SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT (this "Agreement"), dated as of
January 29, 1997, among Spice Entertainment Companies, Inc. f/k/a Xxxxx
Pay-Per-View, Inc., a Delaware corporation (the "Company"), Xxxxxxx
Entertainment Group, Inc., a California corporation and a wholly owned
subsidiary of the Company ("SEG"), and the persons and entities listed on
Schedule 1 to this Agreement (collectively, the "Xxxxxxx Group").
WITNESSETH:
WHEREAS, in connection with the settlement of certain claims
of the Company and the Xxxxxxx Group, the parties hereto have proposed that,
among other things, certain members of the Xxxxxxx Group would transfer shares
of Company Common Stock (as hereinafter defined) and surrender certain employee
stock options to the Company in exchange for the transfer to such members of the
Xxxxxxx Group of all of the capital stock of SEG;
WHEREAS, the parties desire to enter into this Agreement in
order to evidence their agreement regarding the exchange of securities between
the parties and the other matters set forth herein; and
WHEREAS, the parties hereto desire to settle all claims,
actions and disputes existing among them as of the Closing Date on the terms and
conditions set forth below;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
EXCHANGE OF SECURITIES; ADDITIONAL AGREEMENTS
2.1 Exchange of Securities. (a) Subject to the terms and
conditions contained herein, (i) the Company agrees to sell, transfer and assign
to the members of the Xxxxxxx Stockholder Group (as defined below) all of the
issued and outstanding shares of the capital stock of SEG (the "SEG Shares"),
which shares shall be allocated among the members of the Xxxxxxx Stockholder
Group pro rata to the number of shares of Company Common Stock being transferred
to the Company herewith, and (ii) (x) the Xxxxxxx Stockholder Group agrees to
sell, transfer, and assign to the Company 700,000 shares of Company Common Stock
(the "Transferred Shares") and (y) those members of the Xxxxxxx Group which have
previously been granted employee stock options to purchase Company Common Stock
agree to sell, transfer, assign and surrender to the Company all such employee
stock options granted by the Company to such members of the Xxxxxxx Group since
August 9, 1995 (the "Transferred Options", and together with the Transferred
Shares, the "Transferred Securities"). The exchange by the Company of the SEG
Shares for the Transferred Shares and the exchange by the Xxxxxxx Group of the
Transferred Shares for the SEG Shares shall hereinafter be referred to as the
"Exchange".
(a) The closing of the transactions
referred to in subsection (a) (the "Closing"), shall be held at the
offices of Xxxxx & Xxxxx, L.L.P., 599 LexingtonAvenue, New York, New York
at 2:00 p.m. New York City time on the second business day after the date
on which the conditions set forth in Section 6.01 and Section 6.02 hereof
are satisfied or waived, or on such other day and at such other time as the
Parties (as hereinafter defined) shall otherwise agree. (The date on which
the Closing occurs is referred to herein as the "Closing Date".)
(b) At the Closing, in consideration of
(x) certain releases of the Company by the members of Xxxxxxx Group (as set
forth in Article 4 hereof), the agreement of the members of the Xxxxxxx
Group to obtain from Imperial Bank the release of the Company's guarantee of
certain indebtedness of SEG to Imperial Bank, the release of the Company's
guarantee of the employment contracts between SEG, on the one hand, and each
of Xxxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx and Xxxx X. Xxxxxxx, on the other
hand, and SEG entering into, and the Xxxxxxx Individuals causing SEG to enter
into, the "Transponder Agreement" and the "Management Agreement" (each
as hereinafter defined), and other consideration pursuant hereto and
pursuant to the Additional Agreements, and (y) certain releases of the
members of the Xxxxxxx Group and SEG by the Company, the Company entering
into the "Management Agreement" and the "Transponder Agreement", and
other consideration pursuant hereto and pursuant to the Additional Agreements,
the parties shall make to each other the following deliveries:
(i) the Company shall deliver to the
members of the Xxxxxxx Stockholder Group certificates representing the SEG
Shares free and clear of all Liens (as hereinafter defined) and Restrictions
(as hereinafter defined) (other than any arising pursuant to this Agreement
or any Additional Agreement (as hereinafter defined) or under federal or state
securities laws or created by any member of the Xxxxxxx Group (except as
created by any member of the Xxxxxxx Group in his or her capacity as an
officer or director of the Company or any of its subsidiaries (other
than SEG))), registered in such names and amounts as set forth on Schedule
1 hereto;
(ii) the members of the Xxxxxxx
Stockholder Group shall deliver to the Company one or more certificates
representing the Transferred Shares free and clear of all Liens and
Restrictions (other than any arising pursuant to this Agreement or any
Additional Agreement or under federal or state securities laws or created by
the Company its subsidiaries, officers, directors or Affiliates (other than
SEG or any member of the Xxxxxxx Group));
(iii) each member of the Xxxxxxx Group
shall deliver to the Company one or more certificates or agreements (as
the case may be) representing the Transferred Options held by such
member free and clear of all Liens and Restrictions (other than any
arising pursuant to this Agreement or any Additional Agreement or under
federal or state securities laws or created by the Company);
(iv) the Xxxx X. Xxxxxxx Revocable
Living Trust shall have executed and delivered to the Company the Dismissal
Instrument (as hereinafter defined) which upon the filing thereof by the
Company shall effectively dismiss without prejudice the Delaware Action
(as hereinafter defined); and
(v) each of the Termination Agreement,
the Management Agreement, and the Transponder Agreement shall be executed and
delivered by each of the respective parties thereto.
2.2 Scope of Agreement Scope of AgreementScope of Agreement.
This Agreement is entered into solely to put to rest all controversy referred to
herein, to obtain a total and final settlement of all of the matters referred to
herein and to avoid the burden, expense, and hardship of protracted litigation
and dispute. Neither this Agreement, nor any of the terms hereof, nor any
negotiations or proceedings in connection herewith, shall constitute or be
construed as or be deemed to be evidence of an admission on the part of the
Company, any member of the Xxxxxxx Group or any of their respective Affiliates
(as hereinafter defined), or their respective officers, directors, partners
(general or limited), trustees, employees, representatives or agents (including,
without limitation, financial advisors) of any liability whatsoever, or of the
truth of any claim, allegation, or argument, including without limitation those
made before any court, or of any lack of merit in any of the defenses or
responses thereto asserted; nor shall this Agreement, or any of the terms
hereof, or any negotiations or proceedings in connection herewith, be offered or
received in evidence or used in any proceeding against any of the parties
hereto, their Affiliates, or their respective officers, directors, partners
(general or limited), trustees, employees, representatives or agents (including,
without limitation, financial advisors), except with respect to the enforcement
of this Agreement and the Additional Agreements (as hereinafter defined), or in
defense of any claim on this Agreement or any Additional Agreement.
2.3 Effects of Rescission. The Parties acknowledge and agree
that it is the intent of the Parties that if any material transaction
constituting the Transactions (as hereinafter defined) is declared null, void or
otherwise is avoided, rescinded or set aside, the Parties be restored to their
respective positions as existed prior to entering into this Agreement.
Accordingly, if at any time prior to the third anniversary of the Closing, a
court of competent jurisdiction issues a final order (which is not subject to
appeal by any party or with respect to which the time to appeal shall have
expired) in any action, suit or proceeding brought by a third party declaring
that any of the material transactions contemplated by and to be consummated
pursuant to this Agreement and each of the Additional Agreements are null, void
or are otherwise avoided, rescinded or set aside, then the Transactions shall be
rescinded and each party shall be effectively restored to its position
immediately prior to the Closing Date. Without limiting the generality of the
foregoing, (a) each party's rights and obligations under this Agreement and each
Additional Agreement shall be terminated, (b) the securities transferred by such
party at the Closing shall be returned to it, together with any and all
distributions in cash, securities, assets or other property made upon or in
respect of such transferred securities from the Closing to the date of such
return; and (c) all claims released hereunder by any party hereto shall be
revived and any statute of limitations or contractual limitations applicable to
such claim shall be restarted irrespective of whether such statute of
limitations or contractual limitation would have otherwise caused such claim to
expire. No party shall be required to return amounts paid to it by the other
with respect to services rendered during the period from the Closing Date to the
date the Transactions are declared null and void or are otherwise void,
rescinded or set aside, including, but not limited to, payments made in
accordance with the Transponder Agreement.
REPRESENTATIONS AND WARRANTIES
2.4 Representations and Warranties of the Company. Except as
set forth in the Company Disclosure Schedule (as hereinafter defined), the
Company represents and warrants to the Xxxxxxx Group as follows:
(a) (i) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as
now conducted and to own its assets and is duly qualified to transact
business as a foreign corporation in each state where such qualification is
necessary except where the failure to qualify (individually or in the
aggregate) will not have a Material Adverse Effect (as hereinafter defined)
on the Company or on the Transactions.
(ii) The Company has all requisite
corporate power and authority to execute and deliver this Agreement and
each Additional Agreement which it has or is required to execute and
deliver pursuant hereto and to consummate the Transactions.
(b) The Board of Directors (as hereinafter
defined) has approved the execution and delivery of this Agreement and each
of the Additional Agreements to which the Company is or shall become a
party. This Agreement has been, and each Additional Agreement to be
executed by the Company will be when executed and delivered by the Company,
duly executed and delivered by the Company, and assuming the due
execution and delivery of this Agreement and each Additional Agreement to
which a member of the Xxxxxxx Group is a party, this Agreement constitutes,
and each such Additional Agreement will constitute the legal, valid and binding
obligation of the Company enforceable in accordance with its terms.
(c) The execution and delivery by the Company
of this Agreement does not, and the execution and delivery of each Additional
Agreement to which it is a party will not, and the performance by the
Company of its obligations hereunder and thereunder and the consummation
of the Transactions will not:
(i) conflict with or violate the
Certificate of Incorporation or Bylaws of the Company;
(ii) require any consent, approval,
order or authorization of or other action by any Governmental Agency or
Authority (as hereinafter defined) or any registration, qualification,
declaration or filing with or notice to any Governmental Agency or
Authority in each case on the part of or with respect to such member, except
for filings under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), filings under the Securities Act of 1933, as amended
(the "Securities Act") and such approval of the FCC (as hereinafter
defined) (the "FCC Approval") as may be required under the Communications Act
of 1934, as amended (the "Communications Act"), as a result of the change
in control of the holder of the FCC licenses set forth on Schedule 2.02;
(iii) require, on the part of the
Company, any consent by or approval (including, without limitation, any
approval of the stockholders of the Company) or authorization of or notice
to any other Person (as hereinafter defined) (other than a Governmental
Agency or Authority), whether under any license or other Contract (as
hereinafter defined) or otherwise, which has not been obtained;
(iv) conflict with or result in any
violation or breach of or default (with or without notice or lapse of
time, or both) under, or create any rights of termination, cancellation or
acceleration in any Person under any material Contract to which the Company is
a party (any such conflict, violation, breach or default, a "Violation"); or
(v) result in a Violation of, under
or pursuant to any Law or Judgment (each as defined below) applicable to the
Company or by which it, or any of its material assets are bound or affected.
(d) As of the Closing Date, (i) the SEG Shares
delivered to the Xxxxxxx Group will be duly and validly issued and fully
paid and non-assessable and will constitute all of the issued and
outstanding capital stock of SEG, and no options, warrants or other
rights to acquire (collectively, "Rights") any capital stock of SEG from
the Company will be issued or outstanding, and (ii) the SEG Shares will be
free and clear of any Liens or Restrictions whatsoever (other than any
arising pursuant to this Agreement or any Additional Agreement or under
federal or state securities laws or created by any member of the Xxxxxxx
Group (except as created by any member of the Xxxxxxx Group in his or
her capacity as an officer or director of the Company or any of its subsidiaries
(other than SEG)).
(e) There is no action, suit, investigation
or proceeding, governmental or otherwise, pending or, to the best knowledge of
the Company threatened, against the Company or any of its subsidiaries
(including, but only to the best of the Company's knowledge, SEG) specifically
relating to, or the adverse resolution of which could reasonably be expected
to have a Material Adverse Effect on, the Transactions.
(f) Neither the Company nor its subsidiaries
(other than SEG) has entered into any agreement, individually or on behalf
of SEG, which would bind or obligate SEG or its assets with respect to the
performance of any obligations to third parties subsequent to the
Closing; provided, however, that no such representations or warranties
are made with respect to actions taken or agreements entered into by
members of the Xxxxxxx Group while they were employees of the Company.
(g) The Company has not, since September 25,
1996, entered into, and, to the best knowledge of the Company, its officers
and directors, the Company is not a party to, any material Contract which
binds SEG, any member of the Xxxxxxx Group or any of their respective assets
or properties, other than this Agreement and the Additional Agreements.
(h) As of the Closing Date, after giving
effect to the consummation of the Transactions, the Company is solvent,
has sufficient capital to operate its business and to meet its debts and other
obligations as they mature.
2.5 Representations and Warranties of the Xxxxxxx Group.
Except as set forth in the Xxxxxxx Group Disclosure Schedule (as hereinafter
defined), each member of the Xxxxxxx Group, severally and not jointly,
represents and warrants to the Company as follows:
(a) Such member, if applicable, is a trust duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, with all requisite power and authority to
execute and deliver this Agreement and each Additional Agreement which it has
or is required to execute or deliver pursuant hereto and to consummate the
Transactions, and there are no proceedings present or contemplated relating
to the liquidation or dissolution of such entity.
(i) Such member, if an individual, has full legal
capacity, right, powerand authority to execute and deliver this
Agreement and each Additional Agreement which he or she has or is
required to execute and deliver pursuant hereto and to consummate the
Transactions, and in the case of any member that is (x) an individual, the
consent or other approval of such member's spouse, if any, is not required
in connection with any of the foregoing or has been obtained or (y) a
trust, the consent of the beneficiaries thereof is not required or has
been obtained.
(b) Such member of the Xxxxxxx Group has
approved the execution and delivery of this Agreement and each of the
Additional Agreements to which such member is or shall become a party. This
Agreement constitutes, and each Additional Agreement to be executed by such
member of the Xxxxxxx Group will constitute, when executed and delivered
by such member, and assuming the due execution and delivery of this
Agreement and each Additional Agreement to which the Company is a party, the
legal, valid and binding obligation of such member of the Xxxxxxx Group,
enforceable in accordance with its terms.
(c) The execution and delivery by such member
of this Agreement does not, and the execution and delivery of each Additional
Agreement to which such member is a party will not, and the performance by such
member of its obligations hereunder and thereunder and the consummation
of the Transactions will not:
(i) if an entity, conflict with or
violate the trust agreement or other constituent document of such member;
(ii) require any consent, approval,
order or authorization of or other action by any Governmental Agency
or Authority or any registration, qualification, declaration or filing
with or notice to any Governmental Agency or Authority in each case on the
part of or with respect to such member, except for filings under the Exchange
Act, the Securities Act and such FCC Approval as may be required under the
Communications Act as a result of the change in control of the ownership of
the FCC licenses set forth on Schedule 2.02;
(iii) require, on the part of such member,
any consent by or approval (including, without limitation the approval of
the beneficiaries of any entity which is a trust) or authorization of or notice
to any other Person (other than a Governmental Agency or Authority), whether
under any license or other Contract or otherwise which has not been obtained;
(iv) create or result in any Violation
under any material Contract to which such member of the Xxxxxxx Group is a
party; or
(v) result in a Violation of, under
or pursuant to any Law or Judgment applicable to such member or by which such
member's material assets are bound or affected.
(d) There is no action, suit, investigation
or proceeding, governmental or otherwise, pending or, to the best knowledge
of such member threatened, against such member or, to the best knowledge of
such member, any other member of the Xxxxxxx Group or SEG specifically
relating to, or the adverse resolution of which could reasonably be expected
to have, a Material Adverse Effect on the Transactions.
(e) Such member has not (other than in such
member's capacity as a officer of the Company or any of its subsidiaries),
nor to the best knowledge of such member has SEG, entered into any agreement,
individually or on behalf of the Company or any of its subsidiaries (other
than SEG), which would bind or obligate the Company or its subsidiaries
(other than SEG) or their respective assets with respect to the performance
of any obligations to or for the benefit of any Affiliate of such member.
2.6 Representations and Warranties of the Xxxxxxx Stockholder
Group. Without limiting in any way, the representations and warranties made by
the members of the Xxxxxxx Group in Section 2.02, each member of the Xxxxxxx
Stockholder Group, severally and not jointly, represents and warrants to the
Company that:
(a) Such member understands that the SEG
Shares it is acquiring pursuant to this Agreement have not been registered
under the Securities Act nor qualified under any state securities laws, and
that they are being offered and sold pursuant to an exemption from such
registration and qualification based in part upon the representations of
the members of the Xxxxxxx Group contained herein.
(b) Such member is familiar with the business
and operations of the Company and SEG, has been furnished copies of such
materials regarding the Company or SEG as it has requested in writing, and has
been given the opportunity to obtain from the Company or SEG all information
that it has requested regarding the business of the Company and SEG.
(c) Such member has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment contemplated by this Agreement.
(d) Such member understands that it must bear
the economic risk of the investment contemplated hereby indefinitely unless
the SEG Shares are registered pursuant to the Securities Act or an exemption
from such registration is available, and unless the disposition of such
shares is qualified under applicable state securities laws or an exemption
from such qualification is available, and that neither the Company nor SEG
has any obligation to so register such securities, such member further
understands that there is no assurance that any exemption will allow it to
dispose of or otherwise transfer any or all of the SEG Shares in the amounts,
or at the times such member might propose; and such member is able to bear the
economic risk of his investment in SEG.
(e) Such member is acquiring the SEG Shares
solely for his own account for investment and not with a view toward resale,
transfer, or distribution thereof, nor with any present intention of
distributing the SEG Shares, no other Person has any Right with respect to
or interest in the Xxxxxxx Securities to be acquired by such member, nor
has such member agreed to give any Person any such interest or Right in the
future.
2.7 Representations and Warranties Regarding Transferred
Securities. Each member of the Xxxxxxx Stockholder Group and each other member
of the Xxxxxxx Group to whom Transferred Options have been granted, severally
and not jointly, represents and warrants to the Company that as of the Closing
Date, (a) such member will be the sole record and beneficial owner of the number
of Transferred Shares and Transferred Options set forth opposite such member's
name on Schedule 1, free and clear of all Liens and Restrictions whatsoever
(other than any arising pursuant to this Agreement or any Additional Agreement
or under federal or state securities laws or created by the Company, or other
Liens or Restrictions of the Company), and (b) such member will have no legal
obligation, absolute or contingent, to any Person (other than the Company
pursuant to this Agreement) to sell, transfer, assign, pledge or otherwise
encumber, directly or indirectly, the Transferred Securities, and no other
Person will have any Rights to acquire the Transferred Securities of such
member.
2.8 Representations and Warranties of the Xxxxxxx
Individuals. Each of the Xxxxxxx Individuals, severally and not jointly,
represents and warrants to the Company that:
(a) To the best knowledge of such Person, no
assets or property of the Company or its subsidiaries (including SEG) have
been removed by or on behalf of the Xxxxxxx Group or its Affiliates from
the offices or other facilities of SEG since November 20, 1996, other than
in the ordinary course of business.
(b) On January 2, 1997, SEG filed with the
FCC an application and all necessary supporting documentation in order to
obtain the FCC Approval (or provisional authority in lieu thereof), and have
heretofore delivered to the Company true and complete copies of such
application and all written communications related thereto.
(c) As of the Closing, this Agreement will
constitute, and each Additional Agreement executed by SEG will constitute,
assuming the due execution and delivery of this Agreement and each Additional
Agreement to which the Company is a party, the legal, valid and binding
obligation of SEG, enforceable in accordance with its terms.
COVENANTS
2.9 Conduct of SEG Business; Return of Property. Each of the
Xxxxxxx Individuals covenants and agrees to conduct the business of SEG and its
subsidiaries prior to the Closing only in the ordinary course, and the Company
covenants and agrees that, subject to the foregoing, it will not interfere with
the management or business of SEG prior to the Closing.
(a) SEG will, and each of the Xxxxxxx Individuals
covenants and agrees to cause SEG to return promptly after the date hereof
to the Company (at the Company's sole expense) all property of the Company in
its possession or control, if any. The Company covenants and agrees to
return to SEG (at the Company's sole expense) promptly following the
Closing Date all property of SEG in its possession or control, if any.
To the extent that following the Closing Date, SEG or the Xxxxxxx Group
discover property of the Company in its or their possession which was not
so returned, or the Company discovers property of SEG in its possession which
was not so returned, SEG, the Xxxxxxx Individuals or the Company, as the case
may be, shall return (at the Company's expense) such property promptly
following such discovery.
(b) Each of the Xxxxxxx Individuals covenants
and agrees that none of the assets or property of SEG will be removed by or on
behalf of the Xxxxxxx Individuals or their Affiliates from the offices or
facilities of SEG prior to the Closing, other than in the ordinary course of
business. The Company covenants and agrees that it will not remove any of the
assets or properties of SEG from the offices or facilities of SEG prior to the
Closing, other than in the ordinary course of business.
(c) The Company covenants and agree that
it will not resume or commence any physical or electronic surveillance
activities relating to the Xxxxxxx Group and/or SEG.
2.10 Affiliate Transactions and Contracts between the Company
and SEG. During the period from the date hereof to the Closing Date, neither the
Company, on the one hand, nor the members of the Xxxxxxx Group, on the other,
shall permit SEG or the Company, to enter into any Contract with any Person
which Contract would otherwise constitute an Affiliate Transaction (as
hereinafter defined), unless (a) the entering into of such Contract has been
approved by the Board of Directors of the Company and by the Xxxxxxx
Representative or (b)(i) the effectiveness of such Contract is conditioned upon
the occurrence of the Closing or such Contract will be terminable at the option
of the Company in the event of the termination of this Agreement, and (ii) prior
to the Closing or in the event such Contract is terminated prior to the Closing,
such Contract will not obligate SEG or the Company to take or refrain from
taking any action or paying or expending any funds or otherwise performing any
obligations, other than in the ordinary course of business. All Contracts
between the Company and its subsidiaries (other than SEG), on the one hand, and
any member of the Xxxxxxx Group, on the other, shall be terminated as of the
Closing Date and shall cease to be of any further force and effect; provided,
however, that the foregoing shall not be applicable to this Agreement or any
Additional Agreement or any other Contract referred to herein which specifically
states that the obligations thereunder are intended to survive the Closing.
2.11 Public Announcements. Except as otherwise required by
applicable Laws, rules or regulations, neither the Company, on the one hand, nor
any member of the Xxxxxxx Group, on the other, will make any public statement or
announcement concerning this Agreement or the Transactions without the prior
written consent of the other. To the extent that either the Company or any
member of the Xxxxxxx Group determines that any such statements or announcements
are required to be made by applicable Laws, rules or regulations, such
statements or announcements shall be subject to the prior approval (x) of the
Xxxxxxx Representative in the case of statements proposed to be made by the
Company, and (y) of the Company, in the case of statements proposed to be made
by any member of the Xxxxxxx Group, which approval shall not be unreasonably
delayed or withheld. Notwithstanding the foregoing, the Company and SEG shall
each be permitted (i) prior to the Closing to notify its customers with respect
to changes in operational matters (such as changes in transponder assignments)
which will be implemented prior to or immediately after the Closing and (ii)
following the Closing to notify its customers and suppliers of the change in
control resulting from the consummation of the Transactions; provided, that all
such notices shall not reference or include matters relating to the adverse
claims of the Parties.
2.12 Xxxxxxx Group Schedule 13D. Promptly following the
Closing and subject to applicable Law, the Xxxxxxx Group will amend its Report
on Schedule 13D in respect of the Company Common Stock, as amended, to reflect
the consummation of the Transactions.
2.13 Charter Indemnification and D&O Insurance. The Company
hereby reaffirms its obligations under all contracts and agreements relating to
indemnification, insurance and "hold harmless" obligations and those set forth
in its certificate of incorporation, by-laws and under Delaware law relating to
the indemnification of its and its subsidiaries' officers and directors,
including the Xxxxxxx Covered Persons (as defined below); provided, however,
that such reaffirmation shall constitute only a statement of the Company's
current obligations and shall not be construed as creating any additional
obligation or responsibility on the part of the Company or to give any Person
any additional rights or benefits other than those currently existing.
(a) The Company agrees (i) that it will
continue to indemnify the members of the Xxxxxxx Group who were officers or
directors of the Company or any of its subsidiaries ("Xxxxxxx Covered
Persons") (but, with respect to SEG, such persons shall be indemnified only
with respect to actions taken during the period from August 31, 1995 to the
Closing Date)(and advance to such Xxxxxxx Covered Persons their reasonable
expenses) in respect of actions taken while holding such positions in
accordance with the provisions set forth in the Certificate of
Incorporation and Bylaws of the Company, as in effect on the date hereof, and
(ii) to maintain in effect until the fifth anniversary of the Closing a policy
of Directors' and Officers' liability insurance ("D&O Insurance") providing
substantially the same coverage (other than as otherwise provided herein) as its
existing director and officer liability insurance policy (a copy of which has
been delivered to counsel for the Xxxxxxx Group), which D&O Insurance shall not
provide for coverage which discriminates between (x) the Xxxxxxx Covered
Persons, and (y) current or other former directors and officers of the Company.
Notwithstanding the foregoing, the Company's obligation to obtain and maintain
the D&O Insurance shall be subject to the following limitations:
(1) the coverage amount of the D&O Insurance
shall be not less than $5,000,000 during calendar years 1997 and 1998; and
(2) during calendar years 1999, 2000 and
during the year 2001 until the fifth anniversary of the Closing, the coverage
amount of the D&O Insurance shall be not less than the amount which is th
lesser of (x) $5,000,000 and (y) the coverage amount which can be purchased
by the Company for an annual premium which is equal to approximately $456,000.
The Company shall use its reasonable commercial efforts to cause the
provider of the D&O Insurance to provide a copy of all notices issued by such
provider in respect thereof directly to the Xxxxxxx Representative.
In the event the Company materially breaches or fails to perform
in any material respect its obligations under this Section 3.05(b), then,
provided that such breach or failure to perform is not directly attributable
to the actions or omissions of any member of the Xxxxxxx Group, then without
in any way limiting any right, power or remedy any member of the Xxxxxxx Group
may have hereunder, under any Additional Agreement, at law or in equity, the
provisions of Article 5 hereof shall, except as provided below, terminate and
be of no further force or effect; provided, however, that the Xxxxxxx Group's
obligations under Article 5 shall not be terminated in the event that within
ten (10) days of such breach, evidence of such cure reasonably satisfactory to
the Xxxxxxx Representative has been provided it, and following such breach and
prior to such cure no claim has been asserted against any Xxxxxxx Covered
Person which would have been covered by the indemnity to be provided or the
insurance to be purchased pursuant to this Section 3.05 had the Company not
breached its obligations hereunder.
(b) To the extent permitted under the D & O Insurance,
the Company agrees that it will permit Xxxxxx X. Xxxxxxx ("EMS") to purchase
such additional or extended coverage as EMS shall request regarding periods
following his resignation from the Board of Directors of the Company, provided
that EMS pays to the Company any incremental premium payable under such policy
in respect of such additional or extended coverage; and provided, further,
that such purchase of additional coverage does not have an adverse effect upon
the Company's ability to purchase and maintain D&O insurance reasonably
acceptable to it.
2.14 Cooperation regarding Subchapter S. At the request of the
Xxxxxxx Group, the Company shall use its reasonable commercial efforts to
cooperate so that SEG may reelect Subchapter S status under the Code (as
hereinafter defined).
2.15 Additional Obligations; Closing Documents. Each Party
agrees to use its commercially reasonable efforts to cause the Exchange to
qualify as a tax-free exchange under Section 355 of the Code. Each Party agrees
to cooperate fully with the Company's independent auditors in completing such
auditing firm's review of the financial statements of the Company and its
subsidiaries (including SEG) for the year ended December 31, 1996. SEG agrees to
keep accurate and complete records relating to the prior distribution, returns,
and current inventory of encoders and decoders on behalf of the Company and to
make such records available to the Company in connection with the return of such
encoders and decoders pursuant to Section 3.01. In addition, each Party agrees
to use its reasonable best efforts to provide the other Party with drafts of all
opinions, consents, waivers and releases as are to be obtained or provided by
such Party and delivered at the Closing no less than two (2) business days prior
to the proposed Closing Date. To the extent that a Party delivers to the other
Parties drafts of such opinions, consents, waivers or releases prior to Closing,
the receiving Party agrees to respond promptly with any comments or objections
thereto. To the extent that such Party does not so comment or object within two
(2) business days of receipt of any such opinion, consent, waiver or release,
such Party shall be deemed to have accepted such opinion, consent, waiver or
release in the form and substance so provided, and shall not be entitled to
assert a failure of a related condition to its obligation to close under Article
6 based upon such opinion, consent, waiver or release not being reasonably
acceptable to it so long as the opinion, consent, waiver or release delivered to
it at Closing is the same in form and substance as the draft previously
delivered to it.
2.16 Expenses. Except as provided herein, each Party shall
bear its own expenses in connection with the negotiation, execution and delivery
of this Agreement and the Additional Agreements and the consummation of the
Transactions contemplated hereby and thereby.
2.17 SIS Option. The members of the Xxxxxxx Group which are
parties to the SIS Option Agreement (as defined below) agree that their prior
exercise of the "put" under the SIS Option Agreement is deemed suspended as of
the date hereof and that prior to the Closing no such party to such agreement
shall take any action with respect to the SIS Option Agreement (or the exercise
of rights thereunder). At the Closing, the Company and the members of the
Xxxxxxx Group which are parties to the SIS Option Agreement agree to enter into
the Termination Agreement in the form of Exhibit A hereto conditionally
terminating the SIS Option Agreement (the "Termination Agreement").
2.18 Management Agreement and Transponder Agreement. At the
Closing, the Company and SEG agree to execute and deliver (a) the agreement
relating to the management of the FCC Licenses in the form of Exhibit B hereto
(or such other agreement as is customary under the circumstances and which is
reasonably acceptable to the parties) (the "Management Agreement") (to the
extent the FCC Approval has not been received by the Closing) and (b) the
transponder agreement in the form of Exhibit C hereto (the "Transponder
Agreement").
2.19 Termination of Employment Agreement and Guarantees. EMS,
Xxxx Xxxxxxx, Xxxx Xxxxxxx, and any other officers or employees of SEG who are
parties to this Agreement hereby agree (i) to the termination of any and all
guarantees by (or other obligations of) the Company of their respective
employment agreements with SEG, and each of such Persons and the Company agree
that all such guarantees or other obligations of the Company related to such
employment agreements will terminate and cease to be of any further force or
effect on and after the Closing (including any obligations of the Company
relating to severance or similar payments) and (ii) that prior to the Closing
such Person will not terminate such employment agreement or otherwise take any
action seeking to enforce the Company's guarantee of such employment agreement
or which would result in any liability of SEG or the Company for the payment of
any severance or other termination payments. The Company agrees that prior to
the Closing it will not take any action seeking to terminate or otherwise
enforce any rights it or SEG may have with respect to any of such employment
agreements, other than with respect to actions which would otherwise constitute
a breach of this Agreement or any Additional Agreement.
2.20 Certain Reimbursement Obligations. The Company covenants
and agrees to reimburse SEG for (i) the salary of Xx. Xxxxxx X. Xxxxxx
("Xxxxxx") at a rate of $16,187 per month from January 1, 1997 to the Closing
Date, (ii) rent on two New York City apartments currently leased by members of
the Xxxxxxx Group (having an aggregate monthly lease payment of $8,875) for the
period from January 1, 1997 to the expiration of the term of such leases (both
of which leases expire on February 28, 1997), (iii) the associated monthly
expenses related to such apartments (including the reasonable costs and expenses
of removing and shipping to such member of the Xxxxxxx Group the personal
property of such member remaining on such premises) and (iv) the reasonable
costs and expenses (including an appropriate apportionment of SEG employee
salary expenses) incurred by SEG on behalf of or for the benefit of the Company
since January 1, 1997, other than costs and expenses incurred in connection with
or related to the Transactions (including, but not limited to, expenses
(including salary expenses) related to the preparation of the Fairness Opinion
and the Solvency Opinion), in each case as deemed reasonable by Xxxxxx and to
the extent that SEG or the Xxxxxxx Group has actually made such payment (whether
by direct payment or as an apportionment of such an employee's salary based upon
the time spent on Company matters). For purposes of this Section 3.12(a), the
Company, SEG and the Xxxxxxx Group each agree to be bound by the reasonable
determinations of Xxxxxx with regard to any amounts owed. The amounts which the
Company is to pay to SEG in accordance with the foregoing reimbursement
obligation shall be offset against the amount which SEG is obligated to pay to
the Company in respect of its use of a transponder of the Company pursuant to
paragraph (c) of this Section 3.12.
(a) Except as provided in paragraph (a) of this Section
3.12, the Company shall not be obligated to pay, nor shall SEG be entitled
to charge against the intercompany amounts owed by it or its other
reimbursement obligations, any amounts in respect of salary, benefits,
severance obligations or other expenses relating to the employmentby the
Company or SEG of any member of the Xxxxxxx Group.
(b) SEG agrees, and the Xxxxxxx Individuals
hereby covenant and agree to cause SEG, to pay and reimburse the Company
for the use in SEG's business of one transponder (which is the subject of
the Transponder Agreement) (i) for the period from January 1, 1997 to the
earlier of January 31, 1997 or the Closing Date, at a rate of $40,000 per
month, and (ii) in the event that the Closing has not occurred by January 31,
1997, one transponder for the period from February 1, 1997 until the Closing
Date at a rate of $80,000 per month, all upon the terms and conditions set
forth in the Transponder Agreement.
2.21 Agreement to Cooperate; Consents; Further Assurances.
Subject to the terms and conditions of this Agreement, each of the Parties
hereto shall use its commercially reasonable best efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the Transactions, including, without limitation,
providing information and using reasonable efforts to obtain all necessary or
appropriate governmental and third party waivers, consents, approvals
(including, without limitation, the FCC Approval), and releases necessary for
the consummation of the Transactions, to effect all necessary registrations and
filings (including filings under federal and state securities law) and to lift
any injunctions or other legal bar to the Transactions (and, in such case, to
proceed with the Transactions as expeditiously as possible). The Xxxxxxx Group
acknowledges and agrees that it shall have primary responsibility for seeking
and obtaining the required FCC Approval, and the Company agrees to pay the
reasonable costs and expenses of the Xxxxxxx Group related to obtaining such FCC
Approval and to cooperate with the Xxxxxxx Group in obtaining the FCC Approval.
2.22 SEC Filings. The Company covenants and agrees that from
and after the date hereof it will promptly deliver to the Xxxxxxx Representative
copies of all periodic and other reports legally required to be filed by it
under the Exchange Act.
2.23 Guarantee of Imperial Bank Indebtedness. The Xxxxxxx
Group agrees that one or more members thereof, as necessary, will personally
guarantee SEG's indebtedness to Imperial Bank to the extent necessary to obtain
the release of the Company's guarantee of such indebtedness.
2.24 Stay of Delaware Action. Immediately following the
execution of this Agreement but, in any event, prior to the commencement of any
trial or hearing relating to the matters which are the subject of the Delaware
Action, the Xxxx X. Xxxxxxx Revocable Living Trust will, and the trustee of such
trust will cause it to, execute and deliver to the Company a written instrument
staying all proceedings (including, without limitation, hearings, motions,
discovery actions and depositions) in or related to the Delaware Action until
the first to occur of February 10, 1997 or the Closing Date (upon which date
such action shall be dismissed pursuant to the Dismissal Instrument), and the
Company agrees that it will execute and deliver a counterpart of such instrument
and will not take any action inconsistent therewith prior to the date of
termination of such stay. The Company and the Xxxx X. Xxxxxxx Revocable Living
Trust agree that upon the termination of such stay (other than in connection
with the dismissal of the Delaware Action pursuant to the Dismissal Instrument)
no court hearing or appearance will be scheduled to occur prior to the third
business day following the termination of such stay. Neither this Agreement nor
the execution hereof by the Xxxx X. Xxxxxxx Revocable Living Trust may be used
as evidence or as a basis in argument in the Delaware Action. In the event the
Closing does not occur and the stay contemplated by this Section 3.16 is
terminated (other than pursuant to the Dismissal Instrument), the execution of
this Agreement by the Xxxx X. Xxxxxxx Revocable Living Trust shall be without
prejudice to the rights of such trust in the Delaware Action.
2.25 COBRA Obligations of SEG. In connection with the
termination of Xxxxxx'x employment with SEG, SEG agrees to, and the Xxxxxxx
Individuals agree to cause SEG to, comply fully with its obligations to Xxxxxx
pursuant to the health benefit continuation provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA").
SETTLEMENT OF CLAIMS AND OTHER MATTERS
2.26 Release of Potential Claims or Action. Subject
to Section 1.03 hereof and except as otherwise specifically provided herein,
effective at the Closing:
(a) Each member of the Xxxxxxx Group and SEG, on
behalf of itself, its subsidiaries, officers, directors and employees, and
all of their respective agents, representatives, predecessors, successors,
assigns, heirs, trustees, executors and administrators (the "Xxxxxxx Group
Releasors") hereby irrevocably and forever release, discharge, waive,
relinquish and covenant not to xxx, directly or indirectly, derivatively or
otherwise, the Company or its subsidiaries or their irectors, officers,
partners (general or limited), employees, trustees, representatives or
agents (including, without limitation, financial advisors, lenders, counsel and
consultants)or any of their respective agents, representatives, predecessors,
successors, assigns, heirs, trustees, executors or administrators, and all
Persons acting in concert with any such Person (the "Company Releasees"),
with respect to any and all matters, proceedings, actions, causes of
action (including any that were actually asserted or which could have been
asserted), suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, extents, executions,
claims, charges and liabilities whatsoever, at law, equity or otherwise, which
the Xxxxxxx Group Releasors ever had, now have or hereafter can, shall or may
have, whether known or unknown, against any or all of the Company Releasees
for, upon or by reason of any matter, cause or thing whatsoever, from
the beginning of time to the date hereof, arising out of, relating to, or in
connection with: (i) the Merger and the Merger Agreement (as hereinafter
defined); (ii) the matters which are the subject of the Delaware Action (as
hereinafter defined); (iii) matters relating to the business of the Company
(including the management thereof); (iv) resolution of any intercompany
accounts or any other accounts between the Company and SEG and/or the members of
the Xxxxxxx Group; and (v) the employment by the Company or SEG of Xxxxxx or any
members of the Xxxxxxx Group (collectively, the "Released Matters"); provided,
however, that the releases set forth in this Section 4.01(a) shall not release,
discharge, waive, relinquish or be deemed a covenant not to xxx, directly,
derivatively or otherwise, on the part of any Xxxxxxx Group Releasor of any
Released Matters which are related to, based upon or arise from the breach by
any Company Released Party of any of its representations, warranties, covenants,
agreements or obligations set forth in this Agreement or in any Additional
Agreement.
(b) The Company, on behalf of itself, its
subsidiaries (other than SEG), officers, directors and employees, and all
of their respective agents, representatives, predecessors, successors,
assigns, heirs, trustees, executors and administrators (the "Company Releasors")
hereby release, discharge, waive, relinquish and covenant not to xxx,
directly or indirectly, derivatively or otherwise, any member of the
Xxxxxxx Group, SEG or any of their respective directors, officers, partners
(general or limited), employees, trustees, representatives or agents
(including, without limitation, financial advisors, counsel, lenders, and
consultants), or any of their respective agents, representatives,
predecessors, successors, assigns, heirs, trustees, executors and
administrators, and all Persons acting in concert with any such Person (the
"Xxxxxxx Releasees"), with respect to any and all matters, actions, causes of
action (including any that were actually asserted or which could have been
asserted), suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, claims, charges
and liabilities whatsoever, at law, equity or otherwise, which the Company
Releasors ever had, now have or hereafter can, shall or may have, whether known
or unknown, against any or all of the Xxxxxxx Releasees for, upon or by reason
of any matter, cause or thing whatsoever, from the beginning of time to the date
hereof, arising out of, relating to, or in connection with the Released Matters;
provided, however, that the releases set forth in this Section 4.01(b) shall not
release, discharge, waive, relinquish or be deemed a covenant not to xxx,
directly, derivatively or otherwise, on the part of any Company Releasor of any
Released Matters which are related to, based upon or arise from the breach by
any Xxxxxxx Released Party of any of their respective representations,
warranties, covenants, agreements or obligations set forth in this Agreement or
in any Additional Agreement.
(c) The Company, on the one hand, and each
member of the Xxxxxxx Group, on the other hand, hereby agree that from
and after the date hereof they will not encourage, solicit or voluntarily
assist any Person with respect to the institution, prosecution or
continuation of any lawsuits or claims, or encourage, solicit or
voluntarily assist any Governmental Agency or Authority with respect to the
institution, prosecution or continuation of any regulatory action or proceeding,
in which the other Party or its Affiliates or any of their respective officers
directors, partners (general or limited), trustees or agents, are
defendants that relate to or arise out of the Released Matters;
provided, however, that, any party hereto may respond to and cooperate with any
inquiry, action or proceeding from or by any Governmental Agency or Authority
(and such party shall not be required to take actions to contest any such
inquiry, action or proceeding, except as provided below); and provided, further,
that to the extent practicable, any party that is required to give information
in connection with any lawsuit or similar action, or which elects to respond or
cooperate as set forth in the previous proviso, shall, except to the extent
prohibited by Law, give the other parties prompt notice of any inquiry or action
relating to the foregoing (including, without limitation, copies of any
documents or letters relating to the foregoing) and an adequate opportunity to
seek appropriate protective relief.
(d) Notwithstanding anything in this Article
4 to the contrary, in the event that any claim, charge, action, cause of
action, suit, proceeding or demand of any type or description whatsoever is
brought by a third party (a "Third Party Claim") against any party hereto,
the releases set forth in Section 4.01(a) and Section 4.01(b) shall be deemed
to be waived, but only to the extent necessary, for the party subject to such
Third Party Claim to defend against it.
STANDSTILL PROVISIONS
2.27 Restrictions on Certain Actions by the Xxxxxxx Group.
Each of the members of the Xxxxxxx Group agrees that from the date hereof until
the second anniversary of the Closing such member will not, and such member will
cause each of its Affiliates, and the officers, directors, employees, partners
and trustees of such member or its Affiliates, not to, singly or as part of or
through a partnership, limited partnership or other "group" (as such term is
used in Section 13(d)(3) of the Exchange Act), directly or indirectly, through
one or more intermediaries or otherwise:
(a) purchase, in any way acquire or own, offer to
acquire, make any proposal to acquire or agree to acquire by purchase, or
become a pledgee of (any such act shall be encompassed by the term "Acquire"),
any Voting Securities (as defined below) or property of the Company (for
purposes of this Section 5.01, the foregoing shall be deemed to include the
direct or indirect acquisition of any Person or entity whose principal asset
consists, directly or indirectly, of Voting Securities or
other property of the Company), securities convertible into or exercisable or
exchangeable for Voting Securities or any securities granting the right to
acquire any securities convertible, exercisable or exchangeable for
Voting Securities (regardless of whether any such securities are then
convertible, exercisable or exchangeable), or any securities of the Company
representing a debt repayment obligation (including any non-recourse
obligations) of the Company (collectively, "Prohibited Securities"), except the
acquisition of products or services from the Company in the ordinary course of
business;
(b) participate in the formation, or encourage
the formation, of any Person which owns or seeks to Acquire Beneficial Ownership
of Prohibited Securities or seeks to Acquire any property of the Company,
except the acquisition of (i) products or services of the Company in the
ordinary course of business and (ii) any property (other than Prohibited
Securities) of the Company which the Company has publicly offered for sale;
(c) make, or in any way participate in,
directly or indirectly, any "solicitation" of "proxies" (as such terms are
defined or used in Regulation 14A under the Exchange Act) or become a
"participant" in any "election contest" (as such terms are defined or used
in Rule 14a-11 under the Exchange Act) with respect to the Company;
(d) initiate, propose or otherwise solicit
stockholders of the Company for the approval of one or more stockholder
proposals with respect to the Company or induce or attempt to induce any
other Person to initiate any stockholder proposal with respect to the Company;
(e) seek election to or seek to place a
representative on the Board of Directors of the Company or seek the removal
of any member of the Board of Directors of the Company;
(f) call or seek to have called any meeting of
the stockholders of the Company;
(g) otherwise act, directly or indirectly,
alone or in concert with others, to seek to control the management or Board
of Directors of the Company;
(h) (i) solicit, propose, seek to effect
or negotiate with the Company or any other Person with respect to (x) any
form of business combination transaction with the Company or any Affiliate
thereof, (y) any type of purchase, directly or indirectly, of any property of
the Company or any Affiliate thereof, except as provided in clauses (i) or
(ii) of paragraph (b) of this Section 5.01, or (z) any form of restructuring,
recapitalization or similar transaction with respect to the Company or any
Affiliate thereof, (ii) solicit, make or propose or negotiate with the
Company or any other Person with respect to, or announce an intent to make,
any tender offer or exchange offer for any Prohibited Securities, or
(iii) disclose an intent, purpose, plan or proposal with respect
to the Company or any Prohibited Securities inconsistent with the provisions of
this Section 5.01, including an intent, purpose, plan or proposal that is
conditioned on or would require the Company to waive the benefit of or amend any
provision of this Section 5.01; or
(ii) request the Company (or its
directors, officers, employees or agents), directly or indirectly, to
amend or waive any provision of this Section 5.01 (including this paragraph
(i)), otherwise seek any modification to or waiver of the agreements or
obligations of the members of the Xxxxxxx Group on behalf of themselves or any
of their respective Affiliates, officers, directors, employees, partners or
trustees under this Section 5.01 or take any action which might require the
Company to make a pubic announcement (other than upon execution of this
Agreement) regarding any matters specified in this Section 5.01.
Except as specifically provided to the contrary
in this Section 5.01 and provided that their acquisition of such Voting
Securities has not been made in breach or violation of this Section 5.01,
nothing herein shall prohibit or restrict the members of the Xxxxxxx Group,
their Affiliates and the officers, directors, employees, partners or trustees
of such member or its Affiliates from exercising the voting rights relating to
Voting Securities owned by any of them from time to time.
2.28 Termination of Standstill. (a) In the event (x) that a
Termination Event (as defined below) occurs and the default related thereto is
not effectively cured or waived within ten (10) business days of the date of
notice thereof or (y) of a Bankruptcy of the Company (as defined below), the
members of the Xxxxxxx Group shall be released from their obligations under
Section 5.01 and the provisions of Section 5.01 shall terminate and be of no
further force or effect. A "Termination Event" shall be deemed to have occurred
in the event that (i) prior to the termination of the Transponder Agreement,
AT&T Corporation ("AT&T") or any successor thereto providing transponder
services to the Company under the AT&T Transponder Services Agreement dated
February 7, 1995 (the "AT&T Agreement"), delivers notice to the Company that the
Company is in default under the AT&T Agreement or that an event has occurred
which, with notice or lapse of time or both, would constitute a default of the
Company under the AT&T Agreement, in any case which default would give AT&T the
right to cancel or suspend the transponder services provided to the Company
under the AT&T Agreement (an "AT&T Transponder Default"), or the Company
notifies AT&T that such an AT&T Transponder Default has occurred, or the
Company, in any reports filed with the SEC under the Exchange Act or otherwise,
admits that such an AT&T Transponder Default has occurred and is continuing, or
(ii) the Company, in any quarterly compliance certificate or report or any
required interim notice, certificate or report, delivers notice to the holder
(the "Senior Lender") of its senior secured indebtedness that the Company is in
default under the loan agreement relating to such indebtedness, or that any
event has occurred which, with notice or lapse of time or both would constitute
a default under such instrument, or the Senior Lender notifies the Company of
any such default, in any case which default would permit the Senior Lender to
accelerate payment of all such indebtedness (other than any such default which
relates to the failure of the Company to meet or maintain a financial
performance ratio or other financial test which default is not cured or waived
within ninety (90) days thereof ) or the Company, in any report filed with the
SEC under the Exchange Act or otherwise, admits that such a default has occurred
and is continuing (provided, that such an admission by the Company relating to
any such financial performance ratio or other financial test will not constitute
a Termination Event until the period for cure or to obtain a waiver referred to
above has ended).
(b) The Company hereby covenants and agrees
that, until the termination of the standstill provisions pursuant to this
Section 5.02, it will promptly deliver to the Xxxxxxx Representative any notice,
certificate or report received from AT&T or the Senior Lender and will send to
the Xxxxxxx Representative, simultaneously with dispatch of a notice,
certificate or report to AT&T or the Senior Lender, any notice, certificate
or report sent to AT&T or the Senior Lender referred to in Section 5.02(a)
above; provided, however that with respect to notices, certificates or
reports received from or delivered to AT&T, the foregoing obligation
shall be terminated upon the termination of the Transponder Agreement.
2.29 Limitation of Liability. Notwithstanding anything to the
contrary set forth herein, (a) the members of the Xxxxxxx Group, other than the
Xxxxxxx Individuals, shall not be liable for damages at law with respect to a
breach or violation of Section 5.01, but shall be liable solely for equitable
remedies, including, but not limited to, injunctions and (b) the Xxxxxxx
Individuals shall be liable for harm caused by themselves, in their individual
capacities, their Affiliates or other members of the Xxxxxxx Group both for
damages at law and for equitable relief and remedies, for any breach or
violation of Section 5.01.
CLOSING CONDITIONS
2.30 Conditions Precedent to the Obligation of the Xxxxxxx
Group. The obligation of SEG and the Xxxxxxx Group to consummate the
Transactions shall be subject to the satisfaction at or prior to the Closing
Date of each of the following conditions, as determined by the Xxxxxxx
Representative, any one or more of which may be waived by the Xxxxxxx
Representative, on behalf of SEG and the Xxxxxxx Group, in whole or in part, to
the extent permitted by applicable Law:
(a) The Company shall have performed and
complied in all material respects with the agreements, obligations and
covenants contained in this Agreement or in any other Additional Agreement
required to be performed and complied with by it at or prior to the Closing
Date, the representations and warranties of the Company set forth in this
Agreement or in any Additional Agreement to which it is a party shall if
specifically qualified by materiality, be true and correct and, if not so
qualified, be true and correct in all material respects, in each case,
as of the date of this Agreement or the date of such other Additional Agreements
(as the case may be) and as of the Closing Date, with the same force and effect
as though made at and as of the Closing Date (except as otherwise expressly
contemplated by this Agreement or such other Additional Agreements), and the
Xxxxxxx Group shall have received a certificate to such effect signed on behalf
of the Company by an executive officer of the Company.
(b) On the Closing Date, there shall be no
(i) injunction, writ or temporary, preliminary or permanent restraining
order, (ii) order issued by a court of competent jurisdiction or other
Governmental Agency or Authority the effect of which is to prevent or prohibit
the consummation of the Transactions shall be in effect, nor shall any
proceeding brought by a Governmental Agency or Authority seeking any of the
foregoing be pending.
(c) All corporate actions on the part of the
Company necessary to authorize (i) the execution, delivery and performance
of this Agreement and the Additional Agreements to which it is a party and
(ii) the consummation of the Transactions, shall have been duly and validly
taken and shall be in full force and effect. All such actions and all other
actions, proceedings, instruments and documents required to carry out the
Transactions and all other related legal matters shall have been reasonably
satisfactory to and approved by counsel for the Xxxxxxx Group and such
counsel shall have been furnished with such certified copies of
such corporate actions and proceedings (including copies or extracts from the
minutes of the Board of Directors relating to the Company's approval of the
execution and delivery of this Agreement and each of the Additional Agreements
to which the Company is or shall become a party (including the results of all
votes taken by the members of the Board on such matters), and such other
instruments and documents as it shall have reasonably requested.
(d) At the Closing, the Xxxxxxx Group shall
have received a copy of the Solvency Opinion (as hereinafter defined)
addressed to it and reasonably acceptable to it.
(e) Xxxxxx shall have resigned as an officer
of SEG and agreed with SEG to the termination of his employment agreement
with SEG, and delivered to SEG an instrument, in form and substance
reasonably acceptable to the Xxxxxxx
Representative, releasing SEG from any liability under such employment
agreement.
(f) Effective as of the Closing, all
directors or executive officers of the Company (other than members of the
Xxxxxxx Group) shall have resigned from the board of directors of SEG and its
subsidiaries.
(g) The Company shall have duly and validly
executed and delivered to the Xxxxxxx Group each Additional Agreement to be
executed and delivered by the Company, each of which shall be in full force
and effect at the Closing.
(h) The receipt of the SEG Shares by the
members of the Xxxxxxx Group will not result in the recognition of gain or
loss by the members of the Xxxxxxx Group.
(i) The Company shall have delivered to the
Xxxxxxx Representative a release or other evidence reasonably satisfactory
to it that the holder of the Company's senior indebtedness has released
any Lien or Restriction in its favor encumbering the SEG Shares.
(j) SEG or the members of the Xxxxxxx Group,
as applicable, shall have received a release of its obligation as guarantor
or obligor under the Contracts listed on Schedule 6.01(j) hereto, each such
release to be reasonably acceptable to the Xxxxxxx Representative.
(k) Either (i) SEG shall have received the
FCC Approval or a provisional approval of the FCC, in each case reasonably
acceptable to it or (ii) the Company and SEG shall have entered into the
Management Agreement.
(l) The Xxxxxxx Representative shall have
received (i) a copy of the existing policy relating to D & O Insurance for
the calendar year 1997, and (ii) a copy of a letter from the Company to the
carrier issuing such policy instructing such carrier to provide to the Xxxxxxx
Representative a copy of all notices issued by such carrier to the Company in
respect of such policy.
2.31 Conditions Precedent to the Obligation of the Company.
The obligation of the Company to consummate the Transactions shall be subject to
the satisfaction at or prior to the Closing Date of each of the following
conditions, any one or more of which may be waived by the Company, in whole or
in part, to the extent permitted by applicable Law:
(a) SEG and each member of the Xxxxxxx Group
shall have performed and complied in all material respects with their
respective agreements, obligations and covenants contained in this
Agreement or in any Additional Agreement required to be performed and complied
with by it or such member at or prior to the Closing Date, the respective
representations and warranties of SEG and the Xxxxxxx Group set forth in this
Agreement or in any Additional Agreement to which it is a party shall, if
specifically qualified by materiality or knowledge, be true and correct and,
if not so qualified, be true and correct in all material respects
as of the date of this Agreement or such other Additional Agreement (as the case
may be) and as of the Closing Date, with the same force and effect as though
made at and as of the Closing Date (except as otherwise expressly contemplated
by this Agreement or such other Additional Agreements), and the Company shall
have received a certificate to that effect signed on behalf of SEG by its
President and on behalf of the Xxxxxxx Group by the Xxxxxxx Representative.
(b) On the Closing Date, there shall be no
(i) injunction, writ or temporary, preliminary or permanent restraining
order, (ii) order issued by a court of competent jurisdiction or other
Governmental Agency or Authority the effect of which is to prevent or prohibit
the consummation of the Transactions shall be in effect, nor shall any
proceeding brought by a Governmental Agency or Authority seeking any of the
foregoing be pending.
(c) All corporate, partnership, trust or
other actions on the part of each member of the Xxxxxxx Group necessary to
authorize (i) the execution, delivery and performance of this Agreement and
the other Additional Agreements to which the members of the Xxxxxxx Group
are parties and (ii) the consummation of the Transactions, shall have been
duly and validly taken and shall be in full force and effect. All such actions
and all other actions, proceedings, instruments and documents required to
carry out the Transactions and all other related legal matters shall have
been reasonably satisfactory to and approved by counsel for the Company and
such counsel shall have been furnished with such certified copies of such
actions and proceedings and such other instruments and documents as it shall
have reasonably requested (including but not limited to, evidence relating
to such approvals by each of the Xxxxxxx Trusts and of the signing
authority of any trustee executing this Agreement or any Additional Agreement).
(d) The Termination Agreement shall have duly
and validly executed and delivered by each Person who is a party to the SIS
Option Agreement, and the Termination Agreement shall be in full force and
effect at the Closing.
(e) The Company shall have received a release
of its obligations as (i) guarantor under SEG's credit facilities with
Imperial Bank or any other financial institutions, (ii) guarantor or
obligor under the Contracts listed on Schedule 6.02(e) and (iii) guarantor
under any employment agreements relating to employees of SEG (including
any obligations relating to severance payments to SEG employees), each such
release to be reasonably acceptable to the Company.
(f) The Special Committee of the Company
Board of Directors shall have received an opinion (the "Fairness Opinion"),
reasonably acceptable to it, dated the Closing Date, from Xxxxxxx Xxxxxx &
Company, Inc. (or another investment banking firm retained by the Company and
reasonably acceptable to the Special Committee and the Xxxxxxx Group),
that the terms of the Transactions are fair, from a financial point of view,
to the Company's stockholders (other than the members of the Xxxxxxx Group).
(g) The Company shall have received an
opinion (the "Solvency Opinion") reasonably acceptable to it, dated as
of the Closing addressed to both the Company and the Xxxxxxx Group, from
Xxxxxxxx Xxxxx (or another investment banking or appraisal firm retained by
the Company and reasonably acceptable to the Xxxxxxx Group) to the effect
that, as of the Closing Date, and assuming that the Refinancing is consummated
simultaneously with the Closing, the Company is solvent, and has sufficient
capital to conduct its business and to meet its debts and other obligations
as they mature.
(h) Effective as of the Closing, EMS shall
have resigned from the Board of Directors of the Company and each member
of the Xxxxxxx Group shall have resigned from the board of directors of
each subsidiary of the Company (other than SEG) of which he or she is a
member and as an officer or employee of the Company and each such subsidiary.
(i) The receipt of the Transferred Shares by
the Company will not result in the recognition of gain or loss by the Company.
(j) At the Closing, counsel for the Xxxx
Xxxxxxx Revocable Living Trust will deliver to the Company's Delaware
counsel a duly executed stipulation in the form of Exhibit D hereto (the
"Dismissal Instrument") dismissing without prejudice the action brought
by Xxxx Xxxxxxx, as trustee of the Xxxx Xxxxxxx Revocable Living Trust,
in the Delaware Chancery Court filed on November 14, 1996, bearing civil
action No. 15349NC (the "Delaware Action").
(k) Each member of the Xxxxxxx Group shall
have duly and validly executed and delivered to the Company each
Additional Agreement to which such member is a party, each of which shall be
in full force and effect at the Closing.
(l) SEG shall have executed and delivered each
Additional Agreement to which it is a party.
(m) The Company shall have obtained a release
from the holder of the Company's senior indebtedness of any Lien or
Restriction encumbering the SEG Shares in favor of such holder.
(n) Either (i) the Company shall have received
the FCC Approval or a provisional approval of the FCC, in each case reasonably
acceptable to it or (ii) the Company and SEG shall have entered into the
Management Agreement.
2.32 Closing Documents. In the event that a draft of any
opinion, consent, waiver or release to be delivered at the Closing has been
supplied to a party in accordance with Section 3.07 and the receiving Party has
either (x) acknowledged that such document is acceptable to it or (y) failed to
comment upon or otherwise register an objection pursuant to Section 3.07, then
such party shall be deemed to have approved the form and substance of such
opinion, consent, waiver or release (an "Approved Closing Document") and,
subject to the delivery of the Approved Closing Document at the Closing, such
receiving Party's related condition to Closing in Section 6.01 or 6.02 above
shall be deemed satisfied.
INDEMNIFICATION
2.33 Indemnification by the Xxxxxxx Group. Subject to written
notice of such claim for indemnification being delivered to the Xxxxxxx
Representative within the appropriate survival period referred to in Section
9.04, the members of the Xxxxxxx Group, severally and not jointly, and SEG, each
covenant and agree to indemnify, defend and hold harmless the Company and its
directors, officers, employees, agents, successors and assigns from and against
any and all losses, costs, liabilities, damages, and expenses (including
reasonable legal fees, expert fees and other expenses incident thereto) of every
kind, nature, and description (collectively "Losses"), that result from or arise
out of (a) the breach of any representation or warranty made by such member of
the Xxxxxxx Group or, in the case of the Xxxxxxx Individuals, SEG, set forth in
this Agreement, any Additional Agreement or in any certificate, schedule, or
other instrument delivered to the Company pursuant hereto or thereto in any
material respect or (b) the breach of or failure to perform any covenant or
agreement of such member of the Xxxxxxx Group or, in the case of the Xxxxxxx
Individuals, SEG, contained in this Agreement or in any Additional Agreement in
any material respect.
2.34 Indemnification by the Company. Subject to written notice
of such claim for indemnification being delivered to the Company within the
appropriate survival period set forth in Section 9.04, the Company agrees to
indemnify, defend and hold harmless SEG, each member of the Xxxxxxx Group, and
their respective directors, officers, employees, agents, successors and assigns,
from and against (a) all Losses incurred by such member that result from or
arise out of any breach of any representation or warranty made by the Company
set forth in this Agreement, any Additional Agreement or in any certificate,
schedule, or other instrument delivered to the Xxxxxxx Group or SEG pursuant
hereto or thereto in any material respect or (b) the breach of or failure to
perform any covenant or agreement of the Company contained in this Agreement or
in any Additional Agreement in any material respect.
2.35 Claims for Indemnification. Whenever any claim shall
arise for indemnification under Section 7.01, 7.02 or 7.05, the party entitled
to indemnification (the "Indemnified Party") shall promptly notify in writing
the party obligated to provide indemnification (the "Indemnifying Party") of the
claim and, when known, the facts constituting the basis for such claim; such
written notice shall be a condition precedent to any liability of the
Indemnifying Party hereunder. In the event of any claim for indemnification
hereunder resulting from or in connection with any claim or legal proceedings by
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the liability arising therefrom.
2.36 Claims Procedure. Except as provided in Section 7.05, in
connection with any claim giving rise to indemnity hereunder resulting from or
arising out of any claim or legal proceeding by a Person who is not a party to
this Agreement, the Indemnifying Party at its sole cost and expense and with
counsel reasonably satisfactory to the Indemnified Party may, upon written
notice to the Indemnified Party, assume the defense of any such claim or legal
proceeding if (a) the Indemnifying Party acknowledges to the Indemnified Party
in writing, within fifteen (15) days after receipt of notice from the
Indemnifying Party, its obligation to indemnify the Indemnified Party with
respect to all elements of such claim, (b) the Indemnifying Party will have the
financial resources to defend against such third-party claim and fulfill its
indemnification obligations hereunder, (c) the third-party claim involves only
money damages and does not seek an injunction or other equitable relief, or (d)
settlement or an adverse Judgment of the third-party claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a pattern or
practice adverse to the continuing business interests of the Indemnified Party.
The Indemnified Party shall be entitled to participate in (but not control) the
defense of any such action, with its counsel and at its own expense; provided,
however, that if there are one or more legal defenses available to the
Indemnified Party that conflict with those available to the Indemnifying Party,
or if the Indemnifying Party fails to take reasonable steps necessary to defend
diligently the claim after receiving notice from the Indemnified Party that it
believes the Indemnifying Party has failed to do so, the Indemnified Party may
assume the defense of such claim; provided, further, that the Indemnified Party
may not settle such claim without the prior written consent of the Indemnifying
Party, which consent may not be unreasonably withheld. If the Indemnified Party
assumes the defense of the claim, the Indemnifying Party shall reimburse the
Indemnified Party for the reasonable fees and expenses of counsel retained by
the Indemnified Party and the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such claim, with its counsel and
at its own expense. The parties agree to render, without compensation, to each
other such assistance as they may reasonably require of each other in order to
insure the proper and adequate defense of any action, suit or proceeding,
whether or not subject to indemnification hereunder.
2.37 Special Indemnification Relating to Transactions. The
Company agrees to indemnify and hold SEG and the members of the Xxxxxxx Group
harmless from any Losses incurred by them which result from or arise out of any
suits, actions or claims of the Company's shareholders or other third parties
based upon or arising out of the Transactions and, subject to the provisions of
paragraph (b) the Company shall reimburse each of the Xxxxxxx Group and SEG for
their reasonable expenses (including, subject to Section 7.05(b), reasonable
attorneys' fees to the extent provided below) relating to the defense of such
action.
(a) If any action or proceeding shall be
brought or asserted against SEG or any member of the Xxxxxxx Group for which
indemnity may be sought from the Company, such Person or Persons shall promptly
notify the Company in writing. If there is no conflict in the defense of such
action between the Xxxxxxx Group, on the one hand, and other named parties
to such action, on the other hand, as more specifically provided for below,
the Company shall assume the defense of such action, including the employment
of counsel, which counsel shall be reasonably acceptable to the Xxxxxxx Group.
The Xxxxxxx Group shall have joint client status with the Company with respect
to the defense of such action, provided that the Xxxxxxx Representative
shall be the only member of the Xxxxxxx Group authorized to interface with the
counsel defending such action. If the Xxxxxxx Group wishes to retain its own
outside counsel, it may do so at its own sole cost and expense. If there are
one or more legal defenses available to SEG and the members of the Xxxxxxx
Group which are named parties to such action that conflict with those
available to the Company or the other Persons named in such action which the
Company is obligated to indemnify, SEG and the Xxxxxxx Group may employ a
single separate counsel and the Company shall reimburse SEG and the Xxxxxxx
Group for the reasonable fees and expenses of such counsel thereof. In
clarification of the foregoing, the Company shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings arising out of the same general allegations or
circumstances be liable for the reasonable fees and expenses of more than one
separate firm of attorneys representing the Xxxxxxx Group and SEG collectively.
In the event that the Company and the Xxxxxxx Group shall in good faith disagree
as to the existence of such a conflict of interest, then the parties agree that
they shall cause such issues to be resolved by expedited arbitration in the
County of Los Angeles before a retired judge who is mutually acceptable to the
Company and the Xxxxxxx Representative, in accordance with the Rules of the
American Arbitration Association for expedited commercial arbitration. The
determination of such arbitrator shall be binding upon the Parties with respect
to the existence of such conflict. Neither SEG nor the Xxxxxxx Group shall
settle any action, suit or matter for which indemnification is claimed under
this Section 7.05 without the prior written consent of the Company which consent
may not be unreasonably withheld.
TERMINATION
2.38 Termination Prior to Closing.
(a) If the Closing has not occurred by February
10, 1997, either the Company or the Xxxxxxx Representative may terminate
this Agreement at any time thereafter by giving written notice of termination
to the other; provided, however, that no Party may terminate this Agreement
if such Party has willfully or materially breached any of the terms and
conditions hereof.
(b) Prior to February 10, 1997:
(i) the Company may terminate this
Agreement (x) following the insolvency or bankruptcy of SEG, or (y) if any one
or more of the conditions to Closing set forth in Section 6.02 shall become
incapable of fulfillment by any member of the Xxxxxxx Group or SEG or there
shall have occurred a material breach of this Agreement by any member of the
Xxxxxxx Group or SEG and either such condition or breach shall not have been
waived by the Company or cured by SEG or such member of the Xxxxxxx Group
within five (5) days after notice; and
(ii) the Xxxxxxx Representative may
terminate this Agreement (x) following the insolvency or bankruptcy of the
Company or (y) if any one or more of the conditions to Closing set forth in
Section 6.01 shall become incapable of fulfillment by the Company or
there shall have occurred a material breach of this Agreement by the Company
and either such condition or breach shall not have been waived by the Xxxxxxx
Representative, or cured within five (5) days after notice.
2.39 Consequences of Termination. Upon termination of this
Agreement pursuant to this Article 8 or any other express right of termination
prior to Closing provided elsewhere in this Agreement, the Parties shall be
relieved of any further obligation to the others pursuant to this Agreement;
provided, however, that no termination of this Agreement, pursuant to this
Article 8 hereof or under any other express right of termination provided
elsewhere in this Agreement, shall operate to release any party from any
liability to any other party incurred before the date of such termination or
from any liability resulting from any willful misrepresentation made in
connection with this Agreement or willful breach hereof.
MISCELLANEOUS
2.40 Entire Agreement. This Agreement and the Additional
Agreements, together with all Schedules and Exhibits hereto and thereto,
constitutes the entire understanding of the parties with respect to the
Transactions. The parties agree that any obligations or liabilities of the
parties under the Xxxxxxx Letter (as hereinafter defined) are hereby terminated.
2.41 Amendment, etc. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto. At
any time prior to the Closing, the parties hereto may, (a) extend the time for
the performance of any of the obligations or other acts or the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered by any of the other parties
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein which are for the benefit of such party. Any
agreement on the part of a Party hereto to any such extension or waiver shall be
valid if set forth in an instrument in writing signed by such Party (or in the
case of the Xxxxxxx Group, the Xxxxxxx Representative).
2.42 Expenses. Except as otherwise provided herein and
notwithstanding any contrary provision contained in the Xxxxxxx Letter, the
Company and the Xxxxxxx Group shall each pay its own expenses incident to the
negotiation, preparation, and carrying out of this Agreement and each of the
Additional Agreements, including all fees and expenses of its counsel and
accountants for all activities of such counsel and accounts undertaken pursuant
to this Agreement, irrespective of whether or not the Transactions are
consummated.
2.43 Survival of Representations and Warranties. All
statements contained in this Agreement, any Additional Agreement or in any
certificate delivered by or on behalf of the Company, SEG or any member of the
Xxxxxxx Group pursuant hereto or thereto, or in connection with the Transactions
shall be deemed representations and warranties by the Company, SEG or such
member, as the case may be, hereunder or thereunder. All representations and
warranties made by the Company, SEG or any member of the Xxxxxxx Group in this
Agreement, any Additional Agreement, or pursuant hereto or thereto, shall
survive the Closing of the Transactions, but shall terminate two years from the
Closing Date; provided, however, that (i) the representations and warranties in
Section 2.01(d) and Section 2.04 shall survive the Closing until the termination
of the applicable statute of limitations, and (ii) the representation and
warranty made by the Xxxxxxx Individuals in Section 2.05(a) as to the assets or
property of SEG shall terminate upon the Closing.
2.44 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any manner the meaning or
interpretation of this Agreement.
2.45 Severability. If any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable, the remaining
provisions shall remain in full force and effect.
2.46 Counterparts. For the convenience of the parties, any
number of counterparts of this agreement may be executed by the parties, and
each such executed counterpart will be an original instrument.
2.47 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement and all legal
process in regard to this Agreement will be validly given, made or served, if in
writing and delivered personally, by telecopy (except for legal process) or sent
by registered mail postage paid, if to the Company at:
Spice Entertainment Companies, Inc.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Chief Executive Officer
with a separate copy addressed to the General Counsel.
and to the Xxxxxxx Group as indicated in Schedule 1, with a separate
copy to Xxxxx Xxxxx, Esq., Paul, Hastings, Xxxxxxxx & Xxxxxx, LLP, 000 Xxxxx
Xxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, or to such other address or
telecopy number as any party, from time to time, designates in a written notice
given in a like manner. Notice by telecopy shall be deemed delivered on the day
telephone confirmation of receipt is given. Notice given by mail as set out
above shall be deemed delivered five business days after the date the same is
postmarked.
2.48 Successors and Assigns. This Agreement may not be
assigned (either voluntarily or involuntarily) by any party hereto without the
express written consent of the other party. Any attempted assignment in
violation of this Section shall be void and ineffective for all purposes. In the
event of an assignment permitted by this Section, this Agreement shall be
binding upon the heirs, successors and assigns of the parties hereto. There
shall be no third party beneficiaries of this Agreement (other than the Xxxxxxx
Covered Persons and Persons entitled to indemnity pursuant to Article 7 of this
Agreement).
2.49 Governing Law. This Agreement will be governed
by and construed and enforced in accordance with the internal laws of the
State of Delaware, without giving effect to the conflict of law
principles thereof.
2.50 Specific Enforcement. The parties hereto agree that money
damages would not be a sufficient remedy for any breach of this Agreement
because of the difficulty of ascertaining the amount of damage that will be
suffered in connection therewith, that the non-breaching parties would be
irreparably damaged in the event any provision of this Agreement is not
performed in accordance with its specific terms or were otherwise breached and
that the non-breaching parties shall be entitled to equitable relief (including
injunction and specific performance) in any action instituted in any court of
the United States or any state thereof having subject matter jurisdiction, as a
remedy for any material breach or to prevent any material breach of this
Agreement. Such remedies shall not be deemed to be exclusive remedies for a
breach or anticipatory breach of this Agreement, but shall be in addition to all
other remedies available at law or equity.
2.51 Binding Effect. Notwithstanding the failure of certain
members of the Xxxxxxx Group to execute and deliver this Agreement on the date
hereof, upon the execution and delivery of this Agreement by the Company, Xxxxxx
X. Xxxxxxx and the Xxxx X. Xxxxxxx Revocable Living Trust, the provisions of
Section 3.16 shall be binding upon such parties.
DEFINITIONS
2.52 Definitions For purposes of this Agreement, the following
terms shall have the meanings specified below unless the context otherwise
requires:
Acquire: As defined in Section 5.01(a).
Additional Agreements: The Dismissal Instrument,
the Termination Agreement, the Management Agreement, the Transponder
Agreement and the Xxxxxx Agreement.
Affiliate: With respect to any Person, (i)
any other Person that directly or indirectly through one or more
intermediaries Controls, is Controlled by or is under common Control with
such Person and (ii) any other Person in which such Person holds directly
or indirectly, fifty percent or more of the equity economic interests.
Affiliate Transaction: shall mean any agreement,
arrangement or understanding between the Company, SEG or their respective
subsidiaries, on the one hand, and any member of the Xxxxxxx Group or their
respective Affiliates, on the other.
Agreement: This Settlement Agreement and the
Schedules and Exhibits attached hereto.
AT&T: As defined in Section 5.02.
Bankruptcy of the Company: Shall, for purposes of Article 5 of this
Agreement, be deemed to have occurred upon the happening of any of the
following: (x) a court having appropriate jurisdiction in the premises shall
enter a decree or order for relief in respect of the Company in an involuntary
case under Title 11 of the United States Code entitled "Bankruptcy" (as now or
hereafter in effect, or any successor thereto, the "Bankruptcy Code") or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or any other similar relief shall be granted under any applicable
federal or state law; or (y)(i) an involuntary case shall be commenced against
the Company under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; (ii) a decree or order of a court having jurisdiction in
the premises shall be entered for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over the
Company or over all or substantially all of its property; or (iii) the
involuntary appointment shall occur of an interim receiver, trustee or other
custodian of the Company for all or substantially all of its property; and, in
the case of any event described in this clause (y), such event shall continue
for sixty (60) days unless dismissed, bonded or discharged; or (z)(i) an order
for relief shall be entered with respect to the Company in, or the Company shall
commence, a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or (ii)
the Company shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or substantially all of its
property, or (iii) the Company shall make a general assignment for the benefit
of creditors.
Beneficially Own and Beneficial Ownership: With
respect to any securities shall mean having beneficial ownership as determined
pursuant to Rule 13d-3 under the Exchange Act including pursuant to any
agreement, arrangement or understanding, whether or not in writing.
Board of Directors: The Board of Directors of the
Company.
Closing; Closing Date: As defined in Section
1.01(b).
COBRA: As defined in Section 3.17.
Code: The Internal Revenue Code of 1986, as
amended.
Communications Act: As defined in Section 2.01(c).
Company: As defined in the introductory paragraph
of this Agreement.
Company Common Stock: The common stock, par value
$.01 per share, of the Company.
Company Disclosure Schedule: As set forth on
Schedule 2.01 hereto.
Company Releasees: As defined in Section 4.01(a).
Company Releasors: As defined in Section 4.01(b).
Confidential Information: As defined in Section 9.12.
Contract: Any agreement, contract, license,
indenture, lease, mortgage, license, plan, arrangement, commitment or
instrument (whether written or oral).
D&O Insurance: As defined in Section 3.05.
Delaware Action: As defined in Section 6.02(j).
Dismissal Instrument: As defined in Section 6.02 (j).
EMS: As defined in Section 3.08.
Xxxxxx: As defined in Section 3.12.
Exchange: As defined in Section 1.01(a).
Exchange Act: As defined in Section 2.01(c).
Fairness Opinion: As defined in Section 6.02(f).
FCC: The United States Federal Communications
Commission, or any successor United States governmental agency.
FCC Approval: As defined in Section 2.01(c).
Governmental Agency or Authority: Any nation or
government, any state, or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
Indemnified Party: As defined in Section 7.03(a).
Indemnifying Party: As defined in Section 7.03(a).
Judgment: Any judgment, writ, order or decree of
or by any court, judge, justice or magistrate, including any bankruptcy
court or judge, and any order of or by any other Governmental Agency or
Authority.
Knowledge: With respect to a party's awareness
of the presence or absence of a fact, event or condition shall mean (i) actual
knowledge plus, if different, (ii) the knowledge that would be obtained if
such party conducted itself faithfully and exercised sound discretion in the
management of his own affairs.
Law: The common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other standard,
requirement or procedure enacted, adopted, applied or followed by any
Governmental Agency or Authority (including any court), including, without
limitation, any of the foregoing enacted or adopted prior to the Closing Date
with an effective date on or after the Closing Date.
Lien: Any mortgage, pledge, lien, encumbrance,
charge, adverse claim or restriction of any kind affecting title or resulting
in an encumbrance against property, real or personal, tangible or intangible,
or a security interest of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, any third party
option or other agreement to sell and any filing of or agreement to give,
any financing statement under the Uniform Commercial Code (or equivalent
statute) of any jurisdiction).
Losses: As defined in Section 7.01.
Material Adverse Effect: With respect to a party
means an adverse change which would in the aggregate have a material adverse
effect on the assets, liabilities (whether absolute, accrued, contingent or
otherwise), condition (financial or otherwise), results of operations, or
business on a consolidated or combined basis of such party.
Merger: The merger of SEG with and into a wholly
owned subsidiary of the Company pursuant to the Merger Agreement.
Merger Agreement: The Merger Agreement and Plan
of Reorganization, dated August 9, 1995 by and among the SEG, EMS, the
Company and Newco SEG, Inc.
Party; Parties: As the context requires, either
or both of the Company or the Xxxxxxx Group, collectively.
Person: Any individual, partnership, joint venture,
corporation, trust, incorporated organization, Governmental Agency or Authority
or any other entity that would be deemed to be a "person" under Section 13(d)(3)
of the Exchange Act.
Proceeding: Any political, legal or administrative
action, proceeding, investigation or controversy.
Prohibited Securities: As defined in Section
5.01(a).
Released Matters: As defined in Section 4.01(a).
Restrictions: With respect to any capital stock
or other security, any voting or other trust or agreement, option, warrant,
escrow arrangement, proxy, buy-sell agreement, power of attorney or other
Contract, arrangement or understanding, any Judgment or any Law (other than
the Securities Act and customary securities or "blue sky" laws of any
jurisdiction restricting the transfer of securities) which, conditionally or
unconditionally, (i) grants to any Person the right to purchase or otherwise
acquire, or obligates any Person to sell or otherwise dispose of or issue,
or otherwise results or, whether upon the occurrence of any event or with
notice or lapse of time or both or otherwise, may result in any Person
acquiring, (x) any of such capital stock or other security; (y) any of
the proceeds of, or any distributions paid or which are or may become payable
with respect to, any of such capital stock or other security; or (z) any
interest in such capital stock or other security or any such proceeds or
distributions; (ii) restricts or, whether upon the occurrence of any event or
with notice or lapse of time or both or otherwise, may restrict the transfer or
voting of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of ownership of, any such capital stock or other security or
any such proceeds or distributions; or (iii) creates or, whether upon the
occurrence of any event or with notice or lapse of time or both or otherwise,
may create a Lien or purported Lien on such capital stock or other security,
proceeds or distributions.
Rights: As defined in Section 2.01(e).
SEC: The Securities and Exchange Commission.
Securities Act: As defined in Section 2.01(c).
SEG: As defined in the introductory paragraphs to
the Agreement.
SEG Shares: As defined in Section 1.01(a).
SIS: United Transactive Systems, Inc. (formerly
known as Xxxxxxx Information Systems, Inc.)
SIS Option: As defined in Section 3.09.
SIS Option Agreement: The letter agreement
dated as of August 14, 1995, as amended August 30, 1995, by and among the
Company, The Xxxxxxx Family Revocable Trust, Xxxx X. Xxxxxxx, Xxxx X.
Xxxxxxx and Xxxxx X. Xxxxxxx relating to the stock of SIS.
Solvency Opinion: As defined in Section 6.02(g).
Xxxxxxx Group: As defined in the introductory
paragraph of the Agreement, which term shall be deemed to include each of
EMS and Xxxxx Xxxxxxx, both individually and as trustee of the Xxxxxxx
Family Revocable Trust, and Xxxx X. Xxxxxxx, both individually and as
trustee of the Xxxx X. Xxxxxxx Revocable Living Trust.
Xxxxxxx Group Disclosure Schedules: As set forth
on Schedule 2.02 hereto.
Xxxxxxx Group Releasees: As defined in Section 4.01(b).
Xxxxxxx Group Releasors: As defined in Section 4.01(a).
Xxxxxxx Individuals: Xxxxxx X. Xxxxxxx and Xxxx
X. Xxxxxxx.
Xxxxxxx Letter: Letter dated January 12, 1997
executed by the Company and the Xxxxxxx Representative.
Xxxxxxx Representative: The member of the Xxxxxxx
Group appointed by the Xxxxxxx Group to represent such Group in connection
with the Transactions. Xxxxxx X. Xxxxxxx shall be the initial Xxxxxxx
Representative until notice to the contrary executed by the members of the
Xxxxxxx Group shall be delivered to the Company as provided herein.
Xxxxxxx Stockholder Group: The Xxxxxxx Trusts,
Xxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx, collectively.
Xxxxxxx Trusts: The Xxxxxxx Family Revocable
Trust and the Xxxx X. Xxxxxxx Revocable Living Trust.
Termination Agreement: As defined in Section 3.09.
Third Party Claim: As defined in Section 4.01(d).
Transactions: All of the transactions contemplated
by and to be consummated pursuant to this Agreement and each of the Additiona
Agreements.
Transferred Options: As defined in Section 1.01(a).
Transferred Securities: As defined in Section
1.01(a).
Transferred Shares: As defined in Section 1.01(a).
Transponder Agreement: As defined in Section 3.10.
Violation: As defined in Section 2.01(c).
Voting Securities: At any time shares of any
class of capital stock of the Company which are then entitled to vote
generally in the election of directors.
2.53 Terms Generally. The definitions in Sections 10.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
The words "herein", "hereof" and "hereunder" and words of similar import refer
to this Agreement (including the Exhibits and Schedules) in its entirety and not
to any part hereof unless the context shall otherwise require. All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed references
to Articles and Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require. The article and section headings
contained in this Agreement are solely for purposes of reference, are not part
of the agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available. Unless the
context shall otherwise require, any references to any statute or regulation are
to it as amended and supplemented. Any reference in this Agreement to a "day" or
number of "days" (without the explicit qualification of "business") shall be
interpreted as a reference to a calendar day or number of calendar days. If any
action or notice is to be taken or given on or by a particular calendar day, and
such calendar day is not a business day, then such action or notice shall be
deferred until, or may be taken or given on, the next business day.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first referred to above.
SPICE ENTERTAINMENT COMPANIES, INC.
By:/s/ J. Xxxxx Xxxxxxx
--------------------------------
J. Xxxxx Xxxxxxx, Chairman and
Chief Executive Officer
XXXXXXX ENTERTAINMENT GROUP, INC.
By:/s/Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx, President
/s/Xxxxxx X. Xxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxx
/s/Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
/s/Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
XXXXXXX REVOCABLE FAMILY TRUST
By:/s/Xxxxxx X. Xxxxxxx
-------------------------------
Xxxxxx. X. Xxxxxxx, Trustee
By:/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx, Trustee
XXXX X. XXXXXXX REVOCABLE LIVING TRUST
By:/s/ Xxxx X. Xxxxxxx
--------------------------------
Xxxx. X. Xxxxxxx, Trustee
