other than (x) Contracts with lessors in the
ordinary course of business for an aggregate annual fixed rental payment to be
made on or after the Closing Date not to exceed $2,000,000 and (y) Contracts
with respect to the rental or lease of real property for the purpose of motion
picture production (on motion pictures for which production has not concluded),
the costs of which are included in the budgets for such motion pictures), or
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accept any payments under any Company Real Property Lease more than thirty days
in advance or purchase or exercise any option for the purchase or lease of any
real property and provided that such lease, sublease or Contract does not result
in the imposition or assumption of any Environmental Liabilities;
(xiv) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation or effect any recapitalization,
reclassification, restructuring or other reorganization of any Target Company
other than in connection with internal reorganizations that do not have a
material adverse effect on the Target Companies;
(xv) recognize any union, negotiate, enter into or amend
any collective bargaining agreement or any agreement with any works council,
oppose any union organizing campaign, participate in any union decertification
campaign, settle any material grievances or unfair labor practice charges, file
any unfair labor practice charges, or otherwise take any action similar to the
foregoing other than in the ordinary course of business or as required by Law;
(xvi) grant any increase in the compensation payable to
any of Target Companies' officers, directors, employees, agents or consultants
(other than increases in the ordinary course of business that do not exceed 5%
on an annualized basis in the aggregate or as required pursuant to the terms of
existing agreements);
(xvii) (i) enter into, renew or amend any employment,
severance, consulting, termination or other agreement (other than (A) employment
or similar agreements with a term no longer than two years or annual base salary
and target bonus opportunity less than $350,000 (or the foreign currency
equivalent thereof) or (B) in the case of any amendment, an amendment that is
immaterial) with, or make any loan or advance (except with respect to the
advance or reimbursement of employee expenses in the ordinary course of
business) to any of the officers, directors, employees, agents or consultants of
the Company Business, or (ii) make any change in its existing borrowing or
lending arrangements for or on behalf of any of such persons pursuant to an
employee benefit plan or otherwise, except as may be required by Law or as
permitted by Section 7.2(c)(xviii);
(xviii) except to the extent unconditionally obligated
to do so on the date hereof pursuant to the terms of the existing agreements,
plans or otherwise, (i) in any material respect, adopt or amend, or pay, agree
to pay, arrange for payment of, make any accrual with respect to, grant, issue,
or accelerate any awards, benefits (including retirement allowance or unused
benefits) or other payments pursuant to, any pension, profit-sharing, bonus,
extra compensation, incentive, deferred compensation, stock purchase, stock
option, stock appreciation right, group insurance, severance pay, vacation,
retirement or other employee benefit plan, agreement, policy, or arrangement, or
any employment or consultant agreement with or for the benefit of any director,
officer, employee, agent or consultant, whether past or present, or (ii) amend
in any material respect any such existing plan, agreement or arrangement in a
manner inconsistent with the foregoing; provided, however, that nothing in this
Section 7.2(c)(xviii) shall limit the ability of Vivendi and its Affiliates to
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take actions, or to cause any of the Target Companies to take actions, with
respect to Company Employee Benefit Plans to the extent such actions relate
generally to the employees of Vivendi or any of its Affiliates that participate
in such plans;
(xix) approve, or fail to exercise its rights to
prevent, any extension of the Showtime Management Agreement beyond December 31,
2005;
(xx) prepay or delay payment on any material accounts
payable, or accelerate or delay, or permit the acceleration or delay of, payment
on any material accounts receivable, in each case other than in the ordinary
course of business;
(xxi) settle any Legal Proceeding (other than the RTL
Litigation) on terms reasonably expected to result in a payment by a Target
Company in excess of $5,000,000 in excess of the amount reserved on the Company
Financial Statements with respect thereto;
(xxii) enter into (A) any Contract (other than subleases
pursuant to Section 7.33) with Vivendi or any of its Affiliates (other than
another Target Company) that either (I) is not on an arms'-length basis or (II)
is not terminable at will and without prior notice or (B) foreign exchange
hedging Contracts that will become subject to Section 7.30 and that involve
notional amounts in excess of $25,000,000;
(xxiii) amend, supplement or modify any Output Agreement
or enter into any similar agreement if any content produced, co-produced,
presented by, distributed by, or otherwise acquired by any NBC Company will be
covered by, or included in any grant of rights made in any such Output
Agreements or other agreement; or
(xxiv) agree or otherwise commit to take any of the
actions described in the foregoing subsections (i) through (xxiii).
(d) Notwithstanding Section 7.2(b) above, after the date of
this Agreement and prior to the Closing, except (i) as set forth on Schedule
7.2(d), (ii) as expressly contemplated by this Agreement or any of the Ancillary
Agreements, (iii) as required by applicable Law or (iv) with the prior written
consent of Vivendi (which consent shall not be unreasonably withheld and which
consent or non-consent shall be given in a timely manner taking into account the
time considerations of the request), NBC shall not, and GE and NBC shall cause
the other NBC Companies not to:
(i) acquire by merging or consolidating with, or by
purchasing all or substantially all of the assets of, or by any other manner,
any business or any corporation, partnership, association, or other business
organization or division thereof, in each case, for consideration (including any
assumed debt for borrowed money), individually, in excess of $10,000,000 or, in
the aggregate, in excess of $50,000,000 provided such aggregate cap of
$50,000,000 shall not prohibit or restrict any NBC Company's ability to enter
into any Library Underlying Agreement, to acquire any Library Literary
Properties or to acquire any Telemundo broadcast television stations in the
ordinary course of business;
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(ii) transfer, sell, dispose of, lease, license,
mortgage, pledge or encumber or otherwise subject to any Lien (other than
Permitted Encumbrances) any of the NBC Business Assets, other than in the
ordinary course of business, for consideration, individually in excess of
$20,000,000 or, in the aggregate, in excess of $50,000,000 provided this Section
7.2(d)(ii) shall not prohibit any Exploitation Agreement entered into in the
ordinary course of business and involving payments to a NBC Company or, other
than in the ordinary course of business transfer or grant or dispose of any
rights to any material Intellectual Property owned by the NBC Companies;
(iii) (A) create, incur, guarantee or assume any
indebtedness for borrowed money other than intercompany debt between NBC
Companies and other than in the ordinary course of business, or (B) sell any
debt securities or prepay any indebtedness for borrowed money other than as
required under the applicable Contracts governing such indebtedness;
(iv) make any material change in the accounting policies
applied in the preparation of the NBC Financial Statements, unless such change
is required by GAAP;
(v) amend the Organizational Documents of any NBC
Company;
(vi) change any election concerning Taxes or Tax
Returns, change an annual accounting period, change any accounting method, file
any amended Tax Return, enter into any closing agreement with respect to Taxes,
settle any Tax claim or assessment or surrender any right to claim a refund of
Taxes or obtain or enter into any Tax ruling, in each case, if taking such
action would have a materially adverse effect on the Taxes of the NBC Companies,
taken as a whole, after the Closing Date;
(vii) issue or sell any shares of any equity securities
of an NBC Company, or any securities convertible into or exchangeable for any
such equity securities, or issue, sell, grant, or enter into any subscriptions,
options, warrants, conversion or other rights, agreements, commitments,
arrangements or understandings of any kind, contingently or otherwise, to
purchase or otherwise acquire any such equity securities, or any securities
convertible into or exchangeable for such equity securities, or effect any
recapitalization, reclassification, stock split or like change in the
capitalization of any NBC Company other than to any NBC Target Companies in
connection with internal reorganizations;
(viii) transfer any property to NBC Sub within six (6)
months of the Closing Date, other than (A) in the ordinary course of its
business, (B) in connection with a transaction unrelated to this Agreement or
(C) as part of a transaction contemplated by this Agreement;
(ix) adopt a plan of complete or partial liquidation,
dissolution, merger or consolidation, or effect any recapitalization,
reclassification, restructuring, reorganization, stock split or like change in
the capitalization of any NBC Company other than in connection with internal
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reorganizations that do not have a material adverse effect on the NBC Companies;
(x) declare, set aside, make or pay any dividend or
other distribution in respect of its capital stock or otherwise purchase or
redeem, directly or indirectly, any equity securities or make any loan to, or
otherwise transfer any cash to GE or any Affiliate of GE (other than any NBC
Company), except for (A) payments made in accordance with the NBC Cash Pooling
Arrangements and (B) payments made to GE or any Affiliates of GE under
commercial arrangements which terminate on or prior to the Closing or may be
terminated at will by the relevant NBC Companies;
(xi) amend, supplement or modify any Foreign
Distribution Agreement or enter into any similar agreement to provide, or enter
into any similar agreement that provides, that any content produced,
co-produced, presented by, distributed by, or otherwise acquired by any Target
Company will be covered by, or included in any grant of rights made in, such
Foreign Distribution Agreement or other agreement; or
(xii) agree or otherwise commit to take any of the
actions described in the foregoing subsections (i) through (xi).
Section 7.3 Reasonable Best Efforts; FCC; Antitrust.
(a) Subject to the terms and conditions herein provided,
each of the parties agree to use all reasonable best efforts to take, or cause
to be taken, all action, and to do, or cause to be done as promptly as
practicable, all things necessary, proper and advisable under applicable Laws to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and the Ancillary Agreements. Subject to
appropriate confidentiality protections, each party hereto shall furnish to the
other parties such necessary information and reasonable assistance as such other
party may reasonably request in connection with the foregoing.
(b) Each of the parties shall cooperate with one another
and use all reasonable best efforts to prepare all necessary documentation
(including furnishing all information required under the Communication Act or
any other communications or broadcast Laws, the HSR Act, the EU Merger Control
Regulation and Competition Laws of any other jurisdiction), to effect promptly
all necessary filings and to obtain all consents, waivers and approvals
necessary to consummate the transactions contemplated by this Agreement. Each of
the parties shall provide the other parties with copies of all filings made by
such party with any Governmental Authority and, upon request, any other
information supplied by such party to a Governmental Authority in connection
with this Agreement and the transactions contemplated hereby.
(c) (i) Without limiting the generality of the undertakings
pursuant to this Section 7.3, the parties hereto shall provide or cause to be
provided as promptly as practicable to Governmental Authorities with regulatory
jurisdiction over enforcement of any applicable Competition Laws (a
"GOVERNMENTAL ANTITRUST ENTITY") information and documents requested by any
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Governmental Antitrust Entity or necessary, proper or advisable to permit
consummation of the transactions contemplated by this Agreement, including
filing any notification and report form and related material required under the
HSR Act and the EU Merger Control Regulation as promptly as practicable
following the date of this Agreement and thereafter to respond promptly to any
request for additional information or documentary material that may be made
under the EU Merger Control Regulation and the HSR Act; (ii) GE shall, or shall
cause the other GE Companies to use their reasonable best efforts to take such
actions as are necessary or reasonably advisable to obtain approval of
consummation of the transactions contemplated by this Agreement by any
Governmental Antitrust Entity. Notwithstanding anything in this Agreement to the
contrary, in no event will GE or any Affiliate of GE be obligated to propose or
agree to accept any undertaking or condition, to enter into any consent decree,
to make any divestiture, to accept any operational restriction, or take any
other action that, in the reasonable judgment of GE, could be expected to (1)
limit the right of GE or any Affiliate of GE to own or operate all or any
portion of the Company Business or of GE or any Affiliate of GE to own or
operate any portion of their existing businesses or assets, (2) require GE or
any Affiliate of GE to license any of their Intellectual Property or to modify
any existing license of their Intellectual Property. Each party hereto shall
provide to the other parties copies of all correspondence between it (or its
advisors) and any Governmental Antitrust Entity relating to the transactions
contemplated by this Agreement or any of the matters described in this Section
7.3, and, to the extent reasonably practicable, all telephone calls and meetings
with a Governmental Antitrust Entity regarding the transaction contemplated by
this Agreement or any of the matters described in this Section 7.3 shall include
representatives of USH3, Vivendi, GE and NBC.
(d) Without limiting the generality of the undertakings
pursuant to this Section 7.3, GE shall, or shall cause one of the other GE
Companies to, (i) prepare and file, or cause to be prepared and filed, with the
FCC, any necessary applications for the approval of the transactions
contemplated by this Agreement and the Ancillary Agreements as promptly as
practicable, but in no event later than twenty (20) Business Days after the date
hereof, and thereafter use its reasonable best efforts to respond promptly to
requests for additional information or documentary material and (ii) use its
reasonable best efforts to take, or cause to be taken, all actions reasonably
necessary, proper or advisable to avoid or eliminate impediments to, and to
obtain, the necessary approvals of the FCC to complete the transactions
contemplated by this Agreement. GE shall provide Vivendi with copies of all
correspondence between it (or its advisors) and the FCC relating to the
transactions contemplated by this Agreement.
Section 7.4 Publicity. None of the parties shall issue any
press release or make any public announcement concerning this Agreement or the
Ancillary Agreements or the transactions contemplated hereby or thereby without
obtaining the prior written approval of the other parties, which approval shall
not be unreasonably withheld or delayed, unless a party determines, based upon
advice of counsel, that disclosure is otherwise required by applicable Law or
the rules or regulations of any stock exchange upon which the securities of such
party is listed, provided that to the extent any such release or disclosure is
so required, prior to making such release or disclosure, the party intending to
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make such release or disclosure shall use its reasonable best efforts consistent
with such applicable Law or stock exchange rules or regulations to consult with
the other parties with respect to the text thereof.
Section 7.5 Xxxxxx Put/Call. The parties agree that any
purchase of the Common Interests of Xxxxxx and his assignees ("XXXXXX COMMON
INTERESTS") pursuant to the Xxxxxx Put or the Xxxxxx Call under the VUE
Partnership Agreement or the VUE Transaction Agreement shall be effected through
a purchase by the Company using funds or Vivendi Ordinary Shares (as defined in
the VUE Partnership Agreement) provided to the Company as a contribution to
capital for no additional consideration by Vivendi, whether before or after the
Closing. In the event that Xxxxxx exercises the Xxxxxx Put prior to the Closing,
Vivendi shall cause the Company to consummate the purchase of the Xxxxxx Common
Interests as promptly as practicable. In the event that Xxxxxx exercises the
Xxxxxx Put after the Closing, NBC shall notify Vivendi, and Vivendi and NBC
shall cooperate to effect the consummation of the purchase of the Xxxxxx Common
Interests as promptly as practicable following receipt of notice of such
exercise. In the event that the Xxxxxx Put has not been exercised as of May 7,
2004, Vivendi, if the Closing has not occurred, shall cause, or NBC, if the
Closing has occurred, may cause, the Company to exercise the Xxxxxx Call. In the
event that the Xxxxxx Common Interests are purchased by the Company after the
Closing, Vivendi will deliver to the Company the purchase price for the Common
Interests at the closing for the purchase of the Xxxxxx Common Interests.
Section 7.6 Stock Options and Equity Awards. On or prior to
the Closing Date, Vivendi or its Affiliates shall take all actions necessary to
cause all equity awards granted to Company Employees under the Vivendi Stock
Option Plan, the 1997 and 2000 USA Networks Stock and Annual Incentive Plans,
and the 1992 and 1996 The Seagram Company Ltd. Incentive Plans (collectively,
the "VIVENDI EQUITY PLANS") to be fully vested as of the Closing Date, and such
equity awards shall remain exercisable in accordance with the terms of the
Vivendi Equity Plans and any agreements thereunder; except that for purposes of
the period of exercisability of such awards, a Company Employee shall not be
deemed to have terminated employment from Vivendi and its Affiliates merely as a
result of the transactions contemplated by this Agreement.
Section 7.7 Employee Matters.
(a) During the one year period following the Closing Date
or such longer period of time required by applicable Law, NBC shall provide, or
cause to be provided, to each Company Employee, for as long as such Company
Employee remains employed with the Target Companies or their Affiliates or their
respective successor(s) after the Closing Date, (i) the same level of
compensation consisting of salary, wages and opportunities for commissions and
bonuses and (ii) employee benefits that are substantially comparable in the
aggregate to those provided to Company Employees immediately prior to the
Closing, and (iii) a location of employment that is within 50 miles of such
Company Employee's location of employment immediately prior to Closing or, if
outside such 50 mile area, that does not increase the distance of such
employee's commute; provided that NBC shall provide, or cause to be provided, to
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each Company Employee whose employment with the Company or one of its Affiliates
is terminated within one year following the Closing severance benefits no less
favorable than those that would be provided under the applicable severance plan
or arrangement covering such Company Employee immediately prior to the Closing
Date; provided, further, that no plans or arrangements of the Target Companies
or their Affiliates providing for the issuance of, shares of capital stock,
warrants, options or other rights in respect of any shares of capital stock of
any entity or any securities convertible or exchangeable into such shares
pursuant to any such plans or arrangements shall be taken into account for
purposes of determining whether compensation and employee benefits are
substantially comparable in the aggregate, nor shall NBC or any of its
Affiliates have any obligation to issue, or adopt any plans or arrangements
providing for the issuance of shares of capital stock, warrants, options or
other rights in respect of any shares of capital stock of any entity or any
securities convertible or exchangeable into such shares pursuant to any such
plans or arrangements; and provided, further, that no retention or incentive
arrangement set forth on Schedule 7.7(a), which NBC agrees to honor in
accordance with Section 7.7(c), shall be taken into account for purposes of
determining whether employee benefits are substantially comparable in the
aggregate.
(b) For purposes of eligibility and vesting (but not
benefit accrual) under the employee benefit plans (including vacation and any
other benefit for which service is relevant) providing benefits to Company
Employees (the "NBC PLANS") following the Closing Date, NBC shall cause the NBC
Plans to credit each Company Employee with the same years of service as the
Target Companies credited such Company Employee immediately prior to the Closing
for such service under any corresponding or similar Company Employee Benefit
Plan (unless such service credit would result in a duplication of benefits for
the same period). The NBC Plans providing welfare benefits shall not deny
Company Employees coverage on the basis of pre-existing conditions or any
waiting period requirement and shall credit such Company Employees for any
deductibles and out-of-pocket expenses paid in the year of initial participation
in the NBC Plans.
(c) Nothing contained in this Agreement shall be construed
to prevent the termination of employment of any individual Company Employee or,
subject to NBC's compliance with Section 7.7(a), any change in the employee
benefits available to any individual Company Employee or the amendment or
termination of any particular Company Employee Benefit Plan to the extent
permitted by its terms as in effect immediately prior to the Closing; provided,
however, that notwithstanding Section 7.7(a), that NBC shall cause the Target
Companies to honor, comply with and perform all of the respective terms and
obligations of the Target Companies under any severance, retention, incentive,
supplemental incentive, transaction bonus or employment agreement or arrangement
of any Company Employee in effect as of the Closing Date (excluding any equity
based incentive plan), and to the extent not paid out prior to the Closing Date,
(i) NBC shall ensure that the 2003 incentive plan is paid by the Target
Companies in accordance with its terms in the ordinary course consistent with
past practice, and (ii) the Target Companies shall ensure that the 2003
supplemental incentive and transaction bonus plans are paid in accordance with
their terms in effect as of the Closing Date and for which Vivendi shall be
responsible.
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(d) Effective as of the Closing Date, Vivendi or one of its
Affiliates shall cause each Company Employee who participates in the Vivendi
Retirement Account Plan, Vivendi 401(k) Plan and VUE Supplemental Retirement
Account Plan to be fully vested in his or her accrued benefit and/or account
balance, as applicable, under such plans as of the Closing Date.
(e) On or prior to the Closing Date, Vivendi shall cause
VUE to amend the VUE Supplemental Retirement Account Plan to provide that all
benefit accruals shall cease effective as of the Closing. Vivendi shall, or
shall cause one of its Affiliates other than the Target Companies to, assume or
maintain sponsorship of and be solely responsible for, all benefits accrued
under each Company Benefit Plan which is a pension plan or retiree health plan,
including the Vivendi Retirement Account Plan, Vivendi 401(k) Plan, the VUE
Supplemental Retirement Account Plan, and the Universal City Studios, Inc.
Employees Retirement Plan.
(f) On or prior to the Closing Date, Vivendi shall, or
shall cause one of its Affiliates to, (i) assume responsibility for complying
with the requirements of Section 4.4(q) of the Merger Agreement, dated as of
June 19, 2000, among Vivendi S.A., Canal Plus S.A., Sofiee S.A., 3744531 Canada
Inc. and The Seagram Company Ltd. with respect to Company Employees and former
employees of the Company Business, (ii) assume responsibility for providing
post-retirement health and life insurance benefits to certain appointed
executives of USI Services Company LLC in accordance with the "Executive
Benefits Update" memorandum effective as of April 1, 2000 (which benefits may
not be terminated), and (iii) assume responsibility for, and be bound by, any
other individual or group plans, policies or arrangements which provide (or will
provide) post-employment health and/or life insurance benefits to any Company
Employee or former employee of the Company Business in accordance with their
terms and conditions except for any such post-employment health and/or life
insurance benefits sponsored or maintained by one of the GE Companies or one of
its Affiliates (collectively, the post employment health and/or life insurance
benefits are referred to as the "VIVENDI RETIREE HEALTH PLAN").
(g) From and after the Closing Date, NBC and the Target
Companies shall be liable for all accrued but unpaid liabilities under the plans
or arrangements providing non-qualified deferred compensation benefits to any
Company Employee or former employee of the Company Business under the plans and
arrangements set forth on Schedule 7.7(g) (the "VUE DEFERRED COMPENSATION
PLANS"), which liabilities do not exceed as of September 30, 2003 the aggregate
amount set forth on Schedule 7.7(g). Vivendi and its Affiliates shall remain
liable for all amounts under the VUE Deferred Compensation Plans in excess of
the sum of (i) the aggregate amount set forth on Schedule 7.7(g), (ii)
additional deferrals in the ordinary course prior to the Closing Date and (iii)
interest in the ordinary course on such amounts in accordance with the terms of
such plans.
(h) Company Non-U.S. Benefit Plans.
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(i) Vivendi shall, or shall cause one it its Affiliates
to, amend any Company Non-U.S. Pension Plan to provide that each participating
Company Employee (non-U.S.) shall be fully vested under such plan as of the
Closing. Effective as of the Closing, Vivendi shall assume, or shall cause one
of its Affiliates to assume, sponsorship of each Company Non-U.S. Benefit Plan
sponsored or maintained by any of the Target Companies and that is a pension
plan, retiree medical plan or that otherwise provides payments or benefits
following termination of employment (except for such plan that provides solely
for payment of severance) to current or former employees of the Company Business
("COMPANY NON-U.S. PENSION PLANS"). From and after the Closing, none of GE, NBC,
any of the Target Companies or their respective Affiliates shall have any
liability with respect to any Company Non-U.S. Pension Plan.
(ii) If the assumption by Vivendi or its Affiliates of a
Company Non-U.S. Pension Plan is not permissible under applicable Law, the
applicable Target Company shall retain sponsorship of such Company Non-U.S.
Pension Plan and Vivendi or its Affiliates shall transfer or cause to be
transferred to the applicable Target Company or the applicable pension plan any
shortfall between the liabilities of such plan and the fair market value of the
assets of such plan, in each case determined as of the Closing Date. Calculation
of a Company Non-U.S. Pension Plan's liabilities shall be calculated based on
assumptions to be agreed to by Vivendi and NBC (in consultation with their
respective independent actuaries) prior to Closing (it being understood that the
intent of such calculation is to put NBC and its Affiliates in the same economic
position as if Vivendi or one of its Affiliates had assumed such Company
Non-U.S. Pension Plan and all liabilities (and assets) thereof). In the event
that the actuarial assumptions cannot be agreed to prior to Closing, the parties
shall select an independent actuary to resolve any remaining disputes relating
thereto, and such independent actuary's conclusions shall be binding on all
parties to this Agreement. The costs of the independent actuary shall be borne
equally between Vivendi and NBC.
(iii) If applicable Law requires that a Company Employee
(non-U.S.) transfer his or her pension rights to a plan, scheme or arrangement
of a Target Company following the Closing, or applicable Law permits a Company
Employee (non-U.S.) to do so and such employee elects to do so in the manner
prescribed by applicable Law, the provisions of the preceding paragraph shall be
used to determine the amount of the assets to be transferred (or any additional
amount required to be transferred by Vivendi as a result of a shortfall),
provided that the amount so transferred shall be not less than the amount
required to be transferred under applicable Law.
(i) If NBC (i) causes NBC Sub to consolidate with or merge
into any other Person and NBC or NBC Sub is not the ultimate parent of the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of NBC Sub's assets to any
other Person, then, and in each such case, proper provision shall be made by NBC
so that the successors and assigns of NBC shall assume all of the obligations of
NBC set forth in this Section 7.7.
(j) Vivendi and its Affiliates shall be responsible for all
legally mandated continuation of health coverage for any current or former
employee of Vivendi and its Affiliates other than any Company Employees or
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former employees of the Target Companies and their covered dependents ("VIVENDI
COBRA BENEFICIARIES"), who participated in a Company Plan and who have a loss of
health care coverage due to a qualifying event occurring prior to, on or
following the Closing Date. NBC shall be responsible for all legally mandated
continuation coverage for all Company Employees and former employees of the
Target Companies and their covered dependents who have a loss of health care
coverage due to a qualifying event occurring prior to, on or following the
Closing Date.
(k) With respect to any current or former employee of
Vivendi or any of its Affiliates and their covered dependents other than any
Company Employees or former employees of the Target Companies and their covered
dependents (the "VIVENDI EMPLOYEES"), Vivendi and its Affiliates shall be
responsible for all liabilities and obligations arising under any Company
Employee Benefit Plan that is a group life, accident, medical, dental or
disability plan or similar arrangement (whether or not insured) to the extent
that such liability or obligation relates to claims incurred (whether or not
reported) prior to, on or following the Closing Date.
(l) Employee Census. Within (A) seven days with respect to
Company Employees (U.S.) and (B) 14 days with respect to Company Employees
(non-U.S.), following the execution of this Agreement, Vivendi shall provide NBC
with an employee census listing for each Company Employee as of September 1,
2003, such Company Employee's (i) name, (ii) division and business unit, (iii)
title, (iv) location of employment, (v) date of hire, (vi) salary, (vii) target
or expected bonus (or if not available, most recent annual bonus), (viii)
whether a party to an employment contract or other similar agreement and if so,
the scheduled expiration thereof and (ix) whether covered under a collection
bargaining agreement and if so the identity of such agreement. Vivendi shall
provide to NBC an update of the employee census provided for in this section on
a monthly basis through the Closing.
Section 7.8 Further Assurances. From time to time after the Closing, upon the
reasonable request of any party, the other party or parties shall execute and
deliver or cause to be executed and delivered such further instruments, and take
such further action, as the requesting party may reasonably request in order to
effectuate fully the purposes, terms and conditions hereof.
Section 7.9 Pre-Closing Reorganization; Excluded Assets.
(a) Prior to the Closing, Vivendi shall cause each of the
following to be transferred to one or more Affiliates of Vivendi (other than the
Target Companies) or, in the case of clause (ii) below, to a third party:
(i) each of the entities holding the Music Business or
the Games Business (together, the "EXCLUDED BUSINESSES"); provided, however,
that to the extent that any such entity owns or has the exclusive right to use
any asset used in, or required for the operation of, the Company Business or has
any outstanding liabilities incurred in connection with the Company Business,
prior to the Closing, Vivendi shall cause such assets to be transferred to, and
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such liabilities to be assumed by, a Subsidiary of the Company, in each case, in
a manner reasonably satisfactory to GE; and
(ii) the real property described on Schedule 7.9(a)
(collectively, the "EXCLUDED PROPERTIES"), in a manner reasonably satisfactory
to NBC. If any of the Excluded Properties have not been sold or otherwise
disposed of as of the Closing Date, Vivendi shall (A) cause VUE to arrange for
the Excluded Properties to be held in a trust for the benefit of Vivendi and the
IACI Limited Partners in a manner reasonably satisfactory to GE and (B) use its
reasonable best efforts to sell or otherwise dispose of the Excluded Properties
as soon as practicable after the Closing. The parties acknowledge that Vivendi
and the IACI Limited Partners are entitled to the after-Tax proceeds from a sale
or other disposition of the Excluded Properties.
(b) Prior to the Closing, Vivendi shall use its reasonable
best efforts to sell or otherwise dispose of each of (i) the equity interest in
United Cinemas International Multiplex BV, a company organized under the Laws of
the Netherlands ("UCI"), and the loan made by VUE to UCI as described on
Schedule 7.9(b) (collectively, the "UCI ASSETS") and (ii) the equity interest in
or the assets of NWI. If any of the UCI Assets have not been sold or otherwise
disposed of as of the Closing Date, Vivendi shall (A) cause VUE to arrange for
the UCI Assets to be held in a trust for the benefit of Vivendi and the IACI
Limited Partners in a manner reasonably satisfactory to GE and (B) use its
reasonable best efforts to sell or otherwise dispose of the UCI Assets as soon
as practicable after the Closing. The parties acknowledge that the after-Tax
proceeds from a sale or other disposition of the UCI Assets and the proceeds
from the sale of NWI shall be subject to the Company Cash Pooling Arrangements
if such sales or other dispositions are consummated prior to the Closing. Prior
to the Closing, Vivendi shall cause VUE to arrange for Peliculas Nueva Universal
de Cuba, S.A. to be held in a trust for the benefit of Vivendi and the IACI
Limited Partners in a manner reasonably satisfactory to GE.
(c) Prior to the Closing, Vivendi shall use its reasonable
best efforts to complete an arrangement with MHI in a manner reasonably
satisfactory to GE, allowing Vivendi or GE to purchase the Matsushita Minority
Interests at the Closing.
Section 7.10 VUE Debt. NBC shall either (a) obtain or cause
to be obtained and delivered to Vivendi at the Closing an irrevocable waiver of,
or binding amendment to waive, pertinent provisions of the Credit Agreement and
the Film Securitization Facility Agreement such that the transactions
contemplated hereby will not constitute an "Event of Default" under the Credit
Agreement or an "Early Amortization Event" under the Film Securitization
Facility Agreement or (b) subject to Sections 7.11(d) and 10.3, repay the
outstanding indebtedness under the Credit Agreement or the Film Securitization
Facility Agreement with Refinancing Debt (as defined and to the extent permitted
under the VUE Partnership Agreement) or, if the Closing occurs after May 7,
2004, repay or permit to self-amortize such indebtedness as otherwise permitted
under the VUE Partnership Agreement. Vivendi shall, and shall cause VUE to,
cooperate with NBC in connection with NBC obtaining such waivers or repaying
such debt, including providing all such information relating to the Company
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Business and the Target Companies and such access to the employees of the Target
Companies as NBC shall reasonably request, including, in connection with any
Refinancing Debt, causing VUE to enter into such agreements and take such
actions as NBC shall reasonably request.
Section 7.11 Obligations Under the VUE Documents.
(a) At the Closing, Vivendi and NBC shall enter into an
assignment and assumption agreement, pursuant to which Vivendi shall assign to
NBC all of Vivendi's rights and post-Closing obligations under the VUE
Partnership Agreement (the "VUE ASSIGNMENT AND ASSUMPTION AGREEMENT"). From and
after the Closing, NBC shall perform all post-Closing obligations of Vivendi
under the VUE Assignment and Assumption Agreement.
(b) From and after the Closing, NBC shall cause the Company
and each of the other Target Companies (including the general partner of VUE) to
perform all of their respective post-Closing obligations under each of the VUE
Documents and, except as contemplated by Section 7.11(d), to refrain from taking
any action or failing to take any action that would, directly or indirectly,
trigger or result in any Loss to, or indemnification obligation of, Vivendi or
any of its Affiliates (other than any of the Target Companies) under any of the
VUE Documents.
(c) From and after the Closing, NBC shall perform all of
the post-Closing obligations of Vivendi (to the extent relating to post-Closing
events or circumstances) set forth in:
(i) Section 4.16 of the VUE Transaction Agreement,
including complying with the terms of Section 10.03(a) of the VUE Partnership
Agreement and so much of Sections 10.03(c), (d), (e) and (f) thereof as relate
to such Section 10.03(a); and
(ii) the VUE Film Securitization Consent Letter.
(d) From and after the Closing, at NBC's written request,
Vivendi shall make an election pursuant to Section 7.02(b)(ii) of the VUE
Transaction Agreement that any of the covenants set forth in Section 5.05(b) of
the VUE Partnership Agreement shall not apply; provided, however, that Vivendi
shall not be required to make such election unless prior to the making of such
election NBC confirms in writing to Vivendi that NBC's indemnification
obligation under Section 10.3 shall apply.
(e) If Vivendi becomes an Indemnifying Party or is
otherwise required to defend a Third Party Claim (each as defined in and
pursuant to Section 7.06 of the VUE Transaction Agreement), NBC shall, and shall
cause each of the Target Companies to, provide to Vivendi and each of its
officers, directors, employees, counsel, advisors, accountants, financial
advisors and representatives, access during normal business hours (and at such
other times as the parties may mutually agree), upon reasonable notice, to such
properties, books, contracts, commitments, records and personnel of, and other
information relating to, the Target Companies as may be reasonably requested by
Vivendi to permit Vivendi to defend such Third Party Claim.
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(f) From and after the Closing, if Vivendi or any of its
Affiliates is required to purchase Common Interests in connection with the "tag
along" provisions in Section 10.04(d) of the VUE Partnership Agreement, Vivendi
shall promptly provide written notice of such requirement to GE and NBC,
provided that the failure to provide such notice shall not relieve GE and NBC of
their obligations under this Section 7.11(f). Vivendi shall be entitled to
purchase such Common Interests on behalf of GE and NBC, and, in such event, GE,
NBC and Vivendi shall take such steps as may be necessary to cause the
consequences of such transaction to be substantially identical to those that
would obtain if such Common Interests were (i) in the case of an exercise of
such "tag along" provisions in connection with the transaction contemplated by
this Agreement, purchased in accordance with Schedule 7.13 or (ii) in all other
cases, purchased directly by NBC.
(g) Notwithstanding any of the foregoing, NBC shall not be
liable to Vivendi or any of its Affiliates for any failure to perform any
covenants under the VUE Documents to the extent that such failure is
attributable to (A) any action or failure to act by Vivendi or its Affiliates
occurring on or prior to the Closing, (B) any action which gives rise to an
indemnification obligation of Vivendi under Section 4.3 of the IACI Matters
Agreement or (C) any action or failure to act by Vivendi or any of its
Affiliates after the Closing that would cause a breach of any of the covenants
under the VUE Documents (other than (i) any action or failure to act taken at
the written request of NBC (including pursuant to Section 7.11(d)), and (ii) any
action or failure to act required to be taken by Vivendi or any of its
Affiliates under the IACI Matters Agreement).
Section 7.12 Tax Matters. This Section 7.12 shall apply
from and after the Closing Date.
(a) Termination of Existing Tax Sharing Agreements. Vivendi
and USH3 shall cause all Tax Sharing Agreements involving the Universal Common
Parent or its Affiliate (other than a Target Company), on the one hand, and
involving a Target Company, on the other hand, to be terminated with respect to
such Target Company on or prior to the Closing Date such that, after the
Closing, such Target Company shall neither be bound thereby nor have any
liability thereunder. GE shall cause all Tax Sharing Agreements (other than, for
the avoidance of doubt, the GE-NBC Universal Tax Sharing Agreement) involving
the NBC Common Parent or its Affiliate (other than a NBC Company), on the one
hand, and involving a NBC Company, on the other hand, to be terminated with
respect to such NBC Company on or prior to the Closing Date such that, after the
Closing, such NBC Company shall neither be bound thereby nor have any liability
thereunder. On or prior to the Closing Date, GE and the NBC Companies shall
enter into the GE-NBC Universal Tax Sharing Agreement. Immediately after the
Closing Date, the GE-NBC Universal Tax Sharing Agreement shall be the sole tax
sharing agreement between GE and NBC.
(b) Tax Certificates. USH3 shall provide NBC Sub, on or
prior to the Closing Date, with an affidavit pursuant to section 1445(b)(2) of
the Code stating, under penalties of perjury, that USH3 is not a foreign person.
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(c) Preparation and Filing of Tax Returns; Payment of
Taxes.
(i) Consolidated and Combined Returns for Target
Companies' Pre-Closing Periods. Where required or permitted by applicable Law,
the USH3 Group and its Affiliates shall include the Target Companies, or cause
the Target Companies to be included in, and shall file or cause to be filed, (A)
the U.S. consolidated federal income Tax Returns of the Universal Common Parent
for the taxable periods (or portions thereof) of the Acquired Companies ending
on or prior to the Closing Date and (B) where applicable, all other consolidated
and combined or unitary Tax Returns for the taxable periods of the Target
Companies ending on or prior to the Closing Date, and Vivendi and USH3 shall pay
or cause to be paid any and all Taxes due with respect to the returns referred
to in clause (A) or (B) of this Section 7.12(c)(i).
(ii) Separate Returns for Target Companies' Pre-Closing
Periods. In addition to the Tax Returns described in Section 7.12(c)(i), the
USH3 Group shall prepare (or cause to be prepared) all U.S. federal, state,
local and foreign Tax Returns (A) required to be filed by any of the Target
Companies on or prior to the Closing Date (taking into account any applicable
extension periods), and (B) required to be filed by any of the Target Companies
after the Closing Date (taking into account any applicable extension periods)
for a taxable period ending on or before the Closing Date. With respect to Tax
Returns described in clause (A), the USH3 Group shall cause the applicable
Target Company to file such Tax Returns and Vivendi and USH3 shall pay or cause
to be paid any Taxes shown as due on such Tax Return (as initially filed). With
respect to Tax Returns described in clause (B), Section 7.12(c)(vi) shall apply
and the GE Companies shall cause the applicable Target Company to execute and
file such Tax Returns. Vivendi and USH3 shall be responsible for and shall pay
any Taxes shown as due on Tax Returns described in clause (B) (as initially
filed).
(iii) Certain NBC Tax Returns. GE shall be responsible
for preparing and filing, or causing to be prepared and filed, all Tax Returns
of, or which include, the NBC Companies that relate to any taxable period ending
on or prior to the Closing Date. With respect to any Combined NBC Return that is
for a taxable period ending on or prior to the Closing Date, GE shall pay or
cause to be paid any Taxes shown as due on such Tax Return (as initially filed).
With respect to any Standalone NBC Return that is for a taxable period ending on
or prior to the Closing Date, GE shall be responsible for and shall pay or cause
to be paid any Taxes shown as due on such Tax Return (as initially filed).
(iv) Straddle Period Returns. Sections 7.12(c)(v) and
7.12(c)(vi) shall apply to all Straddle Period Returns. NBC shall be responsible
for preparing and filing or causing to be prepared and filed, all Straddle
Period Returns other than a Vivendi Straddle Period Return. NBC and Vivendi
shall cooperate in the joint preparation of each Vivendi Straddle Period Return
and NBC shall cause VUE and the BV Entities, as applicable, to file the
applicable Vivendi Straddle Period Return. Notwithstanding anything to the
contrary herein, GE shall have the sole discretion to determine whether to cause
the general partner of VUE to make an election under Section 754 of the Code for
any Vivendi Straddle Period Return to the extent such election is permitted
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under the VUE Partnership Agreement. Vivendi and USH3 shall be responsible for
and shall pay any Taxes shown as due on any Straddle Period Return (as initially
filed) (other than any Combined NBC Return or Standalone NBC Return) of or which
includes any of the Target Companies to the extent attributable to any
Pre-Closing Period. GE shall be responsible for and shall pay any portion of the
Taxes shown as due on the Straddle Period Returns (as initially filed) of or
which include any of the NBC Companies to the extent attributable to any
Pre-Closing Period.
(v) Allocating Taxable Income. For purposes of
allocating Taxes with respect to a Straddle Period Return and for purposes of
Sections 11.2 and 11.3, (i) real, personal and intangible property Taxes shall
be allocated on a per diem basis, (ii) exemptions, allowances or deductions that
are calculated on an annual basis, such as the deduction for depreciation, will
be apportioned ratably between such periods on a per diem basis and (iii) other
Taxes (including income taxes and taxes in lieu of income taxes to the extent
not governed by clause (ii)), shall be allocated based on a closing of the books
as of the close of business on the Closing Date (including, without limitation,
a closing of the books as of the close of business on the Closing Date for
purposes of allocating income, gain, deduction and loss attributable to VUE
between the Universal Common Parent and the NBC Common Parent consistent with
Treasury Regulation Sections 1.1502-76(b)(1)(ii)(A) and 1.1502-76(b)(2)(vi)).
The principles of this Section 7.12(c)(v) shall apply in determining the extent
to which any Tax is attributable to the Interim Period under the definitions of
Covered Operating Tax and Covered Foreign Tax, except that (x) where
appropriate, September 30, 2003 shall be substituted for the Closing Date and
(y) in applying clause (iii) of this Section 7.12(c)(v), there shall be a
closing of the books as of the close of business on September 30, 2003 and the
Closing Date.
(vi) Procedures for Reviewing Tax Returns and Paying
Taxes.
(A) All Tax Returns relating to taxable periods
ending on or prior to the Closing Date but filed after the Closing Date, and all
Straddle Period Returns, in each case including any Target Company, shall be
prepared in a manner consistent with prior practice unless an alternative method
is available under applicable Tax Laws and consent is granted by Vivendi (such
consent not to be unreasonably withheld) or is otherwise required by applicable
Tax Laws. The party responsible for preparing any such Tax Return (the
"RESPONSIBLE PARTY") shall provide the party responsible for filing such Tax
Return or the party responsible for paying any Taxes shown as due on such Tax
Return (the "OTHER PARTY") with copies of such Tax Return at least twenty (20)
days prior to the due date for filing such return (taking into account any
applicable extensions). The Other Party shall have the right to review and
approve (which approval shall not be unreasonably withheld) such Tax Returns for
ten (10) days following receipt thereof. The failure of the Other Party to
propose any changes to any such Tax Return within such ten (10) days shall be
deemed to be an indication of its approval thereof.
(B) Not later than five (5) days before the due date
for filing any Tax Return described in this Section 7.12(c)(vi) (taking into
account any applicable extensions), the party responsible for paying the Taxes
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shown as due on such Tax Return to the extent attributable to a Pre-Closing
Period (the "PAYING PARTY") shall pay to the party responsible for filing such
Tax Return (the "FILING PARTY") an amount equal to that portion of the Taxes (if
any) shown on such return for which such Paying Party has an obligation to pay
pursuant to this Agreement.
(C) If a dispute arises with respect to the
preparation of the underlying Tax Return or the amount of Taxes for which the
Paying Party is responsible and is not resolved within five (5) days prior to
the due date of the underlying Tax Return (taking into account any applicable
extensions), the Paying Party shall pay to the Filing Party the amount that the
Paying Party deems to be due and owing and the Filing Party shall file such Tax
Return as proposed by the Paying Party on or prior to such due date. The dispute
will be settled by an independent accounting firm mutually acceptable to both
parties and will be final and binding on all parties. Any and all costs arising
from, and expenses incurred in connection with, the independent accounting firm
shall be borne equally by both parties. Within five (5) days following
resolution of the dispute, any amounts determined to be due upon final
resolution of the dispute (including interest and penalties with respect to any
underpayment of Tax) shall be promptly paid by the Paying Party and where
applicable, the Filing Party shall file amended Tax Returns. Notwithstanding the
foregoing, the Filing Party shall not be required to file a Tax Return as
proposed by the Paying Party if the Filing Party determines in its reasonable
discretion that (x) such Tax Return is false, misleading or fraudulent in any
respect or (y) there is a material possibility that the filing of such Tax
Return would give rise to the imposition of a penalty, excise tax or similar
item on or with respect to any individual connected with the filing (including
without limitation the individual that would sign such Tax Returns). In any such
case, the Filing Party may make corrections to such Tax Return in the manner it
reasonably determines to be appropriate to remove the effects of the offending
provision(s) and the procedures set forth herein, including the obligation of
the Paying Party to pay the amounts shown as due, shall apply to such corrected
Tax Returns.
(vii) Amended Returns; Refund Claims.
(A) The USH3 Group and its Affiliates shall have the
right to prepare and file, or cause to be prepared and filed, any amended Tax
Return or claim for refund in respect of any Tax Return as to which the USH3
Group was the Responsible Party and, where required, the GE Companies shall
cause the Target Companies to execute such documents (including a power of
attorney) and take such actions in connection with such filing as the USH3 Group
shall reasonably request, provided that the USH3 Group shall not have the right
to prepare or file any such amended Tax Return or claim for refund, without the
prior written consent of GE (which may, in its sole and absolute discretion,
withhold such consent), if such amended Tax Return or claim for refund would
have a material and adverse effect on GE, NBC or any of their Affiliates in a
post Closing period, except to the extent such amendment is required by
applicable Law. Notwithstanding the foregoing, the GE Companies shall not be
required to file an amended Tax Return as proposed by the USH3 Group if GE
determines in its reasonable discretion that (x) such Tax Return is false,
misleading or fraudulent in any respect or (y) there is a material possibility
that the filing of such Tax Return would give rise to the imposition of a
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penalty, excise tax or similar item on or with respect to any individual
connected with the filing (including without limitation the individual that
would sign such Tax Return).
(B) To the extent any determination of Tax liability
of any Target Company, whether as the result of an audit or examination, a claim
for refund, the filing of an amended Tax Return or otherwise, results in any
refund of U.S. federal, state, local or foreign Taxes attributable to any
Pre-Closing Period, such refund shall belong to the USH3 Group, except to the
extent such refund (x) results from the carryback of a loss or credit arising in
a taxable year (or a portion thereof) beginning after the Closing Date, (y)
relates to any Covered Operating Tax or (z) relates to any Covered Foreign Tax
to the extent it does not give rise to a payment under Section 3.4 or 3.7. NBC
shall promptly pay or cause to be paid the portion of any such refund received
by it or any Subsidiary (unless such Subsidiary is not wholly owned, in which
case only a pro rata portion shall be paid to the USH3 Group) and that belongs
to the USH3 Group (including interest actually received thereon but less any
Taxes imposed in connection with such refund or interest and any expenses
related to such refund or interest) to the USH3 Group. Any and all Tax refunds
that do not belong to the USH3 Group shall belong to the applicable Target
Company and to the extent any such refund is received by the USH3 Group or any
of their Affiliates (other than NBC or the Target Companies), the USH3 Group
shall promptly pay such refund (plus any interest actually received thereon less
any Taxes imposed in connection with such refund or interest and any expenses
related to such refund or interest) to the applicable Target Company.
Notwithstanding the foregoing, a refund for foreign Taxes relating to
Pre-Closing Periods of the Target Companies shall not belong to the USH3 Group
to the extent such refund relates to a refund claim filed on or after the
Closing Date. To the extent any such foreign refund is received by the USH3
Group or any of their Affiliates, the USH3 Group shall promptly pay such refund
(plus any interest actually received thereon less any Taxes imposed in
connection with such refund or interest and any expenses related to such refund
or interest) to the applicable Target Company.
(C) To the extent any determination of Tax liability
of any NBC Company, whether as the result of an audit or examination, a claim
for refund, the filing of an amended Tax Return or otherwise, results in any
refund of U.S. federal, state, local or foreign Taxes attributable to any
Pre-Closing Period shall belong to GE, except to the extent such refund (x)
results from the carryback of a loss or credit arising in a taxable year (or a
portion thereof) beginning after the Closing Date, (y) relates to any Covered
Operating Tax or (z) relates to any Covered Foreign Tax to the extent it does
not give rise to a payment under Section 3.5 or 3.7. NBC shall promptly pay or
cause to be paid the portion of any such refund received by it or any Subsidiary
(unless such Subsidiary is not wholly owned, in which case only a pro rata
portion shall be paid to GE) and that belongs to GE (including interest actually
received thereon but less any Taxes imposed in connection with such refund or
interest and any expenses related to such refund or interest) to GE. Any and all
Tax refunds that do not belong to GE shall belong to NBC or the applicable NBC
Company and to the extent any such refund is received by GE or any of their
Affiliates (other than the NBC Companies), GE shall promptly pay such refund
(plus any interest actually received thereon less any Taxes imposed in
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connection with such refund or interest and any expenses related to such refund
or interest) to NBC or the applicable NBC Company. Notwithstanding the
foregoing, a refund for foreign Taxes relating to Pre-Closing Periods of the NBC
Companies shall not belong to GE to the extent such refund relates to a refund
claim filed on or after the Closing Date. To the extent any such foreign refund
is received by GE or its Affiliates (other than the NBC Companies or the Target
Companies), GE shall promptly pay such refund (plus any interest actually
received thereon less any Taxes imposed in connection with such refund or
interest and any expenses related to such refund or interest) to the applicable
NBC Company.
(D) The GE Companies shall cause the Target Companies
and NBC Companies to elect, where permitted by applicable Law, to carry forward
any Tax asset arising in a taxable period beginning after the Closing Date, that
would, absent such election, be carried back to a taxable period ending on or
before the Closing Date.
(viii) Elections. The GE Companies shall not, without
the prior written consent of the USH3 Group (which may, in its sole and absolute
discretion, withhold such consent), make, or cause to be made, any Tax election,
or adopt or change any method of accounting on or following the Closing with
respect to any Target Company, that would by its terms have a material adverse
effect on the USH3 Group or its Affiliates (including any Target Company) for
any taxable period (or portion thereof) ending on or prior to the Closing Date,
unless such election, adoption or change is required by applicable Law or is
consistent with prior practice of the relevant Target Company or unless GE shall
indemnify the USH3 Group from and against such material adverse effect.
(d) Transfer Taxes. Vivendi and USH3 shall be liable for
and shall pay all Transfer Taxes or governmental charges (together with any
interest or penalty, addition to tax or additional amount imposed) as levied by
any Taxing Authority on any Target Company or caused by the transfer of any
assets in connection with the transactions contemplated by this Agreement. GE
shall be liable for and shall pay all Transfer Taxes or governmental charges
(together with any interest or penalty, addition to tax or additional amount
imposed) as levied by any Taxing Authority on any NBC Company or caused by the
transfer of any assets in connection with the transactions contemplated by this
Agreement.
(e) Cooperation with Respect to Tax Returns. The parties
agree to furnish or cause to be furnished to each other, and each at their own
expense, as promptly as practicable, such information (including access to books
and records) and assistance, including making employees available on a mutually
convenient basis to provide additional information and explanations of any
material provided, relating to the Target Companies and/or the NBC Companies as
is reasonably necessary for the filing of any Tax Return, for the preparation
for any audit, and for the prosecution or defense of any claim, suit or
proceeding relating to any adjustment or proposed adjustment with respect to
Taxes. The USH3 Group shall have the right to make copies (including in
electronic form) of, and to retain all, Tax Returns, financial records and
supporting work papers relating to, Taxes of the Target Companies relating to
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any taxable period (or portion thereof) ending on or prior to the Closing Date.
In addition, the GE Companies shall (or shall cause the Target Companies to)
retain, and shall provide the USH3 Group reasonable access to (including the
right to make copies of), such supporting books and records and any other
materials that the USH3 Group may specify with respect to Tax matters relating
to any taxable period (or portion thereof) ending on or prior to the Closing
Date until the relevant statute of limitations has expired. After such time,
such material may be disposed of; provided that prior to such disposition, the
GE Companies and the applicable Target Companies shall give the USH3 Group a
reasonable opportunity to take possession of such materials.
(f) Valuation of Excluded Businesses. Vivendi and USH3
shall, at least 30 days prior to the Closing Date, provide GE with a valuation
study prepared by a nationally recognized independent appraisal firm specifying
such firm's reasonable determination of the value of each entity holding an
Excluded Business to be transferred to one or more Affiliates of Vivendi
pursuant to Section 7.9(a).
Section 7.13 IACI Limited Partners Tag-Along Rights. At any
time, but in any case no later than 75 days, after the date hereof, Vivendi
shall deliver a copy of the Tag-Along Notice to each of the Tag-Along Offerees.
The parties agree that the tag-along procedures will be substantially as set
forth on Schedule 7.13, and that the economic and equity ownership effects on
the parties of such arrangements and of any exercise by IACI of its tag-along
rights shall be those set forth on Schedule 7.13.
Section 7.14 Put and Call Rights on the Common Interests of
IACI.
(a) NBC and its controlled Affiliates shall have the right
and shall assume all obligations to purchase the IACI Common Interests under and
as contemplated by Section 10.03(a) of the VUE Partnership Agreement. NBC and
its controlled Affiliates may, but shall be under no obligation to, exercise the
Call right thereunder at any time it chooses.
(b) If at any time or from time to time Vivendi or any of
its Affiliates is required to purchase any Common Interests of IACI and its
Affiliates pursuant to Section 4.16 of the VUE Transaction Agreement and Section
10.03(a) of the VUE Partnership Agreement, Vivendi shall promptly provide
written notice of such requirement to NBC, provided that the failure to provide
such notice shall not relieve NBC of its obligations under this Section 7.14(b).
Vivendi shall be entitled to purchase such Common Interests on behalf of NBC
and, in such event, Vivendi and NBC shall take such steps as may be necessary to
cause the consequences of such transaction to be substantially identical to
those that would obtain if such Common Interests were purchased directly by NBC.
Vivendi shall not other than as provided in this Section 7.14(b) purchase any
Common Interests held by IACI under Section 10.3(a) of the VUE Partnership
Agreement.
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Section 7.15 The Defeasance. Prior to the Closing, Vivendi
shall cause VUE to make inapplicable the covenants set forth in Sections
5.05(a)(ii), (iii) and (iv) of the VUE Partnership Agreement in accordance with
Section 5.05(a) of the VUE Partnership Agreement (the "DEFEASANCE"), and VUE or
one of its controlled Affiliates shall borrow sufficient funds (on terms
reasonably satisfactory to NBC) to purchase sufficient collateral for the
purpose of securing the letter of credit to be issued in connection with the
Defeasance.
Section 7.16 Insurance.
(a) Following the Closing, the Target Companies shall be
entitled to the benefit of any occurrence-based insurance policies maintained by
Vivendi (if any) for the benefit of the Target Companies or the Company Business
prior to the Closing Date, including any and all rights of indemnity and the
right to be defended by or at the expense of the insurer, covering any loss,
liability, damage or claim relating to any of the Target Companies or the
Company Business arising out of the occurrences on or prior to the Closing Date
(including all claims pending as of the Closing Date). Vivendi shall (i)
cooperate with NBC and the Target Companies in submitting claims (and pursuing
claims previously made), (ii) use its commercially reasonable efforts to obtain
recoveries for the Target Companies with respect to the claims pursuant to such
insurance policies and (iii) remit to the Target Companies any recovery obtained
by it pursuant to such claims.
(b) Prior to Closing, upon the expiration of the workers'
compensation, auto liability and general liability insurance policy currently
issued to Vivendi (the "VU BUSINESS INSURANCE POLICY") for which VUE and the
Company Business is named insured, Vivendi shall use its commercially reasonable
efforts to cause VUE to obtain its own insurance policy for such coverage, and,
upon receipt of such coverage, VUE shall thereafter cease to be a named insured
on the VU Business Insurance Policy. To the extent required by the insurer in
connection with such VUE insurance policy, Vivendi shall cause VUE to post any
collateral under such new insurance policy and otherwise comply with any
additional terms and conditions reasonably imposed by the insurer.
Section 7.17 Ancillary Agreements. Each of GE and Vivendi
shall execute, or cause to be executed, at the Closing each of the Ancillary
Agreements of which the form is attached hereto as an Exhibit and will use their
reasonable best efforts to negotiate and to execute and deliver at the Closing
each of the Ancillary Agreements for which a term sheet is attached hereto as an
Exhibit.
Section 7.18 Vivendi Noteholders' Consent. Prior to the
Closing, Vivendi shall use its reasonable best efforts to obtain the necessary
approvals or consents, if any, of the transactions contemplated by this
Agreement required under (i) the Indenture, dated as of April 8, 2003, between
Vivendi and The Bank of New York, as trustee, and (ii) the Indenture, dated as
of July 10, 2003, between Vivendi and The Bank of New York, as trustee (the
"NOTEHOLDERS' CONSENT").
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Section 7.19 Company to Hold IACI Shares and NYCSpirit. At
or prior to the Closing, Vivendi shall cause the Company and/or one or more of
the other Target Companies (other than NYCSpirit) to hold, directly or
indirectly, in the aggregate (a) 43,181,308 shares of common stock, par value
$0.01 per share, of IACI, (b) 13,430,000 shares of Class B common stock, par
value $0.01 per share, of IACI (in each case, as adjusted for stock splits,
stock dividends and the like) and (c) 100% of the issued and outstanding capital
stock of NYCSpirit that owns 5.13% of the Common Interests.
Section 7.20 Release of Liens. On or before the Closing
Date, Vivendi shall secure a release of all Liens as of the Closing on the
Company Common Stock, the Company Preferred Stock, the BV1 Common Stock and the
BV2 Common Stock (other than any restrictions under the Securities Act and other
applicable securities Laws).
Section 7.21 Certain Real Property Matters. GE shall
perform those obligations with respect to real property matters set forth on
Schedule 7.21.
Section 7.22 Commercial Arrangements. Each of Vivendi and
GE shall enter into (or cause their respective Affiliates to enter into) the
commercial arrangements described on Schedule 7.22 (the "COMMERCIAL
ARRANGEMENTS"); provided that if such arrangements are not entered into on or
prior to the Closing Date, the obligations under this provision shall continue
after the Closing Date and the parties shall enter into such commercial
arrangements within 30 days following the Closing. The commitment to enter into
such arrangements is an integral part of the transactions contemplated by this
Agreement, and each of Vivendi and GE and their respective Affiliates shall
negotiate in good faith the terms thereof. The Commercial Arrangements will be
promoted and monitored by the Stockholder Strategic Committee (as defined in the
Stockholders Agreement).
Section 7.23 Baseline. Prior to the Closing, GE shall
consult in good faith with Vivendi to establish a new baseline for GE charges to
the combined company based on the increased size of the venture, which baseline
shall be established using the same GE methodology for such charges in effect
prior to the Closing.
Section 7.24 Music Compositions and Sound Recordings. After
the date hereof and prior to the Closing Date, Vivendi shall cause all entities
included within UMG not to transfer, grant, dispose of, encumber, license or
exploit, except in the ordinary course of their business, any right, title or
interest in all or a portion of the musical compositions and sound recordings to
be assigned to NBC Sub pursuant to the Music Assignment Agreement. If between
the date hereof and the Closing Date Vivendi shall transfer, convey, sell or
otherwise dispose of any entity (or any portion thereof) included within UMG
which owns any portion of the rights to be granted to NBC Sub as set forth in
the Music Assignment Agreement, Vivendi shall ensure that the purchaser of such
entity (i) shall be bound by (or shall cause such entity to abide by) the
covenant set forth above until the Closing Date, and (ii) shall be required to
execute (or cause such entity to execute) the Music Assignment Agreement on the
Closing Date in order to give effect to the provisions thereof.
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Section 7.25 Supplemental Disclosure. Vivendi and/or USH3
shall promptly notify in writing GE and NBC of, and furnish GE and NBC with any
information it may reasonably request with respect to, any event or condition or
the existence of any fact that would cause any of the conditions to the GE
Companies' obligation to consummate the transactions contemplated by this
Agreement not to be satisfied. GE shall promptly notify in writing Vivendi and
USH3 of, and furnish Vivendi and USH3 with any information it may reasonably
request with respect to, any event or condition or the existence of any fact
that would cause any of the conditions to USH3's and Vivendi's obligations to
consummate the transactions contemplated by this Agreement not to be satisfied.
Section 7.26 Environmental Work Plans. (a) Within 60 days
after the date hereof, (i) NBC shall provide to Vivendi a schedule, based on
NBC's due diligence or Vivendi's Disclosure Schedule, of instances in which, in
the reasonable judgment of NBC, the Target Companies are not in compliance with
applicable Environmental Laws and (ii) Vivendi shall provide to NBC a schedule,
based on Vivendi's due diligence or NBC's Disclosure Schedule, of instances in
which, in the reasonable judgment of Vivendi, the NBC Companies are not in
compliance with applicable Environmental Laws. Following the delivery of such
schedules, Vivendi and NBC shall develop a work plan for correcting the Target
Companies' and NBC's instances of non-compliance with Environmental Laws,
respectively (collectively, the "EHS WORK PLANS"). All EHS Work Plans and
documents prepared in connection therewith shall be subject to the
Confidentiality Agreement and all matters shall be treated, to the maximum
extent feasible, in a manner to preserve applicable privileges.
(b) All actions taken pursuant to the EHS Work Plans shall
be performed in a diligent manner, with reasonable speed and in accordance with
the standards and requirements of all applicable Environmental Laws. A party
shall have satisfied its obligations under this Section when any non-compliance
matter identified in the EHS Work Plans is brought into compliance with
applicable Environmental Laws in effect as of the date hereof. Vivendi, with
respect to development of the EHS Work Plans for the Target Companies, and NBC,
with respect to development of the EHS Work Plans for the NBC Companies, shall
each bear its own costs.
(c) In connection with the EHS Work Plans and the
obligations of the parties set forth in paragraph (b), above, Vivendi and NBC
shall act in good faith to (i) identify instances of non-compliance with
Environmental Laws, (ii) reach agreement on the scope of the EHS Work Plans,
(iii) resolve any non-compliance matters identified in the EHS Work Plans, and
(iv) resolve any disputes.
(d) If Vivendi disagrees with the schedule provided under
(a)(i) above, Vivendi shall, within 15 days following receipt of such schedule,
submit a written notice of dispute to NBC identifying in reasonable detail the
specific items in dispute and the nature of such dispute, including reasonable
supporting documentation. If NBC disagrees with the schedule provided under
(a)(ii) above, NBC shall, within 15 days following receipt of such schedule,
submit a written notice of dispute to Vivendi identifying in reasonable detail
the specific items in dispute and the nature of such dispute, including
112
reasonable supporting documentation. In each case, for a period of 15 days
following receipt of any such written notice, the parties shall work together in
good faith to resolve any disagreement. In the event the parties are not able to
resolve any such dispute within such 15-day period, they shall promptly submit
all such disputes in writing for resolution to an independent third party
environmental professional or environmental attorney reasonably agreed upon by
the parties, which professional or attorney shall not have provided services to
either Vivendi or NBC at any time during the five years prior to the Closing
Date; provided, further, that such environmental professional or environmental
attorney shall not be an environmental professional or environmental attorney
associated with the transactions contemplated by this Agreement. If Vivendi and
NBC do not agree on the scope of the EHS Work Plans, such dispute, whether with
regard to the corrective action required, the schedule for implementing such
corrective action, or the extent of such corrective action, shall be submitted
in writing to the independent professional or attorney agreed upon by the
parties, whose resolution shall be final and binding upon the parties. The cost
of such third party professional or attorney shall be borne equally by NBC and
Vivendi.
Section 7.27 Transition Services.
(a) Prior to the Closing, each of GE and Vivendi shall use
their reasonable best efforts to negotiate and to execute and deliver at the
Closing a transition services agreement pursuant to which Vivendi and its
Affiliates will provide certain transition services to be mutually agreed upon
with NBC, and pursuant to which NBC will provide certain transition services to
Vivendi and its Affiliates for periods of time to be agreed and at a cost equal
to the fair market value for such services to be mutually agreed in good faith,
provided that NBC shall not be required to provide any services to Vivendi or
any of its Affiliates with respect to human resources, personnel, payroll, or
benefits of the employees of Vivendi or its Affiliates pursuant to such
transition services agreement.
(b) On or before the earlier of (i) January 1, 2004, or
(ii) the Closing, Vivendi shall cause the transfer to the payroll of VUE of the
employees of UMG who work primarily in the UMVD division and are located in the
U.S., including without limitation the employees listed on Schedule 7.27(b). If
any of such employees are parties to employment contracts with UMG, Vivendi
shall cause such contracts to be assigned from UMG to VUE. With respect to other
employees of the UMVD division of UMG providing information technology, credit
and/or collection or warehouse services to VUE, the parties agree to negotiate
in good faith and resolve, prior to the Closing Date, commercially reasonable
terms and conditions for continuation of services provided to VUE as of the date
of this Agreement by such employees. To the extent that UMG incurs any costs
with respect to the disposition of any UMVD employees outside the U.S., VUE
(prior to the Closing) or NBC Sub (after the Closing) shall reimburse UMG for
all such costs.
Section 7.28 Music Videos. The parties hereto agree to
negotiate in good faith and to resolve prior to the Closing Date an agreement on
commercially reasonable terms to transfer to UMG the Copyrights in the music
videos acquired from Polygram, substantially including those music videos listed
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on Schedule 7.28, taking into account the arrangements and any agreements
existing as of the date of the date hereof regarding Exploitation of such music
videos.
Section 7.29 Cash Pooling Post-Closing. The parties shall
perform those agreements with respect to cash pooling arrangements set forth on
Schedule 7.29.
Section 7.30 Guarantees.
(a) Each of GE and NBC shall use its commercially
reasonable efforts to cause NBC or one or more of NBC's respective Subsidiaries
or Affiliates to be substituted in all respects for Vivendi and its Subsidiaries
(other than the Target Companies), effective as of the Closing, in respect of
all obligations of Vivendi or any of its Subsidiaries (other than the Target
Companies) under each of the guarantees, sureties, letters of credit, escrow
deposits, foreign exchange hedging Contracts related to particular Contracts of
the Company Business (and not for investment or financing purposes) and letters
of comfort (collectively, the "GUARANTEES") made by Vivendi or such Subsidiaries
(other than the Target Companies) for the benefit of the Target Companies. If GE
and NBC are unable to effect such a substitution with respect to any such
Guarantee after using their commercially reasonable efforts to do so, and
Vivendi has made a written request to NBC to pay on its behalf amounts due under
a non-transferred Guarantee, NBC shall indemnify and hold harmless Vivendi and
its Affiliates from and against any and all Losses resulting from or arising out
of or relating to such Guarantees. As a result of the substitution contemplated
by the first sentence of this Section 7.30 and/or the indemnity obligation
contemplated by the second sentence of this Section 7.30, and subject to the
provisions of Section 10.3, Vivendi and its Affiliates (other than the Target
Companies) shall, from and after the Closing, cease to have any obligations
whatsoever arising from or in connection with the Guarantees, except for
obligations, if any, for which Vivendi or its Affiliates will be fully
indemnified pursuant to the second sentence of this Section 7.30 or Section
10.3.
(b) On or before the Closing Date, Vivendi shall use
commercially reasonable efforts to secure a release of all Guarantees made by
the Company or any of its Affiliates for the benefit of UCI. In the event that
on the Closing Date any such Guarantees have not been released, Vivendi shall
indemnify and hold harmless GE and its Affiliates from and against any and all
Losses resulting from or arising out of or relating to such Guarantees.
(c) On or before the Closing Date, Vivendi shall use
commercially reasonable efforts to secure a release of all Guarantees made by
any of the Target Companies for the benefit of (i) Vivendi or any of its
Affiliates involved in the Music Business or the Games Business or (ii)
otherwise to the extent relating to any Excluded Business or Excluded Asset. In
the event that on the Closing Date any such Guarantees have not been released,
Vivendi shall indemnify and hold harmless GE and its Affiliates from and against
any and all Losses resulting from or arising out of or relating to such
Guarantees.
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Section 7.31 Affiliate Transactions. Prior to the Closing,
NBC and Vivendi will agree on those Contracts set forth on Schedule 5.19 that
should continue in effect from and after the Closing. Vivendi shall take such
actions as are necessary to terminate as of the Closing Date on commercially
reasonable terms all Contracts on Schedule 5.19 that NBC and Vivendi agree
should not continue in effect after the Closing.
Section 7.32 Records. From and after the Closing, NBC shall
preserve and keep the records held by the Target Companies relating to the
Company Business, and Vivendi shall preserve and keep the records held by
Vivendi relating to the Target Companies, in each case in accordance with its
document retention policies. Each of NBC and Vivendi shall make such records
available to the other, as the expense of the requesting party, in such manner
as shall mutually be agreed in connection with, among other things, any
insurance claim, audit or Legal Proceeding or investigation relating to the
Company Business.
Section 7.33 Vivendi Intercompany Leases.
(a) Prior to the Closing, Vivendi shall identify all real
property leases under which a Target Company is a lessee, obligor or guarantor
but where such leased space is occupied either partially or entirely by Vivendi
or its Subsidiaries (other than a Target Company) (the "VIVENDI TENANT ENTITY").
Vivendi shall use commercially reasonable efforts to cause each lease for space
occupied entirely by a Vivendi Tenant Entity to be assigned to and assumed by
Vivendi or the Vivendi Tenant Entity, and the provisions of Section 7.30 shall
apply to any related guarantee. In the event that on the Closing Date any lease
for space which is occupied entirely by a Vivendi Tenant Entity has not been so
assigned and assumed, such Vivendi Tenant Entity and VUE or an Affiliate of VUE
shall undertake to execute a sublease for such facility on commercially
reasonable terms reasonably satisfactory to Vivendi and NBC, except that (i) the
rent payable under any such sublease shall be equal to the rent payable under
the master lease and (ii) the term of any such sublease shall not exceed the
term of the master lease. With respect to leased space partially occupied by a
Vivendi Tenant Entity, Vivendi shall use commercially reasonable efforts to
cause the Target Company lessee to sublease that portion of the leased space
occupied by the Vivendi Tenant Entity to the Vivendi Tenant Entity on
commercially reasonable terms reasonably satisfactory to Vivendi and NBC, except
that (i) the rent payable under any such sublease shall be equal to the Vivendi
Tenant Entity's pro rata share of the rent payable under the master lease and
(ii) the term of any such sublease shall not exceed the term of the master
lease. Vivendi shall indemnify and hold harmless NBC and its Affiliates from and
against any and all Losses resulting from or arising out of or relating to the
breach of any sublease by a Vivendi Tenant Entity after the Closing.
(b) Prior to the Closing, Vivendi shall identify all real
property leases under which Vivendi or its Subsidiaries (other than a Target
Company) is a lessee, obligor or guarantor but where such leased space is
occupied either partially or entirely by a Target Company (the "TARGET COMPANY
TENANT ENTITY"). Vivendi shall use commercially reasonable efforts to cause each
lease for space occupied entirely by a Target Company Tenant Entity to be
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assigned to and assumed by NBC or the Target Company Tenant Entity, and the
provisions of Section 7.30 shall apply to any related guarantee. In the event
that on the Closing Date any lease for space which is occupied entirely by a
Target Company Tenant Entity has not been so assigned and assumed, such Target
Company Tenant Entity and Vivendi or its Subsidiary shall undertake to execute a
sublease for such facility on commercially reasonable terms reasonably
satisfactory to Vivendi and NBC, except that (i) the rent payable under any such
sublease shall be equal to the rent payable under the master lease and (ii) the
term of any such sublease shall not exceed the term of the master lease. With
respect to leased space partially occupied by a Target Company Tenant Entity,
Vivendi shall use commercially reasonable efforts to cause the Vivendi lessee to
sublease that portion of the leased space occupied by the Target Company Tenant
Entity to the Target Company Tenant Entity on commercially reasonable terms
reasonably satisfactory to Vivendi and NBC, except that (i) the rent payable
under any such sublease shall be equal to the Target Company Tenant Entity's pro
rata share of the rent payable under the master lease and (ii) the term of any
such sublease shall not exceed the term of the master lease. NBC shall indemnify
and hold harmless Vivendi and its Affiliates from and against any and all Losses
resulting from or arising out of or relating to the breach of any sublease by a
Target Company Tenant Entity after the Closing.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
Section 8.1 Conditions Precedent to Obligations of Vivendi,
USH3 and the GE Companies. The respective obligations of Vivendi, USH3 and the
GE Companies to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver on or prior to the Closing Date of the
following conditions precedent:
(a) No Injunctions, Orders. There shall not be in effect
any injunction, order or decree issued by a court or Governmental Authority of
competent jurisdiction that enjoins or restrains the consummation of the
transactions contemplated by this Agreement.
(b) Antitrust. A decision under Article 6(1) or 8(2) of
Council Regulation No. 4064/89 of the European Community shall have been
received, and the waiting period required under the HSR Act, including any
extensions thereof, shall have expired or been terminated, and the approvals of
the other Governmental Antitrust Entities that are required by Law to be
obtained prior to consummation of the transactions contemplated by this
Agreement shall have been received and any applicable waiting periods shall have
expired or have been terminated or waived.
(c) Noteholders' Consent. Vivendi shall have obtained the
Noteholders' Consent, if applicable.
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(d) FCC Approval. The parties shall have obtained any
necessary approval or order from the FCC and such approval or order shall have
become effective.
(e) VUE Partnership Agreement. The Defeasance shall have
occurred or the covenants contained in Section 5.05(a)(ii), (iii) and (iv) of
the VUE Partnership Agreement shall otherwise have been eliminated (or modified
in a manner reasonably satisfactory to GE).
(f) Other Approvals. The approvals of Governmental
Authorities, other than the Governmental Antitrust Entities, or any other third
party necessary for the consummation of the transactions contemplated by this
Agreement shall have been received, except where the failure to obtain such
approvals would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect or, in the case of approvals of
Governmental Authorities, would not expose any party hereto, or any of their
respective officers or directors, to criminal liability or other sanctions by
such Governmental Authorities.
(g) Certain Transfers. The transfers of the Excluded
Businesses and the Excluded Properties provided for under Section 7.9 and the
NBC Restructuring shall have been completed.
Section 8.2 Conditions Precedent to Obligations of the GE
Companies. The obligations of the GE Companies to effect the transactions
contemplated by this Agreement are subject to the satisfaction of the following
conditions, any or all of which may be waived, in whole or in part, solely by
GE:
(a) Representations and Warranties. The representations and
warranties of Vivendi and USH3 contained in this Agreement (without giving
effect to any qualifications or limitations as to materiality or Company
Material Adverse Effect set forth therein), shall be true and correct, in each
case as of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case as of such earlier date, and except further to the extent that the
facts or matters as to which such representations and warranties are not so true
and correct as of such dates, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. GE shall have
received a certificate dated as of the Closing Date and signed by an authorized
officer of each of Vivendi and USH3 (without any personal Liability), certifying
as to the fulfillment of the foregoing.
(b) Agreements. Vivendi and USH3 shall have performed and
complied in all material respects with all of their respective undertakings,
covenants, conditions and agreements required by this Agreement and the IACI
Matters Agreement to be performed or complied with by Vivendi and USH3 prior to
or at the Closing. GE shall have received a certificate dated the Closing Date
and signed by an authorized officer of each of Vivendi and USH3 (without any
personal Liability), certifying to the fulfillment of the foregoing.
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(c) Ancillary Agreements. Vivendi and each of its
Affiliates that is a party to any of the Ancillary Agreements shall have duly
executed and delivered to GE a copy of each Ancillary Agreement to which it is a
party.
Section 8.3 Conditions Precedent to Obligations of Vivendi
and USH3. The respective obligations of Vivendi and USH3 to effect the
transactions contemplated by this Agreement are subject to the satisfaction of
the following conditions, any or all of which may be waived, in whole or in
part, solely by Vivendi:
(a) Representations and Warranties. The representations and
warranties of GE and NBC Holding contained in this Agreement (without giving
effect to any qualifications or limitations as to materiality or NBC Material
Adverse Effect set forth therein) shall be true and correct, in each case as of
the Closing Date as though made on the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date, and except further to the extent that the facts or
matters as to which such representations and warranties are not so true and
correct as of such dates, individually or in the aggregate, would not reasonably
be expected to have a NBC Material Adverse Effect. Vivendi shall have received a
certificate, dated as of the Closing Date and signed by an authorized officer of
each of GE and NBC Holding (without any personal Liability), certifying as to
the fulfillment of the foregoing.
(b) Agreements. The GE Companies shall have performed and
complied in all material respects with all of all of their respective
undertakings, covenants, conditions and agreements required by this Agreement
and the IACI Matters Agreement to be performed or complied with by the GE
Companies prior to or at the Closing. Vivendi shall have received a certificate
dated the Closing Date and signed by an authorized officer of each of the GE
Companies (without any personal Liability), certifying to the fulfillment of the
foregoing.
(c) Ancillary Agreements. GE and each of its Affiliates
that is a party to any of the Ancillary Agreements shall have duly executed and
delivered to Vivendi a copy of each Ancillary Agreement to which it is a party.
Section 8.4 Satisfaction of Conditions. None of the
conditions precedent set forth in this Article 8 shall be deemed to be satisfied
until all such conditions precedent shall have been satisfied or waived in
accordance with this Agreement.
ARTICLE 9
TERMINATION
Section 9.1 Termination. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing:
(a) by the mutual written consent of Vivendi and GE;
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(b) by either Vivendi or GE if any permanent Order
preventing the consummation of the transaction, contemplated by this Agreement
shall have become final and non-appealable;
(c) by either Vivendi or GE, by giving written notice of
such termination to the other party, if the Closing shall not have occurred on
or before the first anniversary of the date hereof, provided that the right to
terminate this Agreement under this Section 9.1(c) shall not be available to any
party whose failure to fulfill in any material respect any obligations under
this Agreement has caused or resulted in the failure of the Closing to occur on
or before such date; or
(d) by GE, by giving written notice of termination to
Vivendi, in the event that GE shall not have received, on or before November 5,
2003, a tax opinion in form and substance reasonably satisfactory to GE (the
"TAX OPINION") from Debevoise & Xxxxxxxx or other tax counsel to the effect
that, immediately following the Closing, NBC and GE will be members of an
affiliated group (as defined in Section 1504 of the Code).
Section 9.2 Effect of Termination.
(a) In the event of the termination of this Agreement in
accordance with Section 9.1, this Agreement shall thereafter become void and
have no effect, and no party hereto shall have any Liability to any party hereto
or its respective Affiliates, directors, officers or employees, except that (i)
the obligations of the parties hereto contained in this Section 9.2, in Sections
7.1(e) and 7.4 and in Article 12 (other than Sections 12.9 and 12.11) shall
survive such termination and (ii) nothing herein will relieve any party from
Liability for any breach of this Agreement.
(b) In the event this Agreement shall be terminated and at
such time any party is in material breach of or in default under any term or
provision hereof, such termination shall be without prejudice to, and shall not
affect, any and all rights to damages that any other party may have hereunder or
otherwise under applicable Law.
ARTICLE 10
INDEMNIFICATION
Section 10.1 Indemnification by Vivendi.
(a) Subject to the provisions of this Article 10, after the
Closing, Vivendi shall, or shall cause USH3 to, indemnify and hold harmless,
without duplication, GE and its Affiliates, and, if applicable, their respective
directors, officers, agents, advisors, representatives, employees, successors
and assigns from and against any and all claims, actions, causes of action,
suits, proceedings, judgments, awards, Liabilities, losses, costs, damages or
expenses (including expenses of investigation and of enforcing any of their
respective rights hereunder, and attorneys' fees and expenses in connection with
any claim or Legal Proceeding whether involving a Third Party Claim or a claim
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solely among or between the parties hereto) (collectively, a "LOSS" or the
"LOSSES") resulting from or arising out of or relating to any of the following:
(i) any breach of the representations or warranties
(which, for purposes of this Article 10, shall each be read without reference to
Company Material Adverse Effect, materiality or any similar materiality
qualifier (other than as to the listing of Company Material Contracts under
Section 5.13(a)) made by Vivendi and USH3 in this Agreement (other than Section
5.16) or deemed made pursuant to Section 8.2(a);
(ii) any breach by Vivendi or USH3 of their respective
covenants and agreements set forth in this Agreement (other than with respect to
Taxes);
(iii) any indemnification obligation of Vivendi set
forth in the fourth paragraph under the title "Indemnification by Vivendi" in
the VUE Film Securitization Consent Letter which obligation NBC agreed to
perform pursuant to Section 7.11(c) of this Agreement, but only to the extent
that such indemnification obligation arises from, relates to or otherwise is in
respect of any Default (as defined in the VUE Film Securitization Consent
Letter) that occurred on or prior to the Closing;
(iv) (A) the ownership and operation of the Excluded
Businesses and the Excluded Assets prior to and after the consummation of the
reorganization transactions contemplated by Section 7.9, (B) any trust
arrangement for the UCI Assets established pursuant to Section 7.9(b), (C) the
VUE Supplemental Retirement Account Plan, (D) the Vivendi Retiree Health Plan
and (E) the transactions involving the Excluded Assets and the Excluded
Businesses referred to in Sections 7.9(a) and (b);
(v) any Liabilities arising out of claims related to the
most favored nations or similar provisions set forth in the Contracts listed on
Schedule 10.1(a);
(vi) any Liabilities arising out of claims made under
the VUE Documents relating to any event or occurrence or action or failure to
act by Vivendi or any of its Affiliates on or prior to the Closing, or otherwise
relating to a breach of the VUE Documents that is attributable to any action or
failure to act by Vivendi or any of its Affiliates (other than (i) any action or
failure to act taken at the written request of NBC (including pursuant to
Section 7.11(d)), and (ii) any action or failure to act required to be taken by
Vivendi or any of its Affiliates under the IACI Matters Agreement).
(vii) any Company Employee Benefit Plan for which
Vivendi or its Affiliates assume sponsorship and/or remain responsible as of the
Closing, or any liability retained by Vivendi or its Affiliates, in each case
pursuant to Sections 7.6 and 7.7 (the "RETAINED PLANS");
(viii) any employee benefit plan, including a
multiemployer plan, sponsored currently or during the past six years by any
Person (other than the Target Companies) that would, together with the Target
Companies, be treated as a controlled group of corporations or as a group of
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trades or businesses under common control pursuant to Sections 414(b), (c), (m)
or (o) of the Code or Section 4001(b) of ERISA (the "COMPANY RELATED PARTY
LIABILITIES");
(ix) the acquisition of the Xxxxxx Common Interests,
including (A) the fees and expenses of any legal, financial and accounting
advisors incurred by GE, NBC or any Target Company, solely in connection with
the exercise of the Xxxxxx Put or the Xxxxxx Call, (B) any amounts payable to
Xxxxxx or any of his assignees (other than tax distributions paid by VUE in the
ordinary course) after the Closing Date, solely in respect of the exercise of
the Xxxxxx Common Interests, (C) any Taxes payable by the Company, solely in
connection with the Xxxxxx Put or the Xxxxxx Call and (D) any other disputes
related solely to the exercise of the Xxxxxx Put or the Xxxxxx Call or the
purchase of the Xxxxxx Common Interests;
(x) any dispute (whether currently existing or arising)
between Vivendi or any of its Affiliates, on the one hand, and Xxxxxx or any of
its Affiliates (other than IACI or any of its Affiliates) or IACI or any of its
Affiliates, on the other hand, relating to the transactions contemplated by this
Agreement or the Ancillary Agreements;
(xi) Liabilities referred to in item 17 of Schedule
5.8(a); and
(xii) (A) fines or penalties arising from and the actual
out-of-pocket cost to cure any violation of any Environmental Law by the Target
Companies or any of their Affiliates or any predecessors in interest with
respect to the Target Companies occurring or first commencing on or prior to the
Closing Date and not provided for in the EHS Work Plan pursuant to Section 7.26;
(B) the reasonable out-of-pocket cost of Remedial Action from the Release of any
Hazardous Substance (y) on, at or from any operation, facility or property
currently or formerly owned or operated by the Target Companies or their
Affiliates or predecessors in interest on or prior to the Closing Date, or (z)
at any property to which Hazardous Substances used or generated by the Target
Companies or their Affiliates, subsidiaries or predecessors in interest were
first sent or first came to be present on or prior to the Closing Date;
provided, however, that such costs are excluded for Remedial Action that (i) was
undertaken despite being in compliance with applicable Environmental Laws or to
the extent not undertaken in a commercially reasonable and cost-effective
manner, which would include, where appropriate, natural attenuation, (ii) was
not required by applicable Environment Laws, and/or (iii) exceeded cleanup
standards applicable to the specific property, including, where available,
risk-based cleanup standards and deed restrictions (unless such restrictions
materially impair the use or value of such property for the property's use as of
the Closing Date), and/or (iv) is the sole legal obligation of an independent
third party and none of Vivendi or its Affiliates has any obligation therefor
unless and until the responsible third party fails to comply with its
obligations; or (C) claims alleging personal injury (including death), property
damage or adverse health effects as a result of exposure to or Release of
Hazardous Substances or violations of Environmental Laws on or prior to the
Closing Date and made by third parties, including any past or present employees
of any Target Company or its Affiliates, to the extent such claims are not
otherwise covered by workers' compensation or other similar insurance; provided,
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however, such indemnity obligation is subject to the limitations in Sections
10.6 and 10.7(e) hereof.
(b) GE shall take and shall cause its Affiliates to take
commercially reasonable steps to mitigate any Loss upon becoming aware of any
event which would reasonably be expected to, or does give rise to, any Loss. In
connection with any Loss for which GE or any of its Affiliates (including NBC)
may seek indemnification from Vivendi under this Agreement that is a Loss
incurred by NBC, Vivendi shall, without duplication, (i) make all payments
directly to NBC for the Losses incurred by NBC and (ii) make all payments to GE
or any such Affiliate (other than NBC) for any other Losses incurred by such
entities in connection with such Loss except as otherwise directed by GE.
Section 10.2 Indemnification by GE.
(a) Subject to the provisions of this Article 10, after the
Closing, GE shall, or shall cause NBC Holding to, indemnify and hold harmless,
without duplication, each of USH3 and Vivendi and each of their respective
Affiliates, and, if applicable, their respective directors, officers, agents,
advisors, representatives, employees, successors and assigns from and against
any Loss or Losses resulting from or arising out of or relating to any of the
following:
(i) any breach of the representations or warranties
(which, for purposes of this Article 10, shall each be read without reference to
NBC Material Adverse Effect, materiality or any similar materiality qualifier
(other than as to the listing of NBC Material Contracts under Section 6.13(a))
made by GE and NBC Holding in this Agreement (other than Section 6.16) or deemed
made pursuant to Section 8.3(a);
(ii) any breach by GE or NBC Holding of their respective
covenants and agreements set forth in this Agreement (other than with respect to
Taxes);
(iii) (A) the ownership of (1) the business and assets
of the entities listed on Schedule 1.1(e) and (2) the business and assets to be
transferred pursuant to paragraph 2 of Schedule 2.1, in each case both prior to
and after the NBC Restructuring, and (B) the NBC Restructuring;
(iv) any indemnification obligation of Vivendi arising
under Section 7.01(a)(ii) of the VUE Transaction Agreement which is attributable
to or caused by any failure by the Company or its controlled Affiliates
described in such Section, but only to the extent that such failure occurred
after the Closing and is not attributable to any action or failure to act by
Vivendi or its Affiliates and is not an action which gives rise to an
indemnification obligation of Vivendi under Section 4.3 of the IACI Matters
Agreement.
(v) (A) any indemnification obligation of Vivendi
arising under Section 7.01(a)(iv) of the VUE Transaction Agreement, but only to
the extent that the "Excluded Liability" (as defined in Annex A to the VUE
Transaction Agreement) is a Liability of the Company Business acquired by NBC
hereunder;
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(B) any indemnification obligation of Vivendi arising
under Section 7.01(a)(v) of the VUE Transaction Agreement in respect of any
event described in such Section, but only to the extent that such event occurred
after the Closing and is not attributable to any action or failure to act of
Vivendi or its Affiliates and is not an action which gives rise to an
indemnification obligation of Vivendi under Section 4.3 of the IACI Matters
Agreement;
(vi) any indemnification obligation of Vivendi arising
under Section 7.02(b)(i) of the VUE Transaction Agreement which is attributable
to or caused by any breach by the Company or its controlled Affiliates described
in such Section, but only to the extent that such breach occurred after the
Closing, and is not attributable to any action or failure to act of Vivendi or
its Affiliates and is not an action which gives rise to an indemnification
obligation of Vivendi under Section 4.3 of the IACI Matters Agreement;
(vii) (A) fines or penalties arising from and the actual
out-of-pocket cost to cure any violation of any Environmental Law by the NBC
Companies or any of their Affiliates or any predecessors in interest with
respect to the NBC Companies occurring or first commencing on or prior to the
Closing Date and not provided for in the EHS Work Plan pursuant to Section 7.26;
(B) the reasonable out-of-pocket cost of Remedial Action from the Release of any
Hazardous Substance (y) on, at or from any operation, facility or property
currently or formerly owned or operated by the NBC Companies or their Affiliates
or predecessors in interest on or prior to the Closing Date, or (z) at any
property to which Hazardous Substances used or generated by the NBC Companies or
their Affiliates, subsidiaries or predecessors in interest were first sent or
first came to be present on or prior to the Closing Date; provided, however,
that such costs are excluded for Remedial Action that (i) was undertaken despite
being in current compliance with applicable Environmental Laws or to the extent
not undertaken in a commercially reasonable and cost-effective manner, which
would include, where appropriate, natural attenuation, (ii) was not required by
applicable Environmental Laws, and/or (iii) exceeded cleanup standards
applicable to the specific property, including, where available, risk-based
cleanup standards and deed restrictions (unless such restrictions materially
impair the use or value of such property for the property's use as of the
Closing Date), and/or (iv) is the sole legal obligation of an independent third
party and none of NBC or its Affiliates has any obligation therefor, unless and
until the responsible third party fails to comply with its obligation; or (C)
claims alleging personal injury (including death), property damage or adverse
health effects as a result of exposure to or Release of Hazardous Substances or
violations of Environmental Laws on or prior to the Closing Date and made by
third parties, including any past or present employees of any NBC Company or its
Affiliates, to the extent such claims are not otherwise covered by workers'
compensation or other similar insurance; provided, however, that such indemnity
obligation is subject to the limitations in Sections 10.6 and 10.7(e) hereof;
and
(viii) any employee benefit plan, including a
multiemployer plan, sponsored currently or during the past six years by any
Person (other than the NBC Companies) that would, together with the NBC
Companies, be treated as a controlled group of corporations or as a group of
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trades or businesses under common control pursuant to Section 414(b), (c), (m)
or (o) of the Code or Section 4001(b) of ERISA ("NBC RELATED PARTY
LIABILITIES").
(b) Vivendi shall take and shall cause its Affiliates to
take commercially reasonable steps to mitigate any Loss upon becoming aware of
any event which would reasonably be expected to, or does give rise to, any Loss.
Section 10.3 Indemnification by NBC. Subject to the
provisions of this Article 10, after the Closing, NBC shall indemnify and hold
harmless Vivendi and its Affiliates, and, if applicable, their respective
directors, officers, agents, employees, successors and assigns from and against
any Loss or Losses resulting from or arising as a consequence of an election by
Vivendi, at the written request of NBC pursuant to Section 7.11(d), pursuant to
Section 7.02(b)(ii) of the VUE Transaction Agreement that any of the covenants
set forth in Section 5.05(b) of the VUE Partnership Agreement shall not apply,
but only to the extent that such Loss is not attributable to any action or
failure to act of Vivendi or its Affiliates which gives rise to an
indemnification obligation of Vivendi under Section 4.3 of the IACI Matters
Agreement.
Section 10.4 Third Party Claims.
(a) If any claim, demand or liability is asserted by any
third party against any of the Persons entitled to be indemnified under this
Article 10 (the "INDEMNIFIED PARTY"), the Indemnified Party shall so notify in
writing the party required to provide indemnity hereunder (the "INDEMNIFYING
PARTY") of the assertion of any such third party claim or commencement of any
action, suit or proceeding (a "THIRD PARTY CLAIM") for which indemnification
pursuant to this Article 10 may be sought, but the failure of an Indemnified
Party to give prompt notice to the Indemnifying Party shall not affect the
rights of the Indemnified Party to indemnification hereunder, except (i) as
provided in Section 10.6 or (ii) if (and then only to the extent that) the
Indemnifying Party is materially prejudiced by reason of such failure to give
timely notice. Within twenty (20) days after delivery of such notification, the
Indemnifying Party may, upon written notice thereof to the Indemnified Party
(and so long as the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party for Losses related to such Third Party Claim),
assume control of the defense of such Third Party Claim at the Indemnifying
Party's own expense with counsel reasonably satisfactory to the Indemnified
Party. If the Indemnifying Party does not so assume control of such defense, the
Indemnified Party shall be entitled to control such defense. The party not
controlling such defense may participate therein at its own expense; provided
that if the Indemnifying Party assumes control of such defense and (i) the
Indemnified Party reasonably concludes that the Indemnifying Party and the
Indemnified Party have a conflict of interest or different defenses available
with respect to such Third Party Claim or (ii) the Indemnifying Party has not in
fact employed counsel to assume control of such defense, the reasonable fees and
expenses of counsel to the Indemnified Party shall be considered "Losses" for
purposes of this Agreement. The party controlling such defense shall keep the
other party advised of the status of such Third Party Claim and the defense
thereof. The Indemnified Party shall not agree to any settlement of such Third
Party Claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. The Indemnifying Party shall not
agree to any settlement of such Third Party Claim without the prior written
consent of the Indemnified Party, which consent shall not be unreasonably
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withheld; provided, however, that such consent shall not be withheld by the
Indemnified Party if the Indemnified Party's obligation under such settlement is
limited to the payment of monetary damages for which the Indemnifying Party
shall be entirely responsible and such settlement includes an unqualified
release of the Indemnified Party from all liability in respect of the matters
that were the subject of such Third Party Claim.
(b) The parties hereto shall reasonably cooperate in the
defense or prosecution of any Third Party Claim, with such cooperation to
include (i) the retention and the provision to the Indemnifying Party of records
and information that are reasonably relevant to such Third Party Claim, and (ii)
the making available of employees on a mutually convenient basis for providing
additional information and explanation of any material provided hereunder.
Section 10.5 Direct Claims. With respect to claims for
indemnification pursuant to this Article 10, other than Third Party Claims, the
Indemnified Party shall use its reasonable best efforts promptly to notify in
writing the Indemnifying Party of such claims, but the failure of the
Indemnified Party so to give notice to the Indemnifying Party shall not affect
the rights of the Indemnified Party to indemnification hereunder, except (i) as
provided in Section 10.6 or (ii) if (and then only to the extent that) the
Indemnifying Party is materially prejudiced by reason of such failure to give
timely notice. The Indemnifying Party and the Indemnified Party will endeavor to
negotiate in good faith to resolve such dispute for a period of twenty (20)
days, if practicable, or such other period of time as they shall mutually agree
in writing, and to the extent any such dispute is not so resolved, either party
shall be entitled to pursue any and all remedies available at law or in equity
with respect to such dispute.
Section 10.6 Expiration. Notwithstanding anything in this
Agreement to the contrary, if the Closing shall have occurred, all
representations and warranties made in Article 5 (other than Sections 5.2,
5.3(a), (b), (c) and (d), 5.16, and, to the extent provided in the last sentence
of this Section 10.6, Section 5.3(g)), and Article 6 (other than Sections 6.2,
6.3 and 6.16), and all indemnification obligations under Sections 10.1(a)(i) and
10.2(a)(i) with respect to any such representation or warranty, shall terminate
and expire on, and no action or proceeding seeking damages or other relief for
breach of any thereof or for any misrepresentation or inaccuracy with respect
thereto shall be commenced after, the 15-month anniversary of the Closing Date,
unless prior to such date a claim for indemnification with respect thereto shall
have been made, with reasonable specificity, by written notice given in
accordance with Section 10.4 or 10.5. Notwithstanding anything in this Agreement
to the contrary, if the Closing shall have occurred, all indemnification
obligations under Sections 10.1(a)(xii)(A) and (C) and 10.2(a)(vii)(A) and (C)
shall terminate and expire on, and no action or proceeding seeking damages or
other relief for indemnification thereunder shall be commenced after, the fifth
anniversary of the Closing Date and the indemnification obligations under
Sections 10.1(a)(xii)(B) and 10.2(a)(vii)(B) shall terminate and expire on, and
no action or proceeding seeking damages or other relief for indemnification
thereunder shall be commenced after the tenth anniversary of the Closing Date,
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unless prior to such date a claim for indemnification with respect thereto shall
have been made, with reasonable specificity, by written notice given in
accordance with Section 10.4 or 10.5. If the Closing shall have occurred, the
representations and warranties contained in Section 5.16(a)(i), (a)(ii), (a)(v),
(a)(vi), (a)(vii), (a)(x), (a)(xiii), (a)(xiv) and (a)(xviii) and Section
6.16(a)(i), (a)(ii), (a)(v), (a)(vi), (a)(vii), (a)(x), (a)(xiii), (a)(xiv) and
(a)(xviii) shall terminate and expire on the Closing, and no action or
proceeding seeking damages or other relief for breach of any thereof or for any
misrepresentation or inaccuracy with respect thereto shall be commenced after
the Closing. All other representations and warranties contained in Sections
5.3(g) (to the extent a breach thereof would give rise to an indemnification
obligation under Section 11.2(a)(ii)), 5.16 and 6.16 shall terminate and expire
sixty days after the expiration of the relevant statute of limitations.
Section 10.7 Certain Limitations.
(a) Notwithstanding the provisions of this Article 10,
Vivendi shall not have any indemnification obligations for Losses under Section
10.1(a)(i), (i) for any individual item where the Loss (together with all Losses
arising out of the same event or series of related events) relating thereto is
less than $10,000,000 and (ii) in respect of each individual item where the Loss
(together with all Losses arising out of the same event or series of related
events) relating thereto is equal to or greater than $10,000,000, unless the
aggregate amount of all such Losses exceeds $325,000,000, in which event Vivendi
shall be required to pay the amount of such Losses which exceeds $325,000,000.
In no event shall the aggregate indemnification to be paid by USH3 and/or
Vivendi collectively under Section 10.1(a)(i) exceed $2,087,891,408.
(b) Notwithstanding the provisions of this Article 10, GE
shall not have any indemnification obligations for Losses under Section
10.2(a)(i), (i) for any individual item where the Loss (together with all Losses
arising out of the same event or series of related events) relating thereto is
less than $10,000,000 and (ii) in respect of each individual item where the Loss
(together with all Losses arising out of the same event or series of related
events) relating thereto is equal to or greater than $10,000,000, unless the
aggregate amount of all such Losses exceeds $325,000,000, in which event GE
shall be required to pay the amount of such Losses which exceeds $325,000,000.
In no event shall the aggregate indemnification to be paid by GE under Section
10.2(a)(i) exceed $2,087,891,408.
(c) Notwithstanding the provisions of this Article 10,
Vivendi shall only have indemnification obligations for Losses under Section
10.1(a)(v), (i) for 50% of every dollar of Loss relating thereto up to an
aggregate amount of all such Losses equal to $50,000,000 and (ii) for all Losses
relating thereto in excess of $50,000,000.
(d) Notwithstanding any other provision of this Agreement,
the rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy or breach of any representation, warranty, covenant or
agreement or failure to fulfill any condition shall in no way be limited by the
fact that the act, omission, occurrence or other state of facts upon which any
claim of any such inaccuracy or breach is based may also be the subject matter
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of any other representation, warranty, covenant or agreement as to which there
is no inaccuracy or breach. The representations and warranties of any party
shall not be affected or deemed waived by reason of any investigation made by or
on behalf of any other party (including but not limited to by any of its
advisors, consultants or representatives) or by reason of the fact that such
other party or any of such advisors, consultants or representatives knew or
should have known that any such representation or warranty is or might be
inaccurate.
(e) Notwithstanding the provisions of this Article 10, with
respect to claims for indemnification under Section 10.1(a)(xii), the aggregate
Losses shall be allocated as follows:
(i) aggregate Losses up to and including $15,000,000
shall be borne by Vivendi (or Vivendi shall cause USH3 to bear such Losses);
(ii) aggregate Losses greater than $15,000,000 up to but
not exceeding $57,000,000 shall be allocated 50 percent (50%) to Vivendi (or
Vivendi shall cause USH3 to bear such allocation of Losses) and 50 percent (50%)
to GE; and
(iii) aggregate Losses greater than $57,000,000 shall be
borne by NBC after Closing;
provided, however, that any Losses required to be borne by Vivendi (and/or USH3)
or GE, as the case may be, shall be paid directly to third parties by Vivendi
(and/or USH3) or GE as required hereunder, and provided further that any Losses
borne by Vivendi (and/or USH3) for implementation (but not development) of the
EHS Work Plan of Vivendi as contemplated by Section 7.26 of this Agreement shall
count as Losses for purposes of such allocation.
(f) Notwithstanding the provisions of this Article 10, with
respect to claims for indemnification under Section 10.2(a)(vii), the aggregate
Losses shall be allocated as follows:
(i) aggregate Losses up to and including $36,000,000
shall be borne solely by GE; and
(ii) aggregate Losses greater than $36,000,000 shall be
borne by NBC after Closing;
provided, however, that any Losses required to be borne by GE shall be paid
directly to third parties by GE as required hereunder, and provided further that
any Losses borne by GE for implementation (but not development) of the EHS Work
Plan of GE as contemplated by Section 7.26 of this Agreement shall count as
Losses for purposes of such allocation.
Section 10.8 Exclusive Remedy. The parties hereto
acknowledge and agree that after the Closing the remedies provided for in this
Agreement and in the IACI Matters Agreement shall be the parties' sole and
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exclusive remedy with respect to the subject matter of this Agreement and the
IACI Matters Agreement, excluding any claims for common law fraud or intentional
misrepresentation.
Section 10.9 Limitation on Damages. Notwithstanding
anything to the contrary contained herein, no party to this Agreement (or any of
its Affiliates) shall, in any event, be liable or otherwise responsible to any
other party (or any of its Affiliates) for any unforeseeable or punitive damages
of such other party (or any of its Affiliates) arising out of or relating to
this Agreement or the performance or breach hereof, other than any such damages
arising in connection with a Third Party Claim.
Section 10.10 Calculation of Losses.
(a) The amount of any Loss for which indemnification is
provided under Section 10.1, 10.2 or 10.3 shall be net of any amounts actually
recovered by the Indemnified Party under insurance policies with respect to such
Loss and of any amounts recovered pursuant to third-party indemnification
agreements, adjusted in accordance with Section 10.10(b) and characterized in
accordance with Section 10.11. To the extent that indemnification for any Loss
is provided under Sections 10.1, 10.2 or 10.3 and subsequently amounts are
recovered by the Indemnified Party under insurance policies with respect to such
Loss or from any third party pursuant to third-party indemnification agreements,
the Indemnified Party shall pay to the Indemnifying Party all such amounts
recovered by the Indemnified Party promptly following the receipt of such
amounts.
(b) To the extent provided herein, the amount of any Loss
(including for purposes of this Section 10.10(b), any liability for Taxes) that
gives rise to an indemnification payment pursuant to this Agreement shall be
(without duplication) (i) increased by any Taxes incurred by the Indemnified
Party as a result of the receipt of the indemnity payment (as increased pursuant
to this Section 10.10(b) and (ii) reduced to the extent provided in this Section
10.10(b) by any decrease in Taxes as a result of Tax deduction or credit (a "TAX
BENEFIT") actually realized by the Indemnified Party as a result of the event
giving rise to the indemnity payment. If any such Tax Benefit is actually
realized before the date of an indemnification payment, such indemnification
payment shall be reduced to take into the account the reduction in the relevant
Loss as a result of such Tax Benefit. If such Tax Benefit is actually realized
after the date of an indemnification payment but before the end of fifth year
following the year in which the relevant Loss occurred, the Indemnified Party
shall promptly after such Tax Benefit is actually realized make a payment to the
applicable Indemnifying Party to take into account the reduction in the relevant
Loss as a result of such Tax Benefit, such payments by an Indemnified Party not
to exceed the indemnification payments previously received by such Indemnified
Party from the Indemnifying Party in respect of such Loss. If the ceiling set
forth in the last sentence of Section 10.7(a) or Section 10.7(b), as the case
may be, has been met, no further payments to the applicable Indemnifying Party
described in the preceding sentence shall be required to be made. A Tax Benefit
that results from an event giving rise to the indemnity payment shall be
considered actually realized by an Indemnified Party only to the extent that,
but for such Tax Benefit, such Indemnified Party's Tax liability would be higher
than it is with such Tax Benefit (e.g., deductions credits or losses of the
Indemnified Party that do not result from the event giving rise to the indemnity
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payment shall be deemed to be used prior to the use of any deduction, credit or
loss that does result from the event giving rise to the indemnity payment). If a
realized Tax Benefit that has been taken into account under this Section
10.10(b) is rendered unavailable by reason of a carryback of any Tax Benefit
from a subsequent period, the Indemnifying Party shall make an appropriate
reconciliation payment to the Indemnified Party, provided that the Indemnified
Party shall be required to take such previously realized Tax Benefit into
account in accordance with this Section 10.10(b) without regard to the five year
limitation described above. The amount of any increase, reduction or payment
hereunder shall be adjusted to reflect any final determination with respect to
the Indemnified Party's liability for Taxes, and if necessary, payments shall be
made between the parties to this Agreement to reflect such adjustment.
Determinations of any Tax Benefit or Tax cost relating to NBC and its
Subsidiaries shall for purposes of this Section 10.10 be made using the NBC
Standalone Tax Principles. No assignment (including any assignment of the NBC
Shares) by any party shall increase the other party's obligations under this
Section 10.10(b) other than by virtue of any reduction in the USH3 Common Equity
Ratio or GE Common Equity Ratio. For purposes of applying this Section 10.10(b)
to any indemnity for Taxes under Article 11, GE and Vivendi shall be deemed to
be Indemnified Parties and Tax Benefits shall include any such benefits realized
by their respective Subsidiaries.
Section 10.11 Characterization of Indemnity Payments. All
persons entitled to indemnifications under this Agreement shall treat any
indemnity payment made pursuant to this Article 10 or Article 11 as an
adjustment to the purchase consideration for all U.S. federal, state, local and
foreign income Tax purposes.
Section 10.12 Liberty Litigation and SEC and COB
Investigations.
(a) Notwithstanding anything to the contrary herein, none
of the provisions of this Article 10 (except the definition of "Loss" and except
Sections 10.4(b), 10.8 and 10.9), shall apply to this Section 10.12.
(b) After the Closing, Vivendi shall indemnify and hold
harmless GE, the Company, NBC and their Affiliates (without duplication) and, if
applicable, their directors, officers, agents, employees, advisors and
representatives, successors and assigns from and against all Losses resulting or
arising from any of the Liberty Litigation, the SEC Investigation and COB
Investigation.
(c) Vivendi and its Affiliates shall have the exclusive
right to control, at their own expense, the Liberty Litigation, the SEC
Investigation and the COB Investigation.
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ARTICLE 11
TAX CONTROVERSY; TAX INDEMNITIES
Section 11.1 Tax Controversy.
(a) Each party shall notify the other party in reasonable
detail of such party's (or any of its Affiliate's) receipt from a Taxing
Authority of any notice of the commencement of any Tax audit, examination or
judicial or administrative proceeding or receipt from a Taxing Authority of any
proposed adjustment, demand or notice of deficiency which if determined
adversely to the relevant taxpayer or after the lapse of time would be grounds
for indemnification by Vivendi or USH3 under Section 11.2 or GE under Section
11.3 (each, a "COVERED PROCEEDING"). To the extent a party fails to give notice
as required in the preceding sentence and such failure is actually prejudicial
to the other party, such other party shall not have an obligation to indemnify
the party failing to give notice in connection with the portion (if any) of such
asserted Tax obligation that would not have been incurred but for such failure.
(b) Subject to the other provisions of this Section 11.1,
(i) USH3 shall have the right to control any Covered Proceeding with respect to
a Tax Return described in Section 7.12(c)(i) or 7.12(c)(ii) and shall notify GE
in writing within 30 days of the commencement of such Covered Proceeding and
(ii) GE shall have the right to control any Covered Proceeding which USH3 does
not control under clause (i).
(c) With respect to any Covered Proceeding, (i) the party
controlling such Covered Proceeding shall (A) control and direct such proceeding
through representatives of its own choosing and its expense, (B) notify the
other party of significant developments with respect to such proceeding and keep
the other party reasonably informed and consult with the other party with
respect to any issue that reasonably could be expected to have an adverse effect
on the other party or any of its Affiliates, (C) give to the other party a copy
of any Tax adjustment proposed in writing with respect to such Covered
Proceeding and copies of any other correspondence with the relevant Taxing
Authority relating to such Covered Proceeding, and (D) otherwise permit the
other party to participate in such proceeding at such other party's own expense,
(ii) if and to the extent required, the party not controlling such Covered
Proceeding shall promptly execute or cause to be executed by the relevant
taxpayer reasonable powers of attorney or other documents authorizing such
representatives of the party controlling such Covered Proceeding to act in
connection with such Covered Proceeding, and (iii) the party controlling such
Covered Proceeding shall not pay or compromise any Tax liability asserted in
such Covered Proceeding which (A) purports to bind the other party or any of its
Affiliates or (B) reasonably could be expected to have a material adverse effect
on the other party, without the other party's prior written consent, which
consent must not be unreasonably withheld or delayed. Except with respect to a
Vivendi Straddle Period Return, this Section 11.1(c) shall not apply to any GE
Consolidated Return Liability (as defined in the GE-NBC Universal Tax Sharing
Agreement), with respect to which the provisions of Section 5 of the GE-NBC
Universal Tax Sharing Agreement shall control.
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Section 11.2 Tax Indemnification by Vivendi and USH3.
(a) From and after the Closing Date, Vivendi and USH3 shall
(without duplication) pay GE an amount equal to the product of the GE Common
Equity Ratio as of the date of payment and the amount of any liabilities or
Losses of any Target Company resulting from or arising out of any of the
following:
(i) any Taxes imposed on or with respect to any Target
Company with respect to any Pre-Closing Period;
(ii) any breach or inaccuracy of any of the
representations or warranties contained in Section 5.3(g) (to the extent such
liabilities or Losses relate to Taxes) or Section 5.16 that survive the Closing
or the failure to perform any covenant contained in this Agreement with respect
to Taxes;
(iii) any Taxes arising as a result of an inclusion
under Section 951(a) of the Code (or any similar or corresponding provision of
state or local Tax law) with respect to any Target Company attributable to (a)
"subpart F income," within the meaning of Section 952(a) of the Code (or any
similar or corresponding provision of state or local Tax law), received or
accrued on or prior to the Closing Date or (b) the holding of "United States
property," within the meaning of Section 956 of the Code (or any similar or
corresponding provision of state or local Tax law), made on or prior to the
Closing Date;
(iv) any Taxes imposed upon or with respect to the
Excluded Businesses, UCI Assets or any of the pre-closing reorganization
transactions contemplated by Section 7.9, or that are attributable to any
deferred intercompany transaction or any excess loss account being taken into
income as a result of any of the transactions contemplated by this Agreement;
(v) any Taxes arising out of the payment or cancellation
of intercompany indebtedness between any Target Company and the USH3 Group or
any of their Affiliates;
(vi) any Taxes that would not have arisen but for the
filing of an amended Tax Return pursuant to the first sentence of Section
7.12(c)(vii)(A);
(vii) any Taxes arising as a result of the distribution,
transfer, settlement or repayment of, or other transaction involving the USI BV
Receivable (or any distribution or transfer of the proceeds received in respect
of any such receivable) on or prior to the Closing Date, including without
limitation any Taxes incurred after the Closing Date as a result of any increase
in the earnings and profits of BV1 or BV2 arising therefrom; and
(viii) any Dutch Tax (including withholding Tax) payable
by BV1 or BV2 as a result of VUE's being treated as a fiscally nontransparent
entity under Dutch Law, in respect of income earned prior to the Closing Date by
any Acquired Company.
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(b) From and after the Closing, Vivendi and USH3 shall be
responsible for, pay, indemnify, defend and hold harmless each of NBC and its
Subsidiaries and if applicable each of their respective directors, officers,
agents, advisors, representatives, employees, successors and assigns for, from
and against any and all liabilities or Losses resulting from or arising from any
Taxes of any Person other than any of the Target Companies for which any of the
Target Companies is liable (A) by virtue of Treasury Regulation Section 1.1502-6
or any similar provision of state, local or foreign law as a result of being a
member (or a predecessor to a member) of a consolidated, combined, unitary or
similar group on or prior to the Closing Date or (B) by virtue of any
contractual obligations entered into prior to the Closing Date (other than this
Agreement or any Ancillary Agreement) with respect to Taxes attributable to a
Pre-Closing Period.
Section 11.3 Tax Indemnification by GE.
(a) From and after the Closing Date, GE shall (without
duplication) pay USH3 an amount equal to the product of the USH3 Common Equity
Ratio as of the date of payment and the amount of any liabilities or Losses of
any NBC Company (excluding, for the avoidance of doubt, any Target Company)
resulting from or arising out of any of the following:
(i) any Taxes imposed on or with respect to any NBC
Company in connection with the NBC Restructuring;
(ii) any Taxes imposed on any NBC Company (other than
any Target Company) (including any such Taxes compensated by a payment made by
NBC to GE under Section 5(c) of the GE-NBC Universal Tax Sharing Agreement) with
respect to any Pre-Closing Period;
(iii) any breach or inaccuracy of any of the
representations or warranties contained in Section 6.16 that survive the Closing
or the failure to perform any covenant contained in this Agreement with respect
to Taxes;
(iv) any Taxes arising as a result of an inclusion under
Section 951(a) of the Code (or any similar or corresponding provision of state
or local Tax law) with respect to any NBC Company (other than any Target
Company) attributable to (a) "subpart F income," within the meaning of Section
952(a) of the Code (or any similar or corresponding provision of state or local
Tax law), received or accrued on or prior to the Closing Date or (b) the holding
of "United States property," within the meaning of Section 956 of the Code (or
any similar or corresponding provision of state or local Tax law), made on or
prior to the Closing Date;
(v) any Taxes that would not have arisen but for the
filing of an amended Tax Return by a NBC Company at the direction of GE for a
Pre-Closing Period that results in a Tax in a post-Closing period; and
(vi) any Taxes arising out of the payment or
cancellation of intercompany indebtedness between any NBC Company and GE or any
of its Affiliates.
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(b) From and after the Closing, GE shall be responsible
for, pay, indemnify, defend and hold harmless each of NBC and its Subsidiaries
and if applicable each of their respective directors, officers, agents,
advisors, representatives, employees, successors and assigns for, from and
against any and all liabilities or Losses resulting from or arising from any
Taxes of any Person other than any of the NBC Companies for which any of the NBC
Companies (other than any Target Company) may be liable (A) by virtue of
Treasury Regulation Section 1.1502-6 or any similar provision of state, local or
foreign law as a result of being a member (or a predecessor to a member) of a
consolidated, combined, unitary or similar group on or prior to the Closing Date
or (B) by virtue of any contractual obligations entered into prior to the
Closing Date (other than this Agreement or any Ancillary Agreement) with respect
to Taxes attributable to a Pre-Closing Period.
(c) Taxes referred to in Sections 11.2(a) and 11.3(a) shall
be determined using the NBC Standalone Tax Principles, provided that, to the
extent such tax principles do not already do so, any such principles shall take
into account the deductibility of local Taxes from state Taxes and the
deductibility of state and local Taxes from federal Taxes (using the highest
state and federal marginal rates applicable to entities of the relevant type for
the relevant Tax period).
Section 11.4 Time Limits. Any claim for indemnity under
this Article 11 shall be made prior to sixty (60) days after the expiration of
the applicable Tax statute of limitations with respect to the relevant taxable
period (including all periods of extension, whether automatic or permissive).
Section 11.5 Payment. Any indemnification payment required
to be made by Vivendi or USH3 pursuant to Section 11.2 or by GE pursuant Section
11.3 shall be made within five business days following written notice from the
other party that payment of such liability is due. Any other payments required
to be made pursuant to this Article 11 shall be made within five business days
of the event that establishes the entitlement to such payment. In the event that
a payment is made pursuant to Section 7.12, Section 10.10(b) or this Article 11
and there is a change in the underlying facts giving rise to such payment, the
party originally receiving payment shall make a reconciliation payment to the
other party.
Section 11.6 Coordination of Provisions. In case of any
inconsistency between Article 10 and Article 11, Article 11 shall control with
respect to Tax matters (other than Section 10.10(b)). No provision of this
Article 11 shall apply until immediately after the Closing.
ARTICLE 12
GENERAL PROVISIONS
Section 12.1 Frustration of the Closing Conditions. Neither
USH3, Vivendi nor the GE Companies may rely on the failure of any condition
precedent set forth in Article 8 to be satisfied if such failure was caused by
such party's (or parties') failure to act in good faith or to use its reasonable
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best efforts to consummate the transactions contemplated by this Agreement.
Section 12.2 Governing Law. This Agreement shall be
governed by, and construed in accordance with, the Laws of the State of New York
applicable to agreements to be performed entirely within such state, including
all matters of construction, validity and performance, without regard to
principles of conflicts of law thereof.
Section 12.3 Notices. All notices, requests, permissions,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been duly given (a) five (5) Business Days following sending by
registered or certified mail, postage prepaid, (b) when sent, if sent
electronically or by facsimile, during the normal business hours on any Business
Day of the recipient, or one Business Day after the date sent, if sent
electronically or by facsimile, after the normal business hours of the
recipient, provided that the electronic message is promptly confirmed by
facsimile confirmation thereof and the sending party receives written
confirmation that the facsimile has been successfully transmitted in its
entirety to the intended recipient, (c) when delivered, if delivered personally
to the intended recipient and (d) one (1) Business Day following sending by
overnight delivery via a national courier service (two (2) Business Days
following sending by overnight international delivery via international courier
service), in each case, addressed to a party at the following address for such
party:
To Vivendi or USH3:
Vivendi Universal, S.A.
00, xxxxxx xx Xxxxxxxxx
00000 Xxxxx cedex 08
France
Attention: General Counsel
Facsimile: 33 1 71 71 11 79
and
Vivendi Universal, S.A.
000 Xxxxx Xxxxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: 000-000-0000
With a copy to (which shall not constitute notice):
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Xxxxxxx Xxxxxx, Esq.
Facsimile: 000-000-0000
134
To any of the GE Companies:
General Electric Company
0000 Xxxxxx Xxxxxxxx, X0
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Vice President and Senior Counsel for
Transactions
Facsimile: 000-000-0000
and
National Broadcasting Company, Inc.
00 Xxxxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President and General Counsel
Facsimile: 000-000-0000
With a copy to (which shall not constitute notice):
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx X. Xxxx, Esq.
Facsimile: 000-000-0000
Such names and addresses may be changed by notice given in accordance with this
Section 12.3.
Section 12.4 Entire Agreement. This Agreement (including
the Exhibits and Schedules, all of which are a part hereof), the Confidentiality
Agreement and the Ancillary Agreements contain the entire understanding of the
parties hereto and thereto with respect to the subject matters contained herein
and therein, supersede and cancel all prior agreements, negotiations,
correspondence, undertakings and communications of the parties, oral or written,
respecting such subject matter.
Section 12.5 Amendment; Waiver. This Agreement can be
amended, supplemented or changed, and any provision hereof can be waived, only
by a written instrument making specific reference to this Agreement signed by
the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. Any of the
parties hereto may: (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered pursuant hereto and (c) waive compliance by
135
the other party with any of the agreements or conditions contained herein. Any
such extension or waiver shall be valid only if set forth in a written
instrument. The failure of a party to assert any of its rights hereunder shall
not constitute a waiver of such rights nor in any way affect the validity of
this Agreement or any part hereof or the right of such party thereafter to
enforce each and every provision of this Agreement. No waiver of any breach of
or noncompliance with this Agreement shall be held to be a waiver of any other
or subsequent breach or noncompliance.
Section 12.6 Headings; References.
(a) The article, section and paragraph headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. All references herein to
"Articles," "Sections," "Schedules" or "Exhibits" shall be deemed to be
references to Articles or Sections hereof or Schedules or Exhibits hereto unless
otherwise indicated.
(b) The Schedules to this Agreement shall be construed with
and as an integral part of this Agreement to the same extent as if the same had
been set forth verbatim herein. Any matter disclosed by Vivendi, USH3, GE or NBC
Holding on any one Schedule shall be deemed disclosed by such party for purposes
of another Schedule if and only to the extent that the relevance of the matter
so disclosed to the disclosure called for by such other Schedule is readily
apparent from the text of such disclosure.
Section 12.7 Return of Information. If for any reason
whatsoever the transactions contemplated by this Agreement are not consummated,
each party hereto shall promptly return to the disclosing party all books and
records furnished to the receiving party or any of its Affiliates, agents,
employees, or representatives (including all copies, summaries and abstracts, if
any, thereof) in accordance with the terms of the Confidentiality Agreement.
Section 12.8 Counterparts. This Agreement may be executed
in multiple counterparts (including via facsimile) and each counterpart shall be
deemed to be an original, but all of which shall constitute one and the same
original.
Section 12.9 Assignment; Third Party Beneficiaries. Neither
this Agreement nor any of the rights, interests or obligations hereunder may be
assigned by any of the parties hereto without the prior written consent of the
other parties. Prior to and following the Closing, Vivendi shall have no right
to assign its rights under this Agreement in connection with any Demerger (as
defined in the Stockholders Agreement) unless such consent is not required under
the Stockholders Agreement (assuming for this purpose that the Stockholders
Agreement is in full force and effect as of the date hereof) provided that in
any event the entities resulting from the Demerger shall have joint and several
liability for Vivendi's obligations under this Agreement pursuant to a writing
reasonably satisfactory to GE. This Agreement shall be binding on the parties
hereto and their respective successors and permitted assigns. This Agreement
shall be for the sole benefit of the parties hereto, and their respective
successors and permitted assigns and is not intended, nor shall be construed, to
136
give any Person, other than the parties hereto and their respective successors
and permitted assigns any legal or equitable right, benefit, remedy or claim
hereunder.
Section 12.10 Severability; Enforcement. The invalidity of
any portion of this Agreement shall not affect the validity, force or effect of
the remaining portions hereof. If it is ever held that any restriction hereunder
is too broad to permit enforcement of such restriction to its fullest extent,
each party agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by Law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such restriction.
Section 12.11 Specific Performance. The parties hereto
agree that the remedy at Law for any breach of this Agreement will be inadequate
and that any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy. Such
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable Law, each party waives any
objection to the imposition of such relief.
Section 12.12 Jurisdiction; Waiver of Jury Trial.
(a) Each party to this Agreement hereby irrevocably agrees
that any legal action, suit or proceeding arising out of or relating to this
Agreement or any of the Ancillary Agreements shall be brought in the United
States District Court for the Southern District of New York, unless federal
jurisdiction does not exist, in which case any such action, suit or proceeding
shall be brought in the Delaware Chancery Court or, if such court lacks
jurisdiction, the Supreme Court of the State of New York, New York County. Each
party hereto agrees not to assert, by way of motion, as a defense or otherwise,
in any such action, suit or proceeding any claim that it is not subject
personally to the jurisdiction of any such court, that the action, suit or
proceeding is brought in an inconvenient forum, that the venue of the action,
suit or proceeding is improper or that this Agreement, any of the Ancillary
Agreements, or the subject matter hereof or thereof may not be enforced in or by
any such court. Each party hereto further and irrevocably submits to the
jurisdiction of any such court in any action, suit or proceeding.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable Law, any
right that such party may have to a trial by jury of any claim or cause of
action directly or indirectly based upon or arising out of this Agreement, any
of the Ancillary Agreements or any of the transactions contemplated herein or
therein.
Section 12.13 Mediation. Prior to commencing legal action
with respect to any disagreement, dispute, controversy or claim arising out of
or relating to this Agreement or the interpretation hereof, any Ancillary
Agreement or the interpretation thereof, or any arrangements relating hereto or
137
thereto or contemplated herein or therein or the breach, termination or
invalidity hereof or thereof (collectively, "DISPUTES"), a party will notify the
other party in writing of any such Dispute (a "DISPUTE NOTICE"). Following
receipt of a Dispute Notice by a party, the parties shall jointly appoint a
mediator and shall attempt in good faith to resolve any Dispute promptly by
confidential mediation pursuant to the then current mediation procedures of the
CPR Institute for Dispute Resolution (the "CPR"). If the parties cannot agree
upon a mediator within five (5) days of receipt of the Dispute Notice by a
party, the parties will ask the CPR to appoint a mediator promptly. If the
Dispute is not resolved for any reason within thirty (30) days of the Dispute
Notice (unless the period of time is extended by the parties in writing), either
party may commence legal action in accordance with the other provisions hereof.
Nothing contained in this Section 12.13 shall preclude a party from seeking
injunctive relief if the prerequisites to obtaining injunctive relief, including
irreparable harm, are otherwise satisfied.
Section 12.14 Fees and Expenses. Except as contemplated by
Article 10, Article 11 and Section 7.12(c)(vi)(C), each of the parties hereto
shall pay the fees and expenses of its counsel, accountants, financial advisors
and other experts (including, in the case of GE, of such advisors to NBC and, in
the case of Vivendi, of such advisors to the Company and VUE) and shall pay all
other costs and expenses incurred by it in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
[Signature Page Follows]
138
IN WITNESS WHEREOF, the parties hereto have duly executed
and delivered this Agreement as of the date first above written.
GENERAL ELECTRIC COMPANY
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice-Chairman
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
NATIONAL BROADCASTING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
UNIVERSAL STUDIOS HOLDING III CORP.
By: /s/ Xxxxxx X. Xxxxxxxx III
-----------------------------------------
Name: Xxxxxx X. Xxxxxxxx III
Title: President
VIVENDI UNIVERSAL, S.A.
By: /s/ Xxxx-Xxxx Fourtou
-----------------------------------------
Name: Xxxx-Xxxx Fourtou
Title: Chairman and Chief Executive Officer
EXHIBIT A
TAX SHARING AGREEMENT
_____________, 2004
Vivendi Universal, S.A.
00 xxxxxx xx Xxxxxxxxx
00000 Xxxxx cedex 08
France
Attention: General Counsel
Universal Studios Holding III Corp.
c/o Vivendi Universal, S.A.
000 Xxxxx Xxxxxx
Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Dear Sirs:
The purpose of this letter agreement (this "Agreement") is
to set forth our agree-ment and understanding as to various matters relating to
the transactions contemplated by the agreements listed on Schedule I hereto
(each, an "Other Agreement" and, collectively, the "Other Agreements") among
Vivendi Universal, S.A., a societe anonyme organized and existing under the laws
of France ("Vivendi"), Universal Studios Holding III Corp., a Delaware
corporation ("Holding"), and/or their respective affiliates, on the one hand,
and the General Electric Company, a New York corporation ("GE"), and/or its
affiliates, on the other hand. Capitalized terms used herein have the meanings
assigned to them herein (including the Schedule attached hereto, which is
incorporated herein) or, if not defined herein, then such terms will have the
meanings assigned to them in the Stockholders Agreement (as defined in Schedule
I) or, if not defined in the Stockholders Agreement, in the Tax Sharing
Agreement (as defined in Schedule I).
In consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained in this
Agreement and in the Other Agreements, and intending to be legally bound hereby,
Vivendi, Holding and GE agree as set forth below.
1. If (a) any Election Notice is delivered pursuant to the
Liquidity Rights Agreement, (b) any amount would be payable by GE to NBC in
respect of any Tax Attribute (or portion thereof) pursuant to Paragraph 4(b) of
the Tax Sharing Agreement but for the proviso in the first sentence thereof and
(c) any portion of such amount is shown as a net tax asset on NBC's financial
statements as of the most recent quarter end, then GE will pay such portion of
such amount to NBC immediately prior to the completion of the Offering
contemplated by such Election Notice. For the avoidance of doubt, if more than
one Election Notice is delivered, then Paragraph 1 of this Agreement will be
applied successively with respect to each such Election Notice but without
requiring any duplication of payments.
2. So long as the shares of the Company Stock collectively
Beneficially Owned by the members of the Vivendi Group constitute at least 5% of
the total voting power represented by the outstanding shares of Company Stock,
and there has been no Vivendi Change of Control, (a) the Tax Sharing Agreement
will not be amended without the consent of the Vivendi Representative if such
amendment would have an adverse effect on Vivendi and (b) Paragraph 4(f) of the
Tax Sharing Agreement will be applied in a manner consistent with the principles
reflected in the other provisions of such Tax Sharing Agreement.
3. In no event will GE be required to make any payment
pursuant to this Agreement or any other Transaction Document that is duplicative
(to any extent) of any payment pursuant to this Agreement or the Tax Sharing
Agreement. By way of illustrating (and not limiting) the preceding sentence, GE
will not be required to make any payment in respect of any Tax Attribute (or
2
portion thereof) pursuant to Paragraph 1 of this Agreement if and to the extent
that payment in respect of such Tax Attribute (or portion thereof) has been made
to Vivendi pursuant to any Transaction Document.
4. This Agreement and the rights and obligations hereunder
will not be assignable or transferable by Vivendi, Holding or GE without the
prior written consent of the other party hereto. Any attempted assignment in
violation of this Section 4 will be void.
5. This Agreement is for the sole benefit of the parties
hereto and the parties to the Other Agreements and their permitted assigns and
nothing herein expressed or implied will give or be construed to give to any
person, other than the parties hereto and the parties to the Other Agreements
and such assigns, any legal or equitable rights hereunder.
6. (a) Whenever the words "include", "includes" or
"including" are used in this Agreement, they should be deemed to be followed by
the words "without limitation". The words "hereof', "herein" and "hereunder" and
words of similar import when used in this Agreement will refer to this Agreement
as a whole and not to any particular provision of this Agreement. 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.
(b) For all purposes hereof:
"affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person.
3
7. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement, and
will become effective when one or more such counterparts have been signed by one
party and delivered to the other party.
8. If any provision of this Agreement (or any portion
thereof) or the application of any such provision (or any portion thereof) to
any person or circumstance will be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision hereof (or the remaining
portion thereof) or the application of such provision to any other persons or
circumstances. Upon such determination that any such provision is invalid,
illegal or unenforceable, the parties will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties hereto as
closely as possible to the fullest extent permitted by applicable Law in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
9. Each party to this Agreement hereby irrevocably agrees
that any legal action, suit or proceeding arising out of or relating to this
Agreement shall be brought in the United States District Court for the Southern
District of New York, unless federal jurisdiction does not exist, in which case
any such action, suit or proceeding shall be brought in the Delaware Chancery
Court or, if such court lacks jurisdiction, the Supreme Court of the State of
New York, New York County. Each party hereto agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding any
claim that it is not subject personally to the jurisdiction of any such court,
that the action, suit or proceeding is brought in an inconvenient forum, that
the venue of the action, suit or proceeding is improper or that this Agreement,
4
or the subject matter hereof may not be enforced in or by any such court. Each
party hereto further and irrevocably submits to the jurisdiction of any such
court in any action, suit or proceeding.
10. This Agreement will be governed by and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
11. Each party hereby waives and agrees not to assert to
the fullest extent permitted by applicable law, any right it may have to a trial
by jury in respect to any litigation directly or indirectly arising out of,
under or in connection with this Agreement or any transaction contemplated
hereby. Each party (a) certifies that no representative, agent or attorney of
any other party has represented, expressly or otherwise, that such other party
would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other parties hereto have been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 12.
12. All notices or other communications required or
permitted to be given hereunder will be in writing and will be delivered by hand
or sent by facsimile or sent, postage prepaid, by registered, certified or
express mail or reputable overnight courier service and will be deemed given
when received, as provided in Section 6.1 of the Stockholders Agreement
(relating to Notices).
5
Please sign in the appropriate space below to indicate your
agreement with the foregoing.
GENERAL ELECTRIC COMPANY
By: __________________________________
Name:
Title:
AGREED:
VIVENDI UNIVERSAL, S.A.
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
UNIVERSAL STUDIOS HOLDING III CORP.
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
6
SCHEDULE I
1. The Business Combination Agreement (including all
Exhibits and Schedules thereto) dated as of October [ ], 2003 by and among GE,
[National Broadcasting Company Holding, Inc., a Delaware corporation, National
Broadcasting Company, Inc., a Delaware corporation ("NBC"),] Vivendi, and
Holding (the "Business Combination Agreement").
2. The Stockholders Agreement, dated as of October ___,
2003 by and among NBC, a Delaware corporation (including its successors, the
"Company"), GE1, Vivendi, Holding, and the other signatories thereto.
3. The Tax Sharing Agreement dated as of October ___, 2003,
between GE, NBC and certain NBC Subsidiaries as defined therein (the "Tax
Sharing Agreement").
4. All other Transaction Documents (as defined in such Tax
Sharing Agreement).
------------------
1 [Assumes that GE is the Stockholder, if an intermediate holding
company is used, will need to revise accordingly.]
7
TAX SHARING AGREEMENT
This AGREEMENT is dated as of ________________, 2003,
between the General Electric Company, a New York corporation ("GE"), and
National Broadcasting Company, Inc., a Delaware corporation ("NBC"), and
[specify all NBC Subsidiaries as defined below].
WITNESSETH
WHEREAS, GE and NBC have joined in the filing of
consolidated Federal income tax returns for the affiliated group of corporations
(within the meaning of Section 1504(a) of the Code (as defined below)) of which
GE is the common parent and NBC is a member (the "GE AFFILIATED GROUP"); and
WHEREAS, pursuant to the Business Combination Agreement
(including all Exhibits and Schedules thereto) dated as of October [ ], 2003 by
and among GE, National Broadcasting Company Holdings, Inc., a Delaware
corporation ("Parent"), NBC, [NBC Sub], a Delaware corporation, Vivendi
Universal, S.A., a societe anonyme organized under the laws of France, and
Universal Studios Holding III Corp., a Delaware corporation (the "BUSINESS
COMBINATION AGREEMENT"), NBC will cease to be wholly-owned by Parent; and
WHEREAS, it is the intent and desire of GE and NBC in this
Agreement to provide for the amount and timing of payments by NBC to GE and for
the amount and timing of payments by GE to NBC with respect to United States
Federal, State, and local, and foreign, taxes;
NOW, THEREFORE, GE and NBC [and the NBC Subsidiaries],
intending to be legally bound hereby, and in consideration of the mutual
covenants herein contained, agree as follows:
1. DEFINITIONS
(a) "CODE" means the Internal Revenue Code of 1986, as amended and in
effect from time to time. A reference to any section of the Code means such
section (or comparable provision of any successor law) as in effect from time to
time.
(b) "CLOSING DATE" means the Closing Date as defined in the Business
Combination Agreement.
(c) "CORPORATION" means a corporation as defined in Section
7701(a)(3) of the Code and the Treasury Regulations thereunder.
(d) "FORMER MEMBER" means NBC or any NBC Subsidiary after such time
as NBC or such NBC Subsidiary ceases to be eligible to be included in a GE
Consolidated Tax Return.
(e) "SEPARATE RETURN TAX LIABILITY" has the meaning ascribed thereto
in Paragraph 3(b)(1).
(f) "GE CONSOLIDATED RETURN LIABILITY" has the meaning ascribed
thereto in Paragraph 3(a).
(g) "GE CONSOLIDATED TAX RETURN" has the meaning ascribed thereto in
Paragraph 2(a).
(h) "TAX" or "TAXES" means all taxes of any kind, together with
interest, penalties, and other additions thereto, imposed by any Taxing
Authority.
(i) "TAX ATTRIBUTE" means any net operating loss, net capital loss,
investment tax credit, foreign tax credit, targeted jobs tax credit, credit for
research activities, alternative minimum tax credit, charitable deduction,
deduction for worthless stock or securities or any other credit or tax attribute
(or carryforward or carryback thereof) which could reduce any Tax.
2
(j) "TAXABLE YEAR" means a taxable year as defined in Section 441(b)
of the Code (and thus may include a period of less than 12 months for which a
return is made).
(k) "TAXING AUTHORITY" means the Internal Revenue Service ("IRS") or
any other domestic or foreign governmental authority responsible for the
administration of any Tax.
(l) "TAX LIABILITY" has the meaning ascribed thereto in Paragraph
3(b)(2).
(m) "TAX RETURN" means any return, filing, or other document filed or
required to be filed, including any request for extension of time, filing made
with estimated Tax payment, claim for refund or amended return that may be filed
for any Taxable Year (or portion thereof) with any Taxing Authority in
connection with any Tax or Taxes (whether or not payment is required to be made
with respect to such filing).
(n) "TRANSACTION DOCUMENTS" means the Business Combination Agreement
(including the Exhibits and Schedules thereto), the Stockholders Agreement (as
defined in the Business Combination Agreement), the Confidentiality Agreement
(as defined in the Business Combination Agreement), the Ancillary Agreements (as
defined in the Business Combination Agreement) and any other agreements among
the parties executed in connection with the transactions and arrangements
contemplated by any of the foregoing.
(o) "NBC SUBSIDIARY" means a corporation which is controlled,
directly or indirectly, by NBC.
(p) "UTILIZED TAX ATTRIBUTE" has the meaning ascribed thereto in
Paragraph 4(b).
(q) Unless otherwise indicated herein, all other capitalized terms
have the meaning ascribed thereto in the Stockholders Agreement.
3
2. GE CONSOLIDATED TAX RETURN
(a) Subject to Paragraph 2(a)(2) hereof, GE will continue to file
consolidated Federal income Tax Returns pursuant to Section 1501 of the Code,
and consolidated, combined, joint, or other similar Tax Returns with respect to
income or other Taxes pursuant to applicable provisions of any State or local or
foreign law, that include both NBC or an NBC Subsidiary and GE or a GE
Subsidiary other than NBC and the NBC Subsidiaries (each such Tax Return a "GE
CONSOLIDATED TAX RETURN"). In connection therewith, (1) NBC and each eligible
NBC Subsidiary will be included in the GE Consolidated Tax Returns until such
time as NBC or such NBC Subsidiary ceases to be eligible to be so included
(which disaffiliation of NBC or the NBC Subsidiary may be the result of actions
taken by GE in its sole and absolute discretion) and (2) subject to the
provisions of applicable law, GE will retain the sole and absolute discretion
whether to file any GE Consolidated Tax Return for any Taxable Year.
(b) GE will be responsible for managing the filing of the GE
Consolidated Tax Returns, any amendment to the GE Consolidated Tax Returns, and
any audits or disputes with Tax Authorities relating to the GE Consolidated Tax
Returns. Except as otherwise expressly provided herein, GE will be responsible
for the final determination of all calculations required under this Agreement.
Without receiving the prior written consent of GE (which shall not be
unreasonably withheld), neither NBC nor any of the NBC Subsidiaries will
knowingly take any Tax reporting position or claim any Tax Attribute, or agree
with a Taxing Authority as to any such position or the allowance of any Tax
Attribute, if such position, claim, allowance, or agreement is inconsistent with
a Tax reporting position or claim of a Tax Attribute by GE or any entity
included in a GE Consolidated Tax Return.
4
(c) NBC and each of the NBC Subsidiaries will furnish GE upon request
with pro forma Tax Returns, Tax Return packages, work papers, and other
requested information and documentation relevant for the preparation of the GE
Consolidated Tax Returns and other United States Federal, State, and local, and
foreign, Tax Returns (the "TAX DATA"). As promptly as is practicable, GE will
provide NBC with a schedule with respect to each GE Consolidated Tax Return
setting forth the differences, if any, between the pro forma Tax Return or other
tax data submitted by NBC and the NBC Subsidiaries and the information reported
on the GE Consolidated Tax Return (each a "TAX SCHEDULE").
(d) If NBC owns or acquires, directly or indirectly, control of any
corporation that is not an NBC Subsidiary on the date hereof, and such
corporation thus becomes an NBC Subsidiary, NBC will cause such corporation to
become a party to this Agreement and to agree to be bound by the terms and
provisions of this Agreement.
3. CALCULATION OF TAX LIABILITY
(a) Except to the extent otherwise provided in this Agreement, and
subject to the payments by NBC and the NBC Subsidiaries contemplated by this
Agreement, GE will be solely responsible and liable for the payment of all Taxes
in respect of all GE Consolidated Tax Returns (the "GE CONSOLIDATED RETURN
LIABILITY").
(b) The portion of the GE Consolidated Return Liability for any
Taxable Year or transaction of NBC or any NBC Subsidiary ending after the
Closing Date that is payable by NBC and the NBC Subsidiaries will be determined
in the following manner:
(1) If any Taxable Year or transaction of NBC or any NBC
Subsidiary ending after the Closing Date is included in a GE
Consolidated Tax Return, the related Tax Liability (as defined below)
5
of NBC or such NBC Subsidiary for such Taxable Year or event will be
determined on a hypothetical separate Tax Return basis as if NBC and
the NBC Subsidiaries had never been included in any such GE
Consolidated Tax Return. To the extent that NBC and any of such NBC
Subsidiaries could have filed a separate consolidated, combined,
joint, or other similar Tax Return for such type of Tax and Taxable
Year or transaction, such Tax Liability will be computed on the basis
of such a hypothetical consolidated, combined, joint, or other
similar Tax Return for such Taxable Year or transaction and for prior
Taxable Years (e.g., without any hypothetical effects of
deconsolidation from the GE Affiliated Group, but with prior
adjustments to basis in the stock of NBC Subsidiaries). (For each GE
Consolidated Tax Return, the sum of such consolidated, combined or
joint Tax Liabilities, together with the separate Tax Liabilities of
NBC and any such NBC Subsidiaries that could not have been included
in the hypothetical consolidated, combined or joint Tax Returns, is
referred to as the "SEPARATE RETURN TAX Liability.")
(2) For purposes of this Agreement, "TAX LIABILITY" means
a hypothetical Federal, State, local, or foreign Tax liability,
including any applicable alternative minimum Tax (as defined in
Section 55 of the Code) and any State or local or foreign minimum
Tax. In addition, the following modifications and additional rules
will apply in determining Tax Liability: (i) where the GE
Consolidated Return Liability with respect to any State or local or
foreign Tax Return is calculated using an apportionment ratio based
on the combined factors of the entities included in such Tax Return,
the apportionment of net income or loss of NBC and each relevant NBC
Subsidiary will be determined using the separate apportionment ratio
of such entity or hypothetical group, (ii) no carryback of any net
operating loss or other Tax Attribute from any Taxable Year ending
6
after the Closing Date to any Taxable Year ending on or before the
Closing Date will be taken into account but will instead be available
as a carryover to Taxable Years ending after the Closing Date, (iii)
no carryover of any net operating loss or other Tax Attribute from
any Taxable Year ending on or before the Closing Date will be taken
into account, (iv) each other election, method of accounting, and
method of calculation will be the same as used in calculating the GE
Consolidated Return Liability, and Tax Liability will be determined
in all other respects in a manner consistent with the calculation of
the related GE Consolidated Return Liability; (v) estimated Tax
payments made pursuant to Paragraph 4(a) of this Agreement will not
be included in the calculation of Tax Liability; (vi) notwithstanding
anything in this Agreement to the contrary, if GE makes a payment in
respect of a Tax Attribute or portion thereof pursuant to Paragraph
4(b) or 4(f) of this Agreement or any Transaction Document, such Tax
Attribute or portion thereof will be excluded in determining Tax
Liability; (vii) if any Taxable Year of NBC or any NBC Subsidiary
includes (but does not end with) the Closing Date, the portion of
such Taxable Year ending on the Closing Date and the remainder of
such Taxable Year will be treated as two separate Taxable Years, and
the income, deductions, gains, losses, and other items of NBC or such
NBC Subsidiary will be allocated between such separate Taxable Years
in a manner consistent with the principles of Treasury Regulation
Section 1.1502-76(b)(2) without any deemed ratable allocation
election under Section 1.1502-76(b)(2)(ii)(D); and (viii) if any
portion of any Taxable Year of NBC or any NBC Subsidiary is included
in a GE Consolidated Tax Return, but the remainder of such Taxable
Year of NBC or such NBC Subsidiary is not included in such GE
Consolidated Tax Return, then such portion of such Taxable Year and
7
the remainder of such Taxable Year will be treated as two separate
Taxable Years, and the income, deductions, gains, losses, and other
items of NBC or such NBC Subsidiary will be allocated between such
two separate Taxable Years in a manner consistent with the principles
of Treasury Regulation Section 1.1502-76(b)(2) without any deemed
ratable allocation election under Section 1.1502-76(b)(2)(ii)(D).
(c) For each Taxable Year ending after the Closing Date, NBC will
calculate each Separate Return Tax Liability on a quarterly basis for GE's
review. In addition, GE will make a final calculation of each Separate Return
Tax Liability for such Taxable Year and will provide such calculation to NBC
(with a certification that it is consistent with this Agreement) within 90 days
after the filing of the related GE Consolidated Tax Return. For each Taxable
Year NBC or any NBC Subsidiary has ceased to be included in any GE Consolidated
Tax Return but computation of the Tax liability of NBC or any NBC Subsidiary is
relevant under this Agreement, NBC will prepare a computation of such Tax
liability (or a computation similar to the Separate Return Tax Liability
computation if NBC is a member, but not the parent corporation, of a separate
group filing consolidated Tax Returns) and provide such computation and
supporting documentation to GE for its review and approval. In the event of any
disagreement relating to such computation that is not resolved within 90 days
after such computation and supporting documents have been provided to GE, such
disagreement will be referred to a mutually satisfactory "BIG FOUR" accounting
firm (or other mutually acceptable accounting firm) for its determination, which
determination will be final and binding on all parties.
(d) If any Taxable Year of NBC or any NBC Subsidiary includes (but
does not end with) the Closing Date or a date on which it ceases to be included
in a GE Consolidated Tax Return, any allocation of income, deductions, gains,
losses and other items of NBC or such NBC Subsidiary will be allocated between
8
the portions of such Taxable Year in a manner consistent with the principles of
Treasury Regulation Section 1.1502-76(b)(2) without any deemed ratable
allocation election under Section 1.1502-76(b)(2)(ii)(D).
4. PAYMENT
(a) NBC and the NBC Subsidiaries will be jointly and severally liable
to pay to GE the amount of each Separate Return Tax Liability, as determined on
a quarterly basis under Paragraph 3, for each Taxable Year ending after the
Closing Date. Such payments will be made in immediately available funds no later
than the business day immediately preceding the due date (including extensions)
for GE's payment of estimated Federal income Tax for such Taxable Year, and such
payments will be credited toward the related Separate Return Tax Liability for
such Taxable Year. Within 10 days after the filing of the Federal GE
Consolidated Tax Return for any such Taxable Year, NBC and the NBC Subsidiaries
will pay to GE the unpaid portion of each Separate Return Tax Liability, if any,
for such Taxable Year. In the event the payments of estimated Tax to GE for any
such Taxable Year exceed the Separate Return Tax Liability for such Taxable
Year, the excess will be refunded by GE to NBC within 30 days after the due date
(including extensions) of the Federal GE Consolidated Tax Return for such
Taxable Year.
(b) GE will pay to NBC the amount of any reduction in GE Consolidated
Return Liability due to any Tax Attribute of NBC or an NBC Subsidiary if (1) the
Tax Attribute arises in any Taxable Year of NBC or such NBC Subsidiary ending
after the Closing Date or in a Taxable Year of USI ending on or prior to the
Closing Date, (2) the GE Consolidated Return Liability for any Taxable Year is
reduced or eliminated due to such Tax Attribute or portion thereof, and (3) the
Separate Return Tax Liability payable to GE under this Agreement after taking
into account any amount reimbursable by GE under this Agreement (other than in
connection with such Tax Attribute or portion thereof) is not and has not been
9
reduced or eliminated for such Taxable Year or for any other Taxable Year due to
such Tax Attribute or portion thereof (a "UTILIZED TAX ATTRIBUTE"); provided,
however, that GE will be liable for such payment only if and to the extent that
(i) the actual Tax liability of NBC or such NBC Subsidiary (for a Taxable Year
in which NBC or such NBC Subsidiary is not included in the Federal GE
Consolidated Tax Return) would have been reduced due to such Tax Attribute had
such Tax Attribute not been applied to reduce or eliminate any GE Consolidated
Return Liability, or (ii) the Separate Return Tax Liability (for any Taxable
Year in which NBC or such NBC Subsidiary is included in the Federal GE
Consolidated Tax Return) would have been reduced or eliminated (but for
Paragraph 3(b)(2)(vi)) due to such Tax Attribute. Such payment will be due and
payable by GE (I) within 90 days after the due date (including extensions) of
the separate Tax Return (for a Taxable Year to which clause (i) of the preceding
sentence applies) for which the actual Tax liability would have been reduced, or
(II) within 90 days after the due date of the GE Consolidated Tax Return (for a
Taxable Year to which clause (ii) of the preceding sentence applies and where
the tax reduction is not due to a carryback of a Tax Attribute), or (III) within
90 days after the receipt of a refund (for a Taxable Year to which clause (ii)
of the preceding sentence applies and the tax reduction is due to a carryback to
a Tax Attribute). Notwithstanding any other provision of this Agreement, GE
shall not be required to make any payment with respect to a Tax Attribute or
portion thereof with respect to which GE has already made a payment under this
Agreement or any other Transaction Document.
(c) For purposes of this Agreement, the amount of any reduction in GE
Consolidated Tax Liability, Separate Return Tax Liability, or actual separate
Tax liability, as the case may be, for any Taxable Year due to any Tax Attribute
will be equal to the excess (if any) of (1) the GE Consolidated Tax Liability,
Separate Return Tax Liability, or actual separate Tax liability, as the case may
10
be, for such Taxable Year determined without regard to such Tax Attribute, over
(2) the actual GE Consolidated Tax Liability, Separate Return Tax Liability, or
actual separate Tax liability, as the case may be, for such Taxable Year.
(d) If NBC or any NBC Subsidiary claims or is entitled to any
deduction for any excess of compensation paid by GE or any member of the GE
Affiliated Group (other than NBC or any NBC Subsidiary) in cash, stock, or other
property (including on the exercise of any option or the vesting of any
restricted stock) over the amount paid by NBC or such NBC Subsidiary to GE in
connection with such compensation, then (i) the calculation of Tax Liability
under Paragraph 3(b) will be made without regard to such deduction, and (ii) if
the actual Tax liability of NBC or any NBC Subsidiary is reduced due to such
deduction in any Taxable Year of NBC or such NBC Subsidiary that is not included
in a GE Consolidated Tax Return, NBC and the NBC Subsidiaries will pay to GE the
amount of any such reduction (determined in accordance with Paragraph 4(c)).
Such payment shall be due and payable by NBC and the NBC Subsidiaries on the due
date (including extensions) of the Tax return of NBC or the NBC Subsidiary for
which such actual Tax liability is reduced.
(e) In the event that any payment required to be made under this
Agreement is made after the date on which such payment is due, interest will
accrue on such amount from (but not including) the due date of the payment to
(and including) the date such payment is actually made at the rate designated
from time to time in Section 6621(a)(2) of the Code, compounded on a daily
basis.
(f) If, for a Taxable Year ending after the Closing Date, NBC or any
NBC Subsidiary achieves reduction of its foreign tax liability by reason of tax
items shifted under group relief or similar foreign tax rules from GE or a GE
11
Subsidiary (other than NBC and the NBC Subsidiaries) without regard to inclusion
of NBC or such NBC Subsidiary in a GE Consolidated Tax Return, then NBC and the
NBC Subsidiaries will pay promptly to GE the amount of the net benefit of such
foreign tax reduction. If, for a Taxable Year ending after the Closing Date, GE
or any GE Subsidiary (other than NBC and the NBC Subsidiaries) achieves
reduction of its foreign tax liability by reason of tax items shifted under
group relief or similar foreign tax rules from NBC or an NBC Subsidiary without
regard to inclusion of NBC or such NBC Subsidiary in a GE Consolidated Tax
Return, then GE will pay promptly to NBC the amount of the net benefit of such
foreign tax reduction.
5. ADJUSTMENTS/CONTESTS
(a) GE will be solely responsible for, and will have sole and
absolute discretion with respect to, claiming, agreeing to, making, contesting,
or settling any adjustment (including as the result of any carryback) to the GE
Consolidated Return Liability. GE will pay any deficiency in, or receive any
refund with respect to, any GE Consolidated Return Liability for any Taxable
Year. GE, on one hand, and NBC or any NBC Subsidiary, on the other hand, will
promptly notify the other in writing upon the commencement of any Tax audit,
administrative or judicial proceeding, or other similar matter (a "CONTEST")
that could affect the GE Affiliated Group, NBC, or any NBC Subsidiary. Each such
notice will contain factual information (to the extent known) describing any
asserted Tax liability in reasonable detail and will include copies of any
notice or other document received from the relevant Taxing Authority. GE will be
entitled to conduct and control any such contest. GE will allow NBC an
opportunity to review and comment upon any settlement, agreement, discharge, or
compromise proposed by a Taxing Authority with respect to the GE Consolidated
Return Liability to the extent it may adversely impact the Tax Liability of NBC
or a NBC Subsidiary or any payments under Paragraph 4. NBC and each NBC
12
Subsidiary will provide GE, and GE will provide to NBC, reasonable access to
books, records, and other information necessary or useful in connection with any
contest, and will fully cooperate in any other matter related to Taxes, with
respect to any Taxable Year (or portion thereof) in which NBC or any NBC
Subsidiary is included in a GE Consolidated Tax Return.
(b) In the event any adjustment is made (i) to any GE Consolidated
Tax Return pursuant to Paragraph 5(a), (ii) with respect to any Tax Attribute of
USI taken into account pursuant to Paragraph 4(b)(1), or (iii) to any other item
that is taken into account in determining the amount of any payment pursuant to
this Agreement, the amounts to be paid or received by GE or NBC pursuant to
Paragraph 4 will be recomputed in a manner consistent with such adjustment, and
GE will pay to NBC or NBC and the NBC Subsidiaries will pay to GE, as the case
may be, the amount of any resulting differences plus any interest or penalties
(computed under the principles of Paragraph 3(b) except subject to any interest
rate adjustments under Code sections 6621(a)(1) or 6621(c) or similar statutes
that apply to the GE Consolidated Return Liability) not later than 90 days after
the date of the relevant payment or receipt to or from a Taxing Authority;
provided, however, that to the extent such adjustment results from a Tax
position taken by GE inconsistent with the Tax Data provided by NBC or a NBC
Subsidiary, as shown on a Tax Schedule, the penalties attributable to such
adjustment will be solely for the account of GE.
(c) If any adjustment is made with respect to any income, deduction,
gain, loss, credit, or other item of NBC or any NBC Subsidiary for any Taxable
Year ending on or prior to the Closing Date, any increase in GE Consolidated
Return Liability for such Taxable Year or any other Taxable Year due to such
adjustment (including interest and determined in accordance with the principles
of Paragraph 4(c)) will be for the account of NBC and the NBC Subsidiaries, and
13
NBC and the NBC Subsidiaries will pay to GE the amount of any such increase
within 30 days after such adjustment becomes final. GE shall be entitled to any
refunds with respect to Taxable Years ending on or prior to the Closing Date
even if they relate to items of NBC or an NBC Subsidiary.
6. DISAFFILIATION
If NBC or any of the NBC Subsidiaries ceases to be included
in a GE Consolidated Tax Return, and thus becomes a Former Member, the
provisions of this Paragraph 6 will apply.
(a) This Agreement will continue to apply with respect to any Taxable
Year of such Former Member included in a GE Consolidated Tax Return or in which
the actual Tax liability of such Former Member is reduced due to a deduction
described in Paragraph 4(d) or a foreign tax described in Paragraph 4(f). Each
Former Member will remain liable to GE for any payments required under this
Agreement, including payments of Tax and estimated Tax, for any Taxable Year
included in a GE Consolidated Tax Return and payments attributable to any
adjustment referred to in Paragraph 5 of this Agreement.
(b) GE will continue to make payments, if any, to any Former Member
as may be required pursuant to Paragraphs 4(b), 4(f) and 5 of this Agreement.
7. PAYMENT OF FUNDS
Payments due to and from a party under this Agreement may
be netted by a party, but no party will be entitled to apply any amounts due
to it pursuant to this Agreement against any other amounts payable to the other
party. GE may designate a member to act on its behalf in receiving and
disbursing funds between or among the members. Such designation, if made in
writing, will continue in force until rescinded.
14
8. AMENDMENT; TERMINATION; SURVIVAL
(a) Except as provided in Paragraph 8(c), this Agreement will be
terminated at the end of the last day on which NBC or any NBC Subsidiary is a
member of the GE Affiliated Group or may be included in any GE Consolidated Tax
Return; it being understood that, subject to the provisions of applicable law,
GE will retain the sole and absolute discretion whether to file any GE
Consolidated Tax Return for any Taxable Year.
(b) Except as provided in Paragraph 8(a), this Agreement may be
amended or terminated in whole or in part only by a written instrument signed by
all the parties hereto, including any corporation that becomes a party after the
effective date of this Agreement.
(c) Paragraphs 2(b), 3(a), 4(b), 4(d), 4(e), 4(f), 5, 6, 7, 8(b), 9,
and 10 will survive the termination of this Agreement.
9. UNENFORCEABILITY
In the event that any provision of this Agreement is held
to be unenforceable or invalid by any court of competent jurisdiction, unless
the unenforceability or invalidity thereof causes a substantial departure from
the underlying intent and sense of the remainder of this Agreement, the validity
and enforceability of the remaining provision will not be affected thereby,
except those remaining provisions of which the unenforceable or invalid
provisions comprise an integral part or from which they are otherwise clearly
inseparable. In the event any provision is held unenforceable or invalid, the
parties will use their best efforts to agree upon an enforceable and valid
provision which will be a reasonable substitute for such unenforceable or
invalid provision in light of the purpose of this Agreement and, upon so
agreeing, will incorporate such substitute provision in this Agreement.
15
10. CHOICE OF LAW
This Agreement will be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts
of law principles.
16
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
GENERAL ELECTRIC COMPANY NATIONAL BROADCASTING COMPANY, INC.
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Title:
[NBC Subsidiary] [NBC Subsidiary]
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Title:
[NBC Subsidiary] [NBC Subsidiary]
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Title:
17
EXHIBIT B
================================================================================
LIQUIDITY RIGHTS AGREEMENT
BY AND AMONG
[NEWCO]
GENERAL ELECTRIC COMPANY
VIVENDI UNIVERSAL S.A.
AND
UNIVERSAL STUDIOS HOLDING III CORP.
DATED AS OF [________]
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS......................................................................................2
1.1 Certain Definitions..................................................................................2
1.2 Capitalized Terms....................................................................................7
1.3 Other Definitions....................................................................................7
ARTICLE II REGISTRATION RIGHTS..............................................................................8
2.1 Special Demand Rights................................................................................8
2.2 Additional Demand Rights............................................................................14
2.3 Incidental Registrations............................................................................17
2.4 Expenses............................................................................................19
2.5 Registration Procedures.............................................................................19
2.6 Underwritten Offerings..............................................................................23
2.7 Holdback Agreements.................................................................................24
2.8 Stock Splits; Adjustment to Share Numbers...........................................................25
2.9 Indemnification.....................................................................................25
2.10 Rule 144............................................................................................29
2.11 Excess Proceeds.....................................................................................29
ARTICLE III PARENT PURCHASE RIGHTS..........................................................................29
3.1 Purchase Right Prior to the Closing under a Registration
Statement...........................................................................................29
3.2 Purchase Right Following the Closing under a Registration Statement.................................31
3.3 Parent Call Right...................................................................................33
3.4 Payment.............................................................................................34
3.5 Closing.............................................................................................34
3.6 December 20 Closing.................................................................................34
ARTICLE IV STOCKHOLDER SELL RIGHT..........................................................................35
4.1 Sell Right..........................................................................................35
4.2 Additional Consideration............................................................................37
4.3 Closing.............................................................................................37
4.4 December 20 Closing.................................................................................37
ARTICLE V APPRAISAL.......................................................................................37
5.1 Appraisal Procedures................................................................................37
ARTICLE VI ADDITIONAL COVENANTS............................................................................40
6.1 [intentionally omitted.]............................................................................40
6.2 Parent Registration Rights..........................................................................40
6.3 Stockholders Agreement..............................................................................41
i
ARTICLE VII REPRESENTATIONS AND WARRANTIES..................................................................41
7.1 Representations and Warranties of each Stockholder..................................................41
7.2 Representations and Warranties of the Issuer........................................................42
ARTICLE VIII MISCELLANEOUS...................................................................................43
8.1 Notices.............................................................................................43
8.2 Stockholders Representative.........................................................................44
8.3 Joint and Several Obligations.......................................................................45
8.4 Entire Agreement; No Inconsistent Agreement.........................................................45
8.5 No Third-Party Beneficiaries........................................................................45
8.6 Assignment..........................................................................................45
8.7 Interpretation......................................................................................46
8.8 Amendment...........................................................................................46
8.9 Governing Law.......................................................................................46
8.10 Jurisdiction; Waiver of Jury Trial..................................................................46
8.11 Mediation...........................................................................................47
8.12 Remedies............................................................................................47
8.13 Headings............................................................................................47
8.14 Severability........................................................................................47
8.15 Counterparts; Faxed Signatures......................................................................48
ii
LIQUIDITY RIGHTS AGREEMENT
LIQUIDITY RIGHTS AGREEMENT, dated as of [___________, ____]
(this "Agreement"), by and among [NewCo], a [Delaware corporation] (including
its successors, the "Issuer"), General Electric Company, a New York corporation
("Parent")(1), Vivendi Universal S.A., a societe anonyme organized under the
laws of France ("Vivendi"), Universal Studios Holding III Corp., a Delaware
corporation ("Holding"), and the other signatories hereto (such other
signatories, together with any Person added to this Agreement pursuant to
Section 8.6 and with Holding, the "Stockholders").(2)
WHEREAS, the parties to this Agreement have entered into
that certain Business Combination Agreement, dated as of October 8, 2003,
providing, among other things, for the combination of the respective businesses
of [NewCo], Universal Studios, Inc., a Delaware corporation and a Subsidiary of
Holding, Universal Pictures International Holdings B.V., a company organized
under the laws of the Netherlands and a Subsidiary of Vivendi and Universal
Pictures International Holdings 2 B.V., a company organized under the laws of
the Netherlands and a Subsidiary of Vivendi (as the same may hereafter be
amended, modified, supplemented or restated from time to time "Business
Combination Agreement");
[Recitals regarding equity ownership to be added]; and
Whereas, the consummation of the transactions contemplated
by the Business Combination Agreement is conditioned upon the execution and
delivery of this Agreement by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
below, the parties hereby agree, severally and not jointly, as follows:
---------------------------
(1) [Prior to Closing, appropriate revisions will need to be made to reflect
intermediate Holdco.]
(2) [Need to add any other parties that may be receiving shares of Issuer Common
Stock in the transaction.]
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein, unless the context
otherwise requires, the following terms have the following respective meanings:
"Adjusted Public Market Value" means, as of a given time in
connection with a particular proposed public offering (whether or not
consummated), with respect to a share of Issuer Common Stock, (i) if the Issuer
consummated such public offering, an amount equal to the per share price to the
public of the Issuer Common Stock actually sold in such public offering; (ii) if
the Issuer did not consummate such public offering, but has completed an IPO as
of such time, an amount equal to the average of the daily volume weighted
average per share closing price of the Issuer Common Stock on the primary
exchange on which it trades for the 45 day trading period ending on the second
trading day immediately preceding the date of the closing of the applicable
purchase transaction pursuant to Section 3.2 or Section 4.1(ii), as the case may
be; and (iii) if the Issuer did not consummate such public offering and has not
consummated an IPO as of such time, an amount equal to the Fully Distributed
Public Market Value of a share of Issuer Common Stock as determined by the
appraisal process set forth in Section 5.1.
"Appraised Value Differential" means, with respect to the
Appraised Value set forth in any two of the three Appraisals, the U.S. Dollar
differential to two decimals between such two Appraised Values.
"beneficially own" means to possess beneficial ownership as
determined under Rule 13d-3 under the Exchange Act.
"Board" means the board of directors of the Issuer.
"Closing" means the closing of the transactions
contemplated by the Business Combination Agreement.
"Commission" means the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Financial Information" means, as of the date such
information is furnished to the Appraisers pursuant to Section 5.1(c), (i)
unaudited income statement results, together with the related statements of
stockholders' equity and cash flow, for (A) each of the interim periods since
the date of the last audited consolidated balance sheet of the Issuer, (B) each
quarterly period contained therein and the balance sheet ending at the end of
each such quarterly period and (C) the last twelve months prior to the date such
information is furnished to the Appraisers, in each case on a consolidated basis
and by business segment; (ii) projected income statement results for each of the
remaining fiscal quarters in the applicable calendar year and each of the next
two calendar years thereafter (which income statement results for the remaining
quarters of the applicable calendar year only shall be by fiscal quarter, in
2
each case on a consolidated basis and by business segment); (iii) the most
recent audited consolidated balance sheet of the Issuer, together with the
related statements of income, stockholders' equity and cash flows; and (iv) such
other financial information as the Appraisers reasonably request in connection
with the appraisal process set forth in Section 5.1, it being agreed that
Financial Information shall include pro forma financial statements giving effect
to any material acquisitions or divestitures and information necessary to make
appropriate adjustment, if any, so that the Financial Information reflects
Issuer as a Stand-alone Entity.
"Initial Transaction Value" means, with respect to a share
of Issuer Common Stock, a fraction, the numerator of which is $41,404,040,226(3)
and the denominator of which is the number of shares of Issuer Common Stock
issued and outstanding immediately following the Closing.
"IPO" means an underwritten initial public offering of
Issuer Common Stock under the Securities Act (whether involving an issuance of
Issuer Common Stock and/or a resale of shares of Issuer Common Stock by a
stockholder of the Issuer).
"Issuer Common Stock" means (a) the common stock of the
Issuer, par value $[__] per share, and (b) any other securities of the Issuer or
any other Person issued with respect to such Common Stock on a pro rata basis by
way of a conversion, exchange, replacement, stock dividend or stock split or
other distribution or in connection with a combination of shares, conversion,
exchange, replacement, recapitalization, merger, consolidation or other
reorganization or otherwise, including following an IPO in the case of (a) and
(b), any such common stock or other such securities issuable pursuant to any
rights, warrants, options, convertible securities or indebtedness, exchangeable
securities or indebtedness, or other rights whether issued by the Issuer or any
other Person.(4)
"Material Acquisition" means a material acquisition
(whether such acquisition occurs by way of stock purchase or exchange, asset
purchase, merger, consolidation or similar transaction) by the Issuer or any of
its subsidiaries of the business or a line of business of a Person that is not
affiliated with the Issuer.
"Material Adverse Condition" means (i) a suspension or
material limitation in trading in securities generally on any national stock
exchange in the United States or on NASDAQ; (ii) a general moratorium on
commercial banking activities declared by either a Federal or New York
Governmental Authority; (iii) any outbreak or escalation of hostilities or any
------------------------------
(3) [Amount to be increased in the event of an IACI tag.]
(4) [Prior to Closing, appropriate adjustments will have to be made to this
definition and other Sections of this Agreement in order to reflect the dual
class structure contemplated by the Business Combination Agreement.]
3
declaration by the United States of a national emergency or war; or (iv) the
occurrence of any other calamity or crisis or any change in financial, political
or economic conditions in the United States or elsewhere, if the effect of any
such event, singly or together with any other such event, in the judgment of the
bookrunning managers of a proposed offering under this Agreement makes it
impracticable or inadvisable to proceed with the public offering at such time.
"Material Event Notice" means a notice signed by an officer
of the Issuer stating that, as of the date of such notice, the Issuer has
pending or in process a material transaction (including a financing transaction
or a Material Acquisition), the disclosure of which would, in the good faith
judgment of the Board, materially and adversely affect the Issuer.
"NASD" means the National Association of Securities
Dealers, Inc.
"NASDAQ" means the NASDAQ National Market.
"Nationally Recognized Investment Bank" means an investment
bank that, pursuant to Securities Data Corporation, ranked among the top 15 U.S.
equity bookrunning managers for the calendar year ended immediately prior to the
Notice Receipt Date or such other nationally recognized investment banking firm
as Parent and the Stockholders Representative agree, or, with respect to an
Appraiser selected pursuant to Section 5.1(b), any of the following investment
banks: The Xxxxxxx Xxxxx Group, Inc., Citigroup Inc., Credit Suisse First Boston
LLC, Xxxxxx Xxxxxxx & Co., Xxxxxxx Xxxxx & Company, XX Xxxxxx Chase & Co.,
Xxxxxx Brothers Holdings Inc., Bank of America Corporation, UBS Investment Bank,
Deutsche Bank AG, Societe Generale or BNP Paribas, including any successor to
any of the foregoing by acquisition or merger, it being understood that the
principal division of any such bank that performs valuation services in the US
will be engaged and such division may have a slightly different name than is
included in the foregoing list.
"Parent Common Stock" means the common stock of Parent, par
value $0.06 per share.
"Parent Common Stock Market Value" means, with respect to a
share of Parent Common Stock, an amount equal to the average of the daily volume
weighted average per share closing price of Parent Common Stock on the New York
Stock Exchange or such other exchange or market on which the common equity
securities of Parent are principally traded for the 30 day trading period ending
on the second trading day immediately preceding the date of the closing of the
applicable purchase transaction pursuant to Article III, as the case may be.
"Preliminary Fully Distributed Public Market Value" means,
with respect to any calendar year, a fraction, the numerator of which is
$41,404,040,226(5) and the denominator of which is the aggregate number of
----------------------------
(5) [Amount to be increased in the event of an IACI tag.]
4
shares of Issuer Common Stock issued and outstanding as of December 20 of such
calendar year.
"Preliminary Prospectus" means, with respect to a proposed
offering, a preliminary prospectus, commonly referred to as a "red xxxxxxx,"
permitted under the Securities Act to be delivered to potential investors before
the effective date of the registration statement for such offering.
"Prime Rate" means the rate of interest per annum equal to
the rate of interest published from time to time by the Wall Street Journal as
the prime rate at the large U.S. money center banks.
"Prospectus" means the prospectus related to any
registration statement (including a Preliminary Prospectus and a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 415 or Rule 430A under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference in such prospectus.
"Public Market Value" means, as of a given time, with
respect to a share of Issuer Common Stock, (i) if prior to an IPO, an amount
equal to the Fully Distributed Public Market Value per share as determined by
the appraisal process set forth in Section 5.1 or (ii) if following an IPO, an
amount equal to the average of the daily volume weighted average per share
closing price of the Issuer Common Stock on the primary exchange or market on
which it trades for trading period of 45 days ending on the second trading day
immediately preceding the date of consummation of the applicable purchase
transaction pursuant to Sections 3.1, 3.3 or 4.1, as the case may be.
"Registrable Securities" means the Shares and any other
Issuer Common Stock owned by the Stockholders, provided that Registrable
Securities shall not include any such securities received in a transaction
registered under the Securities Act. As to any particular securities referred to
in the immediately preceding sentence, once issued, such securities shall cease
to be Registrable Securities when (a) a registration statement with respect to
the sale of such securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with such
registration statement, (b) they shall have been distributed to the public
pursuant to Rule 144 (or any successor provision) under the Securities Act, (c)
registration under the Securities Act is not required to permit the immediate
disposition of such securities on any exchange on which such securities are
listed or on NASDAQ; provided, in the case of any securities held by members of
the Vivendi Group, such securities shall continue to constitute Registrable
Securities until the aggregate amount of all Registrable Securities represents
the lesser of (x) a fair market value of $500,000,000 and (y) 10% of the public
market capitalization of the Issuer, (d) they shall have been otherwise
transferred, and new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Issuer and subsequent public
distribution of them shall not, in the opinion of counsel to the holders (or in
the opinion of counsel to the Issuer, which counsel and opinion are reasonably
5
satisfactory to the holders), require registration of them under the Securities
Act, or (e) they shall have ceased to be outstanding.
"Registration Expenses" means all costs, fees and expenses
incident to the Issuer's performance of or compliance
with Article II, including all registration and filing fees, all fees and
expenses associated with filings required to be made with the NASD (including,
if applicable, the fees and expenses of any "qualified independent underwriter",
as such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, fees and
expenses of compliance with securities or "blue sky" laws (including reasonable
fees and disbursements of counsel in connection with "blue sky" qualifications
of the Registrable Securities), printing expenses (including expenses of
printing certificates for the Registrable Securities in a form eligible for
deposit with Depository Trust Company and of printing Prospectuses if the
printing of Prospectuses is requested by a holder of Registrable Shares),
messenger and delivery expenses, the Issuer's internal expenses (including all
salaries and expenses of its officers and employees performing legal or
accounting duties), the fees and expenses incurred in connection with any
listing of the Registrable Securities, fees and expenses of counsel for the
Issuer and its independent certified public accountants (including the expenses
of any special audit or "comfort" letters required by or incident to such
performance), securities acts liability insurance (if the Issuer elects to
obtain such insurance), the fees and expenses of any special experts retained by
the Issuer in connection with such registration, and the fees and expenses of
other persons retained by the Issuer and reasonable fees and expenses of one
firm of counsel for the sellers (which shall be selected by the Stockholders
Representative), but not including any underwriting discounts, fees, commissions
or transfer taxes relating to the Issuer Common Stock sold by the Stockholders,
if any.
"Shares" means the shares of Issuer Common Stock received
by the Stockholders pursuant to the Business Combination Agreement.
"Shortfall Number" means, with respect to a given Shortfall
Notice, the shortfall in Registrable Securities determined in accordance with
Section 3.2; provided that as of any given time of determination, the Shortfall
Number shall not exceed the remaining number of Registrable Securities held by
the Stockholders at such time.
"Stand-alone Entity" means the Issuer on an independent
basis, adjustments to be made by Issuer management as necessary to the Financial
Information concerning the appropriate tax rate and deferred tax accounts for
Issuer, arm's-length funding costs, and market-rate expenses (including but not
limited to pension and OPEB costs and insurance premiums), all such expense
items to be estimated without regard to benefits or burdens that affiliation
with Parent or an Affiliate of Parent provides to Issuer.
"Stockholders Representative" means Vivendi, or, following
a Transfer of Issuer Common Stock by Vivendi to any such Person, at the election
of Vivendi, (a) a direct or indirect wholly-owned Subsidiary of Vivendi (it
being agreed that certain - such entities may be up to 15% owned by MEI Holding
Inc., a Matsushita Electric Company Ltd. subsidiary) or (b) if consent is -
6
granted pursuant to Section 4.10 of the Stockholders Agreement, a Demerger
Entity (as defined in the Stockholders Agreement).
"Stop Order Event" means any stop order, injunction or
other order or requirement of the Commission or other Governmental Authority
which (i) interferes with any registration pursuant to this Agreement and (ii)
the Issuer fails to have removed, withdrawn or resolved to the Stockholders
Representative's reasonable satisfaction within 30 days after the date on which
it is first imposed or becomes effective.
"Target Amount" means, for the calendar year 2006,
$3,000,000,000, and for each calendar year thereafter, $4,000,000,000 for each
such calendar year.
"U.S. Dollar" means the lawful currency of the United
States.
"Vivendi Group" means, as of any given time of
determination, Vivendi, any Stockholders Representative and all other
Subsidiaries of Vivendi holding Issuer Common Stock.
1.2 Capitalized Terms. Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Business Combination Agreement.
1.3 Other Definitions. The following capitalized terms are
defined in the following sections of this Agreement:
Term Section
---- -------
Additional Share Amount 2.1(e)(i)
Agreement Preamble
Aggregate Specified Amount 3.1(a)(i)
Anticipated Offering Price 2.1(c)(i)
Anticipated Required Share Number 2.1(c)(i)
Appraisal 5.1(d)
Appraised Value 5.1(d)
Appraisers 5.1(b)
Business Combination Agreement First Recital
Call Notice 3.3
Call Period 3.3
Clause (ii) Additional Amount 2.1(e)(ii)
Clause (ii) Aggregate Specified Amount 3.1(a)(i)
Demand Notice 2.2(a)
December 20 Closing 3.6
Election Notice 2.1(d)
Expected Actual Price 2.1(e)
Fully Distributed Public Market Value 5.1
Holding Preamble
7
Term Section
---- -------
Initial Stated Amount 2.1(a)
Issuer Preamble
Maximum Realizable Amount 2.1(c)(ii)
Maximum Realizable Share Number 2.1(c)(ii)
Notice Receipt Date 5.1(a)
Parent Preamble
Parent Appraiser 5.1(b)
Parent Call Right 3.3
Purchase Notice 3.1(a)
Revised Actual Price 2.1(f)
Second Call Notice 3.3
Second Closing 3.6
Second Election Notice 2.1(e)(i)(B)
Second Underwriters' Notice 2.1(e)(i)(B)
Sell Notice 4.1
Sell Right 4.1
Shelf Registration Statement 2.2(b)
Shortfall Notice 3.2(a)
Special Registration Notice 2.1(a)
Special Registration Right 2.1(a)
Specified Share Number 2.1(d)(i)
Stockholders Preamble
Stockholders Appraiser 5.1(b)
Stockholders Shelf Registration Statement 2.2(c)
Third Appraiser 5.1(b)
Third Election Notice 2.1(f)
Third Underwriters' Notice 2.1(f)
Trigger Date 3.1(b)
Underwriters' Notice 2.1(c)
Vivendi Preamble
ARTICLE II
REGISTRATION RIGHTS
2.1 Special Demand Rights.
(a) Special Registration Request. Subject in each case to
(i) Parent's purchase right under Section 3.1, (ii) the termination provisions
in Section 2.1(j), (iii) Section 6.3 and (iv) Section 8.2, the Stockholders
shall have the right, commencing January 1 of each of the calendar years 2006,
2007, 2008, 2009 and 2010, to request, by written notice delivered by the
Stockholders Representative to the Issuer within 20 Business Days following
January 1 of the applicable calendar year (any such notice, a "Special
8
Registration Notice") that the Issuer effect registration under the Securities
Act to permit an underwritten public offering of such number of Registrable
Securities as would permit the Stockholders to realize, in the aggregate, the
amount of gross offering proceeds specified in such Special Registration Notice
(with respect to a given Special Registration Notice, the "Initial Stated
Amount"; such right to request registration in a given calendar year, the
"Special Registration Right"); provided further that the Initial Stated Amount
stated in any Special Registration Notice, together with any other gross
offering proceeds realized by the Stockholders in connection with any other
registration of Registrable Securities hereunder in the applicable calendar year
(such proceeds to exclude for this purpose any amounts in respect of Registrable
Securities that may be purchased by the bookrunning managers pursuant to the
exercise of their overallotment (greenshoe) option in connection with such
registration request, but to include any amounts in respect of Registrable
Securities previously purchased by the bookrunning managers pursuant to the
exercise of their overallotment option in connection with any other prior
registration of Registrable Securities in such calendar year) shall in no event
exceed the Target Amount for such calendar year; provided further, however, that
in calendar year 2006, with the consent of Parent and the Issuer, such proceeds
may exceed the Target Amount in an amount not in excess of $1,000,000,000.
(b) Special Registration Procedures. As long as Parent has
not delivered a Purchase Notice in respect of the Registrable Securities that
are the subject of a registration requested pursuant to this Section 2.1 (in
which case this Section 2.1(b) shall not apply), the parties agree that
notwithstanding anything to the contrary in Section 2.5, but subject to the
other subsections of this Section 2.1, the following registration milestones
will apply to any such registration:
(i) three bookrunning managers shall be named with respect
to the requested offering in accordance with Section 2.6 no later than March 15
of the applicable calendar year;
(ii) a registration statement in respect of the requested
offering shall be prepared and filed with the Commission no later than July 15
of the applicable calendar year;
(iii) the Underwriter's Notice shall be delivered to the
Stockholders Representative in accordance with Section 2.1(c); and
(iv) such requested offering shall be consummated no later
than September 30 of the applicable calendar year;
provided that if any of the foregoing milestones preceding the consummation of
the requested offering are not achieved as specified above, the Stockholders
shall have the right to deliver a Sell Notice to Parent in accordance with
Section 4.1, provided further that a Sell Notice may not be delivered (i) if the
failure to meet any milestone was caused in whole or in part by any material
breach of this Agreement by Vivendi or any Stockholder (including any delay in
cooperating with the provisions of this Agreement by Vivendi or any Stockholder
9
or any failure to timely deliver an Election Notice) or (ii) if the Stockholders
Representative elects to terminate the offering under clause (v) of Section
2.1(d).
(c) Underwriters' Notice. The Issuer shall require the
bookrunning managers for any registration requested under this Section 2.1 to
deliver to the Stockholders Representative, the Issuer and Parent no later than
ten Business Days prior to the anticipated date of the printing of the
Preliminary Prospectus in respect of such requested registration, a joint
written notice from the bookrunning managers (an "Underwriters' Notice") stating
either:
(i) If the bookrunning managers, in light of prevailing
market conditions, jointly anticipate that at least the Initial Stated Amount
would be realized in the requested offering, (A) a number of Registrable
Securities such bookrunning managers expect would be required to be sold in the
offering to realize the Initial Stated Amount (the "Anticipated Required Share
Number") at the lowest Anticipated Offering Price and (B) a range of offering
prices per share such bookrunning managers expect would be the actual pricing of
the offering (each price in such range, an "Anticipated Offering Price"); or
(ii) If such bookrunning managers, in light of prevailing
market conditions, jointly anticipate that the requested offering (regardless of
share price) would realize an amount less than the Initial Stated Amount, (x)
the maximum amount of gross offering proceeds that such bookrunning managers
expect would be realized in the offering (the "Maximum Realizable Amount"), (y)
a number of Registrable Securities such bookrunning managers expect would be
required to realize the Maximum Realizable Amount (the "Maximum Realizable Share
Number") at the lowest price per share specified in clause (z) below and (z) a
range of offering prices per share such bookrunning managers expect would be the
actual pricing of the offering.
(d) Election by Stockholders. Following receipt of the
Underwriters' Notice, the Stockholders shall elect one of the following
alternatives with respect to the requested registration and the Stockholders
Representative shall notify the Issuer and Parent of such election (an "Election
Notice") within five Business Days following receipt of the Underwriters'
Notice:
(i) to include in the offering a specified number of
Registrable Securities, in which case (A) such number shall neither exceed the
Anticipated Required Share Number or the Maximum Realizable Share Number, as
applicable, nor be less than such number of Registrable Securities as is
anticipated (based on the lowest Anticipated Offering Price or lowest price per
share specified in clause (ii)(z) of Section 2.1(c), as applicable) to yield
gross proceeds of at least $1,000,000,000, (B) such number shall not include the
shares that would satisfy the bookrunning managers' overallotment option, which
option, if exercised, would be the responsibility of the Stockholders to satisfy
and (C) for the avoidance of doubt, the Election Notice may not select a number
that exceeds the Stockholders' remaining number of Registrable Securities after
10
allowing for the potential exercise of the overallotment option) (the "Specified
Share Number");
(ii) if such Underwriters' Notice anticipates that the
Initial Stated Amount can be realized, to include in the offering such number of
Registrable Securities as will be required (based on the pricing of the
offering) to realize the Initial Stated Amount (or the highest amount (not to
exceed the Initial Stated Amount) that can be realized using the remaining
Registrable Securities owned by the Stockholders at such time, after allowing
for the potential exercise of the overallotment option, which will be the
responsibility of the Stockholders);
(iii) if such Underwriters' Notice does not anticipate that
the Initial Stated Amount can be realized, to include in the offering as many
shares of Registrable Securities as will be required (based on the pricing of
the offering) to realize the Maximum Realizable Amount (or the highest amount
(not to exceed the Maximum Realizable Amount) that can be realized using the
remaining Registrable Securities owned by the Stockholders at such time, after
allowing for the potential exercise of the overallotment option, which will be
the responsibility of the Stockholders);
(iv) if such Underwriters' Notice anticipates that the
Maximum Realizable Amount will be less than $1,000,000,000, to deliver, subject
to Parent's right to deliver a Purchase Notice pursuant to Section 3.1(a), a
Sell Notice to Parent in accordance with Section 4.1; or
(v) to terminate the offering.
If the Stockholders Representative fails to provide an Election
Notice as provided above, the Stockholders will be deemed for all purposes of
this Agreement to have elected to terminate the offering.
(e) Second Underwriters' Notice. If at any time following
the delivery of an Election Notice under clause (i) of Section 2.1(d), the
bookrunning managers jointly determine that the actual pricing of the offering
(the "Expected Actual Price") will be lower than (A) in the case of an offering
contemplated by an Election Notice delivered in response to an Underwriters'
Notice pursuant to clause (i) of Section 2.1(c), the lowest Anticipated Offering
Price or (B) in the case of an offering contemplated by an Election Notice
delivered in response to an Underwriters' Notice pursuant to clause (ii) of
Section 2.1(c), the lowest price per share set forth in clause (z) of Section
2.1(c)(ii), the bookrunning managers for the offering contemplated by the
Election Notice shall deliver to the Stockholders Representative, the Issuer and
Parent immediately following such determination a written notice (the "Second
Underwriters' Notice") stating the Expected Actual Price. Following receipt of
the Second Underwriters' Notice, the Stockholders will elect one of the
following alternatives with respect to such offering and the Stockholders
Representative shall notify the Issuer, Parent and the bookrunning managers of
such election (a "Second Election Notice") no later than (i) 24 hours before
pricing or (ii) if the Second Underwriters' Notice is received within 24 hours
11
of pricing and the Stockholders Representative has been kept reasonably informed
by the Issuer or the bookrunning managers during the 48 hours preceding the
delivery of such Second Underwriters' Notice regarding pricing discussions with
the bookrunning managers, promptly following receipt of the Second Underwriters'
Notice (with promptness determined taking into account the time when the Second
Underwriters' Notice is received and, most importantly, the prevailing market
dynamics, including the bookrunning managers' advice regarding the necessary
timetable for the completion of the offering; provided, however, without
limiting any other rights Parent or the Issuer may have in respect of any such
failure to respond promptly, if in the view of the bookrunning managers acting
jointly and in writing, any delay in such response is a contributing factor to
the failure to complete the offering as contemplated by the Second Underwriters'
Notice, such failure will be deemed a material breach under the proviso to
Section 2.1(b) and no Sell Notice may be delivered in connection with such
offering):
(i) in the case of an offering contemplated by an Election
Notice delivered in response to an Underwriters' Notice pursuant to clause (i)
of Section 2.1(c), if such Election Notice contained the election set forth in
clause (i) of Section 2.1(d), then (x) to consummate such offering by continuing
to include in such offering the Specified Share Number, (y) to consummate such
offering, but to decrease the number of Registrable Securities to be included in
such offering to an amount stated in the Second Election Notice or (z) to
consummate such offering, but to increase the number of Registrable Securities
to be included in such offering up to an amount (the "Additional Share Amount")
equal to the difference between (1) such number of Registrable Securities
required (based on the Expected Actual Price or Revised Actual Price (as defined
below)) to realize the Initial Stated Amount and (2) the Specified Share Number;
provided that in the case of clause (z), such notice shall indicate whether or
not the Stockholders Representative desire that the bookrunning managers provide
a Third Underwriters' Notice under Section 2.1(f);
(ii) in the case of an offering contemplated by an Election
Notice delivered in response to an Underwriters' Notice pursuant to clause (ii)
of Section 2.1(c), if such Election Notice contained the election set forth in
clause (i) of Section 2.1(d), then (x) to consummate such offering by continuing
to include in such offering the Specified Share Number, (y) to consummate such
offering, but to decrease the number of Registrable Securities to be included in
such offering to an amount stated in the Second Election Notice or (z) to
consummate such offering, but to increase the number of Registrable Securities
to be included in such offering up to an amount (the "Clause (ii) Additional
Amount") equal to the difference between (1) such number of Registrable
Securities required (based on the Expected Actual Price or the Revised Actual
Price (as defined below)) to realize the highest Maximum Realizable Amount and
(2) the Specified Share Number; provided that in the case of clause (z), such
notice shall indicate whether or not the Stockholders Representative desire that
the bookrunning managers provide a Third Underwriters' Notice under Section
2.1(f); or
(iii) to terminate such offering.
12
In the event that such Second Election Notice elects an alternative set forth in
clauses (i)(z) or (ii)(z) of this Section 2.1(e), and if such notice requests
that the bookrunning managers provide a Third Underwriters' Notice then Section
2.1(f) shall apply. In the event that such Second Election Notice elects any of
the alternatives set forth in clauses (i)(x), (i)(y), (ii)(x), (ii)(y) or (iii)
of this Section 2.1(e), or elects the alternative in clauses (i) (z) or (ii) (z)
of this Section 2.1(e), but does not request a Third Underwriters' Notice, then
Parent's rights to purchase Registrable Securities pursuant to Sections 3.1 and
3.2 shall terminate with respect to the applicable registration request or
offering, as the case may be, and the Stockholders Representative's right to
require the Issuer to purchase Registrable Securities pursuant to Section 4.1
shall terminate with respect to such registration request or offering, as the
case may be. If the Stockholders Representative fails to provide a Second
Election Notice as provided above, the Stockholders will be deemed for all
purposes of this Agreement to have elected to consummate such offering pursuant
to the previously delivered Election Notice.
(f) Third Underwriters' Notice. If a Second Election Notice
seeks to include in an offering additional shares and requests a Third
Underwriters' Notice, the bookrunning managers, acting jointly, shall determine
and notify the Issuer and the Stockholders Representative within 48 hours after
receipt of such Second Election Notice as to the actual offering price for an
offering including such additional shares (the "Revised Actual Price"). Promptly
after receiving notice of such Revised Actual Price (such promptness to be
determined with reference to the principles in Section 2.1(e)), the Stockholders
Representative shall notify the Issuer and Parent as to whether the Stockholders
have elected to proceed with the offering including such additional shares at
the Revised Actual Price or to terminate the offering (such notice, a "Third
Election Notice"). If the Stockholders Representative fails to provide a Third
Election Notice as provided in the immediately preceding sentence, the
Stockholders will be deemed for all purposes of this Agreement to have elected
to terminate the offering. If the Third Election Notice elects to proceed with
the offering, any delay in the consummation of the offering attributable to any
required refiling of a registration statement or recirculation of a Preliminary
Prospectus shall be deemed to extend the milestone set forth in clause (iv) of
Section 2.1(b) by a number of days equal to such delay period.
(g) Participation in Registration. The Issuer shall only
have the right to include shares of Issuer Common Stock in a registration under
this Section 2.1 if (i) it is seeking to include such shares in light of the
Issuer's reasonable determination of its capital needs at such time and (ii) the
bookrunning managers determine and notify the Issuer and the Stockholders
Representative in writing that such additional shares can be included in the
offering without adversely affecting the ability of the Stockholders to sell the
Specified Share Number in such offering or the per share price to be obtained in
such offering. For the avoidance of doubt, no other Person (other than the
Stockholders or the Issuer pursuant to this Section 2.1(g)) shall have the right
to include shares of Issuer Common Stock in a registration under this Section
2.1.
(h) Completion of Offering. Following delivery of an
Election Notice (other than an Election Notice under clause (iv) or (v) of
Section 2.1(d)), the parties will seek to complete the offering contemplated by
13
the Election Notice (as modified by any Second Election Notice or Third Election
Notice), it being understood and agreed that the ultimate determination of
offering price, marketing strategy, the number of shares to be included in the
offering (other than any Specified Share Number) and the timing of the closing
of the offering will be made by the Issuer in its reasonable discretion after
consultation with the Stockholders Representative, taking into account the
recommendations of the bookrunning managers. Vivendi and the Stockholders will
cooperate on a timely basis with all reasonable requests of the Issuer
consistent with this Agreement related to the consummation of such requested
registration. Notwithstanding the foregoing and for the avoidance of doubt, if
the Stockholders Representative sends an Election Notice pursuant to clause (ii)
or (iii) of Section 2.1(d) above, then there shall be no obligation to prepare
or send to the Stockholders Representative a Second Underwriters' Notice.
(i) Material Development. With respect to any requested
registration under this Section 2.1, in the event that any of the bookrunning
managers notifies the Issuer, Parent and the Stockholders Representative on one
or more occasions of any Material Adverse Condition that occurs following the
printing of the Preliminary Prospectus, the consummation of such requested
offering shall be delayed for a reasonable period determined by such bookrunning
managers, such period to expire not later than December 20 of the calendar year
in which such registration was requested. The Issuer shall also have the right
to delay the filing of a registration statement in accordance with this Section
2.1 upon delivery to the Stockholders Representative of a Material Event Notice
for up to the earlier of (i) 60 days and (ii) the public disclosure of the
material transaction which necessitated such Material Event Notice (and extend
by an equal number of days the final date on which any registration statement is
required to be filed under Section 2.1(b)); provided, however, that the Issuer
may not delay filing of such registration statement pursuant to this Section
2.1(i) more than twice in any twelve month period.
(j) Termination of Special Demand Rights Upon IPO. All of
the registration rights provided in this Section 2.1 shall automatically expire
as of the date of closing of an IPO; provided that the registration right
pursuant to Section 2.1 that is exercisable commencing January 1, 2006 may be
exercised pursuant to Section 2.1 even if an IPO of the Issuer closed prior to
such date.
2.2 Additional Demand Rights.
(a) Registration Request. Following the closing of an IPO
and in each case subject to Parent's purchase right under Section 3.1 and
Section 6.3, the Stockholders Representative shall have the right to make six
requests that the Issuer effect registration under the Securities Act of such
number of the Registrable Securities owned by all of the Stockholders as the
Stockholders Representative requests (each, a "Demand Notice"), provided that in
each calendar year prior to 2009, such registration request shall not include
any number of Registrable Securities as would reasonably be expected to permit
the Stockholders to realize, in the aggregate with all other gross offering
14
proceeds realized by the Stockholders in connection with any other registration
of Registrable Securities hereunder in such calendar year (such proceeds to
exclude for this purpose any amounts in respect of Registrable Securities that
may be purchased by the bookrunning managers pursuant to the exercise of their
overallotment option in connection with such registration request, but to
include any amounts in respect of Registrable Securities previously purchased by
the bookrunning managers pursuant to the exercise of their overallotment option
in connection with any other prior registration of Registrable Securities in
such calendar year), gross offering proceeds that are more than the Target
Amount for such calendar year (provided that in calendar year 2006, with the
consent of Parent and the Issuer, such proceeds may exceed the Target Amount in
an amount not in excess of $1,000,000,000), such requests to specify the
intended method or methods of disposition thereof (provided that disposition on
a delayed or continuous basis shall be made in accordance with Section 2.2(c));
and provided further that, during any of the following periods or at any of the
following times, the Issuer shall not have any obligation to cause a
registration statement relating to the registration of such Registrable
Securities to be filed with the Commission: (i) at any time prior to the six
month anniversary of the closing of an IPO, (ii) during any period when a
registration of Registrable Securities pursuant to Section 2.1, 2.2 or 2.3
hereof is pending, (iii) during the period prior to the 181st day following the
effective date of the most recent registration previously effected pursuant to
this Section 2.2, and (iv) from and after any time when a Shelf Registration
Statement or a Stockholder Shelf Registration Statement in respect of all the
Registrable Securities has been filed and the obligation to maintain such
registration statement has not expired hereunder. A request made by the
Stockholders pursuant to Section 2.2(c) shall be counted for purposes of the
request limitation set forth above. A request made by the Stockholders shall not
be counted for purposes of the request limitation set forth above (a) if the
registration statement relating to any such request is not declared effective
within 90 days of the date such registration statement is first filed with the
Commission, (b) if the conditions to closing specified in the underwriting
agreement or purchase agreement entered into in connection with the registration
relating to any such request are not satisfied (other than as a result of a
default or breach thereunder by any Stockholders) or (c) if the offering that is
the subject of such registration request does not result in the disposition of
at least 80% of the Registrable Securities sought to be registered by such
request.
Subject to Section 2.2(b) and Section 2.2(d), upon any such
request, the Issuer will effect the registration of:
(i) the Registrable Securities requested to be registered
by the Stockholders Representative;
(ii) such number of shares of Issuer Common Stock that the
Issuer requests to be included in such registration in light of the Issuer's
reasonable determination of its capital needs at such time; and
(iii) subject to the prior written consent of the
Stockholders Representative, all other shares of Issuer Common Stock not held by
the Stockholders which the Issuer has been requested to register by the holders
15
thereof by written request given to the Issuer by such holders within 15 days
after the giving of written notice of such registration by the Issuer to the
holders; provided that the consent of the Stockholders Representative will not
be required to include in such registration (subject to the cutbacks as provided
in Section 2.2(d)) shares of Issuer Common Stock issued in connection with an
acquisition or strategic relationship.
Notwithstanding the foregoing, but subject to the rights of
holders of Registrable Securities under Section 2.3, if the Issuer at any time
furnishes to the Stockholders Representative a Material Event Notice, the Issuer
may defer the filing (but not the preparation) of a registration statement to be
filed pursuant to this Section 2.2 for up to the earlier of (i) 60 days and (ii)
the public disclosure of the material transaction which necessitated such
Material Event Notice (but the Issuer shall use its reasonable best efforts to
complete the transaction and to file the registration statement as soon as
possible thereafter); provided, however, that the Issuer may not delay filing of
such registration statement pursuant to this Section 2.2 more than twice in any
twelve month period.
(b) Shelf Registration. At any time following receipt by
the Issuer of a Demand Notice, the Issuer may, in lieu of effecting registration
pursuant to Section 2.2(a), elect by written notice to the Stockholders
Representative to prepare and file with the Commission a registration statement
on Form S-3 (or, if such form is unavailable, such other form as the Issuer
determines to be available and appropriate and selects with the consent of the
holders of a majority of the Registrable Securities) that shall provide for
sales of Registrable Securities to be made on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act (or any similar rule that may be
adopted by the Commission) in accordance with the intended method or methods of
disposition by the holders of the Registrable Securities (a "Shelf Registration
Statement"). Notwithstanding anything to the contrary in Section 2.5, in the
event the Issuer files a Shelf Registration Statement as provided above:
(i) once effective, the Issuer shall use reasonable best
efforts to keep the Shelf Registration Statement continuously effective until
the earlier of (x) such time as all Registrable Securities that could be sold
under such Shelf Registration Statement have either been sold and (y) such time
as there are no longer any Registrable Securities outstanding; and
(ii) if any holder of Registrable Securities shall propose
to sell any Registrable Securities pursuant to this Section 2.2(b), the
Stockholders Representative shall notify the Issuer of such holder's intent to
do so at least five Business Days prior to such sale, and the provision of such
notice to the Issuer shall be deemed to constitute a representation that any
information previously supplied by the Stockholders Representative is accurate
as of the date of such notice.
(c) Stockholders Shelf Registration. At any time following
the one year anniversary of an IPO, the Stockholders may request, in lieu of
requesting a registration pursuant to Section 2.2(a), by written notice of the
16
Stockholders Representative to the Issuer, that the Issuer prepare and file with
the Commission a registration statement on Form S-3 to permit the Stockholders
to sell Registrable Securities on a delayed or continuous basis pursuant to Rule
415 under the Securities Act (or any similar rule that may be adopted by the
Commission) in accordance with the intended method or methods of disposition by
the holders of the Registrable Securities (a "Stockholders Shelf Registration
Statement"); provided that in each calendar year prior to 2009, the dollar value
of Registrable Securities that may be sold under such Stockholders Shelf
Registration Statement shall in no event exceed an amount of gross offering
proceeds that, if added to all other gross offering proceeds realized by the
Stockholders in connection with any other registration of Registrable Securities
hereunder in such calendar year, is greater than the Target Amount for such
calendar year; and provided further that any such request shall count as a
request for purposes of the request limitation set forth in Section 2.2(a).
Notwithstanding anything to the contrary in Section 2.5, in the event the
Stockholders so request:
(i) once effective, the Issuer shall use reasonable best
efforts to keep the Stockholders Shelf Registration Statement continuously
effective until the earliest of (x) December 31 of the calendar year in which
such registration statement becomes effective, (y) such time as all Registrable
Securities that could be sold under such Stockholders Shelf Registration
Statement have been sold and (z) such time as there are no longer any
Registrable Securities outstanding; and
(ii) if any holder of Registrable Securities shall propose
to sell any Registrable Securities pursuant to this Section 2.2(c), the
Stockholders Representative shall notify the Issuer of such holder's intent to
do so at least five Business Days prior to such sale, and the provision of such
notice to the Issuer shall be deemed to constitute a representation that any
information previously supplied by the Stockholders Representative is accurate
as of the date of such notice.
(d) Priority in Demand Registrations. Subject to Section
6.2, if the bookrunning managers (or, in the case of an offering under this
Section 2.2 which is not underwritten, a Nationally Recognized Investment Bank)
shall advise the Issuer in writing (with a copy to the Stockholders
Representative) that, in their opinion, the number of securities requested and
otherwise proposed to be included in such registration exceeds the number that
can be sold in such offering without materially and adversely affecting the
offering price, the Issuer will include in such registration, to the extent of
the number that the Issuer is so advised can be sold in such offering without
such effect, first, the Registrable Securities of the Stockholders, on a pro
rata basis (based on the number of shares of Registrable Securities requested to
be included by each Stockholder), and second, the shares of Issuer Common Stock
owned by the Issuer or any other Person, on a pro rata basis.
2.3 Incidental Registrations. If the Issuer, at any time
following the six month anniversary of the closing of an IPO, proposes to
register any of its equity securities under the Securities Act for its own
account (other than pursuant to a registration on Form S-4 or S-8 or any
17
successor form) or on behalf of any holder other than the Stockholders, then the
Issuer will give prompt written notice to all Stockholders regarding such
proposed registration. Upon the written request of any Stockholder made within
15 Business Days after the receipt of any such notice (which request shall
specify the number of Registrable Securities intended to be disposed of by such
Stockholder and the intended method or methods of disposition thereof), the
Issuer will, subject to Parent's purchase right under Section 3.1 and Section
6.3, include such Registrable Securities in such registration on a pro rata
basis in accordance with such intended method or methods of disposition,
provided that:
(a) if, at any time after giving written notice pursuant to
this Section 2.3 of its intention to register equity securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Issuer shall determine for any reason not to register such
equity securities, the Issuer may, at its election, give written notice of such
determination to each holder of Registrable Securities and, thereupon, shall not
be obligated to register any Registrable Securities in connection with such
registration (but shall nevertheless pay the Registration Expenses in connection
therewith), without prejudice, however, to any rights of the Stockholders to
request a registration in accordance with Section 2.1 or Section 2.2;
(b) subject to Section 6.2, if in connection with a
registration pursuant to this Section 2.3, the bookrunning managers of such
registration (or, in the case of an offering that is not underwritten, a
Nationally Recognized Investment Bank) shall advise the Issuer in writing (with
a copy to the applicable Stockholders) that the number of securities requested
and otherwise proposed to be included in such registration exceeds the number
which can be sold in such offering without materially and adversely affecting
the offering price, then in the case of any registration pursuant to this
Section 2.3, the Issuer will include in such registration to the extent of the
number which the Issuer is so advised can be sold in such offering without such
effect, first, the securities, if any, being sold by the Issuer or the Person
for whose account the registration is being effected, and second, the
Registrable Securities of the Stockholders (on a pro rata basis based on the
number of shares of Registrable Securities owned by each such Stockholder) that
are reasonably required to be registered and sold to cause the aggregate gross
proceeds to the Stockholders during such calendar year to be equal to the Target
Amount for such year, and third, the shares of Issuer Common Stock held by any
Person not referred to above; and
(c) any Stockholder shall have the right to withdraw such
Stockholder's request for inclusion of such Stockholder's Registrable Securities
in any registration statement pursuant to this Section 2.3 by giving written
notice to the Issuer of such withdrawal at any time prior to the printing of the
Preliminary Prospectus.
No registration in accordance with this Section 2.3 shall
relieve the Issuer from its obligation to effect a registration under Section
2.1 or Section 2.2, it being agreed that any gross offering proceeds realized by
the Stockholders pursuant to a registration in accordance with this Section 2.3
(such proceeds to include for this purpose, if applicable, any amounts in
18
respect of Registrable Securities purchased by the bookrunning managers pursuant
to the exercise of their overallotment option) shall be taken into account for
purposes of Section 2.1 or Section 2.2, as applicable, in measuring the
aggregate gross proceeds realized in a given calendar year.
2.4 Expenses. The Issuer will pay all Registration Expenses
in connection with any registration pursuant to Sections 2.1, 2.2 or 2.3;
provided that each seller of Registrable Securities shall pay all Registration
Expenses to the extent required to be paid by such seller under applicable law.
2.5 Registration Procedures. When the Issuer is required to
effect the registration of any Registrable Securities under the Securities Act
in accordance with Sections 2.1, 2.2 or 2.3, the Issuer will (except as
expressly otherwise provided in Sections 2.1(b), 2.2(b) or 2.2(c)):
(a) prepare, and as soon as practicable, but in any event
within 60 days thereafter, file with the Commission, a registration statement
with respect to such Registrable Securities, make all required filings with the
NASD and use its reasonable best efforts to cause such registration statement to
become effective as soon as practicable;
(b) prepare and promptly file with the Commission such
amendments and post-effective amendments and supplements to such registration
statement and the Prospectus used in connection therewith as may be necessary to
keep such registration statement effective for so long as is required to comply
with the provisions of the Securities Act and to complete the disposition of all
securities covered by such registration statement in accordance with the
intended method or methods of disposition thereof (including any offering on a
delayed or continuous basis pursuant to Section 2.2(c)), but in no event (except
in the case of a Shelf Registration Statement or a Stockholders Shelf
Registration Statement) for a period of more than four months after such
registration statement becomes effective;
(c) furnish to counsel selected by the Stockholders
Representative or the applicable Stockholders, as the case may be, copies of all
documents proposed to be filed with the Commission in connection with such
registration (and all documents incorporated by reference into the registration
statement or Prospectus), and such documents shall be subject to the review of
such counsel, it being agreed that (i) the Issuer shall not file any
registration statement or any amendment or post-effective amendment or
supplement to such registration statement or the Prospectus used in connection
therewith as to which such counsel shall have reasonably objected in writing on
the grounds that such amendment or supplement does not comply (explaining why)
in all material respects with the requirements of the Securities Act, and (ii)
the limitation on filing under clause (i) shall not apply to the extent the
Issuer determines that the filing of such amendment or supplement is required by
law or necessary to avoid liability under the Securities Act;
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(d) furnish to the Stockholders Representative or the
applicable Stockholders, as the case may be, without charge, such number of
conformed copies of such registration statement and of each such amendment and
supplement thereto (in each case including all exhibits and documents filed
therewith) and such number of copies of the Prospectus included in such
registration statement (including each Preliminary Prospectus and any summary
Prospectus) (and all documents incorporated by reference into the registration
statement or Prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act, and
such other documents, as the Stockholders Representative or the applicable
Stockholders, as the case may be, may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller in accordance
with the intended method or methods of disposition thereof;
(e) use reasonable best efforts to register or qualify such
Registrable Securities covered by such registration statement under the
securities or blue sky laws of such jurisdictions as the Stockholders
Representative, or the applicable Stockholders, as the case may be, shall
reasonably request and do any and all other acts and things which may be
necessary or advisable to enable such seller to consummate the disposition of
such Registrable Securities in such jurisdictions in accordance with the
intended method or methods of disposition thereof; provided that the Issuer
shall not for any such purpose be required to qualify generally to do business
as a foreign corporation in any jurisdiction in which it is not so qualified,
subject itself to taxation in any jurisdiction in which it is not so subject, or
take any action which would subject it to general service of process in any
jurisdiction wherein it is not so subject;
(f) use best efforts to obtain and furnish to the
Stockholders Representative, the applicable Stockholders and the bookrunning
managers:
(i) an opinion of counsel for the Issuer experienced in
securities law matters, dated the effective date of the registration statement
(and, if such registration includes an underwritten public offering, the date of
the closing under the underwriting agreement), and
(ii) a "comfort" letter (unless the registration is
pursuant to Section 2.3 and such a letter is not otherwise being furnished to
the bookrunning managers, if any, in such registration), dated the effective
date of such registration statement (and if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants who have
issued an audit report on the Issuer's financial statements or any other
Person's financial statements included in the Prospectus included in the
registration statement; provided that such comfort letter shall be delivered
only to the Stockholders Representative or the applicable Stockholders, as the
case may be, if the Stockholders Representative or the applicable Stockholders,
as the case may be, represent to such accountants in a form reasonably
satisfactory to such accountants that it or they are bookrunning managers or
have performed the due diligence customarily performed by a bookrunning manager;
20
in each case covering such matters as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to the bookrunning
managers in underwritten public offerings of securities;
(g) notify the Stockholders Representative or the
applicable Stockholders, as the case may be, at any time when a Prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event or existence of any fact as a result of which the
registration statement or the Prospectus included in such registration statement
(or any documents incorporated by reference into such registration statement or
Prospectus), as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances
under which they were made, and (i) in the case of a Shelf Registration
Statement or a Stockholders Shelf Registration Statement, if the Stockholders
have provided notice of an intent to sell, within five Business Days of such
notice and (ii) in the case of any other registration statement hereunder, as
promptly as is practicable but in any event, no later than 30 days after such
notice (except to the extent the Issuer delivers a Material Event Notice, in
which case such period may be up to 60 days but shall end upon public disclosure
of the material transaction which necessitated such Material Event Notice),
prepare and furnish to the Stockholders Representative or the applicable
Stockholders, as the case may be, a reasonable number of copies of a supplement
to or an amendment of such Prospectus or such registration statement as may be
necessary so that, as thereafter delivered to the purchasers of such securities,
such Prospectus or such registration statement shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing;
(h) otherwise comply with all applicable rules and
regulations of the Commission and, to the extent required, make available to the
Stockholders Representative or the applicable Stockholders, as the case may be,
as soon as reasonably practicable, an earnings statement of the Issuer (in form
complying with the provisions of Rule 158 under the Securities Act) covering the
period of at least 12 months, but not more than 18 months, beginning with the
first month after the effective date of such registration statement;
(i) notify the Stockholders Representative or the
applicable Stockholders, as the case may be, (i) when the Prospectus has been
filed, and, with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
Commission for amendments or supplements to such registration statement or such
Prospectus (or any documents incorporated by reference into such Registration
Statement or such Prospectus) or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of
such registration statement or the initiation of any proceedings for that
purpose and (iv) of the suspension of the qualification of such securities for
offering or sale in any jurisdiction, or of the institution of any proceedings
for any of such purposes;
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(j) use reasonable best efforts to obtain the lifting of
any stop order that might be issued suspending the effectiveness of such
registration statement at the earliest possible moment;
(k) use its reasonable best efforts (i) (A) to list such
Registrable Securities on any securities exchange or market on which the equity
securities of the Issuer are then listed or, if no such equity securities are
then listed, on an exchange selected by the Issuer, in each case if such listing
is then permitted under the rules of such exchange, or (B) if such listing is
not practicable, to secure designation of such securities as a NASDAQ "national
market system security" within the meaning of Rule 11Aa2-1 under the Exchange
Act or, failing that, to secure NASDAQ authorization for such Registrable
Securities, and, without limiting the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD, and (ii) to provide a transfer agent and registrar for such
Registrable Securities not later than the effective date of such registration
statement and to instruct such transfer agent (A) to release any stop transfer
order with respect to the certificates with respect to the Registrable
Securities being sold and (B) to furnish certificates without restrictive
legends representing ownership of the shares being sold, in such denominations
requested by the Stockholders Representative, the applicable Stockholders or the
bookrunning managers;
(l) furnish to the Stockholders Representative or the
applicable Stockholders, as the case may be, on a confidential basis such
information regarding the Issuer as the Stockholders Representative or the
applicable Stockholders, as the case may be, may reasonably request in
connection with any "due diligence" effort of any seller of Registrable
Securities;
(m) take such other actions as the Stockholders
Representative, or the bookrunning managers reasonably request consistent with
this Agreement in order to expedite or facilitate the disposition of such
Registrable Securities; and
(n) cooperate with the holders of Registrable Securities
covered by such registration statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing the
securities to be sold under such registration statement, and enable such
securities to be in such denominations and registered in such names as such
holders may request.
As a condition to its registration of any Registrable
Securities, the Issuer may require the Stockholders Representative or the
applicable Stockholders, as the case may be, to execute powers-of-attorney,
custody arrangements and other customary agreements appropriate to facilitate
the offering and to furnish to the Issuer such information regarding such seller
of any Registrable Securities as to which any registration is being effected,
its ownership of Registrable Securities and the disposition of such Registrable
Securities as the Issuer may from time to time reasonably request in writing and
as shall be required by law in connection therewith. The Stockholders
Representative or the applicable Stockholders, as the case may be, agree to
22
furnish promptly to the Issuer all such information required to be disclosed in
order to make the information previously furnished to the Issuer by the
Stockholders Representative or the applicable Stockholders, as the case may be,
not materially misleading.
By acquisition of Registrable Securities, each holder of
such Registrable Securities shall be deemed to have agreed that upon receipt of
any notice from the Issuer of the happening of any event of the kind described
in Section 2.5(g), such holder will promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities (including any Shelf Registration
Statement) until such holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 2.5(g). If so directed by the Issuer,
the Stockholders Representative and each holder of Registrable Securities will
deliver to the Issuer (at the Issuer's expense) all copies, other than permanent
file copies, in the Stockholders Representative or such holder's possession of
the prospectus covering such Registrable Securities at the time of receipt of
such notice.
2.6 Underwritten Offerings.
(a) Underwriting Agreement. If requested by the bookrunning
managers for any underwritten offering pursuant to a registration requested
under Section 2.1, 2.2 or 2.3, the Issuer and the Stockholders who seek to
participate in such registration shall enter into an underwriting agreement with
the bookrunning managers for such offering that shall contain such
representations and warranties by the Issuer and such other terms and provisions
as are customarily contained in agreements of this type, including indemnities
to the effect and to the extent provided in Section 2.9. No underwriting
agreement (or other agreement in connection with such offering) shall require
any holder of Registrable Securities, in their respective capacities as
stockholders and/or controlling persons, to make any representations or
warranties to or agreements with the Issuer or the bookrunning managers other
than customary representations, warranties or agreements regarding such holder's
power and authority to enter into the underwriting agreement, the absence of
conflicts with such agreement and the enforceability of such agreement against
such holder, the ownership of such holder's Registrable Securities and such
holder's intended method or methods of disposition and any other representation
required by law or to furnish any indemnity to any Person which is broader than
the indemnity furnished by such holder pursuant to Section 2.9. Notwithstanding
anything to the contrary in this Agreement, any fees or commissions payable to
any bookrunning manager pursuant to a registration requested under Section 2.1
shall be appropriate in light of (i) the fees or commissions paid or payable in
similarly sized initial public offerings of U.S. equity and (ii) the competitive
underwriting market for large U.S. equity offerings and shall be economically
identical to the fees and commissions payable to the other two bookrunning
managers. The aggregate amount of all such fees and commissions shall be subject
to the reasonable approval of the Stockholders Representative; provided that
such approval shall be evidenced by written notice to the Issuer and any such
bookrunning managers prior to the execution of any underwriting agreements, and
if the bookrunning managers to be designated by Parent do not agree to the
proposed fees, Parent shall have the right to designate substitute bookrunning
23
managers pursuant to the provisions of Section 2.6(b), subject to this Section
2.6(a). Any fees or commissions payable to any bookrunning managers pursuant to
a registration request under Section 2.2 shall be subject to the approval of the
Stockholders Representative.
(b) Selection of Underwriters. If a registration is
requested under Section 2.1, the Issuer and the Stockholders Representative will
have the right to select the bookrunning managers for such offering as follows:
the Stockholders Representative will have the right to select, in its sole
discretion, one lead bookrunning manager (which shall be a Nationally Recognized
Investment Bank) and the Issuer will have the right to select, in its sole
discretion, two lead bookrunning managers (which shall be Nationally Recognized
Investment Banks). Such Nationally Recognized Investment Banks selected by the
Stockholders Representative and the Issuer will act as the joint lead
bookrunning managers of such offering. Whenever a registration requested
pursuant to Section 2.2 is for an underwritten offering, the Stockholders
Representative will have the right to select one or more bookrunning managers
(which shall be Nationally Recognized Investment Banks) reasonably satisfactory
to the Issuer to administer such offering. If the Issuer at any time proposes to
register any of its securities under the Securities Act for sale for its own
account pursuant to an underwritten offering as to which the Stockholders may
participate under Section 2.3, the Issuer will have the right to select one or
more bookrunning managers (which shall be Nationally Recognized Investment
Banks) to administer the offering. The Issuer will have the right to designate
the market stabilization agent in connection with any registration under (a)
Section 2.1 or (b) Section 2.3 if the Issuer at any time proposes to register
any of its securities under the Securities Act for sale for its own account
pursuant to an underwritten offering as to which the Stockholders may
participate, and the Stockholders Representative after reasonable consultation
with the Issuer will have the right to designate the market stabilization agent
in connection with any registration under Section 2.2. For purposes of this
Agreement, references to bookrunning managers shall mean the bookrunning
managers selected in accordance with this Section 2.6(b).
2.7 Holdback Agreements.
(a) When the Issuer proposes to register any of its equity
securities under the Securities Act for its own account (other than on Form S-4
or S-8 or any successor form) or effects the registration of any Registrable
Securities under the Securities Act pursuant to Section 2.1, 2.2 or 2.3 or
otherwise, each holder of Registrable Securities agrees by acquisition of such
Registrable Securities not to effect any sale or distribution, including any
sale pursuant to Rule 144 under the Securities Act, or to request registration
under Section 2.1 or Section 2.2 of any Registrable Securities within seven days
prior to and 90 days (unless advised by the bookrunning managers that a longer
period, not to exceed 180 days, is required, or such shorter period as the
bookrunning managers for any underwritten offering may agree) after the
effective date of the registration statement relating to such registration,
except as part of such registration or unless, in the case of a sale or
distribution not involving a public offering permitted under this agreement, the
permitted transferee agrees in writing to be subject to this Section 2.7 even if
24
such Registrable Securities cease to be Registrable Securities upon such
transfer. If requested by such bookrunning managers, each holder of Registrable
Securities agrees to execute an agreement (consistent with such bookrunning
managers' customary form of holdback agreement) to such effect with the Issuer
so long as each director and each officer of the Issuer, to the extent requested
by the bookrunning managers, also executes such agreements.
(b) The Issuer agrees not to effect any public sale or
distribution of its equity securities or securities convertible into or
exchangeable or exercisable for any of such securities within seven days prior
to and 90 days (unless advised in writing by the bookrunning managers that a
longer period, not to exceed 180 days, is required, or such shorter period as
the bookrunning managers for any underwritten offering may agree) after the
effective date of any registration statement filed pursuant to Section 2.1 or
Section 2.2 (except (i) as part of such registration, (ii) as permitted by the
related underwriting, (iii) pursuant to an employee equity compensation plan,
(iv) pursuant to an acquisition or strategic relationship, bank, equipment or
other financing or similar transaction or (v) pursuant to a registration on Form
S-4 or S-8 or any successor form).
2.8 Stock Splits; Adjustment to Share Numbers. Each holder
of Registrable Securities agrees that it will vote to effect a stock split,
reverse stock split, recapitalization or combination with respect to any
Registrable Securities in connection with any registration of any Registrable
Securities hereunder, or otherwise, if the bookrunning managers shall advise the
Issuer in writing (or, in connection with an offering that is not underwritten,
if an investment banker shall advise the Issuer in writing) that in its opinion
such a stock split, reverse stock split, recapitalization or combination would
facilitate or increase the likelihood of success of the offering. The Issuer
shall cooperate in all respects in effecting any such stock split, reverse stock
split, recapitalization or combination. Notwithstanding anything herein to the
contrary, any computation of a number of shares of Issuer Common Stock under
this Agreement (and any related purchase price) shall be appropriately adjusted
to take into account any stock split, reverse stock split, recapitalization or
combination of Issuer Common Stock.
2.9 Indemnification.
(a) Indemnification by the Issuer. The Issuer shall, and
hereby does, indemnify and hold harmless, in the case of any registration
statement hereunder, each seller of any Registrable Securities covered by such
registration statement and each Person who controls such seller and their
respective directors, officers, partners, shareholders, employees,
representatives, agents and Affiliates or controlling persons against any
losses, claims, damages or liabilities, joint or several, to which such seller
or any such director, officer, partner, shareholder, employee, representative,
agent, Affiliate or controlling person may become subject under the Securities
Act or otherwise, including the reasonable fees and expenses of legal counsel,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
25
securities were registered under the Securities Act, any Preliminary Prospectus,
final Prospectus or summary Prospectus contained therein, or any 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, and the Issuer will promptly reimburse each
such seller and each such director, officer, partner, shareholder, employee,
representative, agent, Affiliate and controlling person for any legal or any
other expenses (including expense advances for investigation) reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that the
Issuer shall not be liable (i) in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such Preliminary Prospectus, final Prospectus, summary Prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Issuer by or on behalf of such seller expressly for use
therein, unless prior to the printing of such Preliminary Prospectus, final
Prospectus, summary Prospectus, amendment or supplement the Issuer was furnished
information which corrected or made not misleading the previously furnished
information and the Issuer failed to incorporate such additional information
into the registration statement and Prospectus amendment or supplement or (ii)
for the use of any Prospectus after such time as the Issuer has advised such
indemnified party in writing that the filing of a post-effective amendment or
supplement thereto is required, except for the use of the Prospectus as so
amended or supplemented, or the use of any Prospectus after such time as the
obligation of the Issuer to keep the same current and effective has expired.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of any such seller or any such director,
officer, partner, shareholder, employee, representative, agent, Affiliate or
controlling person and shall survive the transfer of such securities by such
seller. The reimbursements required by this Section 2.9(a) will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred and reasonable documentation of the same
is provided to the indemnifying party.
(b) Indemnification by the Sellers. Each seller of any
Registrable Securities and each other Person who controls such seller, within
the meaning of the Securities Act shall, and hereby does, severally and not
jointly, indemnify and hold harmless (in the same manner and to the same extent
as set forth in Section 2.9(a)) the Issuer and each Person who controls the
Issuer, and their respective directors, officers, partners, shareholders,
employees, representatives, agents, Affiliates or controlling Persons, with
respect to (i) any untrue statement or alleged untrue statement of a material
fact contained in or any omission or alleged omission to state therein a
material fact in any such registration statement, any Preliminary Prospectus,
final Prospectus or summary Prospectus contained therein, or any amendment or
supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Issuer by or on behalf of such seller,
expressly for use therein, unless prior to the printing of such Preliminary
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Prospectus, final Prospectus, summary Prospectus, amendment or supplement the
Issuer was furnished information which corrected or made not misleading the
previously furnished information and the Issuer failed to incorporate such
additional information into the registration statement and Prospectus amendment
or supplement, and (ii) the use of any prospectus after such time as the Issuer
has advised such indemnified party in writing that the filing of a
post-effective amendment or supplement thereto is required, except for the use
of the Prospectus as so amended or supplemented, or the use of any Prospectus
after such time as the obligation of the Issuer to keep the same current and
effective has expired; provided, however, that the liability of such
indemnifying party under this Section 2.9(b) shall be limited to the amount of
net proceeds received by such indemnifying party in the offering giving rise to
such liability. Such indemnity shall remain in full force and effect, regardless
of any investigation made by or on behalf of the Issuer or any such director,
officer, partner, shareholder, employee, representative, agent, Affiliate or
controlling Person and shall survive the transfer of such securities by such
seller. The reimbursements required by this Section 2.9(b) will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred and reasonable documentation of the same
is provided to the indemnifying party.
(c) Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.9(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the indemnifying party of the commencement of such action
or proceeding; provided, however, that the failure of any indemnified party to
give notice as provided herein shall not relieve the indemnifying party of its
obligations under Section 2.9(a) or (b), as the case may be, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any such action is brought against an indemnified party,
the indemnifying party shall be entitled to participate in and to assume the
defense thereof, jointly with any other indemnifying party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
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 legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable out of pocket costs incurred in connection
with complying with requests for production, depositions, interrogatories and
the like; provided, however, that if the indemnified party believes it is
advisable for it to be represented by separate counsel because it has been
advised by counsel that there exists a potential conflict of interest between
its interests and those of the indemnifying party with respect to such claim, or
there exist defenses available to such indemnified party which may not be
available to the indemnifying party, the indemnified party may retain counsel
satisfactory to it and the indemnifying party shall pay all fees and expenses of
such counsel in accordance with Section 2.9(a) or (b) as applicable. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its prior written consent. No indemnifying party
27
shall, without the consent of the indemnified party, consent to the entry of any
judgment or enter into any settlement that is the subject of an indemnification
obligation hereunder which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation or which requires action
other than the payment of money by the indemnifying party. No indemnified party
shall consent to entry of judgment or enter into any settlement of such action
the defense of which has been assumed by an indemnifying party without the
consent of such indemnifying party. Each indemnified party shall furnish such
information regarding itself or the claim in question as an indemnifying party
may reasonably request in writing and as shall be reasonably requested in
connection with the defense of such claim and litigation resulting therefrom.
(d) Contribution. If the indemnification provided for in
this Section 2.9 shall for any reason be held by a court of competent
jurisdiction to be unavailable to an indemnified party under Section 2.9(a) or
(b), as the case may be, in respect of any loss, claim, damage or liability, or
any action or proceeding in respect thereof, then, in lieu of the amount paid or
payable under Section 2.9(a) or (b), as the case may be, the indemnified party
and the indemnifying party under Section 2.9(a) or (b), as the case may be,
shall contribute to the aggregate losses, claims, damages and liabilities
(including reasonable legal or other expenses incurred in connection with
investigating the same), to the extent permitted under applicable law in such
proportion as is appropriate to reflect the relative fault of the Issuer and the
prospective sellers of Registrable Securities covered by the registration
statement in connection with the statements or omissions that resulted in such
loss, claim, damage or liability, or action or proceeding in respect thereof, as
well as any other relevant equitable considerations (the relative fault of the
Issuer and such prospective sellers to 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 the Issuer or such prospective sellers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission). The parties hereto acknowledge that in no
event shall the obligation of any indemnifying party to contribute under this
Section 2.9 exceed the amount that such indemnifying party would have been
obligated to pay by way of indemnification if the indemnification provided for
under Sections 2.9(a) or (b) had been available under the circumstances. The
Issuer and each holder of Registrable Securities agree that it would not be just
and equitable if contribution pursuant to this Section 2.9(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 2.9(d). 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. In no event shall any prospective seller be obligated to make
a contribution pursuant to this Section 2.9(d) in excess of the amount of net
proceeds received by such prospective seller in the offering giving rise to such
obligation. In addition, no Person shall be obligated to contribute hereunder
any amounts in payment for any settlement of any action or claim effected
without such Person's consent.
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2.10 Rule 144. If the Issuer shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to the requirements of the
Securities Act, the Issuer covenants that it will file the reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder and it will take such further
action as any holder of Registrable Securities or Issuer Common Stock may
reasonably request, all to the extent required from time to time to enable such
holder to sell shares of Registrable Securities or Issuer Common Stock without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or (ii) any similar rules or regulation hereafter adopted by
the Commission. Upon the request of any holder of Registrable Securities or
Issuer Common Stock, the Issuer will deliver to such holder a written statement
as to whether it has complied with such requirements.
2.11 Excess Proceeds. In the event that the actual per
share offering price in an offering under Section 2.1 exceeds the lowest
Anticipated Offering Price or the lowest anticipated per share price under
clause (z) of Section 2.1(c)(ii), the Stockholders shall be entitled to receive
the proceeds from such offering even if such excess results in the Stockholders
realizing aggregate gross proceeds in a given calendar year above the Target
Amount for such calendar year.
ARTICLE III
PARENT PURCHASE RIGHTS
3.1 Purchase Right Prior to the Closing under a
Registration Statement.
(a) Following a request for registration under Section 2.1,
Section 2.2 or Section 2.3, subject to the penultimate sentence of Section
2.1(e), Parent shall have the right, exercisable prior to the earliest of (i)
the execution of an underwriting agreement in respect of an offering that is the
subject of such registration request; (ii) the delivery by the Stockholders
Representative of an Election Notice pursuant to Section 2.1(d)(iv); and (iii)
the time when such offering is terminated by an Election Notice pursuant to
Section 2.1(d)(v), by written notice to the Issuer and the Stockholders
Representative (any such notice, a "Purchase Notice"), to purchase from the
Stockholders, and the Stockholders shall have the obligation to sell to Parent,
free and clear of all Liens, the following number of Registrable Securities for
the following aggregate purchase price (it being agreed that if the remaining
number of Registrable Securities held by the Stockholders at such time is fewer
than would be required to be purchased and sold under the following provisions,
the number of Registrable Securities to be purchased and sold will be reduced to
such remaining number of Registrable Securities and the aggregate purchase price
required to be paid under the following provisions will be reduced
proportionately):
(i) in the case of a registration request under Section
2.1, such number of Registrable Securities as is equal to:
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(A) in all cases other than those addressed in clauses (B),
(C) and (D) below, the nearest whole number obtained by dividing (x) the Initial
Stated Amount in such registration request by (y) the Public Market Value, in
which case the aggregate purchase price for such Registrable Securities shall
equal the Initial Stated Amount;
(B) if such Purchase Notice is sent after an Election
Notice has been delivered in connection with such registration, but before the
delivery of the Second Election Notice, if any, in which the Stockholders have
elected to sell a Specified Share Number, the number of Registrable Securities
shall be such Specified Share Number and the aggregate purchase price shall
equal the aggregate Public Market Value for such Specified Share Number;
(C) if such Purchase Notice is sent after a Second Election
Notice contemplated by Section 2.1(e)(i)(z) that requests a Third Underwriters'
Notice has been delivered, the number of Registrable Securities shall be equal
to the sum (the "Aggregate Specified Amount") of (x) the Specified Share Number
and (y) the Additional Share Amount and the aggregate purchase price shall equal
the aggregate Public Market Value for the Aggregate Specified Amount or
(D) if such Purchase Notice is sent after a Second Election
Notice contemplated by Section 2.1(e)(ii)(z) has been delivered, the number of
Registrable Securities shall be equal to the sum (the "Clause (ii) Aggregate
Specified Amount") of (x) the Specified Share Number and (y) the Clause (ii)
Additional Amount and the aggregate purchase price shall equal the aggregate
Public Market Value for the Clause (ii) Aggregate Specified Amount;
provided that, in the case of clause (B) or (D) above, if an Underwriters'
Notice pursuant to Section 2.1(c)(ii) has been delivered, Parent's purchase
right pursuant to this Section 3.1(a) shall include such additional number of
Registrable Securities as is equal to the nearest whole number obtained by
dividing (i) the excess of (I) the Initial Stated Amount in such offering over
(II) the Maximum Realizable Amount in such offering by (ii) the Public Market
Value (and the aggregate purchase price in each such case shall be increased by
the excess of the Initial Stated Amount for such offering and the Maximum
Realizable Amount in such offering, it being understood that Parent shall in no
event be required to pay more to the Stockholders in the aggregate than the
Initial Stated Amount in connection with the exercise of a purchase right under
this Section 3.1); and
(ii) in the case of a registration request pursuant to
Section 2.2 or Section 2.3 all, but not less than all, of the Registrable
Securities that the Stockholders seek to register pursuant to such registration
request, and the aggregate purchase price in each such case shall equal the
aggregate Public Market Value of such Registrable Securities.
(b) If a purchase right is exercised by Parent under this
Section 3.1 in respect of Registrable Securities that are the subject of a
pending registration request under Section 2.1, and if such purchase is not
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consummated by September 30 of the calendar year in which such request for
registration was made (as such date may be extended pursuant to Section 2.1(i);
such date, the "Trigger Date"), the aggregate consideration to be paid by Parent
to the Stockholders in accordance with Section 3.4 shall accrue simple interest
at Prime Rate from the first day after the Trigger Date through and including
the date on which such payment is made. Parent shall have the right to assign
its purchase rights under this Section 3.1 to one or more of its Affiliates
(including the Issuer), provided that Parent shall remain liable for the
obligations of such Affiliates in connection with such transaction; provided,
further that if Parent assigns any of its purchase rights under this Section 3.1
to the Issuer or any of the Issuer's Subsidiaries, the Registrable Securities
purchased by the Issuer or the applicable Subsidiary of the Issuer pursuant to
this Section 3.1 shall be cancelled and shall no longer by outstanding, in each
case immediately following such purchase.
(c) Upon delivery of a Purchase Notice under this Section
3.1, the pending registration request of the Stockholders under Section 2.1,
Section 2.2 or Section 2.3 that triggered such Purchase Notice shall
automatically be suspended and, upon completion of the purchase and sale
contemplated by such Purchase Notice in accordance with this Article III, shall
be terminated and have no further force or effect. If such terminated
registration was initiated under Section 2.2, such terminated registration will
reduce by one the number of permitted registration requests available to the
Stockholders at such time under such Section 2.2.
3.2 Purchase Right Following the Closing under a
Registration Statement.
(a) Subject to the penultimate sentence of Section 2.1(e),
within five Business Days following the earlier of (x) the closing of an
offering initiated pursuant to Section 2.1, and (y) the occurrence of a Stop
Order Event, the Stockholders Representative shall notify Parent in writing (any
such notice, a "Shortfall Notice") as follows:
(i) If an Underwriters' Notice contemplated by Section
2.1(c)(i) was delivered in connection with such offering, if the Stockholders
Representative delivered an Election Notice contemplated by Section 2.1(d)(i),
and (A) if a Second Election Notice was not delivered, the Shortfall Notice will
state this and will specify the shortfall in Registrable Securities sold in such
offering, which shall equal the number, if any, of Registrable Securities
included within the Specified Share Number that were not sold in such offering
or (B) if a Second Election Notice requesting a Third Underwriter's Notice was
delivered as contemplated by Section 2.1(e)(i)(z), and thereafter a Third
Election Notice to proceed with the offering pursuant to Section 2.1(f) was
delivered, the Shortfall Notice will state this and will specify the shortfall
in Registrable Securities sold in such offering, which shall equal the number,
if any, of Registrable Securities included within the Aggregate Specified Amount
that were not sold in such offering;
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(ii) If an Underwriters' Notice contemplated by Section
2.1(c)(i) was delivered in connection with such offering, if the Stockholders
Representative delivered an Election Notice contemplated by Section 2.1(d)(ii),
and if the offering did not realize gross proceeds equal to, or in excess of,
the Initial Stated Amount, the Shortfall Notice will state this and will specify
the shortfall in Registrable Securities sold in such offering, which shall equal
the number of Registrable Securities (to the nearest whole number) obtained by
dividing (x) the excess of (I) the Initial Stated Amount in such offering over
(II) the gross proceeds realized in such offering by (y) the Adjusted Public
Market Value in such offering;
(iii) If an Underwriter's Notice contemplated by Section
2.1(c)(ii) was delivered in connection with such offering, if the Stockholders
Representative delivered an Election Notice contemplated by Section 2.1(d)(i)
and (A) if a Second Election Notice was not delivered, the Shortfall Notice will
state this and will specify the shortfall in Registrable Securities sold in such
offering, which shall equal the sum of (x) the number, if any, of Registrable
Securities included within the Specified Share Number that were not sold in such
offering and (y) the number of Registrable Securities (to the nearest whole
number) obtained by dividing (A) the excess of (I) the Initial Stated Amount in
such offering over (II) the Maximum Realizable Amount in such offering by (B)
the Adjusted Public Market Value in such offering or (B) if a Second Election
Notice requesting a Third Underwriter's Notice was delivered as contemplated by
Section 2.1(e)(ii)(z) and thereafter a Third Election Notice to proceed with the
offering pursuant to Section 2.1(f) was delivered, the Shortfall Notice will
state this and will specify the shortfall in Registrable Securities sold in such
offering, which shall equal the sum of (x) the number, if any, of Registrable
Securities included within the Clause (ii) Aggregate Specified Amount that were
not sold in such offering and (y) the number of Registrable Securities (to the
nearest whole number) obtained by dividing (A) the excess of (I) the Initial
Stated Amount in such offering over (II) the Maximum Realizable Amount in such
offering by (B) the Adjusted Public Market Value in such offering; and
(iv) If an Underwriter's Notice contemplated by Section
2.1(c)(ii) was delivered in connection with such offering, if the Stockholders
Representative delivered an Election Notice contemplated by Section 2.1(d)(iii),
and if the offering did not realize gross proceeds equal to, or in excess of,
the Maximum Realizable Amount in such offering, the Shortfall Notice will state
this and will specify the shortfall in Registrable Securities sold in such
offering, which shall equal the sum of (x) the number of Registrable Securities
(to the nearest whole number) obtained by dividing (I) the excess of (A) the
Maximum Realizable Amount in such offering over (B) the gross proceeds realized
in such offering by (II) the Adjusted Public Market Value of a Registrable
Security in such offering and (y) the number of Registrable Securities (to the
nearest whole number) obtained by dividing (1) the excess of (i) the Initial
Stated Amount over (ii) the Maximum Realizable Amount by (2) the Adjusted Public
Market Value in such offering.
(b) For a period of 10 Business Days from receipt of a
Shortfall Notice, Parent shall have the right, exercisable by delivery of a
Purchase Notice to the Stockholders Representative, to purchase from the
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Stockholders, on a pro rata basis, and the Stockholders shall have an obligation
to sell to Parent, free and clear of all Liens, the Shortfall Number of
Registrable Securities as specified in such Shortfall Notice at a price per
share equal to the Adjusted Public Market Value in the offering; provided that
(i) if the remaining number of Registrable Securities held by the Stockholders
at such time is fewer than Parent would be entitled to purchase and fewer than
the Stockholders would be required to sell pursuant to this Section 3.2, the
number of Registrable Securities to be purchased and sold will be reduced to
such remaining number of Registrable Securities and the aggregate purchase price
will be reduced proportionately and (ii) the aggregate consideration payable to
the Stockholders by Parent upon the exercise of any such purchase right shall in
no event exceed the excess of the Initial Stated Amount over the gross offering
proceeds received by the Stockholders in the offering.
3.3 Parent Call Right. In addition to Parent's purchase
rights pursuant to Section 3.1 and Section 3.2, Parent shall have the right to
purchase from each Stockholder, and each Stockholder shall have the obligation
to sell to Parent, free and clear of all Liens, such Stockholder's Issuer Common
Stock (the "Parent Call Right"), such right to be exercisable at any time (or
from time to time) during the 12 month period commencing on the fifth
anniversary of the Closing (the "Call Period") by written notice to the Issuer
and the Stockholders Representative (a "Call Notice") at any time during such 12
month period. Parent may elect to purchase during the Call Period either (i) all
(but not less than all) of the shares of Issuer Common Stock held by the
Stockholders or (ii) such number of shares of Issuer Common Stock as is equal to
the nearest whole number obtained by dividing (I) $4,000,000,000 by (II) the
greater of (x) the Public Market Value of a Registrable Security and (y) the
Initial Transaction Value of a share of Issuer Common Stock. If Parent elects
pursuant to clause (ii) of the immediately preceding sentence to purchase only a
portion of the shares of Issuer Common Stock during the Call Period, Parent
shall, by written notice to the Issuer and the Stockholder Representative (a
"Second Call Notice") within 12 months following the expiration of the Call
Period, purchase from each Stockholder, and each Stockholder shall sell to
Parent, all, but not less than all, of the remaining shares of Issuer Common
Stock of the Stockholders. The purchase price per share of Issuer Common Stock
purchased by Parent under this Section 3.3 shall equal either (A) if such share
is purchased during the Call Period, the greater of (1) the Public Market Value
of such Issuer Common Stock as of the date of the Call Notice and (2) the
Initial Transaction Value of such Issuer Common Stock or (B) if such share is
purchased during the 12 month period following the Call Period, the greater of
(X) the aggregate Public Market Value of such remaining shares of Issuer Common
Stock as of the date of the Second Call Notice and (Y) the aggregate Initial
Transaction Value of such remaining shares of Issuer Common Stock. Parent shall
have the right to assign the Parent Call Right to one or more of its affiliates
(including the Issuer), provided that Parent shall remain liable for the
obligations of such affiliates in connection with the exercise of such Parent
Call Right; provided further that if Parent assigns any of the Parent Call
Rights to the Issuer or any of the Issuer's Subsidiaries, shares of Issuer
33
Common Stock purchased by the Issuer or the applicable Subsidiary of the Issuer
pursuant to the exercise of any such Parent Call Right shall be cancelled and
shall no longer be outstanding, in each case immediately following such
purchase.
3.4 Payment. Any payment obligation of Parent or its
assignees pursuant to this Article III (including, for the avoidance of doubt,
pursuant to Section 3.6) may be satisfied at Parent's election provided by
written notice to the Stockholders Representative at least five Business Days
prior to the closing of a purchase transaction contemplated by this Article III,
in (a) cash, (b) shares of Parent Common Stock or (c) a combination thereof. To
the extent that Parent elects to satisfy any such payment obligation, partially
or wholly, in shares of Parent Common Stock (i) such shares shall immediately
after issuance be the subject of an effective registration statement on Form S-3
allowing for the resale of such shares by the Stockholders in accordance with
the Securities Act and (ii) the number of such shares issued to the
Stockholders, on a pro rata basis, shall equal the number of shares of Parent
Common Stock (to the nearest whole number) obtained by dividing (x) the cash
consideration otherwise payable to the Stockholders in order to satisfy such
payment obligation by (y) the Parent Common Stock Market Value.
3.5 Closing. The closing of any purchase transaction
contemplated by this Article III shall occur, unless the parties to such
transaction otherwise agree, on the later of (i) the 15th Business Day following
receipt by the Stockholders Representative of the Purchase Notice, the Call
Notice or the Second Call Notice and (ii) if an appraisal is required in order
to establish the Fully Distributed Public Market Value of Registrable Securities
that are subject to such purchase transaction, on the 15th Business Day
following the completion of such appraisal process; provided, however, that if
there shall be any governmental approvals (including the effectiveness of a
resale registration statement on Form S-3 of Parent, if applicable, provided
that if so applicable, Parent shall use its reasonable best efforts to cause
such registration statement to be declared effective as soon as practicable
following delivery by Parent of the Purchase Notice, the Call Notice or the
Second Call Notice, or the case may be) or other regulatory waiting periods with
respect to the consummation of such transaction, such closing shall take place
on the fifth Business Day following the receipt of any such governmental
approvals or the expiration or termination of any such regulatory waiting
periods.
3.6 December 20 Closing. Notwithstanding anything to the
contrary set forth herein, the closing of any purchase transaction resulting
from the exercise of a purchase right pursuant to (a) Section 3.1 in respect of
Registrable Securities that are the subject of a pending registration request
under Section 2.1 or (b) Section 3.2, shall occur no later than December 20 of
the year in which such registration was requested. If any such closing has not
occurred prior to such date, such closing shall be held on December 20 or, if
December 20 of the applicable year is not a Business Day, the next Business Day
(any such closing, a "December 20 Closing"). If an appraisal is required in
order to establish the Fully Distributed Public Market Value of Registrable
Securities that are the subject of a December 20 Closing, but the appraisal
process pursuant to Section 5.1 has not been completed by such closing date,
Parent shall purchase, free and clear of all Liens, and the Stockholders shall
34
sell, the Registrable Securities that are subject to such purchase transaction
at the Preliminary Fully Distributed Public Market Value. Following such
December 20 Closing, promptly upon the completion of the appraisal process
pursuant to Section 5.1 (unless the Fully Distributed Public Market Value
pursuant to such appraisal process is identical to the Preliminary Fully
Distributed Public Market Value), a second closing (the "Second Closing") shall
occur at which:
(a) if the Fully Distributed Public Market Value pursuant
to such appraisal process is greater than the Preliminary Fully Distributed
Public Market Value, Parent shall transfer to the Stockholders, on a pro rata
basis and free and clear of all Liens, such number of Registrable Securities as
is equal to the nearest whole number obtained by dividing (x) the excess of (A)
the number of Registrable Securities sold at the December 20 Closing multiplied
by the Fully Distributed Public Market Value pursuant to such appraisal process
over (B) the number of Registrable Securities sold at the December 20 Closing
multiplied by the Preliminary Fully Distributed Public Market Value by (y) the
Fully Distributed Public Market Value pursuant to such appraisal process or
(b) if the Fully Distributed Public Market Value pursuant
to such appraisal process is less than the Preliminary Fully Distributed Public
Market Value, the Stockholders, on a pro rata basis, shall transfer to Parent
free and clear of all Liens, such number of Registrable Securities as is equal
to the nearest whole number obtained by dividing (x) the excess of (A) the
number of Registrable Securities sold at the December 20 Closing multiplied by
the Preliminary Fully Distributed Public Market Value over (B) the number of
Registrable Securities purchased by Parent at the December 20 Closing multiplied
by the Fully Distributed Public Market Value pursuant to such appraisal process
by (y) the Fully Distributed Public Market Value pursuant to such appraisal;
provided, however, that, if the remaining number of Registrable Securities held
by the Stockholders at such time is fewer than the number that would be required
to comply with this subsection (b), the Stockholders shall pay to Parent, pro
rata, an aggregate cash amount equal to the excess of (A) the number of
Registrable Securities sold at the December 20 Closing multiplied by the
Preliminary Fully Distributed Public Market Value over (B) the product of (i)
the aggregate number of Registrable Securities transferred by the Stockholders
to Parent at both the December 20 Closing and the Second Closing and (ii) the
Fully Distributed Public Market Value pursuant to such appraisal process.
ARTICLE IV
STOCKHOLDER SELL RIGHT
4.1 Sell Right. Except as stated in the final proviso in
Section 2.1(b) or in the penultimate sentence of Section 2.1(e), for a period of
10 Business Days following (a) the failure to achieve any of the registration
milestones set forth in clauses (i) through (iv) of Section 2.1(b) in connection
with a registration requested pursuant to Section 2.1, (b) the expiration of the
period during which Parent may exercise a purchase right under Section 3.2(b) in
35
connection with a requested registration under Section 2.1, or (c) the delivery
of an Election Notice pursuant to Section 2.1(d)(iv) the Stockholders
Representative shall have the right (each, a "Sell Right"), exercisable by
written notice to Parent (any such notice, a "Sell Notice"), to require Parent
to purchase, and Parent shall purchase from the Stockholders, on a pro rata
basis:
(i) in the case of clause (a) above, such number of
Registrable Securities as is equal to either (A) the nearest whole number
obtained by dividing (x) the Initial Stated Amount in such registration request
by (y) the Public Market Value, in which case the aggregate purchase price for
such Registrable Securities shall equal the Initial Stated Amount or (B) (I) if
such Sell Notice is sent after an Election Notice has been delivered in
connection with such registration in which the Stockholders have elected to sell
a Specified Share Number (but prior to the delivery of any Second Election
Notice), the number of Registrable Securities shall be such Specified Share
Number and the aggregate purchase price shall equal the aggregate Public Market
Value for such Specified Share Number, (II) if such Sell Notice is sent after a
Second Election Notice contemplated by Section 2.1(e)(i)(z) has been delivered,
the number of Registrable Securities shall be the Aggregate Specified Number and
the aggregate purchase price shall equal the aggregate Public Market Value for
the Aggregate Specified Number or (III) if such Sell Notice is sent after a
Second Election Notice contemplated by Section 2.1(e)(ii)(z) has been delivered,
the number of Registrable Securities shall be the Clause (ii) Aggregate
Specified Number and the aggregate purchase price shall equal the aggregate
Public Market Value for the Clause (ii) Aggregate Specified Number (provided
that if the remaining number of Registrable Securities held by the Stockholders
at such time is fewer than the number Parent would be required to purchase and
fewer than the number the Stockholders would be entitled to sell pursuant to
this Section 4.1, the number of Registrable Securities to be purchased and sold
will be reduced to such remaining number of Registrable Securities and the
aggregate purchase price will be reduced proportionately);
(ii) in the case of clause (b) above, such number of
Registrable Securities, valued as provided in Section 3.2, as were subject to
the purchase right of Parent under Section 3.2 in connection with such requested
registration; or
(iii) in the case of clause (c) above, such number of
Registrable Securities as is equal to the nearest whole number obtained by
dividing (x) the Initial Stated Amount in such registration request by (y) the
Public Market Value, in which case the aggregate purchase price for such
Registrable Securities shall equal the Initial Stated Amount (provided that if
the remaining number of Registrable Securities held by the Stockholders at such
time is fewer than the number Parent would be required to purchase and fewer
than the number the Stockholders would be entitled to sell pursuant to this
Section 4.1, the number of Registrable Securities to be purchased and sold will
be reduced to such remaining number of Registrable Securities and the aggregate
purchase price will be reduced proportionately).
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4.2 Additional Consideration. If a Sell Right is exercised
by Stockholders Representative under clause (a) of the first sentence of Section
4.1, such purchase shall be consummated no later than September 30 of the
calendar year in which such request for registration was made (as such date may
have been extended under Section 2.1(i)) and, if such purchase is not
consummated by such date, the aggregate consideration to be paid by Parent to
the Stockholders in accordance with Section 4.1 shall accrue simple interest at
Prime Rate from October 1 (or the first day after the extension date under
Section 2.1(i), if applicable) of such calendar year through and including the
date on which such payment is made.
4.3 Closing. The closing of any purchase transaction
contemplated by this Article IV shall occur, unless the parties to such
transaction otherwise agree, on the later of (a) the 15th Business Day following
receipt by Parent of the Sell Notice and (b) if an appraisal is required in
order to establish the fully distributed public market value of Registrable
Shares that are subject to such purchase transaction, on the 15th Business Day
following the completion of such appraisal process; provided, however, that if
there shall be any governmental approvals or other regulatory waiting periods
with respect to the consummation of such transaction, such closing shall take
place on the fifth Business Day following the receipt of any such governmental
approvals or the expiration or termination of any such regulatory waiting
periods. It is agreed that at any such closing (including, for the avoidance of
doubt, pursuant to Section 4.4), the consideration paid by Parent may consist,
in whole or in part, of shares of Parent Common Stock in which case the
provisions set forth in the second sentence of section 3.4 shall apply.
4.4 December 20 Closing. Notwithstanding anything to the
contrary set forth herein, the closing of any purchase transaction pursuant to
Section 4.1 shall occur no later than by December 20 of the calendar year in
which such registration was requested. If any such closing has not occurred
prior to such date, such closing shall be held on December 20 or, if December 20
of the applicable year is not a Business Day, the next Business Day and the
provisions set forth in the third and fourth sentence of the introductory
paragraph of Section 3.6 and Sections 3.6(a) and (b) shall apply.
ARTICLE V
APPRAISAL
5.1 Appraisal Procedures.(6) If in connection with a
Purchase Notice, Call Notice, Second Call Notice or Sell Notice, as the case may
be, a determination needs to be made with respect to the "fully distributed
public market value" of shares of Issuer Common Stock, the following provisions
shall apply. When used in this agreement, "Fully Distributed Public Market
Value"
-------------------
(6) [Prior to the Closing, the parties will agree upon a mechanism for including
in the appraised value under Section 5.1 the assets and business of [LicenseCo],
as well as a mechanism for combining [LicenseCo] and [NewCo] prior to, or
concurrently with, any IPO.]
37
means the anticipated trading price of a share of Issuer Common Stock on a
national stock exchange or NASDAQ, following completion of an IPO and related
market stabilization activities, it being understood that such valuation shall
be established (i) using public market valuation methodologies that, for the
avoidance of doubt, shall not include "comparable acquisitions analysis" or any
"private market" assessment of the Issuer (without regard to any premiums in
respect of the acquisition of a controlling interest or any discounts in respect
of the acquisition of a minority interest), such as the value of such shares in
a acquisition or other business combination transaction, or the price at which
Issuer Common Stock prior to such date may have been acquired or sold or any
proposals or expressions of interest to acquire the Issuer or Issuer Common
Stock that may have been received prior to such date), (ii) assuming the Issuer
is a Stand-alone Entity and (iii) based on all applicable facts and
circumstances as of the second Business Day preceding the date of delivery of
the Appraisals under Section 5.1(d).
(a) Negotiation Period. For a period of 10 calendar days
following the date of receipt of a Purchase Notice, Call Notice, Second Call
Notice or Sell Notice (a "Notice Receipt Date"), the Stockholders Representative
and Parent shall, in good faith, attempt to establish the Fully Distributed
Public Market Value to the extent such valuation is needed to establish Adjusted
Public Market Value or Public Market Value, as applicable.
(b) Engagement of Appraisers. If the Stockholders
Representative and Parent cannot agree on the Fully Distributed Public Market
Value during the time period specified in Section 5.1(a), each of Parent and the
Stockholders Representative shall engage one, and Parent and the Stockholders
Representative shall jointly engage a third Nationally Recognized Investment
Bank to deliver an Appraisal (as defined in Section 5.1(d)). Such third
Nationally Recognized Investment Bank (i) shall be designated as set forth in
the last sentence of this Section 5.1(b) if Parent and the Stockholders
Representative are unable to agree and (ii) shall not have been engaged by GE or
Vivendi or any of their respective Subsidiaries in connection with a material
transaction other than a capital markets or commercial lending transaction
during the six calendar months preceding the date of such engagement. The
Persons so engaged are referred to herein, respectively, as the "Parent
Appraiser", the "Stockholders Appraiser", the "Third Appraiser" and,
collectively, as the "Appraisers". All such Appraisers shall be engaged within
20 calendar days of the applicable Notice Receipt Date. Each of Parent and the
Stockholders Representative shall bear the costs of the Appraiser engaged by
them and Parent and Stockholders Representative shall bear the costs of the
Third Appraiser in equal parts. If Parent and the Stockholders Representative
are unable to agree on the Third Appraiser, Parent shall select four Nationally
Recognized Investment Banks (who meet the parameters of clause (ii) above) from
which the Stockholders Representative shall select one to be the Third
Appraiser.
(c) Information to be Furnished to Appraisers. Promptly
following the engagement of all Appraisers pursuant to Section 5.1(b), the
Issuer shall (i) provide each Appraiser with written instructions consistent
with this Article V regarding the preparation of the Appraisals, including a
38
copy of the pertinent sections of this Agreement; (ii) conduct one or more
management presentations on such matters as are customarily covered by
management presentations to the bookrunning managers in connection with an IPO,
such management presentations to be attended by all three Appraisers; (iii)
provide Financial Information to each Appraiser and (iv) provide supplemental
information, orally or in writing, upon request by any Appraiser. Each Appraiser
shall receive all and identical information pursuant to this Section 5.1(c),
including any information supplied pursuant to (iv) above to any Appraiser.
(d) Preparation and Delivery of Appraisals. Upon receipt of
such information, each Appraiser shall prepare and deliver a written report
(each such report, an "Appraisal") to the Issuer setting forth (i) a range in
U.S. Dollars of the Fully Distributed Public Market Value, (ii) the mid-point of
such range (such mid-point, the "Appraised Value") and (iii) analyses and
computations supporting the information set forth in clauses (i) and (ii). The
Appraisals shall be delivered to Issuer sealed on the same designated date no
later than 50 calendar days following the Notice Receipt Date.
(e) Determination of Fully Distributed Public Market Value.
The Appraised Values delivered by the Parent Appraiser and the Stockholders
Appraiser shall be opened by the Issuer at the same time, in the presence of a
representative of each of Parent and the Stockholders Representative, if
requested by either such party. If the higher of the two Appraised Values set
forth in the Appraisals delivered by the Parent Appraiser and the Stockholders
Appraiser is equal to or less than 120% of the lower of such two Appraised
Values, the Appraised Value delivered by the Third Appraiser shall not be opened
and the Fully Distributed Public Market Value shall be deemed the average of
such two Appraised Values. If the higher of the two Appraised Values set forth
in the Appraisals delivered by the Parent Appraiser and the Stockholders
Appraiser is greater than 120% of the lower of such two Appraised Values, the
Fully Distributed Public Market Value per share shall be deemed the average of
the Appraised Values set forth in those two of the three Appraisals (including,
for the avoidance of doubt, the Appraisal delivered by the Third Appraiser) with
the smallest Appraised Value Differential, or, if two Appraised Value
Differentials are identical, the average of all three Appraised Values. The
determination of Fully Distributed Public Market Value pursuant to this Article
V shall be deemed final, conclusive and binding on Parent, the Issuer, the
Stockholders Representative and the Stockholders.
39
ARTICLE VI
ADDITIONAL COVENANTS
6.1 [intentionally omitted.]
6.2 Parent Registration Rights.(7) The Stockholders
acknowledge that the Issuer has granted registration rights to the Parent and
its Subsidiaries in connection with shares of Issuer Common Stock.
Notwithstanding anything to the contrary in this Agreement or any agreement
relating to such agreement, Parent and the Stockholders agree as follows:
(a) Demand Registration Rights. As of any given time during
any calendar year prior to 2010, if the Stockholders hold demand registration
rights under Section 2.1 or Section 2.2 hereof as of such time and if as of such
time they have not exceeded any applicable limitation on the number of
Registrable Securities they may seek to register under such Section in such
calendar year, Parent will not exercise any demand registration rights it may
otherwise have with respect to shares of Issuer Common Stock unless if first
notifies the Stockholders Representative of its intent to exercise such rights.
The Stockholders Representative will have the right by responsive notice to
Parent and the Issuer within 10 Business Days, to elect to exercise the
registration rights of the Stockholders under Section 2.1 or Section 2.2, as
applicable, in which case: (i) Parent will not seek to exercise its demand
registration rights and (ii) Parent will only have the right to register its
shares on an incidental basis, subject to the priority rights of the
Stockholders in the event of any underwriter cutbacks. If the Stockholders
Representative fails to deliver the responsive notice referred to above or if
the Stockholders Representative is not entitled to be notified by Parent under
the first sentence of this clause (a), Parent and its Subsidiaries shall be free
to exercise their demand registration rights and the Stockholders will have the
right to participate in such offering only on an incidental basis as provided in
Section 2.3 of this Agreement, subject to the priority rights of the Parent in
the event of any underwriter cutbacks.
(b) Incidental Registration Rights. In the event of an
Issuer initiated registration as to which Parent and its Subsidiaries, on the
one hand, and the Stockholders, on the other, are each entitled to exercise
incidental registration rights to participate in such registration, Parent and
its Subsidiaries, on the one hand, and the Stockholders, on the other, shall be
of equal priority in the event of any underwriter cutbacks and in such event
will be subject to pro rata cutbacks, based on the number of shares of Issuer
-----------------------
(7) [It is agreed that Parent shall enter into a registration rights agreement
with the Issuer prior to the Closing that shall provide for an unlimited number
of demand and incidental registration rights but shall be subject to Section 6.2
and shall not contain expense or indemnification provisions more favorable to
Parent than apply to the Stockholders hereunder.]
40
Common Stock requested to be included in such registration by Parent, its
Subsidiaries and the Stockholders.
(c) Hold Back. Each of (i) Parent, in the case of a
proposed registration of Registrable Securities by the Stockholder pursuant to
Section 2.1 or Section 2.2 of this Agreement and (ii) the Stockholders, in the
case of a proposed registration of securities by Parent or any of its direct or
indirect Subsidiaries pursuant to Parent's registration rights referenced in
this Section 6.2, agrees, if required by the bookrunning managers in an
underwritten offering, not to effect (other than pursuant to such registration)
any public sale or distribution, including any sale pursuant to Rule 144 or Rule
144A, of any Registrable Securities, any other equity securities of the Company
or any securities convertible into or exchangeable or exercisable for any equity
securities of the Company (a) for 90 days after (or if so requested by the
bookrunning managers for a longer period not to exceed, 180 days after) and (b)
during the 20 days prior to, the effective date of such registration, to the
extent timely notified in writing by the Company or the bookrunning managers.
6.3 Stockholders Agreement. The Stockholders acknowledge
that the Stockholders Agreement imposes certain restrictions on their ability to
Transfer (as defined in such Agreement) shares of Issuer Common Stock and
further acknowledge that the exercise of rights granted to the Stockholders and
the Stockholders Representative in this Agreement are subject to such
restrictions.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 Representations and Warranties of each Stockholder.
Each Stockholder who is not a party to the Business Combination Agreement hereby
represents and warrants to the Issuer and Parent with respect to itself and its
ownership of its Issuer Common Stock as follows:
(a) Organization, Power and Authority, Binding Agreement.
Such Stockholder is a corporation, partnership, trust or limited liability
company, duly formed, legally existing and in good standing under the laws of
its state of incorporation or formation, has all requisite corporate or limited
liability company, partnership or trust power and authority to enter into this
Agreement. This Agreement has been duly and validly authorized by all necessary
corporate, limited liability company, partnership, trust or similar action and
has been duly executed and delivered by such Stockholder and this Agreement
(assuming due execution and delivery by the other parties hereto) constitutes
the valid and binding obligations of such Stockholder, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at law).
41
(b) No Conflicts.
(i) The execution and delivery of this Agreement by such
Stockholder does not, and the consummation by such Stockholder of the
transactions contemplated by this Agreement, will not, (1) conflict with, or
result in any violation or breach of, any provision of the charter, by-laws or
other organizational document of such Stockholder, (2) conflict with, or result
in any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation) under, require a consent or waiver under,
constitute a change in control under, or result in the imposition of any Lien on
such Stockholder's shares of Issuer Common Stock under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease, license,
contract, agreement or instrument to which such Stockholder is a party or by
which it or any of its properties or assets may be bound, or (3) conflict with
or violate any permit, concession, franchise, license, judgment, injunction,
order, decree, statute, law, ordinance, rule or regulation applicable to such
Stockholder or any of its properties or assets, except in the case of clauses
(2) and (3) of this Section 7.1(b)(i) for any such conflicts, violations,
breaches, defaults, terminations, cancellations, accelerations or Liens as would
not have a material adverse effect on the ability of the Stockholders, or any of
them, to consummate the transactions contemplated by this Agreement.
(ii) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing with, any
Governmental Authority is required by or with respect to such Stockholder in
connection with the execution and delivery of this Agreement by such
Stockholder.
7.2 Representations and Warranties of the Issuer. The
Issuer hereby represents and warrants to the Stockholders as follows:
(a) Organization, Power, Binding Agreement. The Issuer is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to enter into this Agreement. This Agreement has been duly executed
and delivered by the Issuer and constitutes the valid and binding obligation of
the Issuer and (assuming due execution and delivery by the other parties hereto)
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law).
(b) No Conflicts.
(i) The execution and delivery of this Agreement by the
Issuer does not, and the consummation by the Issuer of the transactions
contemplated by this Agreement will not, (1) conflict with, or result in any
violation or breach of, any provision of the charter, by-laws or other
organizational document of the Issuer, (2) conflict with, or result in any
42
violation or breach of, or constitute (with or without notice or lapse of time,
or both) a default (or give rise to a right of termination, cancellation or
acceleration of any obligation) under, require a consent or waiver under,
constitute a change in control under, or result in the imposition of any Lien on
the Issuer's assets under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or
instrument to which the Issuer is a party or by which it or any of its
properties or assets may be bound, or (3) conflict with or violate any permit,
concession, franchise, license, judgment, injunction, order, decree, statute,
law, ordinance, rule or regulation applicable to the Issuer or any of its
properties or assets, except in the case of clauses (2) and (3) of this Section
7.2(b)(i) for any such conflicts, violations, breaches, defaults, terminations,
cancellations, accelerations or Liens as would not, individually or in the
aggregate, materially and adversely affect the ability of the Issuer to
consummate the transactions contemplated by this Agreement.
(ii) No consent, approval, license, permit, order or
authorization of, or registration, declaration, notice or filing with, any
Governmental Authority is required by or with respect to the Issuer in
connection with the execution and delivery of this Agreement by the Issuer or
the consummation by the Issuer of the transactions contemplated by this
Agreement, except for filings and other actions required by the Securities Act,
the Exchange Act, and state securities or "blue sky" laws.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, requests, claims and demands and
other communications hereunder shall be in writing and shall be deemed duly
delivered (i) four Business Days after being sent by registered or certified
mail, return receipt requested, postage prepaid, or (ii) one Business Day after
being sent by facsimile transmission (provided the sender retains confirmation
thereof) or for next Business Day delivery, fees prepaid, via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
(a) if to the Issuer, to:
[NewCo]
with copies (which shall not constitute notice
to Issuer) to:
Parent and its counsel at the addresses
specified below
43
(b) if to Parent, to:
General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Senior Counsel for Transactions
Fax: 000-000-0000
with a copy (which shall not constitute notice
to Parent) to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(c) and if to a Stockholder or to the Stockholders
Representative, to the Stockholders Representative's address set forth under its
signature on the signature pages hereto, with a copy (which shall not constitute
notice to the Stockholders or the Stockholders Representative) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Any party to this Agreement may give any notice or other communication hereunder
using any other means (including personal delivery, messenger service, telecopy
or ordinary mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it actually is received by the office of
the party for whom it is intended. Any party to this Agreement may change the
address or addresses to which notices and other communications hereunder are to
be delivered by giving the other parties to this Agreement notice in the manner
herein set forth.
8.2 Stockholders Representative. Each of the Stockholders
hereby irrevocably constitutes and appoints the Vivendi Representative as the
Stockholders Representative and its true and lawful attorney-in-fact, coupled
with an interest, to take any action, and to give and receive any notices,
requests or other communications, required to be taken, given or received
pursuant to this Agreement by any Stockholder, and Parent therefore shall not be
obligated to deal or communicate with any Stockholder with respect to the
subject matter of this Agreement. Notwithstanding anything herein to the
contrary, the right of the Stockholders Representative to deliver a notice
requesting registration pursuant to Section 2.1 or Section 2.2 shall be subject
to the Stockholders Representative having received a written request to deliver
such notice, (a) in the case of a registration request pursuant to Section 2.1,
from members of the Vivendi Group owning a number of Registrable Securities not
fewer than such number of Registrable Securities as would at such time be
expected to generate gross offering proceeds of $1,000,000,000 (it being
44
understood and agreed that no Stockholders other than members of the Vivendi
Group may exercise rights under Section 2.1) and (b) in the case of a
registration request pursuant to Section 2.2, from Stockholders owning a number
of Registrable Securities not fewer than such number of Registrable Securities
as would at such time be expected to generate gross offering proceeds of
$500,000,000.
8.3 Joint and Several Obligations. Each of Parent and
Vivendi agree that it shall be jointly and severally liable for the acts and
obligations of each Stockholder that is a direct or indirect subsidiary of GE or
Vivendi, as the case may be, at any time from and after the date hereof
(including any Person that becomes a successor to such Stockholder by operation
of law).
8.4 Entire Agreement; No Inconsistent Agreement.
(a) This Agreement (together with the provisions of the
Business Combination Agreement, the IACI Matters Agreement and Stockholders
Agreement) constitutes the entire agreement among the parties hereto and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, or any of them, written or oral, with respect to the subject
matter hereof.
(b) Other than any registration rights agreement
contemplated by Section 6.2, the Issuer is not a party to and will not hereafter
enter into any agreement with respect to its securities which would materially
and adversely affect, or is inconsistent with, the rights expressly granted to
the holders of Registrable Securities in this Agreement (it being agreed that a
registration rights agreement will not be deemed to violate this Section 8.4 if
it grants demand or incidental registration rights to any Person to the extent
that such Person cannot exercise such rights to obtain a higher priority than
the Stockholders in an offering in which the Stockholders can participate
hereunder).
8.5 No Third-Party Beneficiaries. Except as provided in
Section 2.9 (it being understood that the rights of any representatives and
agents under Section 2.9 may only be enforced on their behalf by the
Stockholders Representative), this Agreement is not intended, and shall not be
deemed, to confer any rights or remedies upon any Person other than the parties
hereto and their respective successors and permitted assigns or to otherwise
create any third-party beneficiary hereto.
8.6 Assignment. Each holder of Registrable Securities may
only transfer rights and obligations hereunder (other than the rights under
Section 2.1 and 6.1, which shall not be transferable) to the extent the transfer
of the Registrable Securities associated with registration rights is permitted
pursuant to the terms of the Stockholders Agreement and, in such event, only if
(a) such transferring Stockholder agrees in writing with the transferee or
assignee to transfer or assign such rights, and a copy of such agreement is
furnished to the Issuer promptly after such transfer or assignment; (b) the
Issuer is, promptly after such transfer or assignment, furnished with written
notice of (i) the name and the address of such transferee or assignee, and (ii)
the Registrable Securities with respect to which such rights or obligations are
being transferred or assigned; and (c) at or before the time the Issuer receives
45
the written notice contemplated by clause (b) of this sentence, the transferee
or assignee agrees in writing with the Issuer to be bound by all of the
provisions contained herein. This Agreement shall be binding upon and inure to
the benefit of and shall be enforceable by the parties hereto and, with respect
to the Issuer, its respective successors and assigns and, with respect to the
Stockholders, subject to Section 6.3, any holder of any Registrable Securities.
8.7 Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article of
or a Section of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". 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. All terms defined in this
Agreement shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined therein. 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. Reference to a Person are also to its
permitted successors and assigns.
8.8 Amendment. This Agreement may only be amended or
modified with the written consent of the Issuer, Parent, the Stockholders
Representative if it holds any Registrable Securities and Stockholders who then
hold a majority of the Registrable Securities held by all Stockholders at such
time. Any amendment or modification effected in accordance with this Section 8.8
shall be binding upon each Stockholder, Parent and the Company, provided that if
an election is required to be made by the Stockholders in connection with any
registration, the approval of Stockholders holding a majority of the Registrable
Shares included in such offering shall be sufficient to make such election.
8.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of New York applicable to
agreements to be performed entirely within such state, including all matters of
construction, validity and performance, without regard to principles of
conflicts of law thereof.
8.10 Jurisdiction; Waiver of Jury Trial. Each party to this
Agreement hereby irrevocably agrees that any legal action, suit or proceeding
arising out of or relating to this Agreement shall be brought in the United
States District Court for the Southern District of New York, unless federal
jurisdiction does not exist, in which case any such action, suit or proceeding
shall be brought in the Delaware Chancery Court or, if such court lacks
jurisdiction, the Supreme Court of the State of New York, New York County. Each
party hereto agrees not to assert, by way of motion, as a defense or otherwise,
in any such action, suit or proceeding any claim that it is not subject
46
personally to the jurisdiction of any such court, that the action, suit or
proceeding is brought in an inconvenient forum, that the venue of the action,
suit or proceeding is improper or that this Agreement, or the subject matter
hereof may not be enforced in or by any such court. Each party hereto further
and irrevocably submits to the jurisdiction of any such court in any action,
suit or proceeding. Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable Law, any
right that such party may have to a trial by jury of any claim or cause of
action directly or indirectly based upon or arising out of this Agreement, or
any of the transactions contemplated herein.
8.11 Mediation. Prior to commencing legal action with
respect to any disagreement, dispute, controversy or claim arising out of or
relating to this Agreement or the interpretation hereof, or any arrangements
relating hereto or contemplated herein or the breach, termination or invalidity
hereof (collectively, "Disputes"), a party will notify the other party in
writing of any such Dispute (a "Dispute Notice"). Following receipt of a Dispute
Notice by a party, the parties shall jointly appoint a mediator and shall
attempt in good faith to resolve any Dispute promptly by confidential mediation
pursuant to the then current mediation procedures of the CPR Institute for
Dispute Resolution (the "CPR"). If the parties cannot agree upon a mediator
within five (5) days of receipt of the Dispute Notice by a party, the parties
will ask the CPR to appoint a mediator promptly. If the Dispute is not resolved
for any reason within thirty (30) days of the Dispute Notice (unless the period
of time is extended by the parties in writing), either party may commence legal
action in accordance with the other provisions hereof. Nothing contained in this
Section 8.11 shall preclude a party from seeking injunctive relief if the
prerequisites to obtaining injunctive relief, including irreparable harm, are
otherwise satisfied.
8.12 Remedies. Each party, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Each party
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. In any action or proceeding brought to enforce
any provision of this Agreement or where any provision of this Agreement is
validly asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
8.13 Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
8.14 Severability. If any provision of this Agreement is
inoperative or unenforceable for any reason, such circumstances shall not have
the effect of rendering the provision in question inoperative or unenforceable
in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to any extent
whatsoever, so long as this Agreement, taken as a whole, still expresses the
47
material intent of the parties. The invalidity of any one or more phrases,
sentences, clauses, sections or subsections of this Agreement shall not affect
the remaining portions of this Agreement.
8.15 Counterparts; Faxed Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which together shall be deemed to be one and the same
document. Each of the parties hereto (a) has agreed to permit the use, from time
to time, of faxed or otherwise electronically transmitted signatures in order to
expedite the consummation of the transactions contemplated hereby, (b) intends
to be bound by its respective faxed or otherwise electronically transmitted
signature, (c) is aware that the other parties hereto will rely on the faxed or
otherwise electronically transmitted signature, and (d) acknowledges such
reliance and waives any defenses to the enforcement of the documents effecting
the transaction contemplated by this Agreement based on the fact that a
signature was sent by fax or otherwise electronically transmitted.
48
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
NEWCO
By:
-------------------------------------------
Name:
Title:
GENERAL ELECTRIC COMPANY
By:
-------------------------------------------
Name:
Title:
VIVENDI UNIVERSAL S.A.
By:
-------------------------------------------
Name:
Title:
UNIVERSAL STUDIOS HOLDING III CORP.
By:
-------------------------------------------
Name:
Title:
[STOCKHOLDERS]
49
EXHIBIT C
MUSIC ADMINISTRATION AGREEMENT TERM SHEET
-----------------------------------------
All capitalized terms set forth herein shall be as set forth in the Business
Combination Agreement ("BCA") to which this is attached.
1. AGREEMENT: The long form agreement to be entered in to by the parties
prior to the Closing Date for which the material terms are set forth
herein (the "MPA").
2. PARTIES: Universal Music Corp. (ASCAP), Universal-MCA Music
Publishing (ASCAP), Songs of Universal, Inc. (BMI), Universal-Duchess
Music Corporation (BMI), Universal-Champion Music Corp. (BMI), and
Universal Tunes, a division of Songs of Universal, Inc. (SESAC)
(collectively "UMPG") and the NBC Sub publishing entities which shall
be determined prior to closing (referred to herein as "NBC SUB").
3. TERM: 8 years from the Closing Date on the following schedule for the
works below:
(a) As of the Closing Date: (i) all musical compositions
created on a "work-for-hire" basis for, or assigned and
transferred to, Vivendi Universal Entertainment, Universal
Pictures Group, and their respective affiliated or related
motion picture, television and video production entities
(but excluding musical compositions owned by USA Networks,
Inc. as they are the subject of a separate administration
agreement with Universal-MCA Music Publishing, however,
musical compositions owned by USA Networks will become
subject to the MPA in the future pursuant to subparagraph
3(c)(ii) below); and (ii) all musical compositions assigned
and transferred to NBC Sub by the Music Assignment
Agreement dated as of the Closing Date.
(b) All musical compositions owned, controlled or acquired, in
whole or in part, at any time during the term of the MPA,
by Vivendi Universal Entertainment, Universal Pictures
Group and the respective affiliated or related motion
picture, television and video production entities that
conducted the Company Business (but excluding musical
compositions owned, controlled or acquired by USA Networks,
Inc. until the date those musical compositions become
subject to the MPA pursuant to subparagraph 1(c)(ii)
below).
(c) As of the earlier of April 1, 2006 or the termination of
the existing term of the music publishing administration
agreement between NBC and the EMI Music Entities dated as
of April 1, 2002 ("EMI AGREEMENT"): (i) the musical
compositions administered under the EMI Agreement; and (ii)
the musical compositions administered under the
administration agreement between USA Networks, Inc. and its
affiliates, and MCA Music Publishing.
(d) As of the expiration or termination of the existing term of
the music administration agreement between Cherry Lane
Music Publishing and NBC, the musical compositions owned by
Telemundo Network Group, LLC ("TELEMUNDO").
(e) All other musical compositions that, as of the Closing
Date are owned, controlled or acquired by, and/or during
the term of the MPA are owned, controlled or acquired by,
NBC Sub, NBC, or any of its or their subsidiaries, or
affiliated or related motion picture, television or video
production entities. Notwithstanding the immediately
preceding sentence, the musical compositions contained in
the "Perfect Scores" production music library catalogue
are currently subject to an exclusive administration
agreement with Cherry Lane Music Publishing, and NBC Sub
and UMPG agree to negotiate in good faith regarding those
musical composition becoming subject to the MPA; however,
such negotiations shall at all times be subject to NBC's
existing obligations to Cherry Lane Music Publishing.
4. TERRITORY: Worldwide.
5. ADMINISTRATION FEE: 12% of gross revenue worldwide.
6. POST TERM COLLECTION PERIOD: 1 year in U.S. and Canada; 18 months for
the rest of the world.
7. ADVANCE: None.
8. PER-PROGRAM/DIRECT LICENSES: Solely with respect to non-dramatic
performing rights licensing of the Compositions (as defined below),
NBC Sub shall have the right to direct UMPG to issue non-dramatic
performing rights licenses to any broadcaster on a direct and/or
per-program basis in accordance with practices customary in the
industry at such time, including the payment to UMPG of standard and
customary fees for such licenses, and all income collected by UMPG in
connection with the issuance of such licenses that relate directly to
the Compositions shall be deemed income with respect to which UMPG is
entitled to retain UMPG's administration and subpublishing fees, and
subject to accounting thereafter pursuant to the terms of the MPA.
7. LICENSES FOR NBC SUB: Synchronization licenses for use of
Compositions (as defined below) subject to this MPA shall be granted
to any subsidiary of NBC Sub on a gratis basis for use of such
Compositions in any audiovisual work (and trailers, promos and
advertisements of such audiovisual works) that are produced by NBC
Sub or its subsidiaries, with NBC Sub to fully indemnify and hold
harmless UMPG for any and all claims from writers and composers or
other persons, firms or entities, arising out of or relating to such
use, and from any and all liabilities, claims, losses, damages, fees
and costs (including, without limitation, reasonably incurred
attorneys fees and legal and court costs) arising out of or relating
thereto, and such gratis synchronization license shall in all
instances be subject to NBC Sub's and its subsidiaries' obligation to
obtain all customary clearances of performing rights and to make the
payment of customary performance fees; it being acknowledged that
UMPG is not waiving any rights to receive and collect performance
income on behalf of NBC Sub hereunder from the uses that are the
subject of the aforesaid gratis synchronization licenses); following
NBC Sub's written request to UMPG, UMPG shall cause mechanical
licenses with respect to the reproduction of the Compositions on
soundtrack albums to be issued to NBC Sub at 3/4 of the minimum
statutory rate, provided that NBC Sub may not require UMPG to issue a
2
synchronization or mechanical license pursuant to this paragraph 7 if
UMPG can provide evidence to NBC Sub that the license requested is in
direct violation of a specific contractual provision.
8. CONSENT: NBC Sub shall have consent rights over any and all licensing
by UMPG of that portion of the musical compositions administered by
UMPG pursuant to the MPA (individually and collectively, the
"Compositions"), other than mechanical licenses, performance licenses
granted in the ordinary course of business by performing rights
societies and agencies, and blanket licenses or other authorizations
issued by any mechanical rights or performing rights society or
agency.
9. REPORTING AND ACCOUNTING: Within 90 days after the end of each
semi-annual accounting period pursuant to the MPA, UMPG shall provide
NBC Sub with a royalty statement of all revenues payable or credited
to NBC Sub pursuant to the MPA, and any net royalties due for such
reporting period, on a territory-by-territory (but not necessarily
country-by-country) basis, and at the same time pay to NBC Sub any
net royalties due. UMPG shall provide such royalty statement to NBC
Sub in electronic form. Furthermore, within 90 days following the end
of each quarterly period that falls in the middle of a semi-annual
accounting period, UMPG will provide NBC Sub with a report setting
forth UMPG's reasonable estimates of the royalties credited to NBC
Sub pursuant to the MPA for that quarterly period. The estimated
report will be accompanied by an advance against royalties due
calculated based on the estimates shown in the report; such advance
will be recouped at the end of the semi-annual period in which the
advance was paid.
10. COLLECTIONS: Foreign collections shall be on an "at-source" basis,
but allowing for the deduction of standard commissions and fees
retained by mechanical rights and performing rights societies and
agencies, foreign taxes actually deducted in territories, and fees
deducted by subpublishers, provided that affiliated subpublishers may
take an additional 10% fee.
11. AUDIT: No more than once per year, no more than once per statement,
and during normal business hours, and at the place the statements are
normally kept (and subject to NBC Sub providing at least 30 days
prior written notice to UMPG of NBC Sub's desire to commence an
audit, and making an appointment with UMPG at a mutually convenient
time for such audit to commence), NBC Sub shall have the right to
audit the books and records of UMPG, solely with respect to gross
income received with respect to which royalties are due pursuant to
the MPA to NBC Sub pursuant to any royalty statement, but only for a
period of up to three years after such statement is rendered to NBC
Sub (or deemed rendered to NBC Sub as provided in the next sentence).
Royalty statements shall be deemed rendered on the date when due
unless, within one-hundred and twenty (120) days after the date such
statement was due, UMPG receives written notice of non-receipt of
such statement from NBC Sub. However, NBC Sub's failure to provide
such notice within such time period shall not affect NBC Sub's right
to receive such statement (and any royalties that may be due pursuant
to the terms of that statement) thereafter. NBC Sub shall be forever
barred from bringing legal action or any other action or proceeding
of any kind or nature with respect to a particular accounting
statement unless that legal action or other action or proceeding is
3
commenced in a court of competent jurisdiction within the three year
period following the date that particular accounting statement is
rendered to NBC Sub (or deemed rendered to NBC Sub as provided above)
. NBC Sub shall be solely responsible for all audit fees and cost,
except that if an audit conducted pursuant to the terms of the MPA
shows an underpayment to NBC Sub for the contractually permitted
audit period in an amount that is the greater of: (a) US $25,000, or
(b) 10% of the total royalties due to NBC Sub for the entire audit
period, then UMPG shall reimburse NBC Sub for the actual and
reasonable audit costs relating to the contractually permitted audit
period, but excluding travel and other transportation costs, hotel,
meals, living expenses and other disbursements, and provided that in
no event shall the amount payable by UMPG for audit costs exceed the
amount of the underpayment made for the contractually permitted audit
period.
12. BLACK BOX (UNALLOCATED) INCOME: During each semi-annual accounting
period during the term of the MPA, gross income shall be deemed to
include a fraction of UMPG's black box receipts from the applicable
society in each territory based on the ratio of gross income received
by UMPG during that accounting period from the NBC Sub Compositions
from that society in the given territory, to gross income received by
UMPG during that accounting period from the entire catalogue owned
and/or administered by UMPG (including, without limitation, the
Compositions) in the given territory, which gross income is subject
to UMPG's administration fees and any subpublishing fees under the
MPA.
13. SYNCH LICENSES WITHIN PROGRAMMING AND IN PROMOS: After the
termination of the EMI Agreement and from the date the NBC catalogue
becomes subject to the MPA until the expiration of the term of the
MPA, if NBC Sub executes synchronization licenses for and pays to
UMPG at least $2,000,000 in gross synch licensing fees in any
contract year with respect to all UMPG-published compositions for
which UMPG has sole authority to quote (with the beginning of the
contract year, for this purpose, the date the compositions
administered under the EMI Agreement become administered by
UMPG)(and, for the avoidance of doubt, specifically excluding any
synch licensing fees from the use of any Compositions subject to the
MPA):
(i) UMPG will pay to NBC Sub a rebate in an amount equal to
5% of UMPG's own retained share (i.e., not any share that
UMPG is required to pay to or credit to any writers or
other third parties) with respect to that $2,000,000 in
gross synch licensing fees, and,
(ii) for the balance of the contract year concerned, UMPG
will give NBC Sub for all synch licenses thereafter
executed by NBC Sub and the synch licensing income paid by
NBC Sub to UMPG in any contract year in excess of
$2,000,000, a 10% discount (based on UMPG's own retained
share) on all UMPG-published compositions, for which UMPG
has sole authority to quote (and specifically excluding the
Compositions).
4
Discounts will be calculated on then-current rates, with no discounts
on licenses previously issued. Licenses of Compositions will not
count toward the $2,000,000 threshold nor be eligible for the rebate
or discount.
14. NEGOTIATION REGARDING RENEWAL: Upon written request, which must occur
at least one (1) year prior to the end of the term of the MPA, UMPG
shall have a ninety (90) day exclusive first negotiation period with
NBC Sub and its subsidiaries regarding any music publishing
administration or other music publishing agreement that will commence
after the expiration of the term of the MPA with respect to the
Compositions and/or future musical compositions owned or acquired by
NBC Sub after the term of the MPA (a "SUBSEQUENT AGREEMENT").
15. CREATIVE DIALOGUE: NBC Sub to use commercially reasonable efforts to
arrange opportunities for UMPG creative staff to meet with NBC Sub
creative staff to introduce NBC Sub to UMPG's catalogue and establish
dialogue regarding NBC Sub's potential licensing of UMPG copyrights
on terms and for fees that are standard in the music publishing
industry.
16. EMI TRANSITION: NBC Sub shall use best commercially reasonable
efforts to compel EMI to provide all reasonable and necessary
assistance in the transition of the compositions from EMI's
management to UMPG's management sufficiently far in advance of the
transition as to minimize disruption.
17. QUALITY STANDARDS: The implementation of the following quality
control provisions (or substantially similar provisions thereto) to
be discussed, provided that UMPG shall make best commercially
reasonable efforts to implement the quality control provisions by one
(1) year after Closing, and provided further that UMPG shall make
best commercially reasonable efforts to apply the quality control
provisions to the works obtained following the termination of the EMI
Agreement within one (1) year after the date of the occurrence set
forth in 3(c) above (except, that if EMI does not provide information
in electronic form, UMPG shall have an additional six (6) months to
apply the quality control provisions to the works obtained following
the termination of the EMI Agreement). NBC Sub will consider in good
faith UMPG's capabilities and procedures as part of that discussion.
(a) Index all new copyrights received from NBC Sub on a
monthly basis, provided that all cue sheets received from
NBC Sub must be filed with foreign PROs that accept cue
sheets from publishers within one year of receipt from NBC
Sub. Register all new music cue sheets received from NBC
Sub with PROs outside of North America that will accept
such cue sheets from music publishers on a monthly basis
(so that each individual cue sheet is filed within one
year from the date of receipt from NBC Sub). With respect
to those PROs that do not accept cue sheets from music
publishers, UMPG's sub-publishers will use best
commercially reasonable efforts to ensure that each
broadcaster in international territories supply cue sheets
to the applicable PRO for each broadcast of an NBC
Sub-produced program. In this connection, UMPG will
provide NBC Sub with a quarterly report (accompanying the
quarterly report described in paragraph (j) below)
5
detailing its sub-publishers' efforts with regard to
ensuring that cue sheets are filed by such broadcasters in
international territories.
(b) Cross check domestic broadcast schedules vs. amounts
received and provide quarterly reports to NBC Sub.
(c) Provide periodic desk audits of major foreign PROs
(domestic is handled in subparagraph (b) above) and on a
case by case basis, make appropriate appeals to same.
Perform collection function if needed and report results
in writing to NBC Sub. Provide quarterly reports on all
such payment disputes and any meetings held with such PROs
that include NBC Sub issues.
(d) Supply all UMPG international offices and all
sub-publishers (if applicable) with copies of all cue
sheets, copyright information including splits, titles of
all new songs and programs. All above based on receipt
from NBC Sub.
(e) One year after the date of the occurrence set forth in
3(c) above, make best commercially reasonable efforts to
determine or cause local subpublishers to determine the
local language title of each motion picture, television
series and episode title in each territory, and file cue
sheets for each translation with each PRO in the
applicable territory. NBC Sub will use best commercially
reasonable efforts to provide any information NBC Sub has
or acquires from any licensee regarding such titles. UMPG
will provide written documentation of translated titles to
foreign PROs to enable PROs to cross-reference English
language cue sheets with local broadcast in each territory
broadcasting NBC Sub- produced programs. Track all royalty
statements and payments received from PROs, mechanical
rights societies, sub-publishers, direct licensees, record
companies and co-publishers.
(f) Use NBC Sub's Sales and Distribution Data to track actual
play dates and times in each territory, cross-checking
local broadcast schedules versus income received.
(g) One year after the date of the occurrence set forth in
3(c) above, make best commercially reasonable efforts to
provide electronic reports that allow NBC Sub to allocate
income for profit participants or for purposes of
determining royalty obligations, provided that NBC Sub
will work with UMPG prior to the Closing Date to determine
the data elements that such report shall contain.
(h) All cue sheets received from NBC Sub must be filed with
foreign PROs that accept cue sheets from publishers within
one year of receipt from NBC Sub. If not filed within such
period, UMPG collects no administrative fee on money
subsequently collected on such unfiled uses. UMPG's
sub-publishers will use best commercially reasonable
efforts to ensure that each broadcaster in international
territories supply cue sheets to the applicable PRO for
each broadcast of an NBC Sub produced program.
(i) In connection with any transition to another
administrator, UMPG shall supply to NBC Sub or its
designee all requested cue sheets, distribution data,
6
lists of broadcasts on which collections are outstanding,
and all other reports and information requested by NBC Sub
or NBC Sub's designee to the extent such information is
within UMPG's possession or control. UMPG shall cooperate
fully with NBC Sub and its designee in any transition.
(j) Provide quarterly reports to NBC Sub updating UMPG's
performance of all quality standards set forth herein.
7
EXHIBIT D
MUSIC ASSIGNMENT AGREEMENT
--------------------------
THIS ASSIGNMENT (the "ASSIGNMENT") is hereby made as of the
[insert Closing Date] by and among [UMG Recordings, Inc.] ("URI"), and any
subsidiary, Universal Music Corp. (ASCAP), Universal-MCA Music Publishing
(ASCAP), Songs of Universal, Inc. (BMI), Universal-Duchess Music Corporation
(BMI), Universal-Champion Music Corp. (BMI), and Universal Tunes, a division of
Songs of Universal, Inc. (SESAC) (individually and collectively "ASSIGNORS") to
[NBC Sub] ("ASSIGNEE").
WHEREAS, Vivendi Universal S.A., the parent company of
Assignors and Assignee, has entered into the Business Combination Agreement
("BCA"), dated as of [October __, 2003] with General Electric Company, National
Broadcasting Company Holdings, Inc., National Broadcasting Company, Inc., NBC
Sub, and Universal Studios Holding III Corp. (the "AGREEMENT") providing for the
execution and delivery of this Assignment by Assignors to Assignee (capitalized
terms used herein without definition shall have the meanings set forth in the
BCA);
WHEREAS, this Assignment relates to:
(A) (i) copyrights in original musical compositions, and
(ii) copyrights in sound recordings commissioned as themes,
scores, underscores or musical cues embodied in audiovisual works, including but
not limited to motion pictures and television programs and included in whole or
in part, in soundtrack albums in any format released by any recording company
owned or controlled or acquired by URI;
(B) which musical compositions and sound recordings were
created on a work-for-hire basis or assigned and transferred to [Vivendi
Universal Entertainment], [Universal Studios, Inc.], [USA Network, Inc.] and
their respective Affiliated, predecessor or related motion picture and
television production entities (individually and collectively, "USI");
(C) in connection with:
(i) television programs and other audiovisual works created
prior to March 1, 1998;
(ii) "Current Programs" as defined in Schedule 1.5 to that
certain Investment Agreement dated as of October 19, 1997 as amended and
restated as of December 18, 1997 between USA Networks, Inc. (f/k/a HSN, Inc.),
on the one hand, and Universal Studios, Inc. on the other hand; and
(iii) motion pictures, trailers, promotions, home video
[and television programs and other audiovisual works] created prior to May 7,
2002;
(the compositions, the "COMPOSITIONS," and such sound recordings, the "SOUND
RECORDINGS", and collectively, the "LIBRARY Catalogue"), provided however, that
Library Catalogue does not include: (x) any portion of any musical compositions
that were assigned by USI to Assignors by virtue of Assignors having an existing
agreement with a songwriter or composer who was commissioned by USI to create a
musical composition for a USI production; (y) any portion of any musical
compositions that were acquired by Assignors from third parties who are not an
Affiliate of USI (which third parties may include songwriters, composers or
music publishers); or (z) any sound recordings recorded by an artist who at the
time of recording was subject to recording agreement with URI or its Affiliates;
WHEREAS, the rights in and to the Library Catalogue are
subject in all instances to any and all of the terms and limitations contained
in the agreements pursuant to which USI originally acquired rights in and to the
Library Catalogue (the "COMMISSIONING AGREEMENTS") and any agreements regarding
Exploitation of any portion of the Library Catalogue (the "EXPLOITATION
AGREEMENTS");
WHEREAS, subject to any existing limitations and/or
restrictions (if any) contained in the Commissioning Agreements and any
Exploitation Agreements, Assignors are duly authorized to sell, transfer,
convey, assign and deliver all right, title and interest of Assignors in and to
the Library Catalogue to Assignee;
WHEREAS, certain of the Compositions and the Sound
Recordings may have been encumbered with restrictions on assignment and
transferability ("TRANSFER RESTRICTIONS") by the entity that assigned such
Compositions or Sound Recordings to Assignors prior to their transfer to
Assignors; and
WHEREAS, Assignee desires to purchase or acquire all right,
title and interest of Assignors in and to the Library Catalogue;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignors and Assignee
agree as follows:
1. ASSIGNMENT. Effective as of the Closing Date, each
Assignor hereby sells, transfers, conveys, assigns and delivers to Assignee:
(a) all right, title and interest of Assignor in and to the
Library Catalogue, and all registrations and applications for registration
thereof, to the extent owned by each such Assignor, in all media, now existing
or created in the future, and for the entire duration of such rights, including
any renewals or extensions thereof, to the extent Assignor controls such rights,
free and clear of all liens or encumbrances of any kind in each country in the
world (except as set forth in Section 2); and
(b) all rights, interests, claims and demands recoverable
in law or equity, that may arise after the Closing Date, such Assignor has or
may have in profits and damages for future infringements of the Compositions,
including, but not limited to, the right to compromise, xxx for and collect such
profits and damages, the same to be held and enjoyed by Assignee, its successors
and assigns or their legal representatives, as fully and entirely as the same
would have been held and enjoyed by such Assignor if this Assignment had not
been made.
2. TRANSFER RESTRICTIONS. The parties acknowledge that the
Compositions and Sound Recordings may be encumbered by any of the following:
2
(a) the terms and conditions of the Exploitation
Agreements;
(b) the terms and conditions of the Commissioning
Agreements; and
(c) the terms and conditions of the Transfer Restrictions.
To the extent that any of the Assignors have in their possession and control
agreements containing Transfer Restrictions, copies of all such agreements are
attached hereto as Schedule 1. The parties agree that the inclusion herein of
Schedule 1, which schedule shall be deemed to be a part of this Assignment,
shall not be deemed to be an admission that such Transfer Restrictions are valid
and binding.
3. ADDITIONAL CONDITIONS. Assignee acknowledges and agrees
that from and after the Closing Date, Assignee shall be responsible for
performing and fulfilling: (i) any and all obligations arising from the
ownership of the Compositions to the extent conveyed hereunder; and (ii) any
obligations to performers or musicians, songwriters or music publishers based on
Assignee's exploitation of the Sound Recordings or any union or guild
obligation.
4. LICENSE-BACK. Assignee hereby grants to URI an
exclusive, irrevocable, perpetual, worldwide right and license to exploit the
Sound Recordings in phonorecords [in all media now known or hereafter created]
in any event specifically including online media, subject to the obligations and
restrictions in any of the agreements (including, but not limited to, written
consents [and any limitations on forms of media]) under which the soundtrack
albums were created (including that any unrecouped advances shall continue in
effect and be subject to recoupment). All rights not expressly granted herein
are retained by Assignee. Such license shall be fully sublicensable and freely
transferable, in whole or in part.
5. NON-EXCLUSIVE LICENSE.
(a) To the extent: (i) Assignee created motion pictures and
television programs for which URI released a soundtrack album containing Sound
Recordings, (ii) such motion pictures and television programs contain sound
recordings not included within the Library Catalogue, and (iii) either (x) such
sound recordings were not recorded by an artist who, at the time of recording,
was subject to a recording agreement with URI or its Affiliates or a recording
agreement with a third party; or (y) it cannot be determined whether a sound
recording is owned or controlled by any recording company, then URI hereby
grants to Assignee a non-exclusive, perpetual, royalty-free, worldwide right and
license to use such sound recordings in any manner or means requested by
Assignee for the creation, reproduction and distribution of audiovisual works
directly or indirectly by Assignee. Assignee will notify URI or any
successors-in-interest to URI at least one (1) month prior to any use of any
sound recording pursuant to the license granted in this Section 5(a), and URI
will respond to any such request on a timely basis, but in any event no longer
than ten (10) business days after such request is made.
(b) Any licenses granted under this Section 5 are subject
to: (i) the licensee's compliance with the terms and conditions of the
Commissioning Agreements, Exploitation Agreements and the Transfer Restrictions
regarding the relevant portions of the Library Catalogue, (ii) any obligation to
any performer or musician whose performance is contained in a licensed sound
recording, (iii) any obligation to any composer or music publisher whose
3
original works are contained or embodied in a licensed sound recording, or (iv)
any obligation to any guild or union that arises from use of a licensed sound
recording.
(c) Assignee will indemnify, defend and hold harmless URI
from and against any and all claims, losses, damages, costs and expenses
(including reasonably incurred attorneys' fees and court and legal costs)
arising out of or relating to a license granted pursuant to Section 5, provided
however that if the sound recording is owned by a URI recording company or any
successor-in-interest, or is owned by a third-party recording company and URI
has knowledge of this information and fails to disclose it upon request to
Assignee, and Assignee does not have knowledge of this information, URI shall
indemnify, defend and hold harmless Assignee from and against any such claims,
losses, damages, costs and expenses (including reasonably incurred attorneys'
fees and court and legal costs) arising out of or relating to such license.
6. INDEMNIFICATION BY ASSIGNEE. Assignee will indemnify,
defend and hold harmless Assignors from and against any and all claims, losses,
damages, costs and expenses (including reasonably incurred attorneys' fees and
court and legal costs) arising out of or relating to (i) any breach or alleged
breach of any Transfer Restrictions by reason of the assignment contemplated
herein; (ii) any breach or alleged breach of any obligations to performers,
musicians, songwriters or music publishers; (iii) any breach or alleged breach
of any union or guild obligations; or (iv) breach or alleged breach of the
Commissioning Agreements; except to the extent that an Assignor had knowledge of
such Transfer Restriction or obligation and failed to disclose to Assignee the
terms of such Transfer Restriction or obligation and Assignee did not otherwise
have such knowledge.
7. FURTHER ASSURANCES. At any time after the Closing Date,
Assignors and Assignee hereby agree that each shall and shall cause each of
their Affiliates and related parties to, from time to time, execute and deliver
to the other such additional instruments, documents, conveyances or assurances
and take such other action as shall be necessary, or otherwise reasonably be
requested by either party to confirm and assure the rights and obligations
provided for in this Assignment and render effective the consummation of the
transactions contemplated hereby and thereby, or otherwise to carry out the
intent and purposes of this Assignment.
8. REPRESENTATIONS AND WARRANTIES. Assignors represent and
warrant that, subject to any limitations that may be contained in the
Commissioning Agreements, and subject to any portion of the Compositions
assigned by USI to Assignors by virtue of an existing separate music publishing
agreement between Assignor and a songwriter or composer who was commissioned by
USI to create a Composition in the Library Catalogue: (i) Assignors have the
entire right to grant all rights granted herein, and have not otherwise assigned
all or a portion of the Library Catalogue to any third party, other than in
connection with Exploitation Agreements entered into in the ordinary course of
business; (ii) the post-May 7, 2002 musical compositions commissioned as a
work-for-hire by Vivendi Universal Entertainment or any Affiliated motion
picture production entity for USI's motion pictures, trailers, promotions, home
video, television and other audiovisual works and the post-March 1, 1998 musical
compositions associated with the USA Network, Inc.'s television programs are not
owned by any of the Assignors except those (x) that were assigned by USI to
Assignors by virtue of Assignors having an existing agreement with a songwriter
or composer who was commissioned by USI to create a musical composition for a
4
USI production; or (y) that were acquired by Assignors from third parties who
are not Affiliates of USI (which third parties may include songwriters,
composers or music publishers) or any sound recordings recorded by an artist who
at the time of recording was subject to a recording agreement with URI or its
Affiliates; (iii) each of the representatives of the Assignors are duly
authorized to enter into this Assignment; and (iv) Assignors have not subjected
the Library Catalogue to any Liens other than customary Liens granted in the
ordinary course of business to any guild in connection with the production of
motion pictures and television programs, musical compositions or sound
recordings.
9. SUCCESSORS AND ASSIGNS. This Assignment shall govern and
be binding upon Assignors and any permitted successors and assigns.
10. GOVERNING LAW. This Assignment shall be governed by,
and construed in accordance with, the laws of the United States, in respect to
copyright issues and in all other respects including as to validity,
interpretation and effect by the laws of the State of New York, without giving
effect to the conflict of laws rules thereof.
11. JURISDICTION; WAIVER OF JURY TRIAL. [Provision to be
added prior to execution substantially identical to Section 12.12 of the BCA].
12. MEDIATION. [Provision to be added prior to execution
substantially identical to Section 12.13 of the BCA].
IN WITNESS WHEREOF, Assignors have caused this Assignment
to be duly executed as of the date first written above.
5
EXHIBIT E
================================================================================
STOCKHOLDERS AGREEMENT
BY AND AMONG
GENERAL ELECTRIC COMPANY
NATIONAL BROADCASTING COMPANY HOLDING, INC.
[NEWCO]
VIVENDI UNIVERSIAL, S.A.
AND
UNIVERSAL STUDIOS HOLDING III CORP.
DATED AS OF [_______]
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS........................................................................................1
1.1 Certain Definitions..................................................................................1
1.2 Capitalized Terms....................................................................................5
1.3 Other Definitions....................................................................................5
ARTICLE II COMPANY STOCK......................................................................................6
2.1 Restrictions on Transfer of Company Stock............................................................6
2.2 Certain Acknowledgments; Stock Certificate Legend....................................................6
ARTICLE III GOVERNANCE OF THE COMPANY..........................................................................7
3.1 Veto Rights of the Vivendi Representative............................................................7
3.2 Election of Directors and Operation of the Board.....................................................8
3.3 Preparation for an IPO..............................................................................12
ARTICLE IV COVENANTS OF THE COMPANY AND THE STOCKHOLDERS.....................................................13
4.1 Financial Statements................................................................................13
4.2 Right to Information with Respect to the Company; Reporting by Vivendi..............................14
4.3 Confidentiality.....................................................................................15
4.4 Standstill..........................................................................................15
4.5 [Intentionally Omitted.]............................................................................17
4.6 Corporate Opportunity; Contractual Relationships....................................................17
4.7 Subscription for Equity Interests...................................................................18
4.8 Strategic Committee.................................................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS................................................19
5.1 Ownership of Company Stock..........................................................................19
5.2 Organization, Power and Authority, Binding Agreement................................................19
5.3 No Conflicts........................................................................................19
ARTICLE VI MISCELLANEOUS.....................................................................................20
6.1 Notices.............................................................................................20
6.2 Vivendi Representative..............................................................................21
6.3 Joint and Several Obligations.......................................................................21
6.4 Subsequent Parties..................................................................................22
6.5 Entire Agreement; No Inconsistent Agreement.........................................................22
6.6 No Third-Party Beneficiaries........................................................................22
6.7 Severability........................................................................................22
6.8 Termination.........................................................................................22
6.9 Governing Law.......................................................................................23
6.10 Jurisdiction; Waiver of Jury Trial..................................................................23
6.11 Mediation...........................................................................................24
i
6.12 Assignment..........................................................................................24
6.13 Amendments; Waivers.................................................................................24
6.14 Headings............................................................................................25
6.15 Counterparts........................................................................................25
6.16 Remedies............................................................................................25
6.17 Interpretation......................................................................................25
ii
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of [__________________] (this
"Agreement"), by and among General Electric Company, a New York Company ("GE"),
National Broadcasting Company Holding, Inc., a Delaware corporation and a
wholly-owned Subsidiary of GE ("Parent"), [NewCo], a Delaware corporation and a
wholly-owned Subsidiary of Parent (including its successors, the "Company"),
Vivendi Universal, S.A., a societe anonyme organized under the Laws of France
("Vivendi") and Universal Studios Holding III Corp., a Delaware corporation and
a Subsidiary of Vivendi ("Holding", together with Parent and any Person who is
added to this Agreement pursuant to Section 2.1 or, prior to an IPO, Section
6.5, the "Stockholders").(1)
WHEREAS, the parties to this Agreement have entered into that certain
Business Combination Agreement, dated as of October 8, 2003, providing, among
other things, for the combination of the respective businesses of [NewCo],
Universal Studios, Inc., a Delaware corporation and a Subsidiary of Holding,
Universal Pictures International Holdings B.V., a company organized under the
Laws of the Netherlands and a Subsidiary of Vivendi and Universal Pictures
International Holdings 2 B.V., a company organized under the Laws of the
Netherlands and a Subsidiary of Vivendi (as the same may hereafter be amended,
modified, supplemented or restated from time to time, the "Business Combination
Agreement");
[Recitals regarding equity ownership to be added]; and
Whereas, the consummation of the transactions contemplated by the
Business Combination Agreement is conditioned upon the execution and delivery of
this Agreement by the parties hereto.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereby agree, severally and not jointly, as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Beneficially Own" or "Beneficial Ownership" shall have the meaning
set forth in Rule 13d-3 of the rules and regulations promulgated under the
Exchange Act.
"Board" means the board of directors of the Company.
------------------------
(1) [Need to add the other Vivendi stockholders, if any]
"Bylaws" means the Company's bylaws, as hereafter from time to time
amended in accordance with the terms hereof and thereof and pursuant to
applicable Law.
"Certificate of Incorporation" means the Company's certificate of
incorporation, as hereafter from time to time amended in accordance with the
terms hereof and thereof and pursuant to applicable Law.
"Change of Control" means, with respect to a given Person, any of the
following: (i) a merger, share exchange, consolidation or other business
combination or transaction to which such Person is a party if the stockholders
of such Person immediately prior to the effective date of such merger,
consolidation or other business combination or transaction, as a result of such
transaction, have Beneficial Ownership of voting securities of such Person or
successor thereto representing less than 50% of the total voting power
represented by the outstanding voting securities of such Person, (ii) a sale
(including any transfer or exchange) of all or substantially all of the assets
of such Person or (iii) the acquisition by any Person (other than a Permitted
Transferee of the transferor) of more than 50% of the total voting power
represented by the outstanding shares of Company Stock (or, in the case of any
Person other than the Company, represented by the outstanding capital stock of
such Person).
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Company Stock" means the common stock of the Company, par value
$[__] per share, and any other securities of the Company or any other Person
issued with respect to such common stock by way of a conversion, exchange,
replacement, stock dividend or stock split or other distribution or in
connection with a combination of shares, conversion, exchange, replacement,
recapitalization, merger, consolidation or other reorganization or otherwise.(2)
"Demerger" means a demerger of Vivendi's entertainment business or
assets (in whole or in part), but including the music and games divisions and
the business or assets of the Canal + Group from Vivendi by share dividend, spin
off, split off, demerger or similar transaction.
"Demerger Entity" means any successor entity resulting from a
Demerger that Beneficially Owns all of the shares of Company Stock held by the
Vivendi Group prior to the Demerger; provided that immediately following such
Demerger (a) the shares of Company Stock Beneficially Owned by such Demerger
Entity and its Subsidiaries do not have a value (based upon the enterprise value
------------------------
(2) [Prior to Closing, appropriate adjustments will have to be made to this
definition and other Sections of this Agreement in order to reflect the dual
stock class structure contemplated by the Business Combination Agreement.]
2
of the Company at such time) that is equal to or in excess of 66-2/3% of the
value of the Demerger Entity (based upon the enterprise value of the Demerger
Entity at such time) and (b) no single stockholder (other than any member or
members of the Vivendi Group), together with its Affiliates, shall Beneficially
Own 29.9% or more of the aggregate issued and outstanding voting stock of such
entity.
"Equity Derivatives Transaction" means any transaction (including any
transaction commonly known as a derivatives transaction on equity securities or
equity instruments) entered into or to be entered into by Vivendi or a member of
the Vivendi Group, the payments under which are based upon the change in value
of the shares of Company Stock or the deliveries under which are the shares of
Company Stock, including, (i) any securities lending transaction, short sale,
equity swap, equity swaption, put option, call option, cap transaction, floor
transaction, collar transaction, forward transaction, repurchase transaction,
reverse repurchase transaction, buy/sell-back transaction or other sale
transaction, including by means of the issuance, purchase or sale of any
security or any transaction similar (or with an intended economic result
similar) to the foregoing or any combination of any of the foregoing or (ii) any
transaction pursuant to which Vivendi or a member of the Vivendi Group agrees to
make or receive payments in whole or in part based upon or with reference to
payments made to or received by holders of shares of Company Stock or that are
based upon the change in value of such shares with any Person that is not an
Affiliate of Vivendi or such member of the Vivendi Group, including transactions
that include the granting of a security interest in such shares or any other
collateral in favor of any such Person to secure such transaction or debt
incurred in connection therewith.
"Excluded Securities" means (a) any options or other forms of equity
participation rights issued to employees, consultants, officers or directors of
the Company pursuant to any stock option plan, stock purchase plan, stock bonus
arrangement or sales representative agreement approved by the Board provided
that such options and equity participation rights shall not be exercisable prior
to the consummation of an IPO or (b) any securities issued pro rata to all
holders of the Company Stock in connection with any dividend or similar event.
"Fair Market Value" means, as of any date of determination, with
respect to a share of Company Stock, the fair market value of such stock
(expressed on a per-share basis) as of such date, based on the good faith
determination of the Board in consultation with a nationally recognized
investment bank as to the value of the Company as a going concern, taken as a
whole, without discount for minority interest, restrictions on transfer or
voting rights or other discounts that would be applicable if less than all of
the equity is sold in a single transaction.
"Financing Arrangement" means, with respect to any Stockholder, any
pledge of, grant of security interest in, hypothecation, Lien or other
encumbrance on shares of Company Stock, in each case, to the extent granted in
favor of financial lenders to secure the obligations of such Stockholder in
respect of borrowed money.
"GE Group" means, as of any given time of determination, GE and all
of the Subsidiaries of GE who hold Company Stock.
3
"IPO" means an initial public offering of Company Stock under the
Securities Act, which may be in the form of a spin-off or share dividend to the
public stockholders of GE of Company Stock.
"Liquidity Rights Agreement" means that certain Liquidity Rights
Agreement of even date herewith, by and among the parties thereto, as such
agreement may hereafter be amended, modified, supplemented or restated from time
to time.
"Permitted Transferee" means, with respect to any Stockholder, (a)
prior to the closing of an IPO, any Affiliate of such Stockholder or, in the
case of the members of the Vivendi Group, any Demerger Entity, provided that in
the case of a member of the Vivendi Group, any such Affiliate transferee must be
a direct or indirect wholly-owned Subsidiary of Vivendi (it being agreed that
certain such entities may be up to 15% owned by MEI Holding Inc., a Matsushita
Electric Company Ltd. subsidiary) or, following a Transfer in favor of a
Demerger Entity, be a direct or indirect wholly-owned Subsidiary of such
Demerger Entity (it being agreed that certain such entities may be up to 15%
owned by MEI Holding Inc., a Matsushita Electric Company Ltd. subsidiary) and
(b) from and after the closing of an IPO only, (i) any Person who is a Permitted
Transferee under clause (a) and (ii) any other Person that such Stockholder has
a reasonable basis to believe, after reasonable inquiry, would Beneficially Own
shares representing less than 3% of the outstanding shares of Company Stock
immediately after the completion of such proposed Transfer; it being understood
and agreed that the limitation on Transfer shall apply to any transferee of a
Share Block Agent. For the avoidance of doubt, the Transfer restrictions set
forth in Section 2.1 shall expire pursuant to Section 6.8 as to all Stockholders
other than members of the Vivendi Group from and after the closing of an IPO.
"Share Block Agent" means any placement agent, broker/dealer,
underwriter, bank or other similar Person who has been retained to sell shares
of Company Stock on behalf of a Stockholder.
"Share Block Transfer" means the transfer by a Stockholder of all or
a portion of its shares of Company Stock to a Share Block Agent.
"Significant Acquisition" means any acquisition by the Company of a
Person the gross asset value of which exceeds 10% of the fair market value of
the Company's gross asset value at such time.
"Significant Disposition" means any disposition by the Company of a
Person the gross asset value of which exceeds 20% of the fair market value of
the Company's gross asset value at such time.
"Transfer" means any transfer, sale, assignment, option, bequest,
gift, spin-off, split-off, distribution, pledge, hypothecation or other
disposal, encumbrance or other cessation of legal or Beneficially Owned
interest, whether direct or indirect (including by way of a sale of an interest
in any Stockholder), whether in whole or in part by operation of law or
4
otherwise, including, except as provided below, any Share Block Transfer or
Equity Derivatives Transaction; provided, however, that neither a Financing
Arrangement, nor, following the consummation of an IPO only, a Share Block
Transfer or an Equity Derivatives Transaction shall constitute a "Transfer" for
purposes of this Agreement and no such arrangement, transfer or transaction in
this proviso shall be subject to any of the transfer restrictions contained in
this Agreement (including Section 2.1).
"Vivendi Change of Control" means, (a) a Change of Control of Vivendi
or any Demerger Entity, replacing the reference to 50% in the defined term
"Change of Control" with a reference to 30%, (b) any loss of Beneficial
Ownership of shares in favor of a lender (or an assignee) under any Financing
Arrangement, (c) any date following which all of the shares of Company Stock
Beneficially Owned by the members of the Vivendi Group have an aggregate value
(based upon the enterprise value of the Company at such time) equal to or in
excess of 66-2/3% of such the enterprise value of Vivendi (or the Demerger
Entity).
"Vivendi Group" means, as of any given time of determination, Vivendi
and all Subsidiaries of Vivendi who hold Company Stock or, in the event of a
Transfer to a Demerger Entity, such Demerger Entity and the Subsidiaries thereof
that hold Company Stock.
"Vivendi Representative" means Vivendi or a designee of Vivendi
reasonably acceptable to the Issuer.
1.2 Capitalized Terms. Capitalized terms used and not otherwise
defined herein shall have the respective meanings ascribed to them in the
Business Combination Agreement.
1.3 Other Definitions. The following capitalized terms are defined in
the following sections of this Agreement:
Term Section
---- -------
Agreement Preamble
Business Combination Agreement First Recital
Company Preamble
Confidential Information 4.3
Corporate Opportunity 4.6(a)
CPR 6.11
Dispute Notice 6.11
Disputes 6.11
GE Preamble
GE Transaction 3.1(a)(iii)
Holding Preamble
Parent Preamble
Representatives 4.3
5
Stockholder Group Member 4.6(a)
Stockholders Preamble
Strategic Committee 4.8
Vivendi Preamble
ARTICLE II
COMPANY STOCK
2.1 Restrictions on Transfer of Company Stock. Subject to Section
6.8, no Stockholder may Transfer any shares of Company Stock except to a
Permitted Transferee, provided, however, that in connection with any Transfer to
a Permitted Transferee prior to the consummation of an IPO (a) such Stockholder
must give the Company written notice prior to the time of such Transfer stating
the name and address of the Permitted Transferee and identifying the Company
Stock with respect to which the rights under this Agreement are to be
transferred, (b) such Permitted Transferee must agree in writing to be bound as
a Stockholder by the provisions of this Agreement insofar as it pertains to the
holding, owning and disposition of Company Stock, and (c) prior to any such
Permitted Transferee ceasing to be a Permitted Transferee (due to change in
ownership or otherwise), such Permitted Transferee shall be obligated to
transfer such shares of Company Stock back to the original Stockholder from whom
such Permitted Transferee acquired its shares of Company Stock (or, if control
of such original Stockholder has changed since the date of such original
transfer, to the Person who controlled such original Stockholder as of the date
of such original transfer). For the avoidance of doubt, any Transfer to any
Person who is not a Permitted Transferee shall be void ab initio and shall have
no force or effect.
2.2 Certain Acknowledgments; Stock Certificate Legend. In addition to
the restrictions set forth in Section 2.1, each Stockholder acknowledges that
the Company Stock issued prior to an IPO is issued pursuant to an exemption from
registration under the Securities Act and applicable state securities law and
agrees not to sell or otherwise dispose of its shares of Company Stock in any
transaction which would be in violation of the Securities Act, applicable state
securities law or this Agreement. Each Stockholder acknowledges that the
following legend shall appear on the certificates for the Company Stock
reflecting the foregoing restriction:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE OR ANY OTHER SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE ASSIGNED, EXCEPT (I) PURSUANT TO A
REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES WHICH IS
EFFECTIVE UNDER ALL APPLICABLE SECURITIES OR "BLUE SKY" LAWS, OR (II)
UPON THE FURNISHING TO THE ISSUER BY THE HOLDER OF THIS CERTIFICATE
6
OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER THAT
SUCH TRANSACTION IS NOT REQUIRED TO BE REGISTERED UNDER APPLICABLE
SECURITIES OR "BLUE SKY" LAWS."
(b) "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO RESTRICTIONS ON TRANSFER AND OTHER CONDITIONS, AS
SPECIFIED IN THE STOCKHOLDERS AGREEMENT OF THE ISSUER, DATED AS OF
________, COPIES OF WHICH ARE ON FILE AT THE OFFICE OF THE ISSUER AND
WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST."
Upon registration of any shares of Company Stock pursuant to the
Liquidity Rights Agreement, the Company shall remove from each certificate
evidencing such shares of Company Stock part (a) of the legend set forth above.
Subject to the provisions of Section 2.1, the Company shall, at the request of
any Stockholder, remove from each certificate evidencing Company Stock part (a)
of the legend set forth above if, in the opinion of counsel reasonably
acceptable to the Company, the Company Stock evidenced thereby may be publicly
sold without registration under the Securities Act.
ARTICLE III
GOVERNANCE OF THE COMPANY
3.1 Veto Rights of the Vivendi Representative.
(a) 10% Rights. Subject to Section 6.8, so long as the shares of
Company Stock collectively Beneficially Owned by the members of the Vivendi
Group constitute at least 10% of the total voting power represented by the
outstanding shares of Company Stock (for this purpose, prior to an IPO, without
giving effect to any issuance of Company Stock after the date hereof), the
Vivendi Group shall have the right to veto any of the following transactions,
and the Company shall not engage in any of the following transactions without
the prior written consent of the Vivendi Representative:
(i) any sale, merger or consolidation of the Company only
to the extent such transaction would result in a Change of Control of
the Company;
(ii) any issuance by the Company of equity interests
(other than Excluded Securities) or securities convertible into
equity securities (other than Excluded Securities) at less than Fair
Market Value;
(iii) any transaction that is between the Company or any
of its controlled Affiliates, on the one hand, and GE or any
controlled Affiliate of GE (other than the Company and its controlled
Affiliates), on the other hand, that involves payments or the
incurrence of obligations by the Company in any calendar year in
7
excess of $1,000,000 (a "GE Transaction") other than any GE
Transaction pursuant to the terms of the Business Combination
Agreement, any Ancillary Agreement or any other agreement expressly
contemplated by any such agreement or entered into in connection with
the execution of the Business Combination Agreement or the Closing of
the transactions contemplated thereby, but in each case, such
proposed GE Transaction shall not be subject to the approval of the
Vivendi Representative (A) to the extent such proposed transaction,
in the - reasonable determination of the Board, contains terms that
are as favorable to the Company and its Subsidiaries as would be
obtained at arms length, it being agreed, without limiting the types
of transactions that shall be considered arms length, that if a
transaction involves charges to the Company and its Subsidiaries that
are substantially in the same categories of items (as such categories
may reasonably evolve over time) and determined based upon
substantially the same allocation methodology or costing rules, as
applicable, agreed upon by GE and Vivendi prior to the Closing as
contemplated by Section 7.23 of the Business Combination Agreement,
then such transaction shall be deemed to be at arms length (it being
understood and agreed that on an annual basis, (i) GE will provide
Vivendi with reasonable detail regarding such - charges and the
allocation methodology and costing rules relating thereto and (ii) GE
will inform Vivendi in writing if it -- becomes aware of any
deviation from such methodology or rules in connection with such
charges) or (B), is otherwise agreed - to in writing by Vivendi and
GE prior to or after the Closing; or
(iv) any dissolution, liquidation or winding up of the
Company or any assignment to creditors or commencement of a voluntary
proceeding seeking bankruptcy, reorganization or other similar relief
or the taking of any action similar to any of the foregoing, but
excluding any such dissolution, liquidation or winding up that occurs
in connection with a transaction described in clause (i) above that
does not result in a Change of Control.
(b) 5% Rights. Subject to Section 6.8, for so long as the shares of
Company Stock collectively Beneficially Owned by members of the Vivendi Group
constitute at least 5% of the total voting power represented by the outstanding
shares of Company Stock (for this purpose, prior to an IPO, without giving
effect to any issuance of Company Stock after the date hereof), the Company
shall not engage in any of the actions referred to in Section 3.1(a)(iii) or
(iv).
3.2 Election of Directors and Operation of the Board.
(a) Election of Directors. Each Stockholder shall vote all of its
Company Stock and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within its control (including attendance at meetings in person or by
proxy for purposes of obtaining a quorum and execution of written consents in
lieu of meetings), and the Company shall take all necessary or desirable actions
within its control (including calling special board and stockholder meetings),
such that, subject to the third sentence of this Section 3.2(a), prior to the
8
consummation of an IPO, the Certificate of Incorporation of the Company will
contain cumulative voting provisions for the election of directors to the Board
and the number of directors on the Board shall be 15, it being acknowledged that
the application of cumulative voting results in a Stockholder holding 18.82% of
the votes having the effective power to elect 3 out of 15 directors. So long as
the Certificate of Incorporation contains such cumulative voting provisions, in
the event that a director is removed for cause pursuant to Section 141(k) of the
Delaware General Corporation Law or for any other reason ceases to serve as a
member of the Board during his or her term of office, the Stockholders shall
take all necessary or desirable actions (including attendance at meetings in
person or by proxy for purposes of obtaining a quorum and execution of written
consents in lieu of meetings) to immediately re-elect the entire Board. Upon the
earlier of (i) an IPO and (ii) such time at which the shares of Company Stock
collectively Beneficially Owned by members of the Vivendi Group exceeds 10% of
the total voting power represented by outstanding shares of Company Stock (for
this purpose, prior to an IPO, without giving effect to any issuance of Company
Stock after the date hereof), but the application of cumulative voting will not
enable members of the Vivendi Group to ensure the election of two members to the
Board, the Stockholders agree that they shall vote their shares of Company Stock
and take all action necessary to remove the cumulative voting provisions from
the Certificate of Incorporation. After the removal of such cumulative voting
provisions, each member of the GE Group and the Vivendi Group agrees to vote all
of its shares of Company Stock and take all other necessary or desirable actions
within its control including attendance at meetings in person or by proxy for
purposes of obtaining a quorum, execution of written consents in lieu of
meetings and approval of amendments and/or restatements of the Certificate of
Incorporation or Bylaws, and the Company shall take all necessary and desirable
actions within its control, such that:
(i) so long as the Vivendi Group collectively Beneficially
Owns shares representing at least 10%, but less than 20%, of the
total voting power represented by the outstanding shares of Company
Stock, such Stockholders shall vote their shares of Company Stock in
favor of two directors designated by the Vivendi Representative such
that such two designees shall be elected to the Board;
(ii) so long as the Vivendi Group collectively
Beneficially Owns shares representing at least 5%, but less than 10%,
of the total voting power represented by the outstanding shares of
Company Stock, such Stockholders shall vote their shares of Company
Stock in favor of one director designated by the Vivendi
Representative such that such one designee shall be elected to the
Board; and;
(iii) with regard to the remaining number of directors,
such Stockholders shall vote their shares of Company Stock in favor
of designees of GE such that such remaining directors shall be
elected to the Board (it being understood that the size of the Board
9
may be modified from time to time by Parent, subject to the Vivendi
Group's designation right under clauses (i) and (ii) above);
(iv) the removal from the Board without cause of any
director designated pursuant hereto may only be upon the written
request of the party or parties entitled to designate such director;
provided that any such designee, for cause shown by Parent or the
Vivendi Representative, shall be removed from the Board, in which
case the designating party or parties shall have the right to
identify a replacement designee;
(v) in the event that any director designated pursuant
hereto for any reason ceases to serve as a member of the Board during
his or her term of office, the resulting vacancy on the Board may be
filled only by the party or parties entitled to designate such
departing director; and
(vi) notwithstanding anything in this Section 3.2(a) to
the contrary, GE shall have the right to designate 80% of the Board
(and of all committees thereof with decision-making authority) as
long as members of the GE Group collectively Beneficially Own (as
they do as of the Closing) such number of shares as carry 80% of the
total voting power of the stockholders of the Company.
(b) If (i) at any time the number of members of the Board which the
Vivendi Representative or GE are entitled to designate pursuant to Section
3.2(a) hereof changes as a result of a decrease in the number of shares of
Company Stock Beneficially Owned by members of the Vivendi Group or by GE, as
the case may be, or (ii) any incumbent director dies, becomes incapacitated from
serving on the Board, or retires, resigns or is removed from the Board, each of
the parties hereto agrees to vote their Company Stock and to take all necessary
corporate and other action within its control, including altering the size of
the Board, to ensure that as soon as reasonably practical (and, if necessary to
give effect to this Section 3.2(b), prior to the next regularly scheduled
meeting date of the Stockholders) the number of members of the Board which the
Vivendi Representative or GE have designated at all times corresponds to Section
3.2(a). Such corporate and other action may include, without limitation, either
the removal of one or more incumbent directors or the election of one or more
additional directors (subject in each case to Section 3.2(a) and applicable
requirements of the Certificate of Incorporation and the Bylaws pertaining to
the number of members of the Board).
(c) Operation of the Board and the Board Committees. So long as the
shares of Company Stock collectively Beneficially Owned by the members of the
Vivendi Group constitute at least 5% of the total voting power represented by
the outstanding shares of Company Stock (for this purpose, prior to an IPO, or
until such earlier time as is specified below, without giving effect to any
issuance of Company Stock after the date hereof), each Stockholder agrees to the
following covenants regarding the operation and responsibility of the Board and
certain committees thereof and at all times prior to the IPO and after the IPO,
to the maximum extent possible under applicable federal securities law and stock
exchange rules, each Stockholder shall vote all of its shares of Company Stock
10
and take all other necessary or desirable actions within such Stockholder's
control including attendance at meetings in person or by proxy for purposes of
obtaining a quorum, execution of written consents in lieu of meetings and
approval of amendments and/or restatements of the Certificate of Incorporation
or Bylaws, and the Company shall take all necessary and desirable actions within
its control, such that:
(i) the Board shall meet at least four times per year and
each of the Board's audit, human resources and strategy and finance
committees shall meet at least once per calendar quarter;
(ii) subject to Section 3.2(d), one director designated by
the Vivendi Representative shall serve on each of the Board's audit,
human resources and strategy and finance committees, it being
understood and agreed that the number of members of each such
committee will be adjusted from to time to time so that the
percentage of each such committee designated by the Vivendi
Representative as of a given time is equal to the percentage of the
entire Board designated by the Vivendi Representative at such time,
such representation not to exceed 20% of either such committee;
(iii) so long as the members of the Vivendi Group have a
right to elect at least three directors to the Board, a quorum for
meetings of the Board shall require the participation of one of the
directors designated by Vivendi unless any such director fails to
participate by telephone, video-conferencing or in person after
having received 48 hours advance written notice of a meeting; and
(iv) each of the following shall be subject to the
approval of the Board and shall be reviewed by a committee of the
Board, as specified below:
(A) the Company's strategic plan and annual budget
shall be reviewed, and the implementation and
progress of such plan and budget shall be
monitored, by the strategy and finance
committee;
(B) any Significant Acquisition or Significant
Disposition shall be reviewed by the strategy
and finance committee; provided that, so long
as the members of the Vivendi Group have a
right to elect at least three directors to the
Board, Vivendi shall have the right to
designate an executive of Vivendi to
participate in the negotiations in respect of
any such Significant Acquisition or Significant
Disposition;
(C) the results of operations for each fiscal
quarter and the accounting policy of the
Company during each such period shall be
reviewed following the completion of each such
calendar quarter by the audit committee; and
11
(D) the annual compensation package (including
performance objectives and payouts) for each of
the top five executive officers of the Company
shall be reviewed by the human resources
committee.
(d) Vivendi Designees. Vivendi shall have the right to designate to
the Board (and each applicable committee) any senior officer of Vivendi or a
significant Subsidiary of Vivendi that is a member of the Vivendi Group. If the
Vivendi Group votes in favor of or designates as a director to the Board (or any
committee thereto) a Person who is not as of such time a senior executive of
Vivendi or a significant Subsidiary of Vivendi, GE shall have the right, in its
sole discretion, to require the Vivendi Representative to replace such Person
with a senior executive of Vivendi or a significant Subsidiary of Vivendi.
(e) Telephonic Board Meetings; Notice. The parties hereto shall take
or cause to be taken all necessary actions within their control, including
causing the Bylaws to make due provision, to allow any member of the Board to
telephonically attend any meeting of the Board. Upon the members of the Vivendi
Group ceasing to have the effective power to elect at least three directors to
the Board, for so long as the members of the Vivendi Group collectively
Beneficially Own shares representing at least 5% of the total voting power
represented by the outstanding shares of Company Stock, the Company will give
each director written notice of each regularly scheduled or special meeting of
its Board, which notice, to the extent reasonably practicable, shall be given,
in the case of any meeting to be held in person, at least 72 hours in advance of
such meeting; it being understood and agreed that any such notice requirement
may be waived in accordance with the applicable provisions of the Bylaws.
(f) No Conflict with Agreement. The Stockholders shall vote their
shares of Company Stock and take all other actions necessary, to ensure that the
organizational documents of the Company, and any future amendments thereto, do
not, at any time, conflict with the provisions of this Agreement (except to the
extent required by applicable law).
3.3 Preparation for an IPO. Notwithstanding anything in this
Agreement to the contrary, in connection with and subject to the closing of an
IPO, the Stockholders and their respective Permitted Transferees shall, vote
their shares of Company Stock and take all actions necessary or desirable
(including attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the Company shall take all necessary and desirable actions within its control
(including calling special board and stockholder meetings), to amend the
Certificate of Incorporation and the Bylaws to include (i) customary
anti-takeover protections, (ii) provisions preserving the rights of Parent as
the controlling stockholder of the Company and (iii) to remove the provision
permitting cumulative voting from the Certificate of Incorporation. In each
case, such provisions will be developed by GE and the managing underwriters, in
consultation with the Vivendi Representative, taking into account
then-prevailing corporate governance practice for U.S. public media companies
and in public offerings involving controlling stockholders and preserving the
12
right of the Vivendi Group to have Board representation if their aggregate
ownership of shares representing in excess of the percentages of total voting
power represented by the outstanding shares of Company Stock specified in this
Article III, it being agreed that such provisions must be reasonably acceptable
to GE in light of GE's corporate governance standards at such time.
ARTICLE IV
COVENANTS OF THE COMPANY AND THE STOCKHOLDERS
4.1 Financial Statements. Subject to Section 6.8, as long as the
members of the Vivendi Group collectively Beneficially Own shares representing
5% or more of the total voting power represented by the outstanding shares of
Company Stock (for this purpose, prior to an IPO, without giving effect to any
issuance of Company Stock after the date hereof), the Company shall furnish the
Vivendi Representative with copies of the following financial statements and
other information:
(a) as soon as available after the end of each quarterly accounting
period in each fiscal year of the Company and in any event no later than 30 days
after the end of such quarterly accounting period, copies of the unaudited
consolidated balance sheets of the Company as of the end of such quarterly
accounting period, and of the related consolidated statements of income and
retained earnings and cash flows for such accounting period and for the portion
of the fiscal year then ended, all in reasonable detail, together, for so long
as the Vivendi Group continues to use equity accounting to reflect its
investment in the Company, with such relevant information and assistance
reasonably requested by the Vivendi Representative that will enable members of
the Vivendi Group to reconcile such financial statements to French generally
accepted accounting principles and/or International Accounting Standards, as
applicable, and to comply with the requirements of Rule 3-09 and Rule 4-08 of
Regulation S-X under the Securities Act and any other requirements of the
Exchange Act as applicable (collectively, the "Reconciliation Information");
(b) as soon as available after the end of each fiscal year of the
Company beginning in 2004 and in any event no later than 60 days after the end
of such fiscal year, copies of the audited consolidated balance sheets of the
Company as of the end of such fiscal year, and of the related audited
consolidated statements of income and retained earnings and cash flows for such
fiscal year, all in reasonable detail, and, in the case of such audited
consolidated statements, accompanied by a report thereon of a nationally
recognized firm of independent certified public accountants selected by the
Company, together, for so long as the Vivendi Group continues to use equity
accounting to reflect its investment in the Company; and
(c) for so long as the Vivendi Group continues to use equity
accounting to reflect its investment in the Company, the Company will provide
access to its financial information to enable Vivendi to determine the
13
allocation of Vivendi's investment in the Company under purchase accounting and
to monitor such allocation on an on-going basis;
provided that, prior to March 31, 2005 and upon written notice to Vivendi, the
above deadlines for the delivery of documents may be reasonably extended by the
Company if its accounting system and processes make these deadlines
impracticable. With respect to financial statements and Reconciliation
Information described in paragraphs (a) and (b) above, for so long as Vivendi
Group continues to use equity accounting to reflect its investment in the
Company, (x) the Vivendi Group and, as prescribed by French generally accepted
auditing standards, the Vivendi Group's independent auditors shall have full
access in a timely manner to the Company's auditors and appropriate management
personnel to discuss the Company's financial statements and the Reconciliation
Information for such financial statements (it being understood that the Vivendi
Group and, as prescribed by French generally accepted auditing standards, the
Vivendi Group's independent auditors shall have access to such auditors work
papers upon execution of such customary access letter as such independent
auditors may request), provided that Vivendi and its Representatives will use
reasonable efforts to minimize any disruption to the business arising from such
requests, including by coordinating the flow of information through specific
points of contact designated by the Company in writing and devoting appropriate
resources of Vivendi to participate in this process and (y) the Company shall
use reasonable best efforts to cause its independent auditors to consent to the
Vivendi Group's inclusion to the financial statements referred to in Section
4.1(b) to be included in the Vivendi Group's filings with the Commission. For
the avoidance of doubt, neither the Company nor its Representatives will perform
any reconciliation to French generally accepted accounting principles and/or
International Accounting Standards.
4.2 Right to Information with Respect to the Company; Reporting by
Vivendi.
(a) Subject to Section 6.8, as long as the members of the Vivendi
Group collectively Beneficially Own shares representing 5% or more of the total
voting power represented by the outstanding shares of Company Stock (for this
purpose, prior to an IPO, without giving effect to any issuance of Company Stock
after the date hereof), the Vivendi Representative (and, as prescribed by French
generally accepted auditing standards, the Vivendi Group's independent auditors)
shall have the right, at the Vivendi Representative's sole expense, to inspect
the existing books and records of the Company during the regular business hours
of the Company; provided that the Company shall not be required to cooperate
with any inspection requests of the Vivendi Representative that would unduly
interfere with the operations of the Company.
(b) Vivendi agrees to provide the Company with any final
reconciliation of the Company's financial statements to French generally
accepted accounting principles or International Accounting Standards, as
applicable, prior to any public disclosure of financial statements containing or
reflecting such information.
14
4.3 Confidentiality. All materials and information obtained by any
member of the Vivendi Group (which term, for purposes of this Section 4.3, shall
include the Vivendi Representative and each such member's or the Vivendi
Representative's Representatives (as defined below)) pursuant to the rights
granted under this Agreement, together with all other confidential or
proprietary information of the Company (such materials and information
collectively, the "Confidential Information"), shall be kept confidential and
shall not be disclosed to any third party except (a) information which is
obtained by any member of the Vivendi Group from a third party who is not known
by such member to be prohibited from disclosing the information to such member
by a contractual, legal or fiduciary obligation to the Company, (b) information
which is or becomes publicly available (other than as a result of disclosure by
any member of the Vivendi Group in violation of this section); (c) information
which is independently developed, discovered or arrived at by any member of the
Vivendi Group without use of Confidential Information, (d) to such recipient's
equity holders, directors, officers, trustees, partners, employees, agents,
accountants, representatives and professional consultants ("Representatives") on
a need to know basis, (e) to any Person to which such recipient offers to sell
or transfer any shares of Company Stock, provided that the prospective
transferee shall agree to be bound by a confidentiality agreement for the
benefit of the Company containing provisions substantially similar the
provisions of this Section 4.3, (f) in any report, statement, testimony or other
submission to any Governmental Authority having or claiming to have jurisdiction
over such recipient (including information reasonably required to be included in
Vivendi's financials statements, earnings release or Tax filings) or any
information required to be disclosed to any Governmental Authority or arbitrator
in connection with any claim against GE or NBC or their respective Affiliates,
(g) in order to comply with any law, rule, regulation, or order applicable to
such recipient, or in response to any summons, subpoena or other legal process
or formal or informal investigative demand issued to such recipient in the
course of any litigation, investigation or administrative proceeding or (h) to
Vivendi's financial lenders, in connection with any Financing Arrangement or
Equity Derivatives Transaction; provided that such lenders execute a
non-disclosure agreement with the Company restricting such lenders from the
disclosure of any Confidential Information in the same manner as is set forth in
this Section 4.3. In the event that any party hereto or any of its
Representatives becomes legally compelled by deposition, interrogatory, request
for documents, subpoena, civil investigative demand or similar judicial or
administrative process to disclose any Confidential Information, the disclosing
party shall provide the Company with prompt prior written notice of such
requirement and shall cooperate with the Company, at the Company's expense, to
obtain a protective order or similar remedy to cause such Confidential
Information not to be disclosed, including interposing all available objections
thereto, such as objections based on settlement privilege. In the event that
such protective order or other similar remedy is not obtained, the disclosing
party shall furnish only that portion of such Confidential Information that has
been legally compelled.
4.4 Standstill. As long as the Vivendi Group Beneficially Owns shares
representing 5% or more of the total voting power represented by the outstanding
Company Stock, Vivendi agrees that, without GE's prior written consent, it will
15
not, and it will cause each other member of the Vivendi Group not to take any of
the following actions (it being understood that such limitations shall not be
deemed to limit to the actions of any member of the Board):
(a) acquire, announce an intention to acquire, offer or propose to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
record or beneficial ownership of any Company Stock (which for purposes of this
Section 4.4 will include any Excluded Securities), or direct or indirect rights
to options to acquire (through purchase, exchange, conversion or otherwise) any
Company Stock, in each case, other than as part of any Equity Derivative
Transaction with respect to shares of Company Stock Beneficially Owned by a
member of the Vivendi Group;
(b) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" (as such terms are defined in Rule 14a-1 under the
Exchange Act, as amended) to vote any Company Stock, seek to advise, encourage
or influence any person or entity with respect to the voting of any Company
Stock, initiate or propose any shareholder proposal or induce or attempt to
induce any other person to initiate any shareholder proposal;
(c) make any statement or proposal, whether written or oral, to the
Board or any director, officer or agent of the Company, or make any public
announcement or proposal whatsoever with respect to a merger or other business
combination, sale or transfer of assets, recapitalization, dividend, share
repurchase, liquidation or other extraordinary corporate transaction with the
Company or any other transaction which could result in a Change of Control of
the Company, or solicit or encourage any other person to make any such statement
or proposal;
(d) form, join or in any way participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) (other than as created as a
result of this Agreement) with respect to any securities of the Company;
(e) deposit any Company Stock into a voting trust or subject any
Company Stock to any arrangement or agreement with respect to the voting of any
Company Stock other than this Agreement and the Liquidity Rights Agreement;
(f) make a public request to the Company or to any member of the GE
Group (or their directors, officers, shareholders, employees or agents) to amend
or waive any provisions of this Agreement, the Certificate of Incorporation or
Bylaws, including any public request to permit the Company or any member of the
GE Group or any other person to take any action in respect of the matters
referred to in this Section 4.4;
(g) take any action which might require the Company or any member of
the GE Group to make a public announcement regarding the possibility of any
transaction referred to in paragraph (c) above or similar transaction or,
advise, assist or encourage any other persons in connection with the foregoing;
or
16
(h) disclose any intention, plan or arrangement inconsistent with the
foregoing.
4.5 [Intentionally Omitted.]
4.6 Corporate Opportunity; Contractual Relationships.
(a) Except as otherwise provided in the second sentence of this
Section 4.6(a), no Stockholder and no officer, director, agent, stockholder,
member, manager, partner or Affiliate of any Stockholder (any of the foregoing,
a "Stockholder Group Member") shall have any duty to communicate or present an
investment or business opportunity or prospective economic advantage to the
Company or any of its Subsidiaries in which the Company or one of its
Subsidiaries may, but for the provisions of this Section 4.6(a), have an
interest or expectancy ("Corporate Opportunity"), and no Stockholder nor any
Stockholder Group Member (even if also an officer or director of the Company)
will be deemed to have breached any fiduciary or other duty or obligation to the
Company by reason of the fact that any such Person pursues or acquires a
Corporate Opportunity for itself or its Affiliates or directs, sells, assigns or
transfers such Corporate Opportunity to another Person or does not communicate
information regarding such Corporate Opportunity to the Company. The Company, on
behalf of itself and its Subsidiaries, renounces any interest in a Corporate
Opportunity and any expectancy that a Corporate Opportunity will be offered to
the Company; provided that the Company does not renounce any interest or
expectancy it may have in any Corporate Opportunity that is offered to an
officer of the Company who is also a director or officer of a Stockholder if
such opportunity is expressly offered to such Person in his or her capacity as
an officer of the Company and the Stockholders recognize that the Company
reserves such rights.
(b) Each Stockholder and the Company acknowledge that each
Stockholder and each Stockholder Group Member shall have no duty to refrain
from: (i) engaging or investing in, independently or with others (excluding the
Company or any of its Subsidiaries), any business activity of any type or
description, including those that might be the same as or similar to the
business of the Company or any of its Subsidiaries, (ii) doing business with any
client or customer of the Company or any of its Subsidiaries or (iii) employing
or otherwise engage any officer or employee of the Company, and no Stockholder
or Stockholder Group Member (even if an officer or director of the Company)
shall be liable to the Company or any of the other Stockholders for breach of
any fiduciary duty by reason of any such activities of such Person or of such
Person's participation therein.
(c) Without limiting the obligations under clause (iii) of Section
3.1(a), no contract, agreement, arrangement or transaction between the Company
or one of its Subsidiaries, on the one hand, and a Stockholder or a Stockholder
Group Member, on the other hand, shall be void or voidable solely for the reason
that a Stockholder or a Stockholder Group Member are parties thereto, or solely
because any Stockholder Group Member is present at or participates in any
meeting of the Board or a committee thereof in connection with the authorization
of such contract, agreement, arrangement or transaction, or solely because his
17
or their votes are counted for such purpose, and the Stockholders and the
Stockholder Group Member (even if an officer or director of the Company) (i)
shall have fully satisfied and fulfilled all fiduciary and other duties to the
Company and the Stockholders with respect thereto, (ii) shall not be liable to
the Company or the Stockholders for any breach of fiduciary duty by reason of
the entering into, performance or consummation of any such contract, agreement,
arrangement or transaction, (iii) shall be deemed to have acted in good faith
and in a manner it reasonably believed to be in and not opposed to the best
interests of the Company and the Stockholders and (iv) shall be deemed not to
have breached its or their duties of loyalty to the Company and the Stockholders
and not to have received an improper personal benefit therefrom, if such
transaction is deemed to be at arms length.
(d) Without limiting any contractual remedies that may otherwise be
available to the parties to this Agreement, any contract or business relation
which does not comply with the procedure set forth in Section 3.1(a)(iii) shall
not by reason thereof be deemed void or voidable or result in any breach of any
fiduciary duty or duty of loyalty or failure to act in good faith or in the best
interests of the Company or derivation of any improper personal economic gain,
but shall instead be governed by the provisions of the DGCL and other applicable
law.
4.7 Subscription for Equity Interests. Prior to the consummation of
an IPO, for so long as the shares of Company Stock collectively held by the
members of the Vivendi Group constitute at least 10% of the total voting power
represented by the outstanding shares of Company Stock, GE shall obtain the
prior written consent of the Vivendi Representative prior to purchasing or
permitting any of GE's Affiliates to purchase from the Company any newly issued
equity interests of the Company, or any newly issued securities convertible into
equity securities of the Company; provided that (a) this Section 4.7 shall not
prohibit any purchase of such equity interests to the extent the Company uses
the proceeds to fund a repurchase of shares of Company Stock from the members of
the Vivendi Group pursuant to the Liquidity Rights Agreement and (b) this
Section 4.7 shall terminate and have no further effect as of the first date when
the members of the Vivendi Group are no longer eligible to elect at least three
directors to the Board (of which event the Vivendi Representative will promptly
notify GE).
4.8 Strategic Committee. As long as the members of the Vivendi Group
collectively Beneficially Own shares of Company Stock representing 5% or more of
the total voting power represented by the outstanding shares of Company Stock,
GE and Vivendi shall establish a committee (the "Strategic Committee"), which
shall consist of the chief executive officer of GE and a nominee designated from
time to time by GE and the chief executive officer of Vivendi and a nominee
designated from time to time by Vivendi. The Strategic Committee shall meet at
least once per calendar quarter and shall be responsible for evaluating,
developing and recommending to the Company strategic objectives, business plans
and growth opportunities, and for promoting and monitoring the Commercial
Arrangements with members of the Vivendi Group contemplated by the Business
Combination Agreement. The Strategic Committee shall also discuss any proposed
Demerger of Vivendi. The Strategic Committee shall have no decision-making
18
authority with respect to the Company and its controlled Affiliates. There shall
be no chairman of the Strategic Committee.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder who is not a party to the Business Combination
Agreement hereby, severally, and not jointly, represents and warrants to the
Company with respect to itself and its ownership of its Company Stock as
follows:
5.1 Ownership of Company Stock. Such Stockholder or its wholly owned
direct or indirect subsidiary owns of record and beneficially all of the shares
of Company Stock set forth under its signature on the signature pages hereto and
has good and marketable title to such Company Stock, free and clear of any Liens
or preemptive rights. Except as otherwise provided in this Agreement or the
Liquidity Rights Agreement, such Stockholder or its wholly owned direct or
indirect subsidiary has sole voting power, without restrictions, with respect to
all of such shares of Company Stock.
5.2 Organization, Power and Authority, Binding Agreement. Such
Stockholder is a corporation, partnership, trust or limited liability company,
duly formed, legally existing and in good standing under the Laws of its
jurisdiction of incorporation or formation and has all requisite corporate or
limited liability company, partnership or trust power and authority to enter
into this Agreement. This Agreement has been duly and validly authorized by all
necessary corporate, limited liability company, partnership, trust or similar
action and has been, or at Closing will be, as applicable, duly executed and
delivered by such Stockholder and this Agreement (assuming due execution and
delivery by the other parties hereto) constitutes the valid and binding
obligations of such Stockholder, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
Laws affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
5.3 No Conflicts.
(a) The execution and delivery of this Agreement by such Stockholder
does not, and the consummation by such Stockholder of the transactions
contemplated by this Agreement shall not, (i) conflict with, or result in any
violation or breach of, any provision of the charter, by-laws or other
organizational document of such Stockholder, (ii) conflict with, or result in
any violation or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation) under, require a consent or waiver under,
constitute a change in control under, or result in the imposition of any Lien on
such Stockholder's shares of Company Stock under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or instrument to which such Stockholder is a party or by which it or
any of its properties or assets may be bound, or (iii) conflict with or violate
19
any permit, concession, franchise, license, judgment, injunction, order, decree,
statute, Law, ordinance, rule or regulation applicable to such Stockholder or
any of its properties or assets, except in the case of clauses (ii) and (iii) of
this Section 5.3(a) for any such conflicts, violations, breaches, defaults,
terminations, cancellations, accelerations or Liens as would not have a material
adverse effect on the ability of the Stockholders, or any of them, to consummate
the transactions contemplated by this Agreement.
(b) Other than as set forth in the Business Combination Agreement, no
consent, approval, license, permit, order or authorization of, or registration,
declaration, notice or filing with, any Governmental Authority is required by or
with respect to such Stockholder in connection with the execution and delivery
of this Agreement by such Stockholder.
ARTICLE VI
MISCELLANEOUS
6.1 Notices. All notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) five (5) Business Days following sending by registered or
certified mail, postage prepaid, (b) when sent, if sent electronically or by
facsimile, during the normal business hours on any Business Day of the
recipient, or one Business Day after the date sent, if sent electronically or by
facsimile, after the normal business hours of the recipient, provided that the
electronic message is promptly confirmed by facsimile confirmation thereof and
the sending party receives written confirmation that the facsimile has been
successfully transmitted in its entirety to the intended recipient, (c) when
delivered, if delivered personally to the intended recipient and (d) one (1)
Business Day following sending by overnight delivery via a national courier
service (two (2) Business Days following sending by overnight international
delivery via international courier service), in each case, addressed to a party
at the following address for such party:
(a) if to the Company, to:
[NewCo]
with copies (which shall not constitute notice to the
Company) to:
GE and its counsel at the addresses
specified below
(b) if to Parent or GE, to:
General Electric Company
0000 Xxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Senior Counsel for Transactions
Fax: (000) 000-0000
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with a copy (which shall not constitute notice to GE) to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
(c) and if to a member of the Vivendi Group or the Vivendi
Representative, to the Vivendi Representative's address
set forth on its signature on the signature pages hereto,
with a copy (which shall not constitute notice to the
Vivendi Group or the Vivendi Representative) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Fax: (000) 000-0000
Any party to this Agreement may change the address or addresses to
which notices and other communications hereunder are to be delivered by giving
the other parties to this Agreement notice in the manner herein set forth.
6.2 Vivendi Representative. The members of the Vivendi Group
acknowledge that the Company, Parent and GE desire that such Persons communicate
their decisions regarding the exercise of their rights under this Agreement
through a single representative and that the Company, Parent and GE have the
right to deal exclusively with this representative. For this reason, each member
of the Vivendi Group hereby irrevocably constitutes and appoints Vivendi and its
designees as the Vivendi Representative and as its true and lawful
attorney-in-fact, coupled with an interest, to take any action, and to give and
receive any notices, requests or other communications, required to be taken,
given or received pursuant to this Agreement by any such member of the Vivendi
Group, and therefore neither the Company nor any member of the GE Group shall be
obligated to deal or communicate with any member of the Vivendi Group in
connection with the subject matter of this Agreement.
6.3 Joint and Several Obligations. Each of GE and Vivendi agrees that
it shall be jointly and severally liable to the Company and the other
Stockholders for the acts (including any failure to act) and the obligations
under this Agreement of each Person that is a member of the GE Group and the
Vivendi Group, respectively, at any time from and after the date hereof
(including any Person that becomes a successor to such Stockholder by operation
of Law).
21
6.4 Subsequent Parties. Each Person who after the date of this
Agreement but prior to the closing of an IPO is offered Company Stock by the
Company shall, as a condition precedent to the acquisition of such Company
Stock, (a) become a party to this Agreement by completing and executing a
signature page hereto (including the address of such party), (b) execute all
such other agreements or documents as may reasonably be requested by the
Company, and (c) deliver such signature page and, if applicable, other
agreements and documents to the Company at its address specified in Section 6.1.
Such Person shall, upon its satisfaction of such conditions and acquisition of
Company Stock, be a Stockholder for all purposes of this Agreement.
6.5 Entire Agreement; No Inconsistent Agreement.
(a) This Agreement (and, to the extent referenced herein, the
Business Combination Agreement, any Ancillary Agreement or any other agreement
expressly contemplated by any such agreement or entered into in connection with
the execution of the Business Combination Agreement or the Closing of the
transactions contemplated thereby) constitute the entire agreement among the
parties hereto and supersedes any prior understandings, agreements or
representations by or among the parties hereto, or any of them, written or oral,
with respect to the subject matter hereof.
(b) The Company will not hereafter enter into any agreement with
respect to its securities which would materially and adversely affect the rights
expressly granted to the Stockholders in this Agreement.
6.6 No Third-Party Beneficiaries. This Agreement is not intended, and
shall not be deemed, to confer any rights or remedies upon any Person other than
the parties hereto and their respective successors and permitted assigns or to
otherwise create any third-party beneficiary hereto.
6.7 Severability. If one or more provisions of this Agreement are
held to be unenforceable to any extent under applicable Law, such provision
shall be interpreted as if it were written so as to be enforceable to the
maximum extent permitted by Law so as to effectuate the parties' intent to the
maximum extent, and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its terms
to the maximum extent permitted by Law.
6.8 Termination. Certain rights and obligations under the following
provisions of this Agreement shall terminate as follows:
(a) the Transfer restrictions set forth in Section 2.1 will expire
(i) in the case of a member of the Vivendi Group or any of their Permitted
Transferees, as of the date following the closing of an IPO on which the members
of the Vivendi Group no longer collectively Beneficially Own shares representing
at least 5% of the total voting power represented by the outstanding Company
Stock and (ii) in the case of any other Stockholder (including any member of the
GE Group), as of the closing of an IPO;
22
(b) the consent rights of the Vivendi Representative in Section
3.1(a) shall terminate upon the earliest to occur of (i) an IPO, (ii) a Vivendi
Change of Control or (iii) the date on which the Vivendi Group falls below the
ownership threshold set forth in Section 3.1(a);
(c) the consent rights of the Vivendi Representative in Section
3.1(b) shall terminate upon the earliest to occur of (i) an IPO, (ii) a Vivendi
Change of Control or (iii) the date on which the Vivendi Group falls below the
ownership threshold set forth in Section 3.1(b);
(d) the Board designation rights of Vivendi in Section 3.2(a) shall
terminate upon a Vivendi Change of Control;
(e) the information rights of the Vivendi Representative in Sections
4.1 and 4.2 shall terminate upon the earlier of a Vivendi Change of Control or
the date on which the Vivendi Group falls below the ownership threshold set fort
in such sections; and
(f) the rights of the Vivendi Group under Sections 4.7 and 4.8 shall
terminate on the earliest to occur of (i) a Vivendi Change of Control, (ii) an
IPO and (iii) such date as the Vivendi Group falls below the ownership
thresholds set forth in such sections (if applicable);
provided that (a) a Vivendi Change of Control shall not be deemed to have
occurred if GE agrees to waive such termination event, such waiver not to be
unreasonably withheld or delayed, and (b) no such termination shall relieve any
party of liability for any breach of any such provision prior to such
termination.
6.9 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the Laws of the State of New York applicable to
agreements to be performed entirely within such state, including all matters of
construction, validity and performance, without regard to the conflict of Law
principles of such state to the extent that they would apply the Law of a
different jurisdiction.
6.10 Jurisdiction; Waiver of Jury Trial.
(a) Each party to this Agreement hereby irrevocably agrees that any
legal action, suit or proceeding arising out of or relating to this Agreement
shall be brought in the United States District Court for the Southern District
of New York, unless federal jurisdiction does not exist, in which case any such
action, suit or proceeding shall be brought in the Delaware Chancery Court or,
if such court lacks jurisdiction, the Supreme Court of the State of New York,
New York County. Each party hereto agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, suit or proceeding any claim that it
is not subject personally to the jurisdiction of any such court, that the
action, suit or proceeding is brought in an inconvenient forum, that the venue
of the action, suit or proceeding is improper or that this Agreement, or the
subject matter hereof may not be enforced in or by any such court. Each party
23
hereto further and irrevocably submits to the jurisdiction of any such court in
any action, suit or proceeding.
(b) Each party to this Agreement hereby irrevocably and
unconditionally waives, to the fullest extent permitted by applicable Law, any
right that such party may have to a trial by jury of any claim or cause of
action directly or indirectly based upon or arising out of this Agreement, or
any of the transactions contemplated herein.
6.11 Mediation. Prior to commencing legal action with respect to any
disagreement, dispute, controversy or claim arising out of or relating to this
Agreement or the interpretation hereof, or any arrangements relating hereto or
contemplated herein or the breach, termination or invalidity hereof
(collectively, "Disputes"), a party will notify the other party in writing of
any such Dispute (a "Dispute Notice"). Following receipt of a Dispute Notice by
a party, the parties shall jointly appoint a mediator and shall attempt in good
faith to resolve any Dispute promptly by confidential mediation pursuant to the
then current mediation procedures of the CPR Institute for Dispute Resolution
(the "CPR"). If the parties cannot agree upon a mediator within five (5) days of
receipt of the Dispute Notice by a party, the parties will ask the CPR to
appoint a mediator promptly. If the Dispute is not resolved for any reason
within thirty (30) days of the Dispute Notice (unless the period of time is
extended by the parties in writing), either party may commence legal action in
accordance with the other provisions hereof. Nothing contained in this Section
6.11 shall preclude a party from seeking injunctive relief if the prerequisites
to obtaining injunctive relief, including irreparable harm, are otherwise
satisfied.
6.12 Assignment. Neither this Agreement nor any right or obligation
arising under this Agreement may be assigned by any party without the prior
written consent of the other parties, other than to a Permitted Transferee of
the assignor. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
and no other Person shall have any right, benefit or obligation under this
Agreement.
6.13 Amendments; Waivers. This Agreement may be amended, modified or
supplemented by the Company with the written consent of (a) GE, (b) Vivendi, but
only for so long as the shares of Company Stock collectively Beneficially Owned
by members of the Vivendi Group constitute at least 5% of the total voting power
represented by the outstanding shares of Company Stock (for this purpose, prior
to an IPO, without giving effect to any issuance of Company Stock after the date
hereof), and (c) to the extent (and only to the extent) any particular holders
of Company Stock would be uniquely and adversely affected by such amendment,
modification or supplement, by such holder or a majority (by number of shares)
of any other holders of Company Stock whose interests as a group would be
adversely affected by such amendment, modification or supplement. No failure or
delay by any party in exercising any right, power or privilege under this
Agreement shall operate as a waiver of such right, power or privilege nor shall
any single or partial exercise of any right, power or privilege preclude any
other or further exercise of such right, power or privilege or the exercise of
any other right, power or privilege. Except as otherwise provided in this
24
Agreement, the rights and remedies provided under this Agreement shall be
cumulative and not exclusive of any rights or remedies provided by Law.
6.14 Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
6.15 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall be deemed to be one and the same document. Each of the parties
hereto (a) has agreed to permit the use, from time to time, of faxed or
otherwise electronically transmitted signatures in order to expedite the
consummation of the transactions contemplated hereby, (b) intends to be bound by
its respective faxed or otherwise electronically transmitted signature, (c) is
aware that the other parties hereto will rely on the faxed or otherwise
electronically transmitted signature, and (d) acknowledges such reliance and
waives any defenses to the enforcement of the documents effecting the
transaction contemplated by this Agreement based on the fact that a signature
was sent by fax or otherwise electronically transmitted.
6.16 Remedies. Each party, in addition to being entitled to exercise
all rights granted by Law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. Each party agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense in any action for specific performance that a remedy at law
would be adequate. In any action or proceeding brought to enforce any provision
of this Agreement or where any provision of this Agreement is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
6.17 Interpretation. When a reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article of or a Section of
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". 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. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein. 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. Reference to a Person are also to its permitted successors and
assigns.
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
[NEWCO]
By:
------------------------------------------
Name:
Title:
GENERAL ELECTRIC COMPANY
By:
------------------------------------------
Name:
Title:
NATIONAL BROADCASTING COMPANY HOLDING, INC.
By:
------------------------------------------
Name:
Title:
_______ shares of Company Stock
VIVENDI UNIVERSAL, S.A.
By:
------------------------------------------
Name:
Title:
UNIVERSAL STUDIOS HOLDING III CORP.
By:
------------------------------------------
Name:
Title:
_______ shares of Company Stock
26
EXHIBIT F
UMG TRADEMARK LICENSE AGREEMENT TERM SHEET
------------------------------------------
All capitalized terms set forth herein shall be as set forth in the Business
Combination Agreement ("BCA") to which this is attached.
AGREEMENT: The long form agreement to be entered in to by
Licensor and Licensee prior to the Closing Date
for which the material terms are set forth
herein (the "AGREEMENT").
LICENSOR: Universal City Studios, LLLP
LICENSEE: Universal Music Group, Inc.
LICENSED MARKS: The UNIVERSAL word xxxx, and the Universal
globe logo design xxxx and variations thereof
(collectively, the "LICENSED MARKS").
AUTHORIZED USES (FURTHER
DEFINED BELOW): Field of musical sound recordings, music video
recordings and music publishing in all formats
whether now known or hereafter created (the
"CORE MUSIC BUSINESS").
Music related products and services other than
those in the field of film and television,
including ring tones (the "EXTENDED MUSIC
BUSINESS").
Any products and services other than film and
television ("OTHER PRODUCTS").
LICENSE GRANT: Royalty-free right and license with a limited
right to sublicense, to use the Licensed Marks
worldwide:
(a) in substantially the same manner and
form as the Licensed Marks are used
by UMG as of the date of the BCA in
the Core Music Business and the
Extended Music Business;
(b) as trade names and labels in use by
UMG as of the date of the BCA in
connection with operating the Core
Music Business, including "Universal
Records," "Universal Music" and
"Universal International Music";
(c) upon Licensor's prior written
consent, which shall not be
unreasonably withheld or delayed, to
create new labels, entities,
corporate or trade names, or
trademarks with "UNIVERSAL" as part
of their names other than those
permitted under (d) below;
(d) to create new labels, entities,
corporate or trade names, or
trademarks that contain the words
"Universal Records," "Universal
Music" or "Universal International
Music" (such as "Universal Music
Nashville") unless the name of the
label or entity, corporate or trade
name or trademark would bring
Licensor into disrepute before a
material portion of the consuming
public in the relevant territory;
(e) in connection with the manufacture,
promotion, distribution and sale of
Other Products using a derivative of
the Licensed Xxxx that connotes
music, including "Universal
Records," "Universal International
Music" or "Universal Music" or one
of the derivative marks created
pursuant to (d) above.
(f) This license grant shall not include
the right to use derivatives of the
Licensed Marks containing the words
"Films," "Television," "TV," "Motion
Pictures" or "Movies."
SUBLICENSE: UMG shall have the right to sublicense its
right to use the Licensed Marks to its
controlled Affiliates and outside vendors who
provide UMG with packaging or other materials
for UMG to conduct business as authorized
hereunder.
LICENSOR'S RIGHTS: Licensor shall have the right to use (and to
license to Licensor's Affiliates and outside
vendors to use) the composite xxxx "NBC
UNIVERSAL" in connection with soundtrack albums
for productions of NBCSub.
EXCLUSIVITY Subject to "Licensor's Rights" above, the
licenses granted in the "License Grant" section
above are exclusive in the Core Music Business
for a period of ten (10) years from the Closing
Date. For all permitted uses outside the Core
Music Business or after ten years from the
Closing Date, the licenses are nonexclusive. In
addition, during the term of the Agreement and
for a period of two (2) years thereafter in the
event of expiration or termination for a reason
other than Licensee's breach and for a period
of one (1) year thereafter in the event of
termination for Licensee's breach, Licensor
shall not use the Licensed Marks as part of the
derivative marks "Universal Records,"
"Universal Music" or "Universal International
Music" in any business or for any products or
services.
QUALITY CONTROL: (a) Licensee shall ensure that all
products and services manufactured,
distributed and sold under the
Licensed Marks, as well as all
2
related advertising, promotional and
other uses of the Licensed Marks by
Licensee, conform in all material
respects to the same high standards
of quality heretofore met by
Licensee's products and services in
the Core Music Business ("QUALITY
Standards"), of which Licensor is
aware and which Licensor approves.
It is understood that Licensor is
not seeking to and shall have no
right to control: (i) the artistic
or expressive content of any product
or service of Licensee; (ii)
variations or improvements by
Licensee to the packaging materials,
technologies, or methods of
distribution of its products or
services; (iii) Licensee's
implementation of technological
advances to its products or
services; and (iv) any changes to,
improvements to, or introductions of
new products and services by
Licensee within the scope of the
Authorized Uses that are consistent
with industry standards and
advances.
(b) Licensor shall have the right to
request Licensee to provide samples
of products and services bearing the
Licensed Marks. If, upon examination
of such products and services,
Licensor believes that such products
and services fail to conform to the
Quality Standards, Licensor shall
notify Licensee and shall permit
Licensee a reasonable period of
time, not to exceed one hundred
twenty (120) days, to make
appropriate corrections.
(c) Notwithstanding (a) and (b) above,
if Licensee's use of the Licensed
Marks in connection with particular
products or services reasonably
threatens immediate damage to
Licensor's reputation or image, upon
notice given by Licensor, Licensee
shall immediately cease use of the
Licensed Marks in connection with
such products or services until the
threatened damage has been corrected
to Licensor's satisfaction.
(d) Claims of breach of quality control
provisions shall be resolved through
expedited mediation in accordance
with the BCA.
OWNERSHIP: Licensee shall acknowledge Licensor's sole and
exclusive ownership of all rights in, and the
right to apply to register, prosecute and
maintain the Licensed Marks and that all uses
of and goodwill arising from the Licensed Marks
inures to Licensor's sole benefit.
Licensee shall not register any name or
trademark that includes the Licensed Marks or
3
is confusingly similar to the Licensed Marks
and shall assign to Licensor promptly after the
Closing Date or, if that is not possible for
legal reasons, as soon thereafter as legally
possible, all existing trademark registrations
and pending applications which contain any of
the Licensed Marks or terms confusingly similar
to the Licensed Marks and which are currently
owned by Licensee or its controlled Affiliates,
provided that Licensee may request that
Licensor register a name or trademark at
Licensee's expense that includes the Licensed
Marks, such request not to be unreasonably
refused. Licensor shall maintain and keep
current all registrations and diligently
prosecute all applications containing the
Licensed Marks covering the Core Music Business
or the Extended Music Business in existence as
of the date of the BCA or registered pursuant
to this provision; provided that Licensee is
using the Licensed Xxxx in which maintenance or
other action is required, and provided further
that Licensee agrees to cooperate in assisting
Licensor to maintain such registration and/or
applications. Licensee shall reimburse Licensor
for the filing and maintenance fees associated
with registrations that cover only the Core
Music Business during the ten (10) year period
of exclusivity specified above.
INFRINGEMENT: Licensee shall promptly notify Licensor of any
known infringement or dilution of the Licensed
Marks and Licensor shall have the right to
decide whether to pursue such claims. If
Licensor does not pursue such claims and they
are in the Core Music Business or the Extended
Music Business, Licensee may do so, so long as
the Licensor has the right to approve any
settlement of such a claim.
INDEMNIFICATION: Licensee shall indemnify Licensor for
third-party claims arising out of its breach of
the Agreement or based on an allegation that
Licensor is directly or indirectly responsible
for or participates in Licensee's activities
solely by reason of Licensee's or its
Affiliates' use or exploitation of the Licensed
Marks.
Licensor shall indemnify Licensee against all
third-party claims resulting from Licensor's
use of the Licensed Marks or resulting from
Licensor's failure to maintain trademark
registrations existing as of the Closing Date,
provided that the trademarks covered by such
registrations were still in use by Licensee at
the time period referenced in the applicable
claim.
LIMITATION OF LIABILITY: Neither party can seek from the other any
incidental, indirect, special, punitive or
consequential damages, including damages from
loss of goodwill.
4
TERM: 25 years from the Closing Date (the "TERM"),
unless earlier terminated, provided that upon
Licensee's request Licensor agrees to discuss
in good faith extending the Term, during the
period between four (4) and two (2) years prior
to the end of the Term.
TERMINATION: Licensor may terminate the Agreement if:
(a) Licensee materially breaches any of
the provisions of the Agreement, and
fails to cure, or make best efforts
to cure, such breach by the later of
one hundred twenty (120) days after
receiving written notice thereof or
sixty (60) days after conclusion of
the mediation if a mediation is
commenced pursuant to the quality
control provisions above within that
one hundred twenty (120) days,
provided that Licensor agrees to
engage in good faith discussions in
an effort to resolve the alleged
material breach, provided, further,
that Licensee promptly commences
cure and diligently endeavors to
cure. Notwithstanding the foregoing,
Licensor shall not terminate solely
by reason of a material breach that
cannot be timely cured for reasons
of force majeure.
(b) Licensee sells all or substantially
all of its assets relating to the
Core Music Business or undergoes a
change of control to any entity that
is a Top 8 Motion Picture Company or
a Major Competitor of Licensor at
the time of the sale or the change
of control ("CHANGE OF CONTROL").
"TOP 8 MOTION PICTURE COMPANY" means
any Person that, when it and all of
its Affiliates are aggregated, is
one of the top eight (8) entities by
worldwide revenue derived from the
production of motion pictures in the
theatrical, non-theatrical, home
video/DVD, television and other
markets.
"MAJOR COMPETITOR OF LICENSOR" means
any Person that, when it and all of
its Affiliates are aggregated, is
one of the top five (5) entities by
worldwide gross revenue in each of
the four Competing Businesses listed
below (it being understood that any
entity, when aggregated with its
Affiliates, may be a top five (5)
entity in more than one Competing
Business and may also be a Top 8
Motion Picture Company).
"COMPETING BUSINESS" means any of
(i) television distribution through
over-the-air broadcast, (ii) cable
5
television distribution, (iii)
direct broadcast satellite
television distribution, (iv)
television production.
(c) Neither Licensee nor its Affiliates
uses any of the Licensed Marks for
twelve (12) continuous months
anywhere in the territory.
TRANSITIONAL PERIOD: Upon termination of the Agreement, Licensee may
continue to use the Licensed Marks for:
(a) one (1) year, if the Agreement is
terminated as a result of a material
uncured breach by Licensee;
(b) two (2) years, if Licensee sells all
or substantially all of its assets
relating to the Core Music Business
or undergoes a change of control to
a Top 8 Motion Picture Company; or
(c) three (3) years, if Licensee sells
all or substantially all of its
assets relating to the Core Music
Business or undergoes a change of
control to a Major Competitor of
Licensee (other than a Top 8 Motion
Picture Company), provided that the
first year of such period shall not
be included within the definition
of, or subject to, the requirements
applicable to the Transition Period
(defined below), except that during
the first year Licensee shall not
create any new composite trademark
containing the name of the Major
Competitor of Licensor;
(each such period, the "TRANSITIONAL PERIOD").
During the Transitional Period:
(W) Licensee shall make commercially
reasonable efforts to transition
away from the Licensed Marks;
(X) Licensee shall not use the Licensed
Marks in connection with new
categories of products or services
or in new business;
(Y) once Licensee launches the trademark
that will replace the Licensed
Marks, Licensee shall not apply the
Licensed Marks to any new products
or services; and
(Z) in the event of termination for
Change of Control, Licensee shall
not create any new composite
trademark containing the Licensed
Trademarks and the name of the
6
applicable Top 8 Motion Picture
Company or Major Competitor of
Licensor.
At the end of the Transitional Period and
thereafter, Licensee shall be permitted to sell
off products using the Licensed Marks that are
on hand as of end of the Transitional Period.
ASSIGNABILITY: Licensee may not assign its rights hereunder to
a Top 8 Motion Picture Company or a Major
Competitor of Licensor. The license is
otherwise freely assignable in connection with
an assignment of all or substantially all of
the Core Music Business of Licensee so long as
the assignee agrees in writing to be bound by
all the provisions of this Agreement. It shall
be a material breach of the Agreement for the
Core Music Business of Licensee to be separated
from Licensee's rights under the Agreement.
7
EXHIBIT G
VU TRADEMARK LICENSE AGREEMENT TERM SHEET
-----------------------------------------
All capitalized terms set forth herein shall be as set forth in the Business
Combination Agreement ("BCA") to which this is attached.
AGREEMENT: The long form agreement to be entered in to by
Licensor and Licensee prior to the Closing Date
for which the material terms are set forth
herein (the "AGREEMENT").
LICENSOR: Universal City Studios LLLP ("LICENSOR")
LICENSEE: Vivendi Universal, S.A. ("LICENSEE")
LICENSED MARKS: The UNIVERSAL word xxxx, and the Universal
globe logo design xxxx and variations thereof
(collectively, the "LICENSED MARKS").
AUTHORIZED BUSINESS: The current businesses of Vivendi and its
Affiliates worldwide as of the date of the BCA
(other than the Company Business) ("AUTHORIZED
BUSINESS").(1)
LICENSE GRANT: Royalty-free, non-transferable, right, license
and authorization with limited right to
sublicense, to use the Licensed Marks worldwide
in connection with the Authorized Business,
provided:
(i) Licensee may use the "Vivendi
Universal" composite xxxx for any
purpose within the scope of the
Authorized Business during the Term.
(ii) Except for as set forth in (i),
Licensee may not use the Universal
globe logo alone or the Universal
word xxxx alone or with any other
term, in each case except as used as
of the date of the BCA.
(iii) To the extent Licensee seeks to use
the Licensed Marks for any purpose
other than in connection with the
Authorized Business, Licensee must
obtain prior written consent of
Licensor.
SUBLICENSE: Licensee shall have the right to sublicense its
rights to use the Licensed Marks to its
Affiliates and to third parties for uses
consistent with Licensee's practices within the
Authorized Business as of the date of the BCA.
---------------
(1) Note that the agreement contemplated by this term sheet will carve-out or
otherwise be subject to the license granted with respect to the business of the
Universal Music Group.
QUALITY CONTROL: Licensee acknowledges that its use of the
Licensed Marks will be subject to the quality
control of Licensor to the extent required
under law to maintain the enforceability of the
Licensed Marks. Upon Licensor's request, no
more than once per year, Licensee will provide
a reasonable number of representative samples
of uses of the Licensed Marks in each business
area of the Authorized Business so Licensor can
ascertain compliance with these standards.
COMPLIANCE WITH LAW: Licensee shall agree to use the Licensed Marks
only in such manner as will comply with
applicable laws and regulations and in a manner
consistent with sound industry practice.
OWNERSHIP: Licensee shall acknowledge Licensor's sole and
exclusive ownership of all rights in, and right
to apply to register, prosecute and maintain,
the Licensed Marks in all fields and
territories and that all uses of and goodwill
arising from the Licensed Marks in those fields
and territories inures to Licensor's sole
benefit.
TRANSFER OF TRADEMARKS: Licensor recognizes that Licensee and its
Affiliates currently have trademark
registrations and pending applications for
trademarks consisting of or incorporating the
Licensed Marks.
With regard to any currently existing
registrations or applications for registration
of the composite xxxx "Vivendi Universal,"
Licensor agrees that Licensee and its
Affiliates may maintain those registrations and
applications throughout the Term.
Notwithstanding the foregoing, Licensee will
covenant that Licensee and all its Affiliates
shall cancel all such registrations and shall
abandon all such applications at the end of the
Term. Licensee shall not renew the
registrations for any domain names containing
the "Vivendi Universal" composite xxxx after
the Term and shall not operate any Internet
services in connection with such "Vivendi
Universal" domain names after the Term.
With regard to registrations or pending
applications filed by Licensee or its
Affiliates that contain Licensed Marks and do
not include the "Vivendi Universal" composite
xxxx, Licensee shall assign to Licensor
promptly after the Closing Date, if that is not
possible for legal reasons, as soon thereafter
as legally practical, all existing trademark
registrations and pending applications.
With regard to any Internet domain names
registered by Licensee or its Affiliates that
contain any of the Licensed Marks and do not
include the "Vivendi Universal" composite xxxx,
Licensee or its Affiliates may maintain such
registrations throughout the Term and, at the
2
end of the Term, Licensee or its Affiliate
shall transfer all such domain name
registrations to Licensor.
INFRINGEMENT: Licensee shall promptly notify Licensor of any
infringement or dilution of the Licensed Marks
(other than the "Vivendi Universal" composite
xxxx or marks derivative thereof) and Licensor
shall have the right to decide whether to
pursue such claims, provided that if Licensor
does not pursue such claims and they are
related to Vivendi Universal Games, Licensee or
Vivendi Universal Games (or any successor
entity thereto for the transitional period),
may do so, so long as the Licensor has the
right to approve any settlement of such a
claim.
With regard to any infringement or dilution of
the Vivendi Universal composite xxxx, Licensee
shall have the right to decide whether to
pursue such claims and shall consult with
Licensor to the extent any settlement involves
the Licensed Trademarks.
INDEMNIFICATION: Licensee will indemnify Licensor for
third-party claims arising out of its breach of
the Agreement or based on an allegation that
Licensor is directly or indirectly responsible
for or participates in Licensee's activities
solely by reason of Licensee's or its
Affiliates' use or exploitation of the Licensed
Marks.
Licensor will indemnify Licensee for
third-party claims arising out of its breach of
the Agreement or based on an allegation that
Licensee is directly or indirectly responsible
for or participates in Licensor's activities
solely by reason of Licensor's or its
Affiliates' use or exploitation of the Licensed
Marks.
TERM: 5 years from Closing Date, unless earlier
terminated.
TERMINATION: Licensor may terminate on written notice:
(i) Upon Licensee's material breach in the
event such breach remains uncured one hundred
twenty (120) days after Licensee's receipt of
written notice thereof.
(ii) If Licensee and its Affiliates use none of
the Licensed Marks for six (6) continuous
months (but termination pursuant to this
provision shall not limit any transitional
period as described below).
Licensee may terminate on thirty (30) days'
prior written notice, with or without cause.
3
TRANSITIONAL PERIOD: In the event of termination due to material
breach, Licensee may continue to use the
Licensed Marks to transition to new trademarks
during a commercially-reasonable winding-up
period, not to exceed one (1) year (but in no
event shall any transition period extend this
Agreement beyond the five (5) year term).
In the event of a sale or change of control of
the entities making up Vivendi Universal Games
(e.g., Vivendi Universal Games, Inc. and
Universal Interactive, Inc.), the relevant
entities or businesses shall immediately after
the sale or change of control take steps to
change any of their corporate or trade names
that include the Licensed Marks as part of such
names so they do not include those trademarks
and will remove the Licensed Marks from
invoices, signage, etc. During a wind-down
period (not to extend past the earlier of (i)
two (2) years from the date of the sale or
change of control or (ii) the end of the Term),
for software products that are on sale or have
entered any phase of testing and that have the
Licensed Marks embedded in the software code,
the entities or businesses sold may complete
development (if not already completed) and
manufacture, distribute and sell those software
products with the Licensed Marks embedded in
the software code (in perpetuity) and on the
software packaging, provided that if there are
any substantive changes to the software code or
packaging after the date of the sale or change
of control, the Licensed Marks must be removed
from the software code or packaging, as the
case may be, as part of those changes. In no
event would there be an obligation by the
Licensee or its Affiliates to repurchase goods
bearing the Licensed Marks upon termination of
the Agreement.
In the event of a sale or change of control of
Licensee, any of its Affiliates or any of its
businesses (other than Vivendi Universal
Games), the relevant entity or business shall
immediately after the sale or change of control
take steps to change any of its corporate or
trade names that include the Licensed Marks as
part of such names so they do not include those
trademarks and will remove the Licensed Marks
from invoices, signage, etc. During a wind-down
period (not to extend past the earlier of (i)
one (1) year from the date of the sale or
change of control or (ii) the end of the Term),
the entity or business sold may complete the
production of work in progress (including those
products made using materials bearing the
Licensed Marks that are the subject of a
binding purchase agreement at the commencement
of the wind-down period) and distribute and
sell products bearing the Licensed Marks in the
same form as immediately prior to the
commencement of the wind-down period that are
4
on hand or manufactured as described above, but
may not place orders for new products bearing
the Licensed Marks.
EFFECT OF EXPIRATION OR
TERMINATION: Upon expiration of this Agreement or the end of
the transitional period, if any, Licensee
agrees to immediately discontinue its use of
the Licensed Marks and to cancel all trademark
registrations and abandon any pending
registrations for any and all trademarks
containing the composite xxxx "Vivendi
Universal." Notwithstanding the foregoing (and
in addition to the provisions set forth in
"Transitional Period" above), Licensor
understands that Vivendi Universal Games cannot
remove the Licensed Marks from the code of its
software once it has entered any phase of
testing without incurring significant costs,
and therefore agrees that in all cases Vivendi
Universal Games (or its successor in interest)
may use the Licensed Marks, as embedded in such
software, in perpetuity; provided, however,
that if there are any substantive changes to
the software code after the date of expiration
or the end of the transitional period, the
Licensed Marks must be removed from the
software code as part of those changes.
5
