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Exhibit 10.1
EQUITY PURCHASE
AGREEMENT
BY AND AMONG
GEMSTAR-TV GUIDE INTERNATIONAL, INC.,
UV CORPORATION,
TV GUIDE ENTERTAINMENT GROUP, INC.,
LIONS GATE ENTERTAINMENT, INC.,
AND SOLELY WITH RESPECT TO SECTIONS 9.5, 9.7 AND
9.8 AND ARTICLES V(C), XII AND XIII
MACROVISION SOLUTIONS CORPORATION
JANUARY 5, 2009
TABLE OF
CONTENTS
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PAGE
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ARTICLE I
CERTAIN
DEFINITIONS
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1
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ARTICLE II
THE RESTRUCTURING
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10
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2.1
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Restructuring
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10
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ARTICLE III THE
EQUITY PURCHASE
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10
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3.1
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Agreement to Sell and Purchase
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10
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3.2
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The Closing
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11
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3.3
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Payment of Total Consideration at the
Closing
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11
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3.4
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Post-Closing Adjustments
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11
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3.5
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Further Assurances
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13
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3.6
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Tax Withholding
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13
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
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13
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4.1
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Organization and Good Standing
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13
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4.2
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Subsidiaries
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14
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4.3
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Capitalization of the Company
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14
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4.4
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Corporate Authority Relative to This Agreement;
No Violation
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15
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4.5
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Litigation
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15
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4.6
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Taxes
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16
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4.7
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Financial Statements
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17
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4.8
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Absence of Liabilities
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17
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4.9
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Absence of Certain Changes or Events
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18
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4.10
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Contracts
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18
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4.11
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Intellectual Property
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19
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4.12
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Compliance With Applicable Laws
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21
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4.13
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Real Property
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21
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4.14
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Employees; Labor Matters
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21
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4.15
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Environmental Matters
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23
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4.16
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Transactions with Affiliates
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24
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4.17
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Title to, Sufficiency and Condition of
Assets
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24
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4.18
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Accounts Receivable
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24
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4.19
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[intentionally left blank]
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25
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-i-
TABLE OF
CONTENTS
(CONTINUED)
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PAGE
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4.20
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No Brokers
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25
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4.21
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No Additional Representations
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25
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ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF STOCKHOLDER, SELLER AND PARENT
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25
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5.1
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Organization and Good Standing
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25
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5.2
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Corporate Authority Relative to This Agreement;
No Violation
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26
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5.3
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Title to Equity Interests
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26
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5.4
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Organization and Good Standing
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26
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5.5
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Corporate Authority Relative to This Agreement;
No Violation
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27
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5.6
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Organization and Good Standing
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27
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5.7
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Corporate Authority Relative to This Agreement;
No Violation
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28
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF BUYER
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28
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6.1
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Organization and Good Standing
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28
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6.2
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Corporate Authority Relative to this Agreement;
No Violation
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28
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6.3
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Funding
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29
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ARTICLE VII
COVENANTS OF THE COMPANY OR
SELLER
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29
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7.1
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Access to Information
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29
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7.2
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Maintenance of Network Business
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29
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7.3
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Exclusivity
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33
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7.4
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Non-Competition
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33
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ARTICLE VIII BUYER
COVENANTS
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35
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8.1
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Indemnification and Insurance
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35
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8.2
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Employee Matters
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36
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8.3
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Nonsolicitation
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38
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8.4
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Cooperation with Contractual
Obligations
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39
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ARTICLE IX
OTHER COVENANTS
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39
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9.1
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Notification of Certain Matters
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39
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9.2
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Public Announcement
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39
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9.3
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Confidentiality
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39
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9.4
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Satisfaction of Conditions Precedent
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40
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9.5
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Hart-Scott-Rodino
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40
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9.6
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Settlement of Intercompany Accounts
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41
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9.7
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Nonsolicitation
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41
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9.8
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Insurance
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41
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ARTICLE X
CONDITIONS TO CLOSING OF
THE PURCHASE
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41
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10.1
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Conditions to the Parties’ Obligation to
Effect the Purchase
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41
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-ii-
TABLE OF
CONTENTS
(CONTINUED)
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PAGE
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10.2
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Additional Conditions to Obligations of
Buyer
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42
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10.3
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Additional Conditions to Obligations of
Stockholder
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43
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ARTICLE XI
TERMINATION OF
AGREEMENT
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44
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11.1
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Termination by Mutual Consent
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44
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11.2
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Unilateral Termination
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44
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11.3
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Effect of Termination
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45
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ARTICLE XII SURVIVAL OF
REPRESENTATIONS, INDEMNIFICATION AND REMEDIES;
CONTINUING
COVENANTS
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46
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12.1
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Survival
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46
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12.2
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Indemnification by Seller and Parent
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46
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12.3
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Indemnification by Buyer
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46
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12.4
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Third Party Claims
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47
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12.5
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Limits on Indemnification
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48
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12.6
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Escrow
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48
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12.7
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Exclusive Remedy
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49
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12.8
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Treatment of Indemnification Payments
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49
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12.9
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Remedies Not Affected by Investigation,
Disclosure or Knowledge
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49
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ARTICLE XIII CERTAIN TAX
MATTERS
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49
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13.1
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Transfer Taxes
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49
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13.2
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Section 338(h)(10) Election; Allocation of
ADSP
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49
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13.3
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Tax-Sharing Agreements
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50
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13.4
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Indemnification for Post-Closing
Transactions
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50
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13.5
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Post-Closing Transactions not in Ordinary
Course
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50
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13.6
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Responsibility for Filing Tax Returns and Payment
of Taxes for Periods through the Closing Date
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50
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13.7
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Responsibility for Taxes for Periods after the
Closing Date
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51
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13.8
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Cooperation on Tax Matters
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51
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13.9
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Tax Proceedings
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51
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ARTICLE XIV
MISCELLANEOUS
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52
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14.1
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Governing Law; Exclusive Jurisdiction
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52
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14.2
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Assignment; Binding Upon Successors and
Assigns
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52
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-iii-
TABLE OF
CONTENTS
(CONTINUED)
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PAGE
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14.3
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Severability
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52
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14.4
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Counterparts; Facsimile Signatures
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52
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14.5
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Other Remedies
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52
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14.6
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Amendments and Waivers
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53
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14.7
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Expenses
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53
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14.8
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Attorneys’ Fees
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53
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14.9
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Notices
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53
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14.10
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Interpretation; Rules of Construction
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54
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14.11
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No Third Party Beneficiary Rights
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55
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14.12
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Entire Agreement
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55
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14.13
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Waiver Of Jury Trial
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55
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-iv-
LIST OF EXHIBITS
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Exhibit A
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Transition Services Agreement
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Exhibit B-1
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Network Patent License Agreement
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Exhibit B-2
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Online Patent License Agreement
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Exhibit C-1
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Network Data License Agreement
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Exhibit C-2
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Online Data License Agreement
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Exhibit D-1
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Seller Trademark Assignment and Assumption
Agreement
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Exhibit D-2
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Gemstar Development Corporation Trademark
Assignment and Assumption Agreement
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Exhibit E
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Trademark License Agreement
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Exhibit F
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Licensed Assets Agreement
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Exhibit G
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Restructuring
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-v-
EQUITY PURCHASE
AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (this " Agreement ") is
made and entered into as of January 5, 2009 (the "
Agreement Date ") by and among Gemstar-TV Guide
International, Inc., a Delaware corporation (" Seller "); UV
Corporation, a Delaware corporation and an indirect wholly-owned
subsidiary of Seller (" Stockholder "); the Company (as
defined below); Lions Gate Entertainment, Inc., a Delaware
corporation (" Buyer "); and solely with respect to Sections
9.5, 9.7 and 9.8 and Articles V(C), XII and XIII, Macrovision
Solutions Corporation, a Delaware corporation (" Parent
").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, at the Closing, Buyer shall purchase (the "
Purchase ") from Stockholder and Stockholder shall sell to
Buyer all of the issued and outstanding equity interests of the
Company (the " Equity Interests ") on the terms and subject
to the conditions set forth in this Agreement.
B. The Boards of Directors of each of Buyer, the Company,
Stockholder and Parent have determined that the transactions
contemplated by this Agreement are in the best interests of their
respective stockholders, and have approved and declared advisable
this Agreement and the transactions contemplated hereby.
C. Buyer, the Company and Stockholder desire to make
certain representations, warranties, covenants and agreements in
connection with the Purchase and to prescribe various conditions to
the Purchase.
NOW, THEREFORE, in consideration of the foregoing and the
mutual promises, covenants and conditions contained herein, the
parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings set forth below. Unless indicated otherwise, all
mathematical calculations contemplated hereby shall be made to the
fifth decimal place.
" Action " means any claim, action, suit, inquiry,
proceeding, audit or investigation by or before any Governmental
Authority, or any other arbitration, mediation or similar
proceeding.
" affiliate " means, with respect to any Person, any
other Person which, directly or indirectly, controls, or is
controlled by, or is under common control with, such Person.
" Affiliated Group " means each consolidated, combined or
affiliated group of companies of which the Company and/or any of
its Subsidiaries is, or was at any time, part.
" Applicable Law " means, collectively, all United States
federal, state, local or municipal laws, foreign laws, statutes,
ordinances, regulations, and rules, and all orders, writs,
injunctions,
1
awards, requests, judgments and decrees of any
Governmental Authority applicable to the assets, properties and
business (and any regulations promulgated thereunder) of the
applicable company or entity.
" Buyer Ancillary Agreements " means, collectively, each
certificate to be delivered on behalf of Buyer by an officer or
officers of Buyer at the Closing pursuant to Article X and each
agreement or document (other than this Agreement) that Buyer is to
enter into as a party thereto pursuant to this Agreement.
" Carriage Agreements " means those agreements set forth
on Section 4.10(a)(ii) of the Disclosure Schedule.
" Cash " means cash and cash equivalents determined in
accordance with GAAP.
" Closing " means the closing of the transactions
contemplated by this Agreement.
" Closing Date " means the date on which the Closing
shall occur, as specified by the parties, which shall be no later
than the second business day after the satisfaction or waiver of
the conditions set forth in Article X, or at such other time and
date as the parties hereto agree in writing.
" Closing Date Balance Sheet " means the unaudited
combined balance sheet of the Network Business, as of the Closing
Date and immediately prior to the Effective Time that has been
prepared in a manner consistent with the Balance Sheet except for
the Closing Date Balance Sheet Exceptions.
" Closing Date Balance Sheet Exceptions " means the
following: (A) no depreciation expense has been recognized
during the period between the Balance Sheet Date and the Closing
Date Balance Sheet for any Network Business, (B) no
amortization expense has been recognized during the period between
the Balance Sheet Date and the Closing Date Balance Sheet for any
Network Business, and (C) during the period between the
Balance Sheet Date and the Closing Date Balance Sheet, assets
related to the business of syndicating TV listings and video search
functionality to third parties will have been transferred out of
TVGuide.com.
" Company " means TV Guide Entertainment Group, Inc., a
Delaware corporation.
" Company Ancillary Agreements " means, collectively,
each certificate to be delivered on behalf of the Company by an
officer or officers of the Company at the Closing pursuant to
Article X and each agreement or document (other than this
Agreement) that the Company is to enter into as a party pursuant to
this Agreement.
" Contract " means any written or oral legally binding
contract, agreement, instrument, arrangement, commitment,
understanding or undertaking (including leases, licenses,
mortgages, notes, guarantees, sublicenses, subcontracts and
purchase orders).
" control " (including, with its correlative meanings, "
controlled by " and " under common control with ")
means the possession, directly or indirectly, of the power to
direct or cause the direction of management or policies of a
Person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise.
2
" Credit Agreement " means that certain
Credit Agreement dated as of May 2, 2008 among Parent,
Macrovision Corporation, the Guarantors Party thereto, the Lenders
named therein and JPMorgan Chase Bank, N.A., as administrative
agent and collateral agent.
" Disclosure Schedule " means the disclosure schedule
dated as of the Agreement Date and delivered by the Company to
Buyer on the Agreement Date listing any disclosures to be made
pursuant to the representations and warranties of the Company
herein (each of which disclosures, in order to be effective, shall
clearly indicate the section and, if applicable, the subsection of
Article IV to which it relates (unless and only to the extent the
relevance to other representations and warranties is clearly
apparent from the actual text of the disclosures without reference
to further documentation), and each of which disclosures shall also
be deemed to be a representation and warranty made by the Company
under Article IV hereof).
" Effective Time " means the time of the consummation of
the Purchase or such later time as may be mutually agreed by Buyer,
Parent and the Company.
" Encumbrance " means, with respect to any tangible or
intangible asset, any mortgage, deed of trust, encumbrance, pledge,
charge, security interest, title retention device, collateral
assignment, adverse claim, restriction or other encumbrance of any
kind in respect of such asset (including any restriction on the
voting of any security, any restriction on the transfer of any
security or other asset, any restriction on the receipt of any
income derived from any asset, any restriction on the use of any
asset and any restriction on the possession, exercise or transfer
of any other attribute of ownership of any asset), including with
respect to any security, any adverse claim or third party right or
interest, right of first refusal, preemptive right or restriction
of any nature, or other right of third parties, whether voluntarily
incurred or arising by operation of law, and including, without
limitation, any agreements to give any of the foregoing in the
future, and any contingent sale or other title retention agreement
in the nature thereof. For purposes of clarification only, an
inability to sell a security without registering such security for
sale under the Securities Act or other federal or state securities
laws shall not represent an Encumbrance.
" Escrow Agreement " means that certain Escrow Agreement,
in a customary and mutually agreed upon form, by and among Buyer,
Seller and Wells Fargo Bank, N.A., as escrow agent.
" Exchange Act " means the Securities Exchange Act of
1934, as amended.
" Expiration Date " means 11:59 p.m. California time on
the date that is the fifteenth (15 th ) month anniversary of the
Closing Date.
" GAAP " means United States generally accepted
accounting principles, applied on a consistent basis.
" GAAP Exceptions " means the following: (A) no
accounting for income taxes; (B) no accounting for
Parent’s Employee Stock Purchase Plan; and (C) not all
purchase accounting entries related to Parent’s purchase of
Seller have been pushed down to the Network Business.
3
" Governmental Authority " means any
United States or foreign governmental or regulatory agency,
commission, court, body, entity or authority.
" Immediate Family " with respect to any specified
Person, means such Person’s spouse, parents, children and
siblings, including adoptive relationships and relationships
through marriage, or any other relative of such Person that shares
such Person’s home.
" Indebtedness " means, without duplication,
(A) obligations for borrowed money or obligations evidenced by
notes, bonds, debentures or similar instruments (including all
outstanding principal, prepayment premiums, if any, change of
control premiums, and accrued interest, fees and expenses related
thereto) other than intercompany borrowings from an affiliate,
(B) obligations in respect of capitalized leases (including
the obligation in respect to the capitalized satellite transponder
lease) or to pay the deferred purchase price of property or
services, (C) obligations to perform services in respect of
which payment has been received (except deferred revenue),
(D) obligations in respect of letters of credit, acceptances
or similar obligations, (E) obligations in respect of interest
rate cap agreements, interest rate swap agreements, foreign
currency exchange contracts or other hedging contracts,
(F) bank overdrafts (for the avoidance of doubt, any cash
clearing account is not considered a bank overdraft or
Indebtedness) and (G) any guarantee of the obligations of
another Person with respect to any of the foregoing.
" Indemnity Escrow Fund " means the amount escrowed
pursuant to Section 12.6 hereof and maintained in accordance
with the Escrow Agreement.
" Intellectual Property " means all intellectual property
rights arising under the laws of the United States or any other
jurisdiction, including without limitation: (A) trade names,
trademarks and service marks (registered and unregistered), domain
names, logos, trade dress and similar rights, including all common
law rights and all combinations thereof and all goodwill associated
with the foregoing, and all registrations and applications to
register any of the foregoing (collectively, " Marks ");
(B) patents and patent applications (including all reissues,
divisions, continuation, continuation-in-part, extensions and
reexaminations), and rights in respect of utility models or
industrial designs (collectively, " Patents ");
(C) copyrights, whether registered or unregistered, statutory
or common law (including copyrights in software programs) and
copyrightable works and registrations and applications therefor in
all nations throughout the world, including but not limited to all
derivative works, moral rights, renewals, extensions, reversions or
restorations of copyrights, now or hereafter provided by law
(collectively, " Copyrights "); and (D) know-how,
inventions, discoveries, methods, processes, technical data,
specifications, research and development information, computer
software, technology, data bases and other proprietary or
confidential information, including customer lists, in each case
that derives economic value (actual or potential) from not being
generally known to other Persons who can obtain economic value from
its disclosure, but excluding any Copyrights or Patents that cover
or protect any of the foregoing (collectively, " Trade
Secrets ").
" knowledge " means, with respect to any party to this
Agreement, the actual knowledge (after due inquiry) of a particular
fact, circumstance, event or other matter in question of the Chief
Executive Officer, Chief Financial Officer and General Counsel (as
applicable) of such party.
4
" Material Adverse Effect " when used with
respect to an entity (which shall for this purpose mean the Network
Business) means any change, event, circumstance, condition or
effect that materially impairs the ability of such entity to
perform its obligations under this Agreement or to consummate the
transactions contemplated hereby, or that is or is reasonably
likely to be, individually or in the aggregate, materially adverse
to the condition (financial or otherwise), assets (including
intangible assets), liabilities, business, operations or results of
operations of such entity and its Subsidiaries, taken as a whole;
provided , however , that in no event shall any of
the following be taken into account in determining whether there
has been or will be a Material Adverse Effect with respect to an
entity: (A) any effect resulting directly from the entity
taking an action expressly required to be taken by it pursuant to
the terms and conditions of this Agreement, (B) with respect
to the Company, any effect resulting from a change in the industry
in which the Company operates or in the worldwide economy generally
which does not effect the Company in a disproportionate manner
relative to other participants in the industry, (C) any
adverse effect resulting from any change in Applicable Law or in
accounting requirements or principles required under GAAP,
(D) any failure to meet internal revenue or earnings
projections ( provided , that the facts or occurrences
giving rise to or contributing to such failure that are not
otherwise excluded from the definition of Material Adverse Effect
may be taken into account in determining whether there has been, a
Material Adverse Effect), (E) any effect resulting from any
acts of terrorism, war or natural disaster, or (F) any effect
resulting from or relating to the announcement, negotiation,
execution or performance of this Agreement or the transactions
contemplated hereby.
" Network Business " means the business of each of
(A) TV Guide Network, (B) TV Guide Network Broadband,
(C) TV Guide Network Mobile, (D) TVGuide.com; and
(E) TV Guide Network Video on Demand; provided , that
(i) when this term is used in connection with the Financial
Statements, " Network Business " shall not include either TV
Guide Network Mobile or TVGuide.com, and (ii) when this term
is used in connection with the Interim Financial Statements "
Network Business " shall not include TVGuide.com. For the
avoidance of doubt, TV Guide Network Mobile was first included in
the Network Business on May 2, 2008.
" Net Working Capital " means (A) the Network
Business’ combined total current assets, excluding
(i) cash, (ii) any intercompany payables or receivables
and (iii) deferred tax assets as of the Closing Date, less
(B) the Network Business’ combined total current
liabilities, excluding (i) any cash clearing accounts,
(ii) any intercompany payables or receivables and
(iii) deferred Tax liabilities as of the Closing Date; each of
(A) and (B) as calculated in accordance with GAAP,
subject to the GAAP Exceptions. For the avoidance of doubt, in
calculating Net Working Capital, the term Network Business shall
include each of (A) TV Guide Network, (B) TV Guide
Network Broadband, (C) TV Guide Network Mobile,
(D) TVGuide.com; and (E) TV Guide Network Video on
Demand.
" Net Working Capital Decrease " means the amount by
which the Net Working Capital is less than $6,000,000.
" Net Working Capital Increase " means the amount by
which the Net Working Capital is greater than $6,000,000.
5
" Permitted Encumbrances " means
(A) statutory Encumbrances for taxes that are not yet due and
payable; (B) statutory Encumbrances to secure obligations to
landlords, lessors or renters under leases or rental agreements
(including, without limitation, the Encumbrances related to the
satellite transponder lease); (C) deposits or pledges made in
connection with, or to secure payment of, workers’
compensation, unemployment insurance or other social security or
similar programs mandated by Applicable Law; (D) statutory
Encumbrances in favor of carriers, repairers, servicers, bailees,
warehousemen, mechanics and materialmen, to secure claims for
labor, materials or supplies and other like Encumbrances; or
(E) any minor imperfection of title or similar Encumbrances,
charges or encumbrances which individually or in the aggregate with
other such Encumbrances, charges and encumbrances does not impair
the value of the property subject to such Encumbrance, charge or
encumbrance or the use of such property by the Company or its
Subsidiaries. Prior to the Closing, " Permitted Encumbrances
" shall also mean any security interest in the Equity Interests and
the assets of the Company and its Subsidiaries securing the
guarantees by Stockholder, the Company and the Company’s
Subsidiaries of the obligations under the Credit
Agreement.
" Person " means any individual, corporation, company,
limited liability company, partnership, limited liability
partnership, trust, estate, proprietorship, joint venture,
association, organization, entity or Governmental Authority.
" Related Party " with respect to any specified Person
means: (A) any affiliate of such specified Person, or any
director, executive officer, general partner or managing member of
such affiliate; (B) any Person who serves or within the past
five years has served as a director, executive officer, partner,
member or in a similar capacity of such specified Person;
(C) any Immediate Family member of a Person described in
clause (B); or (D) any other Person who holds, individually or
together with any affiliate of such other Person and any member(s)
of such Person’s Immediate Family, more than 5% of the
outstanding equity or ownership interests of such specified
Person.
" Representatives " means officers, directors,
principals, employees, advisors, auditors, agents, bankers and
other representatives.
" Restructuring " means the restructuring of the various
Subsidiaries of Parent prior to the Closing Date, in accordance
with the plan set forth at Exhibit G .
" Securities Act " means the Securities Act of 1933, as
amended.
" Seller Parties " means Seller, Stockholder, the Company
and Parent.
" Subsidiary " means, with respect to any other party,
any corporation or other entity, whether incorporated or
unincorporated, of which (A) such party or any other
Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by
such party or any Subsidiary of such party do not have a majority
of the voting interest in such partnership) or (B) at least a
majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors
or others performing similar functions with respect to such
corporation or other organization or a majority of the profit
interests in such other organization is directly or indirectly
owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its
Subsidiaries.
6
" Tax " (and, with correlative meaning, "
Taxes ") means (A) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use,
value-added, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit
tax, custom duty and import and export taxes, provincial health
insurance plan premiums, employer health tax, United States or
other government pension plan contributions, employment insurance
premiums, workman’s compensation and other payroll taxes,
deductions at source, non-resident withholding, social service
provincial sales and goods and services taxes, including estimated
taxes, countervail and anti-dumping fees and taxes, all licenses
and registration fees, escheat, any related penalties, or other
tax, governmental fee or other like assessment, reassessment or
charge, duties, impositions and liabilities of any kind whatsoever,
together with any interest or any penalty, addition to tax or
additional amount imposed by any Governmental Authority responsible
for the imposition of any such tax, (B) any liability for the
payment of any amounts of the type described in clause (A) of
this sentence as a result of being a member of an affiliated,
consolidated, combined, unitary or aggregate group for any taxable
period, and (C) any liability for the payment of any amounts
of the type described in clause (A) or (B) of this
sentence as a result of being a transferee of or successor to any
Person or as a result of any express or implied obligation to
indemnify any other Person.
" Tax Return " means any return, report or similar filing
(including the attached schedules) required to be filed with
respect to Taxes, including any information return, claim for
refund, amended return or declaration of estimated Taxes.
" Total Consideration " means (A) $255,000,000 minus
(B) any Indebtedness of the Company or its Subsidiaries
outstanding as of the Closing plus (C) any Cash of the Company
and its Subsidiaries as of the Closing, plus (D) the Net
Working Capital Increase, if any, estimated in accordance with
Section 3.4(a), minus (E) the Net Working Capital
Decrease, if any, estimated in accordance with
Section 3.4(a).
" TVGuide.com " means the public web business currently
located at www.tvguide.com, www.jumptheshark.com,
www.tvshowsondvd.com, www.fansofrealitytv.com, www.m.tvguide.com
and www.tv-now.com and which as of the Agreement Date contains TV
listings with entertainment and TV-related content and products;
provided , however , that TVGuide.com shall not
include the business of syndicating TV listings, IPGs or video
search functionality to third parties. For purposes of this
definition, " syndicating " shall mean (a) any
relationship whereby data, IPGs or video search functionality is
delivered by (or at the request of) Licensee’s web sites to
or on behalf of a third party web site, application or service for
display to others, regardless of whether or not by web affiliate,
in-line linking, RSS, redirects, framing or co-branding
relationships, or other relationships in which content is served
into a third party’s web page, service, product or
application; or (b) serving an IPG into, or using an IPG to
control, a television, set top box, recorder, wireless device or
other consumer electronics device for the express purpose of
tuning, or otherwise controlling, that television, set top box,
recorder, wireless device or other consumer electronics device. For
the avoidance of doubt, " syndicating " shall not include
the distribution of any isolated per program references or
other
7
isolated pieces of information, or links to video
content (with or without sound) which appear within an article. For
the further avoidance of doubt, TVGuide.com shall not include
the listing grid technology, IPGs, listings containers or online
video guide search technology, all of which are licensed to
Buyer in the Licensed Asset agreement. TVGuide.com shall also
not include listings applications such as the iGoogle
gadget.
" TV Guide Network " means the linear broadcast cable
television network that provides entertainment and television
guidance related programming to multi-channel video system
operators, which is currently known as TV Guide Network.
" TV Guide Network Broadband " means an advertiser
supported, video-on-demand service featuring short-form and
originally-produced and edited entertainment programs which is
distributed on major video portals.
" TV Guide Network Mobile " means the business of
repurposing TV Guide Network television programming for mobile
devices, which is currently solely comprised of the Verizon V CAST
deal in 2008.
" TV Guide Network Video on Demand " means an advertiser
supported, video-on-demand television programming services
featuring short-form, originally-produced entertainment
programs."
Index of Other Defined Terms
| |
|
|
|
Defined Terms
|
|
Section Reference
|
|
ADSP
|
|
13.2(b)
|
|
Agreement
|
|
Preamble
|
|
Agreement Date
|
|
Preamble
|
|
Allocation
|
|
13.2(b)
|
|
Antitrust Laws
|
|
9.5(b)
|
|
Assets
|
|
4.17
|
|
Balance Sheet
|
|
4.7
|
|
Balance Sheet Date
|
|
4.7
|
|
Balance Sheet Dispute Notice
|
|
3.4(c)
|
|
Bankruptcy and Equity Exception
|
|
4.4(a)
|
|
Business Transaction
|
|
7.3
|
|
Buyer
|
|
Preamble
|
|
Buyer Indemnitee
|
|
12.2
|
|
Claim Notice
|
|
12.4(a)
|
|
Code
|
|
3.6(a)
|
|
Company Benefit Plans
|
|
4.14(c)
|
|
Company Employees
|
|
8.2(b)
|
|
Company Foreign Plans
|
|
4.14(c)
|
|
Company Group Employees
|
|
7.4(c)
|
|
Company Intellectual Property
|
|
4.11(a)
|
|
Company Registered Copyrights
|
|
4.11(b)
|
8
| |
|
|
|
Company Registered IP
|
|
4.11(b)
|
|
Company Registered Marks
|
|
4.11(b)
|
|
Company Specified Approvals
|
|
4.4(b)
|
|
Confidentiality Agreement
|
|
7.1
|
|
Confirmation Certificate
|
|
3.4(c)
|
|
Copyrights
|
|
Article I – definition of
"Intellectual Property"
|
|
Core Representations
|
|
12.1
|
|
DOJ
|
|
9.5(a)
|
|
Employees
|
|
4.14(a)
|
|
End Date
|
|
11.2(b)
|
|
environment
|
|
4.15(c)
|
|
Environmental Law
|
|
4.15(c)
|
|
Equity Interests
|
|
Recitals
|
|
ERISA
|
|
4.14(c)
|
|
ERISA Affiliate
|
|
4.14(d)
|
|
Financial Statements
|
|
4.7
|
|
FTC
|
|
9.5(a)
|
|
HSR
|
|
4.4(b)
|
|
Indemnifiable Claim
|
|
12.4(a)
|
|
Indemnified Party
|
|
8.1(b)
|
|
Indemnitee
|
|
12.4(a)
|
|
Indemnitor
|
|
12.4(a)
|
|
Independent Accountant
|
|
3.4(e)
|
|
Independent Contractors
|
|
4.14(b)
|
|
Interim Financial Statements
|
|
4.7
|
|
IRS
|
|
13.2(b)
|
|
Licensed Assets Agreement
|
|
3.1(e)
|
|
Losses
|
|
12.2
|
|
Marks
|
|
Article I – definition of
"Intellectual Property"
|
|
Material Contract
|
|
4.10(a)
|
|
Materials of Environmental Concern
|
|
4.15(c)
|
|
Network Data License
|
|
10.2(i)
|
|
Network Patent License
|
|
10.2(g)
|
|
New Plans
|
|
8.2(c)
|
|
Nonsolicitation Period
|
|
8.3
|
|
Online Data License
|
|
10.2(i)
|
|
Online Patent License
|
|
10.2(g)
|
|
Parent
|
|
Preamble
|
|
Patents
|
|
Article I – definition of
"Intellectual Property"
|
|
Permits
|
|
4.12(b)
|
|
Post-Closing Balance Sheet
|
|
3.4(b)
|
|
Purchase
|
|
Recitals
|
|
release
|
|
4.15(c)
|
|
Retained Employee(s)
|
|
8.2(a)
|
|
Section 338(h)(10) Election
|
|
13.2(a)
|
|
Seller
|
|
Preamble
|
9
| |
|
|
|
Start Date
|
|
8.2(a)
|
|
Stockholder
|
|
Preamble
|
|
Stockholder Indemnitee
|
|
12.3
|
|
Tax Proceeding
|
|
13.9
|
|
Threshold Amount
|
|
12.5(a)
|
|
Trade Secrets
|
|
Article I – definition of
"Intellectual Property"
|
|
Trademark Assignment Agreements
|
|
3.1(c)
|
|
Trademark License Agreement
|
|
3.1(d)
|
|
Transfer Taxes
|
|
13.1
|
|
Transition Services Agreement
|
|
10.2(f)
|
|
TVGuide.com Financial Statements
|
|
4.7
|
ARTICLE II
THE RESTRUCTURING
2.1 Restructuring . Prior to the Closing, each of the Company
and its Subsidiaries shall effect the Restructuring.
ARTICLE III
THE EQUITY PURCHASE
3.1 Agreement to Sell and Purchase . At the Closing,
(a) Stockholder shall sell, transfer and deliver to
Buyer, and Buyer shall purchase and accept from Stockholder, free
and clear of any Encumbrance and with the benefits of all rights
whatsoever attaching or accruing to such Equity Interests on or
after the Closing Date, the Equity Interests held by
Stockholder;
(b) Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase and accept from Seller
all of the Seller’s right, title and interest (including all
liabilities, costs, expenses and obligations arising subsequent to
the Closing) in the real property and other leases identified on
Section 3.1(b) of the Disclosure Schedule;
(c) Seller and Gemstar Development Corporation shall
assign to Buyer all of such entities’ right, title and
interest in and to the Marks listed in Section 3.1(c) of the
Disclosure Schedule pursuant to the trademark assignment and
assumption agreements substantially in the form attached hereto as
Exhibit D-1 and Exhibit D-2 (together, the "
Trademark Assignment Agreements "); and
(d) Buyer shall grant to Seller a trademark license to
use the Marks listed in Section 3.1(d) of the Disclosure
Schedule pursuant to a trademark license agreement substantially in
the form attached hereto as Exhibit E (the " Trademark
License Agreement ").
(e) Seller or its affiliates shall grant to Buyer a
license to use the Licensed Assets (as such term is defined in the
Licensed Assets Agreement in the form attached hereto as Exhibit
F (the " Licensed Assets Agreement ")).
10
3.2 The Closing . Unless otherwise
mutually agreed in writing by the Company and Buyer, the Closing
shall take place at the offices of Cooley Godward Kronish LLP, 3175
Hanover Street, Palo Alto, CA 94304, at 9:00 a.m. (California time)
on the business day following the day on which the last to be
satisfied or waived of the conditions set forth in Article X (other
than those conditions that by their nature are to be satisfied at
the Closing, but subject to the fulfillment or waiver of those
conditions) shall be satisfied or waived in accordance with this
Agreement.
3.3 Payment of Total Consideration at the Closing . At
the Closing, Buyer shall cause the Total Consideration (less the
amount delivered to the Indemnity Escrow Fund pursuant to
Section 12.6) to be delivered to Stockholder by wire transfer
of immediately available funds to such accounts as such Stockholder
specifies in written instructions to Buyer prior to the
Closing.
3.4 Post-Closing Adjustments .
(a) Not less than five (5) business days prior to
the scheduled Closing Date, the Company shall deliver to Buyer an
estimated Closing Date Balance Sheet. The Closing Date Balance
Sheet shall present fairly, on a good faith basis, the estimated
financial position of the Network Business as of the Closing Date,
subject to the GAAP Exceptions and the Closing Date Balance Sheet
Exceptions. Such Closing Date Balance Sheet shall serve as the
basis for the estimate of the Net Working Capital as of Closing for
purposes of calculating the Total Consideration on the Closing
Date.
(b) Within ninety (90) days of the Closing Date,
Buyer shall cause to be prepared and delivered to Stockholder an
updated unaudited combined balance sheet of the Network Business as
of the Closing Date (the " Post-Closing Balance Sheet ")
prepared in a manner consistent with the Balance Sheet, subject to
the Closing Date Balance Sheet Exceptions, together with
Buyer’s calculation of the Net Working Capital as of the
Closing Date.
(c) Stockholder shall have thirty (30) days
following the date of delivery by Buyer to Stockholder of the
Post-Closing Balance Sheet to provide Buyer with a written
certificate confirming that the Net Working Capital as set forth in
the Post-Closing Balance Sheet is correct (the " Confirmation
Certificate ") or notifying Buyer in writing of any good faith
reasonable objections to the calculation of the Net Working Capital
as set forth on the Post-Closing Balance Sheet (a " Balance
Sheet Dispute Notice "), setting forth a reasonably specific
and detailed description of such objections. If a Confirmation
Certificate is delivered by Stockholder pursuant to this
Section 3.4(c), then the Net Working Capital calculated by
Buyer in connection with the preparation of the Post-Closing
Balance Sheet shall be deemed to be final and binding on the
parties to this Agreement. During the 30-day period immediately
following Stockholder’s receipt of the Post-Closing Balance
Sheet, Stockholder shall be permitted to review Buyer’s
working papers related to the preparation of the Post-Closing
Balance Sheet and determination of the Net Working Capital.
(d) If Stockholder shall object to the Post-Closing
Balance Sheet or Buyer’s calculation of the Net Working
Capital as reflected in the Balance Sheet Dispute Notice, a
representative of Buyer, on the one hand, and Stockholder, on the
other, shall attempt in good faith to resolve any such objections
within ten (10) business days of the receipt by Buyer of the
Balance Sheet Dispute Notice.
11
(e) If Stockholder and Buyer shall be
unable to resolve any such dispute within the ten
(10) business day period, Stockholder and Buyer (either
together or separately) shall be entitled to submit the dispute to
a mutually agreed upon independent accounting firm (the "
Independent Accountant ") for review and resolution of all matters
(but only such matters) which remain in dispute, and the
Independent Accountant shall make a final determination of the Net
Working Capital to the extent such amount is in dispute, in
accordance with the guidelines and procedures set forth in this
Agreement. Each of Stockholder, on the one hand, and Buyer, on the
other hand, shall, and shall cause their respective Representatives
to provide full cooperation to the Independent Accountant. The
Independent Accountant shall (i) act in its capacity as an
expert and not as an arbitrator, (ii) limit its review to such
items and calculations as were addressed in the Balance Sheet
Dispute Notice that have not been resolved by the parties and any
factual or mathematical errors contained in the information
provided to or by Buyer and (iii) be instructed to reach its
conclusions regarding any such dispute within thirty (30) days
after its appointment and provide a written explanation of its
decision. In resolving any matters in dispute, the Independent
Accountant may not assign a value to any item in dispute greater
than the greatest value for such item assigned by Buyer, on the one
hand, or Stockholder, on the other hand, or less than the smallest
value for such item assigned by Buyer, on the one hand, or
Stockholder, on the other hand. The Independent Accountant’s
determination will be based solely on presentations by Buyer and
Stockholder which are in accordance with the guidelines and
procedures set forth in this Agreement (i.e., not on the basis of
an independent review). The Post-Closing Balance Sheet and the
determination of the Net Working Capital shall become final and
binding on the parties on the date the Independent Accountant
delivers its final resolution in writing to the parties. The fees
and expenses of the Independent Accountant shall be paid by the
party determined by the Independent Accountant to be the
non-prevailing party in connection with the dispute;
provided , however , that if the Independent
Accountant shall determine in its reasonable discretion that
neither party shall be the non-prevailing party, then such fees and
expenses shall be borne 50% by Stockholder and 50% by Buyer.
(f) If Stockholder does not deliver a Balance Sheet
Dispute Notice in accordance with Section 3.4(c) above (i.e.,
within the 30-day period specified therein), the Post-Closing
Balance Sheet (together with Buyer’s calculation of the Net
Working Capital set forth on the Post-Closing Balance Sheet) shall
be deemed to have been accepted by all of the parties to this
Agreement. In the event that Stockholder delivers a Balance Sheet
Dispute Notice in accordance with the provisions above and
Stockholder and Buyer are able to resolve such dispute by mutual
agreement, the Post-Closing Balance Sheet, together with the
calculation of the Net Working Capital, to the extent modified by
the mutual agreement of such parties, shall be deemed to have been
accepted by all of the parties to this Agreement. In the event that
Stockholder delivers a Balance Sheet Dispute Notice in accordance
with the provisions set forth above and Stockholder and Buyer are
unable to resolve such dispute by mutual agreement, the
determination of the Independent Accountant shall be final and
binding on the parties, and the Post-Closing Balance Sheet,
together with the calculation of the Net Working Capital, to the
extent modified by the Independent Accountant, shall be deemed to
have been accepted by all of the parties to this Agreement.
12
(g) In the event that it is determined
that the Net Working Capital shall have been overstated in the
calculation of the Total Consideration for purposes of the Closing,
Stockholder shall deliver to Buyer such overstated amount by wire
transfer of immediately available funds to such accounts as Buyer
specifies in written instructions to Stockholder within three
(3) business days following the final determination of such
amounts pursuant to this Section 3.4.
(h) In the event that it is determined that the Net
Working Capital shall have been understated in the calculation of
the Total Consideration for purposes of the Closing, Buyer shall
deliver to Stockholder such understated amount by wire transfer of
immediately available funds to such accounts as Stockholder
specifies in written instructions to Buyer within three
(3) business days following the final determination of such
amounts pursuant to this Section 3.4.
3.5 Further Assurances . If, at any time before or after
the Closing, any of the parties hereto reasonably believes or is
advised by their attorneys that any further instruments, deeds,
assignments or assurances are reasonably necessary to consummate
the transactions contemplated hereby or to carry out the purposes
and intent of this Agreement at or after the Closing, then
Stockholder, the Company, Buyer and their respective officers and
directors shall execute and deliver all such proper deeds,
assignments, instruments and assurances and do all other things
reasonably necessary to consummate the transactions contemplated
hereby and to carry out the purposes and intent of this
Agreement.
3.6 Tax Withholding .
(a) Buyer or any agent of Buyer shall be entitled to
deduct and withhold from the Total Consideration or other payment
otherwise payable pursuant to this Agreement the amounts required
to be deducted and withheld under the Internal Revenue Code of
1986, as amended (the " Code "), or any provision of state,
local or foreign tax law, with respect to the making of such
payment. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of whom such deduction
and withholding was made.
(b) Stockholder agrees to furnish Buyer with a
non-foreign certification (in form and substance reasonably
satisfactory to Buyer) that satisfies the requirements of Treasury
Regulation section 1.1445-2(b)(2).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to the disclosures set forth in the Disclosure Schedule,
the Company represents and warrants to Buyer that the statements
contained in this Article IV are true and correct, on and as of the
Agreement Date (except to the extent expressly made as of an
earlier date, in which case such statements are true and correct as
of such date), except for those representations and warranties that
may be directly or indirectly affected by the consummation of the
Restructuring, in which case such statements are true and correct
on and as of the effective date of the Restructuring and would be
true as of the Agreement Date if the Restructuring were effected
immediately prior to the Agreement Date, as applicable:
4.1 Organization and Good Standing . The Company is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. The Company has
all requisite power and authority to own, operate and lease its
properties and to carry on the Network Business. The Company is
duly qualified or licensed to do business, and is in good standing,
in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where failure to be so
qualified or licensed could not reasonably be expected to result in
a Material Adverse Effect on the Company. The Company is not in
violation of its organizational documents as amended to date.
13
4.2 Subsidiaries . Each Subsidiary of
the Company is identified on Section 4.2 of the Disclosure
Schedule, together with a listing of the jurisdiction in which each
such Subsidiary is organized. Each such Subsidiary is an entity
duly formed or organized, validly existing and in good standing
under the laws of the jurisdiction in which it was formed or
organized. Each such Subsidiary has all requisite power and
authority to own, operate and lease its properties and to carry on
its business as now being conducted and is duly qualified or
licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such
qualification or licensing necessary, except where failure to be so
qualified or licensed could not reasonably be expected to result in
a Material Adverse Effect on such Subsidiary. No Subsidiary is in
violation of its organizational documents as amended to
date.
4.3 Capitalization of the Company .
(a) Company Capitalization . The authorized capital stock
of the Company consists of 1,000 shares of Company Common Stock, of
which 100 shares are issued and outstanding, all of which
outstanding shares are held by Stockholder. The Equity Interests
have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of and are not subject
to any right of rescission, right of first refusal or preemptive
right, have been offered, issued, sold and delivered by the Company
in compliance with all requirements of Applicable Law and all
requirements set forth in applicable Contracts and the Company has
received all consideration due to it in connection with the sale
and issuance of such Equity Interests.
(b) No Other Rights . There are no appreciation rights,
options, warrants, calls, rights, commitments, conversion
privileges or preemptive or other rights or Contracts outstanding
to purchase or otherwise acquire any interests of the Company or
any securities or debt convertible into or exchangeable for
interests of the Company or obligating the Company to grant, extend
or enter into any such option, warrant, call, right, commitment,
conversion privilege or preemptive or other right or Contract.
There are no voting agreements, rights of first refusal, preemptive
rights, co-sale rights or other restrictions applicable to the
Equity Interests.
(c) Subsidiary Capitalization . Section 4.3(c) of
the Disclosure Schedule sets forth a list of the number and type of
equity securities held by the Company in each of the Subsidiaries
identified in Section 4.2 of the Disclosure Schedule, the
percentage of all outstanding equity interests for such Subsidiary
represented by the securities held by the Company and a summary of
all outstanding options or similar arrangements to acquire equity
securities of such Subsidiaries. The Company owns 100% of the
outstanding equity interests of
14
each of the Subsidiaries. There are no
appreciation rights, options, warrants, calls, rights, commitments,
conversion privileges or preemptive or other rights or Contracts
outstanding to purchase or otherwise acquire any interest of any
Subsidiary or any securities or debt convertible into or
exchangeable for interest of any Subsidiary or obligating any
Subsidiary to grant, extend or enter into any such option, warrant,
call, right, commitment, conversion privilege or preemptive or
other right or Contract. There are no voting agreements, rights of
first refusal, preemptive rights, co-sale rights or other
restrictions applicable to the equity interests of any such
Subsidiary.
4.4 Corporate Authority Relative to This Agreement; No
Violation .
(a) The Company has all requisite corporate power and
corporate authority to enter into, execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated under this Agreement to which it is a party. The
execution, delivery and performance by the Company of this
Agreement and the Company Ancillary Agreements, have been duly and
validly approved and authorized by the Company and constitutes, or
when executed and delivered will constitute, the valid and binding
agreements of the Company, enforceable against the Company in
accordance with their respective terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles (the "
Bankruptcy and Equity Exception ").
(b) The execution, delivery and performance by the
Company of this Agreement and the Company Ancillary Agreements and
the consummation of the transactions contemplated under this
Agreement to which it is a party by the Company does not and will
not require any consent, approval, authorization or permit of,
action by, filing with or notification to any Governmental
Authority other than (i) compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (" HSR "), and (ii) the other consents
and/or notices set forth on Section 4.4(b) of the Disclosure
Schedule (collectively, clauses (i) and (ii), the " Company
Specified Approvals ").
(c) Assuming receipt of or compliance with the Company
Specified Approvals, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of
the Purchase and the other transactions contemplated hereby do not
and will not (i) contravene or conflict with the
organizational or governing documents of the Company or any of its
Subsidiaries, (ii) contravene or conflict with or constitute a
violation in any material way of any provision of any Applicable
Law binding upon or applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets, or
(iii) result in any material violation of, or material default
(with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
material obligation or to the loss of a material benefit under, any
Material Contract or result in the creation of any material
Encumbrance (other than Permitted Encumbrances) upon any of the
properties or assets of the Company or any of its Subsidiaries.
4.5 Litigation . Except as otherwise disclosed on Section
4.5 of the Disclosure Schedule (which disclosed items shall be the
sole responsibility of Seller), there is no Action (except for any
Actions commenced by Persons other than Governmental Authorities
that could not reasonably be
15
expected to result in a liability or loss to the
Company or its Subsidiaries of more than $300,000 individually)
pending or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any material property or
asset of the Company or any of its Subsidiaries, or any of the
officers or directors of the Company or any of its Subsidiaries in
regards to their actions as such, nor is there, to the knowledge of
the Company, any basis for any such Action. There is no
(a) outstanding judgment, order, decree, award, stipulation or
injunction of any Governmental Authority against the Company or any
of its Subsidiaries which seeks to or is reasonably likely to have
the effect of preventing the Company or any of its Subsidiaries
from consummating the Purchase, or (b) any Action which, if
resolved adversely to the Company or any of its Subsidiaries would
be reasonably likely to impair the ability of the Company or any of
its Subsidiaries to consummate the transactions contemplated under
this Agreement.
4.6 Taxes . The Company and each of its Subsidiaries and
each Affiliated Group (i) have prepared and timely filed
(taking into account any extension of time within which to file)
all material Tax Returns required to be filed by any of them and
all such filed Tax Returns are complete and accurate in all
material respects; (ii) the Company and each of its
Subsidiaries and each Affiliated Group have paid all Taxes shown as
due on such Tax Returns; (iii) the Company and each of its
Subsidiaries has withheld and paid all material Taxes required to
have been withheld and paid in connections with amounts owing to
any employee, independent contractor, creditor, stockholder or
other third party and all Forms 1042, W-2 and 1099 required with
respect thereto have been properly completed and timely filed;
(iv) neither the Company nor any of its Subsidiaries has any
liability for Taxes of any Person (other than the Company or such
Subsidiaries) pursuant to any Tax allocation or sharing agreement,
under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or
successor, or otherwise; (v) there are not pending or, to the
knowledge of the Company, threatened in writing, any audits,
examinations, investigations or other proceedings in respect of
Taxes of the Company, any of its Subsidiaries, or any of the
Company’s or such Subsidiaries’ assets, and neither the
Company nor any of its Subsidiaries has given any currently
effective waiver or extension of any statute of limitations in
respect of Taxes nor are there any currently effective waivers of
or extension of any statutes of limitations of Taxes in respect of
any of the Company’s or such Subsidiaries’ assets;
(vi) neither the Company nor any of its Subsidiaries has
entered into any " listed transaction " within the meaning
of Treasury Regulation Section 1.6011-4(b)(2); (vii) none
of the Company or its Subsidiaries has been a " controlled
corporation " or a " distributing corporation " in any
distribution occurring during the two-year period ending on the
Agreement Date that was purported or intended to be governed by
Section 355 of the Code; (viii) the unpaid Taxes of the
Company and each of its Subsidiaries do not exceed the reserves for
Tax liability shown on the Balance Sheet, or similar reserves for
Tax liability shown on the consolidated financial statements of
Parent to the extent such reserves apply to Company’s or its
Subsidiaries’ Tax Returns not yet filed; (ix) each of
the Company and its Subsidiaries has disclosed on its federal
income Tax Returns filed for its 2005 taxable year and thereafter
all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of IRC
section 6662; (x) there are no Encumbrances for Taxes except
Permitted Encumbrances for which reserves have been established on
the Balance Sheet, and (xi) Stockholder and the Company are,
and at the time of the Closing will be, members of Parent’s
federal consolidated Tax group and included in Parent’s
federal consolidated income tax return.
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4.7 Financial Statements . Copies of
(i) the audited combined balance sheet of the Network Business
as of December 31, 2007 and 2006, and the related audited
combined statements of income, parents’ net investment and
cash flows of the Network Business for each of the three years in
the period ended December 31, 2007, together with all related
notes and schedules thereto, accompanied by the report thereon of
the Network Business’ independent auditors (collectively
referred to as the " Financial Statements "), (ii) the
unaudited combined balance sheet of the Network Business as of
September 30, 2008, and the related unaudited combined
statement of income of the Network Business (collectively referred
to as the " Interim Financial Statements "), (iii) the
unaudited combined balance sheet of TVGuide.com as of
September 30, 2008, June 30,
2008, March 31, 2008, December 31, 2007 and
December 31, 2006 and the related unaudited combined statement
of income of TVGuide.com (collectively referred to as the "
TVGuide.com Financial Statements "), and (iv) a
schedule combining the unaudited combined balance sheet of the
Network Business and the unaudited combined balance sheet of
TVGuide.com as of September 30, 2008 (the " Balance
Sheet, " and such date the " Balance Sheet Date ") are
attached as Section 4.7 of the Disclosure Schedule. The
Financial Statements (a) have been prepared based on the books
and records of the Network Business (except as may be indicated in
the notes thereto), (b) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto), and
(c) fairly presents, in all material respects, the combined
financial position, results of operations and cash flows of the
Network Business as of the respective dates thereof and for the
respective periods indicated therein, except as otherwise noted
therein. The Interim Financial Statements (i) have been
prepared based on the books and records of the Network Business;
(ii) have been prepared in a manner consistent with prior
quarter-end unaudited combined balance sheets and statements of
income, which is in accordance with GAAP, subject to the GAAP
Exceptions; and (iii) fairly presents, in all material
respects, the combined financial position and results of operations
of the Network Business as of the respective date thereof and for
the respective period indicated therein, subject to the GAAP
Exceptions; and (iv) subject to normal and recurring year-end
adjustments that will not, individually or in the aggregate, be
material. The TVGuide.com Financial Statements (a) have been
prepared based on the books and records of TVGuide.com except as
may be indicated in the notes thereto; (b) have been prepared
in a manner consistent with prior quarter-end unaudited combined
balance sheets and statements of income, which is in accordance
with GAAP, subject to the GAAP Exceptions, except as may be
indicated in the notes thereto; (c) fairly presents, in all
material respects, the combined financial position and results of
operations of TVGuide.com as of the respective date thereof and for
the respective period indicated therein, except as otherwise noted
therein; and (d) subject to normal and recurring year-end
adjustments that will not, individually or in the aggregate, be
material. The Balance Sheet (a) has been prepared based on the
balance sheet contained in the Interim Financial Statements and the
balance sheet as of September 30, 2008, contained in the
TVGuide.com Financial Statements, except as may be indicated in the
notes thereto; and (b) fairly presents, in all material
respects, the combined financial position of the Network Business
as of the Balance Sheet Date, except as otherwise noted
therein.
4.8 Absence of Liabilities . Except (a) to the
extent reflected or reserved against in the Balance Sheet,
(b) for liabilities or obligations permitted by this
Agreement, or (c) for liabilities and obligations incurred in
the ordinary course of business consistent with past practices
since the Balance Sheet Date, the Network Business does not have
any liabilities or
17
obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP,
subject to the GAAP Exceptions, to be reflected on a combined
balance sheet of the Network Business. For the avoidance of doubt,
for purposes of this Section 4.8, the Network Business
includes TVGuide.com.
4.9 Absence of Certain Changes or Events . Since the
Balance Sheet Date, except as otherwise contemplated, required or
permitted by this Agreement, including, without limitation, the
Restructuring, (i) the Network Business has been conducted, in
all material respects, in the ordinary course of business
consistent with past practices and (ii) neither the Company
nor any of its Subsidiaries has taken any action which, if taken
after the Agreement Date without the prior consent of Buyer, would
constitute a breach of any of the covenants set forth in
Section 7.2 of this Agreement. As of the Agreement Date (and,
for the avoidance of doubt, solely as of such date for all purposes
of this Agreement): Between September 30, 2008 and the
Agreement Date, there has not been any event or effect that has had
a Material Adverse Effect on the Network Business.
4.10 Contracts .
(a) For purposes of this Agreement, " Material
Contract " shall mean (i) any " material contract "
(within the meaning of Item 601(b)(10) of Regulation S-K under
the Securities Act, and the Exchange Act) with respect to Parent
that is solely applicable to the Network Business; (ii) the
Carriage Agreements; (iii) any Contract, except for insertion
orders or carriage agreements, pursuant to which the Company or any
of its Subsidiaries received more than $500,000 over the past 12
months; (iv) any Contract which obligates, or in the
Company’s reasonable discretion is reasonably likely to
obligate, the Company or any of its Subsidiaries to pay more than
$500,000 over any future 12 month period in the next five years;
(v) any indemnification, employment, "change of control,"
retention, severance, consulting or other Contract with any
executive officer of the Network Business other than those
Contracts terminable by the Company or any of its Subsidiaries on
no more than thirty (30) days’ notice without liability
or financial obligation to the Company or any such Subsidiary; and
(vi) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or promissory notes relating to the
borrowing of money, extension of credit or other indebtedness for
borrowed money by the Network Business.
(b) Section 4.10(b) of the Disclosure Schedule sets
forth a list of all the Material Contracts as of the Agreement
Date.
(c) (i) neither the Company nor any Subsidiary of the
Company is in material breach of or material default under the
terms of any Material Contract; (ii) to the knowledge of the
Company, no other party to any Material Contract is in material
breach of or material default under the terms of any Material
Contract; and (iii) each Material Contract is a valid and
binding obligation of the Company or the Subsidiary of the Company
which is party thereto and, to the knowledge of the Company, of
each other party thereto, and except for the Bankruptcy and Equity
Exception, is in full force and effect.
18
4.11 Intellectual Property .
(a) The Intellectual Property that is used in or
necessary for, and (in either event) is material to the operation
of the Network Business as currently conducted (collectively, the "
Company Intellectual Property "); (i) is owned by the
Company or a Subsidiary of the Company, (ii) the Company or
one of its Subsidiaries holds a license to or otherwise possesses
legally enforceable rights to use all such Company Intellectual
Property, or (iii) to the extent held by an affiliate, will be
licensed to the Company or a Subsidiary of the Company prior to the
Closing. All such Company Intellectual Property is free and clear
of any Encumbrances (excluding any rights granted under any license
or distribution agreements entered into in the ordinary course of
business consistent with past practice). None of the Company
Intellectual Property owned by the Company or its Subsidiaries is,
and to the knowledge of the Company, no other Company Intellectual
Property is subject to any outstanding order, judgment or
stipulation restricting the use thereof by the Company or any of
its Subsidiaries. The Company Intellectual Property is sufficient
for the conduct of the Network Business as currently conducted.
(b) Section 4.11(b)(i) of the Disclosure Schedule
sets forth an accurate and complete list of all registered Marks
and applications for registration of Marks used in the Network
Business and owned by the Company or one of its affiliates
(collectively, the " Company Registered Marks "), and
Section 4.11(b)(ii) of the Disclosure Schedule sets forth an
accurate and complete list of all registered Copyrights and all
pending applications for registration of Copyrights used in the
Network Business and owned by the Company or one of its affiliates
(collectively, the " Company Registered Copyrights " and,
together with the Company Registered Marks, the " Company
Registered IP "). The Company and its Subsidiaries own no
Patents that are used in the Network Business. As to all Company
Registered IP, the
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