EXHIBIT 7(c)
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STOCK PURCHASE AGREEMENT
by and among
PRIMEDIA INC.,
LIBERTY MEDIA CORPORATION
and
LIBERTY DIGITAL, INC.
dated as of March 29, 2000
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TABLE OF CONTENTS
Page
ARTICLE I AGREEMENT TO SELL AND PURCHASE................................... 2
SECTION 1.1 Authorization of Shares................................. 2
SECTION 1.2 Sale and Purchase....................................... 2
SECTION 1.3 The Option.............................................. 3
SECTION 1.4 The Post-Option......................................... 4
ARTICLE II CLOSING, DELIVERY AND PAYMENT.................................... 6
SECTION 2.1 Closing................................................. 6
SECTION 2.2 Closing Deliveries and Payment for the Shares
and the LDIG Purchase Shares............................... 6
SECTION 2.3 Closing Deliveries and Payment for the Option
or the Post-Option......................................... 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 10
SECTION 3.1 Organization, Good Standing and Qualification.......... 10
SECTION 3.2 Subsidiaries........................................... 11
SECTION 3.3 Capitalization; Voting Rights.......................... 11
SECTION 3.4 Requisite Power and Authority.......................... 12
SECTION 3.5 SEC Reports; Financial Statements...................... 13
SECTION 3.6 Undisclosed Liabilities................................ 13
SECTION 3.7 Affiliate Agreements................................... 14
SECTION 3.8 Absence of Certain Changes............................. 14
SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc.. 14
SECTION 3.10 Intellectual Property................................. 15
SECTION 3.11 Compliance with Law; Other Instruments................ 15
SECTION 3.12 Litigation............................................ 16
SECTION 3.13 Tax Matters........................................... 16
SECTION 3.14 Employees............................................. 16
SECTION 3.15 Environmental and Safety Laws......................... 17
SECTION 3.16 Offering Valid........................................ 18
SECTION 3.17 Permits............................................... 18
SECTION 3.18 No Broker............................................. 18
SECTION 3.19 Organization, Good Standing and Qualification of PBV.. 18
SECTION 3.20 Investment Representations............................ 18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER............... 19
SECTION 4.1 Requisite Power and Authority.......................... 19
SECTION 4.2 Investment Representations............................. 19
SECTION 4.3 Litigation............................................. 20
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Page
SECTION 4.4 No Broker.............................................. 20
ARTICLE V REPRESENTATIONS AND WARRANTIES OF LIBERTY
DIGITAL................................................... 20
SECTION 5.1 Organization, Good Standing and Qualification.......... 20
SECTION 5.2 Subsidiaries........................................... 21
SECTION 5.3 Capitalization; Voting Rights.......................... 21
SECTION 5.4 Authorization; Binding Obligations..................... 22
SECTION 5.5 SEC Reports; Financial Statements...................... 22
SECTION 5.6 Undisclosed Liabilities................................ 23
SECTION 5.7 Affiliate Agreements................................... 23
SECTION 5.8 Absence of Certain Changes. ........................... 23
SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc.. 23
SECTION 5.10 Intellectual Property................................. 24
SECTION 5.11 Compliance with Law; Other Instruments................ 24
SECTION 5.12 Litigation............................................ 25
SECTION 5.13 Tax Matters........................................... 25
SECTION 5.14 Employees............................................. 25
SECTION 5.15 Environmental and Safety Laws......................... 26
SECTION 5.16 Offering Valid........................................ 26
SECTION 5.17 Permits............................................... 26
SECTION 5.18 No Broker............................................. 26
ARTICLE VI ADDITIONAL AGREEMENTS..................................... 27
SECTION 6.1 Access................................................. 27
SECTION 6.2 Efforts................................................ 27
SECTION 6.3 Regulatory and Other Authorizations; Notices and
Consents.................................................. 28
SECTION 6.4 Transfer Restrictions.................................. 28
SECTION 6.5 Registration Rights.................................... 30
SECTION 6.6 Further Strategic Relationships........................ 31
SECTION 6.7 Adjustment to the Option Purchase Price or
the Post-Option Purchase Price............................ 31
SECTION 6.8 Public Announcements................................... 31
SECTION 6.9 Confidentiality........................................ 31
SECTION 6.10 No-Solicitation....................................... 32
SECTION 6.11 Formation of PBV; IPO................................. 32
SECTION 6.12 Listing of Shares in PBV.............................. 33
ARTICLE VII CONDITIONS TO CLOSING..................................... 33
SECTION 7.1 Purchase Closing Conditions............................ 33
SECTION 7.2 Option Closing Conditions.............................. 38
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ARTICLE VIII MISCELLANEOUS............................................. 40
SECTION 8.1 Other Definitions...................................... 40
SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial...... 41
SECTION 8.3 Successors and Assigns; Assignment..................... 41
SECTION 8.4 Entire Agreement; Supersedes Prior Agreement........... 41
SECTION 8.5 Severability........................................... 41
SECTION 8.6 Amendment and Waiver................................... 41
SECTION 8.7 Delays or Omissions.................................... 41
SECTION 8.8 Notices................................................ 42
SECTION 8.9 Expenses............................................... 43
SECTION 8.10 Titles and Subtitles.................................. 43
SECTION 8.11 Termination........................................... 43
SECTION 8.12 Counterparts; Execution by Facsimile Signature........ 43
Schedules
Schedule 3.3(d) Company's Capitalization
Schedule 3.13 Company's Tax Matters
Schedule 5.13 Liberty Digital Tax Letter
Exhibits
Exhibit A -- Form of Registration Rights Agreement
Exhibit B -- Warrant Term Sheet
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
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March 29, 2000, among PRIMEDIA INC., a Delaware corporation (the "Company"),
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LIBERTY MEDIA CORPORATION, a Delaware corporation ("Purchaser"), and LIBERTY
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DIGITAL, INC., a Delaware corporation and a majority owned Subsidiary (as
defined herein) of Purchaser ("Liberty Digital").
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RECITALS
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WHEREAS, the Company has authorized the sale and issuance to Purchaser of
an aggregate of 8,000,000 shares of the Company's common stock, par value $0.01
per share (the "Common Stock"), and the issuance of warrants (the "Warrants") to
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purchase initially up to 1,500,000 shares of Common Stock, on the terms and
conditions set forth herein;
WHEREAS, Purchaser desires to purchase from the Company 8,000,000 shares
of Common Stock and the Warrants, on the terms and conditions set forth herein;
WHEREAS, the Warrants will be issued pursuant to a warrant agreement (the
"Warrant Agreement") with the terms described in Exhibit B hereto and with such
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other terms and conditions as the Company and Purchaser shall agree and which
shall be in form and substance reasonably satisfactory to the Company and
Purchaser;
WHEREAS, in connection with the sale of the Common Stock by the Company to
Purchaser, the Company has agreed to grant to Purchaser an option to purchase
membership units representing 12.5% of the issued and outstanding membership
units as of the Option Closing Date (as defined herein) in PRIMEDIA Broadband
Video, LLC, a Delaware limited liability company and a wholly owned Subsidiary
of the Company ("PBV"), and, if the Option Closing Date does not occur for the
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reasons described in Section 1.3(d) hereof, the Company has agreed to grant to
Purchaser the Post-Option (as defined herein) with respect to PBV;
WHEREAS, Purchaser desires to obtain each such option, on the terms and
conditions set forth herein; and
WHEREAS, the Company desires to issue and sell such shares of Common Stock
and the Warrants to Purchaser and grant each such option to Purchaser on the
terms and conditions set forth herein;
WHEREAS, Liberty Digital has authorized the sale and issuance to the
Company of an aggregrate of 625,000 shares of Liberty Digital's Series A Common
Stock, par value $.01 per share (the "LDIG Common Stock"), on the terms and
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conditions set forth herein;
WHEREAS, the Company desires to purchase from Liberty Digital 625,000
shares of LDIG Common Stock, on the terms and conditions set forth herein; and
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WHEREAS, Liberty Digital desires to issue and sell such shares of LDIG
Common Stock to the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants hereinafter set forth, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
AGREEMENT TO SELL AND PURCHASE
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SECTION 1.1 Authorization of Shares. (a) The Company has authorized the
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sale and issuance to Purchaser of 8,000,000 shares of Common Stock (the
"Shares") and the issuance to Purchaser of the Warrants. The shares of Common
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Stock issuable upon the exercise of the Warrants shall be referred to herein as
the "Warrant Shares".
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(b) Liberty Digital has authorized the sale and issuance to the Company of
625,000 shares of LDIG Common Stock (the "LDIG Purchase Shares").
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SECTION 1.2 Sale and Purchase. (a) Subject to the terms and conditions
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hereof, the Company hereby agrees to issue and sell to Purchaser (or its
designee; provided, that such designee is a direct or indirect wholly owned
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Subsidiary of Purchaser and agrees to be bound by all of the terms and
provisions of this Agreement and the applicable Registration Rights Agreement
(as defined herein) that are applicable to Purchaser; and provided, further,
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that Purchaser shall not be relieved of liability for any of its obligations
hereunder) and Purchaser hereby agrees to purchase (or cause such designee to
purchase) from the Company for cash, the Shares, free and clear of any
Encumbrances (as defined below) (other than those (x) imposed by the federal or
state securities laws or (y) placed thereon by or on behalf of Purchaser), at a
purchase price of $25.00 per Share for an aggregate purchase price of
$200,000,000 (the "Share Purchase Price"). In connection with the purchase of
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the Shares, the Company hereby agrees to issue to Purchaser (or its designee),
on the Purchase Closing Date (as defined herein), the Warrants.
(b) Subject to the terms and conditions hereof, Liberty Digital hereby
agrees to issue and sell to the Company (or its designee; provided, that such
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designee is a direct or indirect wholly owned Subsidiary of the Company and
agrees to be bound by all of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable to the Company; and
provided, further, that the Company shall not be relieved of liability for any
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of its obligations hereunder) and the Company hereby agrees to purchase (or
cause such designee to purchase) from Liberty Digital for cash, the LDIG
Purchase Shares, free and clear of any Encumbrances (other than those (x)
imposed by the federal or state securities laws or (y) placed thereon by or on
behalf of the Company), at a purchase price of $40.00 per LDIG Purchase Share
for an aggregate purchase price of $25,000,000 (the "LDIG Share Purchase
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Price").
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SECTION 1.3 The Option. (a) In connection with the purchase of the Shares,
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the Company hereby grants to Purchaser an irrevocable option (the "Option") to
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purchase a number of membership units representing 12.5% of the issued and
outstanding membership interests in PBV as of the Option Closing Date (as
defined herein) (the "PBV Units"), at a purchase price (the "Option Purchase
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Price") equal to the fair market value of the PBV Units on the date that
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Purchaser delivers an Option Notice to the Company, payable, at Purchaser's
option, in (i) cash, (ii) shares of LDIG Common Stock or (iii) shares of Liberty
Media Group Class A Common Stock, par value $.01 per share (the "Liberty Media
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Common Stock"). For the purposes of this Section 1.3(a), the "fair market value"
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of the PBV Units will be negotiated by the parties hereto in good faith. The
Option Purchase Price shall be subject to adjustment as provided in Section 6.7.
(b) The Option may be exercised by Purchaser at any time commencing on the
Purchase Closing and ending at midnight on the date which is ninety (90) days
after the Purchase Closing (the "Option Expiration Date"). Purchaser may assign
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its right to exercise the Option to Liberty Digital, in which case, Liberty
Digital shall assume all of the rights and obligations of Purchaser hereunder
with respect to the Option.
(c) In the event Purchaser wishes to exercise the Option, Purchaser shall
send a written notice to the Company of its intention to exercise the Option, in
whole but not in part (the "Option Notice"), specifying (A) whether the Option
Purchase Price will be paid in cash, LDIG Common Stock or Liberty Media Common
Stock, and (B) the place, time and date (the "Option Closing Date") of the
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closing of such purchase (the "Option Closing"), which date shall not be less
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than three (3) business days and not more than five (5) business days from the
date on which the conditions specified in Section 7.2 hereof are satisfied or
waived, or within such other time frame as the Company and Purchaser may
mutually agree. Within five (5) business days of the delivery of the Option
Notice, (i) (x) if Purchaser elects to pay the Option Purchase Price with cash,
Purchaser shall deliver a certificate to the Company, executed by an authorized
officer of Purchaser, containing representations and warranties in the form set
forth in Article IV, with appropriate changes to reflect the fact that Purchaser
is purchasing the PBV Units, (y) if Purchaser elects to pay the Option Purchase
Price with LDIG Common Stock, Purchaser shall deliver a certificate to the
Company, executed by an authorized officer of Purchaser (any certificate
delivered pursuant to clause (x) or (y), the "Liberty Certificate"), containing
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representations and warranties with respect to Liberty Digital and its
Subsidiaries and the LDIG Shares (as defined below) substantially in the form
set forth in Article V and the representations contained in Section 4.2, or (z)
if Purchaser shall elect to pay the Option Purchase Price with Liberty Media
Common Stock, Purchaser shall (1) execute the Liberty Certificate solely with
respect to the representations in the form set forth in Section 4.2 and (2)
cause AT&T Corp., a New York corporation ("AT&T"), to deliver a certificate to
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the Company, executed by an authorized officer of AT&T (the "AT&T Certificate"),
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containing representations and warranties with respect to AT&T in substantially
the form of those contained in Sections 5.1, 5.3(e), 5.4, 5.5, 5.11 and 5.16,
with appropriate modifications to reflect the fact that AT&T is issuing shares
of Liberty Media Common Stock and entering into the applicable Registration
Rights Agreement, and (ii) the Company shall deliver a certificate to Purchaser,
executed by an authorized officer of the Company (the "Company Certificate"),
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containing representations and
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warranties in the form set forth in Sections 3.16 and if Purchaser does not
elect to pay the Option Purchase Price with cash, 3.20 hereof.
(d) In the event that the parties cannot agree on the fair market value of
the PBV Units by the later of (x) the Option Expiration Date or (y) 30 days
after the date of the Option Notice, all rights of Purchaser with respect to the
Option shall expire and terminate and, except as described in Section 1.4,
Purchaser shall have no further rights to purchase PBV Units or any other
interest in PBV.
SECTION 1.4 The Post-Option. (a) In the event that the Option terminates
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pursuant to Section 1.3(d), the Company hereby grants to Purchaser, as of the
date of such termination, an irrevocable option (the "Post-Option") to purchase
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a number of membership units (or an equivalent amount of common stock or other
equity in PBV, if PBV is not a limited liability company at that time) that
would give Purchaser a percentage equity interest in the issued and outstanding
membership units (or common stock or other equity) in PBV equal to the
percentage equity interest that Purchaser would have owned in PBV on the date of
the Post- Option Notice (as defined below) had Purchaser exercised the Option
(the "Post-Option PBV Units"), at a purchase price (the "Post-Option Purchase
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Price") equal to the fair market value of the Post-Option PBV Units (determined
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as described in Section 1.3(a)) on the date that Purchaser delivers a
Post-Option Exercise Notice (as defined below) to the Company, payable, at
Purchaser's option, in (i) cash, (ii) shares of LDIG Common Stock or (iii)
shares of Liberty Media Common Stock. The Post-Option Purchase Price shall be
subject to adjustment as provided in Section 6.7.
(b) The Company hereby agrees to notify Purchaser of its intention to file
documents relating to an initial public offering of PBV (the "Post-Option
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Notice") at least 120 days in advance of the date on which the Company, in good
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faith, anticipates filing such documents. The Post-Option may be exercised by
Purchaser at any time commencing on the date on which Purchaser receives the
Post-Option Notice and ending on midnight of the date which is thirty (30) days
after such date. Purchaser may assign its right to exercise the Post-Option to
Liberty Digital, in which case Liberty Digital shall assume all of the rights
and obligations of Purchaser hereunder with respect to the Post-Option.
(c) In the event Purchaser wishes to exercise the Post-Option, Purchaser
shall send a written notice to the Company of its intention to exercise the
Post-Option, in whole but not in part (the "Post-Option Exercise Notice"),
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specifying (A) whether the Post-Option Purchase Price will be paid in cash, LDIG
Common Stock or Liberty Media Common Stock and (B) the place, time and date (the
"Post-Option Closing Date") of the closing of such purchase (the "Post-Option
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Closing"), which date shall not be less than three (3) business days and not
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more than five (5) business days from the date on which the conditions specified
in Section 7.2 hereof (as modified as set forth in clause (f) below) are
satisfied or waived, or within such other time frame following satisfaction of
such conditions as the Company and Purchaser may mutually agree. Within five (5)
business days of the delivery of the Post-Option Exercise Notice, (i) the
Company shall deliver to Purchaser a certificate, signed by an authorized
officer of the Company (the "Post-Option Company Certificate"), containing (x)
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representations and warranties with respect
5
to PBV and the Post-Option PBV Units substantially similar in scope to those
provided by the Company as to itself and its Subsidiaries and the Shares in
Article III (with such changes as are necessary to reflect that PBV is not a
public company and is a consolidated Subsidiary of the Company) and (y)
representations substantially similar to those contained in Sections 3.16 and if
Purchaser does not elect to pay the Post-Option Purchase Price with cash, 3.20
hereof, and (ii) (x) if Purchaser elects to pay the Post-Option Purchase Price
with cash, Purchaser shall deliver a certificate to the Company, executed by an
authorized officer of Purchaser (any certificate delivered pursuant to clause
(x) or (y), the "Post-Option Liberty Certificate"), containing representations
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and warranties in the form set forth in Article IV, with appropriate changes to
reflect the fact that Purchaser is purchasing the Post-Option PBV Units, (y) if
Purchaser elects to pay the Post-Option Purchase Price with LDIG Common Stock,
Purchaser shall deliver a certificate to the Company, executed by an authorized
officer of Purchaser, containing representations and warranties with respect to
Liberty Digital and its Subsidiaries and the Post- Option LDIG Shares (as
defined below) substantially in the form set forth in Article V and Section 4.2,
or (z) if Purchaser shall elect to pay the Post-Option Purchase Price with
Liberty Media Common Stock, Purchaser shall (1) execute the Post-Option Liberty
Certificate solely with respect to the representations in the form set forth in
Section 4.2 and (2) cause AT&T Corp., a New York corporation ("AT&T") to deliver
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a certificate to the Company, executed by an authorized officer of AT&T (the
"AT&T Certificate"), containing representations and warranties with respect to
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AT&T in substantially the form of those contained in Sections 5.1, 5.3(e), 5.4,
5.5, 5.11 and 5.16, with appropriate modifications to reflect the fact that AT&T
is issuing shares of Liberty Media Common Stock and entering into the applicable
Registration Rights Agreement. If Purchaser or Liberty Digital exercises the
Post-Option, its officers, employees, auditors and other agents, shall be given
not less than 30 days to negotiate the Post-Option Purchase Price with the
Company, during which time they shall be afforded the opportunity, during normal
business hours, (i) to discuss with the officers and employees of the Company
and PBV the affairs, finances, accounts, assets and operations of PBV and (ii)
to review such financial, operating and other data as they may reasonably
request. All such information shall be subject to the confidentiality provisions
contained in Section 6.1(b). The parties shall use their good faith efforts to
agree upon the Post-Option Purchase Price as promptly as reasonably practicable
after the Company's delivery of the Post-Option Notice.
(d) At such time as the Company delivers the Post-Option Notice to
Purchaser, the parties shall perform the covenants set forth in Sections 6.2,
6.3, 6.4(d) and (e) and 6.5 (substituting the terms "Post-Option Closing,"
"Post-Option Closing Date," "Post-Option PBV Units" and "Post-Option LDIG
Shares" or "Post-Option Liberty Media Shares," if applicable for the terms
"Option Closing," "Option Closing Date," "PBV Units" and "LDIG Shares" or
"Liberty Media Shares", if applicable, respectively) to the extent necessary to
permit Purchaser to purchase, and the Company to sell, the Post-Option PBV Units
and, if applicable, the Company to acquire the Post-Option LDIG Shares or the
Post-Option Liberty Media Shares as promptly as reasonably practicable after the
determination of the Post-Option Purchase Price.
(e) Notwithstanding the foregoing, the Post-Option will expire, and the
Company will no longer have any obligations under this Section 1.4, on the
earlier to occur of (i) the date on which an initial public offering of PBV is
consummated or (ii) the second anniversary of the
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Purchase Closing Date; provided, that the Company has timely complied with its
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obligations pursuant to Section 1.4(b), and provided further, that the
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Post-Option shall not expire pursuant to this Section 1.4(e) if the Post-Option
Notice has been delivered by the Company unless, within 30 days of the delivery
of such notice, Purchaser has not delivered the Post-Option Exercise Notice or
if Purchaser has delivered such notice within the applicable period, the
Post-Option Closing fails to occur within 90 days of the delivery of such
notice, in which case, the Post- Option shall expire on such later date.
(f) The obligations of Purchaser to purchase, and the Company to sell, the
Post-Option PBV Units shall be subject to satisfaction (or waiver by the
appropriate party) of the conditions set forth in Section 7.2, modified as
follows:
(i) the terms "Post-Option Closing," "Post-Option Closing
Date," "Post-Option PBV Units" and "Post-Option LDIG Shares" or
"Post-Option Liberty Media Shares", if applicable, shall be substituted
for the terms "Option Closing," "Option Closing Date," "PBV Units" and
"LDIG Shares" or Liberty Media Shares", if applicable, respectively; and
(ii) the representations and warranties of the Company, on
the one hand, and Purchaser or AT&T, as the case may be, on the other hand,
to be made at the Post-Option Closing shall be those delivered by each of
the Company and Purchaser (and, if applicable AT&T) to the other within
five business days of the Company's receipt of the Post-Option Exercise
Notice as described in Section 1.4(c).
ARTICLE II
CLOSING, DELIVERY AND PAYMENT
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SECTION 2.1 Closing. The closing of the sale and purchase of the Shares
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and the LDIG Purchase Shares under this Agreement (the "Purchase Closing" and,
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together with the Option Closing and the Post-Option Closing, each a "Closing")
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shall take place on the fifth business day after the satisfaction or waiver of
the conditions set forth in Section 7.1 hereof, at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other time or place as the Company, Purchaser and Liberty Digital may mutually
agree (such date for the purchase of the Shares and the LDIG Purchase Shares is
hereinafter referred to as the "Purchase Closing Date" and, together with the
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Option Closing Date and the Post Option Closing Date, each a "Closing Date").
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SECTION 2.2 Closing Deliveries and Payment for the Shares and the LDIG
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Purchase Shares. (a) At the Purchase Closing, subject to the terms and
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conditions hereof, the Company shall deliver to Purchaser:
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(i) a certificate or certificates evidencing the Shares, free
and clear of any Encumbrances (other than those (x) imposed by federal or
state securities laws or (y) placed thereon by or on behalf of Purchaser),
registered in the name of Purchaser (or its designee; provided, that such
designee is a direct or indirect wholly owned Subsidiary of Purchaser and
agrees to be bound by all of the terms and provisions of this Agreement and
the applicable Registration Rights Agreements(s) that are applicable to
Purchaser; and provided, further, that Purchaser shall not be relieved of
liability for any of its obligations hereunder);
(ii) a receipt for the Share Purchase Price; and
(iii) an executed counterpart of the Warrant Agreement and
executed certificates in the form attached to the Warrant Agreement,
evidencing the Warrants; and
(iv) the certificates and other documents required to be
delivered pursuant to Section 7.1(a).
(b) At the Purchase Closing, subject to the terms and conditions hereof,
Purchaser shall deliver to the Company:
(i) the Share Purchase Price by wire transfer of immediately
available funds to an account designated by the Company at least two
business days prior to the Purchase Closing Date;
(ii) a receipt for the Shares;
(iii) an executed counterpart of the Warrant Agreement; and
(iv) the certificates and other documents required to be
delivered pursuant to Section 7.1(b).
(c) At the Purchase Closing, subject to the terms and conditions hereof,
the Company shall deliver to Liberty Digital:
(i) the LDIG Share Purchase Price by wire transfer of
immediately available funds to an account designated by Liberty Digital at
least two business days prior to the Purchase Closing Date;
(ii) a receipt for the LDIG Purchase Shares; and
(iii) the certificates and other documents required to be
delivered pursuant to Section 7.1(c).
(d) At the Purchase Closing, subject to the terms and conditions hereof,
Liberty Digital shall deliver to the Company:
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(i) a certificate or certificates evidencing the LDIG
Purchase Shares, free and clear of any Encumbrances (other than those (x)
imposed by federal or state securities laws or (y) placed thereon by or on
behalf of the Company), registered in the name of the Company (or its
designee; provided, that such designee is a direct or indirect wholly owned
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Subsidiary of the Company and agrees to be bound by all of the terms and
provisions of this Agreement and the applicable Registration Rights
Agreement that are applicable to the Company; and provided, further, that
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the Company shall not be relieved of liability for any of its obligations
hereunder);
(ii) a receipt for the LDIG Share Purchase Price; and
(iii) the certificates or other documents required to be
delivered pursuant to Section 7.1(d).
SECTION 2.3 Closing Deliveries and Payment for the Option or the
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Post-Option. (a) At the Option Closing or the Post-Option Closing, as
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applicable, subject to the terms and conditions hereof, the Company shall
deliver to Purchaser:
(i) a certificate or certificates evidencing the PBV Units or
Post-Option PBV Units, as the case may be, free and clear of any
Encumbrances (other than those (x) imposed by federal or state securities
laws or (y) placed thereon by or on behalf of Purchaser), registered in the
name of Purchaser;
(ii) a receipt for the Option Purchase Price or the Post-
Option Purchase Price, as the case may be; and
(iii) the certificates and other documents required to be
delivered pursuant to Section 7.2(a).
(b) At the Option Closing or the Post-Option Closing, as applicable,
subject to the terms and conditions hereof, Purchaser shall deliver to the
Company:
(i) if Purchaser elects to pay the Option Closing Price or
Post-Option Closing Price:
(1) in cash, the Option Closing Price or Post-Option
Closing Price, as the case may be, by wire transfer of
immediately available funds to an account designated by the
Company at least two business days prior to the Option Closing
Date or the Post-Option Closing Date, as the case may be;
(2) in shares of LDIG Common Stock, a certificate or
certificates evidencing the number of shares of LDIG Common
Stock, free and clear of any Encumbrance (other than those (x)
imposed by federal or state securities laws or (y) placed
thereon by or on behalf of the Company), registered in the
name of the Company (or its designee; provided, that such
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designee is a direct or indirect
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wholly owned subsidiary of the Company and agrees to be bound
by all of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable
to the Company; and provided, further, that the Company shall
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not be relieved of liability for any of its obligations
hereunder), equal to the quotient (rounded to the nearest
whole number) derived by dividing (i) in the case of the
Option Closing, the Option Purchase Price by the average of
the last reported sale price (or, if no sale price is reported
on any day, the average of the high and low bid prices on such
day) of a share of LDIG Common Stock on the National Market
tier of the Nasdaq Stock Market ("Nasdaq") on each trading day
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(the "LDIG Average Market Price") during the period commencing
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on the twentieth trading day prior to the Option Closing Date
and ending on the fifth trading day prior to the Option
Closing Date (the "LDIG Shares") or (ii) in the case of the
-----------
Post-Option Closing, the Post-Option Purchase Price by the
LDIG Average Market Price during the period commencing on the
twentieth trading day prior to the Post-Option Closing Date
and ending on the fifth trading day prior to the Post-Option
Closing Date (the "Post-Option LDIG Shares"); or
-----------------------
(3) in shares of Liberty Media Common Stock, a
certificate or certificates evidencing the number of shares of
Liberty Media Common Stock, free and clear of any Encumbrance
(other than those (x) imposed by federal or state securities
laws or (y) placed thereon by or on behalf of the Company),
registered in the name of the Company (or its designee;
provided, that such designee is a direct or indirect wholly
--------
owned subsidiary of the Company and agrees to be bound by all
of the terms and provisions of this Agreement and the
applicable Registration Rights Agreement that are applicable
to the Company; and provided, further, that the Company shall
-------- -------
not be relieved of liability for any of its obligations
hereunder), equal to the quotient (rounded to the nearest
whole number) derived by dividing (i) in the case of the
Option Closing, the Option Purchase Price by the average of
the last reported sale price on the New York Stock Exchange
("NYSE") Composite Transactions Tape (or, if no sale price is
reported on any day, the average of the high and low bid
prices on such day) of a share of Liberty Media Common Stock
on each trading day (the "Liberty Media Average Market Price")
----------------------------------
during the period commencing on the twentieth trading day
prior to the Option Closing Date and ending on the fifth
trading day prior to the Option Closing Date (the "Liberty
-------
Media Shares") or (ii) in the case of the Post-Option Closing,
------------
the Post-Option Purchase Price by the Liberty Media Average
Market Price during the period commencing on the twentieth
trading day prior to the Post-Option Closing Date and ending
on the fifth trading day prior to the Post-Option Closing Date
(the "Post-Option Liberty Media Shares");
--------------------------------
(ii) a receipt for the PBV Units or the Post-Option PBV
Units, as applicable; and
(iii) the certificates and other documents required to
be delivered pursuant to Section 7.2(b).
10
(c) In the event that at the time Purchaser or Liberty Digital
exercises the Option or the Post-Option or at the applicable Closing, the
Liberty Digital Common Stock and/or the Liberty Media Common Stock is no
longer traded on any national securities exchange or through the Nasdaq
National Market, then Purchaser shall pay the Option Purchase Price or Post-
Option Purchase Price in cash or the security described above that continues
to be traded on a national securities exchange or through Nasdaq.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Purchaser and solely with
respect to Sections 3.4, 3.11, 3.12, 3.18 and 3.20, to Liberty Digital, as
follows:
SECTION 3.1 Organization, Good Standing and Qualification. The Company and
---------------------------------------------
each of its Subsidiaries (as defined below) is a corporation or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as the case may be, and has all
requisite power and authority to own, lease and operate its properties and
assets and to carry on its business as currently conducted, except for any
failures by any of the Company's Subsidiaries to be so organized, qualified or
in good standing as would not, either individually or in the aggregate, have a
Material Adverse Effect (as defined below) with respect to the Company. The
Company has all requisite corporate power and authority to execute and deliver
this Agreement and the applicable Registration Rights Agreement in the form of
Exhibit A attached hereto (the "Registration Rights Agreement"), to consummate
-----------------------------
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The Company and each of its Subsidiaries is duly
qualified and is authorized to do business and is in good standing as a foreign
corporation or other entity in all jurisdictions in which the character or
location of its activities and of the properties owned or operated by it makes
such qualification necessary, except for any such failures to be so qualified,
authorized or in good standing as would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company. The
Company has provided to Purchaser a complete and correct copy of its Certificate
of Incorporation, as amended (the "Certificate"), and of its Amended and
-----------
Restated Bylaws (the "Bylaws"), in each case as amended through the date hereof.
------
For the purposes of this Agreement, "Material Adverse Effect" with respect
-----------------------
to any party shall mean a material adverse effect (i) on the business,
operations, properties, assets, liabilities, financial condition or results of
operations of such party and its Subsidiaries, taken as a whole, other than any
effect resulting from general changes in economic conditions or the securities
market generally, or (ii) on the ability of such party to perform its
obligations under this Agreement and the applicable Registration Rights
Agreement and to consummate the transactions contemplated hereby and thereby.
11
SECTION 3.2 Subsidiaries. As used herein, "Subsidiary" means (i) any
------------ ----------
corporation of which a majority of the securities entitled to vote generally in
the election of directors thereof, at the time as of which any determination is
being made, are owned by another entity, either directly or indirectly, and (ii)
any joint venture, general or limited partnership, limited liability company or
other legal entity in which an entity is the record or beneficial owner,
directly or indirectly, of a majority of the economic or voting interests or is
the general partner. All shares of capital stock or other equity interests of
any Subsidiary directly or indirectly owned by the Company have been duly
authorized and validly issued, are fully paid and nonassessable and are directly
or indirectly owned by the Company free and clear of any Encumbrance and have
not been issued in violation of, nor subject to, any preemptive, subscription or
other similar rights. "Encumbrance" means any security interest, pledge,
-----------
mortgage, lien (statutory or other), charge, option to purchase, lease, claim,
restriction, covenant, title defect, hypothecation, assignment, deposit
arrangement or other encumbrance of any kind or any preference, priority or
other security agreement or preferential arrangement of any kind or nature
whatsoever (including any conditional sale or other title retention agreement).
SECTION 3.3 Capitalization; Voting Rights. (a) As of the date hereof, the
-----------------------------
authorized capital of the Company consists of 250,000,000 shares of Common Stock
and 50,000,000 shares of preferred stock, par value $0.01 per share (the
"Preferred Stock"), of which (i) 2,000,000 were designated $10.00 Series D
---------------
Exchangeable Preferred Stock (the "Series D Preferred Stock"), (ii) 1,250,000
------------------------
were designated $9.20 Series F Exchangeable Preferred Stock (the "Series F
--------
Preferred Stock"), and (iii) 2,500,000 were designated $8.625 Series H
---------------
Exchangeable Preferred Stock (the "Series H Preferred Stock").
------------------------
(b) As of the close of business on March 28, 2000, (i) 148,607,539 shares
of Common Stock were issued and outstanding, (ii) 2,146,746 shares of Common
Stock were being held in treasury, and (iii) 2,000,000 shares of Series D
Preferred Stock, 1,250,000 shares of Series F Preferred Stock, and 2,500,000
shares of Series H Preferred Stock, were issued and outstanding.
(c) All issued and outstanding shares of the Company's capital stock (i)
have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued, offered and sold in compliance with all
applicable state and federal laws concerning the issuance, offer and sale of
securities and (iv) were not issued in violation of, or subject to, any
preemptive, subscription or other similar rights of any other Person (as defined
below).
(d) Except as set forth on Schedule 3.3(d) or in the Company's SEC Reports
(as hereinafter defined), as of the date hereof, there are no outstanding
subscriptions, options, calls, warrants, rights (including conversion or
preemptive rights and rights of first refusal), proxy or stockholder agreements,
or agreements of any kind for the purchase or acquisition from the Company or
any of its Subsidiaries of any of their securities, nor has the Company taken or
agreed to take any action to issue or grant the same. Except as described in
this Agreement or set forth on Schedule 3.3(d), as of the date hereof, (x) there
are no outstanding obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any securities of the Company or any
voting or equity securities or interests of any of its Subsidiaries, (y) there
are
12
no voting trust, proxy, stockholder or other agreements or understandings to
which the Company or any of its Subsidiaries or, to the knowledge of the
Company, any of its stockholders is a party or is bound with respect to the
voting or transfer of the capital stock or other voting securities of the
Company or any of its Subsidiaries and (z) there are no other subscriptions,
options, calls, warrants or other rights (including registration rights, whether
demand or piggyback registration rights), agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any of its Subsidiaries to which the Company or any of its
Subsidiaries is a party. Except as set forth on Schedule 3.3(d), the
consummation of the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement will not trigger the anti-dilution
provisions or other price adjustment mechanisms of any subscriptions, options,
calls, warrants, commitments, contracts, preemptive rights, rights of first
refusal, demands, conversion rights or other agreements or arrangements of any
character or nature whatsoever outstanding on the date hereof under which the
Company is obligated to issue or acquire shares of any of its capital stock. The
sale of the Shares is not and will not be subject to any preemptive rights,
rights of first refusal, subscription or similar rights that have not been
properly waived.
(e) The Shares have been duly and validly authorized and when the Shares
are issued and sold in accordance with the provisions of this Agreement, such
shares will be duly authorized, validly issued, fully paid and nonassessable,
will not be issued in violation of any preemptive, subscription or other similar
rights of any Person and will be delivered to Purchaser free and clear of all
Encumbrances (other than those (x) imposed by federal or state securities laws
or (y) placed thereon by or on behalf of Purchaser).
(f) The Warrants have been duly and validly authorized and when the
Warrants are issued in accordance with the provisions of this Agreement, the
Warrants will be duly authorized, validly issued and will be the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits of the Warrant
Agreements subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing. The Warrant Shares have been duly and validly authorized
and when the Warrant Shares are issued upon exercise of the Warrants in
accordance with the term thereof, such shares will be duly authorized, validly
issued, fully paid and nonassessable, will not be issued in violation of any
preemptive, subscription or other similar rights of any Person and will be
delivered to Purchaser free and clear of all Encumbrances (other than those (x)
imposed by federal or state securities laws or (y) placed thereon by or on
behalf of Purchaser).
SECTION 3.4 Requisite Power and Authority. All corporate action on the
-----------------------------
part of the Company, its officers, directors and stockholders necessary for the
execution and delivery of this Agreement, the Warrant Agreement, and the
applicable Registration Rights Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance of all obligations of the
Company hereunder and thereunder has been taken or will be taken prior to the
Purchase Closing. This Agreement has been, and the Warrant Agreement and the
applicable
13
Registration Rights Agreement will be, duly executed and delivered by the
Company. This Agreement is and the Warrant Agreement and the applicable
Registration Rights Agreement (assuming due execution and delivery by Purchaser
and/or Liberty Digital) will be legal, valid and binding obligations of the
Company enforceable against it in accordance with their terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 3.5 SEC Reports; Financial Statements. (a) The Company has filed
---------------------------------
with the U.S. Securities and Exchange Commission (the "SEC") all forms, reports,
schedules, proxy statements (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "SEC Reports") required to be filed by the Company with the SEC since
-----------
January 1, 1998. As of its date of filing, each of the Company's SEC Reports
complied in all material respects with the requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or the Securities Act of
------------
1933, as amended (the "Securities Act"), and the rules and regulations
--------------
promulgated thereunder, and none of such SEC Reports (including any and all
financial statements included therein) contained when filed or (except to the
extent revised or superceded by a subsequent filing with the SEC prior to the
date hereof) contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including the notes
thereto) included in the Company's SEC Reports complied as to form, as of its
date of filing with the SEC, in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, has been prepared in accordance with U.S. generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
----
(except as may be indicated in the notes thereto) and fairly presents in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended, subject (in the
case of unaudited financial statements) to normal year-end adjustments and any
other adjustments described therein or in the notes or schedules thereto which
are not expected to be material.
SECTION 3.6 Undisclosed Liabilities. Except for (i) those liabilities that
-----------------------
are fully reflected or reserved for in the audited consolidated balance sheet of
the Company included in its Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 as filed with the SEC, and (ii) liabilities incurred since
December 31, 1999 in the ordinary course of business consistent with past
practice, neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature whatsoever (whether accrued, absolute, contingent or
otherwise) that are material to the consolidated financial position of the
Company which would be required to be set forth on a balance sheet prepared in
accordance with GAAP.
14
SECTION 3.7 Affiliate Agreements. (a) Except as disclosed in the Company's
--------------------
SEC Reports, there are no contracts, agreements, understandings or proposed
transactions between the Company or any of its Subsidiaries and any of its
officers, directors or Affiliates or any family member or Affiliate thereof that
would be required to be disclosed pursuant to Item 404 of Regulation S-K of the
SEC.
(b) Neither the Company nor any of its Subsidiaries is, nor to the
Company's knowledge is any other party to any "material contracts" within the
meaning of Item 601 of Regulation S-K of the SEC (the "Material Contracts"), in
------------------
default under, or in breach or violation of, any material term or condition of
any Material Contract and, to the knowledge of the Company, no event has
occurred which, with the giving of notice or passage of time or both would
constitute a default of such a material term or condition by the Company or any
other party under any Material Contract, other than any such events as would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to the Company. Other than Material Contracts which have terminated
or expired in accordance with their terms, each of the Material Contracts is in
full force and effect and (assuming due execution and delivery by the
counterparties thereto) is a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms (subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing).
SECTION 3.8 Absence of Certain Changes. (a) Except as set forth in
--------------------------
Schedule 3.3(d) or as disclosed in the Company's SEC Reports filed and publicly
available prior to the date hereof, since December 31, 1999, no event, change or
circumstance has occurred which has had, or would reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse Effect
with respect to the Company.
(b) Except as set forth in the Company's SEC Reports filed and publicly
available prior to the date hereof, since December 31, 1999, the Company and its
Subsidiaries have carried on their respective businesses only in the ordinary
and usual course consistent with their past practices.
SECTION 3.9 Title to Properties and Assets; Liens, Condition, Etc. The
------------------------------------------------------
Company and each of its Subsidiaries have good and marketable title to their
respective properties and assets, and good title to their respective leasehold
estates, in each case free and clear of any Encumbrance, other than (i) liens
for current taxes not yet due and payable and (ii) possible minor Encumbrances
which do not in any case materially detract from the value of the property
subject thereto or materially impair the operations of the Company and its
Subsidiaries, and which have not arisen other than in the ordinary course of
business. The Company and each of its Subsidiaries are in compliance with all
material terms of each material lease to which they are a party or are otherwise
bound. All material properties, equipment and systems of the Company and its
Subsidiaries are in good repair, working order and condition and are in material
compliance with all applicable standards and rules imposed (a) by any
governmental agency or
15
authority in which such properties, equipment and systems are located, and (b)
under any agreements with customers.
SECTION 3.10 Intellectual Property. The Company and its Subsidiaries own
---------------------
or have a valid license to use all trademarks, trade names, service marks,
copyrights and other intellectual property (collectively, "Intellectual
------------
Property") used by them in the conduct of their respective businesses, except
--------
where the failure to own or have a valid right to use any such Intellectual
Property would not, either individually or in the aggregate, have a Material
Adverse Effect with respect to the Company. Neither the Company nor any of its
Subsidiaries has received any notice or other communication alleging that its
usage of such Intellectual Property violates the intellectual property rights of
any other person.
SECTION 3.11 Compliance with Law; Other Instruments. Neither the Company
--------------------------------------
nor any of its Subsidiaries is in violation or default of (i) the Certificate or
Bylaws or the organizational documents of any Subsidiary or (ii) of any judicial
or administrative judgment, decision, decree, order, settlement, injunction,
writ, stipulation, determination or award (each, an "Order") or any statute,
-----
law, ordinance, rule or regulation (each, a "Law") and has received no notice
---
of, and to the knowledge of the Company, no investigation or review is in
process or threatened by any governmental authority with respect to, any
violation or alleged violation of any Order or Law except, in the case of any
Order or Law, where such violation or default would not, either individually or
in the aggregate, have a Material Adverse Effect with respect to the Company.
The execution, delivery and performance of this Agreement, the Warrant Agreement
and the applicable Registration Rights Agreement, and the consummation of the
transactions contemplated hereby (including the grant of the Option and the
Post-Option and sale of the PBV Units or the Post-Option PBV Units upon exercise
of the Option or the Post-Option, respectively) and thereby, will not result in
(i) any violation, or be in conflict with or constitute a default (with or
without notice or lapse of time or both) under the Certificate or Bylaws or the
organizational documents of any Subsidiary, (ii) any violation, or be in
conflict with or constitute a default (with or without notice or lapse of time
or both) under, any term or provision of, or any right of termination,
cancellation or acceleration arising under any Material Contract, (iii) any
violation under any Order or Law applicable to the Company or any of its
Subsidiaries, its business or operations or any of its assets or properties or
(iv) result in the imposition of any Encumbrance on the business or material
properties or assets of the Company or any of its Subsidiaries, except, in the
case of the foregoing clauses (ii), (iii) and (iv), where such violation,
default, investigation or review would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to the Company. The
execution, delivery and performance of this Agreement, the Warrant Agreement and
the applicable Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby (including the grant of the Option and sale of
the PBV Units upon the exercise of the Option) and thereby will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any governmental or regulatory authority or any other person,
except as described on Schedule 3.11 and except where the failure to obtain any
such consent, approval, authorization or other action or to make such filing or
notification would not, either individually or in the aggregate, have a Material
Adverse Effect with respect to the Company.
16
SECTION 3.12 Litigation. Except as described in the Company's SEC Reports
----------
filed and publicly available prior to the date hereof, there is no claim,
action, suit, audit, assessment, arbitration or inquiry, or any proceeding or,
to the Company's knowledge, investigation, by or before any governmental
authority (each, an "Action") pending, or to the Company's knowledge, currently
------
threatened against the Company or any Subsidiary which would, either
individually or in the aggregate, have a Material Adverse Effect with respect to
the Company.
SECTION 3.13 Tax Matters. (a) Except as set forth on Schedule 3.13 and
-----------
except for such matters as would not, either individually or in the aggregate,
have a Material Adverse Effect with respect to the Company, (i) all material Tax
Returns (as defined below) that are required to be filed by or with respect to
the Company and its Subsidiaries have been duly filed with the appropriate
governmental agencies on or prior to the respective due dates (including any
extensions thereof) for such Tax Returns, (ii) all material Taxes (as defined
below) of the Company and its Subsidiaries due and payable, whether or not shown
on the Tax Returns referred to in clause (i), have been paid in full, (iii) the
Tax Returns referred to in clause (i) have been audited by the Internal Revenue
Service or the appropriate state, local or foreign taxing authority or the
period for assessment of the Taxes in respect of which such Tax Returns were
required to be filed has expired, (iv) all material deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (v) no
material issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending, (vi) no waiver of statutes of limitation have been
given by or requested with respect to any Taxes of the Company or its
Subsidiaries, (vii) there are no liens for Taxes on any asset of the Company or
any of its Subsidiaries other than for current Taxes not yet due and payable, or
if due, (A) not delinquent or (B) being contested in good faith by appropriate
proceedings and (viii) no consent has been filed relating to the Company or any
of its Subsidiaries pursuant to Section 341(f) of the Internal Revenue Code of
1986, as amended (the "Code").
----
(b) For purposes of this Agreement, the term (i) "Taxes" means all taxes,
-----
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to, income, gross receipts, excise, property, sales and use, transfer,
franchise, employment, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto, and (ii)
"Tax Return" means any return, report, information return or other document
----------
(including any related or supporting information) filed or required to be filed
with any taxing authority with respect to Taxes.
SECTION 3.14 Employees. Neither the Company nor any of its Subsidiaries
---------
has any collective bargaining agreements with any of its employees. There is no
labor union organizing activity pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened with respect to the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is aware that any
officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company or any of its Subsidiaries, nor does
the Company or any of its Subsidiaries have a present intention to terminate the
employment of any
17
officer, key employee or group of key employees. No employee of the Company or
its Subsidiaries is bound by any contract, agreement or covenant that would
interfere or conflict with or restrict in any way his or her full provision of
services thereto, including any of the foregoing relating to trade secrets,
confidential information or other Intellectual Property.
SECTION 3.15 Environmental and Safety Laws. (a) Except as would not,
-----------------------------
either individually or in the aggregate, have a Material Adverse Effect with
respect to the Company, neither the Company nor any of its Subsidiaries has
failed to comply in any material respect with any Environmental Laws (as defined
below).
(b) Except as would not, individually or in the aggregate, have a Material
Adverse Effect with respect to the Company, neither the Company nor any of its
Subsidiaries has Released (as defined below), generated or disposed of any
Hazardous Substance (as defined below) in a manner which could reasonably be
expected to give rise to a material liability under or relating to any
Environmental Laws.
(c) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to the Company, there is no claim under or
relating to Environmental Laws pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries or, to the knowledge
of the Company, pending or threatened against any other Person whose liability
for any environmental claim the Company or any of its Subsidiaries has retained
or assumed either contractually or by operation of law. Except as would not
reasonably be expected to give rise to a material liability under or relating to
any Environmental Laws, no real property currently or formerly owned, operated
or leased by the Company or any of its Subsidiaries has been impacted by any
Release or threatened Release of any Hazardous Substance.
(d) For purposes of this Agreement, the term (i) "Environmental Laws"
------------------
means all applicable federal, foreign, state, local or municipal Laws or Orders
or other legally binding requirements relating to pollution or the protection of
human health or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.,
Section 9601, et seq., as amended ("CERCLA"), the Resource Conservation and
------
Recovery Act, 42 U.S.C. Section 6901, et seq., as amended, the Clean Air Act, 42
U.S.C. Section 7401 et seq., as amended, the Clean Water Act, 33 U.S.C. Section
et seq., the Toxic Substance Control Act, 15 U.S.C. Section 2601 et seq., and
the Occupational Safety and Health Act, 29 U.S.C. Section 651, et seq.; (ii)
"Hazardous Substances" means any pollutant, contaminant, toxic substance,
--------------------
hazardous waste, hazardous material, or hazardous substance, or any oil,
petroleum or petroleum product, each as defined or listed in, or classified
pursuant to, any Environmental Laws or any other substance or force that could
result in liability under any Environmental Laws; and (iii) "Release" means any
-------
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing (including, without limitation, the
abandonment or discarding of barrels, containers and other receptacles).
SECTION 3.16 Offering Valid. Assuming the accuracy of the representations
--------------
and warranties of the Purchaser contained in Section 4.2 hereof, no registration
under the
18
Securities Act of the Shares or the Warrants is required for the offer, sale and
issuance of the Shares or the Warrants as contemplated hereby or the issuance of
the Warrant Shares upon exercise of the Warrants.
SECTION 3.17 Permits. The Company and its Subsidiaries hold all licenses,
-------
permits, orders, consents, approvals, registrations, authorizations,
qualifications and filings with and under all federal, state, local or foreign
laws and governmental authorities and all industry or other non-governmental
self-regulatory organizations (each, a "Permit") necessary for the lawful
------
conduct of their respective businesses as they are presently being conducted,
except where the failure to so hold Permits would not, either individually or in
the aggregate, have a Material Adverse Effect with respect to the Company. All
Permits are in full force and effect in all material respects. The Company and
its Subsidiaries have complied in all material respects with the terms of the
Permits and there are no pending modifications, amendments or revocations of any
Permits. All fees due and payable from the Company or any of its Subsidiaries to
governmental authorities or other third parties pursuant to the Permits have
been paid. There are no pending or, to the knowledge of the Company, threatened,
suits, actions, proceedings or, to the Company's knowledge, investigations with
respect to the possible revocation, cancellation, suspension, limitation or
nonrenewal of any Permits, and there has occurred no event which (whether with
notice or lapse of time or both) could reasonably be expected to result in or
constitute the basis for such a revocation, cancellation, suspension, limitation
or nonrenewal thereof.
SECTION 3.18 No Broker. Neither the Company nor any of its Subsidiaries
---------
has employed any broker or finder, or incurred any liability for any brokerage
or finders' fees or any similar fees or commissions in connection with the
transactions contemplated by this Agreement.
SECTION 3.19 Organization, Good Standing and Qualification of PBV. PBV is
----------------------------------------------------
a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted. PBV has all requisite corporate power and
authority to execute and deliver the applicable Registration Rights Agreement,
to consummate the transactions contemplated thereby and to perform its
obligations thereunder. PBV is duly qualified and is authorized to do business
and is in good standing as a foreign corporation or other entity in all
jurisdictions in which the character or location of its activities and of the
properties owned or operated by it makes such qualification necessary, except
for any such failures to be so qualified, authorized or in good standing as
would not, either individually or in the aggregate, have a Material Adverse
Effect with respect to PBV. The Company has provided to Liberty Digital a
complete and correct copy of PBV's organizational documents, in each case as
amended through the date hereof.
SECTION 3.20 Investment Representations. The Company acknowledges that the
--------------------------
LDIG Purchase Shares have not been registered under the Securities Act or under
any state securities laws. The Company (a) is acquiring the LDIG Purchase Shares
for investment for its own account, not as a nominee or agent, and not with the
view to, or for resale in connection with, any distribution thereof, (b) is an
"accredited investor" within the meaning of Regulation D,
19
Rule 501(a), promulgated by the SEC, (c) acknowledges that the LDIG Purchase
Shares must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from the registration requirements of the
Securities Act is available and (d) represents that by reason of its business or
financial experience, the Company has the capacity to protect its own interests
in connection with the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement. The Company acknowledges that it has
had an opportunity to discuss Liberty Digital's business, management and
financial affairs with Liberty Digital's management. The Company acknowledges
that it has had an opportunity to ask questions of and receive answers from
officers of Liberty Digital. The Company understands that such discussions, as
well as any other written information issued by Liberty Digital, were intended
to describe certain aspects of Liberty Digital's business and operations, but
were not an exhaustive description.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
Purchaser hereby represents and warrants to the Company as follows:
SECTION 4.1 Requisite Power and Authority. Purchaser has all requisite
-----------------------------
power and authority to execute and deliver this Agreement, the Warrant Agreement
and the applicable Registration Rights Agreement, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. All corporate action on Purchaser's part necessary for the execution
and delivery of this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement, the consummation of the transactions contemplated
hereby and thereby and the performance of all obligations of Purchaser hereunder
and thereunder has been or will be taken prior to the Purchase Closing. This
Agreement has been and the Warrant Agreement and the applicable Registration
Rights Agreement will be, duly executed and delivered by Purchaser. This
Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement (assuming due execution and delivery by the Company and/or Liberty
Digital) will be legal, valid and binding obligations of Purchaser, enforceable
against it in accordance with their terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 4.2 Investment Representations. Purchaser acknowledges that the
--------------------------
Shares, the Warrants and the Warrant Shares have not been registered under the
Securities Act or under any state securities laws. Purchaser (a) is acquiring
the Shares, the Warrants and the Warrant Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof, (b) is an "accredited investor"
within the meaning of Regulation D, Rule 501(a), promulgated by the SEC, (c)
acknowledges that the Shares, the Warrants and the Warrant Shares must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from the registration requirements of the Securities Act is
available and (d) represents that by reason of its business or
20
financial experience, Purchaser has the capacity to protect its own interests in
connection with the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement. Purchaser acknowledges that it has had
an opportunity to discuss the Company's business, management and financial
affairs (including the business, management and financial affairs of PBV) with
the Company's management. Purchaser acknowledges that it has had an opportunity
to ask questions of and receive answers from officers of the Company. Purchaser
understands that such discussions, as well as any other written information
issued by the Company, were intended to describe certain aspects of the
Company's business and operations, but were not an exhaustive description.
SECTION 4.3 Litigation. Except as set forth in the Purchaser's SEC Reports
----------
filed and publicly prior to the date hereof, there is no Action pending, or to
Purchaser's knowledge, currently threatened against Purchaser which, would,
individually or in the aggregate, have a Material Adverse Effect with respect to
Purchaser.
SECTION 4.4 No Broker. Purchaser has not employed any broker or finder, or
---------
incurred any liability for any brokerage or finders' fees or any similar fees or
commissions in connection with the transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF LIBERTY DIGITAL
-------------------------------------------------
Liberty Digital hereby represents and warrants to the Company as follows:
SECTION 5.1 Organization, Good Standing and Qualification. Liberty Digital
---------------------------------------------
and each of its Subsidiaries is a corporation or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or formation, as the case may be, and has all requisite power and
authority to own, lease and operate its properties and assets and to carry on
its business as currently conducted, except for any failures by any of Liberty
Digital's Subsidiaries to be so organized, qualified or in good standing as
would not, either individually or in the aggregate, have a Material Adverse
Effect with respect to Liberty Digital. Liberty Digital has all requisite
corporate power and authority to execute and deliver this Agreement and the
applicable Registration Rights Agreement, to consummate the transactions
contemplated hereby and thereby and to perform its obligations hereunder and
thereunder. Liberty Digital and each of its Subsidiaries is duly qualified and
is authorized to do business and is in good standing as a foreign corporation or
other entity in all jurisdictions in which the character or location of its
activities and of the properties owned or operated by it makes such
qualification necessary, except for any such failures to be so qualified,
authorized or in good standing as would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital.
Liberty Digital has provided to the Company a complete and correct copy of its
Certificate of Incorporation, as amended (the "Liberty Certificate"), and of its
-------------------
Bylaws (the "Liberty Bylaws"), in each case as amended through the date hereof.
--------------
21
SECTION 5.2 Subsidiaries. All shares of capital stock or other equity
------------
interests of any Subsidiary directly or indirectly owned by Liberty Digital have
been duly authorized and validly issued, are fully paid and nonassessable and
are directly or indirectly owned by Liberty Digital free and clear of any
Encumbrance and have not been issued in violation of, nor subject to, any
preemptive, subscription or other similar rights.
SECTION 5.3 Capitalization; Voting Rights. (a) The authorized capital
-----------------------------
stock of Liberty Digital consists of (i) 1,755,000,000 shares of common stock,
par value $.01 per share, of which (A) 1,000,000,000 shares are LDIG Common
Stock and (B) 755,000,000 shares are Series B common stock ("LDIG Series B
Stock") and (ii) 5,000,000 shares of preferred stock, par value $.01 per share,
of which 150,000 shares are designated as Class B Preferred Stock ("LDIG
Preferred Stock").
(b) As of the close of business on January 31, 2000 (i) 26,638,479 shares
of LDIG Common Stock and 171,950,167 shares of LDIG Series B Stock were issued
and outstanding, respectively, (ii) no shares of LDIG Common Stock were in
treasury, (iii) 171,950,167 shares of LDIG Common Stock were reserved for
issuance upon conversion of shares of LDIG Series B Stock, (iv) 25,764,600
shares of LDIG Series B Stock was reserved for issuance upon conversion of the
LDIG Preferred Stock, and (v) 150,000 shares of LDIG Preferred Stock were issued
and outstanding. As of December 31, 1999, 2,514,531 shares of LDIG Common Stock
were reserved for future issuance to employees pursuant to outstanding stock
options under Liberty Digital's stock option plans.
(c) All issued and outstanding shares of Liberty Digital's capital stock
(i) have been duly authorized and validly issued, (ii) are fully paid and
nonassessable, (iii) were issued, offered and sold in compliance with all
applicable state and federal laws concerning the issuance, offer and sale of
securities and (iv) were not issued in violation of, or subject to, any
preemptive, subscription or other similar rights of any other Person.
(d) Except as set forth in Liberty Digital's SEC Reports, as of the date
hereof, (x) there are no outstanding obligations of Liberty Digital or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any securities of
Liberty Digital or any voting or equity securities or interests of any of its
Subsidiaries, and (y) there are no voting trust, proxy, stockholder or other
agreements or understandings to which Liberty Digital or any of its Subsidiaries
or, to the knowledge of Liberty Digital, any of its stockholders is a party or
is bound with respect to the voting or transfer of the capital stock or other
voting securities of Liberty Digital or any of its Subsidiaries. The
consummation of the transactions contemplated by this Agreement and the
applicable Registration Rights Agreement will not trigger the anti-dilution
provisions or other price adjustment mechanisms of any subscriptions, options,
calls, warrants, commitments, contracts, preemptive rights, rights of first
refusal, demands, conversion rights or other agreements or arrangements of any
character or nature whatsoever outstanding on the date hereof under which
Liberty Digital is or may be obligated to issue or acquire shares of any of its
capital stock. The sale of the LDIG Shares is not and will not be subject to any
preemptive rights, rights of first refusal, subscription or similar rights that
have not been properly waived.
22
(e) The LDIG Purchase Shares have been duly and validly authorized and
when the LDIG Purchase Shares are issued and sold in accordance with the
provisions of this Agreement and the Option, such shares will be duly
authorized, validly issued, fully paid and nonassessable, will not be issued in
violation of any preemptive, subscription or other similar rights of any Person
and will be delivered to the Company free and clear of all Encumbrances (other
than those (x) imposed by federal or state securities laws or (y) placed thereon
by or on behalf of the Company).
SECTION 5.4 Authorization; Binding Obligations. All corporate action on
----------------------------------
the part of Liberty Digital, its officers, directors and stockholders necessary
for the execution and delivery of this Agreement and the applicable Registration
Rights Agreement, the consummation of the transactions contemplated hereby and
thereby and the performance of all obligations of Liberty Digital hereunder and
thereunder has been taken or will be taken prior to the Purchase Closing. This
Agreement has been, and the applicable Registration Rights Agreement will be,
duly executed and delivered by Liberty Digital. This Agreement is and the
applicable Registration Rights Agreement (assuming due execution and delivery by
the Company and Purchaser) will be legal, valid and binding obligations of
Liberty Digital enforceable against it in accordance with their terms, subject
to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
SECTION 5.5 SEC Reports; Financial Statements. (a) Liberty Digital has
---------------------------------
filed with the SEC all SEC Reports required to be filed by Liberty Digital with
the SEC since January 1, 1998. As of its date of filing, each of Liberty
Digital's SEC Reports complied in all material respects with the requirements of
the Exchange Act or the Securities Act, and the rules and regulations
promulgated thereunder, and none of such SEC Reports (including any and all
financial statements included therein) contained when filed or (except to the
extent revised or superceded by a subsequent filing with the SEC prior to the
date hereof) contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated financial statements (including the notes
thereto) included in Liberty Digital's SEC Reports complied as to form, as of
its date of filing with the SEC, in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, has been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presents in all material respects the consolidated
financial position of Liberty Digital and its consolidated Subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended, subject (in the case of unaudited financial
statements) to normal year-end adjustments and any other adjustments described
therein or in the notes or schedules thereto which are not expected to be
material.
23
SECTION 5.6 Undisclosed Liabilities. Except for (i) those liabilities that
-----------------------
are fully reflected or reserved for in the audited consolidated balance sheet of
Liberty Digital as of December 31, 1999 and (ii) liabilities incurred since
December 31, 1999 in the ordinary course of business consistent with past
practice, neither Liberty Digital nor any of its Subsidiaries has any
liabilities or obligations of any nature whatsoever (whether accrued, absolute,
contingent or otherwise) that are material to the consolidated financial
position of Liberty Digital which would be required to be set forth on a balance
sheet prepared in accordance with GAAP.
SECTION 5.7 Affiliate Agreements. (a) Except as disclosed in Liberty
--------------------
Digital's SEC Reports, there are no contracts, agreements, understandings or
proposed transactions between Liberty Digital or any of its Subsidiaries and any
of its officers, directors or Affiliates or any family member or Affiliate
thereof that would be required to be disclosed pursuant to Item 404 of
Regulation S-K of the SEC.
(b) Neither Liberty Digital nor any of its Subsidiaries is, nor to Liberty
Digital's knowledge is any other party to any Material Contract, in default
under, or in breach or violation of, any material term or condition of any
Material Contract and, to the knowledge of Liberty Digital, no event has
occurred which, with the giving of notice or passage of time or both would
constitute a default of such a material term or condition by Liberty Digital or
any other party under any Material Contract, other than such events as would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to Liberty Digital. Other than Material Contracts which have
terminated or expired in accordance with their terms, each of the Material
Contracts is in full force and effect and (assuming due execution and delivery
by the counterparties thereto) is a legal, valid and binding obligation of
Liberty Digital enforceable against Liberty Digital in accordance with its terms
(subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing).
SECTION 5.8 Absence of Certain Changes. (a) Except as disclosed in Liberty
--------------------------
Digital's SEC Reports filed and publicly available prior to the date hereof,
since December 31, 1999, no event, change or circumstance has occurred which has
had, or would reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect with respect to Liberty Digital.
(b) Except as set forth in Liberty Digital's SEC Reports filed and
publicly available prior to the date hereof, since December 31, 1999, Liberty
Digital and its Subsidiaries have carried on their respective businesses only in
the ordinary and usual course consistent with their past practices.
SECTION 5.9 Title to Properties and Assets; Liens, Condition, Etc. Liberty
------------------------------------------------------
Digital and each of its Subsidiaries have good and marketable title to their
respective properties and assets, and good title to their respective leasehold
estates, in each case free and clear of any Encumbrance, other than (i) liens
for current taxes not yet due and payable and (ii) possible minor Encumbrances
which do not in any case materially detract from the value of the property
24
subject thereto or materially impair the operations of Liberty Digital and its
Subsidiaries, and which have not arisen other than in the ordinary course of
business. Liberty Digital and each of its Subsidiaries are in compliance with
all material terms of each material lease to which they are a party or are
otherwise bound. All material properties, equipment and systems of Liberty
Digital and its Subsidiaries are in good repair, working order and condition and
are in material compliance with all applicable standards and rules imposed (a)
by any governmental agency or authority in which such properties, equipment and
systems are located, and (b) under any agreements with customers.
SECTION 5.10 Intellectual Property. Liberty Digital and its Subsidiaries
---------------------
own or have a valid license to use all Intellectual Property used by them in the
conduct of their respective businesses, except where the failure to own or have
a valid right to use any such Intellectual Property would not, either
individually or in the aggregate, have a Material Adverse Effect with respect to
Liberty Digital. Neither Liberty Digital nor any of its Subsidiaries has
received any notice or other communication alleging that its usage of such
Intellectual Property violates the intellectual property rights of any other
person.
SECTION 5.11 Compliance with Law; Other Instruments. Neither Liberty
--------------------------------------
Digital nor any of its Subsidiaries is in violation or default of (i) the
Liberty Certificate or Liberty Bylaws or the organizational documents of any
Subsidiary or (ii) any Order or Law and has received no notice of, and to the
knowledge of Liberty Digital, no investigation or review is in process or
threatened by any governmental authority with respect to, any violation or
alleged violation of any Order or Law except, in the case of any Order or Law,
where such violation or default would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital. The
execution, delivery and performance of this Agreement and the applicable
Registration Rights Agreement, and the consummation of the transactions
contemplated hereby (including the grant and any exercise of the Option) and
thereby, will not result in (i) any violation, or be in conflict with or
constitute a default (with or without notice or lapse of time or both) under the
Liberty Certificate or Liberty Bylaws or the organizational documents of any
Subsidiary, (ii) any violation, or be in conflict with or constitute a default
(with or without notice or lapse of time or both) under, any term or provision
of, or any right of termination, cancellation or acceleration arising under any
Material Contract, (iii) any violation under any Order or Law applicable to
Liberty Digital or any of its Subsidiaries, its business or operations or any of
its assets or properties or (iv) result in the imposition of any Encumbrance on
the business or material properties or assets of Liberty Digital or any of its
Subsidiaries, except, in the case of the foregoing clauses (ii), (iii) and (iv),
where such violation, default, investigation or review would not, either
individually or in the aggregate, have a Material Adverse Effect with respect to
Liberty Digital. The execution, delivery and performance of this Agreement and
the applicable Registration Rights Agreement do not, and the consummation of the
transactions contemplated hereby (including the grant of the Option and the any
exercise of the Option) and thereby will not, require any consent, approval,
authorization or other action by, or filing with or notification to, any
governmental or regulatory authority or any other person, and except where the
failure to obtain any such consent, approval, authorization or other action or
to make such filing or notification would not, either individually or in the
aggregate, have a Material Adverse Effect with respect to Liberty Digital.
25
SECTION 5.12 Litigation. Except as set forth in Liberty Digital's SEC
----------
Reports filed and publicly available prior to the date of this Agreement, there
is no Action pending, or to Liberty Digital's knowledge, currently threatened
against Liberty Digital or any Subsidiary which would, either individually or in
the aggregate, have a Material Adverse Effect with respect to Liberty Digital.
SECTION 5.13 Tax Matters. Except as set forth in a letter delivered to the
-----------
Company on or before April 5, 2000 and except for such matters as would not,
either individually or in the aggregate, have a Material Adverse Effect with
respect to Liberty Digital, (i) all material Tax Returns that are required to be
filed by or with respect to Liberty Digital and its Subsidiaries and each
affiliated group (within the meaning of Section 1504(a) of the Code) of which
they are members (an "Affiliated Group") have been duly filed with the
appropriate governmental agencies on or prior to the respective due dates
(including any extensions thereof) for such Tax Returns, (ii) all material Taxes
of Liberty Digital, its Subsidiaries and any Affiliated Group due and payable,
whether or not shown on the Tax Returns referred to in clause (i), have been
paid in full, (iii) the Tax Returns referred to in clause (i) have been audited
by the Internal Revenue Service or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all material
deficiencies asserted or assessments made as a result of such examinations have
been paid in full, (v) no material issues that have been raised by the relevant
taxing authority in connection with the examination of any of the Tax Returns
referred to in clause (i) are currently pending, (vi) no waiver of statutes of
limitation have been given by or requested with respect to any Taxes of Liberty
Digital, its Subsidiaries or any Affiliated Group, (vii) there are no liens for
Taxes on any asset of Liberty Digital or any of its Subsidiaries other than for
current Taxes not yet due and payable, or if due, (A) not delinquent or (B)
being contested in good faith by appropriate proceedings and (viii) no consent
has been filed relating to Liberty Digital or any of its Subsidiaries pursuant
to Section 341(f) of the Code.
SECTION 5.14 Employees. Neither Liberty Digital nor any of its
---------
Subsidiaries has any collective bargaining agreements with any of its employees.
There is no labor union organizing activity pending or, to the knowledge of
Liberty Digital or any of its Subsidiaries, threatened with respect to Liberty
Digital or any of its Subsidiaries. Neither Liberty Digital nor any of its
Subsidiaries is aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with Liberty Digital or any of
its Subsidiaries, nor does Liberty Digital or any of its Subsidiaries have a
present intention to terminate the employment of any officer, key employee or
group of key employees, except that Liberty Digital has announced the closure of
its New York office. No employee of Liberty Digital or its Subsidiaries is bound
by any contract, agreement or covenant that would interfere or conflict with or
restrict in any way his or her full provision of services thereto, including any
of the foregoing relating to trade secrets, confidential information or other
Intellectual Property.
SECTION 5.15 Environmental and Safety Laws. (a) Except as would not,
-----------------------------
either individually or in the aggregate, have a Material Adverse Effect with
respect to Liberty Digital, neither Liberty Digital nor any of its Subsidiaries
has failed to comply in any material respect with any Environmental Laws.
26
(b) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to Liberty Digital, neither Liberty Digital
nor any of its Subsidiaries has Released, generated or disposed of any Hazardous
Substance in a manner which could reasonably be expected to give rise to a
material liability under or relating to any Environmental Laws.
(c) Except as would not, either individually or in the aggregate, have a
Material Adverse Effect with respect to Liberty Digital, there is no claim under
or relating to Environmental Laws pending or, to the knowledge of Liberty
Digital, threatened against Liberty Digital or any of its Subsidiaries or, to
the knowledge of Liberty Digital, pending or threatened against any other Person
whose liability for any environmental claim Liberty Digital or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law. Except as would not reasonably be expected to give rise to a material
liability under or relating to any Environmental Laws, no real property
currently or formerly owned, operated or leased by Liberty Digital or any of its
Subsidiaries has been impacted by any Release or threatened Release of any
Hazardous Substance.
SECTION 5.16 Offering Valid. Assuming the accuracy of the representations
--------------
and warranties of the Company contained in Section 3.20 hereof, no registration
under the Securities Act of the LDIG Purchase Shares is required for the offer,
sale and issuance of the LDIG Purchase Shares as contemplated hereby.
SECTION 5.17 Permits. Liberty Digital and its Subsidiaries hold all
-------
Permits necessary for the lawful conduct of their respective businesses as they
are presently being conducted, except where the failure to so hold Permits would
not, either individually or in the aggregate, have a Material Adverse Effect
with respect to Liberty Digital. All Permits are in full force and effect in all
material respects. Liberty Digital and its Subsidiaries have complied in all
material respects with the terms of the Permits and there are no pending
modifications, amendments or revocations of any Permits. All fees due and
payable from Liberty Digital or any of its Subsidiaries to governmental
authorities or other third parties pursuant to the Permits have been paid. There
are no pending or, to the knowledge of Liberty Digital, threatened, suits,
actions, proceedings or, to Liberty Digital's knowledge, investigations with
respect to the possible revocation, cancellation, suspension, limitation or
nonrenewal of any Permits, and there has occurred no event which (whether with
notice or lapse of time or both) could reasonably be expected to result in or
constitute the basis for such a revocation, cancellation, suspension, limitation
or nonrenewal thereof.
SECTION 5.18 No Broker. Neither Liberty Digital nor any of its
---------
Subsidiaries has employed any broker or finder, or incurred any liability for
any brokerage or finders' fees or any similar fees or commissions in connection
with the transactions contemplated by this Agreement.
27
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.1 Access. (a) During the period from the date of this Agreement
------
until the earlier to occur of the Option Closing Date or the Option Expiration
Date, each of the Company and Liberty Digital shall, and shall cause its
Subsidiaries, officers, directors, employees, auditors and other agents to, (a)
afford the officers, employees, auditors and other agents of the other parties
hereto, during normal business hours reasonable access at all reasonable times
to its officers, employees, auditors, legal counsel, properties, offices, plants
and other facilities and to all books and records, (b) furnish the other parties
with all financial, operating and other data and information as such party,
through its officers, employees or agents, may from time to time reasonably
request and (c) afford the other parties the opportunity to discuss its affairs,
finances and accounts (including, in the case of the Company, the affairs,
finances and accounts of PBV and of the Subsidiaries the assets of which are to
be covered (in whole of in part) by the License Agreement) with its officers on
a regular basis.
(b) Each of the parties hereto agrees that it shall keep all information
furnished to it pursuant to Section 6.1(a) or otherwise by any other party
hereto regarding such party's business or operations, and any analyses,
compilations, forecasts, and/or other documents prepared by the receiving party
containing or based in whole or in part on any such furnished information
(collectively, the "Information"), confidential and will not publicly disclose
-----------
any of the Information except (i) as may be consented to by the furnishing party
and (ii) as required by law, regulation or legal or judicial process; provided,
--------
that where such disclosure is required, the receiving party shall provide the
furnishing party with a reasonable opportunity to review the disclosure, to the
extent practicable before it is made, and to interpose its own objections to, or
seek to limit, the disclosure at its own expense. The Information does not
include any information which (i) is or becomes publicly available other than as
a result of a disclosure by any receiving party hereunder, (ii) is already in
any party's possession, provided that such information is not known by such
party to be subject to any legal or contractual obligation of confidentiality
owed to the furnishing party, (iii) is or becomes available to any receiving
party on a non-confidential basis from a source other than the furnishing party
(provided, that such source is not known by the receiving party to be subject to
--------
any legal or contractual obligation to the furnishing party to keep such
information confidential), or (iv) is independently developed by any party
hereto without violating any of its obligations under this Section 6.1.
SECTION 6.2 Efforts. (a) Each party hereto agrees to use commercially reasonable
-------
efforts to take any and all actions required in order to consummate the
transactions contemplated in this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement.
(b) Purchaser and the Company agree to use their reasonable best efforts
and to negotiate in good faith after the date hereof and prior to the Purchase
Closing Date to agree on the Warrant Agreement, with the terms set forth in
Exhibit B hereto and in form and substance reasonably satisfactory to each such
party.
28
SECTION 6.3 Regulatory and Other Authorizations; Notices and Consents. (a)
---------------------------------------------------------
Each of the parties hereto shall promptly make any and all filings which they
are required to make under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), for the sale of the Shares, the Warrants, the
-------
Warrant Shares, the PBV Units and the LDIG Purchase Shares and agrees to furnish
the other parties hereto with such necessary information and reasonable
assistance as such party may reasonably request in connection with the
preparation of any necessary filings or submissions to the Federal Trade
Commission ("FTC") or the Antitrust Division of the U.S. Department of Justice
---
(the "Antitrust Division"), including any filings or notices necessary under the
------------------
HSR Act. Any such actions with respect to the exercise of the Option shall be
taken by the Company at such times as Liberty Digital reasonably shall so
request. Each of the parties hereto shall, at its own expense, use all
reasonable efforts to respond to any request for additional information, or
other formal or informal request for information, witnesses or documents which
may be made by any governmental authority pertaining to it with respect to the
sale of the Shares, the Warrants, the Warrant Shares, the PBV Units and the LDIG
Purchase Shares and shall keep the other parties hereto fully apprised of its
actions with respect thereto.
(b) Each of the parties hereto shall use their commercially reasonable
efforts to give such notices and obtain all other authorizations, consents,
orders and approvals of all governmental authorities and other third parties
that may be or become necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement, the Warrant
Agreement, the Option and the applicable Registration Rights Agreement and will
cooperate fully with the other parties hereto in promptly seeking to obtain all
such authorizations, consents, orders and approvals. Notwithstanding the
foregoing, no party nor any of its Affiliates shall be required to dispose of
any assets, or agree to any material limitations on any of its operations, as a
condition to obtaining any such authorization, consent, order or approval.
SECTION 6.4 Transfer Restrictions. (a) The Shares. Purchaser agrees that
---------------------
it shall not, without the prior written consent of the Company, directly or
indirectly sell, transfer, assign, pledge, encumber, hypothecate or similarly
dispose of, either voluntarily or involuntarily, or enter into any contract,
option or other arrangement or understanding with respect to the sale, transfer,
assignment, pledge, encumbrance, hypothecation or similar disposition of
("Transfer"), any of the Shares at any time prior to the first anniversary of
--------
the Purchase Closing Date, other than (x) to a Subsidiary of Purchaser (a
"Purchaser Permitted Transferee"); provided, that (i) the Purchaser Permitted
------------------------------ --------
Transferee must agree in writing to be bound by the terms of this Agreement and
the applicable Registration Rights Agreement, and (ii) such a Transfer shall not
relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a
pledge of the Shares, in whole or in part, by Purchaser or such Purchaser
Permitted Transferee to secure bona fide indebtedness; provided, that the
--------
pledgee agrees with the Company to be bound hereby in the event of a foreclosure
with the same effect as if it were named herein in lieu of Purchaser and no such
pledge shall relieve Purchaser of any of its liabilities or obligations
hereunder.
(b) The Warrants and the Warrant Shares. Purchaser agrees that it shall
not, without the prior written consent of the Company, directly or indirectly
Transfer any of the Warrants or the Warrant Shares at any time prior to the
first anniversary of the Purchase Closing
29
Date, other than (x) to a Purchaser Permitted Transferee; provided, that (i) the
--------
Purchaser Permitted Transferee must agree in writing to be bound by the terms of
this Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement, and (ii) such a Transfer shall not relieve Purchaser of any of its
liabilities or obligations hereunder, and (y) a pledge of the Warrant or the
Warrant Shares, in whole or in part, by Purchaser or such Purchaser Permitted
Transferee to secure bona fide indebtedness; provided, that the pledgee agrees
--------
with the Company to be bound hereby in the event of a foreclosure with the same
effect as if it were named herein in lieu of Purchaser and no such pledge shall
relieve Purchaser of any of its liabilities or obligations hereunder.
(c) The LDIG Purchase Shares. The Company agrees that it shall not,
without the prior written consent of Liberty Digital, directly or indirectly
Transfer any of the LDIG Purchase Shares at any time prior to the first
anniversary of the Purchase Closing Date, other than (x) to a Subsidiary of the
Company (a "Company Permitted Transferee"); provided, that (i) the Company
---------------------------- --------
Permitted Transferee must agree in writing to be bound by the terms of this
Agreement and the applicable Registration Rights Agreement, and (ii) such a
Transfer shall not relieve the Company of any of its liabilities or obligations
hereunder, and (y) a pledge of the LDIG Purchase Shares, in whole or in part, by
the Company or such Company Permitted Transferee to secure bona fide
indebtedness; provided, that the pledgee agrees with Liberty to be bound hereby
--------
in the event of a foreclosure with the same effect as if it were named herein in
lieu of the Company and no such pledge shall relieve the Company of any of its
liabilities or obligations hereunder.
(d) The PBV Units. Purchaser agrees that, in the event that Purchaser
acquires the PBV Units, it shall not, without the prior written consent of PBV,
Transfer any of the PBV Units at any time prior to the first anniversary of the
Option Closing Date, other than (x) to a Subsidiary of Purchaser (a "Purchaser
---------
Permitted Transferee"); provided, that (i) the Purchaser Permitted Transferee
-------------------- --------
must agree in writing to be bound by the terms of this Agreement and the
applicable Registration Rights Agreement, and (ii) such a Transfer shall not
relieve Purchaser of any of its liabilities or obligations hereunder, and (y) a
pledge of the Shares, in whole or in part, by Purchaser or such Purchaser
Permitted Transferee to secure bona fide indebtedness; provided, that the
--------
pledgee agrees with PBV to be bound hereby in the event of a foreclosure with
the same effect as if it were named herein in lieu of Purchaser and no such
pledge shall relieve Purchaser of any of its liabilities or obligations
hereunder.
(e) The LDIG Shares or Liberty Media Shares. The Company agrees that, in
the event that the Company acquires the LDIG Shares or the Liberty Media Shares,
it shall not, without the prior written consent of Purchaser, Transfer any of
such shares at any time prior to the first anniversary of the Option Closing
Date, other than (x) to a Company Permitted Transferee; provided, that (i) the
--------
Company Permitted Transferee must agree in writing to be bound by the terms of
this Agreement and the applicable Registration Rights Agreement, and (ii) such a
Transfer shall not relieve the Company of any of its liabilities or obligations
hereunder, and (y) a pledge of the Shares, in whole or in part, by the Company
or such Company Permitted Transferee to secure bona fide indebtedness; provided,
--------
that the pledgee agrees with Purchaser to be bound hereby in the event of a
foreclosure with the same effect as if it were named herein in
30
lieu of the Company and no such pledge shall relieve the Company of any of its
liabilities or obligations hereunder.
(f) Legend. Upon original issuance thereof and until such time as the same
is no longer required by the applicable requirements of the Securities Act,
certificates representing the Shares, the Warrants, the Warrant Shares, the PBV
Units, the LDIG Purchase Shares, the LDIG Shares, the Liberty Media Shares, the
Post-Option PBV Units, the Post-Option LDIG Shares and the Post-Option Liberty
Media Shares (and all securities issued in exchange or substitution therefor)
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR WITH ANY STATE SECURITIES COMMISSIONER,
AND MAY NOT BE TRANSFERRED OR DISPOSED OF BY
THE HOLDER IN THE ABSENCE OF A REGISTRATION
STATEMENT WHICH IS EFFECTIVE UNDER THE
SECURITIES ACT OF 1933 OR AN APPLICABLE EXCEPTION
THEREFROM. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER CONTAINED IN THE STOCK PURCHASE
AGREEMENT DATED AS OF MARCH 29, 2000, AMONG
PRIMEDIA INC., LIBERTY MEDIA CORPORATION, AND
LIBERTY DIGITAL, INC., A COPY OF WHICH IS ON FILE
WITH [PRIMEDIA INC.] [PRIMEDIA BROADBAND VIDEO,
LLC] [LIBERTY DIGITAL, INC.][AT&T CORP.]
SECTION 6.5 Registration Rights. (a) At the Purchase Closing, the Company
-------------------
and Purchaser shall enter into a Registration Rights Agreement and the Company
and Liberty Digital shall enter into a Registration Rights Agreement, each
substantially in the form attached as Exhibit A hereto. Prior to the Purchase
Closing, the parties agree to negotiate in good faith with respect to the
appropriate limits on the number of shares that can be included in a demand
registration with respect to the shares of Liberty Digital or PBV issued or
issuable hereunder in an effort to mitigate the impact of the potential adverse
affect such a registration could have on the volatility and market price of the
securities subject to each such agreement.
(b) At the Option Closing, (i) (x) if the Option Purchase Price is paid in
LDIG Shares, the Company and Liberty Digital shall enter into a Registration
Rights Agreement and (y) if the Option Purchase Price is paid in Liberty Media
Shares, Purchaser shall cause AT&T to enter into a Registration Rights Agreement
and (ii) PBV and Purchaser shall enter into a Registration Rights Agreement,
each substantially in the form attached as Exhibit A hereto.
SECTION 6.6 Further Strategic Relationships. The Company and Purchaser
-------------------------------
will jointly evaluate other strategic relationships in the broadband video area.
31
SECTION 6.7 Adjustment to the Option Purchase Price or the Post-Option
----------------------------------------------------------
Purchase Price. The parties hereto agree that, if the price paid for each PBV
--------------
Unit or Post-Option PBV Unit (in each case, appropriately adjusted to reflect
any recapitalization or reorganization of PBV undertaken in connection with an
initial public offering of PBV) (the per unit price paid by Liberty Digital for
the PBV Units or Post-Option PBV Units being herein referred to as the "Per
---
Share PBV Price") exceeds one-half of the gross per share or per unit price at
---------------
which an initial public offering of PBV is consummated (the "IPO Price"), then
---------
the Company shall remit to Purchaser within five business days after the closing
of the initial public offering of PBV, an amount equal to the product of (A) the
difference between (x) the Per Share PBV Price and (y) one-half the IPO Price,
multiplied by (B) the number of PBV Units or Post-Option PBV Units (in each
case, appropriately adjusted to reflect any recapitalization or reorganization
of PBV undertaken in connection with an initial public offering of PBV) (the
"Adjustment Value"). The payment of the Adjustment Value shall be made by the
----------------
Company, at its option, in either (i) cash or (ii) if the Option Purchase Price
or Post-Option Purchase Price was paid with shares of LDIG Common Stock or
Liberty Media Common Stock, by delivery of a certificate or certificates
evidencing the number of shares of LDIG Common Stock or Liberty Media Common
Stock, free and clear of any Encumbrances (other than those (x) imposed by
federal or state securities laws or (y) placed thereon by or on behalf of
Purchaser), equal to the quotient (rounded to the nearest whole number) derived
by dividing the Adjustment Value by the Average Market Price of a share of LDIG
Common Stock or Liberty Media Common Stock, as applicable, that was used to
determine the number of LDIG Shares or Post-Option LDIG Shares, as applicable,
or Liberty Media Shares or Post-Option Liberty Media Shares, as applicable, to
be delivered pursuant to Section 2.3(b)(i).
SECTION 6.8 Public Announcements. Neither Purchaser nor Liberty Digital,
--------------------
on the one hand, nor the Company, on the other hand, will issue any press
release or public statement with respect to the transactions contemplated by
this Agreement without the prior written consent of the other parties hereto,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with the NYSE or Nasdaq. In addition to the
foregoing, Purchaser, Liberty Digital and the Company will consult to the extent
reasonably practicable with each other before issuing, and provide each other
the opportunity to review and comment upon, any such press release or other
public statement. The parties agree that the initial press release or releases
to be issued by or on behalf of the parties with respect to the transactions
contemplated by this Agreement shall be mutually agreed upon prior to the
issuance thereof.
SECTION 6.9 Confidentiality. No party hereto shall publicly disclose, by
---------------
any means, the scope and nature of the registration rights which such party
enjoys pursuant to this Agreement and the applicable Registration Rights
Agreement, except as may be required by applicable law or court process. This
obligation of confidentiality shall last indefinitely, regardless of the
termination of this Agreement in accordance with Section 8.11 hereof.
SECTION 6.10 No-Solicitation. Each of the parties hereto agrees that,
---------------
during the period beginning on the date hereof and ending on the second
anniversary of the Purchase Closing Date, it will not, directly or indirectly,
without the prior written consent of the
32
appropriate party, (i) hire or enter into any services contract with any current
officer, director or employee of any other party or any of such party's
Subsidiaries, or (ii) induce or attempt to induce or otherwise counsel or
encourage any current officer, director or employee of any other party or any of
such party's Subsidiaries with whom such party has had contact in the course of
its consideration of the transactions contemplated hereby to leave or otherwise
terminate such person's relationship with his or her current employer; provided,
--------
however, that the foregoing shall not (x) prohibit any such actions pursuant to
a general employment advertisement published in a newspaper or other publication
of general circulation, (y) prevent any party from hiring any such person who
contacts it on his or her own initiative without any solicitation by or
encouragement from such party or (z) prevent any party from hiring any such
person who has been terminated by any other party or any of such party's
Subsidiaries prior to the commencement of employment discussions.
SECTION 6.11 Formation of PBV; IPO. (a) The parties agree that the assets
---------------------
of PBV shall include a licensing agreement (the "Licensing Agreement"),
-------------------
containing commercially reasonable terms, pursuant to which PBV shall have a
non-exclusive license to utilize any and all consumer video and other assets
(whether in print or any other medium), whether currently in existence or
hereafter developed or acquired, of the Company and its Subsidiaries (the
"Licensed Assets") for the development, promotion, distribution, sale or other
---------------
exploitation of consumer-oriented broadband video, interactive video and
streaming video products and services; provided, however, such assets shall not
-------- -------
include the educational video assets of the Company or its Subsidiaries,
including those of Channel One Corporation and Films for the Humanities and
Sciences, unless the Company, in its sole discretion, elects to include such
educational video assets. The exploitation of the Licensed Assets will not
extend to services that have traditionally been delivered by television, cable
and satellite television program services or to traditional videocassettes or
similar medium. "Commercially reasonable terms" means terms, including
royalties, that are no less favorable to PBV than those that could be obtained
in an arm's length negotiations with unrelated third parties who are not
Affiliates of the Company.
(b) Commencing on the date hereof, the parties shall use their good faith
and commercially reasonable efforts to, as promptly as reasonably practicable,
(i) identify the assets of the Company and its Subsidiaries that are to be
licensed to PBV pursuant to the License Agreement, (ii) determine the terms of
the License Agreement and (iii) agree on the fair market value of the PBV Units
for purposes of Section 1.3.
(c) If the Option is exercised, then the Company shall use its
commercially reasonable efforts (x) to cause the business of PBV to be conducted
in a manner that will permit PBV to effect an underwritten public offering (an
"IPO") within eighteen (18) months of the Option Closing Date and, (y) subject
---
to market conditions, to cause PBV to effect an IPO within such eighteen month
period and if the Option is not exercised, then the Company shall use its
commercially reasonable efforts to cause the business of PBV to be conducted in
a manner that will permit PBV to effect an IPO within eighteen (18) months of
the Option Expiration Date and, subject to market conditions, to cause PBV to
effect and IPO within such eighteen month period. Purchaser and Liberty Digital
will cooperate with the efforts of the Company and PBV to effect an IPO,
including with respect to any recapitalization or reorganization in connection
therewith;
33
provided, that (i) such IPO consist of a primary offering of not less than 5% of
--------
the total equity of PBV, (ii) the underwriters are reasonably satisfactory to
the party that has exercised the Option or the Post-Option, and (iii) the
valuation of PBV that is used to determine the initial public offering price is
recommended by the lead managing underwriter(s).
SECTION 6.12 Listing of Shares in PBV. In the event that the Option or the
------------------------
Post-Option is exercised, following an IPO, the Company shall use its
commercially reasonable efforts to cause PBV to have the PBV Units or
Post-Option PBV Units, as the case may be, listed on any nationally recognized
securities exchange or national quotation service on which the outstanding
membership units or shares of PBV are then listed.
ARTICLE VII
CONDITIONS TO CLOSING
---------------------
SECTION 7.1 Purchase Closing Conditions.
---------------------------
(a) Obligations of Purchaser. Purchaser's obligation to purchase the
------------------------
Shares at the Purchase Closing is subject to the satisfaction (or waiver by
Purchaser), on or prior to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of the Company contained in
this Agreement that is qualified as to materiality or Material Adverse
Effect shall be true and correct, and each of the representations and
warranties of the Company contained in this Agreement that is not so
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). The Company shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date (it
being understood that the covenants relating to PBV and its assets shall
be deemed to not be required to be performed or observed by the Company on
or prior to the Purchase Closing Date).
(ii) Legal Investment. On the Purchase Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
Shares and the other transactions contemplated by this Agreement, the
Warrant Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the Shares, the
Warrants, the PBV Units or the LDIG Shares or (y)
34
the other transactions contemplated by this Agreement, the Warrant
Agreement and the applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Compliance Certificate; Secretary's Certificate. The Company
-----------------------------------------------
shall have delivered to Purchaser a compliance certificate, executed by
the Chief Executive Officer or the President of the Company, dated as of
the Purchase Closing Date, to the effect that the conditions specified in
Section 7.1(a)(i) have been satisfied. The Company shall have delivered to
Purchaser a certificate executed by the Secretary of the Company, dated as
of the Purchase Closing Date, certifying as to (x) the resolutions of the
Board evidencing approval of the transactions contemplated by this
Agreement, the Warrant Agreement and the applicable Registration Rights
Agreement and the authorization of the named officer or officers to
execute and deliver this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement and (y) certain of the officers
of the Company, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the Shares and the Warrants under the HSR Act shall have been
terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by the Company and delivered to
Purchaser.
(viii) Listing of Shares. The Shares shall have been approved for
-----------------
listing on the NYSE, subject to official notice of issuance.
(ix) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(c) (other than clause (viii)) and 7.1(d) (other than
clause (ix)) hereof shall have been satisfied (or waived by the
appropriate party).
(b) Conditions to Obligations of the Company. The Company's obligation to
----------------------------------------
issue and sell the Shares at the Purchase Closing is subject to the satisfaction
(or waiver by the Company), on or prior to such Closing, of the following
conditions:
(i) Representations and Warranties of Purchaser True;
-------------------------------------------------
Performance of Obligations. Each of the representations and warranties of
--------------------------
Purchaser contained in this Agreement shall be true and correct in all
material respects as of the Purchase Closing Date. Purchaser shall have
performed in all material respects all agreements, obligations, covenants
and conditions herein required to be performed or observed by it on or
prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall
----------------
not be in effect any Law or Order directing that the purchase and sale
of the Shares and the other
35
transactions contemplated by this Agreement, the Warrant Agreement and the
applicable Registration Rights Agreement not be consummated or which has
the effect of rendering it unlawful to consummate such transactions.
(iii) Proceedings and Litigation. No Action shall have
--------------------------
been commenced by any governmental authority against any party hereto
seeking to restrain or delay (x) the purchase and sale of the Shares, the
Warrants, the PBV Units or the LDIG Shares or (y) the other transactions
contemplated by this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and
---------
waivers of governmental authorities necessary or appropriate for
consummation of the transactions contemplated by this Agreement shall have
been obtained.
(v) Purchaser's Compliance Certificate; Secretary's Certificate.
-----------------------------------------------------------
Purchaser shall have delivered to the Company a compliance certificate,
executed by the Chief Executive Officer or the President of Purchaser,
dated as of the Purchase Closing Date, to the effect that the conditions
specified in Section 7.1(b)(i) have been satisfied. Purchaser shall have
delivered to the Company a certificate executed by the Secretary of
Purchaser, dated as of the Purchase Closing Date, certifying as to (x) the
resolutions of the Board evidencing approval of the transactions
contemplated by this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement and the authorization of the named officer
or officers to execute and deliver this Agreement and the applicable
Registration Rights Agreement and (y) certain of the officers of
Purchaser, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the Shares and the Warrants under the HSR Act shall have been
terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by Purchaser and delivered to
the Company.
(viii) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(c) (other than clause viii)) and 7.1(d) (other than
clause (ix)) hereof shall have been satisfied (or waived by the
appropriate party).
(c) Obligations of Liberty Digital. Liberty Digital's obligation to
------------------------------
issue and sell the LDIG Purchase Shares at the Purchase Closing is subject to
the satisfaction (or waiver by Liberty Digital), on or prior to such Closing, of
the following conditions:
(i) Representations and Warranties of the Company True; Performance
---------------------------------------------------------------
of Obligations. Each of the representations and warranties of the Company
--------------
contained in Sections 3.4, 3.11, 3.12., 3.18 and 3.20 of this Agreement
that is qualified as to materiality or Material Adverse Effect shall be
true and correct, and each of the representations and warranties of the
Company contained in such sections that is not so
36
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). The Company shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall
----------------
not be in effect any Law or Order directing that the purchase and sale of
the LDIG Purchase Shares and the other transactions contemplated by this
Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions .
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the LDIG Purchase
Shares, (y) the other transactions contemplated by this Agreement and the
applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Compliance Certificate; Secretary's Certificate. The Company
-----------------------------------------------
shall have delivered to Liberty Digital a compliance certificate, executed
by the Chief Executive Officer or the President of the Company, dated as
of the Purchase Closing Date, to the effect that the conditions specified
in Section 7.1(c)(i) have been satisfied. The Company shall have delivered
to Liberty Digital a certificate executed by the Secretary of the Company,
dated as of the Purchase Closing Date, certifying as to (x) the
resolutions of the Board evidencing approval of the transactions
contemplated by this Agreement and the applicable Registration Rights
Agreement and the authorization of the named officer or officers to
execute and deliver this Agreement and the applicable Registration Rights
Agreement and (y) certain of the officers of the Company, their titles and
examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the LDIG Purchase Shares under the HSR Act shall have been terminated
or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by the Company and delivered to
Liberty Digital.
(viii) Satisfaction of Other Conditions. All of the conditions set
--------------------------------
forth in Sections 7.1(a) (other than clause (ix)) and 7.1(b) (other than
clause (viii)) hereof shall have been satisfied (or waived by the
appropriate party).
37
(d) Conditions to Obligations of the Company. The Company's obligation to
----------------------------------------
purchase the LDIG Purchase Shares at the Purchase Closing is subject to the
satisfaction (or waiver by the Company), on or prior to such Closing, of the
following conditions:
(i) Representations and Warranties True; Performance of Obligations.
--------------------------------------------------------------
Each of the representations and warranties of Liberty Digital contained in
this Agreement that is qualified as to materiality or Material Adverse
Effect shall be true and correct, and each of the representations and
warranties of Liberty Digital contained in this Agreement that is not so
qualified as to materiality or Material Adverse Effect shall be true and
correct in all material respects, in each case as of the Purchase Closing
Date (except for those representations and warranties which address
matters only as of a particular date, which shall be true and correct, or
true and correct in all material respects, as the case may be, as of such
date). Liberty Digital shall have performed in all material respects all
agreements, obligations, covenants and conditions herein required to be
performed or observed by it on or prior to the Purchase Closing Date.
(ii) Legal Investment. On the Purchase Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
LDIG Purchase Shares and the other transactions contemplated by this
Agreement and the applicable Registration Rights Agreement not be
consummated or which has the effect of rendering it unlawful to consummate
such transactions.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay (x) the purchase and sale of the LDIG Purchase
Shares, or (y) the other transactions contemplated by this Agreement and
the applicable Registration Rights Agreement.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
transactions contemplated by this Agreement shall have been obtained.
(v) Purchaser's Compliance Certificate; Secretary's Certificate.
-----------------------------------------------------------
Liberty Digital shall have delivered to the Company a compliance
certificate, executed by the Chief Executive Officer or the President of
Liberty Digital, dated as of the Purchase Closing Date, to the effect that
the conditions specified in Section 7.1(d)(i) have been satisfied. Liberty
Digital shall have delivered to the Company a certificate executed by the
Secretary of Liberty Digital, dated as of the Purchase Closing Date,
certifying as to (x) the resolutions of the Board evidencing approval of
the transactions contemplated by this Agreement and the applicable
Registration Rights Agreement and the authorization of the named officer
or officers to execute and deliver this Agreement and the applicable
Registration Rights Agreement and (y) certain of the officers of Liberty
Digital, their titles and examples of their signatures.
(vi) HSR Compliance. All waiting periods applicable to the purchase of
--------------
the LDIG Purchase Shares under the HSR Act shall have been terminated or
expired.
38
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by Liberty Digital and
delivered to the Company.
(viii) Listing of Shares. All of the LDIG Purchase Shares shall have
-----------------
been approved for quotation on Nasdaq, subject to official notice of
issuance.
(ix) Satisfaction of Other Conditions. The conditions set forth in
--------------------------------
Sections 7.1(a)(other than clause (ix)) and 7.1(b) (other than clause
(viii)) hereof shall have been satisfied (or waived by the appropriate
party).
SECTION 7.2 Option Closing Conditions.
-------------------------
(a) Obligations of Purchaser. Purchaser's obligation to purchase the PBV
------------------------
Units at the Option Closing is subject to the satisfaction (or waiver by
Purchaser), on or prior to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of the Company contained in the
Company Certificate that is qualified as to materiality or Material
Adverse Effect shall be true and correct, and each of the representations
and warranties of the Company contained in the Company Certificate that is
not so qualified as to materiality or Material Adverse Effect shall be
true and correct in all material respects, in each case as of the Option
Closing Date (except for those representations and warranties which
address matters only as of a particular date, which shall be true and
correct, or true and correct in all material respects, as the case may be,
as of such date). The Company shall have performed in all material
respects all agreements, obligations, covenants and conditions herein
required to be performed or observed by it on or prior to the Option
Closing Date.
(ii) Legal Investment. On the Option Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty
Media Shares, not be consummated or which has the effect of rendering it
unlawful to consummate such transaction.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay the purchase and sale of the PBV Units in exchange
for, if applicable, the LDIG Shares or the Liberty Media Shares.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
sale of the PBV Units in exchange for, if applicable, the LDIG Shares or
the Liberty Media Shares shall have been obtained.
(v) Compliance Certificate. The Company shall have delivered to
----------------------
Purchaser a compliance certificate, executed by the Chief Executive
Officer or the President of the
39
Company, dated as of the Option Closing Date, to the effect that the
conditions specified in Section 7.2(a)(i) have been satisfied.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the PBV Units and, if applicable, the acquisition in exchange therefor
of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have
been terminated or expired.
(vii) Registration Rights Agreement. The applicable Registration
-----------------------------
Rights Agreement shall have been executed by PBV and delivered to
Purchaser or Liberty Digital.
(b) Conditions to Obligations of the Company. The Company's obligation to
issue and sell the PBV Units and to purchase the LDIG Shares at the Option
Closing is subject to the satisfaction (or waiver by the Company), on or prior
to such Closing, of the following conditions:
(i) Representations and Warranties True; Performance of Obligations.
---------------------------------------------------------------
Each of the representations and warranties of Purchaser or Liberty Digital
contained in the Liberty Certificate or AT&T contained in the AT&T
Certificate, as the case may be, that is qualified as to materiality or
Material Adverse Effect shall be true and correct, and each of the
representations and warranties of Purchaser, Liberty Digital or AT&T
contained in the Liberty Certificate or the AT&T Certificate, as
applicable, that is not so qualified as to materiality or Material Adverse
Effect shall be true and correct in all material respects, in each case as
of the Option Closing Date (except for those representations and
warranties which address matters only as of a particular date, which shall
be true and correct, or true and correct in all material respects, as the
case may be, as of such date). Purchaser and Liberty Digital shall have
performed in all material respects all agreements, obligations, covenants
and conditions herein required to be performed or observed by it on or
prior to the Option Closing Date.
(ii) Legal Investment. On the Option Closing Date, there shall not
----------------
be in effect any Law or Order directing that the purchase and sale of the
PBV Units, in exchange for, if applicable, the LDIG Shares or Liberty
Media Shares, not be consummated or which has the effect of rendering it
unlawful to consummate such transaction.
(iii) Proceedings and Litigation. No Action shall have been
--------------------------
commenced by any governmental authority against any party hereto seeking
to restrain or delay the purchase and sale of the PBV Units in exchange
for, if applicable, the LDIG Shares or the Liberty Media Shares.
(iv) Approvals. All approvals, consents, permits and waivers of
---------
governmental authorities necessary or appropriate for consummation of the
sale of the PBV Units in exchange for, if applicable, the LDIG Shares or
the Liberty Media Shares shall have been obtained.
40
(v) Compliance Certificate. Purchaser, Liberty Digital or AT&T, as
----------------------
applicable, shall have delivered to the Company a compliance certificate,
executed by the Chief Executive Officer or the President of such company,
dated as of the Option Closing Date, to the effect that the conditions
specified in Section 7.2(b)(i) have been satisfied.
(vi) HSR Compliance. All waiting periods applicable to the purchase
--------------
of the PBV Units and, if applicable, the acquisition in exchange therefor
of the LDIG Shares or Liberty Media Shares, under the HSR Act shall have
been terminated or expired.
(vii) Registration Rights Agreement. If the Option Purchaser Price
-----------------------------
is not paid in cash, the applicable Registration Rights Agreement shall
have been executed by Liberty Digital or AT&T and delivered to the
Company.
(viii) Listing of LDIG Shares. The LDIG Shares or the Liberty Media
----------------------
Shares, as the case may be, shall have been approved for quotation on
Nasdaq, subject to official notice of issuance.
ARTICLE VIII
MISCELLANEOUS
-------------
SECTION 8.1 Other Definitions. The following terms as used in this
-----------------
Agreement shall have the following meanings:
(a) "Affiliate" means, with respect to any Person, any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person, for so
long as such Person remains so associated to the specified Person.
(b) "Control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with"), with respect to the relationship between or among two or more
------------
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise.
(c) "Group" shall have the meaning assigned to it in Section 13(d)(3) of
-----
the Exchange Act.
(d) "Person" means any individual, corporation, limited liability company,
------
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivisions thereof or any Group comprised of two or more of the foregoing.
41
SECTION 8.2 Governing Law; Jurisdiction; Waiver of Jury Trial. This
-------------------------------------------------
Agreement shall be governed in all respects by the laws of the State of New
York. No suit, action or proceeding with respect to this Agreement may be
brought in any court or before any similar authority other than in a court of
competent jurisdiction in the State of New York. Each of the parties hereby
submits to the exclusive jurisdiction of such courts for the purpose of such
suit, proceeding or judgment. Each of the parties hereto hereby irrevocably
waives any right which it may have had to bring such an action in any other
court, domestic or foreign, or before any similar domestic or foreign authority.
Each of the parties hereto hereby irrevocably and unconditionally waives trial
by jury in any legal action or proceeding in relation to this Agreement and for
any counterclaim therein.
SECTION 8.3 Successors and Assigns; Assignment. Except as otherwise
----------------------------------
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, permitted assigns, heirs, executors and
administrators of the parties hereto. This Agreement may not be assigned without
the prior written consent of each other party.
SECTION 8.4 Entire Agreement; Supersedes Prior Agreement. This Agreement
--------------------------------------------
and the Exhibits hereto, the applicable Registration Rights Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
SECTION 8.5 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 8.6 Amendment and Waiver. This Agreement may be amended or
--------------------
modified, and the rights of the parties hereunder may only be waived, upon the
written consent of each party sought to be bound.
SECTION 8.7 Delays or Omissions. It is agreed that no delay or omission to
-------------------
exercise any right, power or remedy accruing to any party, upon any breach,
default or noncompliance by another party under this Agreement or the applicable
Registration Rights Agreement, shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any party's part
of any breach, default or noncompliance under this Agreement or the applicable
Registration Rights Agreement or any waiver on such party's part of any
provisions or conditions of this Agreement or the applicable Registration Rights
Agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or the applicable Registration Rights Agreement, by law, or otherwise
afforded to any party, shall be cumulative and not alternative.
42
SECTION 8.8 Notices. All notices required or permitted hereunder shall be
-------
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified; (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) business day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to the addresses set forth below:
If to the Company:
PRIMEDIA, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
with copies to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxx, Esq.
If to Purchaser or Liberty Digital:
Liberty Media Group
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxx Xxxxxx, Esq.
Liberty Digital, Inc.
00000 Xxxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxx Xxxxxxxxx
43
with copies to:
Xxxxx Xxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx Xx., Esq.
SECTION 8.9 Expenses. Each party hereto shall pay all costs and expenses
--------
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement, the Warrant Agreement and the applicable
Registration Rights Agreement.
SECTION 8.10 Titles and Subtitles. The titles of the sections and
--------------------
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
SECTION 8.11 Termination. This Agreement may be terminated by (i) mutual
-----------
agreement of the parties hereto or (ii) by Purchaser or the Company in the event
the Purchase Closing has not occurred by August 1, 2000; provided, that this
--------
termination right may not be exercised by a party whose nonperformance has
delayed the Purchase Closing. Upon termination of this Agreement pursuant to
this Section 8.11, this Agreement shall be void and of no further force and
effect and no party shall have any liability to any other party under this
Agreement, except that nothing herein shall relieve any party from any liability
for the breach of any of the representations, warranties, covenants and
agreements set forth in this Agreement and except as contemplated by Section
8.9.
SECTION 8.12 Counterparts; Execution by Facsimile Signature. This
----------------------------------------------
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument. This
Agreement may be executed by facsimile signature(s).
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have executed this STOCK PURCHASE
AGREEMENT as of the date set forth in the first paragraph hereof.
PRIMEDIA INC.
By: ________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By: ________________________________
Name:
Title:
LIBERTY DIGITAL, INC.
By: ____________________________
Name:
Title:
