Exhibit 2.1
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
by and between
NEWS CORPORATION
and
LIBERTY MEDIA CORPORATION
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As of December 22, 2006
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TABLE OF CONTENTS
Page
ARTICLE I. CERTAIN DEFINITIONS AND OTHER MATTERS.............................2
Section 1.1. Certain Definitions.....................................2
Section 1.2. Terms Defined in Other Sections........................14
ARTICLE II. INTERPRETATION..................................................15
Section 2.1. Interpretation.........................................15
ARTICLE III. EXCHANGE OF STOCK; CLOSING.....................................15
Section 3.1. Exchange of Stock......................................15
Section 3.2. Closing................................................16
Section 3.3. Parent's Deliveries at the Closing.....................16
Section 3.4. LMC's Deliveries at the Closing........................17
Section 3.5. Performance............................................17
Section 3.6. Adjustment to Number and Type of Securities............18
Section 3.7. Parent Restructuring and Related Matters...............18
Section 3.8. Estimated Net Working Capital Adjustment...............18
Section 3.9. Final Net Working Capital Adjustment...................19
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT........................21
Section 4.1. Organization and Standing..............................21
Section 4.2. Capitalization.........................................21
Section 4.3. Corporate Power and Authority..........................23
Section 4.4. Shareholder Votes Required.............................24
Section 4.5. Conflicts; Consents and Approvals......................24
Section 4.6. Operations of the Transferred Business.................25
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Section 4.7. Compliance with Law....................................25
Section 4.8. Intellectual Property..................................26
Section 4.9. Absence of Splitco Operations; Splitco Assets
and Liabilities......................................27
Section 4.10. Environmental Matters..................................27
Section 4.11. Litigation.............................................28
Section 4.12. Employee Benefit Plans.................................28
Section 4.13. Contracts..............................................30
Section 4.14. Labor Matters..........................................32
Section 4.15. RSN Subsidiaries Financial Statements..................33
Section 4.16. Permits................................................34
Section 4.17. Real Estate............................................34
Section 4.18. Guarantees.............................................35
Section 4.19. Title to DTV Shares....................................35
Section 4.20. Certain Tax Matters....................................35
Section 4.21. Affiliate Transactions.................................37
Section 4.22. Brokers or Finders.....................................37
Section 4.23. Investigation; Reliance................................37
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF LMC............................38
Section 5.1. Organization and Standing..............................38
Section 5.2. Corporate Power and Authority..........................38
Section 5.3. No Vote Required.......................................39
Section 5.4. Conflicts; Consents and Approvals......................39
Section 5.5. LMC Parent Shares......................................40
Section 5.6. Litigation.............................................40
Section 5.7. Governmental Actions...................................40
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Section 5.8. FCC Matters............................................41
Section 5.9. Investment Purpose and Experience......................41
Section 5.10. Investigation; Reliance................................41
Section 5.11. Brokers and Finders....................................42
ARTICLE VI. COVENANTS AND AGREEMENTS........................................42
Section 6.1. Access and Information.................................42
Section 6.2. Conduct of Business by Parent..........................42
Section 6.3. Conduct of Business by LMC.............................46
Section 6.4. Proxy Statement........................................46
Section 6.5. Parent Stockholders' Meeting...........................48
Section 6.6. Appropriate Action; Consents; Filings..................48
Section 6.7. Further Assurances.....................................50
Section 6.8. Standstill Agreements..................................50
Section 6.9. Confidentiality; Access to Records after Closing.......55
Section 6.10. Employee Matters.......................................56
Section 6.11. Intercompany Services and Accounts.....................58
Section 6.12. Cooperation with Respect to Financial Reporting........59
Section 6.13. No Solicitation........................................59
Section 6.14. DTV Charter Restrictions...............................61
Section 6.15. Certain Tax Matters....................................61
Section 6.16. Ancillary Agreements...................................61
Section 6.17. Pledged Shares.........................................62
ARTICLE VII. CONDITIONS TO CLOSING..........................................62
Section 7.1. Mutual Conditions......................................62
Section 7.2. Conditions to LMC's Obligations........................62
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Section 7.3. Conditions to Parent's Obligations.....................64
Section 7.4. Frustration of Closing Conditions......................65
ARTICLE VIII. INDEMNIFICATION...............................................65
Section 8.1. Survival of Representations, Warranties and
Covenants............................................65
Section 8.2. Indemnification........................................66
Section 8.3. Procedures.............................................67
Section 8.4. Exclusivity............................................68
Section 8.5. Certain Rights and Limitations.........................69
ARTICLE IX. TERMINATION.....................................................69
Section 9.1. Termination............................................69
Section 9.2. Effect of Termination..................................71
ARTICLE X. MISCELLANEOUS....................................................72
Section 10.1. Notices................................................72
Section 10.2. Expenses...............................................72
Section 10.3. Governing Law; Consent to Jurisdiction.................73
Section 10.4. Waiver of Jury Trial...................................73
Section 10.5. Assignment; Successors and Assigns; No Third
Party Rights.........................................73
Section 10.6. Counterparts...........................................74
Section 10.7. Titles and Headings....................................74
Section 10.8. Amendment and Modification.............................74
Section 10.9. Publicity; Public Announcements........................74
Section 10.10. Waiver.................................................74
Section 10.11. Severability...........................................75
Section 10.12. No Strict Construction.................................75
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Section 10.13. Entire Agreement.......................................75
Section 10.14. Equitable Remedies.....................................75
Exhibits
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Exhibit A-I Tax Matters Agreement
SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT, dated as of December 22, 2006 (this
"Agreement"), is entered into by and between NEWS CORPORATION, a Delaware
corporation ("Parent") and LIBERTY MEDIA CORPORATION, a Delaware corporation
("LMC").
W I T N E S S E T H:
WHEREAS, Greenlady Corp. ("Splitco"), a Delaware corporation, as an
indirect wholly owned subsidiary of Parent;
WHEREAS, the Networks (as defined in Article I) conduct a business
consisting of regional sports programming networks (the "Transferred
Business");
WHEREAS, Parent through its wholly owned subsidiary Fox Entertainment
Group, Inc. ("FEG") owns the DTV Shares (as defined in Article I);
WHEREAS, the Stockholders (as defined in Article I) are indirect
wholly owned subsidiaries of LMC;
WHEREAS, the Stockholders collectively own the LMC Parent Shares (as
defined in Article I);
WHEREAS, as of the Closing (as defined in Article III) the assets of
Splitco will consist solely of (i) all issued and outstanding equity interests
of each RSN Subsidiary (as defined in Article I), (ii) the DTV Shares and (iii)
the Cash Amount (as defined in Article I);
WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, (a) Parent desires to exchange the Splitco Shares (as defined
in Article I) for the LMC Parent Shares, and (b) LMC desires to cause the
Stockholders to exchange the LMC Parent Shares for the Splitco Shares;
WHEREAS, the parties hereto intend that the Exchange (as defined in
Section 3.1) qualify as a tax-free exchange under Section 355(a) of the Code
(as defined in Article I) and this Agreement, together with the Tax Matters
Agreement (as defined in Article I), constitute a "plan of reorganization," as
defined in Section 368 of the Code;
WHEREAS, concurrently with the execution of this Agreement, Parent and
certain of its Affiliates party thereto, on the one hand, and LMC and certain
of its Affiliates party thereto, on the other hand, are entering into the Tax
Matters Agreement;
WHEREAS, at or prior to the Closing Parent and LMC shall enter into
the Global Affiliation Agreement Side Letter (as defined in Article I);
WHEREAS, at or prior to the Closing, Parent and certain of its
Affiliates (other than the Transferred Subsidiaries) party thereto, on the one
hand, and the Transferred Subsidiaries and DTV, on the other hand, shall enter
into the following agreements, each in a form reasonably satisfactory to each
of Parent and LMC: (i) the NSP Agreements, (ii) the NAP Agreements, (iii) the
Technical Services Agreement, (iv) the Transitional Services Agreement, (v) the
Production Services Agreement, (vi) the Sports Access Agreement, (vii) the
Webpage Services Agreement, (viii) the FSD Representation Agreement, (ix) the
Fox College Sports License Agreement, (x) the DTV Non-Competition Agreement and
(xi) the RSN Subsidiary Non-Competition Agreement (such agreements, together
with the Global Affiliation Side Letter and the Tax Matters Agreement, the
"Ancillary Agreements");
WHEREAS, the Board of Directors of Parent and the Board of Directors
of LMC and each Stockholder have, in each case, determined that it is in the
best interests of their respective corporations and their respective
stockholders to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and intending to be legally bound, the parties hereto agree as
follows:
ARTICLE I.
CERTAIN DEFINITIONS AND OTHER MATTERS
Section 1.1. Certain Definitions. As used in this Agreement and the
schedules hereto, the following terms have the respective meanings set forth
below.
"Action" means any demand, action, claim, suit, countersuit,
litigation, arbitration, prosecution, proceeding (including any civil,
criminal, administrative, investigative or appellate proceeding), hearing,
inquiry, audit, examination or investigation commenced, brought, conducted or
heard by or before, or otherwise involving, any court, grand jury or other
Governmental Authority or any arbitrator or arbitration panel.
"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 Person; provided, however
that (i) the Transferred Subsidiaries will be treated as Affiliates of Parent
prior to the Closing and as Affiliates of LMC after the Closing, and (ii) the
term "Affiliate" when used with respect to Parent or any Affiliate of Parent
prior to the Closing, or LMC or any Affiliate of LMC after the Closing, shall
not include DTV or any of its Subsidiaries. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, including the ability
to elect the members of the board of directors or other governing body of a
Person, and the terms "controlled" and "controlling" have correlative meanings.
"Antitrust Laws" means the HSR Act, the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Federal Trade Commission Act, as amended, and all
other federal, state, and foreign statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate actions having the purpose or
effect of monopolization or restraint of trade or lessening competition through
merger or acquisition.
"Associate" shall have the meaning ascribed to such term under the ASX
Listing Rules.
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"ASX" means the Australian Stock Exchange.
"beneficial ownership" shall have (and related terms such as
"beneficially owned" or "beneficial owner") the meaning set forth in Rule 13d-3
under the Exchange Act; provided, however that a Person shall be deemed to
beneficially own any securities which such Person has the right to acquire
whether such right is exercisable immediately or only after the passage of time
or upon the satisfaction of one or more conditions (whether or not within the
control of such Person) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange
rights, other rights, warrants or options.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in New York, New York are authorized or
required by Law or executive order to close.
"Business FCC Licenses" means the material licenses, permits,
authorizations, and approvals issued by the FCC to each of the RSN Subsidiaries
which are used in connection with the operation of the Networks.
"Cash Amount" means five hundred and fifty million dollars
($550,000,000), plus the Estimated Net Working Capital Deficiency Amount (if
any) or minus the Estimated Net Working Capital Excess Amount (if any).
"Cleanup" means all actions required to (a) clean up, remove, treat or
remediate Hazardous Materials in the indoor or outdoor environment, (b) perform
pre-remedial studies and investigations and post-remedial monitoring and care,
(c) respond to any requests by a Governmental Authority for information or
documents relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous Materials in the indoor
or outdoor environment or (d) prevent the Release of Hazardous Materials so
that they do not migrate, endanger, or threaten to endanger public health or
welfare or the indoor or outdoor environment.
"Code" means the Internal Revenue Code of 1986, as amended.
"Communications Act" means the Communications Act of 1934, as amended,
and the rules, regulations and published orders of the FCC thereunder.
"Communications Regulation" means the Communications Act, the
Telecommunications Act of 1996, any rule, regulation or policy of the FCC,
and/or any statute, rule, regulation or policy of any other Governmental
Authority with respect to the operation of channels of radio communication
and/or the provision of communications services (including the provision of
direct-to-home video programming).
"Confidentiality Agreement" means the letter agreement, dated
September 5, 2006, by and between Parent and LMC.
"Contract" means any agreement, contract, lease, power of attorney,
note, loan, evidence of indebtedness, purchase and sales order, letter of
credit, settlement agreement, franchise agreement, undertaking, covenant not to
compete, employment agreement, license, instrument, obligation, option,
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commitment, understanding and other executory commitment, whether oral or
written, express or implied.
"Customer Agreements" means all Contracts between any RSN Subsidiary
and a customer of the Transferred Business.
"Damages" means any and all losses, Liabilities, claims, damages,
deficiencies, fines, payments, costs and expenses, whenever or however arising
and whether or not resulting from third party claims (including all amounts
paid in connection with any demands, assessments, judgments, settlements and
compromises relating thereto; interest and penalties with respect thereto; and
costs and expenses, including reasonable attorneys', accountants' and other
experts' fees and expenses, incurred in investigating, preparing for or
defending against any such Actions or other legal matters or in asserting,
preserving or enforcing an Indemnified Party's rights hereunder). Damages shall
expressly exclude special, punitive and consequential damages and any and all
losses, Liabilities, claims, damages, deficiencies, fines, payments, costs or
expenses with respect to diminution of value; provided that Damages shall
include any of the foregoing awarded in an Action (or settlement thereof) to
any third party against an Indemnified Party, without regard to the foregoing
limitations.
"DIT" means any "deferred intercompany transaction" or "intercompany
transaction" within the meaning of the Treasury Regulations (or predecessors
thereto) that does not occur pursuant to the Parent Restructuring.
"DTV" means The DirecTV Group, Inc., a Delaware corporation.
"DTV Non-Competition Agreement" means the letter agreement relating to
Parent's confidentiality, non-competition and non-solicitation provisions
relating to DTV to be entered into by and between Parent and DTV.
"DTV Shares" means, the shares of common stock of DTV held by FEG, as
specified in Section 1.1 of the Parent Disclosure Letter, and to be transferred
to Splitco pursuant to Section 3.1.
"ELA" means any "excess loss account" within the meaning of the
Treasury Regulations (or predecessors thereto).
"Encumbrances" means security interests, liens, charges, claims, title
defects, deficiencies or exceptions (including, with respect to the Leased Real
Property, defects, deficiencies or exceptions in, or relating to, marketability
of title, or leases, subleases or the like affecting title), mortgages,
pledges, easements, encroachments, restrictions on use, rights-of-way, rights
of first refusal, rights of first negotiation or any similar right in favor of
any third party, any restriction on the receipt of any income derived from any
asset and any limitation or restriction on the right to own, vote, sell or
otherwise dispose of any security, conditional sales or other title retention
agreements, covenants, conditions or other similar restrictions (including
restrictions on transfer) or other encumbrances of any nature whatsoever, other
than Permitted Encumbrances.
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"Environmental Claim" means any claim, action, cause of action,
investigation, request for information or notice (written or oral) by any
Person or entity alleging potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties arising out of, based on or resulting
from (a) the presence, or Release into the environment, of any Hazardous
Material at any location, whether or not owned or operated by such Person or
any of its Subsidiaries or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law or (c) any
contractual liabilities.
"Environmental Laws" means all Laws relating to pollution or
protection of human health and safety or the environment (including ambient
air, surface water, groundwater, land surface, natural resources or subsurface
strata), including all such Laws relating to Releases or threatened Releases of
Hazardous Materials into the environment or work place, or otherwise relating
to the environmental or worker health and safety aspects of manufacturing,
processing, distribution, importation, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, including the Comprehensive
Response, Compensation, and Liability Act and its state equivalents, chemical
inventories in all relevant jurisdictions, and all such Laws relating to the
registration of products of the Transferred Business or Splitco under the
Federal Insecticide, Fungicide and Rodenticide Act, the Food Drug and Cosmetic
Act, the Toxic Substances Control Act, the European List of Notified Chemical
Substances, the European Inventory of Existing Commercial Chemical Substances
or similar Laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FCC" means the United States Federal Communications Commission,
including a Bureau or subdivision thereof acting on delegated authority.
"FCC Consent" means the grant, without regard to whether such grant
has become a final order, by the FCC of its consent to, or approval of, the
transfer of control of Splitco, and consent to, or approval of, transfer of the
DTV Shares and any transfer of control of DTV, to LMC (or any Affiliate of
LMC), pursuant to appropriate applications filed by the parties with the FCC,
as contemplated by this Agreement.
"FLSA" means the Fair Labor Standards Act, 29 U.S.C. Section 201, as
amended.
"FSD Representation Agreement" means the FSD representation agreement
entered into by and among Fox Sports Direct and each of the RSN Subsidiaries,
respectively.
"Fox College Sports License Agreement" means the agreement relating to
the license of Network programming by the RSN Subsidiaries to Fox College
Sports, Inc.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
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"Global Affiliation Agreement Side Letter" means the letter agreement
relating to global affiliation agreements entered into by and between LMC and
Parent.
"Governmental Authority" means any supranational, national, federal,
state or local government, foreign or domestic, or the government of any
political subdivision of any of the foregoing, or any entity, authority,
agency, ministry, department, board, commission, court or other similar body
exercising executive, legislative, judicial, regulatory or administrative
authority or functions of or pertaining to government, including any authority
or other quasi-governmental entity established by a Governmental Authority to
perform any of such functions.
"Hazardous Materials" means any substance which is listed, defined or
regulated as a pollutant, contaminant, hazardous, dangerous or toxic substance,
material or waste, or is otherwise classified as hazardous, dangerous or toxic
in or pursuant to any Environmental Law or which is or contains any explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products (including waste
petroleum and petroleum products) as regulated under any applicable
Environmental Law.
"Indebtedness" of any Person means, without duplication, (i) all
obligations of such Person for money borrowed, whether current or unfunded, or
secured or unsecured; (ii) all obligations of such Person evidenced by notes,
debentures, bonds or other similar instruments or debt securities for the
payment of which such Person is responsible or liable (excluding current
accounts payable incurred in the ordinary course of business); (iii) all
obligations of such Person issued or assumed for deferred purchase price
payments associated with acquisitions, divestments or other transactions; (iv)
all obligations of such Person under leases required to be capitalized in
accordance with GAAP, (v) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance, guarantees or
similar credit transaction, (vi) all interest, fees, prepayment premiums and
other expenses owed with respect to the indebtedness referred to above and
(vii) all indebtedness of others referred to above which is directly or
indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured a creditor against loss, including through the
grant of a security interest upon any assets of such Person.
"Intellectual Property" shall mean all United States and foreign (i)
patents, patent applications, patent disclosures, and all related
continuations, continuations-in-part, divisionals, reissues, re-examinations,
substitutions, and extensions thereof, (ii) trademarks, service marks, trade
names, domain names, logos, slogans, trade dress, and other similar
designations of source or origin, together with the goodwill symbolized by any
of the foregoing, (iii) copyrights and copyrightable subject matter, (iv)
rights of publicity, (v) moral rights and rights of attribution and integrity,
(vi) trade secrets and all confidential information, know-how, inventions,
proprietary processes, formulae, models, and methodologies, (vii) all rights in
the foregoing and in other similar intangible assets, (viii) all applications
and registrations for the foregoing, and (ix) all rights and remedies against
infringement, misappropriation, or other violation thereof.
"IRS" means the Internal Revenue Service of the United States of
America.
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"Knowledge" means (i) with respect to Parent, the actual knowledge of
any of the individuals set forth on Schedule 1.1(a) of the Parent Disclosure
Letter, and (ii) with respect to LMC, the actual knowledge of any of the
individuals set forth on Schedule 1.1(b) of the LMC Disclosure Letter. "Know,"
"knows" and correlative terms will be read to have similar meanings.
"Laws" means all United States federal, state or local, foreign or
supranational laws, constitutions, statutes, codes, rules, regulations,
ordinances, orders, judgments, writs, stipulations, awards, injunctions,
arbitration awards or findings decrees or edicts by a Governmental Authority
having the force of law, including any of the foregoing as they relate to Tax.
"Leased Real Property" means any real property leased or subleased by
the Transferred Subsidiaries and set forth (and designated as leased) in
Section 4.17.2 of the Parent Disclosure Letter.
"Liabilities" means any and all Indebtedness, liabilities, commitments
and obligations, whether or not fixed, contingent or absolute, matured or
unmatured, direct or indirect, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whether or not required by GAAP to be reflected in
financial statements or disclosed in the notes thereto, including those arising
under any Action, Law, order, judgment, injunction or consent decree of any
Governmental Authority or any award of any arbitrator of any kind, and those
arising under any contract, commitment or undertaking.
"Liberty Basket Amount" means $12,000,000.
"Liberty Basket Breach" means the failure of any representation or
warranty contained in this Agreement and made by LMC (other than those
representations or warranties contained in Sections 5.1, 5.2, 5.3, 5.5, 5.10
and 5.11) to be true and correct when made or deemed made.
"Liberty Basket Exception Breach" means the failure of any
representation or warranty contained in Sections 5.1, 5.2, 5.3, 5.5, 5.10 and
5.11 of this Agreement to be true and correct when made or deemed made.
"LMC Disclosure Letter" means the disclosure letter that LMC has
delivered to Parent on the date of this Agreement prior to the execution
hereof, which letter is incorporated by reference herein.
"LMC Indemnitees" means, collectively, LMC, its Affiliates, and their
respective stockholders, members, partners, officers, directors, employees,
attorneys, representatives and agents.
"LMC Parent Shares" means the 324,637,067 Shares of Parent Class A
Common Stock and 188,000,000 shares of Parent Class B Common Stock owned by the
Stockholders.
"LMC Tax Opinion" means the written opinion of LMC's Tax counsel,
addressed to LMC and dated as of the Closing Date, in form and substance
reasonably satisfactory to LMC, to the effect that, based upon the Rulings, the
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Tax Opinion Representations, and any other facts, representations and
assumptions set forth or referred to in such opinion, and subject to such
qualifications and limitations as may be set forth in such opinion, for United
States federal income tax purposes, no gain or loss will be recognized by (and
no amount will be includible in the income of) the Stockholders on the
Exchange.
"LMC Tax Opinion Representations" means the representations set forth
in a letter, which shall be executed by LMC on the Closing Date and dated and
effective as of the Closing Date, to be made by LMC to each of the firms
providing the Tax Opinions as a condition to, and in connection with, the
issuance of the Tax Opinions, including representations in form and substance
substantially as set forth in Schedule A to this Agreement (amended as
necessary to reflect changes in relevant facts occurring after the date of this
Agreement and on or before the Closing Date).
"Material Adverse Effect" means, with respect to a Person or the
Transferred Business, any change, effect, event, occurrence, development,
condition or circumstance that, individually or in the aggregate with all other
adverse changes, effects, events, occurrences, developments, conditions or
circumstances, is, or is reasonably likely to be, materially adverse to the
business, operations, results of operations, assets, liabilities, or condition
(financial or otherwise) of such Person and its Subsidiaries, taken as a whole,
or the Transferred Business, taken as a whole, or on the ability of such Person
to consummate the Transactions, other than any change, effect, event,
occurrence, development, condition or circumstance resulting from, or relating
to (i) the United States economy in general or (ii) the industry in which such
Person or the Transferred Business operates in general, and not having a
materially disproportionate effect (relative to the effect on other Persons
operating in such industry) on such Person or the Transferred Business;
provided that for the purposes of any determination as to the existence of a
"Material Adverse Effect" with respect to Splitco, Splitco's assets shall be
deemed to consist of the following as of the time of such determination: (i)
all issued and outstanding equity interests of each RSN Subsidiary and (ii) the
DTV Shares; provided further that any determination as to the existence of a
"Material Adverse Effect" with respect to Splitco shall be made after taking
into account (without duplication) any amounts actually recovered, under any
insurance policy maintained by Parent or any of its Affiliates or DTV, and/or
by Parent, any Affiliate of Parent or DTV from any other third party, and, in
each case, after giving effect to the application of any such amounts for the
benefit of the Transferred Subsidiaries or DTV. No change, effect, event or
occurrence arising or resulting from any of the following, either alone or in
combination, shall constitute or be taken into account in determining whether
there has been, a Material Adverse Effect: (i) the announcement or performance
of this Agreement and the transactions contemplated hereby (including
compliance with the covenants set forth herein, or any action taken or omitted
to be taken by Parent, any Transferred Subsidiary, Splitco or DTV at the
request or with the prior written consent of LMC), including, to the extent
arising therefrom, any termination of, reduction in or similar negative impact
on relationships, contractual or otherwise, with any customers, suppliers,
distributors, partners or employees of the Transferred Business or DTV, (ii)
acts of war or terrorism or natural disasters, (iii) changes in any Laws or
regulations or applicable accounting regulations or principles or the
interpretations thereof, (iv) the fact, in and of itself (and not the
underlying causes thereof) that any Transferred Subsidiary or DTV failed to
meet any projections, forecasts, or revenue or earnings predictions for any
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period, or (v) any change, in and of itself (and not the underlying causes
thereof) in the stock price of the LMC Parent Shares or the DTV Shares.
"Maximum Amount" means $75,000,000 (provided that it is the
understanding of the parties that such $75,000,000 amount shall not have
deducted therefrom the amount of the Parent Basket Amount or the Liberty Basket
Amount, as the case may be).
"Multiemployer Plan" means any "multiemployer plan" within the meaning
of Section 3(37) of ERISA.
"Xxxxxxx Interests" means each of Mr. K. Xxxxxx Xxxxxxx, the Xxxxxxx
Family Trust and Cruden Financial Services LLC and (x) any successor to any of
the foregoing and (y) any transferee of Parent Class B Stock of any of the
foregoing.
"NAP Agreements" means each national advertising sales representation
agreement by and among National Advertising Partners and each of the RSN
Subsidiaries.
"Network" means each of the regional sports programming cable networks
operated by the RSN Subsidiaries and listed on Section 1.1 of the Parent
Disclosure Letter.
"Net Working Capital" means the (A) current assets (excluding cash and
excluding Tax assets) less (B) current liabilities (excluding Tax liabilities,
and calculated after giving effect to the settlement of intercompany accounts
contemplated by Section 6.11), in each case, of the RSN Subsidiaries on a
consolidated basis, all as determined in accordance with the methods,
principles and classifications used in preparing the Interim Balance Sheet
included in the Financial Statements and set forth on Schedule B attached
hereto and in accordance with GAAP (excluding footnotes and normal year-end
adjustments).
"NSP Agreements" mean each national sports programming service license
agreement by and among National Sports Programming and each of the RSN
Subsidiaries.
"Parent Basket Amount" means $12,000,000.
"Parent Basket Breach" means the failure of any representation or
warranty contained in this Agreement and made by Parent (other than those
representations or warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.19,
4.22 and 4.23 and other than the representations and warranties contained in
Section 4.20 which shall not be the subject of any claim for indemnification
under Article VIII) to be true and correct when made or deemed made.
"Parent Basket Exception Breach" means the failure of any
representation or warranty contained in Sections 4.1, 4.2, 4.3, 4.4, 4.19, 4.22
and 4.23 of this Agreement to be true and correct when made or deemed made.
"Parent Common Stock" means, collectively, the Class A Common Stock,
par value $0.01 per share, of Parent ("Parent Class A Stock") and the Class B
Common Stock, par value $0.01 per share, of Parent ("Parent Class B Stock").
9
"Parent Disclosure Letter" means the disclosure letter that Parent has
delivered to LMC on the date of this Agreement prior to the execution hereof,
which letter is incorporated by reference herein.
"Parent Indemnitees" means, collectively, Parent, its Affiliates and
its and their respective stockholders (other than LMC and any of its
Affiliates), members, partners, officers, directors, employees, attorneys,
representatives and agents.
"Parent Restructuring" means the restructuring effected by Parent and
its Affiliates pursuant to the steps set forth on Schedule C hereto, as the
same may be modified in accordance with the Tax Matters Agreement.
"Parent Tax Opinion" means the written opinion of Parent's Tax
counsel, addressed to Parent and dated as of the Closing Date, in form and
substance reasonably satisfactory to Parent, to the effect that, based upon the
Rulings, the Tax Opinion Representations and any other facts, representations
and assumptions set forth or referred to in such opinion, and subject to such
qualifications and limitations as may be set forth in such opinion, for United
States federal income tax purposes, no gain or loss will be recognized by (and
no amount will be includible in the income of) Parent or any of its Affiliates
on the Exchange or the Parent Restructuring, except with respect to any DITS or
ELAs.
"Parent Tax Opinion Representations" means the representations set
forth in the letter, which shall be executed by Parent on the Closing Date and
dated and effective as of the Closing Date, to be made by Parent to each of the
firms providing the Tax Opinions as a condition to, and in connection with, the
issuance of the Tax Opinions, including representations in form and substance
substantially as set forth in Schedule D to this Agreement (amended as
necessary to reflect changes in relevant facts occurring after the date of this
Agreement and on or before the Closing Date).
"Permitted Encumbrances" means (i) Encumbrances for Taxes not yet due
or being contested in good faith by appropriate proceedings and for which
adequate accruals or reserves have been established, (ii) the claims of
mechanics, materialmen or like Persons that have arisen in the ordinary course
of business or imperfections of title, restrictions and other Encumbrances
that, in any such case, do not materially interfere with the use of (in the
ordinary course of business) or the value (as so used) of, the property subject
thereto, (iii) rights granted to any licensee of any Intellectual Property
Rights in the ordinary course of business consistent with past practices, (iv)
Encumbrances securing Indebtedness not yet in default for the purchase price or
lease payments on property purchased or leased in the ordinary course of
business, (v) Encumbrances created by actions of LMC or its Affiliates, (vi)
with respect to securities, including capital stock, Encumbrances imposed by
the Securities Act or the Exchange Act or (vii) Encumbrances arising from the
rights and obligations under this Agreement or any Ancillary Agreement.
"Person" means an individual, partnership (general or limited),
corporation, limited liability company, joint stock company, unincorporated
organization or association, trust, joint venture or other entity, or a
Governmental Authority.
10
"Pledged Shares" means the 60,000,000 shares of Parent Class A Common
Stock owned beneficially and of record by the Stockholders pledged, as of the
date hereof, to secure certain of the Stockholders' obligations under variable
forward OTC contracts.
"Production Services Agreement" means the agreement relating to the
provision of production services identified therein by the Transferred
Subsidiaries to be entered into by and among each of the Transferred
Subsidiaries and Fox Sports Net, Inc.
"Real Property Lease" means the lease or sublease agreement pursuant
to which a Leased Real Property is leased or subleased.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into
the indoor or outdoor environment (including ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
"RSN Subsidiaries" means each of Fox Sports Net Rocky Mountain, LLC,
Fox Sports Net Pittsburgh, LLC, and Fox Sports Net Northwest, LLC.
"RSN Subsidiary Non-Competition Agreement" means the letter agreement
relating to Parent's confidentiality, non-competition and non-solicitation
obligations relating to the RSN Subsidiaries to be entered into by and among
Parent, Splitco and each RSN Subsidiary.
"Rulings" shall mean the Exchange Rulings and the Parent Restructuring
Ruling.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the United States Securities Act of 1933.
"Securities Encumbrances" means security interests, liens, charges,
claims, title defects, deficiencies or exceptions, mortgages, pledges, rights
of first refusal, rights of first negotiation or any similar right in favor of
any Person, any restriction on the receipt of any income derived from any
security and any limitation or restriction on the right to own, vote, sell or
otherwise dispose of any security, conditional sales or other title retention
agreements, covenants, conditions or other similar restrictions (including
restrictions on transfer) or other encumbrances of any nature whatsoever, other
than (i) Encumbrances imposed by the Securities Act or the Exchange Act or (ii)
Encumbrances arising from the rights and obligations under this Agreement.
"Splitco Common Stock" means the common stock, par value $0.01 per
share, of Splitco.
"Splitco Shares" means all of the issued and outstanding shares of
Splitco Common Stock.
"Sports Access Agreements" means the agreements relating to the
license of highlights and clips for news access by media organizations to the
11
RSN Subsidiaries to be entered into by and among each of the RSN Subsidiaries
and Sports Access, a division of ARC Holding, Ltd.
"Stockholders" means Liberty NC, Inc., Liberty NC II, Inc., Liberty NC
IV, Inc., Liberty NC V, Inc., Liberty NC VI, Inc., Liberty NC VII, Inc.,
Liberty NC VIII, Inc., Liberty NC IX, Inc., Liberty NC XII, Inc. and LMC Bay
Area Sports, Inc.
"Subsidiary" when used with respect to any Person, means (i)(A) a
corporation of which a majority in voting power of its share capital or capital
stock with voting power, under ordinary circumstances, to elect directors is at
the time, directly or indirectly, owned by such Person, by a Subsidiary of such
Person, or by such Person and one or more Subsidiaries of such Person, whether
or not such power is subject to a voting agreement or similar Encumbrance, (B)
a partnership or limited liability company in which such Person or a Subsidiary
of such Person is, at the date of determination, (1) in the case of a
partnership, a general partner of such partnership with the power affirmatively
to direct the policies and management of such partnership or (2) in the case of
a limited liability company, the managing member or, in the absence of a
managing member, a member with the power affirmatively to direct the policies
and management of such limited liability company, or (C) any other Person
(other than a corporation) in which such Person, a Subsidiary of such Person or
such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (1) the power to elect or
direct the election of a majority of the members of the governing body of such
Person, whether or not such power is subject to a voting agreement or similar
Encumbrance, or (2) in the absence of such a governing body, at least a
majority ownership interest or (ii) any other Person of which an aggregate of
more than 50% of the equity interests are, at the time, directly or indirectly,
owned by such Person and/or one or more Subsidiaries of such Person. For the
purposes of the foregoing, the Transferred Subsidiaries will be treated as
Subsidiaries of Parent until the Closing is completed and as Subsidiaries of
LMC immediately after the Closing, and neither IAC/InterActiveCorp nor Expedia,
Inc., or any of their respective Subsidiaries, will be treated as Subsidiaries
of LMC.
"Tax" or "Taxes" means (i) any and all taxes, charges, fees, levies,
customs, duties, tariffs, or other assessments, including income, gross
receipts, excise, real or personal property, sales, withholding, social
security, retirement, unemployment, occupation, use, goods and services,
service use, license, value added, capital, net worth, payroll, profits,
withholding, franchise, transfer and recording taxes, fees and charges, and any
other taxes, charges, fees, levies, customs, duties, tariffs or other
assessments imposed by the IRS or any taxing authority (whether domestic or
foreign including any state, county, local or foreign government or any
subdivision or taxing agency thereof (including a United States possession)),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest thereon, fines, penalties,
additions to tax, or additional amounts attributable to, or imposed upon, or
with respect to, any such taxes, charges, fees, levies, customs, duties,
tariffs, or other assessments; (ii) any Liability for the payment of any
amounts described in clause (i) as a result of being a member of an affiliated,
consolidated, combined, unitary or similar group or as a result of transferor,
successor or similar Liability; and (iii) any Liability for the payments of any
amounts as a result of being a party to any Tax sharing agreement or as a
result of any express or implied obligation to indemnify any other Person with
respect to the payment of any amounts of the type described in clause (i) or
(ii).
12
"Tax Matters Agreement" means the Tax Matters Agreement by and among
Parent and LMC, attached as Exhibit A-I hereto.
"Tax Opinions" means the Parent Tax Opinion and the LMC Tax Opinion.
"Tax Opinion Representations" means the LMC Tax Opinion
Representations and the Parent Tax Opinion Representations.
"Tax Returns" means any return, report, certificate, form or similar
statement or document (including any related or supporting information or
schedule attached thereto and any information return, amended Tax Return, claim
for refund or declaration of estimated Tax) required to be supplied to, or
filed with, a Taxing Authority in connection with the determination, assessment
or collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.
"Taxing Authority" shall have the meaning given to such term in the
Tax Matters Agreement.
"Tax Sharing Agreement" shall have the meaning given to such term in
the Tax Matters Agreement.
"Technical Services Agreement" means the agreement relating to the
provision of uplink, engineering and other services identified therein by and
among Fox Sports Net, Inc. and each of the RSN Subsidiaries.
"Transactions" means the transactions contemplated hereby and each of
the Ancillary Agreements, including the Exchange and the Parent Restructuring.
"Transferred Employees" means the individuals listed on Section 1.1 of
the Parent Disclosure Letter (which section of the Disclosure Letter shall be
updated as of the Closing Date to reflect individuals hired following the date
hereof and prior to the Closing Date in compliance with Section 6.2 hereof,
provided, however that any individual listed on Section 1.1.1(a) of the Parent
Disclosure Letter as of the Closing Date whose employment with any Transferred
Subsidiary terminates in the ordinary course of business following the date
hereof and prior to the Closing Date shall not be deemed to be a "Transferred
Employee").
"Transferred Subsidiaries" means, collectively, Splitco and each RSN
Subsidiary.
"Transitional Services Agreement" means the agreement relating to the
provision of corporate transitional services identified therein by and among
Fox Sports Net, Inc. and each of the RSN Subsidiaries.
"Treasury Regulations" mean the regulations promulgated under the
Code.
"WARN Act" means the Worker Adjustment and Retraining Notification Act
and any similar state or local Law of any jurisdiction in the United States of
America.
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"Webpage Services Agreement" means the agreement relating to the
provision of website management and other information technology services
identified therein by and among Fox Interactive Media, Inc. and each of the RSN
Subsidiaries.
Section 1.2. Terms Defined in Other Sections. The following terms are
defined elsewhere in this Agreement in the following Sections:
Ancillary Agreements Recitals
Affiliate Transaction Section 4.21
Agreement Preamble
Broker Section 4.22
Broker Fees Section 4.22
Business Records Section 6.9.3
Closing Section 3.2
Closing Certificates Section 3.4.3
Closing Date Section 3.2
Collective Bargaining Agreement Section 4.14.1
Conclusive Net Working Capital Statement Section 3.9.3
Controlled Group Liability Section 4.12.2
Disinterested Stockholder Approval Section 6.4.1
Disputed Items Section 3.9.2
Employee Benefit Plan Section 4.12.1
Employment Agreement Section 4.12.1
ERISA Affiliate Section 4.12.2
Estimated Net Working Capital Section 3.8.1
Estimated Net Working Capital Deficiency Amount Section 3.8.2
Estimated Net Working Capital Excess Amount Section 3.8.2
Exchange Section 3.1
Exchange Rulings Section 7.2.4
Extended Termination Date Section 9.1.2
Extraordinary Transaction Section 6.13.2
FCC Applications Section 6.6.3
Final Net Working Capital Deficiency Amount Section 3.9.4
Final Net Working Capital Excess Amount Section 3.9.4
HSR Act Section 4.5.4
Indemnified Party Section 8.3.1
Indemnifying Party Section 8.3.1
L Acquisition Proposal Section 6.13.2
Licensed Intellectual Property Section 4.8.2
LMC Preamble
LMC Exchange Ruling Section 7.2.4
LMC Related Party Section 10.5
LMC Ruling Section 7.2.4
Material Contracts Section 4.13
Net Working Capital Statement Section 3.9.1
Neutral Arbitrator Section 3.9.3
Owned Intellectual Property Section 4.8.1
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Parent Preamble
Parent Acquisition Proposal Section 6.13.1
Parent Change in Recommendation Section 6.4.1
Parent Exchange Ruling Section 7.2.4
Parent Group Section 4.20.5
Parent Recommendation Section 6.4.1
Parent Restructuring Date Section 3.7
Parent Restructuring Ruling Section 7.3.5
Parent Stockholder Approval Section 4.4
Parent Stockholders' Meeting Section 6.5
Permits Section 4.16
Proxy Statement Section 6.4.1
Records Section 6.9.3
Representatives Section 6.13.1
Requisite Parent Stockholder Approval Section 6.4.1
Resolution Period Section 3.9.2
Seller Disability Plans Section 6.10.2
Settlement Section 6.6.5
Splitco Recitals
Subsidiary Employee Benefit Plan Section 4.12.1
Termination Date Section 9.1.2
Termination Fee Section 9.2.2
Transfer Section 6.8.1
Transferred Business Recitals
ARTICLE II.
INTERPRETATION
Section 2.1. Interpretation. Unless otherwise indicated to the
contrary in this Agreement by the context or use thereof: (a) the words,
"herein," "hereto," "hereof" and words of similar import refer to this
Agreement as a whole and not to any particular Section or paragraph hereof; (b)
words importing the masculine gender shall also include the feminine and
neutral genders, and vice versa; (c) words importing the singular shall also
include the plural, and vice versa; and (d) the word "including" means
"including without limitation"; and (e) the words "as of the date hereof" means
"as of the date of this Agreement."
ARTICLE III.
EXCHANGE OF STOCK; CLOSING
Section 3.1. Exchange of Stock. Upon the terms and subject to the
conditions of this Agreement, at the Closing, (a) Parent shall assign,
transfer, convey and deliver to the Stockholders (in accordance with
instructions relating to allocation of such shares provided by LMC to Parent no
later than three (3) Business Days prior to the Closing Date) and LMC shall
cause the Stockholders to accept and acquire from Parent, all of the Splitco
Shares (free and clear of all Securities Encumbrances) in exchange for the LMC
15
Parent Shares, and (b) LMC shall cause the Stockholders to assign, transfer,
convey and deliver to Parent, and Parent shall accept and acquire from the
Stockholders, the LMC Parent Shares (free and clear of all Securities
Encumbrances) in exchange for the Splitco Shares (collectively, the "Exchange).
Section 3.2. Closing. The closing of the Exchange and the other
transactions contemplated hereby (the "Closing") shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 4 Times Square, New York,
New York, as soon as practicable, but in no event later than three (3) Business
Days after the satisfaction or waiver of the conditions set forth in Article
VII (excluding conditions that, by their terms, cannot be satisfied until the
Closing, but subject to the satisfaction or waiver of such conditions at the
Closing), or at such other place or on such other date as Parent and LMC may
mutually agree. The date upon which the Closing shall be effective is referred
to herein as the "Closing Date."
Section 3.3. Parent's Deliveries at the Closing. At the Closing,
Parent shall deliver or cause to be delivered to LMC or the Stockholders, as
applicable, the following:
3.3.1 one or more stock certificates, together with stock powers
executed in blank, representing all of the issued and
outstanding capital stock of Splitco;
3.3.2 the stock books, stock ledgers and minute books of each of
the Transferred Subsidiaries;
3.3.3 each of the Ancillary Agreements (other than the Tax Matters
Agreement which shall be executed and delivered concurrently
with this Agreement) duly executed by Parent and any of its
Affiliates party thereto;
3.3.4 letters of resignation, dated as of the Closing Date, from
(i) each of the directors and officers of Splitco and each
RSN Subsidiary and (ii) each of K. Xxxxxx Xxxxxxx, Xxxxx
XxXxx and Xxxxx Xxxxxxx from the Board of Directors of DTV;
3.3.5 a certificate of an authorized officer of Parent pursuant to
Sections 7.2.1 and 7.2.2 hereof; and
3.3.6 such other documents as are reasonably required by LMC to be
delivered to effectuate the Transactions or to evidence the
authority, existence and good standing of Parent and its
relevant Subsidiaries, including evidence of the possession
by Splitco of the Cash Amount; provided that LMC shall use
its reasonable best efforts to identify such documents to
Parent in writing reasonably in advance of the anticipated
Closing Date.
Section 3.4. LMC's Deliveries at the Closing. At the Closing, LMC
shall deliver or cause to be delivered to Parent the following:
3.4.1 one or more stock certificates, together with stock powers
executed in blank, representing the LMC Parent Shares owned
by the Stockholders, or a confirmation from Parent's transfer
agent, Computershare Investor Services, LLC, of a book-entry
transfer of the LMC Parent Shares to Parent;
16
3.4.2 each of the Ancillary Agreements to which LMC and any of its
Affiliates are party (other than the Tax Matters Agreement
which shall be executed and delivered concurrently with this
Agreement) duly executed by LMC and any of its Affiliates
party thereto;
3.4.3 a certificate of an authorized officer of LMC pursuant to
Sections 7.3.1 and 7.3.2 hereof (together with the
certificate delivered pursuant to Section 3.3.5 hereof, the
"Closing Certificates"); and
3.4.4 such other documents as are reasonably required by Parent to
be delivered to effectuate the Transactions or to evidence
the authority, existence and good standing of LMC and its
relevant Subsidiaries; provided that Parent shall use its
reasonable best efforts to identify such documents to LMC in
writing reasonably in advance of the anticipated Closing
Date.
Each document of transfer or assumption referred to in this Article III (or in
any related definition set forth in Article I) that is not attached as an
Exhibit to this Agreement or is not otherwise an Ancillary Agreement shall be
in customary form and shall be reasonably satisfactory in form and substance to
the parties hereto.
Section 3.5. Performance.
3.5.1 LMC undertakes to Parent that to the extent that any
Subsidiary of LMC fails to comply with any of its obligations
under this Agreement and the Tax Matters Agreement when
performance of such obligation has become due, LMC shall
either (i) procure that such Subsidiary shall perform such
obligation; or (ii) if such Subsidiary fails to so perform or
if the Parent so elects, itself perform any such unperformed
obligation.
3.5.2 Parent undertakes to LMC that to the extent that any
Subsidiary of Parent fails to comply with any of its
obligations under this Agreement, the Tax Matters Agreement,
the DTV Non-Competition Agreement or the RSN Non-Competition
Agreement, when performance of such obligation has become
due, Parent shall either (i) procure that such Subsidiary
shall perform such obligation; or (ii) if such Subsidiary
fails to so perform or if LMC so elects, itself perform any
such unperformed obligation.
Section 3.6. Adjustment to Number and Type of Securities.
3.6.1 If, after the date of this Agreement, there is a subdivision,
share split, consolidation, share dividend, combination,
reclassification or similar event with respect to the
securities referred to in this Agreement, then, in any such
event, the numbers and types of such securities (and if
applicable, the share prices thereof) shall be appropriately
adjusted.
3.6.2 In the event that DTV pays any dividend or makes any
distribution (other than any periodic cash dividends paid or
set aside in the ordinary course), in each case on the DTV
Shares, in cash, property or other securities (other than any
dividend or distribution for which appropriate adjustment is
17
made in accordance with Section 3.6.1 above) to holders of
record prior to the Closing Date, then upon payment of such
dividend or the making of such distributions, such cash,
property or other securities will (A) continue to be held by
Parent and (B) be contributed (including any dividend or
distributions thereon and, in the case of cash, interest
thereon) to Splitco in connection with the Parent
Restructuring without the payment of any additional
consideration.
Section 3.7. Parent Restructuring and Related Matters. Prior to the
Closing Date, Parent shall complete the Parent Restructuring such that after
the Parent Restructuring (the date on which the Parent Restructuring is
complete, the "Parent Restructuring Date"):
(a) Parent will be the sole shareholder of Splitco;
(b) Splitco will be the sole record and beneficial owner of (i) all of
the outstanding equity securities of each RSN Subsidiary and (ii) the DTV
Shares; and (iii) will hold directly the Cash Amount; and
(c) the RSN Subsidiaries will own, directly or indirectly, the
Transferred Business.
Section 3.8. Estimated Net Working Capital Adjustment.
3.8.1 For the purpose of determining the Cash Amount, two (2)
Business Days prior to the Closing Date, Parent shall cause
to be prepared and delivered to LMC a statement setting forth
a good faith estimate of the Net Working Capital (the
"Estimated Net Working Capital") and the components thereof
as of the Closing Date, together with a certificate from the
principal financial officer of Parent stating that the
Estimated Net Working Capital has been calculated in
accordance with GAAP (excluding footnotes and normal year-end
adjustments) and in accordance with the methods, principles
and classifications used in preparing the Interim Balance
Sheet included in the Financial Statements.
3.8.2 If the Estimated Net Working Capital is a positive amount
(the "Estimated Net Working Capital Excess Amount"), the Cash
Amount shall be decreased by the Estimated Net Working
Capital Excess Amount. If the Estimated Net Working Capital
is a negative amount (the "Estimated Net Working Capital
Deficiency Amount"), the Cash Amount shall be increased by
the Estimated Net Working Capital Deficiency Amount. If the
Estimated Net Working Capital is equal to zero dollars ($0),
no adjustment pursuant to this Section 3.8.2 shall be made to
the Cash Amount.
Section 3.9. Final Net Working Capital Adjustment.
3.9.1 Within forty-five (45) calendar days after the Closing Date,
LMC shall cause to be prepared and delivered to Parent a
statement (the "Net Working Capital Statement") setting forth
the Net Working Capital and the components thereof as of the
Closing Date, together with a certificate from the principal
financial officer of LMC stating that the Estimated Net
18
Working Capital has been calculated in accordance with GAAP
(excluding footnotes and normal year-end adjustments) and in
accordance with the methods, principles and classifications
used in preparing the Interim Balance Sheet included in the
Financial Statements. For purposes of preparing such Net
Working Capital Statement, no effect shall be given to any
new accounting pronouncements that may be issued following
the delivery of the statement pursuant to Section 3.8.1.
Following the delivery of such Net Working Capital Statement,
LMC shall provide Parent and any of Parent's Representatives
(as defined below) with access during normal business hours
to (and to examine and make copies of) all documents,
records, work papers (including those of accountants),
facilities and personnel of the Transferred Subsidiaries as
is reasonably necessary for purposes of reviewing the Net
Working Capital Statement.
3.9.2 After receipt of the Net Working Capital Statement, Parent
will have thirty (30) calendar days to review the Net Working
Capital Statement. Unless Parent delivers written notice to
LMC setting forth the specific items disputed by Parent on or
prior to the thirtieth (30th) day after Parent's receipt of
the Net Working Capital Statement, Parent will be deemed to
have accepted and agreed to the Net Working Capital Statement
and such statement (and the calculations contained therein)
will be final, binding and conclusive. If Parent notifies LMC
of its objections to the Net Working Capital Statement (or
specific calculations contained therein) within such thirty
(30) day period, Parent and LMC shall, within thirty (30)
days following delivery of such notice by Parent to LMC (the
"Resolution Period"), attempt in good faith to resolve their
differences with respect to the disputed items (or
calculations) specified in the notice (the "Disputed Items"),
and all other items (and all calculations relating thereto)
will be final, binding and conclusive. Any resolution by
Parent and LMC during the Resolution Period as to any
Disputed Item shall be set forth in writing and will be
final, binding and conclusive.
3.9.3 If Parent and LMC do not resolve all Disputed Items by the
end of the Resolution Period, then all Disputed Items
remaining in dispute will be submitted to an independent
accounting firm not retained by Parent or LMC or such other
United States national independent accounting firm, in each
case, mutually acceptable to Parent and LMC (the "Neutral
Arbitrator"). The Neutral Arbitrator, acting as an expert and
not as an arbitrator, shall determine only those Disputed
Items remaining in dispute, consistent with this Section
3.9.3, and shall request a statement from Parent and LMC
regarding such Disputed Items. In resolving each Disputed
Item, the Neutral Arbitrator (i) may not assign a value to
any Disputed Item greater than the greatest value for such
Disputed Item claimed by any party or less than the lowest
value for such Disputed Item claimed by any party and (ii)
shall make its determination in accordance with the methods,
principles and classifications used in preparing the Interim
Balance Sheet included in the Financial Statements and in
accordance with GAAP (excluding footnotes and normal year-end
adjustments). All fees and expenses relating to the work, if
any, to be performed by the Neutral Arbitrator will be
19
allocated between Parent and LMC based upon the percentage
which the portion of the contested amount not awarded to each
party hereto bears to the amount actually contested by such
party hereto. In addition, Parent and LMC shall give the
Neutral Arbitrator access to all documents, records, work
papers, facilities and personnel of such party and its
Subsidiaries as reasonably necessary to perform its function
as arbitrator. The Neutral Arbitrator will deliver to Parent
and LMC a written determination (such determination to
include a work sheet setting forth all material calculations
used in arriving at such determination and to be based solely
on information provided to the Neutral Arbitrator by Parent
and LMC) of the Disputed Items submitted to the Neutral
Arbitrator within thirty (30) days of receipt of such
Disputed Items, which determination will be final, binding
and conclusive. The final, binding and conclusive Net Working
Capital Statement based either upon agreement or deemed
agreement by Parent and LMC or the written determination
delivered by the Neutral Arbitrator in accordance with this
Section 3.9.3, will be the "Conclusive Net Working Capital
Statement." If any party fails to submit a statement
regarding any Disputed Item submitted to the Neutral
Arbitrator within the time determined by the Neutral
Arbitrator or otherwise fails to give the Neutral Arbitrator
access as reasonably requested, then the Neutral Arbitrator
shall render a decision based solely on the evidence timely
submitted and the access afforded to the Neutral Arbitrator
by Parent and LMC.
3.9.4 If the amount of Net Working Capital on the Conclusive Net
Working Capital Statement is less than the Estimated Net
Working Capital (the "Final Net Working Capital Deficiency
Amount"), Parent shall pay to Splitco an amount in cash equal
to the Final Net Working Capital Deficiency Amount. If the
amount of Net Working Capital on the Conclusive Net Working
Capital Statement is greater than the Estimated Net Working
Capital (the "Final Net Working Capital Excess Amount"),
Splitco shall pay to Parent an amount in cash equal to the
Final Net Working Capital Excess Amount. If the amount of Net
Working Capital on the Conclusive Net Working Capital
Statement is equal to the Estimated Net Working Capital, no
payment shall be required.
3.9.5 All payments to be made pursuant to this Section 3.9 will (i)
be made by wire transfer of immediately available funds on
the second (2nd) Business Day following the date on which
Parent and LMC agree or are deemed to have agreed to, or the
Neutral Arbitrator delivers, the Conclusive Net Working
Capital Statement, and (ii) will bear interest from the
Closing Date through the date of payment at the prime rate of
Citibank, N.A. in effect on the date such payment was
required to be made.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth in the Parent Disclosure Letter delivered by
Parent to LMC prior to the execution of this Agreement, Parent hereby
represents and warrants to LMC as follows:
20
Section 4.1. Organization and Standing. Each of Parent and the
Transferred Subsidiaries is (a) a corporation, limited liability company or
other legal entity duly organized, validly existing and duly qualified or
licensed and in good standing under the Laws of the state or jurisdiction of
its organization with full corporate or other power, as the case may be, and
authority to own, lease, use and operate its properties and to conduct its
business as currently conducted, and (b) duly qualified or licensed to do
business and, to the extent applicable, in good standing in any other
jurisdiction in which the nature of the business conducted by it or the
property it owns, leases, uses or operates requires it to be so qualified,
licensed or in good standing, except where the failures to be so qualified,
licensed or in good standing have not had a Material Adverse Effect on the
Transferred Business. Parent has made available to LMC a complete and correct
copy of the certificate of incorporation and by-laws (or other comparable
organizational documents) of each of the Transferred Subsidiaries as in effect
on the date hereof.
Section 4.2. Capitalization.
4.2.1 As of the Closing, Splitco's authorized capital stock will
consist of one thousand (1,000) shares of Splitco Common
Stock (the "Splitco Shares"). As of the date of this
Agreement, Parent owns indirectly, through wholly owned
Subsidiaries of Parent, all of the issued and outstanding
shares of Splitco beneficially and of record, free and clear
of any Securities Encumbrances. Immediately prior to the
Closing, Parent shall own directly all of the issued and
outstanding shares of Splitco beneficially and of record,
free and clear of any Securities Encumbrances. There are no
shares of capital stock of Splitco issued or outstanding
other than the Splitco Shares. Parent has the sole, absolute
and unrestricted right, power and capacity to exchange,
assign and transfer all of the Splitco Shares to the
Stockholders.
4.2.2 Parent, indirectly through one of its Subsidiaries, owns all
of the issued and outstanding equity interests of each of the
RSN Subsidiaries beneficially and of record, free and clear
of any Encumbrances. A Subsidiary of Parent has the sole,
absolute and unrestricted right, power and capacity to
exchange, assign and transfer all of the equity interests of
each RSN Subsidiary to Splitco.
4.2.3 The Splitco Shares are duly authorized, validly issued, fully
paid and nonassessable, and have not been issued in violation
of any preemptive or similar rights. Other than this
Agreement, there are no outstanding subscriptions, options,
warrants, puts, calls, agreements or other rights of any type
or other securities (a) requiring the issuance, sale,
transfer, repurchase, redemption or other acquisition of any
shares of capital stock of Splitco or any equity interests of
any RSN Subsidiary, (b) restricting the transfer of any
shares of capital stock of Splitco or any equity interests of
any RSN Subsidiary, or (c) relating to the voting of any
shares of capital stock of Splitco or any equity interests of
any RSN Subsidiary. There are no issued or outstanding bonds,
debentures, notes or other indebtedness of Splitco or any RSN
Subsidiary having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote), upon
the happening of a certain event or otherwise, on any matters
on which the equity holders of Splitco or any RSN Subsidiary
may vote.
21
4.2.4 Neither Splitco nor any RSN Subsidiary is in default under or
in violation (and no event shall have occurred which, with
notice or the lapse of time or both, would constitute such a
default or violation) of any term, condition or provision of
its certificate of incorporation or bylaws except for any
such defaults or violations which would not materially delay
or impair the performance of this Agreement by Parent.
4.2.5 As of the date hereof, Parent or one of its Subsidiaries has
good and valid title to the Splitco Shares and all issued and
outstanding equity interests of each of the Transferred
Subsidiaries, free and clear of any and all Securities
Encumbrances. As of the Closing, Splitco will have good and
valid title to all shares of the RSN Subsidiaries, free and
clear of any and all Securities Encumbrances. Except as
specified in this Agreement, as of the Closing, Splitco shall
not have entered into any agreement, arrangement or
understanding to purchase, capital stock or other equity
interests in any other Person. There exists no Subsidiary of
any RSN Subsidiary. No RSN Subsidiary owns any equity
interest of any Person.
4.2.6 Except as set forth in this Section 4.2, there are no
outstanding subscriptions, options, warrants, puts, calls,
trusts (voting or otherwise), rights (including conversion or
preemptive rights and rights of first refusal), exchangeable
or convertible securities or other commitments or agreements
of any nature relating to the capital stock or other
securities or ownership interests of Splitco (including any
phantom shares, phantom equity interests, stock or equity
appreciation rights or similar rights) or obligating Splitco
or any of its Subsidiaries, at any time or upon the happening
of any event, to issue, transfer, deliver, sell repurchase,
redeem or otherwise acquire, or cause to be issued,
transferred, delivered, sold, repurchased, redeemed or
otherwise acquired, any of its capital stock or any phantom
shares, phantom equity interests, stock or equity
appreciation rights or similar rights, or other ownership
interest of Splitco or obligating Splitco to grant, extend or
enter into any such subscription, option, warrant, put, call,
trust, right, exchangeable or convertible security,
commitment or agreement.
4.2.7 Immediately after the Closing, the Stockholders will have
good title to all of the Splitco Shares free and clear of all
Securities Encumbrances. As of the Closing, except for the
Splitco Shares, there shall be no outstanding (i) shares of
capital stock or voting securities of, or other ownership
interests in, Splitco, (ii) securities of Splitco or any of
its Subsidiaries convertible into or exchangeable for shares
of capital stock or other voting securities of, or ownership
interests in, Splitco or (iii) options or other rights to
acquire from Splitco or any of its Subsidiaries, or other
obligations of Splitco or any of its Subsidiaries to issue,
any capital stock or other voting securities of, or other
ownership interests in, or any securities convertible into or
exercisable or exchangeable for any capital stock or other
voting securities of Splitco. As of the Closing, there will
be no outstanding obligations of any Transferred Subsidiary
to repurchase, redeem or otherwise acquire any such
securities from any other Person.
22
Section 4.3. Corporate Power and Authority. Parent has all requisite
corporate power and authority to enter into and deliver this Agreement and to
consummate the Transactions. Each of Parent, Splitco and the other Subsidiaries
of Parent party thereto has all requisite corporate or similar power, as the
case may be, and authority to execute and deliver the Ancillary Agreements and
the other agreements, documents and instruments to be executed and delivered by
it in connection with this Agreement, including the Parent Tax Opinion
Representations, the Closing Certificates required by Sections 7.2.1 and 7.2.2,
or the Ancillary Agreements and to consummate the transactions contemplated
thereby. The execution, delivery and, subject to receipt of the Parent
Stockholder Approval, performance of this Agreement by Parent and the
consummation by Parent, Splitco and the other applicable Subsidiaries of Parent
of the Transactions, including the execution, delivery and performance of the
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement or the Ancillary
Agreements by Parent, Splitco and the other applicable Subsidiaries of Parent
and the consummation (other than the payment of any Termination Fee) of the
Transactions, have been duly authorized by all necessary action on the part of
Parent, Splitco and the other applicable Subsidiaries of Parent. Each of this
Agreement and the Tax Matters Agreement has been duly executed and delivered by
Parent and constitutes the legal, valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws now or hereafter in effect relating to or affecting
creditors' rights generally, including the effect of statutory and other Laws
regarding fraudulent conveyances and preferential transfers and subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at Law or in equity). When signed,
each of the Ancillary Agreements (other than the Tax Matters Agreement which is
the subject of the preceding sentence) and the other agreements, documents,
certificates (including the Parent Tax Opinion Representations) and instruments
to be executed and delivered by Parent, Splitco and each Subsidiary of Parent
in connection with this Agreement and the Transactions shall have been duly
executed and delivered by Parent, Splitco and the other Subsidiaries of Parent
party thereto and shall constitute the legal, valid and binding obligations of
Parent, Splitco and such other Subsidiaries of Parent, enforceable against each
such Person in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar Laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other Laws regarding
fraudulent conveyances and preferential transfers and subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at Law or in equity).
Section 4.4. Shareholder Votes Required. At the Parent Stockholders'
Meeting (as defined in Section 6.5), the affirmative vote of a majority of the
votes cast in person or by proxy by holders of Parent Class B Shares other than
LMC, the Stockholders and any of their respective Associates (the "Parent
Stockholder Approval"), in accordance with Chapter 10.1 of the ASX Listing
Rules is the only vote of the holders of any class or series of capital stock
of Parent or any of its Subsidiaries required by any applicable Law to approve
the Exchange. Other than the Parent Stockholder Approval, no vote or other
action of the stockholders of Parent is required by Law, the organizational
documents of Parent, the ASX Listing Rules, the rules and regulations of the
New York Stock Exchange or otherwise in order for Parent to consummate the
Transactions. The Board of Directors of Parent, by vote at a meeting duly
called and held, has approved this Agreement, determined that the Exchange is
23
fair to and in the best interests of Parent's stockholders and has adopted
resolutions recommending approval of the Exchange by the stockholders of
Parent. The Xxxxxxx Interests have agreed with Parent and LMC to be present, in
person or by proxy, at the Parent Stockholder Meeting and to vote all shares of
Parent Class B Stock beneficially owned by them at the Parent Stockholder
Meeting (or any adjournment thereof) in favor of the approval of the Exchange;
provided that the foregoing shall be deemed not to have been violated if the
shares held by the Xxxxxxx Interests shall have been disregarded for purposes
of the Parent Shareholder Approval under the ASX listing rules.
Section 4.5. Conflicts; Consents and Approvals. Except as set forth in
Section 4.5 of the Parent Disclosure Letter, neither the execution, delivery
and performance by Parent of this Agreement, nor the execution, delivery and
performance by Parent, the Transferred Subsidiaries and the other Subsidiaries
of Parent party thereto of the Ancillary Agreements and the other agreements,
documents and instruments to be executed and delivered by each of them in
connection with this Agreement and the Ancillary Agreements, will:
4.5.1 conflict with, or result in a breach of any provision of, the
organizational documents of Parent, any Transferred
Subsidiary any applicable Parent Subsidiary;
4.5.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a change of control or default
(or an event that, with the giving of notice, the passage of
time or otherwise, would constitute a default) under, or
require any action, consent, waiver or approval of any third
party or entitle any Person (with the giving of notice, the
passage of time or otherwise) to terminate, accelerate,
modify or call a default under, or give rise to any
obligation to make a payment under, or to any increased,
additional or guaranteed rights of any Person under, or
result in the creation of any Encumbrance upon any of the
properties or assets of any Transferred Subsidiary or under
any of the terms, conditions or provisions of any material
Contract to which Parent or any Transferred Subsidiary is a
party or pursuant to which any of their respective properties
or assets are bound, except for any such conflicts,
violations, breaches, defaults or occurrences which would not
prevent or materially delay the performance of this Agreement
by Parent;
4.5.3 assuming the approvals required under Section 4.5.4 are
obtained, violate any order, writ, or injunction, or any
decree, or any material Law applicable to Parent or any
Transferred Subsidiary, or any of their respective properties
or assets; or
4.5.4 require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority,
except for (i) (A) applicable requirements of the Exchange
Act, the Securities Act, and state securities or "blue sky"
Laws, (B) the pre-merger notification requirements of the
Xxxx- Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR
Act"), and (C) approval of the Transactions under the
Communications Act and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make
24
such filings or notifications would not prevent or materially
delay the performance of this Agreement by Parent.
Section 4.6. Operations of the Transferred Business. Except as set
forth in Section 4.6 of the Parent Disclosure Letter, since October 1, 2006 and
through the date of this Agreement, the Transferred Business has been conducted
in the ordinary course of business consistent with past practice and there has
not been since such date the occurrence of any fact, event or circumstance
described in Sections 6.2.8, 6.2.9, 6.2.12 - 6.2.17 (assuming that the period
referred to therein is effective beginning October 1, 2006).
Section 4.7. Compliance with Law. The Transferred Business is
currently being conducted, and since January 1, 2004, has been conducted, in
compliance with all material Laws applicable to the Transferred Business or the
Transferred Employees. Since January 1, 2004 and prior to the date of this
Agreement, none of Parent, Splitco or any of the RSN Subsidiaries has received
any material notice from any Governmental Authority that the Transferred
Business has been or is being conducted in violation of any applicable material
Law or that an investigation or inquiry into any noncompliance with any
applicable material Law is ongoing, pending or, to the Knowledge of Parent,
threatened. This Section 4.7 does not relate to matters with respect to Taxes,
which are the subject of Section 4.20 or the Tax Matters Agreement, as the case
may be, to Environmental Matters, which are the subject of Section 4.10, to
Employee Benefits Plan matters, which are the subject of Section 4.12 or to
Labor and Employment Matters, which are the subject of Section 4.14.
Section 4.8. Intellectual Property.
4.8.1 Section 4.8.1 of the Parent Disclosure Letter sets forth a
list of all patents, patent applications, registered
trademarks, material unregistered trademarks, registered
copyrights and Internet domain name registrations that are,
as of the date of this Agreement, owned by the RSN
Subsidiaries (the "Owned Intellectual Property"). The RSN
Subsidiaries own the Owned Intellectual Property, free and
clear of all Encumbrances and have the exclusive right to use
and sublicense, without payment to any other Person, all of
the Owned Intellectual Property. As of the date hereof, no
license relating to any of the Owned Intellectual Property
has been granted, except as provided in the Ancillary
Agreements, and except for Customer Agreements entered into
in the ordinary course of business.
4.8.2 Section 4.8.2 of the Parent Disclosure Letter sets forth a
list that includes all material Intellectual Property that is
held for use under license by the RSN Subsidiaries as of the
date hereof (the "Licensed Intellectual Property"). As of the
date hereof, neither Parent nor the RSN Subsidiaries have
given or received any notice of material default or of any
event which with the lapse of time would constitute a
material default under any material agreement relating to the
Licensed Intellectual Property; neither Parent nor the
Transferred Subsidiaries, nor, to Parent's Knowledge, any
other Person, currently is in material default under any such
agreement.
25
4.8.3 To Parent's Knowledge, as of the date hereof, no third party
is infringing in any material respect a proprietary right in
any Owned Intellectual Property. To Parent's Knowledge, the
use of any Owned Intellectual Property or Licensed
Intellectual Property in connection with the Transferred
Business as currently conducted does not materially infringe
upon, misappropriate, violate or conflict in any way with any
material Intellectual Property rights of any Person.
4.8.4 There is no pending or, to Parent's Knowledge, threatened
material claim (i) challenging the validity or enforceability
of, or contesting the Parent's or the Transferred
Subsidiaries' right to make, sell, offer to sell, and/or use
any of the Owned Intellectual Property or Licensed
Intellectual Property; (ii) challenging the validity or
enforceability of any agreement relating to the Owned
Intellectual Property or Licensed Intellectual Property; or
(iii) asserting that the manufacture, sale, offer of sale,
and/or use of any Owned Intellectual Property or Licensed
Intellectual Property infringes upon, misappropriates,
violates or conflicts in any way with the Intellectual
Property rights of any Person.
4.8.5 The making, using, selling, offering to sell, or other
implementation of any apparatus, systems, processes, methods,
or other technologies (and/or combination thereof) used in or
necessary for operation and conducting of the Transferred
Business as currently conducted do not infringe upon,
misappropriate, violate, or conflict in any way with the
material Intellectual Property rights of any Person.
Section 4.9. Absence of Splitco Operations; Splitco Assets and
Liabilities. Splitco has conducted no activities other than in connection with
the execution and delivery of the Ancillary Agreements to which it is or will
be a party. As of the Closing, the assets of Splitco will consist solely of (i)
all issued and outstanding equity interests of each RSN Subsidiary, (ii) the
DTV Shares and (iii) the Cash Amount (collectively, the "Splitco Assets"). As
of the Closing, the Transferred Subsidiaries will have no Liabilities other
than Liabilities arising as a result of its ownership of the Splitco Assets and
any Liabilities set forth in Section 4.9(a) of the Parent Disclosure Letter.
Except as set forth in Section 4.9(b) of the Parent Disclosure Letter, the
assets of the RSN Subsidiaries, along with the rights of Splitco and the RSN
Subsidiaries under the Ancillary Agreements, are sufficient to permit the RSN
Subsidiaries to conduct immediately following the Closing the Transferred
Business in all material respects in the manner as the Transferred Business was
being conducted as of the date hereof.
Section 4.10. Environmental Matters.
4.10.1 The Transferred Business is currently being conducted in
compliance in all material respects with, and, since January
1, 2004 has been conducted in compliance in all material
respects with, all applicable Environmental Laws.
4.10.2 Except as would not reasonably be expected to form the basis
of any material Environmental Claim against the Transferred
Business, since January 1, 2004, the Transferred Business has
not disposed of, Released, transported, stored, or arranged
for the disposal of any Hazardous Materials to, at or upon:
26
(i) any location other than a site lawfully permitted to
receive such Hazardous Materials; (ii) any premises currently
or formerly owned or leased by any of the RSN Subsidiaries,
except for the use of household cleaners and office products
in the ordinary course of business in compliance with
applicable Environmental Laws; or (iii) any site which has
been placed on the National Priorities List, CERCLIS or their
state equivalents;
4.10.3 Since January 1, 2004, the operations of the Transferred
Business have not resulted in any Release of Hazardous
Materials at or from any Leased Real Property that requires
Cleanup that has not been completed to the satisfaction of
the relevant Governmental Authority or would reasonably be
expected to form the basis of any material Environmental
Claim against the Transferred Business;
4.10.4 The Transferred Business is not subject to, and, since
January 1, 2004, none of the RSN Subsidiaries has received
written notice of, any existing, pending, or, to the
Knowledge of Parent, threatened material Action, by any
Person under any Environmental Laws or involving the
presence, Release or threatened Release of any Hazardous
Material at any location currently or formerly owned or
operated as part of the Transferred Business.
Section 4.11. Litigation.
4.11.1 Other than Actions of the type contemplated by Section 4.11.2
and judgments, decrees, written agreements, memoranda of
understanding or orders of Governmental Authorities of the
type contemplated by Section 4.11.3, (i) as of the date
hereof, there are no Actions pending or, to the Knowledge of
Parent, threatened against any of the Transferred
Subsidiaries, by or before any Governmental Authority, (ii)
there are no material Actions pending, or to the Knowledge of
Parent, threatened against any of the Transferred
Subsidiaries, by or before any Governmental Authority, (iii)
as of the date hereof, there is no judgment, decree,
injunction, ruling or order of any Governmental Authority
outstanding against any Transferred Subsidiary and (iv) there
is no material judgment, decree, injunction, ruling or order
of any Governmental Authority outstanding against any
Transferred Subsidiary.
4.11.2 As of the execution of this Agreement, there is no Action
pending or, to Parent's Knowledge, threatened against Parent
or any of its Affiliates that seeks, or would reasonably be
expected, to prohibit or restrain the ability of Parent or
any of its Affiliates to enter into this Agreement or any of
the Ancillary Agreements to which it is a party or to timely
consummate the Transactions.
4.11.3 As of the execution of this Agreement, there are no material
judgments, decrees, written agreements, memoranda of
understanding or orders of any Governmental Authority
outstanding against Parent or any of its Affiliates which
would reasonably be expected to prevent, prohibit, materially
delay or enjoin the consummation of the Transactions.
27
Section 4.12. Employee Benefit Plans.
4.12.1 Section 4.12.1 of the Parent Disclosure Letter sets forth, as
of the date of this Agreement, a list of all material
"employee pension benefit plans" (as defined in Section 3(2)
of ERISA), "employee welfare benefit plans" (as defined in
Section 3(1) of ERISA), and deferred compensation, bonus,
retention bonus, incentive, severance, stock bonus, stock
option, restricted stock, stock appreciation right, stock
purchase, holiday pay, and vacation pay plans, and any other
employee benefit plan, program, policy or arrangement
covering Transferred Employees as of the date hereof, that
are currently either maintained by or contributed to by
Parent or any of its Subsidiaries or to which Parent or any
of its Subsidiaries is obligated to make payments or
otherwise have any liability (collectively, the "Employee
Benefit Plans"), and each employment, severance, retention,
consulting or similar agreement currently in effect that has
been entered into by Parent, any Transferred Subsidiary or
any of their respective Affiliates, on the one hand, and any
Transferred Employee, on the other hand (collectively, the
"Employment Agreements"). Each Employee Benefit Plan which
provides, as of the date of hereof, benefits solely with
respect to the Transferred Employees and no other active
employees of Parent or any other Subsidiary is separately
identified on Section 4.12.1 of the Parent Disclosure Letter
(collectively, the "Subsidiary Employee Benefit Plans").
Summaries of all Employee Benefit Plans (except for plans
contributed to pursuant to a Collective Bargaining Agreement
set forth on Section 4.12.1 of the Parent Disclosure Letter),
copies of all such written Subsidiary Employee Benefit Plans
and Employment Agreements and written summaries of all
unwritten Subsidiary Employee Benefit Plans have been made
available to LMC.
4.12.2 No Controlled Group Liability has been incurred by any
Transferred Subsidiary or any trade or business that together
with any Transferred Subsidiary would be deemed a "single
employer," within the meaning of section 4001(b) of ERISA (an
"ERISA Affiliate"), no condition exists that presents a
material risk to any Transferred Subsidiary or any ERISA
Affiliate of incurring any Controlled Group Liability, and no
Controlled Group Liability would reasonably be expected to be
incurred by the Transferred Subsidiaries following the
Closing by reason of such Transferred Subsidiaries having
been an ERISA Affiliate of Parent (or of any other ERISA
Affiliate of Parent) prior to the Closing. For purposes of
this Agreement, "Controlled Group Liability" means any and
all liabilities (i) under Title IV of ERISA, other than for
payment of premiums to the Pension Benefit Guaranty
Corporation (which premiums have been paid when due), (ii)
under Section 302 or 4068(a) of ERISA, (iii) under Sections
412(n) or 4971 of the Code and (iv) for violation of the
continuation coverage requirements of Section 601 et seq. of
ERISA and Section 4980B of the Code or the group health
requirements of Sections 9801 et seq. of the Code and
Sections 701 et seq. of ERISA. The consummation of the
Transactions will not result in the occurrence of any
reportable event within the meaning of Section 4043(c) of
ERISA with respect to any pension plan maintained by Parent
28
or an ERISA Affiliate. None of the Subsidiary Employee
Benefit Plans is subject to Title IV of ERISA or Section 412
of the Code.
4.12.3 No Transferred Subsidiary has any liability, fixed or
contingent, with respect to a Multiemployer Plan.
4.12.4 Each Employee Benefit Plan has been operated and administered
in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the
Code. As of the date hereof, there are no actions, suits or
claims pending (other than routine claims for benefits) or,
to the Knowledge of Parent, threatened against, or with
respect to, any of the Employee Benefit Plans or their
assets. There are no material actions, suits or claims
pending (other than routine claims for benefits) or, to the
Knowledge of Parent, threatened against, or with respect to,
any of the Employee Benefit Plans or their assets. There have
been no "prohibited transactions" (as described in Section
406 of ERISA or Section 4975 of the Code) with respect to any
of the Employee Benefit Plans. Other than routine filings,
there is no matter pending or audit in progress with respect
to any of the Employee Benefit Plans before or by any
Governmental Authority.
4.12.5 Each Employee Benefit Plan intended to be qualified, within
the meaning of Section 401(a) of the Code, has received a
favorable determination letter regarding the Employee Benefit
Plan's qualification from the IRS with respect to all
amendments required by applicable law (or such plan has been
submitted to the IRS for a determination as to its
qualification within the applicable remedial amendment
period).
4.12.6 The execution and delivery of this Agreement and the
consummation of the Transactions will not (except as
otherwise provided in this Agreement) (A) require any
Transferred Subsidiary to make a larger contribution to, or
pay greater benefits or provide other rights under, any
Employee Benefit Plan, any Employment Agreement or any other
employee benefit plan or arrangement than it otherwise would,
whether or not some other subsequent action or event would be
required to cause such payment or provision to be triggered
or (B) create, give rise to or accelerate any additional
benefits, vested rights or service credits under any Employee
Benefit Plan, Employment Agreement or any other employee
benefit plan or arrangement. In connection with the
consummation of the Transactions, no payment of money or
other property, acceleration of benefits or provision of
other rights has been made under this Agreement, any Employee
Benefit Plan or otherwise that would be nondeductible for
income Tax purposes by Splitco or the Transferred
Subsidiaries by virtue Section 280G of the Code.
4.12.7 No Subsidiary Employee Benefit Plan provides post employment
medical, disability, life insurance benefits or other welfare
benefits, except as required by Section 4980B of the Code or
Part 6 of Title I of ERISA and at no expense to any
Transferred Subsidiary.
29
4.12.8 Except as disclosed on Section 4.12.8 of the Parent
Disclosure Schedule, no Subsidiary Employee Benefit Plan,
Employment Agreement or payment or benefit provided pursuant
to any Subsidiary Employee Benefit Plan, Employment Agreement
or other contract, agreement or benefit arrangement covering
any "service provider" (within the meaning of Section 409A of
the Code), including the grant, vesting or exercise of any
option or appreciation right, will or may provide for the
deferral of compensation subject to Section 409A of the Code,
whether pursuant to the execution and delivery of this
Agreement or the consummation of the transactions
contemplated hereby (either alone or upon the occurrence of
any additional or subsequent events) or otherwise. Each
Subsidiary Employee Benefit Plan that is a nonqualified
deferred compensation plan subject to Section 409A of the
Code has been operated and administered in good faith
compliance with Section 409A of the Code from the period
beginning January 1, 2005 through the date hereof.
Section 4.13. Contracts. Section 4.13 of the Parent Disclosure Letter
contains a complete list, as of the date hereof, of all Contracts (together
with each material amendment, modification, change or waiver thereto) by and
between any Transferred Subsidiary and one or more third parties (other than
this Agreement or the Ancillary Agreements), pursuant to which any Transferred
Subsidiary is obligated or liable or is entitled to any rights or benefits or
pursuant to which any Transferred Subsidiary or any of its properties or assets
is subject, in each case, which fall within any of the following categories
(such Contracts as are required to be set forth in Section 4.13 of the Parent
Disclosure Letter, the "Material Contracts"):
(a) each advertising and sponsorship Contract pursuant to which
payment of more than $100,000 annually is required to be paid to any
Transferred Subsidiary;
(b) each Contract providing for the sale, lease or other disposition
of a material portion of the assets of any Transferred Subsidiary other than in
the ordinary course of business;
(c) each material Contract relating to the production or licensing of
any programming for any Network;
(d) each affiliation, distribution, carriage or similar agreement
between any Transferred Subsidiary (or under which any Transferred Subsidiary
is bound or is liable or pursuant to which any Transferred Subsidiary or any of
its properties or assets is subject) and any of its affiliates, distributors,
carriers, over-the-air broadcast operators and multichannel video programming
distributors, in which such affiliate, distributor, carrier or operator
accounts for at least 50,000 subscribers to a Network operated by such
Transferred Subsidiary as of July 31, 2006;
(e) each material definitive rights agreement relating to the telecast
of professional, collegiate conference, university or high school sports teams
or any sports related tournaments or events on any Network;
30
(f) each Contract pursuant to which any Transferred Subsidiary is
obligated (or assuming performance of any Contract in effect at the date
hereof, would be obligated) to any Person for payments in respect of capital
expenditures in excess of $1,000,000;
(g) each currently effective joint venture or partnership or similar
agreement and each Contract providing for the formation of a joint venture,
limited liability company, long-term alliance or partnership or involving an
equity investment;
(h) each currently effective Contract (including any Employment
Agreements) which (A) materially restricts the ability of any Transferred
Subsidiary or any of its Affiliates or the Transferred Business to engage in
any business activity in any geographic area or line of business following the
Closing or (B) materially restricts the ability of any Transferred Subsidiary
or any of its Affiliates or the Transferred Business to compete with any Person
following the Closing;
(i) each Contract (or group of related Contracts) under which there
has been created, incurred, assumed, or guaranteed any Indebtedness, or that
relates to the lending or advancing of amounts or investment in any other
Person, in each case, in excess of $100,000, or providing for the creation of
any Encumbrance securing an obligation likely to exceed $100,000 upon any asset
of any Transferred Subsidiary;
(j) each lease, sublease or similar agreement relating to tangible
personal property used or held for use in the Transferred Business, for an
annual rent in excess of $100,000, or agreement regarding the purchase of real
property;
(k) each currently effective material Real Property Lease;
(l) any currently effective Contract concerning the marketing or
distribution by third parties of any products or services of the Transferred
Business (including any Contract requiring the payment of any sales or
marketing or distribution commissions or granting to any Person rights to
market, distribute or sell such products or services) involving sales of
products of more than $100,000 annually;
(m) any other currently effective Contract which was entered into
other than in the ordinary course of business involving payments to or from
third parties in excess of $500,000 over the remaining term of such Contract;
and
(n) each satellite and transponder agreement to which any Transferred
Subsidiary is a party or pursuant to which any Transferred Subsidiary or under
which any Transferred Subsidiary is bound or is liable or pursuant to which any
Transferred Subsidiary or any of its properties or assets is subject.
Parent has made available to LMC or its Representatives (as defined below)
correct and complete copies of all such Material Contracts (other than such
Material Contracts referenced in Section 4.13(n) pursuant to which the
Transferred Subsidiaries shall have no liabilities or obligations of any kind
after Closing other than pursuant to the Technical Services Agreement) with all
amendments thereto. Each such Material Contract is valid, binding and
enforceable against a Transferred Subsidiary and the other parties thereto in
accordance with its terms and is in full force and effect, subject to
31
expiration in accordance with its terms. Except as set forth in Section 4.13 of
the Parent Disclosure Letter, none of the Transferred Subsidiaries is in
material default under or in material breach of any such Material Contract, and
no event has occurred that, with notice or lapse of time, or both, would
constitute such a material default. Except as set forth in Section 4.13 of the
Parent Disclosure Letter, each of the other parties to the Material Contracts
has performed in all material respects all of the obligations required to be
performed by it under, and is not in material default under, any such Material
Contract, and to the Knowledge of Parent, no event has occurred that, with
notice or lapse of time, or both, would constitute such a material default.
Section 4.14. Labor Matters.
4.14.1 Except as set forth in the Parent Disclosure Letter, as of
the date hereof, there are no collective bargaining
agreements, union contracts or similar agreements or
arrangements in effect that cover any Transferred Employee
(each, a "Collective Bargaining Agreement"). With respect to
the Transferred Business, (a) there is no material labor
strike, dispute, slowdown, lockout or stoppage pending or, to
the Knowledge of Parent, threatened, and no Transferred
Subsidiary has experienced any labor strike, dispute,
slowdown, lockout or stoppage relating to the Transferred
Business or any Transferred Employee since January 1, 2004;
(b) there is no material unfair labor practice charge or
complaint pending or, to Parent's Knowledge, threatened
before the National Labor Relations Board or before any
similar state or foreign agency; (c) there is no material
grievance or arbitration arising out of any Collective
Bargaining Agreement or other grievance procedure; (d) no
material charges are pending before the Equal Employment
Opportunity Commission or any other agency responsible for
the prevention of unlawful employment practices; and (e)
Parent, Splitco and the Transferred Subsidiaries have
complied in all material respects with all laws relating to
the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective
bargaining, affirmative action, occupational safety and
health, immigration and the withholding and payment of social
security and other taxes, and no claim to the contrary has
been made by any employee or Governmental Authority.
4.14.2 Neither Parent nor any of its Affiliates has effected any of
the following with respect to any Transferred Employee: (a) a
"plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating
units within any site of employment or facility; or (b) a
"mass layoff" (as defined in the WARN Act) affecting any site
of employment or facility. None of the Transactions or any of
the actions taken by Parent or its Affiliates in preparation
for the Closing have or will result in plant closing or mass
layoff under the WARN Act.
Section 4.15. RSN Subsidiaries Financial Statements.
4.15.1 Attached as Section 4.15.1 of the Parent Disclosure Letter
are the unaudited consolidated interim balance sheet (with
respect to each RSN Subsidiary, the "Interim Balance Sheet")
32
of each RSN Subsidiary as of October 1, 2006 (the "Interim
Balance Sheet Date"), and the unaudited consolidated
statements of operations and partners' deficit and cash flows
for each RSN Subsidiary for the fiscal year ended July 2,
2006 (such unaudited consolidated financial statements,
collectively, the "Financial Statements"). Except as provided
in Section 4.15.1 of the Parent Disclosure Letter, the
Financial Statements (i) conform to the books and records of
the RSN Subsidiaries in all material respects, (ii) present
fairly in all material respects the financial position of the
RSN Subsidiaries as of the dates indicated and the results of
operations and partners' deficit and cash flows for the
respective periods indicated, and (iii) were prepared in
accordance with GAAP, consistently applied; provided that
each Interim Balance Sheet is subject to normal, recurring
year-end audit adjustments (none of which are material,
individually or in the aggregate, to Parent's Knowledge).
4.15.2 From the Interim Balance Sheet Date to the date hereof,
except as set forth on Section 4.15.2 of the Parent
Disclosure Letter, (i) the business of the RSN Subsidiaries
has been conducted in the ordinary course of business
consistent with past practices, (ii) there has not been any
event, circumstance, change or effect that has had or could
reasonably be expected to have, individually or in the
aggregate, Material Adverse Effect on the Transferred
Business, (iii) no RSN Subsidiary has redeemed any ownership
interests in any RSN Subsidiary, (iv) no RSN Subsidiary has
waived, released, compromised or settled any right or claim
of substantial value to such RSN Subsidiary or any other
Person and (v) no RSN Subsidiary has engaged in any
transaction or taken any other action except in the ordinary
course of business consistent with past practices. No RSN
Subsidiary has engaged in any activity other than the
operation of the Networks.
4.15.3 There are no Liabilities of the RSN Subsidiaries, and there
is no existing condition, situation or set of circumstances
that could reasonably be expected to result in such a
Liability, other than: (i) Liabilities disclosed or provided
for in the Interim Balance Sheet or in the notes to the
Financial Statements; (ii) the Liabilities set forth on
Section 4.15.3 of the Parent Disclosure Letter; and (iii)
Liabilities incurred in the ordinary course of business
consistent with past practice since the Interim Balance Sheet
Date that have not had and could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse
Effect on the Transferred Business.
4.15.4 Except as set forth in Section 4.15.4 of the Parent
Disclosure Letter, each RSN Subsidiary is, and since the
Interim Balance Sheet Date has been, in compliance with and,
as of the date hereof, to the Knowledge of Parent is not
under investigation with respect to and has not been
threatened to be charged with or given any notice of any
violation of, any applicable Law.
Section 4.16. Permits. The RSN Subsidiaries are in possession of, all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own,
lease and operate the Transferred Business as it is being operated as of the
date hereof, other than such franchises, grants, authorizations, licenses,
33
permits, easements, variances, exemptions, consents, certificates, approvals
and orders which the failure to hold would not adversely affect the ability of
the RSN Subsidiaries to conduct the Transferred Business in all material
respects as it is currently conducted by the RSN Subsidiaries (collectively,
the "Permits"). As of the date hereof, there are no Business FCC Licenses.
Except as set forth in Section 4.16 of the Parent Disclosure Letter (a) (i) as
of the date hereof, there is no Action pending, or, to the Knowledge of Parent,
threatened, regarding any of the Permits and (ii) there is no material Action
pending, or to the Knowledge of Parent, threatened regarding any of the Permits
and (b) each such Permit is in full force and effect. The RSN Subsidiaries do
not possess any Business FCC Licenses.
Section 4.17. Real Estate4.17.1 None of the Transferred Subsidiaries
owns or has owned any real property.
4.17.2 As of the date hereof, the RSN Subsidiaries have good and
valid leasehold interests in all Leased Real Property except
for any such Leased Real Property which is no longer used or
useful in the conduct of the Transferred Business.
4.17.3 Each of the RSN Subsidiaries has complied in all material
respects with the terms of all Real Property Leases to which
it is a party and under which it is in occupancy, and all
such Real Property Leases and deeds are in full force and
effect. Section 4.17.3 of the Parent Disclosure Letter sets
forth a complete list, as of the date hereof, of all leases
pursuant to which parcels of the Leased Real Property are
held. The RSN Subsidiaries enjoy peaceful and undisturbed
possession under all such leases and there are no existing
material defaults beyond any applicable grace periods under
such leases.
Section 4.18. Guarantees. Except to the extent contemplated by this
Agreement or as set forth in Section 4.18 of the Parent Disclosure Letter, none
of the Transferred Subsidiaries is directly or indirectly (a) liable, by
guarantee or otherwise, upon or with respect to or (b) obligated to provide
funds with respect to, or to guarantee or assume, any Indebtedness or other
Liability of any other Person.
Section 4.19. Title to DTV Shares. As of the date hereof, FEG is the
sole record owner and has good and valid title to the DTV Shares, free and
clear of any and all Securities Encumbrances. As of the Closing, Splitco will
be the sole record beneficial owner of, and will have good and valid title to
the DTV Shares, free and clear of any and all Securities Encumbrances. The DTV
Shares are duly authorized, validly issued, fully paid and nonassessable, and
have not been issued in violation of any preemptive or similar rights. The DTV
Shares constitute all shares of common stock of DTV beneficially owned by
Parent.
Section 4.20. Certain Tax Matters.
4.20.1 Filing and Payment. (i) All material Tax Returns required to
be filed with any Taxing Authority by or on behalf of the
Transferred Subsidiaries or otherwise with respect to the
Transferred Business have been filed when due (taking into
account any extension of time within which to file) in
accordance with all applicable Laws; (ii) all such Tax
34
Returns are accurate and complete in all material respects
and have been prepared in substantial compliance with all
applicable Laws; (iii) all material Taxes due and payable by
the Transferred Subsidiaries or with respect to the
Transferred Business have been timely paid, or withheld and
remitted to the appropriate Taxing Authority; (iv) no written
claim has been made by any Taxing Authority in a jurisdiction
where any of the Transferred Subsidiaries does not file a Tax
Return that it is, or may be, subject to Tax by that
jurisdiction; and (v) there are no Encumbrances on any of the
assets of any of the Transferred Subsidiaries that arose in
connection with any failure (or alleged failure) to pay any
Tax (except for Encumbrances that arise by operation of Law
for Taxes not yet due and payable).
4.20.2 Withholding. Each of the Transferred Subsidiaries has
complied with all applicable Laws relating to the payment and
withholding of any material amount of Taxes and have, within
the time and the manner prescribed by applicable Law,
withheld from and paid over to the proper Taxing Authorities
all material amounts required to be so withheld and paid over
under all applicable Laws.
4.20.3 Proceedings and Compliance. (i) No outstanding written claim
has been received, and no audit, action, suit or proceeding
is in progress, against or with respect to any of the
Transferred Subsidiaries in respect of any material Tax; and
(ii) all material deficiencies, assessments or proposed
adjustments asserted against any of the Transferred
Subsidiaries by any Taxing Authority have been paid or fully
and finally settled.
4.20.4 Availability of Tax Returns. Parent has furnished or made
available to LMC complete and accurate copies of all portions
of United States federal income Tax Returns and material
state income Tax Returns relating to the Transferred
Subsidiaries, and including, in each case, any amendments
thereto, filed by or on behalf of any such Transferred
Subsidiaries for all taxable periods beginning after December
31, 2000.
4.20.5 Consolidation and Similar Arrangements; Tax Sharing
Agreements. None of the Transferred Subsidiaries (i) is or
has been a member of an affiliated group (within the meaning
of Section 1504 of the Code) filing a consolidated federal
income Tax Return, other than an affiliated group the common
parent of which is or was Parent (a "Parent Group"), (ii) is
or has been a member of any affiliated, combined,
consolidated, unitary or similar group for state, local or
foreign Tax purposes other than a group the common parent of
which is Parent, (iii) is a party to, or has any liability
for any Tax under, any Tax Sharing Agreement or (iv) has any
liability for the Taxes of any Person under Treasury
Regulations Section 1.1502-6 (or any similar provision of
state, local, or foreign Law) or as a transferee or
successor, except for such liability arising from membership
in a Parent Group.
4.20.6 Timing. None of the Transferred Subsidiaries will be required
to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of
35
any (i) change in method of accounting for a taxable period
(or portion thereof) ending on or prior to the Closing Date
(other than any change in method of accounting made by LMC or
any of its Affiliates, except for any change in method of
accounting made on any Tax Return of or including the
Transferred Subsidiaries which Parent is responsible for
preparing pursuant to Section 2.1(a) of the Tax Matters
Agreement), (ii) "closing agreement" as described in Section
7121 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax Law) executed prior to
the Closing, or (iii) installment sale or open transaction
occurring prior to the Closing.
4.20.7 Statute of Limitations. No waiver or extension of any statute
of limitations in respect of material Taxes or any extension
of time with respect to a material Tax assessment or
deficiency is in effect for any of the Transferred
Subsidiaries.
4.20.8 Section 355. Except with respect to the Transactions, none of
the Transferred Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (or
is otherwise a successor to a "distributing corporation" or a
"controlled corporation") in a distribution of stock
qualifying or intended to qualify under Section 355 of the
Code.
4.20.9 Reportable Transactions. None of the Transferred Subsidiaries
has participated in a "listed transaction" within the meaning
of Treasury Regulations Section 1.6011-4(b)(2).
4.20.10 Certain Agreements and Rulings. None of the Transferred
Subsidiaries is a party to or bound by any advance pricing
agreement, closing agreement or other agreement or ruling
relating to Taxes with any Taxing Authority that will remain
in effect with respect to such Transferred Subsidiary after
the Closing.
4.20.11 DTV Shares. To the Knowledge of Parent, for United States
federal income Tax purposes the aggregate basis of the DTV
Shares is $6.8 billion. Parent has not taken any position for
Tax purposes or in computing any deferred income tax
provision or reserve for financial reporting purposes that is
inconsistent with the representation set forth in the
preceding sentence.
Section 4.21. Affiliate Transactions. Section 4.21 of the Parent
Disclosure Letter sets forth, as of the date hereof, all Contracts and all
material allocations, obligations, transactions or other arrangements (oral or
written) between DTV, on the one hand, and Parent or any of its Subsidiaries,
on the other hand, that, in each case, shall be in effect following the Closing
(each, an "Affiliate Transaction").
Section 4.22. Brokers or Finders. Except as set forth in Section 4.22
of the Parent Disclosure Letter, no agent, broker, investment banker, financial
advisor or other Person (any such Person, a "Broker") is or will be entitled to
any financial advisory, broker's, finder's or similar fee or commission in
connection with the Transactions (collectively, "Broker Fees") based upon
arrangements made by or on behalf of Parent, DTV, a Transferred Subsidiary or
any of their respective Affiliates.
36
Section 4.23. Investigation; Reliance.
4.23.1 Notwithstanding anything to the contrary set forth herein,
the express representations and warranties set forth in this
Agreement, the Parent Tax Opinion Representations and the Tax
Matters Agreement are the only representations and warranties
concerning Parent and the DTV Shares made to LMC by Parent.
Such representations and warranties are made expressly in
lieu of all other warranties and representations, express or
implied.
4.23.2 Parent hereby acknowledges and agrees that LMC makes no
representations or warranties to Parent, express or implied,
other than those representations and warranties set forth in
this Agreement, the LMC Tax Opinion Representations, the Tax
Matters Agreement and the Ancillary Agreements. Parent hereby
expressly acknowledges and agrees that it is not relying on,
is not entitled to rely on and, except in the case of fraud
or willful breach, neither LMC nor any Person will have or be
subject to any liability to Parent or any other Person
resulting from, any statements or communications by LMC or
any of its Affiliates or Representatives with respect to any
matter in connection with its investigation or evaluation of
the Transactions, except for the representations and
warranties expressly set forth in this Agreement, the Tax
Matters Agreement, the LMC Tax Opinion Representations and
the Ancillary Agreements.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF LMC
Except as set forth in the LMC Disclosure Letter delivered by LMC to
Parent prior to the execution of this Agreement, LMC hereby represents and
warrants to Parent as follows:
Section 5.1. Organization and Standing. LMC and each Stockholder is
(a) a corporation, limited liability company or other legal entity duly
organized, validly existing and duly qualified or licensed and in good standing
under the Laws of the state or jurisdiction of its organization with full
corporate or other power and authority to own, lease, use and operate its
properties and to conduct its business, and (b) duly qualified or licensed to
do business and in good standing in any other jurisdiction in which the nature
of the business conducted by it or the property it owns, leases or operates
requires it to so qualify, be licensed or be in good standing, except where the
failures to be so qualified, licensed or in good standing have not had a
Material Adverse Effect on LMC or any of the Stockholders, as the case may be.
Section 5.2. Corporate Power and Authority. LMC and each Stockholder
has all requisite corporate or other power and authority to execute and deliver
this Agreement and to consummate the Transactions. LMC and each Stockholder has
all requisite corporate or other power and authority to execute and deliver the
Ancillary Agreements and the other agreements, documents and instruments to be
executed and delivered by it in connection with this Agreement, including the
LMC Tax Opinion Representations, the Closing Certificates required by Sections
7.3.1 and 7.3.2, or the Ancillary Agreements and to consummate the
Transactions. The execution, delivery and performance of this Agreement by LMC
37
and each Stockholder and the consummation by LMC and each Stockholder of the
Transactions, including the exchange and delivery by the Stockholders to Parent
of the LMC Parent Shares, and the execution, delivery and performance of the
Ancillary Agreements and the other agreements, documents, certificates and
instruments to be executed and delivered in connection with this Agreement or
the Ancillary Agreements by LMC and each Stockholder and the consummation of
the Transactions, have been duly authorized by all necessary action on the part
of LMC and each Stockholder. Each of this Agreement and the Tax Matters
Agreement has been duly executed and delivered by LMC and constitutes the
legal, valid and binding obligation of LMC, enforceable against LMC in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other Laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at Law or in equity). When signed, the Ancillary Agreements
(other than the Tax Matters Agreement which is the subject of the preceding
sentence) and the other agreements, documents, certificates (including the LMC
Tax Opinion Representations) and instruments to be executed and delivered by
LMC and each Stockholder in connection with this Agreement or the Transactions
shall have been duly executed and delivered by LMC and each Stockholder and
shall constitute the legal, valid and binding obligations of LMC and each
Stockholder, enforceable against LMC and each Stockholder in accordance with
their respective terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws now or hereafter
in effect relating to or affecting creditors' rights generally, including the
effect of statutory and other Laws regarding fraudulent conveyances and
preferential transfers and subject to the limitations imposed by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding at Law or in equity).
Section 5.3. No Vote Required. No vote or other action of the
shareholders of LMC or any Stockholder is required by Law, the organizational
documents of LMC or any Stockholder otherwise in order for LMC and/or the
Stockholders to consummate the Exchange and the transactions contemplated
hereby. The Board of Directors of LMC, by vote at a meeting duly called and
held, has approved the Exchange.
Section 5.4. Conflicts; Consents and Approvals. Except as set forth in
Section 5.4 of the LMC Disclosure Letter, neither the execution and delivery by
LMC and each Stockholder of this Agreement, the Ancillary Agreements and the
other agreements, documents and instruments to be executed and delivered by LMC
and each Stockholder in connection with this Agreement and the Ancillary
Agreements, nor the consummation of the Transactions, will:
5.4.1 conflict with, or result in a breach of any provision of, the
organizational documents of LMC or any Stockholder;
5.4.2 violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event that, with
the giving of notice, the passage of time or otherwise, would
constitute a default) under, or entitle any Person (with the
giving of notice, the passage of time or otherwise) to
terminate, accelerate, modify or call a default under, or
38
give rise to any obligation to make a payment under, or to
any increased, additional or guaranteed rights of any Person
under, or result in the creation of any Encumbrance upon any
of the LMC Parent Shares or any of the other properties or
assets of LMC or any Stockholder under any of the terms,
conditions or provisions of any Contract to which LMC or any
Stockholder is a party or pursuant to which any of its
properties or assets are bound, except for any such
conflicts, violations, breaches, defaults or occurrences
which would not prevent or materially delay the performance
of this Agreement by LMC or a Stockholder;
5.4.3 assuming the approvals required under Section 5.4.4 are
obtained, violate any order, writ, or injunction, or any
material decree, or material Law applicable to LMC or any
Stockholder or any of their properties or assets except as
would not have a Material Adverse Effect on LMC's or the
Stockholders' ability to consummate the Exchange and the
transactions contemplated hereby; or
5.4.4 require any consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority,
except for (i) (A) applicable requirements of the Exchange
Act, the Securities Act, and state securities or "blue sky"
Laws, (B) the pre-merger notification requirements of the HSR
Act, and (C) approval of the transactions contemplated by
this Agreement under the Communications Act or (ii) where the
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications would not
prevent or materially delay the performance of this Agreement
by LMC.
Section 5.5. LMC Parent Shares. The LMC Parent Shares constitute all
shares of Parent Class A Common Stock and all shares of Parent Class B Common
Stock beneficially owned by the Stockholders and/or LMC. Except as set forth on
Section 5.5 of the LMC Disclosure Letter, each Stockholder has good and valid
title to the LMC Parent Shares owned by it, free and clear of any and all
Securities Encumbrances. Upon delivery to Parent of the certificates
representing the LMC Parent Shares at the Closing, or evidence of a book-entry
transfer of the LMC Parent Shares to an account of Parent, Parent will acquire
good and valid title to such shares, free and clear of any and all Securities
Encumbrances.
Section 5.6. Xxxxxxxxxx.Xx of the execution of this Agreement, there
is no Action pending or, to LMC's Knowledge, threatened against LMC that seeks,
or would reasonably be expected, to prohibit or restrain the ability of LMC to
enter into this Agreement or any Ancillary Agreement to which it is a party or
to timely consummate any of the Transactions.
Section 5.7. Governmental Actions. As of the execution of this
Agreement, there are no material judgments, decrees, written agreements,
memoranda of understanding or orders of any Governmental Authority outstanding
against LMC which would reasonably be expected to prevent, prohibit, materially
delay or enjoin the consummation of the Transactions.
Section 5.8. FCC Matters. LMC is legally and financially qualified
under the Communications Act to hold the Business FCC Licenses and the DTV
Shares. To LMC's Knowledge, there are no facts or circumstances pertaining to
LMC or any of its Subsidiaries which, under the Communications Act, would
39
reasonably be expected to result in the FCC's refusal to grant the FCC Consent
or which would require waiver of, or exemption from, any provision of the
Communications Act necessary to obtain the FCC Consent.
Section 5.9. Investment Purpose and Experience. The Stockholders are
receiving the Splitco Shares, and indirectly the DTV Shares, for their own
account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, except pursuant to sales registered or
exempted under the Securities Act. Each Stockholder is an "accredited
investor," as that term is defined in Regulation D promulgated under the
Securities Act. LMC acknowledges that each Stockholder can bear the economic
risk and complete loss of its investment in the Splitco Shares, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment contemplated hereby.
Section 5.10. Investigation; Reliance.
5.10.1 Notwithstanding anything to the contrary set forth herein,
the express representations and warranties set forth in this
Agreement, the LMC Tax Opinion Representations and the Tax
Matters Agreement are the only representations and warranties
concerning LMC and the LMC Parent Shares made to Parent by
LMC. Such representations and warranties are made expressly
in lieu of all other warranties and representations, express
or implied.
5.10.2 LMC hereby acknowledges and agrees that Parent makes no
representations or warranties to LMC, express or implied,
other than those representations and warranties set forth in
this Agreement, the Parent Tax Opinion Representations, the
Tax Matters Agreement and the Ancillary Agreements. LMC
hereby expressly acknowledges and agrees that it is not
relying on, is not entitled to rely on and, except in the
case of fraud or willful breach, neither Parent nor any
Person will have or be subject to any liability to LMC or any
other Person resulting from, any statements or communications
by Parent, any Transferred Subsidiary, DTV or any of their
respective Affiliates or Representatives with respect to any
matter in connection with its investigation or evaluation of
the Transferred Business, the Transferred Subsidiaries,
Splitco or DTV (including any of the assets or liabilities of
the Transferred Business, the Transferred Subsidiaries,
Splitco or DTV), including any information, document or
material made available in any offering memorandum, in any
"data room," in any management presentations or in any other
form, except for the representations and warranties expressly
set forth in this Agreement, the Parent Tax Opinion
Representations, the Tax Matters Agreement and the Ancillary
Agreements
Section 5.11. Brokers and Finders. Except as set forth in Section 5.11
of the LMC Disclosure Letter, no Broker is or will be entitled to any Broker
Fees based upon arrangements made by or on behalf of LMC or any of its
Affiliates.
40
ARTICLE VI.
COVENANTS AND AGREEMENTS
Section 6.1. Access and Information. During the period from the date
of this Agreement to the Closing, except to the extent prohibited by applicable
Law or the terms of any Contract entered into prior to the date hereof for
which Parent has been unable, despite use of its reasonable best efforts, to
obtain a consent or waiver from the other parties thereto (other than any
Affiliate of Parent) to enable disclosure to LMC, or as would reasonably be
expected to violate or result in a loss or impairment of any attorney-client or
work product privilege (it being understood that the parties shall use
reasonable best efforts to cause such information to be provided in a manner
that does not result in such violation, loss or impairment), and subject to the
obligations of LMC under the Confidentiality Agreement with respect thereto,
Parent will permit (and will cause the Transferred Subsidiaries to permit)
Representatives of LMC to have reasonable access during normal business hours
and upon reasonable notice to all premises, properties, personnel, books,
records, Contracts, commitments, reports of examination, and documents of or
pertaining to the Transferred Business, and reasonable opportunity upon prior
notice and consultation with Parent to communicate with employees of the
Transferred Business (provided that Parent and the Transferred Subsidiaries
shall have the right to be present by representative for all such contacts
between LMC and any employee of the Transferred Business, whether in person,
telephonic or otherwise), except with respect to DTV, as may be necessary to
permit LMC to, at its sole expense, make, or cause to be made, such
investigations thereof as are reasonably necessary in connection with the
consummation of the Transactions, and Parent shall (and shall cause the
Transferred Subsidiaries to) reasonably cooperate with any such investigations;
provided that Parent's designees on the Board of Directors of DTV, subject to
their fiduciary duties to DTV and its stockholders, shall take no action to
interfere with the investigation of DTV by LMC. No information or knowledge
obtained in any investigation pursuant to this Section 6.1 or otherwise shall
affect or be deemed to modify any representation or warranty contained herein
or delivered pursuant hereto or to modify the conditions to the obligations of
the parties hereto to consummate the Transactions.
Section 6.2. Conduct of Business by Parent. Except (i) as contemplated
or permitted by this Agreement and the Ancillary Agreements, (ii) as required
by applicable Law, (iii) as described in Section 6.2 of the Parent Disclosure
Letter or (iv) with the prior written consent of LMC (not to be unreasonably
withheld or delayed), during the period from the date hereof to the Closing
Date, Parent shall, and shall cause each of the Transferred Subsidiaries to,
conduct the Transferred Business only in the ordinary course of business
consistent with past practice and use reasonable best efforts to preserve
intact current business organizations of the Transferred Business and
relationships with third parties and keep available the service of the current
officers and employees of the Transferred Business. From the date hereof until
the earlier of the Closing or the termination of this Agreement, Parent will
vote or cause its Affiliates to vote all shares of DTV over which it has the
power to vote or cause to be voted against any action by DTV or any of its
Subsidiaries, which is outside its ordinary course of business (including
amendments to DTV's Charter) that is presented or proposed for consideration by
DTV stockholders at any time after the date of this Agreement and prior to the
Closing or termination of this Agreement, subject to Parent's obligations under
Section 6.13.3 of this Agreement. Without limiting the generality of the
foregoing, except (i) as contemplated or permitted by this Agreement and the
41
Ancillary Agreements, (ii) as required by applicable Law, (iii) as described in
Section 6.2 of the Parent Disclosure Letter or (iv) with the prior written
consent of LMC, prior to the Closing Date, Parent shall not take any action
that would violate the terms of the RSN Non-Competition Agreement (assuming
that the period referred to therein is effective beginning as of the date
hereof) and Parent shall cause each of the Transferred Subsidiaries not to:
6.2.1 make any change in or amendments to the charter, bylaws,
partnership agreement, membership agreement or other
organizational documents applicable to any Transferred
Subsidiary;
6.2.2 issue, grant, sell or deliver any shares of capital stock or
other equity interests or securities of any Transferred
Subsidiary, or any securities convertible into, or options,
warrants or rights of any kind to subscribe for or acquire,
any shares of capital stock or other equity interests or
securities of any Transferred Subsidiary, or any phantom
shares, phantom equity interests or stock or equity
appreciation rights of any Transferred Subsidiary, or enter
into any Contract, commitment or arrangement with respect to
any of the foregoing;
6.2.3 split, combine or reclassify the outstanding shares of
capital stock or other equity interests or securities of any
Transferred Subsidiary or issue any capital stock or other
equity interests or securities of any Transferred Subsidiary
in exchange for any such shares or interests;
6.2.4 redeem, purchase or otherwise acquire, directly or
indirectly, any shares of capital stock or any other equity
interests or securities of any Transferred Subsidiary;
6.2.5 adopt or authorize any stock or equity appreciation rights,
restricted stock or equity, stock or equity purchase, stock
or equity bonus or similar plan, arrangement or agreement
applicable to any Transferred Subsidiary;
6.2.6 make any other changes in the capital structure or the
partnership or membership structure of any Transferred
Subsidiary;
6.2.7 make any change in any method of financial accounting or
financial accounting principles, practice or policy employed
by or applicable to a Transferred Subsidiary, except for any
such change required by reason of a concurrent change in
GAAP;
6.2.8 except to the extent sold or otherwise disposed of in the
ordinary course of business consistent with past practices,
sell, lease (as lessor), mortgage, pledge or otherwise
dispose of any material asset of a Transferred Subsidiary to
any Person;
6.2.9 except (A) in accordance with Parent's cash management system
or (B) for dividends and distributions permitted under clause
(6.2.10) below, make any loans or advances to, investments
in, or guarantees for the benefit of, any Person, except for
travel and similar advances made to employees, officers or
directors, in the ordinary course of business, or engage in
42
or amend, or modify, or extend any Contract, arrangement,
commitment or transaction with any Affiliate of Parent which
will continue in full force and effect following the Closing;
6.2.10 declare or pay any dividend or make any other distribution to
its stockholders whether or not upon or in respect of any
shares of its capital stock or equity interest; provided,
however, that LMC acknowledges and agrees that (A) the
Transferred Subsidiaries do not maintain cash balances and,
at the time of the Closing, Parent will withdraw any cash
balances of the Transferred Subsidiaries (other than the
material proceeds from an insurance claim) and (B) from the
date hereof until the Closing, dividends and distributions of
cash may continue to be made by the Transferred Subsidiaries
to wholly owned Subsidiaries of Parent in the ordinary course
of business consistent with past practices;
6.2.11 except to the extent required pursuant to the terms of any
Employee Benefit Plan or in effect on the date hereof, (i)
increase salary, wages or other compensation (including any
bonuses, commissions and any other payments) of any
Transferred Employee whose annual salary, wages and such
other compensation is, or after giving effect to such change
would be, in the aggregate, $150,000 or more per annum; (ii)
hire any new employee who would be a Transferred Employee or
enter into a contract with any consultant to perform services
relating to the Transferred Business, in each case on terms
providing for annual salary, wages and other compensation, in
the aggregate, of $150,000 or more per annum; (iii) adopt,
enter into or amend any Employee Benefit Plan other than a
Subsidiary Employee Benefit Plan, except as required by
applicable Law or applicable to all participants of such
plan; provided that such plan does not disproportionately
affect Transferred Employees; or (iv) adopt, enter into or
amend any Collective Bargaining Agreement or other labor
union contract, Subsidiary Employee Benefit Plan or
Employment Agreement applicable to Transferred Employees, or
enter into any Contract, commitment or arrangement with
respect to any of the foregoing; provided that it is the
understanding of the parties that Parent shall have the
right, prior to or at the Closing, to transfer the employment
of each Transferred Employee not already employed by one of
the Transferred Subsidiaries to the applicable Transferred
Subsidiary;
6.2.12 pay, discharge or satisfy Liabilities, other than (i) the
payment, discharge or satisfaction of Liabilities reflected
or reserved against in the Interim Balance Sheet or incurred
since the Interim Balance Sheet Date in the ordinary course
of business consistent with past practices and (ii) scheduled
repayments of indebtedness reflected on any Interim Balance
Sheet;
6.2.13 cancel any Indebtedness or waive or assign any claims or
rights (tangible and intangible), except in the ordinary
course of business and consistent with past practices;
6.2.14 (i) incur or assume or become obligated with respect to any
Indebtedness or guarantee any such Indebtedness of another
Person, issue or sell any debt securities or warrants or
other rights to acquire any debt securities, or guarantee any
43
debt securities of another Person, except, in each case, in
the ordinary course of business consistent with past
practices, (ii) secure any of its outstanding unsecured
Indebtedness or provide additional security for any of its
outstanding secured Indebtedness or (iii) except in the
ordinary course of business consistent with past practices,
incur, impose or permit to exist any Encumbrance on any
asset;
6.2.15 (i) other than in the ordinary course of business, enter into
any Contract of a character required to be disclosed in
Section 4.13 of the Parent Disclosure Letter or terminate,
renew, modify or amend any of the Material Contracts;
provided that, for the avoidance of doubt, the expiration in
accordance with its terms of any Material Contract shall not
constitute termination, renewal or amendment of such Material
Contracts; or (ii) cancel or terminate, or permit to be
cancelled or terminated, any material insurance relating to
the Transferred Business or any related assets;
6.2.16 (i) acquire any business or significant assets and properties
of any Person (whether by merger, consolidation or
otherwise); (ii) make any capital contribution or investment
(or agree to make any capital contribution or investment) in
or acquire any securities or debt or equity interests in any
other Person; or (iii) except as necessary in the ordinary
course of business consistent with past practices, dispose
of, grant, or obtain, or permit to lapse any rights to, any
material Owned or Licensed Intellectual Property;
6.2.17 settle any Actions in a manner in which the settlement of
such Action would materially adversely affect the conduct of
the Transferred Business following the Closing Date, except
where any such material adverse effect on the conduct of the
Transferred Business resulting from the settlement of any
such Action is not disproportionate to the adverse effect of
such settlement on the conduct of the business of the
regional sports programming cable networks operated by Parent
and its Subsidiaries (other than the RSN Subsidiaries); or
6.2.18 enter into an agreement to do any of the foregoing.
Section 6.3. Conduct of Business by LMC. Except as described in
Schedule 6.3, during the period from the date hereof to the Closing Date, or
the date, if any, on which this Agreement is earlier terminated in accordance
with Article IX, neither LMC nor any of its Subsidiaries shall acquire or make
any investment in any corporation, partnership, limited liability company,
other business organization or any division thereof that holds, or has an
attributable interest in, any license, authorization, permit or approval issued
by the FCC if such acquisition or investment would reasonably be expected to
prevent or materially delay or impede receipt of the FCC Consent.
Section 6.4. Proxy Statement.
6.4.1 Within forty-five (45) days of the signing of this Agreement,
Parent shall prepare and shall cause to be filed with each of
the SEC and the ASX a proxy statement in preliminary form
44
(together with any amendments thereof or supplements thereto,
the "Proxy Statement") relating to the Parent Stockholders'
Meeting. Parent shall include in the Proxy Statement the
recommendation of the Board of Directors of Parent that the
Parent stockholders approve the Exchange (the "Parent
Recommendation"); provided that prior to the approval of the
Exchange by Parent's stockholders in accordance with this
Agreement the Board of Directors of Parent may fail to make
or withdraw, modify or change in a manner adverse to LMC its
recommendation that the stockholders vote in favor of this
Agreement (a "Parent Change in Recommendation"), if, and only
if, the Board of Directors of Parent has determined, in its
good faith judgment and after consultation with outside legal
counsel, that the failure to effect such action could
reasonably be expected to be inconsistent with the
fulfillment of its fiduciary duties to Parent's stockholders
under applicable Law; provided that a Parent Change in
Recommendation shall not relieve Parent of its obligations
pursuant to Section 6.5 hereof. Parent shall use its
reasonable best efforts to respond as promptly as practicable
to any comments of the SEC and the ASX with respect to the
Proxy Statement. Parent shall promptly notify LMC upon the
receipt of any comments (written or oral) from the SEC or the
ASX or their respective staff or any request from the SEC or
the ASX or their respective staff for amendments or
supplements to the Proxy Statement, shall consult with LMC
prior to responding to any such comments or request or filing
any amendment or supplement to the Proxy Statement, and shall
provide LMC with copies of all correspondence between Parent
and its Representatives, on the one hand, and the SEC and the
ASX and their respective staff, on the other hand. In
addition to the Parent Stockholder Approval required by Law,
the parties have agreed as a matter of contract that the
affirmative vote of a majority of the votes cast in person or
by proxy by holders of Parent Class B Shares other than LMC,
the Stockholders and any of their respective Associates, and
the Xxxxxxx Interests (the "Disinterested Stockholder
Approval" and, together with the Parent Stockholder Approval,
the "Requisite Parent Stockholder Approval") is required to
approve the Exchange. Parent represents and warrants that (i)
none of the information with respect to Parent or its
Subsidiaries to be included in the Proxy Statement or
incorporated by reference therein will, at the time of the
mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Parent
Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; and (ii) the Proxy Statement
will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations
promulgated thereunder and any applicable rules and
regulations promulgated by the ASX, except for any such
failures to comply as to form which result from any actions
or omissions of LMC or any person authorized to act on its
behalf, and will include, or be accompanied by, a report from
Xxxxx Xxxxxx & Associates as to the fairness and
reasonableness of the Exchange, which is qualified as an
independent expert for these purposes under the ASX Listing
Rules and applicable Law (the "Independent Expert Report").
Parent will provide LMC with drafts of the Independent Expert
45
Report received by Parent to the extent permitted by
applicable Law and to the extent that Australian counsel to
Parent has advised Parent that such action will not
compromise the independence of such expert. LMC represents
and warrants that none of the information with respect to LMC
or its Subsidiaries supplied by LMC or any person authorized
to act on its behalf for inclusion in the Proxy Statement or
incorporated by reference therein will, at the time of the
mailing of the Proxy Statement or any amendments or
supplements thereto, and at the time of the Parent
Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to
be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
6.4.2 Parent and LMC shall cooperate and consult with each other in
preparation of the Proxy Statement and any other documents or
reports to be disseminated to holders of Parent Class B
Common Stock primarily in connection with such holders'
consideration of the Exchange (other than, except, to the
extent permitted by applicable Law, any factual matters
contained in such report, the Independent Expert Report).
Without limiting the generality of the foregoing, LMC will
use reasonable best efforts to furnish to Parent the
information relating to it required by the Exchange Act and
the rules and regulations promulgated thereunder or any
applicable rules and regulations promulgated by the ASX to be
set forth or incorporated by reference in the Proxy
Statement. Notwithstanding anything to the contrary stated
above, prior to filing and mailing the Proxy Statement (or
any amendment or supplement thereto) or responding to any
comments of the SEC or the ASX with respect thereto, Parent
shall provide LMC an opportunity to review and comment on
such document or response.
6.4.3 As promptly as reasonably practicable after the Proxy
Statement has been cleared by the SEC and the ASX, Parent
shall mail the Proxy Statement to the holders of Parent Class
B Common Stock as of the record date established for the
Parent Stockholders' Meeting. If at any time prior to the
Parent Stockholders' Meeting any event, occurrence or
circumstance relating to the Parent, LMC or any of their
respective Subsidiaries, or their respective officers or
directors, should be discovered by Parent or LMC,
respectively, which, pursuant to the Securities Act or
Exchange Act or any applicable rule or regulation promulgated
by the ASX, should be set forth in an amendment or a
supplement to the Proxy Statement, such party shall promptly
inform the other parties hereto. Each of LMC and Parent
agrees to correct any information provided by it for use or
incorporated by reference in the Proxy Statement which shall
have become false or misleading. Parent will be solely
responsible for all filing fees, costs and expenses relating
to the preparation of the Proxy Statement and matters related
to the Parent Stockholder Meeting.
Section 6.5. Parent Stockholders' Meeting. Unless this Agreement has
been earlier terminated in accordance with Article VIII, Parent shall, acting
through its Board of Directors, as promptly as reasonably practicable following
the date of this Agreement, establish a record date for, duly call, give notice
of, convene and hold a meeting of the holders of Parent Class B Common Stock in
46
accordance with the Listing Rules of the ASX and any other applicable Laws, for
the purpose of voting upon the approval of the Exchange (the "Parent
Stockholders' Meeting"). Except as required by any Governmental Authority, and
for matters to which LMC shall have provided its prior written consent (which
consent shall not be unreasonably withheld or delayed), the only matters Parent
shall propose to be acted on by the holders of Parent Class B Common Stock at
the Parent Stockholders' Meeting shall be the approval of the Exchange. In
connection with the Parent Stockholders' Meeting, Parent will use reasonable
best efforts to obtain the requisite quorum at the Parent Stockholders' Meeting
and to obtain the Requisite Parent Stockholder Approval, including by
soliciting from its stockholders proxies in favor of the approval of the
Exchange, provided that Parent shall have no obligation to solicit from its
stockholders proxies in favor of the approval of the Exchange from and after
the date upon which there shall have been a Parent Change in Recommendation in
accordance with Section 6.4.1; provided, however, Parent shall continue to be
obligated to convene and hold the Parent Stockholders' Meeting in accordance
with the terms of this Agreement.
Section 6.6. Appropriate Action; Consents; Filings.
6.6.1 The parties hereto will use their respective reasonable best
efforts to consummate and make effective the Transactions and
to cause the conditions to the Closing set forth in Article
VII to be satisfied, including (i) the obtaining of all
necessary actions or nonactions, consents and approvals from
Governmental Authorities or other Persons necessary in
connection with the consummation of the Transactions, and the
making of all necessary registrations and filings (including
filings with Governmental Authorities if any) and the taking
of all reasonable steps as may be necessary to obtain an
approval from, or to avoid an Action by, any Governmental
Authority or other Persons necessary in connection with the
consummation of the Transactions; and (ii) the defending of
any lawsuits or other Actions, whether judicial or
administrative, challenging this Agreement or the
consummation of the transactions performed or consummated by
such party in accordance with the terms of this Agreement,
including the Exchange, including seeking to have any stay or
temporary restraining order entered by any court or other
Governmental Authority vacated or reversed.
6.6.2 Each of the parties hereto shall promptly (in no event later
than twenty (20) Business Days following the date that this
Agreement is executed) make its respective filings, and
thereafter make any other required submissions under the HSR
Act with respect to the Transactions.
6.6.3 LMC and Parent shall cooperate to prepare such applications
as may be necessary for submission to the FCC in order to
obtain the FCC Consent (the "FCC Applications"). LMC and
Parent shall promptly (in no event later than twenty (20)
Business Days following the date that this Agreement is
executed) file the FCC Applications with the FCC, and the
parties shall diligently take, or cooperate in the taking of,
all necessary, desirable and proper actions, and provide any
additional information, reasonably required or requested by
the FCC. Each of LMC and Parent agrees not to, and shall not
47
permit any of its respective Subsidiaries to, take any action
that would reasonably be expected to prevent or materially
delay or impede receipt of the FCC Consent.
6.6.4 Each of LMC and Parent shall give (or shall cause its
respective Subsidiaries to give) any notices to third
parties, and each of LMC and Parent shall use, and cause each
of its Subsidiaries to use, its reasonable best efforts to
obtain any third party consents not covered by Sections
6.6.1, 6.6.2 and 6.6.3 above, necessary, proper or advisable
to consummate Transactions. Each of the parties hereto will
furnish to the other such necessary information and
reasonable assistance as the other may request in connection
with the preparation of any required governmental filings or
submissions and will cooperate in responding to any inquiry
from a Governmental Authority, including promptly informing
the other party of such inquiry, consulting in advance before
making any presentations or submissions to a Governmental
Authority, and supplying each other with copies of all
correspondence, filings or communications between either
party and any Governmental Authority with respect to this
Agreement. No party hereto shall independently participate in
any formal meeting with any Governmental Authority in respect
of any such filings, submissions, investigation, or other
inquiry without giving the other parties hereto prior notice
of the meeting and, to the extent permitted by such
Governmental Authority, the opportunity to attend and/or
participate.
6.6.5 If any objections are asserted with respect to the
Transactions under any Antitrust Law or any Communications
Regulation or if any suit is instituted by any Governmental
Authority or any private party challenging any of the
Transactions as violative of any Antitrust Law or
Communications Regulation, the parties shall use their
reasonable best efforts to resolve any such objections or
challenge as such Governmental Authority or private party may
have to such transactions under such law so as to permit
consummation of the Transactions. In furtherance of the
parties' obligations under this Section 6.6, LMC and Parent
shall be required to (and, to the extent required by any
Governmental Authority, shall cause their respective current
and future Subsidiaries to), propose, negotiate, commit to
and enter into one or more settlements, undertakings,
conditions, consent decrees, stipulations and other
agreements with or to one or more Governmental Authorities
(each, a "Settlement") in connection with the Transactions
(including obtaining the requisite consent of such
Governmental Authorities), including one or more Settlements
that require LMC or Parent to restructure the operations of,
or sell or otherwise divest or dispose of, its assets and/or
the assets of its current and future Subsidiaries; provided,
however, that (i) neither LMC nor any of its Subsidiaries
shall be required to take (or commit to take) any of the
foregoing actions, or any other action contemplated by this
Section 6.6, (A) if any such actions would reasonably be
expected to have a material adverse effect on the business or
operations of LMC and its Subsidiaries or any of their cable,
television (including video or electronic home shopping) or
satellite businesses, or (B) if the Board of Directors of LMC
determines, in good faith, that the taking of such actions
would be reasonably likely to have a Material Adverse Effect
on Splitco (without giving effect, for purposes of this
Section 6.6.5, to the exception contained in clause (i) of
48
the second sentence of the definition of "Material Adverse
Effect" relating to the performance of this Agreement), (ii)
neither Parent nor any of its Subsidiaries shall be required
to take (or commit to take) any of the foregoing actions or
any other action contemplated by this Section 6.6, if the
Board of Directors of Parent determines, in good faith, that
the taking of such actions would be reasonably expected to
have a Material Adverse Effect on Splitco (without giving
effect, for purposes of this Section 6.6.5, to the exception
contained in clause (i) of the second sentence of the
definition of "Material Adverse Effect" relating to the
performance of this Agreement), without the prior written
consent of LMC, and (iii) neither Parent nor any of its
Subsidiaries shall be required to take (or commit to take)
any of the foregoing actions, or any other action
contemplated by this Section 6.6, if any such actions would
reasonably be expected to have a material adverse effect on
the business or operations of Parent and its Subsidiaries or
any of their cable programming or television businesses.
Section 6.7. Further Assurances.
6.7.1 Each of the parties shall use its reasonable best efforts to
take, or cause to be taken, all appropriate action, do or
cause to be done all things necessary, proper or advisable
under applicable Law, and execute and deliver such documents
and other papers, as may be reasonably required to consummate
the Transactions.
Section 6.8. Standstill Agreements.
6.8.1 LMC agrees that, during the period commencing on the date
hereof and ending on the earliest of (w) the valid
termination of this Agreement in accordance with Article IX
hereof, (x) the 10th anniversary of the date hereof, (y) the
consummation of the sale of all or substantially all of the
assets of Parent and its Subsidiaries to any Person and (z)
the effective time of any merger, consolidation or business
combination of Parent with or into any other Person, other
than a merger, consolidation or business combination in which
the holders of Parent common stock immediately prior to such
consummation hold immediately following the consummation of
such merger, consolidation or other business combination,
shares of the surviving entity constituting at least a
majority of the outstanding voting power of such surviving
entity, it shall not, and shall not authorize or permit any
of its Affiliates or their respective Representatives to do
or agree to do any of the following, without the prior
written consent of Parent: (a) effect or seek, offer or
propose (whether publicly or otherwise) to effect, or
announce any intention to effect or cause or participate in
or in any way assist, facilitate or encourage any other
Person to effect or seek, offer or propose (whether publicly
or otherwise) to effect or participate in, (i) any
acquisition of any equity securities (or beneficial ownership
thereof), or rights or options to acquire any equity
securities (or beneficial ownership thereof), or any
securities convertible into or exercisable or exchangeable
for equity securities (or beneficial ownership thereof)
("Convertible Securities") any assets, indebtedness or
businesses of Parent or any of its Affiliates, (ii) any
tender or exchange offer, consolidation, business
49
combination, acquisition, merger, joint venture or other
business combination involving Parent, any of Parent's
Affiliates or any of the assets of Parent or its Affiliates,
(iii) any recapitalization, restructuring, liquidation,
dissolution or other extraordinary transaction with respect
to Parent or any of its Affiliates, or (iv) any
"solicitation" of "proxies" (as such terms are used in the
proxy rules of the SEC) to vote any voting securities of
Parent or consents to any action from any holder of any
voting securities of Parent or seek to advise or influence
any Person with respect to the voting of or the granting of
any consent with respect to any voting securities of Parent;
(b) form, join or in any way participate in a "group" (as
defined under the Exchange Act) in connection with the voting
securities of Parent or otherwise act in concert with any
Person in respect of any such securities; (c) otherwise act,
alone or in concert with others, to seek representation on or
to control or influence the management, Board of Directors or
policies of Parent or to obtain representation on the Board
of Directors of Parent; (d) enter into any discussions or
arrangements with any third party with respect to any of the
foregoing; (e) request that Parent or any of its
Representatives amend or waive any provision of this
paragraph, or make any public announcement with respect to
the restrictions of this paragraph, or take any action which
would reasonably be expected to require Parent make a public
announcement regarding the possibility of a business
combination or merger; or (f) advise, assist or encourage, or
direct any Person to advise, assist or encourage any other
Persons, in connection with any of the foregoing; provided,
however, that, notwithstanding anything contained herein, (1)
any acquisition (or proposed acquisition) of an indirect
interest in equity securities of Parent or any of its
Affiliates arising out of an acquisition by LMC or any of its
Affiliates of an interest in another Person (which Person,
immediately following such acquisition, would be an Affiliate
of LMC) that beneficially owns equity securities or
Convertible Securities of Parent or any of its Affiliates
will not constitute a breach or violation of LMC's
obligations under this Section 6.8.1 and, for all purposes of
this Section 6.8.1, LMC will not be deemed to have acquired
beneficial ownership of, and following such acquisition will
not be deemed to have beneficial ownership of, any such
equity securities or Convertible Securities of Parent or any
of its Affiliates, so long as such equity securities and
Convertible Securities of Parent or any of its Affiliates
beneficially owned by such Person do not constitute, in the
aggregate, on an as-converted basis, more than two percent
(2%) of any class of Parent's or any of its Affiliate's
equity securities immediately prior to the execution in full
of a binding purchase or similar agreement relating to such
acquisition (but after giving effect to any sale or other
disposition of equity securities or Convertible Securities of
Parent or any of its Affiliates by such Person to occur on a
reasonably prompt basis after the closing of such acquisition
pursuant to a binding agreement entered into by such acquired
Person prior to or in connection with the closing of such
acquisition to sell or dispose of such Person's shares of
equity securities or Convertible Securities of Parent or any
of its Affiliates, subject to such disposition closing;
provided that prior to such disposition, LMC shall vote, and
shall cause its Affiliates to vote, any such equity
securities or Convertible Securities at any special or annual
50
meeting of the shareholders of Parent or any of its
Affiliates, as applicable, in proportion to the votes cast by
shareholders of Parent or its Affiliates, as applicable,
other than LMC and its Affiliates, at such meeting), and (2)
for all purposes of this Section 6.8.1, LMC will not be
deemed to have acquired beneficial ownership of, and
following such acquisition will not be deemed to have
beneficial ownership of, any equity securities or Convertible
Securities of Parent or any of its Affiliates to the extent
that such equity securities or Convertible Securities are
received by LMC or its Affiliates as a result of any dividend
or other distribution made, or similar action taken
(including the receipt by LMC or any of its Affiliates of any
rights, warrants or other securities granting to the holder
the right to acquire equity securities or Convertible
Securities of Parent or its Affiliates, and any acquisition
of equity securities or Convertible Securities of Parent or
its Affiliates upon the exercise thereof), by Parent, any of
its Affiliates or any other Person which is not LMC or an
Affiliate of LMC. Except as provided on Section 6.8 of the
LMC Disclosure Letter, from the date hereof until the Closing
Date or the date upon which this Agreement is earlier
terminated in accordance with Article IX, LMC shall not, and
shall cause its respective Affiliates not to, without
Parent's prior written consent, (i) offer for sale, sell
(including short sales), transfer, tender, pledge, encumber,
assign or otherwise dispose of (including by gift)
(collectively, a "Transfer"), or enter into any contract,
option, derivative, hedging or other agreement or arrangement
or understanding (including any profit-sharing arrangement)
with respect to, or consent to, a Transfer of, any or all of
the LMC Parent Shares; (ii) grant any proxies or powers of
attorney with respect to any or all of the LMC Parent Shares;
(iii) permit to exist any Encumbrance (other than pursuant to
this Agreement or the Ancillary Agreements) of any nature
whatsoever with respect to any or all of the LMC Parent
Shares; or (iv) take any action that would have the effect of
preventing, impeding, interfering with or adversely affecting
LMC's ability to perform its obligations under this
Agreement.
6.8.2 Parent agrees that, during the period commencing on the date
hereof and ending on the earliest of (w) the valid
termination of this Agreement in accordance with Article IX
hereof, (x) the 10th anniversary of the date hereof, (y)
solely with respect to the securities of LMC or DTV, as
applicable, the consummation of the sale of all or
substantially all of the assets of LMC and its Subsidiaries
or DTV and its Subsidiaries, as applicable, to any Person and
(z) solely with respect to the securities of LMC or DTV, as
applicable, the effective time of any merger, consolidation
or business combination of LMC or DTV, as applicable, with or
into any other Person, other than a merger, consolidation or
business combination in which the holders of LMC or DTV, as
applicable, immediately prior to such consummation hold
immediately following the consummation of such merger,
consolidation or other business combination shares of the
surviving entity constituting at least a majority of the
outstanding voting power of such surviving entity, it shall
not, and shall not authorize or permit any of its Affiliates
or their respective Representatives to do or agree to do any
of the following, without the prior written consent of LMC:
(a) effect or seek, offer or propose (whether publicly or
otherwise) to effect, or announce any intention to effect or
cause or participate in or in any way assist, facilitate or
encourage any other Person to effect or seek, offer or
51
propose (whether publicly or otherwise) to effect or
participate in, (i) any acquisition of any equity securities
(or beneficial ownership thereof), or rights or options to
acquire any equity securities (or beneficial ownership
thereof), Convertible Securities or any assets, indebtedness
or businesses of LMC, DTV or any of their respective
Affiliates, (ii) any tender or exchange offer, consolidation,
business combination, acquisition, merger, joint venture or
other business combination involving LMC, DTV or any of their
respective Affiliates or any of the assets of LMC, DTV or
their respective Affiliates, (iii) any recapitalization,
restructuring, liquidation, dissolution or other
extraordinary transaction with respect to LMC, DTV or any of
their respective Affiliates, or (iv) any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the
SEC) to vote any voting securities of LMC, DTV or any of
their respective Affiliates or consents to any action from
any holder of any voting securities of LMC or DTV or seek to
advise or influence any Person with respect to the voting of
or the granting of any consent with respect to any voting
securities of LMC or DTV; (b) form, join or in any way
participate in a "group" (as defined under the Exchange Act)
in connection with the voting securities of LMC or DTV or
otherwise act in concert with any Person in respect of any
such securities; (c) otherwise act, alone or in concert with
others, to seek representation on or to control or influence
the management, Board of Directors or policies of LMC or DTV
or to obtain representation on the Board of Directors of LMC
or DTV; (d) enter into any discussions or arrangements with
any third party with respect to any of the foregoing; (e)
request that LMC or any of its Representatives amend or waive
any provision of this paragraph, or make any public
announcement with respect to the restrictions of this
paragraph, or take any action which would reasonably be
expected to require LMC make a public announcement regarding
the possibility of a business combination or merger; or (f)
advise, assist or encourage, or direct any Person to advise,
assist or encourage any other Persons, in connection with any
of the foregoing; provided, however, that, notwithstanding
anything contained herein, (1) any acquisition (or proposed
acquisition) of an indirect interest in equity securities of
LMC, DTV or any of their respective Affiliates arising out of
an acquisition by Parent or any of its Affiliates of an
interest in another Person (which Person, immediately
following such acquisition, would be an Affiliate of Parent)
that beneficially owns equity securities or Convertible
Securities of LMC, DTV or any of their respective Affiliates
will not constitute a breach or violation of Parent's
obligations under this Section 6.8.2 and, for all purposes of
this Section 6.8.2, Parent will not be deemed to have
acquired beneficial ownership of, and following such
acquisition will not be deemed to have beneficial ownership
of, any such equity securities or Convertible Securities of
LMC, DTV or any of their respective Affiliates, so long as
such equity securities or Convertible Securities beneficially
owned by such Person do not constitute, in the aggregate on
an as-converted basis, more than two percent (2%) of any
class of LMC's or DTV's or any of their respective
Affiliates' equity securities, as applicable, immediately
prior to the execution in full of a binding purchase or
similar agreement relating to such acquisition (but after
giving effect to any sale or other disposition of equity
securities or Convertible Securities of LMC, DTV or any of
52
their respective Affiliates by such Person to occur on a
reasonably prompt basis after the closing of such acquisition
pursuant to a binding agreement entered into by such acquired
Person prior to or in connection with the closing of such
acquisition to sell or dispose of such Person's shares of
equity securities or Convertible Securities of LMC, DTV or
any of their respective Affiliates, subject to such
disposition closing; provided that prior to such disposition,
Parent shall vote, and shall cause its Affiliates to vote,
any such equity securities or Convertible Securities at any
specified or annual meeting of the shareholders of LMC or DTV
or any of their Affiliates, as applicable, in proportion to
the votes cast by shareholders of LMC, DTV or their
Affiliates, as applicable, other than Parent and its
Affiliates, at such meeting), and (2) for all purposes of
this Section 6.8.2, Parent will not be deemed to have
acquired beneficial ownership of, and following such
acquisition will not be deemed to have beneficial ownership
of, any equity securities or Convertible Securities of LMC,
DTV or any of their respective Affiliates to the extent that
such equity securities or Convertible Securities are received
by Parent or its Affiliates as a result of any dividend or
other distribution made, or similar action taken (including
the receipt by Parent or any of its Affiliates of any rights,
warrants or other securities granting to the holder the right
to acquire equity securities or Convertible Securities of
LMC, DTV or their respective Affiliates, and any acquisition
of equity securities or Convertible Securities of LMC, DTV or
their respective Affiliates upon the exercise thereof), by
LMC, DTV, any of their respective Affiliates or any other
Person which is not Parent or an Affiliate of Parent.
Notwithstanding anything to the contrary in this Section
6.8.2, neither Parent nor any Affiliate of Parent nor any of
their respective Representatives shall be bound by any of the
restrictions set forth in this Section 6.8.2 with respect to
DTV or the equity securities or Convertible Securities of DTV
from and after the date upon which LMC and its Affiliates
(including any LMC Related Party) shall have disposed of, in
the aggregate, in any transaction or series of transactions,
50% or more (by number, with appropriate adjustment for any
subdivision, share split, consolidation, share dividend,
combination, reclassification or similar event occurring
following the Closing) of the DTV Shares (or an equivalent
amount of securities (based on voting power) of any successor
to DTV, whether by consolidation, business combination,
acquisition, or merger, or any entity which shall acquire a
majority of DTV's voting power, whether by tender or exchange
offer or otherwise, or any entity to which DTV shall sell,
lease or otherwise transfer all or substantially all of its
assets).
Section 6.9. Confidentiality; Access to Records after Closing.
6.9.1 LMC acknowledges that the information being provided to it in
connection with the Exchange and the consummation of the
other transactions contemplated hereby, or by any of the
Ancillary Agreements, is subject to the terms of the
Confidentiality Agreement, the terms of which are
incorporated herein by reference. Effective upon, and only
upon, the Closing, the Confidentiality Agreement shall
terminate with respect to information relating to the
Transferred Business; provided, however, that LMC
53
acknowledges that any and all other information provided to
it by Parent or its Representatives concerning Parent or any
of its Affiliates (other than information relating to the
Transferred Business) shall remain subject to the terms and
conditions of the Confidentiality Agreement after the
Closing. Parent agrees to hold all Proprietary Information
(as defined in the Confidentiality Agreement) in its
possession as of the Closing Date confidential and to refrain
from using such Proprietary Information for a period of two
(2) years following the Closing Date; provided, that,
notwithstanding anything to the contrary herein, Parent may
use such Proprietary Information to the extent reasonably
necessary for purposes of preparing and filing Tax Returns,
corresponding with tax authorities, preparing accounting
records, and in connection with any litigation, including,
without limitation, litigation arising out of, relating to or
resulting from the Transactions or the subject matter of such
Proprietary Information.
6.9.2 LMC acknowledges and agrees that Parent may from time to
time, subsequent to the consummation of the Transactions
require access to or copies of the business records of
Splitco or Transferred Subsidiaries to the extent relating to
the operations of the Transferred Business prior to the
Closing and LMC agrees that upon reasonable prior notice from
Parent it will, during normal business hours, provide or
cause to be provided to Parent, at Parent's option, access to
or copies of such records. Parent hereby agrees to hold any
Proprietary Information so provided in confidence; provided,
that, notwithstanding anything to the contrary herein, Parent
may use such Proprietary Information to the extent reasonably
necessary for purposes of preparing and filing Tax Returns,
corresponding with tax authorities, preparing accounting
records, and in connection with any litigation, including,
without limitation, litigation arising out of, relating to or
resulting from the Transactions or the subject matter of such
Proprietary Information.
6.9.3 Parent recognizes that, after the Closing, it may have
documents, books, records, work papers and information,
whether in written, magnetic, electronic or optical form
(collectively, "Records") which relate to the Transferred
Business with respect to the period or matters arising prior
to the Closing, including Records pertaining to the assets
and Liabilities related to the Transferred Business and
Splitco's or the Transferred Subsidiaries' respective
employees, assets and liabilities (the "Business Records") or
other Records relating to the Transferred Business. Parent
recognizes that LMC, the Stockholders or their respective
Affiliates may need access to such Business Records and other
Records after the Closing. Upon LMC's, a Stockholder's or
Splitco's reasonable request Parent shall provide LMC, the
Stockholders or Splitco and their respective Representatives
access to, and the right to photocopy (at LMC's, the
Stockholders' or Splitco's expense), during normal business
hours on reasonable advance notice, such reasonably requested
Records. For a period of five (5) years following the
Closing, Parent shall use reasonable best efforts to maintain
all such Records or, at Parent's discretion or at LMC's, the
Stockholders' or Splitco's reasonable request (at LMC's, the
Stockholders' or Splitco's expense), transfer any such
Records to LMC, the Stockholders or Xxxxxxx.
00
6.9.4 Notwithstanding any provision herein to the contrary, from
and after the Closing, Records pertaining to Taxes shall be
governed solely by the Tax Matters Agreement.
Section 6.10. Employee Matters.
6.10.1 Section 1.1 of the Parent Disclosure Letter sets forth the
name of each Transferred Employee, along with such employee's
job title and reporting position, current salary and
incentive bonus opportunities, and years of service, and
designating such employee's status as exempt or non-exempt
under the FLSA, whether such employee is full-time or
part-time. Prior to the Closing, Parent shall update Section
1.1 of the Parent Disclosure Letter.
6.10.2 LMC acknowledges and agrees that, effective as of the Closing
Date, each Transferred Employee, including any such employee
on approved leave of absence (whether family leave, workers'
maternity or parental leave, workers' compensation,
short-term and long-term disability, medical leave or
otherwise) shall be employed in a substantially comparable
position to the position in which such Transferred Employee
was employed immediately prior to Closing Date. As of and for
no less than one year following the Closing, LMC shall, and
shall cause its Affiliates to, provide the Transferred
Employees who remain employed with LMC and its Affiliates
with the same rate of base salary and wages and commissions
and with employee benefit and compensation plans, programs
and arrangements that are substantially equivalent in the
aggregate to those provided to similarly situated employees
of LMC and its Affiliates. Any Transferred Employee who
became entitled to short-term or long-term disability
benefits under the applicable Employee Benefit Plans (the
"Seller Disability Plans") prior to Closing shall be entitled
to continue to receive such benefits under the terms of the
Seller Disability Plans until his or her return to active
employment, so long as such benefits are payable pursuant to
third-party insurance coverage. Parent agrees to use
commercially reasonable efforts to cause the insurance
policies underlying the Seller Disability Plans to provide
for such payments. Notwithstanding anything to the contrary
contained herein, LMC and its Affiliates shall have no
obligation to keep any Transferred Employee employed for any
period of time following the Closing, provided that if the
employment of any Transferred Employee is terminated by LMC
or its Affiliates during the 12-month period beginning on the
Closing Date, LMC or its Affiliates shall pay to such
terminated employee severance payments that are no less
favorable than those provided under the Employee Benefit
Plans immediately prior to the Closing Date. Parent and its
Affiliates shall cause the Employment Agreements and, to the
extent necessary, any talent Contract identified on Sections
4.13(c) of the Parent Disclosure Letter, to be assigned to
the appropriate Transferred Subsidiary prior to the Closing.
Notwithstanding the provisions of the employment agreement
between Xxxx Xxxxxx ("Xxxxxx") and Xxx Cable Networks
Services, LLC, dated as of July 16, 2006 (the "Shuken
Agreement"), during the period between the date of this
Agreement and Closing, Parent agrees to allow (and to cause
its Affiliates to allow) Shuken to discuss terms of potential
55
employment with LMC and its Affiliates, and to waive (and
cause its Affiliates to waive) any restrictions in the
Employment Agreement or any other agreement that would
prevent Shuken from accepting employment with LMC or its
Affiliates as of the Closing. Following the Closing, LMC
shall assume and honor and/or shall cause its Affiliates to
assume and to honor in accordance with their terms all
Employment Agreements, and take all actions necessary to
update such Employment Agreements to reflect such assumption,
and Parent and Parent Group shall cease to have any further
obligations under the Employment Agreements as of the Closing
Date. Parent shall take all actions necessary such that
following the Closing, the LMC Indemnitees, as applicable,
shall have no liabilities with respect to any Employee
Benefit Plans or any other employee benefit plans,
arrangements or agreements sponsored or contributed to by
Parent Group other than the Subsidiary Employee Benefit Plans
and the Employment Agreements. For purposes of all plans,
programs or arrangements maintained, sponsored or contributed
to by LMC or its Affiliates in which the Transferred
Employees shall be eligible to participate, LMC shall cause
each such plan, program or arrangement to treat the prior
service of each Transferred Employee with Parent, the Parent
Entities or any of their Subsidiaries as service rendered to
LMC for purposes of eligibility and vesting for all purposes
and levels of benefits for purposes of severance and
vacation, except to the extent such treatment would result in
the duplication of benefits with respect to the same period
of service. From and after the Closing, LMC and its
Affiliates shall (i) cause any pre-existing conditions,
limitations and eligibility waiting periods under any group
health plans of LMC or its Affiliates to be waived with
respect to the Transferred Employees and their eligible
dependents to the extent such condition would have been
covered, or limitation or waiting period would not have
applied, with respect to such Transferred Employee (or
dependent) under the terms of the Employee Benefit Plan in
which such Transferred Employee was a participant immediately
prior to the Closing and (ii) give each Transferred Employee
credit for the plan year in which the Closing (or the
transition from Parent's plans to LMC's plans) occurs towards
applicable deductibles and annual out-of-pocket limits for
expenses incurred prior to the Closing (or such later
transition date). LMC or its Affiliates shall not provide
financial incentive to any Transferred Employee to elect
continued group health plan coverage under Section 601 et
seq. of ERISA and Section 4980B of the Code (or any similar
state Law) with respect to plans maintained by Parent and its
Affiliates, except to the extent LMC or its Affiliates
directly or indirectly pay for such continued group health
plan coverage for all Transferred Employees, whether pursuant
to the Transitional Services Agreement or otherwise.
6.10.3 Effective as of the Closing, Parent and its Affiliates shall
cause each Transferred Employee to be fully vested in his or
her accrued benefit under the savings plan in which such
Transferred Employee participates immediately prior to
Closing.
6.10.4 Notwithstanding the foregoing, nothing contained herein,
whether express or implied, shall be treated as an amendment
or other modification of any Subsidiary Employee Benefit
Plan, or shall limit the right of LMC, Splitco, the
56
Transferred Subsidiaries or any of their Subsidiaries to
amend, terminate or otherwise modify any Subsidiary Employee
Benefit Plan following the Closing Date. In the event that
(i) a party other than Parent makes a claim or takes other
action to enforce any provision in this Agreement as an
amendment to any Subsidiary Employee Benefit Plan, and (ii)
such provision is deemed to be an amendment to such
Subsidiary Employee Benefit Plan even though not explicitly
designated as such in this Agreement, then such provision
shall lapse retroactively and shall have no amendatory
effect. Parent acknowledges and agrees that all provisions
contained in this Section 6.10 with respect to the
Transferred Employees are included for the sole benefit of
Parent, and that nothing in this Agreement, whether express
or implied, shall create any third party beneficiary or other
rights (i) in any other Person, including, without
limitation, any employees, former employees, any participant
in any Subsidiary Employee Benefit Plan, or any dependent or
beneficiary thereof, or (ii) to continued employment with
LMC, Splitco, the Transferred Subsidiaries or any of their
respective Affiliates.
Section 6.11. Intercompany Services and Accounts. Except for the
Ancillary Agreements, and except as set forth in Section 6.11 of the Parent
Disclosure Letter, all Contracts pursuant to which any goods, services,
materials or supplies have at any time been provided (i) by any RSN Subsidiary,
on the one hand, to Parent or any of its Affiliates (other than the RSN
Subsidiaries), on the other hand, or (ii) by Parent or any of its Affiliates
(other than the RSN Subsidiaries), on the one hand, to any RSN Subsidiary, on
the other hand, will be terminated as of the Closing. Parent shall use
commercially reasonable efforts to obtain at or before the Closing the written
release and waiver from all appropriate Persons of any Encumbrances arising
therefrom. Without derogating from the Parent's rights to withdraw cash from
the RSN Subsidiaries pursuant to Section 6.2.10, prior to the Closing, all
intercompany receivables or payables and loans then existing between Parent and
its Affiliates (other than the RSN Subsidiaries), on the one hand, and the RSN
Subsidiaries, on the other hand, shall be settled by way of capital
contribution, dividend or otherwise and all intercompany arrangements shall be
terminated, except for those arrangements contemplated by the Ancillary
Agreements or as expressly set forth in Section 6.11 of the Parent Disclosure
Letter.
Section 6.12. Cooperation with Respect to Financial Reporting. Until
the third anniversary of the Closing Date, each of Parent, on the one hand, and
LMC, on the other hand, shall, and shall cause each of their respective
Affiliates to, reasonably cooperate with the other (at the other's expense) in
connection with the other's preparation of historical financial statements of,
or including, the Transferred Business as required for the other's filings
under the Exchange Act following the Closing. Until the third anniversary of
the Closing Date, LMC shall, and shall cause Splitco to, (i) reasonably
cooperate with Parent (at Parent's expense) in connection with Parent's
preparation of pro forma and historical financial statements of the Transferred
Business as may be required for Parent's filings under the Exchange Act
following the Closing and (ii) use its reasonable best efforts to cause DTV to
reasonably cooperate with Parent (at Parent's expense) in connection with
Parent's preparation of Parent's financial statements as may be required for
Parent's filings under the Exchange Act following the Closing.
Section 6.13. No Solicitation.
57
6.13.1 Parent and its Affiliates have ceased all, and, from the date
of this Agreement until the Closing or the earlier
termination of this Agreement, Parent shall not, nor shall it
authorize or permit any of its Affiliates nor any of its or
their respective officers, directors, employees,
representatives, consultants, advisors, accountants or agents
("Representatives") to, (A) directly or indirectly, initiate,
solicit or knowingly encourage or facilitate (including, in
each case, by way of furnishing information) any inquiries or
the making of any proposal or offer with respect to, or any
indication of interest in, any acquisition by any third party
of all or a substantial portion of the assets of any
Transferred Subsidiary, any acquisition by any third party of
any securities or other ownership interests of any of the
Transferred Subsidiaries or any acquisition of all or a
portion of the DTV Shares (any such proposal, offer or
indication of interest, a "Parent Acquisition Proposal"), (B)
directly or indirectly, engage in any negotiations or
discussions concerning a Parent Acquisition Proposal, or
provide access to its properties, books and records or any
non-public information or data to, any third party that has
made, or to Parent's Knowledge, is considering making a
Parent Acquisition Proposal or any Representatives thereof,
(C) approve or recommend, or propose to approve or recommend,
or execute or enter into any letter of intent, agreement in
principle, option agreement, acquisition agreement or other
agreement relating to a Parent Acquisition Proposal or (D)
propose publicly or agree to any of the foregoing relating to
a Parent Acquisition Proposal.
6.13.2 Parent will, and will take such lawful action solely in its
capacity as a stockholder of DTV as may be reasonable to
cause DTV and each of its Affiliates to, cease any ongoing,
and not initiate any new, activities, directly or indirectly,
through any Representative or otherwise, to solicit, initiate
or encourage inquiries or submission of proposals or offers
from any Person relating to (A) any sale or other disposition
of all or any substantial portion of the assets of DTV or its
Affiliates or all or any substantial portion of the equity
interests in DTV or its Affiliates or (B) any business
combination involving DTV or any of its Affiliates, whether
by merger, consolidation, tender offer or otherwise (any of
the foregoing, an "Extraordinary Transaction") or to
participate in any negotiation regarding, or furnishing to
any other Person any information with respect to, or
otherwise cooperate in any way with or assist in, facilitate
or encourage, any effort or attempt by any other Person to do
or seek to do any of the foregoing; provided, however, that
nothing in this Section 6.13.2 shall prohibit (or require
Parent to prohibit) any director of DTV from exercising
(solely in his or her capacity as a director of DTV)
fiduciary duties to DTV or its shareholders (other than
Parent) under applicable Law;
6.13.3 From the date hereof until the earlier of the Closing or the
termination of this Agreement, Parent will (A) vote all
voting shares of DTV or of any other Person held by Parent
and any Affiliate of Parent against any Extraordinary
Transaction that is presented or proposed to them at any time
after the date of this Agreement and prior to the Closing or
termination of this Agreement, (B) not solicit proxies or
become a "participant" in a "solicitation" with respect to
the shares of capital stock of DTV (as such terms are defined
in Regulation 14A under the Exchange Act) in opposition to or
58
in competition with the consummation of the Exchange or
otherwise encourage or assist any party in taking or planning
any action which would compete with or materially impede,
interfere with, adversely effect or tend to discourage or
inhibit the timely consummation of the Exchange and (C) in
the event of a tender offer for all or a portion of the
outstanding shares of capital stock of DTV, not tender any
DTV Shares in such tender offer and publicly announce, within
5 days of the announcement of such tender offer, Parent's
intention not to tender any DTV Shares in such tender offer;
provided, however that, in the event this Agreement is
terminated by Parent or LMC pursuant to Section 9.1.6 or
9.1.7 or by LMC pursuant to Section 9.1.9, Parent's
obligations under clauses (A), (B) and (C) of this sentence
shall continue until the date that is six (6) months from the
date of such termination, and, solely with respect to any
transaction in respect of at least a majority of DTV's
outstanding shares or all or substantially all of DTV's
assets with respect to which a bona fide written proposal was
publicly announced and not withdrawn prior to such
termination, until the date that is twelve (12) months from
the date of such termination. Parent will notify LMC promptly
if any inquiries or proposals are received by, any
information is requested from, or any negotiations or
discussions are sought to be initiated or continued with,
Parent or, to the knowledge of Parent, DTV or any of its
Affiliates, in each case in connection with any Extraordinary
Transaction.
6.13.4 LMC and its Affiliates have ceased all, and from the date
hereof until the Closing or the earlier termination of this
Agreement, LMC shall not, nor shall it authorize or permit
any of its Affiliates nor any of its Representatives to, (A)
directly or indirectly, initiate, solicit or knowingly
encourage or facilitate (including, in each case, by way of
furnishing information) any inquiries or the making of any
proposal or offer with respect to, or any indication of
interest in, any acquisition by any third party of all or a
portion of the LMC Parent Shares (any such proposal, offer or
indication of interest, a "L Acquisition Proposal"), (B)
directly or indirectly, engage in any negotiations or
discussions concerning an L Acquisition Proposal, or provide
access to its properties, books and records or any non-public
information or data to, any third party that has made, or to
LMC's Knowledge, is considering making an L Acquisition
Proposal or any Representatives thereof, (C) approve or
recommend, or propose to approve or recommend, or execute or
enter into any letter of intent, agreement in principle,
option agreement, acquisition agreement or other agreement
relating to an L Acquisition Proposal or (D) propose publicly
or agree to any of the foregoing relating to an L Acquisition
Proposal.
Section 6.14. DTV Charter Restrictions. From the date of this
Agreement to the Closing, neither LMC nor Parent shall, and each shall cause
its respective Affiliates not to, propose to the Board of Directors of DTV, nor
enter into any discussion with the Board of Directors of DTV regarding, any
amendment to the DTV certificate of incorporation or bylaws. From the date of
this Agreement until the earlier of the termination of this Agreement or the
Closing, notwithstanding the foregoing, to the extent that any amendment to
DTV's certificate of incorporation is proposed by DTV for approval of DTV's
stockholders, Parent will publicly state its intention to vote against, and
59
cause all DTV Shares beneficially owned by Parent to be voted against any such
amendment, unless LMC has consented to Parent voting in favor of such amendment
Section 6.15. Certain Tax Matters. Notwithstanding anything to the
contrary in this Agreement, except as expressly provided in the Tax Matters
Agreement, as set forth in Sections 4.20, 7.2.4, 7.2.5, 7.3.5, 7.3.6 or this
6.15, or as set forth in Sections 4.12 or 6.10 (including any indemnities
related to Sections 4.12 or 6.10), the parties' sole and exclusive
representations, warranties, agreements or other obligations (including
indemnities) with respect to Tax matters (interpreted in its broadest sense),
including the Tax consequences of the Transactions, shall be as set forth in
the Tax Matters Agreement, and in the event of any conflict or inconsistency
between any provision of this Agreement and any provision of the Tax Matters
Agreement, the applicable provision of the Tax Matters Agreement shall govern.
Section 6.16. Ancillary Agreements. Each of Parent and LMC shall, and
shall cause each of its respective Affiliates to, at or prior to the Closing,
duly execute and deliver each of the Ancillary Agreements (other than the Tax
Matters Agreement which shall be executed and delivered concurrently with this
Agreement) to which it is to become a party pursuant to the terms of this
Agreement.
Section 6.17. Pledged Shares. Prior to or at the Closing, LMC shall
unwind or terminate any variable forward OTC contracts to which any or all of
the Pledged Shares are subject or substitute other securities, property or
assets for the Pledged Shares under any such contracts, such that, at the
Closing all of the Pledged Shares shall be delivered to Parent pursuant to
Section 3.1; provided, that, nothing in this Section 6.17 shall require LMC to
terminate or unwind such contracts; provided further, that, nothing in this
Section 6.17 shall derogate from LMC's obligation to deliver the LMC Parent
Shares in accordance with Section 3.1.
ARTICLE VII.
CONDITIONS TO CLOSING
Section 7.1. Mutual Conditions. The respective obligations of each
party hereto to consummate the transactions contemplated by this Agreement,
including the Exchange, shall be subject to the fulfillment or, if legally
permitted, waiver at or prior to the Closing of the following conditions:
7.1.1 No Governmental Authority of competent jurisdiction located
in the United States shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order of any nature that
prohibits, enjoins or restrains the consummation of the
transactions contemplated by this Agreement, including the
Exchange.
7.1.2 Any waiting period (and any extension thereof) applicable to
the consummation of the transactions contemplated by this
Agreement, including the Exchange, under the HSR Act shall
have expired or been terminated.
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7.1.3 Each of the Tax Matters Agreement and the Global Affiliation
Agreement Side Letter shall be valid, binding and in full
force and effect and shall not have been repudiated by any
party thereto (provided that the right to assert this
condition shall not be available to any party if the failure
of such condition to be satisfied was due to any wrongful
action or omission by such party).
7.1.4 The Parent Stockholder Approval shall have been obtained.
Section 7.2. Conditions to LMC's Obligations. The obligations of LMC
to consummate the transactions contemplated by this Agreement, including the
Exchange, shall be subject to the fulfillment or waiver by LMC prior to or at
the Closing of each of the following conditions:
7.2.1 Except as set forth in the following sentence, the
representations and warranties of Parent contained in this
Agreement and in Article III of the Tax Matters Agreement
shall be true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect"
set forth therein) at and as of the Closing Date as if made
at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such earlier
date), except where the failure of such representations and
warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Material Adverse
Effect" set forth therein) would not, individually or in the
aggregate, have a Material Adverse Effect on Splitco. The
representations and warranties of the Parent contained in
Section 4.2 and Section 4.19 shall be true and correct in all
respects at and as of the Closing Date as if made at and as
of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date). LMC
shall have received a certificate, dated the Closing Date,
signed on behalf of Parent by an executive officer of Parent
to such effect.
7.2.2 Parent shall have performed in all material respects each
obligation and agreement to be performed by it at or prior to
Closing, and shall have complied in all material respects
with each covenant required by this Agreement and by Article
V of the Tax Matters Agreement to be performed or complied
with by it at or prior to the Closing, and LMC shall have
received a certificate, dated the Closing Date, signed on
behalf of Parent by an authorized officer of Parent to such
effect.
7.2.3 Prior to or at the Closing, Parent shall have delivered to
the Stockholders the items to be delivered by Parent pursuant
to Section 3.3.
7.2.4 (i) Parent shall have received a private letter ruling from
the IRS which includes rulings to the effect that, subject to
customary caveats, for United States federal income tax
purposes, no gain or loss will be recognized by (and no
amount will be includible in the income of) Parent or any of
its Affiliates on the Exchange, except with respect to any
DITs or ELAs (the "Parent Exchange Ruling"), (ii) LMC shall
have received a private letter ruling from the IRS which
includes rulings to the effect that, subject to customary
caveats, for United States federal income tax purposes, no
61
gain or loss will be recognized by (and no amount will be
includible in the income of) the Stockholders on the Exchange
(the "LMC Exchange Ruling," and collectively with the Parent
Exchange Ruling, the "Exchange Rulings"), (iii) each of the
Exchange Rulings shall be in form and substance reasonably
satisfactory to LMC, and (iv) neither LMC, Parent nor any of
their respective Affiliates shall have been notified by the
IRS that either Exchange Ruling has been withdrawn,
invalidated or modified in an adverse manner.
7.2.5 LMC shall have received the LMC Tax Opinion.
7.2.6 No change, effect, event, occurrence, development, condition
or circumstance shall have occurred which has had or would be
reasonably expected to have a Material Adverse Effect on
Splitco.
7.2.7 The FCC Consent shall have been obtained, without the
imposition of any conditions other than those contemplated by
Sections 6.6.5 as applicable to LMC and its Affiliates.
Section 7.3. Conditions to Parent's Obligations. The obligations of
Parent to consummate the transactions contemplated by this Agreement, including
the Exchange shall be subject to the fulfillment or waiver at or prior to the
Closing of each of the following conditions:
7.3.1 Except as set forth in the following sentence, the
representations and warranties of LMC contained in this
Agreement and in Article IV of the Tax Matters Agreement
shall be true and correct (without giving effect to any
limitation as to "materiality" or "Material Adverse Effect"
set forth therein) at and as of the Closing Date as if made
at and as of such time (except to the extent expressly made
as of an earlier date, in which case as of such earlier
date), except where the failure of such representations and
warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Material Adverse
Effect" set forth therein) would not, individually or in the
aggregate, have a Material Adverse Effect on LMC's ability to
consummate the transactions contemplated by this Agreement,
including the Exchange. The representations and warranties of
LMC contained in Section 5.5 shall be true and correct in all
respects at and as of the Closing Date as if made at and as
of such time (except to the extent expressly made as of an
earlier date, in which case as of such earlier date). Parent
shall have received a certificate, dated the Closing Date,
signed on behalf of LMC by an executive officer of LMC to
such effect.
7.3.2 LMC and each Stockholder shall have performed in all material
respects each obligation and agreement to be performed by it
at or prior to Closing, and shall have complied in all
material respects with each covenant required by this
Agreement and by Article V of the Tax Matters Agreement to be
performed or complied with by it at or prior to the Closing,
and Parent shall have received a certificate, dated the
Closing Date, signed on behalf of LMC by an authorized
officer of LMC to such effect.
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7.3.3 Prior to or at the Closing, the Stockholders shall have
delivered to Parent the items to be delivered pursuant to
Section 3.4.
7.3.4 The Disinterested Stockholder Approval shall have been
obtained.
7.3.5 (i) LMC shall have received the LMC Exchange Ruling, (ii)
Parent shall have received the Parent Exchange Ruling, (iii)
Parent shall have received a private letter ruling from the
IRS, in form and substance reasonably satisfactory to Parent,
which includes rulings to the effect that, subject to
customary caveats, for United States federal income tax
purposes, no gain or loss will be recognized by (and no
amount will be includible in the income of) Parent or any of
its Affiliates on the Parent Restructuring, except with
respect to any DITs or ELAs (the "Parent Restructuring
Ruling"), (iv) each of the Exchange Rulings and the Parent
Restructuring Ruling shall be in form and substance
reasonably satisfactory to Parent, and (v) neither LMC,
Parent nor any of their respective Affiliates shall have been
notified by the IRS that either Exchange Ruling or the Parent
Restructuring Ruling has been withdrawn, invalidated or
modified in an adverse manner.
7.3.6 Parent shall have received the Parent Tax Opinion.
7.3.7 The FCC Consent shall have been obtained, without the
imposition of any conditions other than those contemplated by
Sections 6.6.5 as applicable to Parent and its Affiliates.
Section 7.4. Frustration of Closing Conditions. Neither Parent, nor
LMC may rely on the failure of any condition set forth in this Article VII to
be satisfied if such failure was caused by such party's failure to act in good
faith or to use its reasonable best efforts to cause the Closing to occur as
required by Section 6.6.
ARTICLE VIII.
INDEMNIFICATION
Section 8.1. Survival of Representations, Warranties and Covenants
8.1.1 The representations and warranties contained in this
Agreement shall survive the Closing as follows: (i) the
representations and warranties contained in Sections 4.1
(Organization and Standing), 4.2 (Capitalization), 4.3
(Corporate Power and Authority), 4.4 (Shareholder Votes
Required), 4.19 (Title to DTV Shares), 4.22 (Brokers and
Agents), 4.23 (Investigation; Reliance), 5.1 (Organization
and Standing), 5.2 (Corporate Power and Authority), 5.3 (No
Vote Required), 5.5 (LMC Parent Shares), 5.10 (Investigation
and Reliance) and 5.11 (Brokers and Agents) shall survive
indefinitely; (ii) the representations and warranties
contained in Sections 4.12 (Employee Benefit Plans) shall
survive until the date that is 60 calendar days following the
expiration of the statute of limitations applicable to
actions with respect thereto; (iii) the representations and
warranties contained in Sections 4.20.6, 4.20.10 and 4.20.11
(relating to Certain Tax Matters) shall survive, but solely
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for purposes of the Tax Matters Agreement as provided
therein; and (iv) all other representations and warranties
contained in this Agreement (other than the representations
and warranties contained in Sections 4.20.1 - 4.20.5 and
Sections 4.20.7 - 4.20.9 (Certain Tax Matters), which shall
not survive the Closing) shall survive until the date that is
18 months following the Closing Date.
8.1.2 The covenants and agreements made by each party in this
Agreement shall survive the Closing, unless specified to the
contrary herein. Notwithstanding Section 8.1.1, any breach of
representation, warranty, covenant or agreement in respect of
which indemnity may be sought under this Agreement shall
survive the time at which it would otherwise terminate
pursuant to Section 8.1.1 or 8.1.2 if notice of the
inaccuracy or breach thereof giving rise to such right of
indemnity shall have been given to the party against whom
such indemnity may be sought prior to such time.
Section 8.2. Indemnification.
8.2.1 Provided that the Closing shall have occurred, subject to
Sections 8.1 and 8.2.2, Parent hereby agrees to indemnify
each LMC Indemnitee against and agrees to hold each of them
harmless (without duplication) from any and all Damages
incurred or suffered by any LMC Indemnitee arising out of or
resulting from (i) any representation or warranty of Parent
contained in this Agreement (other than the representations
and warranties contained in Section 4.20) not being true and
correct (which representations and warranties (except those
made as of a specified date) shall be deemed to have been
made again as of the Closing Date for purposes of this
Section 8.2.1) or (ii) any breach or nonperformance of any
covenant or agreement made or to be performed by Parent.
8.2.2 No indemnification by Parent shall be due and payable under
Section 8.2.1 in respect of any Parent Basket Breach unless
and until the cumulative amount of all Damages arising out of
or resulting from all such Parent Basket Breaches exceeds the
Parent Basket Amount, whereupon Parent will be obligated to
indemnify the LMC Indemnitees for the cumulative amount of
Damages incurred or suffered by the LMC Indemnitees in excess
of the Parent Basket Amount, and only to the extent of such
excess. Parent shall not be obligated to indemnify the LMC
Indemnitees for Damages arising out of or resulting from all
Parent Basket Breaches under this Agreement in an aggregate
amount in excess of the Maximum Amount; provided that the
limitation on Parent's obligations set forth in this sentence
shall not apply to breaches of the representations and
warranties contained in Section 4.12. The limitations on
indemnification set forth in this Section 8.2.2 shall not be
applicable to (x) any Parent Basket Exception Breach (and the
LMC Indemnitees will be entitled to indemnification with
respect to any Parent Basket Exception Breach without regard
to any Parent Basket Amount or any Maximum Amount) and (y)
any claim based upon fraud or knowing misrepresentation. For
purposes of determining the amount of Damages arising from
any Parent Basket Breach (but not for purposes of determining
64
whether any such Parent Basket Breach has occurred), the
representations and warranties shall be read without giving
effect to any limitations or qualifications as to
"materiality" (including the words "material" or
"materially") or "Material Adverse Effect" set forth therein.
8.2.3 Provided that the Closing shall have occurred, subject to
Sections 8.1 and 8.2.4, LMC hereby agrees to indemnify each
Parent Indemnitee against and agrees to hold each of them
harmless (without duplication) from any and all Damages
incurred or suffered by any Parent Indemnitee arising out of
or resulting from (i) any representation or warranty of LMC
contained in this Agreement not being true and correct (which
representations and warranties (except those made as of a
specified date) shall be deemed to have been made again as of
the Closing Date for purposes of this Section 8.2.3) or (ii)
any breach or nonperformance of any covenant or agreement
made or to be performed by LMC pursuant to this Agreement.
8.2.4 No indemnification by LMC shall be due and payable under
Section 8.2.3(i) in respect of any Liberty Basket Breach
unless and until the cumulative amount of all Damages arising
out of or resulting from all such Liberty Basket Breaches
exceeds the Liberty Basket Amount, whereupon LMC will be
obligated to indemnify the Parent Indemnitees for the
cumulative amount of Damages incurred or suffered by the
Parent Indemnitees in excess of the Liberty Basket Amount,
and only to the extent of such excess. LMC shall not be
obligated to indemnify the Parent Indemnitees for Damages
arising out of or resulting from all Liberty Basket Breaches
under this Agreement in an aggregate amount in excess of the
Maximum Amount. The limitations on indemnification set forth
in this Section 8.2.4 shall not be applicable to (x) any
Liberty Basket Exception Breach (and the Parent Indemnitees
will be entitled to indemnification with respect to any
Liberty Basket Exception Breach without regard to any Liberty
Basket Amount or any Maximum Amount) and (y) any claim based
upon fraud or knowing misrepresentation. For purposes of
determining the amount of Damages arising from any Liberty
Basket Breach (but not for purposes of determining whether
any such Liberty Basket Breach has occurred), the
representations and warranties shall be read without giving
effect to any limitations or qualifications as to
"materiality" (including the words "material" and
"materially") or "Material Adverse Effect" set forth therein.
Section 8.3. Procedures.
8.3.1 The party or parties seeking indemnification under Section
8.2 (the "Indemnified Party") agrees to give prompt notice to
the party or parties against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of
which indemnity may be sought under such Section and will
provide the Indemnifying Party such information with respect
thereto in its possession that the Indemnifying Party may
reasonably request; provided, however, that failure to give
such notification shall not affect the indemnification
65
provided hereunder except to the extent the Indemnifying
Party shall have been actually materially prejudiced as a
result of such failure.
8.3.2 In the case of a third party claim, the Indemnified Party
shall be entitled to exercise full control of the defense,
compromise or settlement of any third party claim,
investigation, action, suit or proceeding unless the
Indemnifying Party within a reasonable time after the giving
of notice of such indemnity claim by the Indemnified Party
shall: (i) deliver a written confirmation to such Indemnified
Party that the indemnification provisions of Section 8.2 are
applicable to such claim, investigation, action, suit or
proceeding and that the Indemnifying Party will indemnify
such Indemnified Party in respect of such claim, action or
proceeding pursuant to the terms of Section 8.2, (ii) notify
such Indemnified Party in writing of the Indemnifying Party's
intention to assume the defense thereof and (iii) retain
legal counsel reasonably satisfactory to such Indemnified
Party to conduct the defense of such claim, investigation,
action, suit or proceeding.
8.3.3 If the Indemnifying Party so assumes the defense of any such
claim, investigation, action, suit or proceeding in
accordance herewith, then such Indemnified Party shall
cooperate with the Indemnifying Party in any manner that the
Indemnifying Party reasonably may request in connection with
the defense, compromise or settlement thereof. If the
Indemnifying Party so assumes the defense of any such claim,
investigation, action, suit or proceeding, the Indemnified
Party shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or
settlement thereof, but the fees and expenses of such counsel
shall be the expense of such Indemnified Party unless (i) the
Indemnifying Party has agreed to pay such fees and expenses,
(ii) any relief other than the payment of money damages is
sought against the Indemnified Party or (iii) such
Indemnified Party shall have been advised by its regular
outside counsel that there may be one or more legal defenses
available to it that are different from or additional to
those available to the Indemnifying Party or that a conflict
of interest between the Indemnifying Party and the
Indemnified Party in the conduct of the defense of such
action would reasonably be expected (in which case the
Indemnifying Party shall not have the right to control the
defense, compromise or settlement of such action on behalf of
the Indemnified Party), and in any such case described in
clauses (i), (ii) or (iii) the reasonable fees and expenses
of one such separate counsel, and one local counsel, if
necessary, shall be borne by the Indemnifying Party. No
Indemnified Party shall settle or compromise or consent to
entry of any judgment with respect to any such action for
which it is entitled to indemnification hereunder without the
prior consent of the Indemnifying Party, which consent shall
not be unreasonably withheld or delayed, unless the
Indemnifying Party shall have failed, after reasonable notice
thereof, to undertake control of such action in the manner
provided above in this Section 8.3 to the extent the
Indemnifying Party was entitled to do so pursuant to this
Section 8.3. The Indemnifying Party shall not, without the
consent of such Indemnified Party, settle or compromise or
consent to entry of any judgment with respect to any such
claim, investigation, action, suit or proceeding (x) in which
any relief other than the payment of money damages is or may
66
be sought against such Indemnified Party or (y) that does not
include as an unconditional term thereof the giving by the
claimant, party conducting such investigation, plaintiff or
petitioner to such Indemnified Party of a release from all
liability with respect to such claim, action, suit or
proceeding.
Section 8.4. Exclusivity. Following the Closing, except in the case of
common law fraud, the sole and exclusive monetary remedy of the parties with
respect to any and all claims arising from any breach of this Agreement or any
of the other matters addressed in Section 8.2 shall be pursuant to the
indemnification provisions set forth in this Article VIII; provided that this
Section 8.4 shall not be construed so as to derogate from or otherwise limit
any party's right to seek the remedy of specific performance, injunctive relief
or other non-monetary equitable remedies with respect to any such breach.
Section 8.5. Certain Rights and Limitations.
8.5.1 The treatment of any Tax costs or Tax benefits to any party
as a result of any indemnification payment(s) pursuant to
this Article VIII shall be as set forth in the Tax Matters
Agreement.
8.5.2 Notwithstanding anything to the contrary herein, no party
shall be entitled to assert any right to indemnification
under this Article VIII unless, and until, the Closing shall
have occurred.
ARTICLE IX.
TERMINATION
Section 9.1. Termination. This Agreement may be terminated and the
Exchange and other transactions contemplated hereby abandoned at any time prior
to the consummation of the Closing, whether before or after receipt of the
Requisite Parent Stockholder Approval, under the following circumstances:
9.1.1 by mutual written consent of Parent and LMC;
9.1.2 by LMC or Parent upon written notice to the other if the
Closing shall not have been consummated on or before December
22, 2007 (the "Termination Date"); provided, that if, as of
the Termination Date all conditions to this Agreement shall
have been satisfied or waived (other than those that are
satisfied by action taken at the Closing) other than the
conditions set forth in Sections 7.2.7, 7.3.7, 7.2.4 or 7.3.5
then the Termination Date shall be extended to March 22, 2008
(the "Extended Termination Date");
9.1.3 by LMC upon written notice to Parent, if there has been a
breach by Parent or Splitco of any representation, warranty,
covenant or agreement contained in this Agreement or the Tax
Matters Agreement which would result in a failure of a
condition set forth in Section 7.2 and either cannot be cured
prior to the Termination Date, or is not cured within 45 days
after LMC shall have given Parent written notice stating
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LMC's intention to terminate this Agreement pursuant to this
Section 9.1.3 and the basis for such termination; provided,
at the time of the delivery of such notice, LMC shall not be
in material breach of its obligations under this Agreement or
the Tax Matters Agreement;
9.1.4 by Parent upon written notice to LMC, if there has been a
breach by LMC of any representation, warranty, covenant or
agreement contained in this Agreement or the Tax Matters
Agreement which would result in a failure of a condition set
forth in Section 7.3 and either cannot be cured prior to the
Termination Date, or is not cured within 45 days after Parent
shall have given LMC written notice stating Parent's
intention to terminate this Agreement pursuant to this
Section 9.1.4 and the basis for such termination; provided,
at the time of the delivery of such notice, Parent shall not
be in material breach of its obligations under this Agreement
or the Tax Matters Agreement;
9.1.5 by either LMC or Parent upon written notice to the other
party hereto, if any Governmental Authority of competent
jurisdiction shall have issued an order or taken any other
action permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement,
and such order or other action shall have become final and
non-appealable, provided that the party seeking to terminate
this Agreement pursuant to this Section 9.1.5 shall have used
its reasonable best efforts to remove such order or other
action; provided, further, that the right to terminate this
Agreement under this Section 9.1.5 shall not be available to
a party if the issuance of such final, non-appealable order
was primarily due to the failure of such party to perform any
of its obligations under this Agreement, including, without
limitation, the obligation of LMC and Parent to comply with
Section 6.6 of this Agreement so as to allow the parties to
close the transactions contemplated by this Agreement as
promptly as practicable;
9.1.6 by either LMC or Parent upon written notice to the other
party hereto if the Parent Stockholder Approval shall not
have been obtained by reason of the failure to obtain the
required vote at the Parent Stockholders' Meeting or any
adjournment thereof;
9.1.7 by either LMC or Parent upon written notice to the other
party hereto, if the Disinterested Stockholder Approval shall
not have been obtained by reason of the failure to obtain the
required vote at the Parent Stockholders' Meeting or any
adjournment thereof; provided that LMC (i) shall not be
entitled to exercise its termination right pursuant to this
Section 9.1.7 earlier than the eleventh (11th) Business Day
following the Parent Stockholders' Meeting; and (ii) shall
only be entitled to exercise such right if Parent shall not
have delivered written notice of its waiver of the condition
set forth in Section 7.3.4 and its termination right under
this Section 9.1.7 prior to such eleventh (11th) Business
Day;
9.1.8 by LMC if there shall have occurred following the date of
this Agreement a Material Adverse Effect on Splitco which is
continuing and has not been cured within 30 days after LMC
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shall have given Parent written notice stating LMC's
intention to terminate this Agreement pursuant to this
Section 9.1.8 and describing in reasonable detail the basis
for such termination; or
9.1.9 by LMC upon written notice to Parent, if there shall have
occurred a Parent Change in Recommendation; provided that
LMC's right to terminate pursuant to this Section 9.1.9 shall
terminate ten (10) Business Days following the earlier of the
date notice of the Parent Change in Recommendation is filed
with the SEC and the date LMC receives written notice from
Parent pursuant to Section 10.1 of such Parent Change in
Recommendation.
Section 9.2. Effect of Termination.
9.2.1 In the event of the termination of this Agreement pursuant to
Section 9.1, this Agreement, except for the provisions of (i)
Section 6.9.1 relating to the obligation of the parties to
keep confidential certain information obtained by them, (ii)
Section 6.13.3 relating to Parents obligation with respect to
the DTV Shares, (iii) Article X, and (iv) this Section 9.2.1,
which shall, in each case, remain in full force and effect,
shall become void and have no effect, without any liability
on the part of any party hereto or its directors, officers or
stockholders. Notwithstanding the foregoing, nothing in this
Section 9.2.1 shall relieve any party hereto of liability for
a willful breach of any of its obligations under this
Agreement.
9.2.2 If:
(i) either LMC or Parent terminates this Agreement pursuant
to 9.1.6 (and the votes associated with the shares held by
the Xxxxxxx Interests shall have been disregarded under the
ASX listing rules for purposes of the Parent Stockholder
Approval) or 9.1.7 (and prior to vote at the Parent
Stockholders' Meeting there shall not have occurred a Parent
Change in Recommendation), then Parent shall pay to LMC by
wire transfer of immediately available funds an amount equal
to one hundred million dollars ($100,000,000); or
(ii) (A) (1) either LMC or Parent terminates this Agreement
pursuant to Section 9.1.7 and (2) prior to the vote at Parent
Stockholders' Meeting, there shall have occurred a Parent
Change in Recommendation, (B) (1) either LMC or Parent
terminates this Agreement pursuant to Section 9.1.6 and (2)
the votes associated with the shares held by the Xxxxxxx
Interests shall not have been disregarded under the ASX
listing rules for purposes of the Parent Stockholder Approval
or (C) LMC terminates this Agreement pursuant to Section
9.1.9, then Parent shall pay to LMC by wire transfer of
immediately available funds an amount equal to three hundred
million dollars ($300,000,000) (the amounts payable under
paragraphs (i) and (ii) of Section 9.2.2, as the case may be,
the "Termination Fee").
Parent acknowledges that the agreements contained in this
Section 9.2.2 are an integral part of the transactions
contemplated by this Agreement and that, without these
agreements, LMC would not enter into this Agreement;
accordingly, if Parent fails to pay when due the amounts due
69
pursuant to this Section 9.2.2, LMC shall be entitled to
interest on the amounts set forth in this Section 9.2.2 at
the prime rate of Citibank, N.A. in effect on the date such
payment was required to be made. All payments made pursuant
to paragraphs (i) and (ii) of this Section 9.2.2 shall be
made by wire transfer of immediately available funds within
two (2) Business Days of the applicable termination date. If
payable, the Termination Fee shall not be payable more than
once under this Agreement.
ARTICLE X.
MISCELLANEOUS
Section 10.1. Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be delivered personally, by
facsimile (with confirming copy sent by one of the other delivery methods
specified herein), by overnight courier or sent by certified, registered or
express air mail, postage prepaid, and shall be deemed given when so delivered
personally, or when so received by facsimile or courier, or, if mailed, three
calendar days after the date of mailing, as follows:
If to Parent: News Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxx
Xxxxxx X. Xxxxx
If to LMC: Liberty Media Corporation
00000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: General Counsel
with a copy to: Xxxxx Xxxxx L.L.P.
00 Xxxxxxxxxxx Xxxxx
00xx Xx.
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. XxXxxxx
Xxxxxxxx Xxxxxx
70
or to such other address and with such other copies as any party hereto shall
notify the other parties hereto (as provided above) from time to time.
Section 10.2. Expenses. Regardless of whether the transactions
provided for in this Agreement are consummated, except as otherwise expressly
provided herein, each of the parties hereto shall pay its own expenses incident
to this Agreement and the transactions contemplated herein (including legal
fees, accounting fees, investment banking fees and filing fees).
Notwithstanding anything herein to the contrary, Parent shall pay and be
responsible for all reasonable and reasonably documented out-of-pocket fees,
costs and expenses incurred by DTV in connection with the negotiation of this
Agreement and any of the Ancillary Agreements, LMC's due diligence review of
DTV and DTV's Subsidiaries, and DTV's actions taken in anticipation of the
consummation of the Transactions, including the fees and expenses of the
advisers, accountants and legal counsel of DTV and of any special committee of
the board of directors of DTV and any filing fees paid to any Governmental
Authority.
Section 10.3. Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by, and construed in accordance with, the internal Laws of
the State of Delaware, without reference to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the Delaware Chancery Courts, or, if the Delaware
Chancery Courts do not have subject matter jurisdiction, in the state courts of
the State of Delaware located in Wilmington, Delaware, or in the United States
District Court for any district within such state, for the purpose of any
Action or judgment relating to or arising out of this Agreement or any of the
transactions contemplated hereby and to the laying of venue in such court.
Service of process in connection with any such Action may be served on each
party hereto by the same methods as are specified for the giving of notices
under this Agreement. Each party hereto irrevocably and unconditionally waives
and agrees not to plead or claim any objection to the laying of venue of any
such Action brought in such courts and irrevocably and unconditionally waives
any claim that any such Action brought in any such court has been brought in an
inconvenient forum.
Section 10.4. Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH
ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY UNDERSTANDS
AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH PARTY MAKES
THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
71
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 10.4.
Section 10.5. Assignment; Successors and Assigns; No Third Party
Rights. This Agreement may not be assigned by any party hereto without the
prior written consent of the other parties hereto, and any attempted assignment
shall be null and void; provided, however, that following the Closing LMC will
be permitted to assign its rights hereunder, without obtaining the consent of
Parent, to any Person (any such Person a "LMC Related Party") to which
ownership of one hundred percent (100%) of the shares of capital stock of
Splitco are or have been transferred in connection with any spin off, split off
or other distribution of the securities of such transferee in which holders of
LMC capital stock immediately prior thereto are entitled to, or have the
opportunity to, participate in such distribution. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement shall be for the
sole benefit of the parties hereto, and their respective successors and
permitted assigns and is not intended, nor shall be construed, to give any
Person, other than the parties hereto and their respective successors and
permitted assigns any legal or equitable right, benefit, remedy or claim
hereunder, except in the case of Section 10.2, DTV.
Section 10.6. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original agreement, but all of
which together shall constitute one and the same instrument.
Section 10.7. Titles and Headings. The headings and table of contents
in this Agreement are for reference purposes only, and shall not in any way
affect the meaning or interpretation of this Agreement.
Section 10.8. Amendment and Modification. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10.9. Publicity; Public Announcements. The initial press
release concerning this Agreement and the Transactions shall be a joint press
release approved in advance by Parent and LMC and thereafter each of Parent and
LMC shall consult with the other prior to issuing any press releases or
otherwise making public announcements with respect to this Agreement and the
Transactions and prior to making any filings with any third party or any
Governmental Authority (including any national securities exchange or
interdealer quotation system) with respect thereto, except as may be required
by applicable Laws or the requirements of any national securities exchange or
interdealer quotation system on which the securities of Parent or LMC are
listed or quoted; provided that the foregoing limitations shall not apply to
any disclosure of any information concerning this Agreement or the Transactions
(i) which Parent or LMC deems appropriate in its reasonable judgment, in light
of its status as a publicly owned company, including without limitation to
securities analysts and institutional investors and in press interviews; and
(ii) in connection with any dispute between the parties regarding this
Agreement or the Transactions.
72
Section 10.10. Waiver. Any of the terms or conditions of this
Agreement may be waived at any time by the party or parties hereto entitled to
the benefit thereof, but only by a writing signed by the party or parties
waiving such terms or conditions.
Section 10.11. Severability. If any term, provisions, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent
possible.
Section 10.12. No Strict Construction. LMC and Parent each acknowledge
that this Agreement has been prepared jointly by the parties hereto and shall
not be strictly construed against any party hereto.
Section 10.13. Entire Agreement. This Agreement (including the
Disclosure Letters, Schedules and Exhibits attached hereto or delivered in
connection herewith), the Ancillary Agreements and the Confidentiality
Agreement constitute the entire agreement among the parties hereto with respect
to the matters covered hereby and thereby, and supersede all previous written,
oral or implied understandings among them with respect to such matters.
Section 10.14. Equitable Remedies. Neither rescission, set-off nor
reformation of this Agreement shall be available as a remedy to any of the
parties hereto. The parties hereto agree that irreparable damage would occur in
the event any of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof in addition to any other remedies at
Law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
NEWS CORPORATION
By: /s/ Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President and
Deputy CFO
LIBERTY MEDIA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & CEO
