Exhibit 2.1
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
by and between
NEWS CORPORATION
and
LIBERTY MEDIA CORPORATION
------------------------------
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
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Exhibits
--------
Exhibit A-I
Tax Matters Agreement
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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
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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 Sherman Act, as amended,
the
Clayton 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.
6
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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.
"Murdoch Interests" means each of Mr. K. Rupert Murdoch, the
Murdoch
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").
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"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.
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"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
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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).
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<PAGE>
"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
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<PAGE>
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, Meagher & Flom 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. Rupert Murdoch, David
DeVoe and Peter Chernin 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;
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<PAGE>
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
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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
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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
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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:
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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.
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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.
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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
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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 Murdoch 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 Murdoch 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
Hart- Scott-Rodino 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
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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.
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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:
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(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.
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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
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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
Trans
